Filed 4/14/14
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                     DIVISION TWO


GLOBAL HAWK INSURANCE
COMPANY,
        Plaintiff and Respondent,                  A137976

v.                                                 (Alameda County
JERRY LE,                                          Super. Ct. No. VG11598026)
        Defendant and Appellant.


        Appellant Jerry Le was one of two truck drivers on a cross-country trip for V&H
Transport (V&H), a trip for which he would be paid a lump sum of $1,100, with no
deductions. Le was seriously injured when, while he was asleep, the other driver was
involved in a one-vehicle accident. After the accident, V&H refused to pay Le the lump
sum promised, telling him that he did not finish the trip. He was also told he was not an
employee, and would not be eligible for worker’s compensation.
        Le sued V&H and its owners for his injuries, who tendered defense to Global
Hawk Insurance Company (Global Hawk), which insured V&H under a commercial auto
truckers liability insurance policy. Global Hawk refused the defense, and filed an action
for declaratory relief, contending that Le’s injuries were excluded from coverage because
he was an employee. Global Hawk moved for summary judgment, which the trial court
granted, ignoring the pertinent facts in the case and holding that the definition of
employee in certain federal regulations—regulations, not incidentally, enacted for the
benefit of the public and nowhere mentioned in the insurance policy—controlled. We
reverse.




                                              1
                                    BACKGROUND
       The Facts
       In 2009 Le attended driving school to obtain a Class A driver’s license, to allow
him to drive commercial vehicles. He passed the appropriate tests, following which he
obtained some long haul driving jobs. Sometime in 2010, some friends referred Le to
V&H, and in late November or early December he spoke with Tuyet Vu, one of the
co-owners of V&H. Vu took down some information from Le, and then told him she did
not have any driving jobs available at that time but would have one in about a week.
According to Le’s declaration, Vu said “that V&H would call me if it needed a driver for
a particular job, I would be paid a lump sum for that job, I would not receive any
benefits, no taxes, social security or other deductions would be taken out of my pay and I
would receive a 1099 at the end of the year for taxes. [¶] . . . Ms. Vu made no
representation as to how much V&H would use me or how many jobs would be available
for me. In other words, there was no guarantee or representation of how much work I
would receive through V&H. I was free to turn down a job if I wanted and I was free to
perform driving services for other companies or individuals, neither of which would have
prevented me from taking or receiving job assignments from V&H in the future.”
       A few days later Vu told Le of a job driving with Quyen Cao1 on a cross-country
trip. The job consisted of hauling goods to New York, then to Georgia, then back to New
York, and finally returning to Los Angeles. The trip was expected to last 10 days. V&H
would pay Le a lump sum of $1,100. Vu told Le that he would be receiving “a 1099,”
and that no taxes, social security, or other deductions would be taken out of the lump
sum, the same arrangements Le had with his other driving jobs.
       Le and Cao traveled from Los Angeles to New York, then to Georgia, then back to
New York, and began the trip home. On the morning of December 12, 2010, with Cao
driving and Le asleep, the truck was involved in a single vehicle accident. Le was ejected
from the cab and suffered serious injuries, including a broken neck.

       1
         Cao is sometimes referred to in the record as Gao. We use Cao because it is the
spelling used in the briefing.

                                            2
       After the accident, Le talked to Vu about being paid. Vu refused, saying Le had
not finished the trip and she would not pay him the $1,100. Le complained that he was
seriously ill and was vomiting blood, and Vu gave Le $600 or $700, apparently out of
pity. Vu specifically told Le that he was not an employee and would not be entitled to
worker’s compensation.
       Le’s Complaint for Damages
       On June 1, 2011, Le filed a complaint for damages in Los Angeles Superior Court;
it named three defendants including Cao and V&H. According to representations by Le,
and documents submitted by him via a request for judicial notice,2 none of the defendants
answered, and three defaults were entered on August 29, 2011. This suit followed shortly
thereafter.
       Global Hawk’s Complaint in Declaratory Relief
       On October 3, 2011, Global Hawk filed a complaint in Alameda County Superior
Court, naming six defendants: Le, the four defendants named in Le’s action, and Giao
Hoang, who was not originally named in Le’s action, but was later added as a defendant.
Global Hawk’s complaint was styled, “Complaint for Declaratory Relief; Insurance
Coverage,” and alleged as follows:
       Global Hawk had “issued on behalf of defendant Giao Hoang, doing business as
V&H Transport, a commercial auto truckers liability policy, policy number CTM391547,
in effect from May 10, 2010 until May 10, 2011”; that Le had filed a lawsuit against Cao,
V&H, and others in the Superior Court of Los Angeles County (the underlying action);
that defendants in the underlying action “tendered the complaint to [Golden Hawk] and
demanded that [Golden Hawk] defend and indemnify them. Because Jerry Le is an
employee of V&H Transportation and a driver for V&H Transportation and was acting as
a co-driver when he was in the sleeper berth at the time of the accident, the claim is



       2
        We ordered that Le’s request for judicial notice would be ruled on with the
opinion, which request we now grant.


