Court of Appeal of California, Fifth Appellate District

August 8, 2023, Opinion Filed

F085014

INFINITY SELECT INSURANCE COMPANY et al., Petitioners, v. THE SUPERIOR COURT OF FRESNO COUNTY, Respondent; CAL LEDUC et al., Real Parties in Interest.

Notice: CERTIFIED FOR PARTIAL PUBLICATION^*

Prior History:  [**1] ORIGINAL PROCEEDINGS; petition for writ of mandate. Superior Court No. 19CECG01278, D. Tyler Tharpe, Judge.

Case Summary

Overview

HOLDINGS: [1]-An insurer did not violate the Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., by issuing a policy to a carrier with a bodily injury limit lower than the $750,000 minimum coverage amount under Veh. Code, § 34631.5, subd. (a), because the carrier was responsible for satisfying requirements to hold a valid permit under former Veh. Code, §§ 34620, subd. (a), 34621, subd. (b)(6), and could opt to meet financial responsibility requirements under Veh. Code, §§ 34630, 34631, by other means, such as stacking coverage under multiple policies, and the insurer had no duty to ensure compliance; [2]-Reformation to provide greater coverage was unwarranted because there was no conflict requiring the policy be conformed to statutes, nor did the facts show either that the insured requested certification or greater coverage or that the insurer assumed greater obligations.

Outcome

Writ petition granted.

LexisNexis® Headnotes

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN1  Common Carrier Duties & Liabilities, State & Local Regulation

A motor carrier of property is subject to heightened insurance coverage requirements under the Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

HN2  Common Carrier Duties & Liabilities, State & Local Regulation

Except in certain situations, a motor carrier of property shall not operate a commercial motor vehicle on any public highway in the State of California unless it has complied with certain statutory requirements including the holding of a valid motor carrier permit issued by the California Department of Motor Vehicles. Former Veh. Code, § 34620, subd. (a).

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

Insurance Law > … > Coverage > Compulsory Coverage > Self Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN3  Common Carrier Duties & Liabilities, State & Local Regulation

To obtain a valid motor carrier permit, a motor carrier of property must, among other things, provide the California Department of Motor Vehicles (DMV) with evidence of financial responsibility. Former Veh. Code, § 34621, subd. (b)(6). Proof of financial responsibility may take the form of a compliant certificate of insurance, surety bond, or certificate of self-insurance deposited with the DMV. Veh. Code, § 34631, subds. (a)-(c). A motor carrier permit shall not be granted until a certificate of insurance meeting the minimum insurance requirements contained in Veh. Code, § 34631.5, is filed with the DMV. Veh. Code, § 34630, subd. (a).

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

HN4  Common Carrier Duties & Liabilities, State & Local Regulation

A motor carrier of property who operates a commercial motor vehicle in violation of insurance permitting requirements is subject to having his or her permit suspended (assuming one has been obtained) under Veh. Code, §§ 34631.5, subd. (b)(5), 34632, subd. (b), cessation of operations under § 34631.5, subd. (b)(7), and misdemeanor fines and/or imprisonment under Veh. Code, §§ 34660, subd. (a), 34661. Other violations of the Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., may result in additional sanctions against a motor carrier of property, including issuance of an injunction to prohibit the carrier’s continued operation under § 34660, subd. (c), and impoundment of the carrier’s vehicle(s) under § 34660, subd. (d).

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Self Insurance

HN5  Common Carrier Duties & Liabilities, State & Local Regulation

California Department of Motor Vehicles (DMV) regulations provide three methods by which a motor carrier of property may prove the financial responsibility necessary to obtain a motor carrier permit: (1) a DMV Form 65 certificate of insurance pursuant to Veh. Code, § 34631, subd. (a); (2) a surety bond pursuant to § 34631, subd. (b); or (3) a certificate of self-insurance pursuant to § 34631, subd. (c). Cal. Code Regs., tit. 13, § 220.06, subd. (a).

Governments > Legislation > Interpretation

HN6  Legislation, Interpretation

A court’s fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute. The court begins by examining the statutory language, giving the words their usual and ordinary meaning. If there is no ambiguity, then the court presumes the lawmakers meant what they said, and the plain meaning of the language governs. If, however, the statutory terms are ambiguous, then the court may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. In such circumstances, the court selects the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoids an interpretation that would lead to absurd consequences.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

HN7  Common Carrier Duties & Liabilities, State & Local Regulation

Former Veh. Code, § 34620, prohibits a motor carrier of property from operating a commercial motor vehicle on any public highway unless it has met certain requirements including holding a valid motor carrier permit issued by the California Department of Motor Vehicles. Former § 34620, subd. (a).

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > Contract Formation > Policy Delivery

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

HN8  Compulsory Coverage, Certificates of Insurance

Proof of financial responsibility in the form of a certificate of insurance must meet the requirements of Veh. Code, § 34631.5. Subject to certain exceptions, § 34631.5 provides every motor carrier of property shall provide and thereafter continue in effect insurance coverage meeting the $750,000 minimum coverage limits. § 34631.5, subd. (a).

Business & Corporate Compliance > … > Insurance Company Operations > Policy Forms Regulation > Standard Forms & Provisions

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN9  Policy Forms Regulation, Standard Forms & Provisions

If a motor carrier’s insurance policy is certified, the policy shall provide coverage with respect to the operation, maintenance, or use of any vehicle for which a permit is required, although the vehicle may not be specifically described in the policy. Veh. Code, §§ 34630, subd. (a), 34631.5, subd. (b)(1). In addition, the certificate of insurance shall not be cancelable on less than 30 days’ written notice from the insurer to the California Department of Motor Vehicles except in the event of cessation of operations as a permitted motor carrier of property, under §§ 34630, subd. (b), 34631.5, subd. (b)(3), and shall remain in full force and effect until cancelled. § 34631.5, subd. (b)(4). These obligations adhere to an insurer that has certified an insurance policy. The plain language of the statute does not impose any requirements upon an insurer that has not certified an insurance policy.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

HN10  Common Carrier Duties & Liabilities, State & Local Regulation

A commercial highway carrier bears the ultimate responsibility for maintaining adequate liability coverage. Nothing in the text of the Motor Carriers of Property Permit Act (MCPPA), Veh. Code, § 34600 et seq., provisions regarding proof of financial responsibility operates to transfer such a responsibility to an insurer who has not certified an insurance policy for the purpose of complying with the MCPPA, and who has not included an endorsement incorporating the provisions of the MCPPA into its policy.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN11  Common Carrier Duties & Liabilities, State & Local Regulation

Cal. Code Regs., tit. 13, § 220.06, subd. (a), states acceptable proof of insurance (i.e., one form of financial responsibility) under the Motor Carriers of Property Permit Act (MCPPA), Veh. Code, § 34600 et seq., shall be submitted to the California Department of Motor Vehicles (DMV) in the form of a DMV Form 65 certificate of insurance; said certificate shall be submitted to the DMV by the motor carrier’s insurance provider; and proof of financial responsibility pursuant to Veh. Code, § 16000 et seq., shall not be substituted for the proof required for a motor carrier permit. § 220.06, subd. (a)(1), (2). Moreover, the regulation provides that a DMV Form 67 policy endorsement amending the insurance policy to comply with insurance requirements imposed by the MCPPA, commencing with Veh. Code, § 34630, shall be attached to and made part of, the insurance policy insuring the motor carrier. § 220.06, subd. (b).

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN12  Common Carrier Duties & Liabilities, State & Local Regulation

Cal. Code Regs., tit. 13, § 220.06, provides that when an insurer issues a policy with the purpose of meeting the requirements of the Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., it is required to (1) issue a California Department of Motor Vehicles (DMV) Form 65 certificate of insurance and to submit the certificate to the DMV; and (2) attach a DMV Form 67 policy endorsement to the policy.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > Contract Formation > Policy Delivery

HN13  Common Carrier Duties & Liabilities, State & Local Regulation

Veh. Code, § 34630, appears to contemplate that a certificate of insurance may be issued for less than the full $750,000 coverage requirement. It provides, in part, that a motor carrier permit shall not be granted until there is filed with the California Department of Motor Vehicles proof of financial responsibility in the form of a currently effective certificate of insurance, if the policy represented by the certificate meets the minimum insurance requirements contained in Veh. Code, § 34631.5. § 34630, subd. (a). The Legislature’s use of the word “if” in § 34630, subd. (a), suggests the Legislature contemplated a certified policy may or may not meet the requirement contained in § 34631.5.

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN14  Compulsory Coverage, Certificates of Insurance

The California Department of Motor Vehicles (DMV) Form 65 certificate of insurance allows an insurer to designate whether the policy issued is primary or excess insurance. It also allows an insurer to denote, by checking the appropriate box, whether primary coverage provided is below statutory minimum limits or equal to or exceeding statutory minimum limits. DMV Form MC 65 M (rev. 12/2012). Similarly, for excess coverage, the form allows an insurer to denote, again by checking the appropriate box, whether excess coverage provided is between primary coverage and statutory minimum limits or provided at or above statutory minimum limits. The DMV Form 65 certificate of insurance is expressly incorporated into the DMV regulation. Cal. Code Regs., tit. 13, § 220.06, subd. (a).

Insurance Law > Liability & Performance Standards > Good Faith & Fair Dealing > Duty to Defend

Insurance Law > Claim, Contract & Practice Issues > Secondary Insurance

Insurance Law > … > Excess Insurance > Obligations > Duty to Defend

Insurance Law > … > Excess Insurance > Obligations > Indemnification Obligations

HN15  Good Faith & Fair Dealing, Duty to Defend

Primary coverage is insurance coverage whereby, under the terms of the policy, liability attaches immediately upon the happening of the occurrence that gives rise to liability. Primary insurers generally have the primary duty of defense. Excess or secondary coverage is coverage whereby, under the terms of the policy, liability attaches only after a predetermined amount of primary coverage has been exhausted.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Certificates of Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Self Insurance

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

HN16  Common Carrier Duties & Liabilities, State & Local Regulation

Even where an insurer provides coverage for the purpose of meeting a motor carrier of property’s Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., requirements, the insurer is allowed to issue a policy with limits below the statutory requirement of $750,000. It is up to the insured motor carrier of property to secure additional insurance or to comply with the permitting requirements in other authorized ways (e.g., a surety bond or certificate of self-insurance).

Business & Corporate Law > Agency Relationships > Types > Insurance Agents & Insurance Companies

Insurance Law > Liability & Performance Standards > Good Faith & Fair Dealing > Agents & Brokers

Insurance Law > … > Insurance Company Operations > Company Representatives > Brokers

Insurance Law > … > Agents > Types > General Agents

HN17  Types, Insurance Agents & Insurance Companies

An insurance agent’s primary duty is to represent the insurer in transactions with insurance applicants and policyholders. In contrast, a broker’s primary duty is to represent the applicant/insured, and his or her actions are not generally binding on the insurer. Put quite simply, insurance brokers, with no binding authority, are not agents of insurance companies.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > Liability & Performance Standards > Good Faith & Fair Dealing > Agents & Brokers

HN18  Common Carrier Duties & Liabilities, State & Local Regulation

Absent the existence of a statutory duty on an insurer’s part to provide greater coverage to the insured than he requested, and absent proof of the existence of fraud, fraudulent misrepresentation, or assumption of a greater duty, the insurer has no duty under the Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., to provide insurance the insured did not request or apply for. It is the insured’s responsibility to advise the agent of the insurance he wants, including the limits of the policy to be issued.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Compulsory Coverage > Proof of Financial Responsibility

HN19  Common Carrier Duties & Liabilities, State & Local Regulation

The Motor Carriers of Property Permit Act, Veh. Code, § 34600 et seq., contemplates that a policy with coverage limits less than $750,000 may issue to a motor carrier of property, and California Department of Motor Vehicles (DMV) regulations expressly allow a motor carrier to stack policies to meet the carrier’s financial responsibility requirements. Veh. Code, § 34631.5, subd. (a)(1); Cal. Code Regs., tit. 13, § 220.06, subd. (a); DMV Form MC 65 M (rev. 12/2012).

Business & Corporate Compliance > … > Insurance Company Operations > Policy Forms Regulation > Standard Forms & Provisions

Governments > Legislation > Interpretation

HN20  Policy Forms Regulation, Standard Forms & Provisions

Where insurance coverage is required by law, the statutory provisions are incorporated into the insurance contract. The obligations of such a policy are measured and defined by the pertinent statute, and the two together form the insurance contract. Any provisions of such a policy which are in conflict with the pertinent statutes are nullified and superseded to that extent, particularly where the policy itself expressly so provides.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > State & Local Regulation

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Insurance Law > … > Coverage > Underinsured Motorists > Stacking Provisions

HN21  Common Carrier Duties & Liabilities, State & Local Regulation

The Motor Carriers of Property Permit Act (MCPPA), Veh. Code, § 34600 et seq., allows a motor carrier of property to meet its financial responsibility requirements by stacking coverage provided by multiple insurance policies. This means a policy that is intended to support a motor carrier of property’s application for a motor permit may, nevertheless, be issued with lower coverage limits than that required by the MCPPA, and the motor carrier may meet MCPPA requirements by obtaining additional policies of insurance.

Headnotes/Summary

Summary
 [*190] CALIFORNIA OFFICIAL REPORTS SUMMARY

The trial court ruled the Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) required an insurance policy issued to a motor carrier of property conform to the statutory $750,000 minimum coverage amount (Veh. Code, § 34631.5, subd. (a)) and ordered reformation of a policy with a lower bodily injury limit to provide the minimum coverage. (Superior Court of Fresno County, No. 19CECG01278, D. Tyler Tharpe, Judge.)

