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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ZURICH AMERICAN INSURANCE,

Plaintiff,

 v.

GRAND AVENUE TRANSPORT,

Defendant. /

No. C 09-00197 CRB

ORDER GRANTING PLAINTIFF’S

MOTION FOR SUMMARY

JUDGMENT AND DENYING

DEFENDANT’S MOTION FOR

SUMMARY JUDGMENT

This dispute involves the interpretation of an insurance contract. The parties agree

that there are no genuine issues of material fact, and disagree only about the legal impact of

two endorsements in the contact. 

BACKGROUND

1. The Dispute

XTRA is a Missouri corporation that leases and rents trailers used for hauling cargo. 

Stip. at 2. XTRA leased a trailer to Grand Avenue Transport, Inc., a California trucking

company. Id. In October 2005 in Pleasanton, California, a Grand Avenue driver, Anthony

Bravo, was hauling the XTRA trailer leased by Grand Avenue. Id. Bravo fell asleep at the

wheel and collided with a vehicle parked on the side of the road. Id. The occupant of that

vehicle, Jose Rodriguez, was killed. Id.

Jose and Catalina Rodriguez, the decedent’s parents, brought a wrongful death action

in state court. Id. Initially, the Rodriguezes sued Grand Avenue, Bravo, the tractor owner,

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1 At the motion hearing on November 13, 2009, at the Rodriguezes’ request, the Court agreed

to allow the parties to submit supplemental briefing as to whether Illinois or Missouri law applied to the

Zurich policy. In their brief, the Rodriguezes argued that, while Illinois and Missouri law did not

necessarily apply, a separate endorsement in the Zurich policy, the MCS-90 endorsement, requires

coverage. Add. Brief at 2. The Court will therefore address both the Leasing or Rental Concerns –

Contingent Coverage endorsement, which was the initial focus of this lawsuit, and the MCS-90

endorsement, which was the subject of the parties’ supplemental briefing. 

2

and XTRA, but all of the defendants other than Grand Avenue were subsequently dismissed. 

Id. Before trial, Grand Avenue settled with the Rodriguezes, admitting liability and

submitting the issue of damages to an arbitrator. Id. The arbitrator issued an award of

damages against Grand Avenue in the amount of $5 million. Id. That award was confirmed

as a judgment, and Grand Avenue’s insurer, Century National, paid its $1 million policy limit

in satisfaction of the judgment. Id. Four million dollars of the damages award was left

unsatisfied.

XTRA’s insurance was provided by Zurich American Insurance Co., which issued a

commercial auto policy for the relevant period with a limit of $2 million per accident. Id.; id.

Ex. A. The parties agree that the XTRA trailer leased to Grand Avenue and involved in the

accident was a “covered auto” and a “leased auto” under the Zurich policy. Id. at 3. The

parties disagree about whether the Zurich policy covers any portion of the unpaid judgment

the Rodriguezes recovered against Grand Avenue. 

Zurich filed a complaint for declaratory judgment in this Court, arguing that it does

not owe the Rodriguezes any damages. Z MSJ at 1. Zurich now moves for summary

judgment in its favor and against the Rodriguezes, who have counterclaimed for declaratory

relief and for direct recovery under California Insurance Code § 11580(b)(2). Id. The

Rodriguezes have also moved for summary judgment, claiming that they are entitled to

recover under the Zurich policy. R MSJ at 8.

2. The Zurich Policy

The Zurich policy is 214 pages long and contains 83 forms. Z Opp. at 10. Two

endorsements in the Zurich policy are relevant to the parties’ motions.1

 

The first endorsement is titled “Leasing or Rental Concerns - Contingent Coverage.” 

It is not identified on the policy’s Business Auto Coverage Part Declarations page at the

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beginning of the policy, though that page states underneath “Forms and Endorsements

Applying to this Coverage Part and Made a Part of this Policy at Time of Issue,” “See

Schedule of Forms and Endorsements.” Id. at ZPOL 2. The Schedule of Forms and

Endorsements, a few pages later, lists the endorsement’s form number, edition date, and full

name. Id. at ZPOL 6. The endorsement is not mentioned in the Business Auto Coverage

Form’s list of Exclusions. Id. at ZPOL 24. 