                                             3
expressly excluded by the policy language. Plaintiff Global Hawk issued a reservation of
rights letter and, subsequently, denied the tender of the complaint.”
       Finally, Golden Hawk alleged that an actual controversy had arisen among the
parties regarding whether the policy provided coverage for the injuries alleged in the
underlying action. Specifically, Golden Hawk “contends that there is no coverage under
the policy in connection with the underlying action, that it has no duty to defend or
indemnify defendants Quyen Minh Cao, Vivian Cao, Giao Hoang or V&H Transport, and
that it has no obligation in connection with any settlement or judgment that may be made
as to the claims of defendant Jerry Le.” The contention was based on two exclusions:
that the policy did not cover bodily injury to an employee (exclusion 4) or “any
obligation for which the insured . . . may be held liable under . . . workers’
compensation” (exclusion 3).
       Apparently the only defendant to answer Global Hawk’s complaint was Le, who
filed his answer on January 12, 2012.
       The Motion for Summary Judgment
       On August 31, 2012, Global Hawk filed a motion for summary judgment. It was
accompanied by a five-page memorandum of points and authorities and a separate
statement that set forth 13 claimed-to-be undisputed facts. The brief memorandum of
points and authorities cited several cases for boilerplate principles of summary judgment,
and a handful of cases upholding the “employee exclusion in auto liability policies,”
policies not applicable here.
       Golden Hawk did cite two cases factually relevant to the setting here: Perry v.
Harco National Ins. Co. (9th Cir. 1997) 129 F.3d 1072 (Perry), and Consumers County
Mutual Ins. Co. v. PW & Sons Trucking Inc. (5th Cir. 2002) 307 F.3d 362 (Consumers).
Golden Hawk’s brief described Perry, its primary authority, as follows: In Perry, “the
Ninth Circuit applied the employee exclusion found in the federally mandated MCS-90
endorsement to preclude coverage for the driver of a leased vehicle whether or not the
driver was an employee or an independent contractor of the insured employer motor
carrier.”


                                              4
       On October 31, 2012, Le filed opposition to the motion, along with his response to
the separate statement. That response went on to include “additional disputed facts,” one
of which was that the Global Hawk policy “does not have an MCS-90 endorsement.”
       Global Hawk filed no response to Le’s additional disputed facts, impliedly
conceding that no MCS-90 endorsement was attached to the policy. Golden Hawk did
file a reply memorandum of points and authorities which, for the first time, made
reference to regulations promulgated under the Federal Motor Carrier Safety
Administration Act (FMCSA) contained in 49 U.S.C. § 101 et seq. Golden Hawk’s reply
also quoted from Amerigas Propane, L.P. v. Landstar Ranger, Inc. (2010)
184 Cal.App.4th 981, 996–997 (Amerigas Propane), as follows: “Under FMCSR § 390.5
(2009), an ‘employee’ is broadly defined as including ‘a driver of a commercial motor
vehicle (including an independent contractor while in the course of operating a
commercial vehicle) . . . . (49 C.F.R. § 390.5 (2009), italics added.) Section 3110 of the
Act likewise defines an ‘employee’ as ‘a driver of a commercial motor vehicle (including
an independent contractor when personally operating a commercial vehicle) . . .
(49 U.S.C.A. § 31101(2), italics added.)” The reply made absolutely no reference to any
MCS-90 endorsement.
       The trial court issued a tentative ruling, apparently favoring Global Hawk, and the
motion came on for hearing on November 15. On November 18, the trial court entered a
lengthy order granting summary judgment for plaintiff Global Hawk, which order
provided in pertinent part as follows:
       “Plaintiff contends that the applicable definition of ‘employee’ is found in federal
regulations. Plaintiff relies on the holding in Perry v. Harco National Ins. Co.
(9th Cir. 1997) 127 F.3d 1072, 1075. In that case, the policy included an exclusion for
bodily injury to the insured’s ‘employees.’ The exclusion was contained in an MCS-90
endorsement. The court found that the endorsement was mandated by federal regulations
and, thus, the relevant definition of ‘employee’ was the definition found in 49 C.F.R.
section 390.5. Section 390.5 defines ‘employee’ to include an independent contractor
driving a commercial motor vehicle. The court held that the exclusion from coverage for


