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Global Hawk Insurance Co. v. Le

California Court of Appeals, First District, Second Division

April 14, 2014

GLOBAL HAWK INSURANCE COMPANY, Plaintiff and Respondent,
JERRY LE, Defendant and Appellant.

Alameda County Super. Ct. No. VG11598026 Honorable Ronni MacLaren, Judge.

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[Copyrighted Material Omitted]

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

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



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.

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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 Cao[1] 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.

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.

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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”; Le had filed a lawsuit against Cao, V&H, and others in the Superior Court of Los Angeles County (the underlying action); defendants in the underlying action “tendered the complaint to [Global Hawk] and demanded that [Global 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 expressly excluded by the policy language. Plaintiff Global Hawk issued a reservation of rights letter and, subsequently, denied the tender of the complaint.”

Finally, Global 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, Global 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).

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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.

Global 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). Global 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.”

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. Global 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 Improvement Act of 1999 (FMCIA) contained in 49 U.S.C. § 101 et seq. Global Hawk’s reply also quoted from AmeriGas Propane, L.P. v. Landstar Ranger, Inc. (2010) 184 Cal.App.4th 981, 997 [109 Cal.Rptr.3d 686] (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 motor vehicle).... (49 C.F.R. § 390.5 (2009), italics added.) Section 31100 of the Act likewise defines an ‘employee’ as ‘a driver of a commercial motor vehicle (including an independent contractor when personally operating a commercial motor vehicle)... (49 U.S.C.A. § 31101(2), italics added.)" (Some 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

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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.[, supra, 129] 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 ‘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.[, supra,] 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 ...

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