The endorsement is attached to the policy two forms behind the Business Auto

Coverage Form. Id. It is just over one page in length, and contains no unrelated policy

provisions. Id. at Ex. A, ZPOL 35-36. At the top of the endorsement, in all-capital type that

is larger than the type used for the body of the endorsement, is the statement: “THIS

ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.” Id.

The title of the endorsement is in still larger, bold, all-capital letters just below that. Id. The

line following that again notes that the “endorsement modifies insurance provided under” the

policy. Id.

The endorsement states that the Limits of Insurance are $2 million. Id. In several

places it references the coverage “provided by this endorsement.” Id. Most importantly, the

endorsement states: 

A. Liability Coverage and any required no-fault insurance provided by the policy for

a covered “auto” that is a “leased auto” applies subject to the following provisions:

1. a. The lessee or rentee has furnished you with a certificate of insurance, a

copy of the policy or a copy of the endorsement making you an

additional insured on the lessee’s or rentee’s policy as required by the

leasing or rental agreement; and

b. At the time of an “accident” the insurance required by the leasing

agreement is not collectible. 

Id. (emphasis added). 

The endorsement includes a definition of the term “leased auto” as used in section A

of the endorsement. Id. at ZPOL 36. As to subsection (1)(a), the parties agree that Grand

Avenue named XTRA as an additional insured under its policy with Century National, and

that Grand Avenue provided a certificate of insurance to XTRA. Stip. at 3. As to subsection

(1)(b), the Rodriguezes also do not dispute Zurich’s interpretation that “the second condition

of coverage– that the lessee’s insurance be ‘not collectible’ at the time of the accident– is not

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met” because Century National in fact paid the Rodriguezes $1 million. See Z MSJ at 8. 

The parties dispute only whether this endorsement, with its unmet contingency, is

enforceable, and thus spares Zurich from paying damages.

The second endorsement at issue in the Zurich policy is the MCS-90 endorsement,

which provides:

[I]nsurer (the company) agrees to pay, within the limits of liability described herein,

any final judgment recovered against the insured for public liability resulting from

negligence in the operation, maintenance or use of motor vehicles subject to the

financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act

of 1980 regardless of whether or not each motor vehicle is specifically described in

the policy. . . .” See ZPOL 0056.

The MCS-90 endorsement goes on to say that “no condition, stipulation, or limitation

contained in the policy, this endorsement, or any other endorsement thereon, or violation

thereof, shall relieve the company from liability or from the payment of any final judgment,

within the limits of liability herein described.” Id. The endorsement states at the top that the

policy to which the endorsement is attached provides primary insurance in excess of

$2,000,000 for each accident; at the bottom, the endorsement includes a Schedule of Limits

for Public Liability listing limits for the transport of nonhazardous materials as $750,000. Id.

at ZPOL 0056-57. The parties dispute whether this endorsement requires Zurich to pay

damages.

LEGAL STANDARD

1. Summary Judgment

Summary judgment is appropriate “if the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact

issue is “material” only if it could affect the outcome of the suit under the governing law. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact issue is “genuine” if the

evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.

2. Interpretation of Insurance Policies

“The insurer’s duty to indemnify runs to claims that are actually covered, in light of

the facts proved . . . . By definition, it entails the payment of money in order to resolve

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liability.” Buss v. Superior Court, 16 Cal. 4th 35, 45-46 (1997). To determine whether the

duty to indemnify exists, “‘courts must focus on the nature of the risk and the injury, in light

of the policy provisions.’” Safeco Ins. Co. of America v. Fireman’s Fund Ins. Co., 148 Cal.

App. 4th 620, 630 (2007) (quoting Vandenberg v. Superior Court, 21 Cal. 4th 815, 840

(1999).

A judgment creditor must prove that his claim falls within the scope of the policy’s

coverage. Cal. Ins. Code § 11580(b)(2). A judgment creditor must prove that the “policy

covers the relief awarded in the judgment.” See Miller v. American Home Assurance Co., 47

Cal. App. 4th 844, 848 (1996) (internal citation omitted). An insured has the burden of

proving that the claim falls within the scope of the applicable insurance policy. See Aydin

Corp. v. First State Ins. Co., 18 Cal. 4th 1183, 1188 (1998). The insured must first

demonstrate that there is coverage before the insurer must invoke an exclusion. Uhrich v.

