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Judge Who Declared Policy Limiting Coverage To $50,000 Meant $750,000 Is Reversed
By a MetNews Staff Writer
A judge of the Fresno Superior Court erred in treating a vehicle-accident policy which specified maximum coverage of $50,000 per accident for bodily injuries as if it said $750,000, the Fifth District Court of Appeal has held, issuing a writ of mandate to bar a jury from being instructed that the policy limit is set at the higher amount.
The insured, Mario Guerra, was legally obliged under Vehicle Code §34631.5, as a “motor carrier of property,” to have the capacity to make payment “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.”
However, that did not preclude defendants Infinity Select Insurance Company and an allied company from selling a policy in less than that amount, Justice Donald R. Franson Jr. said in a partially published opinion filed Tuesday.
Judge D. Tyler Tharpe, in ruling on two causes of action in advance of a jury trial on other claims, reformed the policy to conform to Guerra’s obligation as a carrier. The suit stems from an accident, caused by an employee of Guerra while permissibly driving one of the employer’s vehicles, resulting in the death of Marsha LeDuc and injuries to her daughter and granddaughter.
Those survivors of the collision in 2013 sued for their own injuries and, along with other family members, for the death of Marsha LeDuc. That action was settled in 2017 (after Guerra and his employee had declared bankruptcy), with the plaintiffs succeeding to the insured’s purported cause of action against the insurers for an alleged bad-faith refusal to settle, being pursued in the present litigation.
Franson’s Opinion
In his opinion directing that the Fresno Superior Court vacate the ruling setting Infinity’s policy limit at $750,000, and ordering that the limit be set, on remand, at $50,000, Franson said:
“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.”
He went on to comment:
“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 total $750,000. Plaintiffs’ counsel conceded this point at oral argument. We too agree.”
Franson observed in a footnote:
“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.”
Carrier’s Duties
The Motor Carriers of Property Permit Act (“MCPPA”), contained in the Vehicle Code, imposes financial-responsibility obligations on carriers, he said, but, in general, not on insurers.
He did point to a portion of the Code of Regulations “providing that when an insurer issues a policy with the purpose of meeting the requirements of the MCPPA,” it must issue a certificate of insurance on a particular Department of Motor Vehicles (“DMV”) form, submit it to the DMV, and attach a specified DMV form endorsement to the policy. Franson added, however, that “[n]othing in the regulation suggests that an insurer who does not issue a policy for that purpose is nevertheless required” to undertake those tasks.
The defendants had not certified Guerra’s policy. Franson noted that Guerra never sought insurance for the purpose of complying with the MCPPA and the insurers never represented that the policy met the requirements.
“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,” the jurist remarked.
He added: “[E]ven 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).”
Franson mentioned 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 means, but specified that “our decision is not dependent upon Infinity’s lack of such knowledge.”
The case is Infinity Select Insurance Company v. Superior Court
(LeDuc), 2023
S.O.S. 2893.
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