The Court of Appeal granted the insurer’s petition for writ of mandate. The court held the issuance of a policy with a lower limit was permissible because the carrier was responsible for satisfying requirements to hold a valid permit (Veh. Code, former §§ 34620, subd. (a), 34621, subd. (b)(6)) and could opt to meet financial responsibility requirements (Veh. Code, §§ 34630, 34631) by other means, such as stacking coverage under multiple policies; the insurer had no duty to ensure compliance. Reformation to provide greater coverage was unwarranted because there was no conflict requiring the policy be conformed to statutes, nor did the facts show either that the insured requested certification or greater coverage or that the insurer assumed greater obligations. (Opinion by Franson, J., with Levy, Acting P. J., and Smith, J., concurring.)

Headnotes

CALIFORNIA OFFICIAL REPORTS HEADNOTES

CA(1) (1)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Insurance—Permits.

A motor carrier of property is subject to heightened insurance coverage requirements under the Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.). Except in certain situations, a motor carrier of property shall not operate a commercial motor vehicle on any public highway in the State of California unless it has complied with certain statutory requirements including the holding of a valid motor carrier permit issued by the Department of Motor Vehicles (DMV) (Veh. Code, former § 34620, subd. (a)). To obtain a valid motor carrier permit, a motor carrier of property must, among other things, provide the DMV with evidence of financial responsibility (Veh. Code, former § 34621, subd. (b)(6)). Proof of financial responsibility may take the form of a compliant certificate of insurance, surety bond, or certificate of self-insurance deposited with the DMV (Veh. Code, § 34631, subds. (a)–(c)). A motor carrier permit shall not be granted until a certificate of insurance meeting the minimum insurance requirements contained in Veh. Code, § 34631.5, is filed with the DMV (Veh. Code, § 34630, subd. (a)).

CA(2) (2)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Insurance—Penalties for Noncompliance.

A motor carrier of property who operates a commercial motor vehicle in violation of insurance permitting requirements is subject to having his or her permit suspended (assuming one has been obtained) (Veh. Code, §§ 34631.5, subd. (b)(5), 34632, subd. (b)), cessation of operations (§ 34631.5, subd. (b)(7)), and misdemeanor fines and/or imprisonment (Veh. Code, §§ 34660, subd. (a), 34661). Other violations of the Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) may result in additional sanctions against a motor carrier of property, including issuance of an injunction to prohibit the carrier’s continued operation (§ 34660, subd. (c)) and impoundment of the carrier’s vehicle(s) (§ 34660, subd. (d)).

CA(3) (3)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility.

Department of Motor Vehicles (DMV) regulations provide three methods by which a motor carrier of property may prove the financial responsibility necessary to obtain a motor carrier permit: (1) a DMV form 65 certificate of insurance pursuant to Veh. Code, § 34631, subd. (a); (2) a surety bond pursuant to § 34631, subd. (b); or (3) a certificate of self-insurance pursuant to § 34631, subd. (c) (Cal. Code Regs., tit. 13, § 220.06, subd. (a)).

 [*192] CA(4) (4)

Statutes § 21—Construction—Legislative Intent—Ascertaining and Effectuating.

A court‘s fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute. The court begins by examining the statutory language, giving the words their usual and ordinary meaning. If there is no ambiguity, then the court presumes the lawmakers meant what they said, and the plain meaning of the language governs. If, however, the statutory terms are ambiguous, then the court may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. In such circumstances, the court selects the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoids an interpretation that would lead to absurd consequences.

CA(5) (5)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Operating Without Permit.

Veh. Code, former § 34620, prohibits a motor carrier of property from operating a commercial motor vehicle on any public highway unless it has met certain requirements including holding a valid motor carrier permit issued by the Department of Motor Vehicles (former § 34620, subd. (a)).

CA(6) (6)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Certificate of Insurance—Policy Limits.

Proof of financial responsibility in the form of a certificate of insurance must meet the requirements of Veh. Code, § 34631.5. Subject to certain exceptions, § 34631.5 provides every motor carrier of property shall provide and thereafter continue in effect insurance coverage meeting the $750,000 minimum coverage limits (§ 34631.5, subd. (a)).

CA(7) (7)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Insurance—Certified and Uncertified Policies.

If a motor carrier’s insurance policy is certified, the policy shall provide coverage with respect to the operation, maintenance, or use of any vehicle for which a permit is required, although the vehicle may not be specifically described in the policy (Veh. Code, §§ 34630, subd. (a), 34631.5, subd. (b)(1)). In addition, the certificate of insurance shall not be cancelable on less than 30 days’ written notice from the insurer to the Department of Motor Vehicles except in the event of cessation of operations as a permitted motor carrier of property (§§ 34630, subd. (b), 34631.5, subd. (b)(3)) and shall remain in full force and effect until cancelled (§ 34631.5, subd. (b)(4)). These obligations adhere to an insurer that has certified an insurance policy. The plain language of the statute does not impose any requirements upon an insurer that has not certified an insurance policy.

 [*193] CA(8) (8)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Insurance—Certified and Uncertified Policies.

A commercial highway carrier bears the ultimate responsibility for maintaining adequate liability coverage. Nothing in the text of the Motor Carriers of Property Permit Act (MCPPA) (Veh. Code, § 34600 et seq.) provisions regarding proof of financial responsibility operates to transfer such a responsibility to an insurer who has not certified an insurance policy for the purpose of complying with the MCPPA, and who has not included an endorsement incorporating the provisions of the MCPPA into its policy.

CA(9) (9)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Certificate of Insurance.

Cal. Code Regs., tit. 13, § 220.06, subd. (a), states acceptable proof of insurance (i.e., one form of financial responsibility) under the Motor Carriers of Property Permit Act (MCPPA) (Veh. Code, § 34600 et seq.) shall be submitted to the Department of Motor Vehicles (DMV) in the form of a DMV form 65 certificate of insurance; said certificate shall be submitted to the DMV by the motor carrier’s insurance provider; and proof of financial responsibility pursuant to Veh. Code, § 16000 et seq., shall not be substituted for the proof required for a motor carrier permit (§ 220.06, subd. (a)(1), (2)). Moreover, the regulation provides that a DMV form 67 policy endorsement amending the insurance policy to comply with insurance requirements imposed by the MCPPA, commencing with Veh. Code, § 34630, shall be attached to and made part of, the insurance policy insuring the motor carrier (§ 220.06, subd. (b)).

CA(10) (10)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Certificate of Insurance.

Cal. Code Regs., tit. 13, § 220.06, provides that when an insurer issues a policy with the purpose of meeting the requirements of the Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.), it is required to (1) issue a Department of Motor Vehicles (DMV) form 65 certificate of insurance and to submit the certificate to the DMV; and (2) attach a DMV form 67 policy endorsement to the policy.

CA(11) (11)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Certificate of Insurance—Policy Limits.

Veh. Code, § 34630, appears to contemplate that a certificate of insurance may be issued for less than the full $750,000 coverage requirement. It provides, in part, that a motor carrier permit shall not be granted until there is filed with the Department of Motor Vehicles proof of financial responsibility in the form of a currently effective certificate of insurance, if the policy represented by the certificate meets the minimum insurance requirements contained in Veh. Code, § 34631.5 [*194]  (§ 34630, subd. (a)). The Legislature’s use of the word “if” in § 34630, subd. (a), suggests the Legislature contemplated a certified policy may or may not meet the requirement contained in § 34631.5.

CA(12) (12)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Certificate of Insurance—Policy Limits—Primary or Excess Insurance.

The Department of Motor Vehicles (DMV) form 65 certificate of insurance allows an insurer to designate whether the policy issued is primary or excess insurance. It also allows an insurer to denote, by checking the appropriate box, whether primary coverage provided is below statutory minimum limits or equal to or exceeding statutory minimum limits (DMV form MC 65 M (rev. 12/2012)). Similarly, for excess coverage, the form allows an insurer to denote, again by checking the appropriate box, whether excess coverage provided is between primary coverage and statutory minimum limits or provided at or above statutory minimum limits. The DMV form 65 certificate of insurance is expressly incorporated into the DMV regulation (Cal. Code Regs., tit. 13, § 220.06, subd. (a)).

CA(13) (13)

Insurance Contracts and Coverage § 117—Primary and Excess Coverage.

Primary coverage is insurance coverage whereby, under the terms of the policy, liability attaches immediately upon the happening of the occurrence that gives rise to liability. Primary insurers generally have the primary duty of defense. Excess or secondary coverage is coverage whereby, under the terms of the policy, liability attaches only after a predetermined amount of primary coverage has been exhausted.

CA(14) (14)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Insurance Policy with Limits Below Statutory Amount.

Even where an insurer provides coverage for the purpose of meeting a motor carrier of property’s Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) requirements, the insurer is allowed to issue a policy with limits below the statutory requirement of $750,000. It is up to the insured motor carrier of property to secure additional insurance or to comply with the permitting requirements in other authorized ways (e.g., a surety bond or certificate of self-insurance).

CA(15) (15)

Insurance Companies § 9—Agents and Brokers—Duties.

An insurance agent’s primary duty is to represent the insurer in transactions with insurance applicants and policyholders. In contrast, a broker’s primary duty is to represent the applicant/insured, and his or her actions are not generally binding on the insurer. Put quite simply, insurance brokers, with no binding authority, are not agents of insurance companies.

 [*195] CA(16) (16)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Insurance—Duties of Insurer and Insured.

Absent the existence of a statutory duty on an insurer’s part to provide greater coverage to the insured than the insured requested, and absent proof of the existence of fraud, fraudulent misrepresentation, or assumption of a greater duty, the insurer has no duty under the Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) to provide insurance the insured did not request or apply for. It is the insured’s responsibility to advise the agent of the insurance the insured wants, including the limits of the policy to be issued.

CA(17) (17)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Insurance Policy with Limits Below Statutory Amount.

The Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.) contemplates that a policy with coverage limits less than $750,000 may issue to a motor carrier of property, and Department of Motor Vehicles (DMV) regulations expressly allow a motor carrier to stack policies to meet the carrier’s financial responsibility requirements (Veh. Code, § 34631.5, subd. (a)(1); Cal. Code Regs., tit. 13, § 220.06, subd. (a); DMV form MC 65 M (rev. 12/2012)).

CA(18) (18)

Insurance Contracts and Coverage § 12—Interpretation—As Affected by Statutes.

Where insurance coverage is required by law, the statutory provisions are incorporated into the insurance contract. The obligations of such a policy are measured and defined by the pertinent statute, and the two together form the insurance contract. Any provisions of such a policy which are in conflict with the pertinent statutes are nullified and superseded to that extent, particularly where the policy itself expressly so provides.

CA(19) (19)

Carriers § 3—Regulation—Motor Carriers of Property Permit Act—Proof of Financial Responsibility—Insurance Policy with Limits Below Statutory Amount—Coverage Stacked Under Multiple Policies.

An insurance policy issued to a motor carrier of property, which had a bodily injury policy limit lower than $750,000, was not in conflict with the Motor Carriers of Property Permit Act (MCPPA) (Veh. Code, § 34600 et seq.) with regard to its policy limits because the MCPPA allows a motor carrier of property to meet its financial responsibility requirements by stacking coverage provided by multiple insurance policies. This means a policy that is intended to support a motor carrier of property’s application for a motor permit may, nevertheless, be issued with lower coverage limits than that required by the MCPPA, and the motor carrier may meet MCPPA requirements by obtaining additional policies of [*196]  insurance. Thus, a policy provision which provided that the policy would be conformed to statutes in the event of a conflict between the two had no application.

[Cal. Forms of Pleading and Practice (2023) ch. 480, Public Utilities, § 480.162.]

Counsel: Sheppard, Mullin, Richter & Hampton, Peter H. Klee, Thomas R. Proctor and Todd E. Lundell for Petitioners.

No appearance for Respondent.

Cornwell & Sample, Stephen R. Cornwell; Freedman Law and Vernon J. Reynolds for Real Parties in Interest.

Judges: Opinion by Franson, J., with Levy, Acting P. J., and Smith, J., concurring.

Opinion by: Franson, J.

Opinion

FRANSON, J.—

INTRODUCTION

Petitioners Infinity Select Insurance Company and Infinity Property and Casualty Corporation (collectively, Infinity) are named defendants in a pending action (LeDuc v. Infinity Select Ins. Co. (Super. Ct. Fresno County, 2019, No. 19CECG01278) (the instant lawsuit)).

The instant lawsuit stems from an earlier 2013 case (the prior action) in which plaintiffs, named here the real parties in interest, sued Infinity’s insured, Mario Guerra and his employee Daniel Canchola, for negligence and wrongful death in connection with a three-vehicle collision (the collision) involving Canchola, two of the plaintiffs, and others.¹ At the time of the collision, Guerra and Canchola were insured/protected from liability under a policy issued by Infinity with a bodily injury policy limit of $50,000 per accident. Plaintiffs contend it was [**2]  unlawful for Infinity to issue a policy with such a low limit because Guerra, as a motor carrier of property, was required to have a minimum of $750,000 in coverage. Plaintiffs submitted an assumed policy limits settlement demand of $750,000 to settle the entire action, which was rejected.

 [*197] 

The prior action eventually settled in October 2017. Under the terms of the settlement, plaintiffs and Infinity agreed that (1) plaintiffs’ overall damages total $3,565,995.23; (2) plaintiffs would dismiss the prior action; (3) plaintiffs would be assigned Guerra’s and Canchola’s claims against Infinity for bad faith failure to settle; and (4) plaintiffs could pursue their legal claims against Infinity to establish Infinity’s liability for damages in excess of its stated policy limits without having to secure a judgment against Guerra and Canchola. The instant lawsuit followed.