                                             5
‘employees’ was applicable to decedent even though he was an independent contractor.
The court rejected the argument that leased drivers would be left without compensation,
finding that they can recover under worker’s compensation law.
       “Defendant Le contends that Perry does not apply because the exclusion for
bodily injury to employees in this case was not found in an MCS-90 endorsement, the
policy did not include an MCS-90 endorsement, and the policy specifically defines
‘employee’ but does not include ‘independent contractors’ within that definition.
Defendant Le relies on Northland Insurance Company v. Rhodes (D. Colo. Dec. 10,
2010, Civ. No. 09-CV-01691) 2010 WL 5110107. There, the court found that because
the policy included a definition of ‘employee,’ and the exclusion was not contained in an
MSC-90 [sic] endorsement, the parties did not intend to incorporate the regulatory
definition of employee into the policy. The court found that the policy did not define
‘employee’ to include ‘independent contractor.’
       “The court in Northland rejected the holding in Consumers County Mutual Ins.
Co. v. PW & Sons Trucking, Inc. (5th Cir. 2002) 307 F.3d 362 (Consumers). In
Consumers, the policy contained an exclusion for bodily injury to an ‘employee’ of the
insured arising out of and in the course of employment by the insured. An injured driver
claimed that the exclusion was not applicable because he was an independent contractor
of the insured, rather than an employee. The court held that the common law definitions
of ‘employee’ and ‘independent contractor’ were not applicable, because the policy was a
public-liability policy designed specifically for use by motor carriers in the interstate
trucking industry. The court found that the Motor Carrier Safety Act of 1984, 49 U.S.C.
section 13906 (2000) requires motor carriers to procure at least a minimum level of
public-liability insurance in order to obtain an operating permit. The purpose of the
insurance requirement, said the court, was to ensure that a financially responsible party
will be available to compensate members of the public injured in a collision with a
commercial vehicle, but the Act does not require motor carriers to obtain coverage for
injury to or death of their employees while engaged in the course of their employment.
The court applied the definition of ‘employee’ in 49 C.F.R. section 390.5. The court


                                              6
found that since the parties clearly intended to comply with federal regulations, it was
reasonable to conclude that the parties intended for section 390.5 to supply the definition
of the term ‘employee’ in the policy. The court concluded that the term ‘employee’ was
intended to have the same meaning wherever it appeared in the policy, and noted that the
court in Perry had come to the same conclusion. (Consumers, supra, 307 F.3d at
pp. 365–367; see also Amerigas Propane, LP v. Landstar Ranger, Inc. (2010)
184 Cal.App.4th 981, 996-997.)
       “The court finds that the holdings in Perry and Consumers, and the reasoning
supporting those holdings, are more persuasive, and concludes that the exclusion for
injury to an ‘employee’ of the insured arising out of and in the course of employment by
the insured is applicable. V&H Transport, as a motor carrier engaged in the movement of
cargo, was necessarily subject to the Motor Carrier Safety Act. (Amerigas Propane,
supra, 184 Cal.App.4th at 994.) Although the policy in this case provides a definition of
‘employee,’ nothing in that definition is inconsistent with the definition in
49 C.F.R. section 390.5. The definition of ‘employee’ in the policy excludes a
‘temporary worker,’ but ‘temporary worker’ is defined as a person who is ‘furnished to
you.’ Defendants do not claim that Defendant Jerry Le was furnished to V&H Transport
by a third party. Thus, the policy provision providing coverage for bodily injury to
temporary workers is not applicable in this case and does not affect the distinction
between the terms ‘employee’ and ‘independent contractor’ in section 390.5”
       Judgment was thereafter entered, from which Le filed a timely notice of appeal.
                                      DISCUSSION
       Summary Judgment and the Standard of Review
       The standard of review following entry of summary judgment is well established.
In Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 253-254, we summarized it
as follows:
       “Code of Civil Procedure section 437c, subdivision (c) provides that summary
judgment is properly granted when there is no triable issue of material fact and the
moving party is entitled to judgment as a matter of law. [Citation.] As applicable here,


                                              7
moving defendants can meet their burden by demonstrating that ‘a cause of action has no
merit,’ which they can do by showing that ‘[o]ne or more elements of the cause of action
cannot be separately established . . . .’ [Citations.] Once defendants meet this burden,
the burden shifts to plaintiff to show the existence of a triable issue of material fact.
[Citation.]
       “On appeal ‘[w]e review a grant of summary judgment de novo; we must decide
independently whether the facts not subject to triable dispute warrant judgment for the
moving party as a matter of law. [Citations.]’ [Citation.] Put another way, we exercise
our independent judgment, and decide whether undisputed facts have been established
that negate plaintiff’s claims. [Citation.] As we put it in Fisherman’s Wharf Bay Cruise
Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: ‘[W]e exercise an
independent review to determine if the defendant moving for summary judgment met its
burden of establishing a complete defense or of negating each of the plaintiff’s theories
and establishing that the action was without merit.’ [Citation.]
       “But other principles guide us as well, including that ‘[w]e accept as true the
facts . . . in the evidence of the party opposing summary judgment and the reasonable
inferences that can be drawn from them.’ (Morgan v. Regents of University of California
(2000) 88 Cal.App.4th 52, 67.) And we must ‘ “view the evidence in the light most
favorable to . . . the losing part[y]” and “liberally construe [his] evidentiary submissions
and strictly scrutinize [the moving party’s] own evidence, in order to resolve any
evidentiary doubts or ambiguities in [the losing party’s] favor.” ’ (McDonald v. Antelope
Valley Community College Dist. (2008) 45 Cal.4th 88, 96–97.)”
       Applying those principles here leads to the conclusion that there were triable
issues of material fact whether Le was an employee of V&H and whether he was eligible
for worker’s compensation—and therefore whether the exclusions applied. Since there
were, the summary judgment was error.
       The Policy
       As indicated, Global Hawk’s position was based on two exclusions in the policy,
the pertinent provisions of which read as follows:


                                               8
         “Exclusions:
         “This insurance does not apply to any of the following: [¶] . . . [¶]
         “3. Workers Compensation
         “Any obligation for which the ‘insured’ or the ‘insured’s’ insurer may be held
liable under any worker’s compensation, disability benefits of unemployment
compensation law or any similar law.
         “4. Employee Indemnification and Employer’s Liability
         “ ‘Bodily injury’ to:
         “(a) An ‘employee’ of the ‘insured’ arising out of and in the course of:
         “(1) Employment by the ‘insured’, . . . [¶] . . . [¶]
         “(b) The spouse, child, parent, brother or sister of that ‘employee’ as a
consequence of Paragraph a above.
         “This exclusion applies:
         “(1) Whether the ‘insured’ may be liable as an employer or in any other capacity;
and
         “(2) To any obligation to share damages with or repay someone else who must pay
damages because of the injury.”
         The definitions section contained the following pertaining to the term “employee”:
         “F. ‘Employee’ includes a ‘leased worker.’ ‘Employee’ does not include a
‘temporary worker.’ [¶] . . . [¶]
         “I. ‘Leased worker’ means a person leased to you by a labor leasing firm under an
agreement between you and the labor leasing firm, to perform duties related to the
conduct of your business. ‘Leased worker’ does not include a ‘temporary worker.’
[¶] . . . [¶]
         “R. ‘Temporary worker’ means a person who is furnished to you to substitute for a
permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.”
         Thus, the issue is whether Le’s injuries are undisputedly excluded from coverage
under the Golden Hawk policy because he was an employee of V&H and/or eligible for
worker’s compensation.


                                                 9
       California Law Regarding Employee
       The leading case of S.G. Borello & Sons Inc. v. Department of Industrial Relations
(1989) 48 Cal.3d 341 (Borello) involved the issue of whether growers had failed to
secure worker’s compensation for 50 migrant harvesters of crops. The department ruled
for the harvesters, finding that the workers were employees. The trial court found that
the evidence supported the department’s finding. The Court of Appeal reversed, holding
the harvesters were independent contractors. The Supreme Court reversed the Court of
Appeal, in an exhaustive discussion which included some general principles applicable
here, including that the “determination of employee or independent-contractor status is
one of fact if dependent upon the resolution of disputed evidence or inferences.” (Id. at
p. 349.) The Supreme Court went on to elaborate numerous factors to be analyzed in
making the determination, including the method of payment and whether or not the
parties believed they were creating the relationship of employer-employee. (Id. at
pp. 350–351; accord, Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal.App.4th
72, 85 (Cristler) [listing 12 factors for analysis].)
       An employee is contrasted with an independent contractor, categories that are
mutually exclusive. (City of Los Angeles v. Meyers Bros. Parking Systems, Inc. (1975)
54 Cal.App.3d 135, 138; see Lab. Code, §§ 3351, 3352, 3353, 3357; see generally
3 Witkin, Summary of Cal. Law (10 ed. 2005) Agency and Employment, § 21, p. 61.) In
short, whether one is an employee or independent contractor is usually a question of fact.
       This law, of course, is crucial to the determination of the issue here, at least if it is
to be determined by California common law and insurance principles. As indicated
above, the trial court did not proceed in this fashion, and did not apply California law, but
rather some federal regulations pertaining to the trucking industry. We conclude that
approach was wrong, that California law governed, and that application of California law
demonstrates triable issues of material fact as to both exclusions.
       As to “employee,” Global Hawk goes to great lengths to attempt to show that
under the principles enunciated in Borello, Cristler, and other cases Le was an employee,
an argument that runs for pages, proceeding factor by factor. We see no need to make