State Farm Fire & Cas. Co., 109 Cal. App. 4th 598, 609 (2003). 

DISCUSSION

1. The Leasing or Rental Concerns - Contingent Coverage Endorsement

The Rodriguezes advance two arguments for why the Leasing or Rental Concerns -

Contingent Coverage endorsement, which would appear to bar coverage in these

circumstances, is not enforceable. First, they argue that the endorsement does not comply

with California Insurance Code Section 11580.1. R Opp. at 5. Second, they argue that the

endorsement is not conspicuous, plain, or clear. Id. at 14. 

A. Application of California Insurance Code § 11580.1

The Rodriguezes argue that Cal. Ins. Code § 11580.1 specifies the only limitations

that California allows to permissive user coverage, and, because Zurich’s endorsement does

not comport with either limitation, the endorsement is unenforceable. Id. at 5-6. However,

section 11580.1(a), which precedes the two limitations the Rodriguezes rely on, states: “No

policy of automobile liability insurance described in Section 16054 of the Vehicle Code

covering liability arising out of the . . . use of any motor vehicle shall be issued or delivered

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in this state . . . unless it contains the provisions set forth in subdivision (b).” Section

11580.1 therefore only applies to policies that are issued or delivered in California. 

There is no evidence in the record that the Zurich policy was either issued or delivered

in California. Indeed, there is compelling evidence that it was issued and delivered

elsewhere. See Z Reply at 3 (“Zurich prepared and issued the policy in Chicago, Illinois, and

then delivered the policy to [the broker] in . . . Missouri. . . . [who,] in turn, delivered the

policy to XTRA in St. Louis, Missouri.”); and Tallungan Decl. at ¶ 4; Dreller Decl. at ¶ 4. 

Accordingly, section 11580.1 does not apply to the Zurich policy. See also Occidental Fire

& Cas. Co. of N.C. v. Lumbermens Mutual Cas. Co., 667 F. Supp. 679, 686 (N.D. Cal. 1987)

(finding that section 11580.1(b) did not apply because policy issued in Bermuda and

delivered in Singapore was not issued or delivered in California).

B. Whether the Leasing or Rental Concerns - Contingent Coverage

Endorsement is Conspicuous, Plain and Clear

The second argument the Rodriguezes make as to why the Leasing or Rental Concerns

- Contingent Coverage endorsement is not enforceable is that the endorsement is neither

conspicuous, plain, nor clear. “Coverage may be limited by a valid endorsement. . . . But to

be enforceable, any provision that takes away or limits coverage reasonably expected by an

insured must be conspicuous, plain and clear.” Haynes v. Farmers Ins. Exchange, 32 Cal. 4th

1198, 1204 (2004). The burden of making such language conspicuous, plain and clear is on

the insurer. Id.

i. Conspicuous

In Haynes, the California Supreme Court explained that in assessing conspicuousness,

courts look to “how a coverage-limiting provision actually has been positioned and printed

within the policy at issue.” 32 Cal. 4th at 1209. Courts are to read the policy from the

perspective of a layman, rather than an attorney or insurance expert. Id. The court in Haynes

found an endorsement to be inconspicuous where: “it was listed on the policy’s declarations

page only by alphanumeric designation (‘S9064');” the language in the endorsement itself

was “‘not bolded, italicized, enlarged, underlined, in different font, capitalized, boxed, set

apart, or in any other way distinguished from the rest of the fine print;’” one of the terms in

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the title was nowhere defined; and the relevant limiting language was “in the least

conspicuous position on the page”– essentially “bur[ied].” Id. at 1207-1209.

Haynes cited to two additional cases finding provisions unenforceable because they

were inconspicuous. Id. at 1205-06. The first of these is Jauregui v. Mid-Century Ins. Co., 1

Cal. App. 4th 1544, 1550 (1991), in which the limiting language was “surrounded by

language that has nothing to do with exclusions or limitations on coverage.” The second is

Thompson v. Mercury Cas. Co., 84 Cal. App. 4th 90, 96-97 (2000), in which the limiting

language was included in the “other insurance” subsection, though it had nothing to do with

other insurance. In addition, the language fell within an unnumbered subsection containing

“30 random and unrelated subsections,” and was not set apart in any way from the rest of the

fine print, though other parts of this section were bolded.