In the first phase of a bifurcated trial, the trial court adjudicated the first two causes of action of plaintiffs’ eight causes of action against Infinity: (1) breach of the insurance contract under Insurance Code section 11580, subdivision (b)(2), where plaintiffs, as judgment creditors, were seeking judgment of $750,000 against [**3]  Infinity and (2) declaratory relief that the policy limits are $750,000. In August 2022, the court issued its ruling. The primary effect of the ruling was to reform the Infinity policy to provide greater bodily injury policy limits of $750,000. Per its terms, the ruling “establishes the policy limits for the jury’s consideration in the upcoming jury trial on the remaining causes of action” including plaintiffs‘ cause of action against Infinity for bad faith breach of the implied covenant of good faith and fair dealing due to Infinity’s rejection of plaintiffs’ Code of Civil Procedure section 998 demand of $750,000.

Infinity filed a petition for a writ of mandate challenging the subject ruling. We granted an alternative writ and stayed the proceedings below.

We conclude the trial court erred in reforming the Infinity policy and will issue a peremptory writ.

FACTUAL AND PROCEDURAL BACKGROUND

The Infinity Policy

Infinity Select issued the Infinity policy to Guerra for the policy period June 3, 2013, to June 3, 2014.² The declarations page of the policy identified the following vehicles as insured: a 2000 Ford Econoline E250; a 2005 Ford F150; and a 2001 Dodge RAM 3500 (the RAM truck). It identified the limits of liability for [**4]  bodily injury at $25,000 for each person and $50,000 for each accident and for property damage at $15,000 for each accident (together, “minimum auto liability coverage”).

 [*198] 

The Collision and Prior Action

On June 12, 2013, Guerra’s employee, Canchola, while driving the RAM truck with Guerra’s permission collided with two other vehicles. A passenger in one of the vehicles, Marsha LeDuc (decedent), was fatally injured. Her daughter and granddaughter were also in the vehicle and suffered injuries. The third vehicle was driven by Guadalupe Medina. Ms. Medina is not a party to the instant lawsuit.

Plaintiffs include decedent’s daughter, granddaughter, and other heirs. They filed the prior action against Guerra, Canchola, and others in December 2013. While the action was pending, plaintiffs served a Code of Civil Procedure section 998 policy limits demand to settle all outstanding claims against Guerra and Canchola for $750,000—the amount plaintiffs contend was the minimum required policy limit. The offer was not accepted.

Plaintiffs contend (and Infinity disputes) (1) California law required Guerra to have insurance with minimum limits of liability of $750,000 by virtue of the fact his RAM truck was a commercial vehicle; (2) all [**5]  applicable state law requirements for commercial auto liability coverage, including state law requirements for the amounts of liability coverage, are read into the Infinity Policy; and (3) the Infinity Policy provisions provide the policy will conform to the state law requirements for the amounts of liability coverage and, as a result, the actual limits of liability are or should be a total of $750,000 for all injuries and deaths. Plaintiffs rely on provisions of the Motor Carriers of Property Permit Act (MCPPA) (Veh. Code, § 34600 et seq.)³ to support their claim Infinity was required to issue an insurance policy with minimum liability coverage of $750,000.

Shortly after trial in the prior action began, the case settled. Plaintiffs and Infinity stipulated that Guerra and Canchola were negligent; that Canchola was acting in the course and scope of his employment for Guerra while driving the RAM truck; and that Guerra’s and Canchola’s negligence was the cause of decedent’s death and the injuries to her daughter and granddaughter.

Covenants in the Prior Action Settlement Agreement

Under the terms of the prior action settlement agreement, plaintiffs agreed to dismiss the prior action with prejudice “after the court in the [prior action] has ruled on the amount of [**6]  costs to which the Plaintiffs are entitled which amount … shall be added to the agreed-to damages set forth below.” As to “agreed-to damages,” the settlement agreement provided, in relevant part:

 [*199] 

“3. Plaintiffs contend that the Infinity Policy has or should have operative $750,000 limits of liability imposed by law and/or the provisions of the policy and that Infinity would be, at minimum, liable up to those $750,000 limits of liability in connection with an entry of judgment in Plaintiffs‘ favor in the [prior action]. Infinity agrees that if Plaintiffs prevail on this contention, then Plaintiffs will be entitled to recover the sum of $750,000 from Infinity as damages in the [instant lawsuit]. This provision shall not otherwise limit the damages to which the plaintiff may otherwise be entitled.

“4. Additionally, Plaintiffs contend that they made a reasonable offer to settle the [prior action] for an amount within the Infinity Policy’s claimed $750,000 limits of liability imposed by law and/or the provisions of the policy, and that Infinity unreasonably rejected that offer. Infinity agrees that if Plaintiffs can prove this ‘bad faith failure to settle’ claim in the [instant lawsuit], [**7]  Plaintiffs may recover from Infinity the full amount of the agreed upon damages and costs set forth in affirmative covenant number 5 below.

“5. The Parties agree and stipulate that, for purposes of determining the potentially recoverable damages in the [instant lawsuit], the amount of damages which the jury would have found and which would have been reduced to judgment in the [prior action] are:

“(i) damages for the wrongful death claim arising out of the death of [decedent], which the parties agree has a value of $2,562,941.28;

“(ii) damages for [decedent’s daughter’s] injury claim, which the parties agree has a value of $79,677.52;

“(iii) damages for [decedent’s granddaughter’s] injury claim, which the parties agree has a value of $136,079.64; and

“(iv) Plaintiffs’ recoverable costs of suit in the [prior action] … .”⁴ Plaintiffs obtained an award of costs in the prior action in the amount of $836,326.79.

 [*200] 

Additional Stipulated and Admitted Facts

The first phase of trial in the instant lawsuit was a bench trial on the first two causes of action. In advance of the trial date, the parties stipulated, among other things, (1) the gross vehicle weight rating (GVWR) for the RAM truck was 10,001 [**8]  to 14,000 pounds; (2) based on the GVWR of the RAM truck and “the manner in which it was being used during the term of the [Infinity] policy, … Guerra was a ‘motor carrier of property,’ as defined by … section 34601”; (3) “Infinity did not issue a policy endorsement using [Department of Motor Vehicles] form 67 MCP upon issuance of the policy in either May 2012 or June 2013” (in essence, this endorsement incorporates provisions of the MCPPA into an insurance policy); (4) “Infinity did not issue a DMV form 65 to the [DMV] prior to the [collision]” (in essence, an insurer who issues such a certificate, certifies the insurance policy is being issued in compliance with the MCPPA); (5) the RAM truck was an “ ‘insured auto’” as defined in the policies; (6) “plaintiffs have an assumed judgment of $3,615,005.23 plus interest from the date of the dismissal of the [prior] action”;⁵ and (7) Infinity Select paid plaintiffs the $50,000 policy limit of the Infinity policy to be applied as a credit against a larger judgment, if any, obtained in the instant lawsuit. ⁶

The following additional facts were among those [**9]  admitted by plaintiffs in their return by verified answer to the writ petition: (1) Guerra applied for insurance from Infinity through his broker; (2) Guerra, through his broker, applied for minimum auto liability coverage; (3) Guerra’s application for insurance contained checkboxes to indicate whether a DMV filing was necessary. The “No” box was checked.

Issues Decided by the Trial Court in the First Phase of Trial

The first phase of trial lasted two days. After the presentation of evidence, the parties executed a stipulation on the issues they wanted the trial court to decide. On August 3, 2022, the trial court issued the subject ruling and resolved the parties’ requested issues in the following manner. (The court’s response to issues presented by the parties is in bold & underscored type below.)

 [*201] 

(1) “Is an insurance company that issues a policy to a motor carrier of property, as defined by the [MCPPA], required to issue a policy with limits of at least $750,000? Yes.”

(2) “Were the limits of the subject Infinity policy amended by law and/or express policy provisions as of the date of issuance to provide limits of $750,000? Yes.”

(3) “Upon issuing a policy insuring a motor carrier of [**10]  property, was Infinity required under California Code of Regulations title 13, section 220.06, to issue a [DMV Form 65 certificate of insurance] … and issue a DMV [F]orm 67 [policy endorsement] … ? Yes, as to both forms.”

(4) “Are the … plaintiffs, as judgment creditors pursuant to Insurance Code section 11580, subdivision (b)(2), entitled to judgment for $750,000, less credits to which Infinity is entitled, plus costs recovered in the underlying case as well as interest pursuant to the Settlement Agreement as of the date of the dismissal of the underlying action in an amount to be determined? Yes.”

(5) “Are the provisions of the MCPPA read into an insurance policy that was issued to a motor carrier of property, as defined by Vehicle Code section 34601, where (i) the insurance company did not file a DMV [Form] 65 certificate of insurance with the DMV or otherwise certify to the DMV that the policy complies with the MCPPA and (ii) the insurance policy was issued for less than $750,000? Yes.”

(6) “Where an insurance policy has been issued to a motor carrier of property, but the insurance company has not filed a DMV [Form] 65 … certificate of insurance, or otherwise certified that its insurance policy complies with the MCPPA, is the insurance policy governed by the MCPPA or Vehicle Code section 16450 and Insurance Code section 11580.05? Such a policy is governed [**11]  by Vehicle Code section 16450 and Insurance Code section 11580.05 subject to additional requirements imposed by the MCPPA.” (Boldface & underscoring added.)

(7) “Under the terms of the October 2017 settlement agreement, are the … plaintiffs entitled to recover under the first cause of action as Insurance Code section 11580 judgment creditors? Yes.

“If so, under what legal theory are they entitled to recover as judgment creditors? The theories alleged in the first and second causes of action of the Second Amended Complaint.

“If so, what damages are they entitled to recover? $700,000 plus costs awarded in the underlying case and awardable in this case, plus accumulated interest in an amount to be determined, plus possible attorney fees [*202]  in an amount to be determined. The Settlement Agreement (Exh. 208) does not limit damages as Infinity contends.

“The bench trial resolves the issue of recovery as to the limits of the Infinity policy for purposes of both the declaratory relief and the entitlement to a creditor’s claim under Insurance Code section 11580, subdivision (b)(2). It also establishes the policy limits for the jury’s consideration in the upcoming jury trial on the remaining causes of action.” (Boldface & underscoring added.)

The Writ Petition and Return by Verified Answer

On September 29, 2022, Infinity timely [**12]  filed the writ petition. Infinity requests this court direct respondent trial court to vacate the subject ruling and “enter a new order declaring the Infinity Policy limit is $50,000.”

Plaintiffs filed their return. In addition to responding to the allegations of the petition, plaintiffs have alleged three affirmative defenses they contend bar issuance of a writ: the equitable doctrine of laches (on grounds “Infinity could have filed a motion to clarify the scope of the trial court’s ruling but failed to do so, and thereby has unreasonably delayed final disposition in this case”); the equitable doctrine of waiver (on grounds “Infinity asked the court to rule on a question of law, received an answer, and now complains about the scope of the question”); and the equitable doctrine of exhaustion (on grounds “Infinity should have asked the trial court to clarify its ruling if it felt the ruling on its question was worded too broadly but failed to do so,” citing Mitchell v. Superior Court (1984) 37 Cal.3d 268 [208 Cal. Rptr. 152, 690 P.2d 625]).

DISCUSSION

I., II.^* [NOT CERTIFIED FOR PUBLICATION]

III. Prefatory Comments

Because this case is presented to us as one based on undisputed facts, [**13]  it is perhaps helpful to state what this case (as presented to us) is not about. The undisputed facts, as presented to us, do not indicate that Guerra ever requested insurance in order to comply with the MCPPA, or that he requested Infinity file a DMV Form 65 certificate of insurance or issue a DMV form 67 [*203]  policy endorsement (DMV Form 67 policy endorsement). Similarly, the undisputed evidence before us does not suggest Infinity ever represented to Guerra that the Infinity policy would comply with MCPPA requirements, or that Infinity would file such certificate of insurance or issue such endorsement. Rather, Infinity issued the type of insurance actually requested in the application Guerra submitted through his broker.

IV. The MCPPA and Related DNV Regulations

HN1 CA(1) (1) A motor carrier of property is subject to heightened insurance coverage requirements under the MCPPA. Subject to exceptions not relevant here, former section 34601 of the MCPPA⁷ provided, in relevant part, “[a]s used in this division, ‘motor carrier of property’ means any person who operates any commercial motor vehicle as defined in subdivision (c).” (Former § 34601, subd. (a).) It further provided “[a]s used in this division, except as provided in paragraph (2), a ‘commercial motor vehicle’ means … any motortruck of two of more [**14]  axles that is more than 10,000 pounds [GVWR], and any other motor vehicle used to transport property for compensation.” (Former § 34601, subd. (c)(1).) As noted above, the parties stipulated Guerra was a “motor carrier of property” by virtue of the RAM truck’s GVWR and the manner in which he used it during the term of the Infinity policy.

HN2 Except in certain situations not relevant here, a motor carrier of property “shall not operate a commercial motor vehicle on any public highway in this state” unless it has complied with certain statutory requirements including the holding of a “valid motor carrier permit” issued by the DMV. (Former § 34620, subd. (a).)

HN3 To obtain a valid motor carrier permit, a motor carrier of property must, among other things, provide the DMV with “[e]vidence of financial responsibility.” (Former § 34621, subd. (b)(6).) Proof of financial responsibility may take the form of a compliant certificate of insurance, surety bond, or certificate of self-insurance deposited with the DMV.⁸ (§ 34631, subds. (a)–(c).) “A motor carrier permit shall not be granted” until a certificate of insurance meeting the “minimum insurance requirements contained in Section 34631.5” is filed with the DMV. (§ 34630, subd. (a).)