                                               10
such a detailed analysis, as we easily find triable issues of fact that Le was not an
employee, including that he was to be paid a lump sum; he was to be paid without any
withholding for taxes; and he was to be provided a 1099 at the year end, a tax form
provided to independent contractors. Indeed, Golden Hawk itself describes the trip as a
“one off” job. Were that not enough, Le was told by Vu that he was “not an employee”
and was not eligible for worker’s compensation. Those facts do not indicate, much less
demonstrate, employee. They indicate independent contractor. There is a triable issue
whether the “employee” exclusion applies. Likewise, the exclusion for “workers
compensation.”
       An independent contractor is not eligible for worker’s compensation. (An
Independent Home Support Service, Inc. v. Superior Court (2006) 145 Cal.App.4th 1418,
1428–1429.) As Witkin puts it, “(1) In General. Independent contractors are excluded
[from worker’s compensation], and the rules to determine whether a person is an
employee or an independent contractor apply. (See Lab.C. 3357; supra, § 172.) Under
the Act, an ‘independent contractor’ is a person who renders service for a specified
recompense for a specified result, under the control of a principal as to the result of the
work only, and not as to the means by which the result is accomplished. (Lab.C. 3353;
see Torres v. Reardon (1992) 3 [Cal.App.4th] 831, 838, 5 C.R.2d 52 [self-employed
gardener hired to trim homeowner’s trees was independent contractor; agreement
between parties specified the result, but not means of achieving it] . . . .” (2 Witkin,
Summary of Cal. Law, supra, Worker’s Compensation, § 189, p. 770.) And again, Le
was told point blank by Vu that he did not qualify for worker’s compensation.
       There are, in short, triable issues of fact whether either of the exclusions Global
Hawk relied on applies. Ignoring that, the trial court ruled as it did, relying on Perry and
Consumers, and the language of the federal regulations. That reliance, we conclude, was
misplaced. Before turning to a demonstration of why, to put the cases in perspective we
digress to discuss the federal regulations.




                                              11
       The Federal Regulations and the MCS-90 Endorsement
       Under the FMCSA, certain interstate motor carriers are required to meet the
financial responsibility mandates of the Motor Carrier Act of 1980 (MCA), 49 U.S.C.
§ 10101 et seq., which contains regulations governing the industry. Our colleagues in
Division One have recently described the background of, and policy behind, these
regulations, a description well known to Global Hawk. Thus:
       “ ‘The MCA and the subsequent regulations promulgated by the Federal Motor
Carrier Safety Administration (FMCSA) require interstate motor carriers to obtain “a
special endorsement . . . providing that the insurer will pay within policy limits any
judgment recovered against the insured motor carrier for liability resulting from the
carrier’s negligence, whether or not the vehicle involved in the accident is specifically
described in the policy.” [Citation.] In particular, the MCA provides that a commercial
motor carrier may operate only if registered to do so, 49 U.S.C. § 13901, and must be
“willing and able to comply with . . . [certain] minimum financial responsibility
requirements,” id. § 13902(a)(1) [(italics added)].’ [Citation] Proof of minimum
financial responsibility can be demonstrated by (1) an MCS-90 endorsement issued by an
insurer or insurers, (2) a surety bond for public liability issued by a surety, or
(3) self-insurance, if authorized by the Federal Motor Carrier Safety Administration
(FMCSA). [Citations.] . . .
       “Congress passed the MCA ‘[a]s part of its push to deregulate the trucking
industry, increase competition, reduce entry barriers, and improve quality of service.’
[Citation.] The purpose of the requirement that motor carriers demonstrate minimum
financial responsibility is to address the concerns of legislators who ‘ “fear[ed] that
increased safety problems [would] result from the expanded entry provided in [the
MCA]” and that “increased entry [would] open the highways to truckers who might have
little concern for the safe operation and maintenance of their vehicles, thereby posing a
threat to those who share the highways with them.” [Citation.] The MCA, therefore,
included provisions addressing these concerns as well as the “abuses that had arisen in
the interstate trucking industry which threatened public safety, including the use by motor