Another example of an inconspicuous limitation is Ponder v. Blue Cross of So. Cal.,

145 Cal. App. 3d 709 (1983). The court there found that an exclusion for

temporomandibular joint syndrome was “conspicuous only in the sense that it contains the

longest word in the entire body of the contract.” Id. at 722. The exclusion appeared on a

page with over 2,056 words, 17 numbers, and 54 letters with multiple headings and

subheadings. Id. The court noted that the exclusions section itself included 923 words and

took up just a third of a page– and that the exclusion at issue was found under the

unassuming subheading of “dental care services.” Id. 

In contrast to Haynes, Jauregui, Thompson and Ponder, the endorsement in the Zurich

policy is quite conspicuous. Its position makes sense, falling close behind the main Business

Auto Coverage Form. See Stip. Ex. A at ZPOL 22-32, 35-36. In addition, it is identified in

the Schedule of Forms and Endorsements by its complete name, not only its alphanumeric

designation. Id. at ZPOL 6. Though the Rodriguezes complain that “it is only listed as one

of 71 other endorsements,” R MSJ at 12, this was a lengthy policy involving a complicated

insurance risk. As Zurich argues, “[t]he Contingent Coverage Endorsement is no more or

less important than any other policy form– it just happens to be the form at issue in this

lawsuit.” Z Opp. at 10.

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The printing of the endorsement is also clear. At its top is the statement, in large, allcapital letters, that the endorsement changes the policy. Id. at ZPOL 35. The title of the

endorsement is in still larger, bold, all-capital letters. Id. The text of the endorsement is set

apart on its own two pages, is uncrowded, and has no unrelated text surrounding it. Id. at 35-

36. The only new term in the endorsement, “leased auto,” is defined in the endorsement

itself. Id. at 36. As in Venoco, Inc. v. Gulf Underwriters Ins. Co., 175 Cal. App. 4th 750,

759 (2009), the endorsement is “not hidden in fine print nor placed in an unusual part of the

policy.” It is conspicuous. 

ii. Plain and Clear

To be enforceable, the endorsement must also be plain and clear. The court in Ponder

explained that “[t]his means more than the traditional requirement that contract terms be

‘unambiguous.’ Precision is not enough. Understandability is also required.” 145 Cal. App.

3d at 723. In that case, for example, the court found the exclusion for temporomandibular

joint syndrome to be unclear because the policy never defined that syndrome, let alone did so

using “the vocabulary of average lay persons.” Id. at 723-26. In Haynes, the court’s

discussion of “plainness and clarity” also involved an undefined term– the term “permissive

user”– but identified other sources of confusion as well. 32 Cal. 4th at 1211. The court

complained that the endorsement at issue had “repeated cross-references . . . to policies other

than the car policy,” “confusing language surrounding and introducing the permissive user

limitation,” and directions to the insured to insert the limitation into two separate parts of the

policy. Id. at 1212. It concluded that these problems “seriously impair[ed] the clarity with

which the limitation imparts its intended message.” Id.

The Rodriguezes argue that the Zurich policy here is similarly unclear for a variety of

reasons. First, they argue that the Business Auto Coverage Form “provides coverage for all

accidents,” without limitation, and that it is only the endorsement that excludes coverage. R

MSJ at 13-14. But that is what endorsements do– they change the terms of the policy. 

Moreover, “[i]f there is a conflict in meaning between an endorsement and the body of the

policy, the endorsement controls.” Aerojet-General Corp. v. Transp. Indem. Co., 17 Cal. 4th

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38, 50 n.4 (1997) (internal citation omitted). The Rodriguezes add that “[i]f a reader’s

attention is eventually drawn to the Endorsement” – really a conspicuousness argument– the

endorsement is confusing because it is not titled a “Limitation of Insurance” or “Policy

Exclusion.” R MSJ at 14. But calling the document an “endorsement” and using it to limit

coverage is not unclear, or unusual. See Adams v. Explorer Ins. Co., 107 Cal. App. 4th 438,

450 (2003) (endorsements may vary any term of the policy, and may delete insureds).