Section 34631.5 provides, in relevant part: “(a)(1) Every motor carrier of property as defined [**15]  in Section 34601, except those subject to paragraph (2), [*204]  (3), or (4),⁹ shall provide and thereafter continue in effect adequate protection against liability imposed by law upon those carriers for the payment of damages in the amount of a combined single limit of not less than seven hundred fifty thousand dollars ($750,000) on account of bodily injuries to, or death of, one or more persons, or damage to or destruction of, property other than property being transported by the carrier for any shipper or consignee whether the property of one or more than one claimant in any one accident.” (§ 34631.5, subd. (a)(1).)

HN4 CA(2) (2) A motor carrier of property who operates a commercial motor vehicle in violation of insurance permitting requirements is subject to having his or her permit suspended (assuming one has been obtained) (§§ 34631.5, subd. (b)(5), 34632, subd. (b)), cessation of operations (§ 34631.5, subd. (b)(7)), and misdemeanor fines and/or imprisonment (§§ 34660, subd. (a), 34661). Other violations of the MCPPA may result in additional sanctions against a motor carrier of property including issuance of an injunction to prohibit the carrier’s continued operation (§ 34660, subd. (c)) and impoundment of the carrier’s vehicle(s) (id., subd. (d)).

HN5 CA(3) (3) DMV regulations¹⁰ provide three methods by which a motor carrier of property may prove the financial responsibility [**16]  necessary to obtain a motor carrier permit: (1) a DMV Form 65 certificate of insurance pursuant to subdivision (a) of section 34631; (2) a surety bond pursuant to subdivision (b) of section 34631; or (3) a certificate of self-insurance pursuant to subdivision (c) of section 34631. (Cal. Code Regs., tit. 13, § 220.06, subd. (a).) These regulations further provide that the DMV Form 65 certificate of insurance “shall be submitted to the [DMV] by the motor carrier’s insurance provider” (id., subd. (a)(1)); and “[p]roof of financial responsibility pursuant to … section 16000 et seq., shall not be substituted for the proof required for a Motor Carrier Permit … .” (Id., subd. (a)(2).) In addition, DMV regulations provide that a DMV Form 67 policy endorsement “amending the insurance policy to comply with insurance requirements imposed by the [MCPPA] … shall be attached to and made part of, the insurance policy insuring the motor carrier.” (Cal. Code Regs., tit. 13, § 220.06, subd. (b).)

The DMV Form 65 certificate of insurance provides, among other things, that the insurer certifies (1) the motor carrier of property has insurance [*205]  “within the coverage limits identified [in the certificate] as required by … Section 34630, 34631.5 and 34640, and by Part 387 of Title 49 of the Code of Federal Regulations”; (2) the “policy covers all vehicles used in conducting the service performed by the Insured for which a motor carrier permit is required whether or not said [**17]  vehicle is listed in the insurance policy”; and (3) “[a] fully executed [DMV Form 67 policy] endorsement … is attached to the … policy to conform to the requirements of the [MCPPA] … and the rules and regulations of the DMV.” (DMV Form MC 65 M (rev. 12/2012).) Moreover, a certifying insurer agrees the certificate “shall not be canceled on less than thirty (30) days notice from the Insurer to the DMV … .” (Ibid.)

The DMV Form 67 policy endorsement provides, among other things, that the insurer agrees (1) “[t]o pay, consistent with the minimum insurance coverage required by … Section 34631.5, and consistent with the limits it provides herein, any legal liability of insured for bodily injury, death, or property damage arising out of the operation, maintenance, or use of any vehicle(s) for which a motor carrier permit is required, whether or not such vehicle(s) is described in the attached policy[]”; (2) “[n]o provision, stipulation, or limitation contained in the attached policy or any endorsement shall relieve insurer from obligations arising out of [the e]ndorsement or the [MCPPA]”; and (3) the policy “shall not be cancelled on less than thirty (30) days‘ notice from the Insurer to the DMV.” [**18]  (DMV Form MC 67 M (rev. 10/2010).)

The parties have not cited to any statute or regulation that expressly or impliedly authorizes a court to reform the coverage limits of the Infinity policy and we have not found any in our review.

V. Under the Undisputed Facts as Presented, an Insurer That Issues an Insurance Policy to a Motor Carrier of Property Is Not Required To Provide Coverage in the Amount of $750,000

HN6 CA(4) (4) “Our fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute. [Citation.] We begin by examining the statutory language, giving the words their usual and ordinary meaning. [Citation.] If there is no ambiguity, then we presume the lawmakers meant what they said, and the plain meaning of the language governs. [Citations.] If, however, the statutory terms are ambiguous, then we may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.] In such circumstances, we ‘“select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid [**19]  an interpretation that would lead to absurd consequences.”’” (Day v. City of Fontana (2001) 25 Cal.4th 268, 272 [105 Cal. Rptr. 2d 457, 19 P.3d 1196].)

 [*206] 

A. The Motor Carrier of Property—Not the Insurer—Bears Ultimate Responsibility for Meeting the Requirements Necessary To Obtain a Motor Carrier Permit

Infinity contends the plain language of the MCPPA demonstrates it imposes obligations on motor carriers but not insurers who have not certified compliance with the MCPPA. In general, we agree.

HN7 CA(5) (5) Former section 34620 prohibits a motor carrier of property from “operat[ing] a commercial motor vehicle on any public highway” unless it has met certain requirements including “hold[ing] a valid motor carrier permit issued … by the [DMV].” (Former § 34620, subd. (a).) “The [DMV] shall issue a motor carrier permit upon the carrier’s written request, compliance with [among other things] Section[] 34630” and payment of the required fee. (Ibid., italics added.) As noted above, section 34630 provides a motor carrier permit “shall not be granted” unless proof of financial responsibility is filed with the DMV. (§ 34630, subd. (a).) HN8 CA(6) (6) Proof of financial responsibility in the form of a certificate of insurance must meet the requirements of section 34631.5. Subject to certain exceptions not applicable here, section 34631.5 provides “[e]very motor carrier of property … shall provide and thereafter [**20]  continue in effect” insurance coverage meeting the $750,000 minimum coverage limits. (§ 34631.5, subd. (a), italics added.)

The MCPPA imposes further obligations on motor carriers of property. (§ 34632 [“Every motor carrier of property shall furnish the [DMV] annually, … , a list, prepared under oath, of all vehicles, described in Section 34601, used in transportation during the preceding year”]; § 34633 [“Every motor carrier of property with a carrier fleet of 20 or more commercial motor vehicles” are subject to additional reporting requirements].)

HN9 CA(7) (7) If the motor carrier’s insurance policy is certified, the policy “shall provide coverage with respect to the operation, maintenance, or use of any vehicle for which a permit is required, although the vehicle may not be specifically described in the policy.” (§ 34630, subd. (a); see § 34631.5, subd. (b)(1).) In addition, “[t]he certificate of insurance shall not be cancelable on less than 30 days’ written notice from the insurer to the [DMV] except in the event of cessation of operations as a permitted motor carrier of property[]” (§ 34630, subd. (b); see § 34631.5, subd. (b)(3)) and “shall remain in full force and effect until cancelled.” (§ 34631.5, subd. (b)(4).) These obligations adhere to an insurer that has certified an insurance policy. The plain language of the statute does not impose any [**21]  requirements upon an insurer that has not certified an insurance policy.

CA(8) (8) In interpreting provisions of the Highway Carriers’ Act (Pub. Util. Code, former § 3501 et seq.), the statutory scheme that regulated motor [*207]  carriers of property prior to enactment of the MCPPA, our state Supreme Court noted HN10 a commercial highway carrier “bears the ultimate responsibility for maintaining adequate liability coverage.” (Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4th 389, 404 [48 Cal. Rptr. 2d 159, 906 P.2d 1341] (Tab).) Nothing in the text of the above MCPPA provisions operates to transfer such a responsibility to an insurer who has not certified an insurance policy for the purpose of complying with the MCPPA, and who has not included an endorsement incorporating the provisions of the MCPPA into its policy.

CA(9) (9) Plaintiffs point to California Code of Regulations, title 13, section 220.06, subdivision (a) in support of their contention that Infinity was required to issue a compliant MCPPA policy with liability limits of $750,000. HN11 That regulation states acceptable proof of insurance (i.e., one form of financial responsibility) under the MCPPA “shall be submitted to the department in the form of a [DMV Form 65 certificate of insurance]”; said certificate “shall be submitted to the [DMV] by the motor carrier’s insurance provider”; and that “[p]roof of financial responsibility pursuant to Division 7, … section 16000 et seq., shall not be substituted for [**22]  the proof required for a Motor Carrier Permit.” (Cal. Code Regs., tit. 13, § 220.06, subd. (a)(1), (2).) Moreover, the regulation provides that a DMV Form 67 policy endorsement “amending the insurance policy to comply with insurance requirements imposed by the [MCPPA], commencing with … section 34630, shall be attached to and made part of, the insurance policy insuring the motor carrier.” (Cal. Code Regs., tit. 13, § 220.06, subd. (b).)

HN12 CA(10) (10) We read the above regulation as providing that when an insurer issues a policy with the purpose of meeting the requirements of the MCPPA, it is required to (1) issue a DMV Form 65 certificate of insurance and to submit the certificate to the DMV; and (2) attach a DMV Form 67 policy endorsement to the policy. Nothing in the regulation suggests that an insurer who does not issue a policy for that purpose is nevertheless required to issue the DMV Form 65 certificate of insurance or include the DMV Form 67 policy endorsement in the policy it issues.

B. Even Where an Insurer Intends To Issue and Certify a Policy Under Section 34631.5, It Is Not Obligated To Issue the Policy in the Full Amount of $750,000

Infinity contends a motor carrier of property may meet its MCPPA insurance obligations by purchasing more than one policy so long as the aggregate limits of the policies procured [**23]  total $750,000. Plaintiffs’ counsel conceded this point at oral argument. We too agree.

 [*208] 

CA(11) (11) First, we note HN13 section 34630 appears to contemplate that a certificate of insurance may be issued for less than the full $750,000 coverage requirement. It provides, in relevant part, “[a] motor carrier permit shall not be granted … until there is filed with the department proof of financial responsibility in the form of a currently effective certificate of insurance, … if the policy represented by the certificate meets the minimum insurance requirements contained in Section 34631.5.” (§ 34630, subd. (a), italics added.) The Legislature’s use of the word “if” in subdivision (a) of section 34630 suggests the Legislature contemplated a certified policy may or may not meet the requirement contained in section 34631.5.¹¹

CA(12) (12) Second, DMV regulations support Infinity’s proffered interpretation. HN14 The DMV Form 65 certificate of insurance allows an insurer to designate whether the policy issued is primary or excess insurance.¹² It also allows an insurer to denote, by checking the appropriate box, whether primary coverage provided is “below statutory minimum limits” or “equal to or exceeding statutory minimum limits.” (DMV Form MC 65 M (rev. 12/2012), italics added.) Similarly, for excess coverage, the form [**24]  allows an insurer to denote, again by checking the appropriate box, whether excess coverage provided is “between primary coverage and statutory minimum limits” or “provided at or above statutory minimum limits.”¹³ (Ibid.) The DMV Form 65 certificate of insurance is expressly incorporated into the DMV regulation. (Cal. Code Regs., tit. 13, § 220.06, subd. (a).)

CA(14) (14) Thus, HN16 even where an insurer provides coverage for the purpose of meeting a motor carrier of property’s MCPPA requirements, the insurer is allowed to issue a policy with limits below the statutory requirement of $750,000. It is up to the insured motor carrier of property to secure additional insurance or to comply with the permitting requirements in other authorized ways (e.g., a surety bond or certificate of self-insurance).

Consequently, even if we were to accept the premise that an insurer must issue an MCPPA compliant insurance policy to a motor carrier of property under the undisputed facts as presented to us—a premise that we do not [*209]  adopt—nothing in the MCPPA statutes or DMV regulations support reforming the Infinity policy to provide coverage in the full amount of the $750,000.

C.  [**25] Evidence of Insurance Is Not the Only Means of Complying with the MCPPA Financial Responsibility Requirements and Infinity Was Under No Duty To Determine Whether Guerra Had Otherwise Complied with MCPPA Requirements

Infinity contends the subject ruling “ignores the fact that a motor carrier is not actually required to purchase an insurance policy in that amount.” Again, we agree.

As discussed ante, a motor carrier of property may comply with the MCPPA in several different ways—e.g., through one or more certificates of insurance, a surety bond, or a certificate of self-insurance. (§ 34631, subds. (a)–(c).) It is worth noting that the undisputed facts do not suggest Infinity knew, at the time it issued the Infinity policy, whether Guerra had otherwise met the requirements for a motor carrier permit through other certificates of insurance, a surety bond, or certificate of self-insurance. However, our decision is not dependent upon Infinity’s lack of such knowledge.