                                              12
carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that
occurred while goods were being transported in interstate commerce.” ’ [Citations.]”
(Century-National Ins. Co. v. Global Hawk Ins. Co. (2012) 203 Cal.App.4th 1458,
1464-1465; fn. omitted.)
         Perry, Golden Hawk’s primary authority, observed that the Act had two purposes:
(1) “[T]o protect members of the public from motor carriers’ attempts to escape liability
for the negligence of drivers by claiming their drivers were independent contractors,” and
(2) “to provide ‘enhanced protection of the health of commercial motor vehicle
operators.’ ” (Perry, supra, 129 F.3d at p. 1074.)
         The MFCSA mandates that every liability insurance policy covering a motor
carrier contain a MCS-90 endorsement. That endorsement requires the insurer to pay any
final judgment “recovered against the insured for public liability,” as a result of the
negligent operation of any vehicle, regardless of whether the vehicle is specifically
described in the policy and despite the insured’s failure to comply with policy conditions.
(See 49 C.F.R. §§ 387.7(a), 387.9, 387.15 [containing form endorsement].) As described
in the leading California insurance treatise:
         “In effect, the endorsement shifts the risk of loss for accidents occurring in the
course of interstate commerce away from the public by guaranteeing that an injured party
will be compensated even if the insurer has a valid defense based on a condition in the
policy. (See Canal Ins. Co. v. Distribution Services, Inc. (4th Cir. 2003) 320 F.3d 488,
489; Harco Nat’l Ins. Co. v. Bobac Trucking Ins. (9th Cir. 1997) 107 F.3d 733, 736.)
         “(1) [7:1188.24] Purpose: The endorsement prevents the possibility that, through
inadvertence or otherwise, some vehicles may be left off of a policy to the detriment of
the public: ‘[T]he primary purpose of the MCS-90 is to assure that injured members of
the public are able to obtain judgment from negligent authorized interstate carriers.’
(John Deere Ins. Co. v. Nueva [(9th Cir. 2000)] 229 F.3d [853,] 857 [applying federal
law].)
         “The endorsement is a ‘safety net in the event other insurance is lacking.’
(Carolina Cas. Ins. Co. v. Yeates (10th Cir. 2009) 584 F.3d 868, 878 (en banc) [MSC-90


                                                13
obligations triggered only if underlying policy does not meet federally-mandated
minimum].)
       “(2) [7:1188.25] Prevails over policy limitation: The mandatory endorsement
creates a duty on the part of the insurer to cover an insured carrier’s nondescribed
vehicles despite a ‘covered auto’ limitation in the insurance policy itself. (John Deere
Ins. Co. v. Nueva, supra, 229 F.3d at 857 [endorsement obligated insurer to indemnify
permissive user of insured’s noncovered auto trailer despite a ‘covered auto’ limitation in
main policy]; Adams v. Royal Indem. Co. (10th Cir. 1996) 99 F.3d 964, 968.)” (Croskey
et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2013) ¶ 7:1188.23,
pp. 7D-12-13.)
       Finally, the regulations define an employee as follows: “Employee means any
individual, other than an employer, who is employed by an employer and who in the
course of his or her employment directly affects commercial motor vehicle safety. Such
term includes a driver of a commercial motor vehicle (including an independent
contractor while in the course of operating a commercial motor vehicle), a mechanic, and
a freight handler.” (49 C.F.R. § 390.5.)
       That is the background against which Perry and Consumers were decided, which
cases, we conclude, were improperly relied on here.
       Perry and Consumers Are Not Applicable
       Appellant Perry was the widow of a driver killed while driving a truck owned by
his employer, M&P Transportation (M&P), which truck had been leased to Sunset
Express, Inc. (Sunset). Perry sued Sunset and M & P in state court. Sunset, which
subsequently dissolved, entered into a consent judgment for $750,000 in consideration
for a covenant not to execute, and assigned to Perry its rights against Harco, its insurer.
Perry then sued Harco in federal court. The truck was not covered by Sunset’s insurance
policy. But, in the words of the Ninth Circuit, “The insurance policy, however, did
contain an MCS-90 Endorsement for the protection of the public required by Department
of Transportation regulations. The Endorsement requires Harco to indemnify Sunset for
final judgments finding liability for negligence associated with any of Sunset’s vehicles.


                                             14
It specifically excludes liability resulting from injury to or death of Sunset’s employees
while acting in the course of their employment. (Perry, supra, 129 F.3d at p. 1073.)
       The district court, using the definitions in the regulations mandating the
Endorsement, concluded that Perry was an employee for the purpose of the Endorsement,
because he was an “employee” under the plain language of the regulations applicable to
the endorsement. It thus held that Perry was excluded from coverage. (Perry, supra,
129 F.3d at p. 1073.)
       The Ninth Circuit affirmed, beginning its discussion as follows:
       “Under the authority of the Motor Carrier Safety Act of 1980, 49 U.S.C. § 13906
(Motor Carrier Act), the Secretary of Transportation promulgated the regulations at issue
in this case, 49 C.F.R. §§ 387.1, 390.1, and 390.5. The district court relied on the plain
language of the regulations when it evaluated Appellant’s claim.
       “The Endorsement contained in Sunset’s policy is set forth in and mandated by
49 C.F.R. § 387.1. The Endorsement provides insurance for liability ‘for bodily injury or
death of any person . . . excluding injury to or death of the insured’s employees while
engaged in the course of their employment.’ (49 C.F.R. § 387.1.)
       “The relevant definition of ‘employee’ is found in 49 C.F.R. § 390.5. The term is
defined as ‘a driver of a commercial motor vehicle (including an independent contractor
while in the course of operating a commercial motor vehicle).’ (49 C.F.R. § 390.5.) This
definition applies to the entire chapter. (See 49 C.F.R. § 390.1.)
       “For the purpose of the Endorsement, the district court concluded that Perry was
an employee of Sunset’s ‘[a]s a matter of law.’ Therefore, this death was not covered by
the Endorsement.” (Perry, supra, 129 F.3d at p. 1073.)
       Perry argued that the Court of Appeals should depart from the plain language of
the regulations for two reasons: (1) the plain language interpretation does not fulfill some
of the purposes of the Motor Carrier Act, and (2) the interpretation produces results that
are unfair. (Perry, supra, 129 F.3d at p. 1074.) The court rejected both contentions, in an
analysis that was all of a page and a half. Notwithstanding its apparent agreement with
Perry’s argument that the purposes of the Act would be thwarted by its conclusion, it