The Rodriguezes’ second, and main, argument is that “it is entirely unclear if the

liability coverage only applies or also applies when the two specified conditions are met.” R

MSJ at 14. Essentially they contend that it is not clear whether the endorsement provides an

additional layer of coverage and not a limitation of coverage, in part due to references in the

endorsement to “coverage provided by this endorsement.” Id. at 14-15, Stip. Ex. A at ZPOL

35. However, the endorsement’s title communicates that coverage for leasing or rental – a

risk already covered by the policy– is subject to contingencies. Id. The endorsement’s

limiting language is in clear, everyday language: “Liability Coverage and any required nofault insurance provided by the policy for a covered ‘auto’ that is a ‘leased auto’ applies

subject to the following provisions.” Stip. Ex. A at ZPOL 35. Despite the Rodriguezes’

argument to the contrary, the word “and” makes clear that “Liability Coverage” is part of the

sentence and that the sentence is not merely about no-fault insurance. See id. The sentence

plainly refers to coverage provided by the policy, and specifically to leased autos covered by

the policy. Id. Unlike in Ponder and Jauregui, here the only new term, “leased auto,” though

not technical, is defined in the endorsement itself. Id. at 36. The language “subject to” is a

common term– the Rodriguezes do not argue otherwise. Accordingly, this language is

unambiguous and cannot reasonably be construed as providing an additional layer of

coverage, rather than limiting coverage provided by the policy. See Mercury Ins. Co. v.

Pearson, 169 Cal. App. 4th 1064, 1070 (2008) (“Courts will not adopt a strained . . .

interpretation in order to create an ambiguity where none exists.”) (internal citation omitted).

The Rodriguezes next argue that according to the Other Insurance section of the

Zurich policy, the Zurich policy was supposed to act as an excess policy (sitting over the

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underlying policy), and that “there is nothing in the endorsement that even arguably affects

this coverage.” R MSJ at 16-17. This distinction is irrelevant: the endorsement clearly

makes “liability coverage . . . provided by this policy” subject to two contingencies. Stip.

Ex. A at ZPOL 35. It does not specify whether that liability needs to be primary or excess. 

Accordingly, that the policy has an “Other Insurance” section that might make the Zurich

policy an excess policy has no impact on whether coverage was triggered under the

endorsement. Moreover, it has no bearing on whether the policy is plain and clear. 

Finally, the Rodriguezes argue that the endorsement’s reference to “the minimum

limit required by any applicable compulsory or financial responsibility law” is unclear. 

Indeed, in Jauregui, the California Court of Appeal held that a general reference to “the limits

of the Financial Responsibility Law” was not understandable, and that the policy should have

identified either the specific monetary limits, or specific statute being cited. 1 Cal. App. 4th

at 1550. The Rodriguezes reject the holding of Del Real that such language was acceptable

and clear, see 962 F. Supp. 2d 962 (decided several years after Jauregui and distinguishing it

in the commercial liability context), and claim that the California Supreme Court has since

endorsed Jauregui in Haynes. See R Opp. at 18. Haynes did not so hold, however, simply

noting in a footnote that an insurer in that case had specified the dollar amounts required by

law and thereby addressed the Jauregui court’s concerns. See 32 Cal. 4th at 1209 n.7. 

Moreover, one does not even reach this language about the limit of insurance for lessees until

coverage is triggered, and coverage cannot be triggered unless the two clearly-worded

contingencies are met. 

The Rodriguezes have failed to point to any provision that takes away or limits

coverage and that “seriously impairs the clarity with which the limitation imparts its intended

message.” See Haynes, 32 Cal. 4th at 1212. The endorsement is therefore conspicuous, and

plain and clear. Accordingly, it is enforceable.

2. The MCS-90 Endorsement

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 The Court rejects Zurich’s argument that “only XTRA is the named insured in both the Zurich

policy and the attached MCS-90 endorsement” in light of the language of the policy naming as an

insured “anyone else while using with your permission a covered ‘auto,’” see Add. Brief at 4 (citing

ZPOL 0023), and of John Deere, 229 F.3d 853 (9th Cir. 2000), discussed below.