Infinity, as an insurance carrier, and not a broker, had no duty to ensure that Guerra met the insurance requirements necessary for a motor carrier permit.¹⁴ In Gibson v. Government Employees Ins. Co. (1984) 162 Cal.App.3d 441 [208 Cal. Rptr. 511], this court considered the plaintiffs’ claim that its insurer breached its fiduciary duty [**26]  to plaintiffs by failing to advise them on the “availability and potential need for ‘underinsured motorist’ coverage, as well as the inadequacy of plaintiffs’ $3,000 medical payments benefit.” (Id. at p. 443.) Although the plaintiffs had been customers of the insurer for 20 years, this court held that “absent some conduct on the part of the insurer consistent with assuming broader duties, the insurer’s fiduciary duties are limited to those arising out of the insurance contract … .” (Ibid., italics added.) The court noted that “an insured person’s initial decision to obtain insurance and the corresponding decision of an insurer to offer coverage remain, at the inception of the contract at least, an arm’s length transaction to be governed by traditional standards of freedom to contract.” (Id. at p. 448.)

In Hess v. Transamerica Occidental Life Ins. Co. (1987) 190 Cal.App.3d 941 [235 Cal. Rptr. 715] (Hess), a plaintiff was an applicant for “‘key [*210]  person’” life insurance and was discovered to have high blood pressure after she underwent a medical exam at the insurer’s request. (Id. at p. 943.) As a condition of insuring the plaintiff, the insurer required her and her company to pay a $1,000 premium surcharge each quarter. (Ibid.) The plaintiff agreed and obtained insurance by paying the higher premiums. (Ibid.) Approximately [**27]  seven years later, the plaintiff successfully petitioned her insurer to drop the premium surcharge. (Ibid.) She then sued the insurer for reformation of the contract and to recoup $60,000 in premium surcharges previously paid, under the theory the insurer had a “duty of good faith and fair dealing during the period prior to the inception of the contract” and that it breached the duty by “failing to adequately investigate” the plaintiff’s health condition. (Ibid.) Relying, in part, on Gibson, the Hess court reaffirmed the principle that an insurance contract, at its inception, is “‘an arm’s length transaction … governed by traditional standards of freedom to contract.’” (Id. at p. 945.) Hess concluded that, absent allegations of fraud or fraudulent inducement, the insurer’s precontract conduct could not support a cause of action for bad faith. (Ibid.) Infinity cites to numerous cases holding similarly.

Plaintiffs contend Gibson is irrelevant because it dealt with a policy of insurance that actually met the minimum policy limits required by law whereas, here, the Infinity policy did not meet the minimum coverage requirements for a motor carrier permit. In their posttrial brief, plaintiffs explained their position as [**28]  follows: “Plaintiffs do not contend a pre-contractual duty existed to advise Guerra of the need for MCPPA coverage. Rather, Plaintiffs contend that Infinity, once it issues a policy to [a motor carrier of property], may not write coverage less than the amount required by law.” However, as discussed above, motor carriers of property are allowed to stack coverage through multiple policies in order to meet the greater policy limits required for a motor carrier permit.

Plaintiffs further contend Hess does not stand for the “proposition that an insurer has no duty to evaluate an applicant’s insurance needs, to spontaneously procure a policy with a certain amount of coverage, or … to recommend that the prospective insured buy a certain amount of coverage” and that it is not on point because it “dealt with whether an insurer can require a prospective insured to undergo a medical examination to confirm insurability and concluded in the affirmative.” We are not persuaded.

CA(16) (16) We conclude the principles set forth in Gibson and Hess are relevant to this case. HN18 Absent the existence of a statutory duty on Infinity’s part to provide greater coverage to Guerra than he requested, and absent proof of the existence of [**29]  fraud, fraudulent misrepresentation, or assumption of a greater duty, Infinity had no duty to provide Guerra insurance he did not request or apply for. “It is the insured’s responsibility to advise the agent of the [*211]  insurance he wants, including the limits of the policy to be issued.” (Jones v. Grewe (1987) 189 Cal.App.3d 950, 956 [234 Cal. Rptr. 717]; see Everett v. State Farm General Ins. Co. (2008) 162 Cal.App.4th 649, 660 [75 Cal. Rptr. 3d 812] [“It is up to the insured to determine whether he or she has sufficient coverage for his or her needs.”].)

As mentioned, even where an insurer and insured intend that the policy issued be used to apply for a motor carrier permit—a situation not presented by the undisputed facts in the instant lawsuit—the insurer may issue a policy with a lower limit (e.g., $50,000) and that policy, together with other policies aggregating to a larger limit (i.e., $750,000), may suffice for permitting purposes. Because we conclude that the MCPPA‘s required coverage limits may be met by combining multiple policies, we need not consider whether certain uses of the RAM truck were excepted from the financial responsibility requirements of the MCPPA.

Plaintiffs rely on Barrera v. State Farm Mut. Automobile Ins. Co. (1969) 71 Cal.2d 659 [79 Cal. Rptr. 106, 456 P.2d 674] (Barrera) and Fireman’s Fund American Ins. Co. v. Escobedo (1978) 80 Cal.App.3d 610 [145 Cal. Rptr. 785] (Fireman’s Fund) for the proposition that Infinity had a duty to investigate whether Guerra required a motor carrier permit and whether the insurance it was providing [**30]  Guerra was sufficient to meet permitting requirements. Plaintiffs’ reliance is misplaced.

The question before the Barrera court was whether an insurer could avoid liability under a policy of insurance if it subsequently discovers that the insured made material misrepresentations in applying for the policy. It concluded that “an automobile liability insurer must undertake a reasonable investigation of the insured’s insurability within a reasonable period of time from the acceptance of the application and the issuance of a policy” and that an insurer may not avoid liability on the policy by “indefinitely … postpon[ing] its investigation of insurability until such time as it is financially opportune to do so”—i.e., by waiting until a claim against the policy is made. (Barrera, supra, 71 Cal.2d at pp. 663, 671.) The court held, “failure of the … insurer reasonably to investigate the insurability of the insured within a reasonable time after issuance of the policy, … , results in the loss of the carrier’s right to rescind … .” (Id. at p. 681.) Fireman’s Fund cited Barrera for the same proposition. (Fireman’s Fund, supra, 80 Cal.App.3d at pp. 619–620.)

The situation here is different from that in Barrera and Fireman’s Fund. Infinity is not attempting to rescind the Infinity policy nor is it attempting to avoid liability under the policy. [**31]  To the contrary, it has paid the full policy limits of the Infinity policy to plaintiffs. Thus, the duty announced in Barrera and Fireman’s Fund has no application here.

 [*212] 

D. Samson and Related Cases Do Not Support Reforming the Infinity Policy To Provide $750,000 in Coverage

The trial court ruled that “an insurance company that issues a policy to a motor carrier of property, as defined by the [MCPPA], [is] required to issue a policy with limits of at least $750,000.” In so ruling, the trial court stated, “[t]o hold otherwise would allow Infinity to thwart its financial responsibility requirements by writing a policy for less than the statutory minimum requirement. This ruling is consistent with the law and the terms of the subject policy,” citing Samson v. Transamerica Ins. Co. (1981) 30 Cal.3d 220, 231 [178 Cal. Rptr. 343, 636 P.2d 32] (Samson), and the provision of the Infinity policy which reads: “TERMS OF POLICY CONFORMED TO STATUTES [¶] Terms of this policy which are in conflict with the statutes of the state in which we issue this policy are hereby amended to conform to such statutes.” (Boldface omitted.)

CA(17) (17) As discussed ante, we reject the premise that an insurer may not issue a motor carrier of property a policy with coverage limits less than the minimum required coverage necessary to obtain [**32]  a motor carrier permit. As explained, HN19[] the MCPPA contemplates that a policy with coverage limits less than $750,000 may issue to a motor carrier of property, and relevant DMV regulations expressly allow a motor carrier to stack policies to meet the carrier’s financial responsibility requirements. (§ 34631.5, subd. (a)(1); Cal. Code Regs., tit. 13, § 220.06, subd. (a); DMV Form MC 65 M (rev. 12/2012).) Absent certification of greater coverage; or facts suggesting either that Guerra requested such certification or greater coverage and/or that Infinity represented it would provide such certification or greater coverage; or facts suggesting Infinity assumed greater obligations than those provided in the Infinity policy, we conclude reforming the Infinity policy to provide greater coverage is unwarranted and beyond any requirement imposed at law.

The Samson case, relied upon by the trial court, does not support the court’s determination. In Samson, the insured drove his pickup on the wrong side of the road and collided into another vehicle, killing one of its occupants and injuring three others. (Samson, supra, 30 Cal.3d at p. 224.) The insured was licensed as a “radial highway common carrier” under the Highway Carriers’ Act (Pub. Util. Code, former § 3501 et seq.) but was on a personal errand and not performing services as a common carrier at the time of the [**33]  accident. (Samson, supra, at pp. 225–226.)

The insured carried two insurance policies from separate insurance companies. (Samson, supra, 30 Cal.3d at pp. 224–225.) His pickup was insured for $100,000 from one company. (Id. at p. 224.) His other vehicle, a tractor truck, and two trailers were insured by another company for $300,000. (Id. at  [*213]  p. 225.) The latter policy contained an endorsement prepared by the Public Utilities Commission (PUC) which stated it would cover “any final judgment against the insured for bodily injury … ‘resulting from the operation, maintenance, or use of motor vehicles for which a … permit is required or has been issued to the insured by the [PUC], regardless of whether such motor vehicles are specifically described in the policy or not.’” (Ibid.) The endorsement also stated its purpose was to “ ‘assure compliance by the insured, as a motor carrier of property, with General Order No. 100-Series’” (id. at p. 225, fn. 2), which stated the required total liability limits of a highway carrier’s insurance policy for bodily injury or death was $300,000 (id. at p. 226, fn. 3) and covered “each vehicle used or to be used in conducting the service performed by … such highway carrier” (ibid.).

The insurer that issued the $100,000 policy paid the claimant survivors the policy limits. (Samson, supra, 30 Cal.3d at p. 228.) The insurer [**34]  that issued the $300,000 policy denied coverage. (Id. at p. 227.) After the survivors obtained a judgment against the insured for $725,000, and an assignment of the insured’s claims against the latter insurer, they sued the insurer for the $300,000 policy limit and $325,000 for bad faith refusal to settle. (Id. at p. 229.)

The Samson court noted the insured’s pickup truck had commercial plates and the insured admitted the pickup was used “regularly in his trucking business” although it was not used to actually transport property. (Samson, supra, 30 Cal.3d at pp. 226, 232.) The court determined the “service performed” by the insured, as that phrase was used in the general order, “include[d] ‘every service in connection with or incidental to the transportation of property … .’” (Id. at p. 234.) The court determined the services provided in the pickup truck were sufficient to bring it within scope of the general order and endorsement and that “[s]ince both the general order and the endorsement were incorporated into the insurance policy, the … policy covered [the insured’s] pickup truck.” (Id. at p. 235, italics added.)

Samson bears little similarity to the case before us. Here, the Infinity policy was not issued for the purpose of complying with the MCPPA and contained no endorsement [**35]  incorporating MCPPA provisions. Moreover, the Samson court did not reform the insured’s policy to provide broader coverage than it actually provided. Rather, the court determined the policy, as written, actually covered all vehicles used in connection with the services performed by the carrier.

CA(18) (18) Plaintiffs point to language in Samson which they contend illustrates that the MCPPA must be incorporated into the Infinity policy, namely: HN20[] “Where insurance coverage is required by law, the statutory provisions are [*214]  incorporated into the insurance contract. ‘The obligations of such a policy are measured and defined by the pertinent statute, and the two together form the insurance contract. … [The] insurance carrier is done no injustice when its rights are determined thereunder. [¶] Any provisions of such a policy which are in conflict with the pertinent statutes are nullified and superseded to that extent, particularly where the policy itself, expressly so provides.’” (Samson, supra, 30 Cal.3d at p. 231.) However, the Infinity policy did not expressly incorporate, by way of certification, endorsement or otherwise, the statutory provisions of the MCPPA.

CA(19) (19) Moreover, we reiterate the Infinity policy is not in conflict with the MCPPA with regard [**36]  to its policy limits because HN21[] the MCPPA allows a motor carrier of property to meet its financial responsibility requirements by stacking coverage provided by multiple insurance policies. This means a policy that is intended to support a motor carrier of property’s application for a motor permit may, nevertheless, be issued with lower coverage limits than that required by the MCPPA, and the motor carrier may meet MCPPA requirements by obtaining additional policies of insurance. Thus, the Infinity policy provision which provides that the policy will be conformed statutes in the event of a conflict between the two has no application under the undisputed facts presented.

Plaintiffs also rely on Empire Fire & Marine Ins. Co. v. Bell (1997) 55 Cal.App.4th 1410 [64 Cal. Rptr. 2d 749] (Empire) to support the trial court’s decision to reform the policy limits of the Infinity policy. Plaintiffs’ reliance on Empire is likewise misplaced.

In Empire, the insurance company issued a business automobile policy to an ambulance company. (Empire, supra, 55 Cal.App.4th at p. 1413.) The county in which the ambulance company operated had adopted an ordinance requiring ambulance services to provide the county with proof of liability insurance and, in accordance therewith, the insurer provided the county with a certificate of insurance as proof its insured [**37]  met the ordinance’s requirements. (Id. at pp. 1413, 1423.) The ordinance further required that the policy of insurance must have a “provision requiring 15 days’ notice to the county prior to cancellation or modification of the policy.” (Id. at pp. 1419–1420.) During the policy period, the insurer issued an endorsement to the policy excluding the owner of the company from coverage under the policy without providing DMV the required 15 days’ notice. (Id. at pp. 1413–1414, 1423.) Two months later, the owner, while operating one of the ambulances, caused an accident and injured a third party. (Id. at p. 1415.) The insurer then brought a declaratory relief action to determine whether it had a duty to defend and indemnify the owner. (Ibid.) The Empire court concluded the insurer was bound by the 15 days’ notice period and, having failed to provide [*215]  such notice to the county that it had excluded the owner from coverage, remained liable on the policy. (Id. at p. 1423.)