                                             15
nevertheless held that “every part of the regulations need not fulfill every purpose of the
legislation.” (Ibid.)
       Turning to Perry’s second point, the court said this: “According to Appellant, if
the district court’s opinion is not reversed, ‘all leased drivers would be left without any
source for compensation for injuries or death arising out of the negligence of the parties
for whom they were performing contract-based services.’ This appeal is limited to the
construction of the Endorsement in Harco’s policy insuring Sunset. We express no
opinion whether Appellant had a right to recover from Sunset as specified in the consent
judgment. Moreover, Appellant does have a source of compensation for her husband’s
death: Workers’ Compensation.” (Perry, supra, 129 F.3d at p. 1075.)
       Perry is distinguishable on three fundamental bases: there is no MCS-90
endorsement on the policy here; the truck was insured on the V&H policy; and Le was, at
least according to what he was told by Vu, not eligible for worker’s compensation.
       As mentioned above, one of Le’s “additional disputed facts” was that there was no
MCS-90 endorsement on the policy. Golden Hawk did not even respond to this,
admitting that there was no such endorsement. Indeed, there was express testimony on
the point, including from Global Hawk Vice President Sahorta, who testified about the
policy in issue here, authenticating it and its terms. His testimony confirmed that the
policy had a total of 32 endorsements, not one of which was the MCS-90 endorsement.
Sahorta was also asked if the policy contained an exclusion for “independent
contractors.” He could find none. And the policy contained absolutely no reference to
the regulations.
       In sum, while Perry affirmed the district court’s ruling, it made clear that the sole
reason it did so was that it was construing only the scope of the MCS-90 endorsement, as
opposed to any additional coverage that could have been, but was not, provided in an
underlying insurance policy. To again quote from Perry: “This appeal is limited to the
construction of the [MCS-90] endorsement in Harco’s policy insuring Sunset.” (Perry,
supra, 129 F.3d at p. 1075, italics added.)



                                              16
       Perry does not stand for the proposition that the definition used in the FMCSA
should supplant the definition set forth in an underlying policy of insurance, especially
when, as here, it would displace an insurer’s obligation to pay a covered claim. Indeed,
the law and regulations are to the contrary. (Carolina Cas. Ins. Co. v. Yeates, supra,
584 F.3d at pp. 882–883; C.F.R. § 387.15 [“all terms, conditions, and limitations in the
policy to which endorsement is attached shall remain in full force and effect as binding
between the insured and the company”].)
       Consumers, supra, 307 F.3d 362, the other case relied on by the trial court is
similar—and similarly distinguishable. The issue there was whether Paillet, a driver for
P.W. & Sons Trucking (PWS), was an employee excluded from coverage under PWS’s
commercial insurance policy. The district court held that he was. The Fifth Circuit
affirmed, again an affirmance that does not avail Global Hawk.
       To begin with, and unlike the situation here, the policy did not define employee.
(Consumers, supra, 307 F.3d at p. 362, fn. 2 [“the policy does not define the term
employee”].) The policy was a public liability policy purposefully designed for interstate
carriers, to satisfy the minimal requirements of the FMCSA. The Court of Appeals
concluded that the parties must have intended to interpret the term “employee” in a
manner consistent with those minimal requirements. (Id. at pp. 365–367 and fn. 5.) In
other words, because the FMCSA did not require shipping carriers to provide coverage
for its employees, the FMSCA-specific policy should not be construed to provide
coverage in excess of that demanded under the FMCSA.
       AmeriGas Propane, LP v. Landstar Ranger, Inc., supra, 184 Cal.App.4th 981,
though involving a different issue than insurance coverage, is instructive. That case arose
out of a lawsuit by an injured truck driver (King) and his wife, who settled a personal
injury action they had filed against AmeriGas. AmeriGas brought a cross-complaint
against Landstar, a motor carrier with which it had contracted for the transport of the
propane tanks that injured King. The trial court granted Landstar’s motion for summary
judgment, on the basis that King was an employee of Landstar, and since Landstar had