3

 Unfortunately, none of it is Ninth Circuit authority. The circuit has not addressed the MCS-90

issue in a published opinion since John Deere, and it was not confronted with such facts in John Deere.

11

The Rodriguezes next argue that because Grand Avenue and Bravo (the driver) are

both “insureds” under the Zurich policy,2

 the MCS-90 endorsement requires Zurich to pay

for any judgment recovered against them resulting from negligence in the operation of a

motor vehicle. Add. Brief at 5-6. If true, the Rodriguezes argue, they are due $2,000,000,

notwithstanding the Contingent Coverage clause. Id. In support of this interpretation, the

Rodriguezes rely on the plain language of the MCS-90 endorsement, as well as John Deere v.

Nueva, 229 F.3d 853, 856 and n.3 (9th Cir. 2000). See id. at 3-4. 

In John Deere, 229 F.3d at 854, the Ninth Circuit set out to determine whether MCS90 “creates a duty on the part of an insurer to indemnify a permissive user of an auto not

covered by the underlying policy for injuries he negligently caused to members of the

public.” The court held that the MCS-90 endorsement “negates the [policy’s] limitation that

only users of ‘covered autos’ are ‘insureds.’” Id. at 859. It noted that so holding effectuates

the policy the endorsement was designed to serve– “modifying a policy to insure the

availability of insurance for negligently injured members of the public.” Id. at 860.

Zurich argues that John Deere is distinguishable, because there the Ninth Circuit “was

faced with a victim who would receive no compensation unless there was MCS-90

coverage,” but here “the victim’s family has already received more than the federallymandated minimum.” Resp. at 3. Despite the broad language of the endorsement, a great

deal of authority supports such a distinction.3

 Zurich points to several cases holding that the

MCS-90 endorsement “simply covers the public when other coverage is lacking.” See, e.g.,

Canal Ins. Co. v. Carolina Cas. Ins. Com., 59 F.3d 281, 283 (1st Cir. 1995). See also Kline

v. Gulf Ins. Co., 466 F.3d 450, 455-56 (6th Cir. 2006) (distinguishing between cases where

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4 The Rodriguezes’ efforts to distinguish Kline, Reply at 2-3, are unavailing. Kline did not

reject the notion that the MCS-90 endorsement was not triggered if other coverage was available; in that

case other insurers had provided “some, albeit inadequate, coverage.” 455 F.3d at 452 n.3. 

5

 Yeates cited to the earlier case of Harco Nat’l Ins. Co. v. Bobac Trucking Inc., 107 F.3d 733,

736 (9th Cir. 1997). Though Harco was distinguished, in part, by John Deere (as to its holding that the

MCS-90 endorsement did not expand coverage to autos not covered under the main policy), Harco held

elsewhere that “the district court’s comparison of an insurer’s obligation under an MCS-90 to that of

a surety does not demonstrate any error” and that “[t]hat analogy was apt.” See 107 F.3d at 736.

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plaintiff’s recovery already exceeded proscribed limit, and those where families received no

compensation).4

 

Most relevant is Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 871 (10th Cir. 2009),

in which Yeates, an individual, was injured in a collision with a truck owned by Birmingham

Livestock, who had two insurance policies, with State Farm and with Carolina Casualty. The

State Farm policy, which explicitly insured the truck involved in the accident, promptly paid

$750,000 to Yeates. Id. The Carolina Casualty policy, which did not explicitly cover the

truck involved in the accident, included an MCS-90 endorsement, which provided that

Carolina Casualty would pay up to $1,000,000 for “any final judgment recovered against”

Birmingham Livestock. Id. Carolina Casualty filed a declaratory action seeking a ruling that

it had no liability to Yeates, in part because State Farm had already tendered $750,000,

which was the federal mandatory minimum. Id. at 872.

The Tenth Circuit, sitting en banc, noted that the approach of the majority of circuits

was to treat the MCS-90 endorsement “as one of a surety rather than a modification of the

underlying policy” – as “a safety net in the event other insurance is lacking.” Id. at 878

(citing cases in First, Sixth, Third, Fourth, Fifth, Ninth5

 and Seventh Circuits). The Court

went on to adopt the majority approach, holding: 

[A]n insurer’s obligation under the MCS-90 endorsement is not triggered unless (1)

the underlying insurance policy (to which the endorsement is attached) does not

provide liability coverage for the accident, and (2) the carrier’s other insurance

coverage is either insufficient to meet the federally-mandated minimums or nonexistent. Once the federally-mandated minimums have been satisfied, however, the

endorsement does not apply.