In summarizing its holding, the Empire court wrote, “when, as here, insurance coverage is required by law as a condition to doing business, the provisions of the compulsory insurance law are incorporated into the insurance contract so that an insurer providing a certificate of insurance as proof that the regulated business entity has [**38]  insurance remains liable on its policy until the requisite notice has been given to the regulatory agency.” (Empire, supra, 55 Cal.App.4th at p. 1415, italics added.) In this regard, Empire stands for the unremarkable proposition that, when an insurer certifies to a government agency that it has issued a policy of insurance which complies with an ordinance (or other law), the insurer will be held to provisions of the ordinance (or other law). Empire does not aid plaintiffs because, here, Infinity issued no similar certification to comply with the MCPPA.

Tab is also unavailing. In Tab, the insurer, Transamerica Insurance Company (Transamerica), had issued a policy to a “commercial trucking company regulated by the PUC under the Highway Carriers’ Act” (Pub. Util. Code, former § 3501 et seq.), the MCPPA‘s predecessor statutes. (Tab, supra, 12 Cal.4th at p. 395.) Transamerica filed a certificate of insurance with the PUC to demonstrate the insured’s compliance with the act and attached the required PUC endorsement to its policy of insurance confirming the policy had been amended to comply with the PUC regulations including General Order No. 100-Series. (Ibid.) The certificate stated, “the policy was ‘Effective 2-1-80 Until Canceled’” (Ibid.) Under the act, an insurer could cancel a highway carrier insurance policy only upon 30 days’ written [**39]  notice to the PUC (Pub. Util. Code, former § 3634) and this provision was likewise contained in General Order No. 100-Series (Tab, at p. 400).

In 1981, the Tab insured replaced its Transamerica policy with policies issued by other companies but neither party notified the PUC that the Transamerica policy was canceled. (Tab, supra, 12 Cal.4th at p. 395.) Eight years later, when the insured was involved in an accident resulting in the death of several third parties, the insured demanded coverage under both its replacement policies as well as the Transamerica policy. (Ibid.) Transamerica filed for declaratory relief seeking a determination it was not liable on its policy. (Id. at p. 396.) The California Supreme Court held that “because the Transamerica policy was amended by the PUC’s standard form endorsement to remain ‘in full force and effect until canceled,’ it could never lapse by reason of expiration of the policy term” and coverage remained in effect until [*216]  canceled in the manner required by the PUC regulations. (Id. at p. 401, italics omitted.) Thus, the court ruled coverage was still in effect.¹⁵ (Tab, at pp. 396, 404.)

In each of the cases discussed above, i.e., Samson, Empire, and Tab, liability was premised on the fact that each of the insurers had actually certified their policies as compliant with the applicable regulatory schemes [**40]  and/or had amended their policies with endorsements that ensured such compliance. Here, Infinity did neither.

The parties have not cited to any cases in which a policy has been reformed to meet MCPPA coverage requirements (or that of its predecessor statutes, i.e., the Highway Carriers’ Act) absent the insurer providing the applicable certification of insurance and/or policy endorsement and absent facts suggesting the insured had justifiable expectations of greater coverage. Moreover, we have found none.

VI.–VIII.^* [NOT CERTIFIED FOR PUBLICATION]

DISPOSITION

The petition is granted. A peremptory writ of mandate shall issue directing respondent court to vacate its “RULINGS AFTER COURT TRIAL” (i.e., the [*217]  subject ruling) entered on August 3, 2022. On remand, respondent court shall enter a new ruling consistent with the views expressed herein and declaring the Infinity policy limit is [**41]  $50,000.

Petitioners Infinity Select Insurance Company and Infinity Property and Casualty Corporation are entitled to their costs under California Rules of Court, rule 8.493(a)(1)(A).

Levy, Acting P. J., and Smith, J., concurred.

End of Document

---

^* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of parts I., II., VI., VII., and VIII. of the Discussion.

¹ (LeDuc v. General Motors LLC (Super. Ct. Fresno County, 2013, No. 13CECG03811).)

² Although not relevant to the issues before us, it appears from stipulations by the parties that the Infinity policy may have been in effect only through January 21, 2014.

³ All statutory references are to the Vehicle Code unless otherwise noted.

⁴ In addition, Infinity agreed the “amounts set forth in [paragraph] 5 above may be presented to the jury in the [instant lawsuit] as the amount of a ‘judgment’ entered in the [prior action]” and that [Infinity] would not “assert any defense in the [instant lawsuit] based on: (1) the fact that no verdict was rendered by the jury and/or no final judgment was entered in the [prior action] … ; (2) the fact that Plaintiffs do not have an operative assignment from Guerra and/or Canchola of their respective rights under the [subject] Infinity Policy … ; and (3) any argument that the bankruptcy of Guerra and/or Canchola precludes any of the relief Plaintiffs may seek from Infinity.” (According to allegations contained in plaintiffs‘ original complaint, Guerra and Canchola both declared bankruptcy at some point prior to trial.)

⁵ The parties have not explained how the amount of the assumed judgment was calculated. The amount is very close to the sum of the agreed-to damages set forth in paragraph five of the prior action settlement agreement plus the cost award issued by the trial court.

⁶ Plaintiffs state that Infinity issued a DMV form 65 certificate of insurance (DMV Form 65 certificate of insurance) to the DMV in October 2013, several months after the collision occurred. Although plaintiffs make several references to this fact, they do not adequately explain the relevance of this postcollision insurance and certification to Infinity’s obligations at the time it issued the Infinity policy. Moreover, we are unable to discern the relevance of this fact.

^* See footnote, ante, page 190.

⁷ Some, but not all, of the relevant statutes discussed in this opinion have been amended since the date of the collision in 2013. Wherever we refer to a “former” version of a statute in the Vehicle Code, it is because that former version was in effect in 2013.

⁸ Qualifying nonprofit organizations may also prove financial responsibility by submitting a form indicating “coverage is provided by a charitable risk pool operating under Section 5005.1 of the Corporations Code.” (§ 34631, subd. (d).)

⁹ Paragraphs (2), (3) and (4) of subdivision (a) of section 34631.5 provide different mandatory minimum limits of liability coverage depending on, for example, the type of material being transported.

¹⁰ The MCPPA authorizes the DMV to “adopt reasonable rules and regulations necessary to administer” the act. (§ 34604.) The DMV is further authorized to “adopt rules and regulations necessary to administer civil sanction proceedings and impose fines for failure to comply with” the act. (Ibid.)

¹¹ If the Legislature wanted to mandate that a certified policy be issued for no less than the minimum insurance requirement, it could have crafted legislation to so provide.

¹² HN15 CA(13) (13) “‘Primary coverage is insurance coverage whereby, under the terms of the policy, liability attaches immediately upon the happening of the occurrence that gives rise to liability. [Citation.] Primary insurers generally have the primary duty of defense. [¶] “Excess” or secondary coverage is coverage whereby, under the terms of the policy, liability attaches only after a predetermined amount of primary coverage has been exhausted.’” (Century Surety Co. v. United Pacific Ins. Co. (2003) 109 Cal.App.4th 1246, 1255 [135 Cal. Rptr. 2d 879].)

¹³ At oral argument, plaintiffs’ counsel acknowledged the DMV Form 65 certificate of insurance provides a space for an insurance company to indicate whether the policy being certified contains coverage limits below statutory minimum limits.

¹⁴ HN17 CA(15) (15) “‘An [insurance] agent’s primary duty is to represent the insurer in transactions with insurance applicants and policyholders.’ [Citation.] ‘In contrast, a broker’s primary duty is to represent the applicant/insured, and his or her actions are not generally binding on the insurer. “Put quite simply, insurance brokers, with no binding authority, are not agents of insurance companies … .”’” (Mercury Ins. Co. v. Lara (2019) 35 Cal.App.5th 82, 88 [246 Cal. Rptr. 3d 907].)

¹⁵ The parties, through their counsel of record, notified this court of the existence of new authority—Allied Premier Ins. v. United Financial Casualty Co. (2023) 15 Cal.5th 20 [___ Cal.Rptr.3d ___, ___ P.3d ___] (Allied)—not available to them at the time of briefing.

In Allied, the California Supreme Court considered the following question certified for its review by the United States Court of Appeals for the Ninth Circuit: “Under [the MCPPA], does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the [DMV], regardless of the insurance policy’s stated expiration date?” (Allied, supra, 15 Cal.5th at p. 24.) In response, the Allied court wrote: “The answer is no. The terms of an insurance contract generally determine the duration of the policy’s coverage. Although an endorsement can amend the policy, neither the [MCPPA] nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date.” (Ibid.)

In answering the certified question, the Allied court noted a different result under similar circumstances obtained in Tab under the Highway Carriers’ Act (Pub. Util. Code, former § 3501 et seq.) but stated the statutory language they relied on in Tab was not carried over when that statutory scheme was replaced by the MCPPA. (Allied, supra, 15 Cal.5th at p. 24.) Although the same or similar policy considerations are undoubtedly reflected in the two different statutory schemes, Allied confirms that the statutory language matters.

Our opinion in this matter is not affected by the Allied decision. Nothing in that decision is contrary to the holding herein.

^* See footnote, ante, page 190.

United States District Court for the Western District of Washington

August 3, 2023, Decided; August 3, 2023, Filed

Civil Action No. 2:21-cv-1501

INTEGON PREFERRED INSURANCE COMPANY, Plaintiff, v. DANIEL WILCOX and ELIZABETH WILCOX and ERIC HOFF, Defendants.DANIEL WILCOX and ELIZABETH WILCOX, Counterclaimants, v. INTEGON PREFERRED INSURANCE COMPANY, Counter-Defendant.DANIEL WILCOX and ELIZABETH WILCOX, Third-Party Plaintiffs, v. ROBERT W. WARREN, ATTORNEY AT LAW, PLLC, dba WRIXTON LAW OFFICE; and SMITH FREED EBERHARD, P.C., Third-Party Defendants.

Counsel:  [*1] For Integon Preferred Insurance Company, a foreign corporation, Plaintiff: Gabrielle Lindquist, Eliot M Harris, WILLIAMS KASTNER & GIBBS (SEA), TWO UNION SQUARE, SEATTLE, WA.

For Daniel Wilcox, Washington Resident, Elizabeth Wilcox, Washington Resident, Defendants: Daniel Robert Laurence, LEAD ATTORNEY, Bradley Jerome Moore, STRITMATTER KESSLER KOEHLER MOORE (SEA), SEATTLE, WA.

For Eric Hoff, Washington Resident, Defendant: Geoff J M Bridgman, Kari Ingrid Lester, OGDEN MURPHY WALLACE PLLC, SEATTLE, WA.

Judges: Barbara Jacobs Rothstein, United States District Judge.

Opinion by: Barbara Jacobs Rothstein

Opinion

ORDER GRANTING INTEGON’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE WILCOXES’ EXTRA-CONTRACTUAL CLAIMS

I. INTRODUCTION

This lawsuit arises from a pedestrian/motor vehicle accident that occurred in Snohomish County, Washington in November 2017. The parties to this litigation are: (1) Plaintiff and Counter-Defendant Integon Insurance Company (“Integon”), (2) Defendant Eric Hoff (“Hoff”), (3) Defendants, Counterclaimants, and Third-Party Plaintiffs Daniel and Elizabeth Wilcox (“the Wilcoxes”), (4) Third-Party Defendant Robert W. Warren and Wrixton Law Office (collectively “Warren”), and (5) Third-Party Defendant Smith [*2]  Freed Eberhard, P.C. (“Smith Freed”).¹ Currently before the Court is Integon’s motion for partial summary judgment on the Wilcoxes’ extra-contractual claims. Dkt. No. 133. Having reviewed the motion, the opposition and reply thereto, the record of the case, and the relevant legal authority, the Court will grant the motion. The reasoning for the Court’s decision follows.²

II. FACTUAL BACKGROUND

Mr. Wilcox purchased an automobile insurance policy from Integon that was effective from August 2017 to August 2018, with limits for liability coverage of $25,000 per person and $50,000 per accident (“the Policy”). On November 1, 2017, Mr. Wilcox turned right at an intersection where he had a green light but failed to see Eric Hoff who was walking in the crosswalk. Mr. Wilcox hit Hoff, injuring him. Mr. Wilcox timely reported the incident to Integon and the insurer opened a claim file and assigned an adjuster. The day after the incident, the adjuster contacted Hoff to obtain information about the incident and his injuries. The adjuster also contacted and took a recorded statement of Mr. Wilcox. On November 10, 2017, the adjuster sent a letter to Mr. Wilcox that explained the claim process and [*3]  informed him of the Policy’s liability limits. The letter further advised Mr. Wilcox that the claims arising from the incident may exceed the Policy’s limits and that he had the right to consult with his own attorney to advise him regarding the potential excess liability, but that he would have to bear the cost of this legal advice. By November 22, 2017, Integon had determined that Mr. Wilcox was solely responsible for the incident.

On November 29, 2017, Integon received a voicemail from attorney Kari Lester in which she stated that she represented Hoff regarding the incident. Over the next six months, Integon continued to follow up with Lester, exchange letters and emails, and speak on the phone. On July 13, 2018, Lester sent a settlement demand letter to Integon, which requested $1,638.574.92, comprised of $82,372.72 in medical costs, $31,200 in lost wages, and $1,525,000 for past and future pain and suffering. Integon forwarded a copy of the demand letter to Mr. Wilcox on July 18, 2018.