                                            17
worker’s compensation covering him, the cross-complaint was barred under the worker’s
compensation exclusive remedy doctrine. (Id. at pp. 984-985.)
       The Court of Appeal reversed, concluding there was a triable issue of fact whether
King was an employee under state law. Doing so, the court discussed some of the
regulations in the Motor Carrier Act (AmeriGas Propane, supra, 184 Cal.App.4th at
pp. 996–997), and then discussed Perry, noting its observations about a “ ‘split in the
circuits as to whether motor carriers are liable under the Motor Carrier Act for injuries to
drivers of leased trucks, and not just members of the public.’ ” (Id. at p. 997.) The court
then said that while Perry did not resolve the split, Perry did confirm the two purposes of
the Act quoted above: “(1) ‘[T]o protect members of the public from motor carriers’
attempts to escape liability for the negligence of drivers by claiming their drivers were
independent contractors,’ [citation] and (2) ‘to provide “enhanced protection of the health
of commercial motor vehicle operators.” ’ [Citation.]” (Ibid.)
       The Court of Appeal then went on to conclude as follows: “Thus, even though
under FMCSR part 376.12(c)(1) (2009) a truck lease must contain language that the
carrier has exclusive possession, control, and use of the leased truck, and the carrier is
completely responsible for the operation of the truck, these mandatory lease provisions
do not transform an agreed upon independent contractor relationship between the
carrier and truck owner/operator into an employee relationship under state law.
(FMCSR, § 376.12(c)(4) (2009).)” (AmeriGas Propane, supra, 184 Cal.App.4th at
p. 999, italics added.) And two pages later, the court noted that the purpose of the
FMCSA regulations “is to protect drivers regardless of whether they are employees or
independent contractors under state law.” (Id. at p. 1001 (italics added).)
       Some Closing Observations
       As indicated above, Le’s position is that no MCS-90 endorsement was attached to
the policy. Global Hawk’s position does not expressly take issue with this, though its
brief does contain this quizzical comment: “Of course the policy had an MCS-90, such
an endorsement is mandated by the federal regulations, as [Le] states. While the issue
was not raised below by [Golden Hawk], since the MCS-90 as such is not applicable to


                                             18
this loss and is not the basis for the motion, the exclusions and the regulations are the
basis, an MCS-90 Endorsement was attached to the policy at the request of V&H, the
insured, prior to the loss. [¶] What the MCS-90 does is inform the policy as to intent of
the parties in procuring insurance to comply with federal financial responsibility
requirements necessary to obtain a permit to haul cargo in interstate commerce. The
MCS-90’s express preclusion of recovery for injuries by a driver (either an employee or
an independent contractor) support the definition of employee in the Act and the
regulations.”
       At another point Golden Hawk asserts that “Since the policy at issue was designed
to comply with the Act and the regulations promulgated pursuant to the Act, the policy
terms must be read in the context of and informed by the definitions of the Act and the
regulations. Pursuant to those definitions, Mr. Le was an employee because he was a
driver and was engaged in operating the motor vehicle and his activities directly affected
the safety of the motor vehicle.”
       Global Hawk cites nothing in support of this, and we are unaware of any principle
of insurance law that something external to an insurance policy can be read to “inform”
what the policy in fact provides. (See AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d
807, 821–822 [parties’ intent is to be inferred “solely from the written provisions of the
contract”].) To the extent Global Hawk is trying to argue that the mere possibility that a
policy could be augmented by an MCS-90 Endorsement, the law is otherwise. For
example, an insured cannot be held bound to a definition applicable to an endorsement
not included in the policy. As the Supreme Court put it in Haynes v. Farmers Ins.
Exchange (2004) 32 Cal.4th 1198, 1204: “But to be enforceable, any provision that takes
away or limits coverage reasonably expected by an insured must be ‘conspicuous, plain
and clear.’ (Steven v. Fidelity & Casualty Co., (1962) 58 Cal.2d 862, 878.) Thus, any
such limitation must be placed and printed so that it will attract the reader’s attention.
Such a provision also must be stated precisely and understandably, in words that are part
of the working vocabulary of the average layperson. [Citations.] The burden of making



                                              19
coverage exception and limitations conspicuous, plain and clear rests with the insurer.
[Citations.]”
                                     DISPOSITION
       The summary judgment is reversed. Le shall recover his costs on appeal.



                                                 _________________________
                                                 Richman, J.


We concur:


_________________________
Haerle, Acting P.J.


_________________________
Brick, J.*




*
 Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                            20
A137976, Global Hawk Ins. Co. v. Le


Trial Court:                              Alameda County Superior Court

Trial Judge:                              Honorable Ronni MacLaren

Attorney for Plaintiff and Respondent:    NorCal Logistics Lawyers Group, Dominic
                                          G. Flamiano

Attorneys for Defendant and Appellant:    Carpenter, Zuckerman, & Rowley, John C.
                                          Carpenter, Maureen Johnson




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