Id. at 879 (emphasis added). In the course of an extensive discussion of the regulatory

scheme that gave rise to MCS-90, the court noted that a motor carrier may demonstrate its

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 Note that since this article was published, the Tenth Circuit rejected its earlier approach and

joined the majority with Yeates.

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financial responsibility under the MCA through either the MCS-90 endorsement, with a

surety bond, or with self-insurance. Id. It concluded that “the MCS-90 endorsement

operates in much the same way as the two alternatives– i.e., as a surety in the event judgment

against the carrier is for some reason unsatisfied.” Id. at 880-81. Because the State Farm

policy was sufficient to meet the federally mandated minimum level for the type of property

being transported, the MCS-90 endorsement was not triggered. Id. at 886. 

Secondary sources also recognize that this is the majority view. See, e.g., Michael Jay

Leizerman, “Finding Insurance in Truck Crash Cases,” 44 Feb. Trial 27, Feb. 2008 (“The

MCS-90. . . . endorsement is intended only to apply to a motor carrier when the underlying

policy does not provide coverage for some reason”); Irvin E. Schermer & William Schermer,

“Motor carrier financial responsibility – the MCS-90 endorsement – MCS-90 indemnity

obligations,” 1 Auto. Liability Ins. 4th, Nov. 2009, at § 2:12.50 (“The obligations under the

MCS-90 are triggered only when the liability policy of which it is a part would otherwise not

provide coverage for the insured, and, in the case of a nonowned vehicle, when its owner has

no coverage for the accident”); James R. Lilly, “Insurance Coverage and Conflicting

Interpretations of the MCS-90,” 74 Def. Couns. J. 343, 349 (Oct. 2007) (“A majority of

jurisdictions hold that the MCS-90 has no affect on the allocation of coverage among

insurers; once the injured party is compensated, the endorsement is ignored”).6

Accordingly, and in the absence of contrary guidance from the Ninth Circuit, this

Court follows the majority circuit view and holds that MCS-90 is not triggered once the

federally mandated minimum has been satisfied. So holding does not conflict with John

Deere, which dealt primarily with whether the MCS-90 endorsement operated to cover an

individual not otherwise covered by the policy, but which did not address the issue of other

insurance having already paid the federally mandated minimum. See 229 F.3d at 854. The

Court notes that at least one other district court in the circuit indicated confidence in such a

holding. See Canal Ins. Co. v. Lincoln Gen. Ins. Co., No. C07-553-JPD, 2008 WL 3103270,

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 The Court declines to reach Zurich’s alternative argument, that XTRA was not a “motor

carrier” at the time of the accident. See Response at 11.

G:\CRBALL\2009\197\order on SJ.wpd 14

at *7 (W.D. Wash. Aug. 4, 2008) (noting that Ninth Circuit “has indicated a strong

willingness” to join the majority as interpreting the purpose of the MCS-90 as protecting

injured members of the public and acting as “a surety rather than an extension of coverage”).

Here, Century National has already paid the Rodriguezes $1,000,000. Stip. at 2. 

Zurich asserts, and the Rodriguezes do not deny, that the trailer at issue was carrying

nonhazardous materials. See Response at 6-7 (citing RJN Ex. A, Ex. 1, CHP Report). The

federally mandated minimum was therefore just $750,000. See Yeates, 584 F.3d at 885

(“Motor carriers must maintain at least $750,000 in financial responsibility coverage for

vehicles transporting non-hazardous cargo”); ZPOL 0057 (MCS-90 listing minimum

insurance for nonhazardous property as $750,000). Because the federally mandated

minimum has been satisfied, the MCS-90 is not triggered, Zurich does not owe the

Rodriguezes any money.7

 

CONCLUSION

For the foregoing reasons, the Court GRANTS Zurich’s motion for summary

judgment and DENIES the Rodriguezes’ motion for summary judgment.

IT IS SO ORDERED.

Dated: February 23, 2010 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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