On July 30, 2018, Integon offered the policy limits to Lester to settle Hoff’s claims; it also provided her with a copy of the Policy and a declaration from the Wilcoxes regarding other insurance and [*4]  their personal assets. Lester acknowledged the offer and indicated that she would speak to Hoff about it. Over the next six months, Integon called and emailed Lester multiple times about the offer. On February 12, 2019, Lester informed Integon that Hoff was not ready to accept the offer. Integon continued to regularly call Lester about the settlement.

On January 16, 2020, Lester filed a lawsuit against the Wilcoxes in Snohomish County Superior Court on behalf of Hoff (the “Underlying Lawsuit”). She did not provide a courtesy copy of the Underlying Lawsuit to Integon, nor did she provide notice to Integon about the Lawsuit. Mr. Wilcox was served with the Underlying Lawsuit on February 1, 2020.

Defendants claim that Mr. Wilcox called Integon on February 3, 2020 and left a voicemail informing the insurer that he had been served with the Underlying Lawsuit. However, Integon does not have a record of the phone call and the Wilcoxes have also been unable to produce a record of the phone call.³ This alleged phone call was an issue in a previous summary judgment motion brought by Integon and this Court determined that in light of the record evidence no reasonable jury could find that Mr. Wilcox [*5]  made the phone call. See Dkt. No. 149.

Integon did receive a telephone call from Mrs. Wilcox on that day (i.e., February 3, 2020). The 4 minute 43 second call at 11:20am was recorded and Integon produced a transcript of the call. During the call, Mrs. Wilcox informed Integon that she and Mr. Wilcox planned to meet with an attorney the following day and requested that a copy of the Policy declaration page be sent to them so that they could bring it to the attorney. Mr. Wilcox also briefly spoke with the Integon agent during the phone call to give the agent permission to speak with Mrs. Wilcox about the Policy. Neither Mr. nor Mrs. Wilcox informed Integon about the Underlying Lawsuit during the phone call.

On February 5, 2020, the Wilcoxes met with Third-Party Defendant attorney Robert Warren about the Underlying Lawsuit. That same day, Warren sent a letter of representation to Integon, but he did not mention the Underlying Lawsuit and did not provide a copy of the summons and complaint to Integon. Integon called and spoke with Warren after receiving his letter; the conversation was recorded and a transcript of the call produced. Once again, Warren did not mention the Underlying Lawsuit; [*6]  indeed, Warren admits that he never tendered the Underlying Lawsuit to Integon.

No one appeared on behalf of the Wilcoxes in the Underlying Lawsuit, so on March 11, 2020, the Superior Court entered an order of default against them and, on October 16, 2020, entered default judgment in the amount of $1,618,587.33. On February 18, 2021, in response to an email that Integon sent Lester regarding the outstanding settlement offer Integon had extended to Hoff back in July 2018, Lester informed Integon that she had obtained the default judgment against the Wilcoxes. Integon immediately contacted Mr. Wilcox who confirmed that he had been served with the Underlying Lawsuit in February 2020 and had provided the pleadings to Warren. Integon tried to speak to Warren that same day but was unable to reach him until February 22, 2021, when he confirmed that he was aware of the Underlying Lawsuit but not the default judgment. That same day, Integon retained Third-Party Defendant Smith Freed Eberhard P.C. (“Smith Freed”) as defense counsel for Mr. Wilcox to try to vacate the default judgment. Smith Freed appeared in the Underlying Lawsuit on February 24, 2021 and moved to vacate the default judgment [*7]  on September 29, 2021. The Superior Court denied the motion on October 11, 2021.

III. PROCEDURAL HISTORY

Integon instituted this lawsuit against the Wilcoxes and Hoff in November 2021, seeking a declaratory judgment that: (1) the liability limit under the Policy for Hoff’s injuries is $25,000, (2) Mr. Wilcox breached the Policy’s terms and conditions, (3) Integon did not breach its duty to defend Mr. Wilcox, and (4) Integon satisfied its duty to indemnify Mr. Wilcox. Dkt. No. 42. Integon also brought third-party claims against Warren for promissory estoppel and tortious interference. Id. The Wilcoxes, in turn, filed counterclaims against Integon, alleging breach of contract, bad faith, negligence, and violations of the Insurance Fair Conduct Act (“IFCA”) and the Washington Consumer Protection Act (“WCPA”). Dkt. No. 73. They also filed third-party claims against Warren and Smith Freed for legal malpractice and breach of fiduciary duty.

The parties have filed multiple dispositive motions to date, several of which this Court has already resolved. For instance, Integon moved for summary judgment on its claim that it did not breach its duty to defend Mr. Wilcox under the Policy. This Court [*8]  granted the motion, holding that Integon did not become legally obligated to defend Mr. Wilcox in the Underlying Lawsuit until February 18, 2021, when Integon first learned of the Lawsuit, and that Integon satisfied its obligation thereafter by retaining Smith Freed on February 22, 2021 to try to vacate the default judgment. Dkt. No. 149. Thus, this Court concluded, Integon did not breach its duty to defend Mr. Wilcox.

Smith Freed also moved for summary judgment on the Wilcoxes’ legal malpractice and breach of fiduciary duty claims against it. In granting the motion, this Court determined that Smith Freed failed to act with due diligence in filing the motion to vacate, but the failure was not the proximate cause of the Wilcoxes’ alleged damages. Dkt. No. 153. Thus, this Court concluded, the law firm was entitled to summary judgment on the Wilcoxes’ claims against it. Lastly, Warren moved for summary judgment on Integon’s promissory estoppel and tortious inference claims against him. This Court granted the motion, concluding, among other things, that because this Court had already determined that Integon did not breach its duty to defend Mr. Wilcox, Integon could not establish the final [*9]  element of either claim, thus requiring summary judgment for Warren. Dkt. No. 154.

With the instant motion, Integon now moves for summary dismissal of the Wilcoxes’ extra-contractual claims against it.

IV. STANDARD OF REVIEW

“The standard for summary judgment is familiar: ‘Summary judgment is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, there is no genuine dispute as to any material fact.'” Zetwick v. County of Yolo, 850 F.3d 436, 440 (9th Cir. 2017) (quoting United States v. JP Morgan Chase Bank Account No. Ending 8215, 835 F.3d 1159, 1162 (9th Cir. 2016)). A court’s function on summary judgment is not “to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). If there is not, summary judgment is warranted.

V. DISCUSSION

As stated above, Integon seeks summary judgment on the Wilcoxes’ extra-contractual claims. Specifically, Integon argues that it is entitled to summary dismissal of the bad faith and negligence claims because the Wilcoxes cannot establish that its conduct was unreasonable, frivolous, or unfounded—the standard for such claims under Washington law. Integon claims that it is also entitled to summary judgment on the WCPA claim because the Wilcoxes cannot establish that Integon violated any applicable provisions of the [*10]  Washington Administrative Code (“WAC”), and even if they could, they cannot establish causation or compensable damages as a result of the alleged violations. Lastly, Integon asserts that the IFCA claim fails as a matter of law because Integon did not deny benefits or coverage under the Policy. The Wilcoxes counter that a genuine issue of material fact exists as to the reasonableness of Integon’s actions and whether Integon’s actions violated the applicable provisions of the WAC, thus rendering summary judgment inappropriate.

A. The Bad Faith and Negligence Claims

In order to succeed on their bad faith claim against Integon under Washington law, the Wilcoxes must demonstrate that Integon acted unreasonably, frivolously, or in an unfounded manner in administering the Hoff claim. See Smith v. Safeco Ins. Co., 150 Wn.2d 478, 78 P.3d 1274, 1277 (Wash. 2003). Typically, whether an insurer acted in bad faith is a question of fact for the jury; however, the insurer is entitled to summary judgment if there are no disputed facts pertaining to the reasonableness of the insurer’s conduct under the circumstances. See Indus. Indem. Co. of the NW, Inc. v. Kallevig, 114 Wn.2d 907, 792 P.2d 520, 528 (Wash. 1990). The elements of a negligence claim are similar to those of a bad faith claim in the insurance context. See Cardenas v. Navigators Ins. Co., 2011 U.S. Dist. LEXIS 145194, 2011 WL 6300253, *8 (W.D. Wash. Dec. 16, 2011) (citing Hamilton v. State Farm, 83 Wn.2d 787, 523 P.2d 193 (Wash. 1974)) (“The analysis of a negligence cause [*11]  of action is essentially the same as that of a claim of bad faith.”).

The Wilcoxes cite to the deposition testimony of Integon’s 30(b)(6) representative as evidence that the insurer acted unreasonably in administering the Hoff claim. According to the Wilcoxes, the representative testified that Integon could have handled the Hoff claim better by: (1) checking the Snohomish County Court docketing system to see if a lawsuit had been filed by Hoff, (2) specifically asking the Wilcoxes if a lawsuit had been filed against them, and (3) requesting proof that a lawsuit had been filed before continuing to attempt to settle the Hoff claim after the statute of limitations on the claim expired. The Wilcoxes assert that the default judgment in the Underlying Lawsuit would have been avoided if Integon had performed the above actions.

This argument fails for several reasons. First and most important, the Wilcoxes fail to cite to any legal authority, Washington or otherwise, that obligates an insurer to check a court docketing system to determine whether a lawsuit has been filed against its insured, or for an insurer to specifically ask its insured if a lawsuit has been filed. Not only do the Wilcoxes [*12]  fail to provide any legal authority for their allegation, but the allegation directly contradicts the terms of the Policy which place the burden for notifying Integon of any lawsuit on the Wilcoxes. See Dkt. No. 1-5, the Policy, p. 32, PART E, > DUTIES AFTER AN ACCIDENT OR LOSS FILING A CLAIM GENERAL DUTIES, B. 2 (stating that the insured is required to “promptly send [Integon] copies of any notices or legal papers received in connection with the accident or loss”), see also, GENERAL DUTIES, A (“[f]ailure to comply with any of the duties under this Part E may result in denial of coverage and relieve [Integon] of all duties to … defend, pay any judgment or otherwise honor any claims made against an insured”). There is no dispute that the Wilcoxes failed to comply with this provision of the Policy. Lastly, even if Integon had requested proof from Hoff’s attorney that he had filed a lawsuit before continuing to attempt to settle his claim after the statute of limitations expired, doing so would not have prevented the default judgment in the Underlying Lawsuit because the statute of limitations expired almost a month after the default judgment was entered.

Next, the Wilcoxes submit a [*13]  bullet-point list of Integon’s alleged actions (or inaction) that their expert witness, Kevin Quinley, claims fell below insurance claims handling customs and practices and, as such, were unreasonable.⁴ The list is presented in summary fashion with no analysis; nevertheless, the Court has reviewed the portions of Quinley’s report cited and concludes that his testimony is insufficient to create a genuine issue of material fact because, as detailed below, he (1) opines on matters this Court has already resolved, (2) contradicts the record evidence, and/or relies (3) on conclusory statements.

• Integon failed to ask Hoff’s attorney whether she sued the Wilcoxes.

In support of his opinion that it was unreasonable for Integon to fail to ask Hoff’s attorney whether she sued the Wilcoxes, Quinley states, in its entirety:

Integon failed to communicate to Hoff’s attorney the message, ‘If you file suit, please send us a courtesy copy of the Summons and Complaint.’ Requesting a copy of lawsuit papers is a standard request claims representatives make to personal injury attorneys. Integon repeatedly asked attorney Lester about a signed Release but never asked whether Lester had sued the Wilcoxes. [*14]  Making such inquires is part of a reasonable claim investigation. Moreover, there never was a ‘signed Release.’

Dkt. No. 119, Ex. at 6-7 (internal citation omitted). Quinley fails to provide any substantiation for his claim that it is the standard within the insurance industry for a claims representative to request a personal injury attorney to provide a copy of “lawsuit papers”. Such unsupported, conclusionary statements are insufficient to create a genuine issue of material fact on summary judgment. See Queen City Farms, Inc. v. Central National Ins. Co. of Omaha, 126 Wn.2d 50, 882 P.2d 703, 731 (Wash. 1994) (“Where there is no basis for the expert opinion other than theoretical speculation, the expert testimony should be excluded.”); United States v. Various Slot Machines in Guam, 658 F.2d 697, 700 (9th Cir. 1981) (stating that “in the context of a motion for summary judgment, an expert must back up his opinion with specific facts”); see also Evers v. General Motors Corp.,770 F.2d 984, 986 (11th Cir. 1985) (noting that a party may not avoid summary judgment solely on the basis of an expert’s opinion that fails to provide specific facts from the record to support his conclusory allegations). What is more, Quinley’s claim is contradicted by the governing terms of the Policy that place the burden of providing any legal paperwork on the Wilcoxes, not Integon.

• Integon did not ask Ms. Wilcox during the February 3, 2020 phone call [*15]  what lawsuit and papers she was referring to and why they were meeting with a lawyer.

Quinley opines that Ms. Wilcox made four statements during the February 3, 2020 phone with Integon that “should have triggered mental alarms for any claim representative.” Dkt. No. 119, Ex. 1 at 7. Specifically, Mrs. Wilcox (1) stated that “over two years had gone by since the accident”, (2) referred to “this lawsuit”, (3) referred to “these papers”, and (4) stated that she planned to take “these papers” to Warren. Id. Quinley further opines that Ms. Wilcoxes’ statements would have caused a “reasonable claim representative” to believe that a lawsuit had been filed and “should have galvanized Integon’s representative to (a) request a copy of those papers ASAP and (b) appoint Integon-selected counsel (c) with the directive to enter a Notice of Appearance for the Wilcoxes, protect the docket and file an Answer.” Id.

