In Global Hawk Insurance Company v. Century-National Insurance Company (filed 2/29/12), the Court of Appeal held that uninsured motorist coverage available to an injured driver does not constitute “other insurance” relieving the at-fault driver’s insurer from its obligation to pay under a federally-mandated MCS-90 motor carrier endorsement.
Global Hawk insured Shamamyan, doing business as E&Z Trucking. The policy did not list a truck driven by Shamamyan’s employee, but attached a federally-mandated MCS-90 motor carrier endorsement, as required for interstate motor carriers. The MCS-90 (like its California intrastate counterpart DMV 67 MCP) covers all vehicles used in the insured’s business regardless of whether or not each motor vehicle is specifically described in the policy.
Notwithstanding its MCS-90, Global Hawk denied coverage when Shamamyan’s employee caused an accident in the unlisted truck. As a result the other driver, Padilla, made a claim for uninsured motorist benefits to his employer’s own insurer, Century-National. Century-National confirmed Global Hawk’s denial and then paid Padilla its UM coverage limits.
Global Hawk subsequently filed a complaint seeking to rescind the policy issued to Shamamyan, on the ground that Shamamyan had concealed the use of unlisted trucks. The complaint listed all involved parties to bind them to the rescission and Century-National cross-complained, seeking reimbursement from Global Hawk. Century-National also sued Shamamyan in subrogation to Padilla’s damages under Insurance Code section 11580.2(g).
Citing federal case law, Global Hawk argued that there is no obligation to reimburse another insurer under an MCS-90 motor carrier endorsement. Global Hawk argued that MCS-90 liability is not triggered when the dispute is between two or more insurance companies about apportioning the cost of compensating the injured plaintiff, but that it only applies when the injured plaintiff directly sues the insurance company, and the underlying insurance policy would not have covered the loss but for the MCS-90 endorsement.
The court disagreed, stating that the availability of uninsured motorist benefits under the victim’s own insurance does not constitute “other insurance” relieving the MCS-90 insurer of its obligation to pay. The court said that the MCS-90 is only secondary to other liability insurance covering the at-fault driver. To hold otherwise the court said would be putting the onus of insuring against accidents on the accident victims.
In addition, the court noted that Century-National had also obtained default judgments against Shamamyan and the driver, in uninsured motorist subrogation under Insurance Code section 11580.2(g). Thus, Century-National was effectively a direct judgment holder against Global Hawk’s insureds, putting it squarely within the coverage provided by the MCS-90 endorsement.
As a result, Global Hawk was obligated to reimburse Century-National for the uninsured motorist benefits it had paid to Padilla when Global Hawk erroneously denied coverage for the loss.
The court’s holding means that coverage under an MCS-90 motor carrier endorsement remains primary to a victim’s own uninsured motorist coverage, which is not “other insurance” relieving the motor carrier insurer of its obligation to pay judgments against the motor carrier. As a practical matter, the court’s decision also stands for the proposition that no cause of action could be stated for post-loss rescission of an MCS-90 motor carrier endorsement based on application fraud in concealing the use of unlisted vehicles.
Global Hawk Insurance Company v. Century-National Insurance Company (A131656 __ Cal.App.4th __, filed 2/29/12)
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