Once again Quinley provides no substantiation for his claim that, under insurance industry customs or practices, Ms. Wilcoxes’ comments would have caused a reasonable claim representative to believe a lawsuit had been filed. Id. at 7-8. Moreover, this Court has previously determined that it [*16]  is clear from the context of the February 3, 2020 telephone conversation that by “lawsuit”, Mrs. Wilcox was referring to Hoff’s initial $1.6 million demand letter and not the Underlying Lawsuit. See Dkt. No. 149 at fn. 3. Indeed, Mrs. Wilcox testified to as much during her deposition. See Dkt. No. 105, Ex. 4 at 74:20-77:8.

It is equally clear from the telephone transcript that by “these papers” Mrs. Wilcox is referring to the Policy:

Elizabeth Wilcox: Okay. Yeah, that I was aware of. So what I’m needing, because we just spoke with an attorney and he’s wanting us to bring a copy of what our insurance policy was at the time, and I don’t have that. So I was hoping you could forward that to us.

Insurance Representative: Okay. And you said you guys got an attorney for this accident?

Elizabeth Wilcox: We are. We’re going to confer with an attorney tomorrow.

Insurance Representative: Okay. Okay.

Elizabeth Wilcox: And he’s wanting us to bring these papers with us.

(Mr. Wilcox, as the insured, gets on the telephone to give permission for the Insurance Representative to send the Policy paperwork.)

Insurance Representative: — and it looks you guys are just wanting some kind of documentation showing [*17]  what your policy limits were at the time of the accident; is that correct?

Mr. Wilcox: Yes.

Insurance Representative: Perfect. What I can do is I can email you a copy of your declaration page, which shows the policy limits.

Mr. Wilcox: Okay.

Insurance Representative: Would that work out?

Mr. Wilcox: Yeah. …

Insurance Representative: Perfect. I’ll email it to you there and you should receive it shortly.

Mr. Wilcox: All right. Thank you.

Insurance Representative: No problem. Thank you, sir.

Mr. Wilcox: Bye-bye.

Insurance Representative: Bye.

Dkt. No. 103, Ex. 1 at 3-6. The transcript clearly demonstrates that by “these papers”, Ms. Wilcox is referring to “a copy” of the “insurance policy” that Mr. Warren instructed her to bring to their meeting the next day. Thus, this Court concludes that the foregoing does not create a genuine issue of material fact regarding whether Integon should have known that a lawsuit had been filed.

• Integon failed to recognize that Hoff’s attorney’s “silence” was a “red flag”.

In support of his opinion that Integon should have recognized that Hoff’s attorney’s silence was a “red flag”, Quinley simply states: “Most lawsuits are initiated on claims that are being actively [*18]  handled by the claim representative. These lawsuits may be filed because the statute of limitations is about to expire or because negotiations have been unproductive. Here, no substantive settlement negotiations occurred.” Dkt. No. 119, Ex. 1 at 12. This “opinion” provides no basis for why Hoff’s attorney’s silence should have been a “red flag” to Integon. Thus, this allegation is unsubstantiated and cannot provide a basis on which a reasonable jury could conclude that Integon acted unreasonably. See Various Slot Machines in Guam, 658 F.2d at 700.

• Integon failed to defend the Wilcoxes.

The Court has previously determined that Integon did not breach its duty to defend Mr. Wilcox and will not address this issue again here. See Dkt. No. 149.

• Integon failed to direct Warren to enter a notice of appearance and file an answer in the Underlying Lawsuit.

The Court has previously determined that Integon was not made aware of the Underlying Lawsuit until after the default judgment was entered. Id. As such, Integon did not have the opportunity to direct Warren’s actions in the Underlying Lawsuit.

• Integon failed to exercise prudent claim and litigation management over Warren.

Given that Integon was unaware of the Underlying Lawsuit until [*19]  after the default judgment was entered, it did not have the opportunity to exercise “litigation management over Warren.”

• Integon failed to recognize that the Wilcoxes hiring Warren was unusual.

With respect to this opinion, Quinley simply states: “This fact alone could and should have caused Integon [] to investigate and learn that Hoff had sued Wilcox.” Dkt. No. 119, Ex. 1 at 16. Once again, this blanket opinion without substantiation as to why, under insurance industry custom and practice, an insured hiring an attorney should have triggered a particular action by the insurer is an insufficient to defeat summary judgment. This is particularly true given the evidence in the record that Integon repeatedly notified the Wilcoxes that they had the right to retain their own attorney and might want to do so given that Hoff’s claim would mostly likely exceed the Policy limits. Given this repeated advice, there was no reason for Integon to find it “unusual” that the Wilcoxes retained counsel.

• Integon failed to reasonably investigate whether a lawsuit had been filed against the Wilcoxes.

Here, Quinley asserts that Integon should have been checking the Snohomish County docketing system to determine [*20]  whether a lawsuit had been filed against the Wilcoxes. The Court has already rejected this argument (supra at pp. 8-9) and will not address it again here.

• Integon did not actively engage in the Wilcoxes’ file.

With respect to this statement, Quinley opines:

‘Trust — but verify’ are watchwords for adjusters overseeing defense counsel. As one claim industry training text explains: The claim representative’s responsibilities in handling a claim did not end when the claim has been referred to defense counsel. The claim representative continues to be involved in all aspects of the defense. The adjuster controls the litigation process and provides direction to the handling attorney, in accordance with the litigation management program.

Dkt. No. 119, Ex. 1 at 17. This statement does not establish that Integon “did not actively engage in the Wilcoxes’ file” and is directly contradicted by the evidence in the record that demonstrates that Integon continued to attempt to settle Hoff’s claim even after the Wilcoxes retained Warren.

For the foregoing reasons, this Court concludes that there is no legal or factual basis to support the Wilcoxes’ bad faith or negligence claims and Integon is entitled [*21]  to summary judgment on these claims as a matter of law.

B. The WCPA Claim

In order to prevail on their WCPA claim, the Wilcoxes must satisfy the five-part test established in Hangman Ridge Training Stables, Inc. v. Safeco Title Insurance Co., by demonstrating: (1) an unfair or deceptive act or practice; (2) in trade or commerce; (3) that impacts the public interest; (4) causes injury to the party in his business or property; and (5) the injury is causally linked to the unfair or deceptive act. 105 Wn.2d 778, 719 P.2d 531, 535-39 (Wash. 1986). “The question of whether an act or practice is actionable under the [WCPA] is a question of law.” Dombrosky v. FIE Ins. Co., 84 Wn. App. 245, 928 P.2d 1127, 1136 (Wn. App. 1996) review denied, 131 Wn.2d 1018, 936 P.2d 417(Wash. 1997). The Wilcoxes may establish a per se unfair trade practice under the WCPA by demonstrating a violation of RCW 48.30.010 based upon a violation of WAC 284-30-330. Id. Even then, however, they must still prove that Integon acted unreasonably when it violated WAC 284-30-330. Keller v. Allstate, 81 Wn. App. 624, 915 P.2d 1140, 1145 (Wn. App. 1996).⁵

The Wilcoxes allege that Integon violated WAC 284-30-330(1), which prohibits an insurer from “[m]isrepresenting pertinent facts or insurance policy provisions.” They allege that Integon violated this regulation because it “never told [them] they were entitled to have a defense lawyer provided to them at Integon’s expense to advise, handle or defend them against the [*22]  Hoff claim.” Dkt. No. 140 at 23-24. Instead, the Wilcoxes claim, Integon “actively told [them] on at least five occasions that if they wanted a lawyer to assist them with the claim or provide them advice, that lawyer would have to be paid for by them. Id. at 24. Lastly, the Wilcoxes assert that “Integon did not provide ‘reasonable assistance’ to [them] in reporting the Hoff lawsuit”. Id.

The Wilcoxes’ allegation that Integon allegedly did not inform them that they were entitled to a defense attorney at Integon’s expense is contradicted by the record evidence that establishes that Integon provided the Wilcoxes with a copy of the Policy, which states that Integon will retain, and pay for, defense counsel as it considers appropriate to defend a lawsuit. The Wilcoxes have presented no evidence to suggest that Integon ever said anything to the contrary to them. As to the Wilcoxes’ claim that Integon repeatedly informed them that if they wanted a lawyer to assist them with the claim, they would have to pay for the attorney themselves, they take these statements out of context. As stated above, Integon quickly surmised that Mr. Wilcox was solely responsible for the accident and further concluded [*23]  that Hoff’s claim would likely exceed the Policy limits. It is in this context that Integon wrote Mr. Wilcox and informed him that:

Our investigation leads us to believe that the claim for injuries and/or damages could exceed the bodily injury and/or property damage limits of liability under this policy. While every attempt will be made to resolve all claims against you consistent with our assessment of your liability and the injuries and damages that are presented for this accident or loss, please understand that Integon [] will not be responsible for any award, judgment or verdict against you in excess of the limits of liability as set forth in your policy and any such excess damages will be your personal responsibility.

While we cannot render legal advice, we would be happy to answer any questions you may have regarding any personal contribution. We also do want to remind you that you do have the right to retain counsel, at your own expense, to consult with or represent you in this matter. Should you decide to retain counsel, please have that attorney contact me immediately so that I can work with that attorney on the successful handling and resolution of your claim.

Dkt. No. 118, [*24]  Ex. 8 (emphasis added). The Wilcoxes cite to no Washington authority, and this Court could not locate any, that holds that an insurer acts in bad faith when it advises its insured to seek personal counsel in situation involving potential exposure beyond the policy limits. To the contrary, at least one court has suggested that it may be bad faith for an insurer to not advise its insured of its right to seek personal counsel in such a situation:

Where a claim is made for an amount greater than the limits of the policy, it is obvious that the insured may be exposed to liability up to the amount of the excess. It is the duty of the insurer to disclose to its insured its adverse interest with respect to the extent of its liability under the policy. Here the insurer fulfilled its duty in this respect by its communication to the insured advising them of the possibility of a verdict in excess of the policy limit and suggesting that they retain personal counsel.

Murach v. Massachusetts Bonding & Ins. Co., 339 Mass. 184, 158 N.E. 2d 338, 342 (Mass. 1959). Thus, for the foregoing reasons, this Court concludes that the Wilcoxes have presented no evidence that Integon violated WAC 284-30-330(1). Integon is entitled to summary judgment on the WCPA claim.

C. The IFCA Claim

In order to maintain their IFCA claim, [*25]  the Wilcoxes must demonstrate that Integon unreasonably denied the claim or payment of benefits. RCW 48.30.015(1). Their IFCA claim rests entirely on Integon’s alleged breach of its duty to defend Mr. Wilcox in the Underlying Lawsuit. As it has already been stated several times supra, this Court has previously concluded that because Mr. Wilcox did not tender the Underlying Lawsuit to Integon before the default judgment was entered—indeed did not even inform Integon about the Lawsuit until after the default judgment was entered—and Integon retained legal counsel for Mr. Wilcox within days of first learning about the Lawsuit, Integon did not breach its duty to defend him. See Dkt. No. 149. Therefore, Integon is entitled to summary judgment on the IFCA claim.

VI. CONCLUSION

For the foregoing reasons, the Court HEREBY GRANTS Integon’s motion for summary judgment on the Wilcoxes’ extra-contractual claims against it.

Dated this 3rd day of August, 2023.

/s/ Barbara Jacobs Rothstein

Barbara Jacobs Rothstein

U.S. District Court Judge

End of Document

---

¹ Smith Freed was dismissed from this lawsuit on July 17, 2023. See Dkt. No. 153.

² The Wilcoxes object that this is Integon’s second summary judgment motion and argue that it should be stricken because it violates Local Civil Rule 7(e)(3). The purpose of Rule 7(e)(3) is to prevent a party from circumventing motion page limitations by filing multiple contemporaneous dispositive motions. That is not the case here as briefing on the first motion was fully complete before the second motion was filed. Moreover, the first motion involved Integon’s affirmative claim for declaratory judgment regarding tender of the Underlying Lawsuit, an issue that needed only limited discovery. The instant motion was filed after further discovery, including the deposition of the Wilcoxes’ expert witness, and relates to the Wilcoxes’ extra-contractual counterclaims. Rather than attempting to take advantage, the Court finds that Integon’s approach promoted judicial efficiency.

³ All calls to Integon are recorded. See Dkt. No. 103, Ex. 1 at 2:3-4.

⁴ Quinley has worked in the insurance industry for 45 years and is the author of several articles and books on insurance claim handling. See Dkt. No. 119, Ex. 1 at 1.

⁵ The Wilcoxes allege in their opposition to the instant motion that Integon also violated WAC 284-30-350(1) and 284-30-360(4), but these allegations were not raised in their counterclaims. It is well-settled law that a party may not assert new claims for the first time in response to a summary judgment motion; as such, the Court will not address the claims. See Mansur Properties, LLC v. First Amer. Title, 2022 U.S. Dist. LEXIS 190201, 2022 WL 10428119 at *5 (W.D. Wash., Oct. 18, 2022) (“A party cannot assert a new theory of liability—effectively amending its complaint—in response to a motion for summary judgment.”); Oyarzo v. Turner, 641 F. App’x 700, 702 (9th Cir. 2015) (same). The Wilcoxes did plead in their counterclaims that Integon violated WAC 284-30-370 but did not address that regulation in their opposition. Therefore, the Court assumes that the Wilcoxes have abandoned that claim. Jackson v. Fed. Express, 766 F.3d 189, 196 (2d Cir. 2014) (noting that a court may infer from a party’s partial opposition that relevant claims or defenses that are not defended have been abandoned).