United States v. 2006-07-13 | 04-56265 | SENTRY SELECT INSURANCE VFIDELITY GUARANTY | precedential |…

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 SENTRY SELECT INSURANCE No. 04-56265
COMPANY, D.C. No.
Plaintiff-Appellee, CV-02-01055-LSP
v. Southern District
of California,FIDELITY & GUARANTY, Fidelity San Diegoand Guaranty Insurance Company, 
Defendant-Appellant. ORDER
CERTIFYING A
QUESTION TO
THE SUPREME
COURT OF
CALIFORNIA

Filed July 14, 2006
Before: Michael Daly Hawkins, Susan P. Graber, and
Richard A. Paez, Circuit Judges.
COUNSEL
Mark W. Flory, Harrington, Foxx, Dubrow & Canter, LLP,
Los Angeles, California, for the defendant-appellant.
Laurence J. Rabinovich, Schindel, Farman & Lipsius LLP,
New York, New York, for the plaintiff-appellee.
ORDER
The panel of the United States Court of Appeals for the
Ninth Circuit hereby certifies to the Supreme Court of Cali-
7825

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fornia that this case contains a question concerning the law of
California that is determinative of the cause and on which
there is no clear controlling precedent in California’s judicial
decisions. The panel therefore respectfully requests that the
Supreme Court of California answer the certified question
below and provides the following statement of facts and
explanation:
Question Certified
What is the appropriate test for determining whether an
insured is “engaged in the business of renting or leasing
motor vehicles without operators” under California Insurance
Code § 11580.9(b)? Compare Travelers Indem. Co. of Ill. v.
Md. Cas. Co., 41 Cal. App. 4th 1538, 1546-47 (1996), and
McCall v. Great Am. Ins. Co., 119 Cal. App. 3d 993, 998
(1981), with W. Carriers Ins. Exch. v. Pac. Ins. Co., 211 Cal.
App. 3d 112, 116-17 (1989), Mission Ins. Co. v. Hartford
Accident & Indem. Co., 160 Cal. App. 3d 97, 101 (1984), and
Transp. Indem. Co. v. Robert Alo, 118 Cal. App. 3d 143, 148
(1981).
Statement of Facts
John’s Trucking, Inc. (“JTI”) offers trucking services and
owns a fleet of tractors and trailers. JTI fulfills most of its
hauling contracts by subcontracting the work to independent
truckers. Those truckers generally retain 95% of the hauling
contract’s value, with JTI taking 5%. If the truckers rent trail-
ers from JTI to complete the contract, JTI’s percentage rises
to 25%. JTI does not rent trailers to anyone other than its sub-
contractors, and the vast majority of its fleet is used by those
subcontractors. Fidelity & Guaranty Insurance Co.
(“Fidelity”) insured JTI for $1 million of liability coverage
per accident.
Richard Justice (“Justice”), an independent trucker, owned
a Peterbuilt tractor. While fulfilling a contract for JTI and
7826 SENTRY SELECT INS. v. FIDELITY & GUARANTY

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renting a JTI trailer and semitrailer, Justice negligently caused
an accident. John Deere Insurance Co. (“John Deere”) pro-
vided $750,000 of liability coverage per accident. Sentry
Select Insurance Co. (“Sentry”) bought John Deere after the
accident. Plaintiffs involved with the accident settled with
Sentry for $600,000.
Sentry filed this diversity suit against Fidelity for contribu-
tion, implied equitable indemnity, and implied contractual
indemnity. The parties brought cross-motions for summary
judgment. The district court granted Sentry’s motion, ruling
that California Insurance Code § 11580.9(b) did not apply,
that § 11580.9(d) controlled, and that both policies were pri-
mary. The court awarded Sentry $427,104.13.
Explanation
No controlling precedent exists to answer the certified
question. Travelers and McCall, from California’s Second
District, looks at the insured’s primary business purpose in
determining whether it is “engaged in the business of” leasing
motor vehicles. Alo, Mission, and Western Carriers, from the
First and Fifth Districts, examine the specific transaction in
determining the same question. No California Supreme Court
decision is on point.
The question is controlling. In this case, the approach used
to answer whether the insured is “engaged in the business of”
leasing motor vehicles will determine whether subdivision (b)
will apply. If subdivision (b) does apply, Fidelity will not be
required to pay contribution. If subdivision (b) does not apply,
subdivision (d) will apply, requiring Fidelity to pay contribu-
tion.
In response to the question listed above, the California
Supreme Court shall not be bound by the manner in which the
questions have been phrased by this court, and this court will
accept its decision.
7827 SENTRY SELECT INS. v. FIDELITY & GUARANTY

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As required by California statute, we provide the following
list of counsel with addresses:
Mark W. Flory and Michael C. Denlinger; Harring-
ton, Foxx, Dubrow & Canter LLP; 1055 West Sev-
enth Street, 29th Floor, Los Angeles, CA 90071 for
Defendant-Appellant.
Laurence J. Rabinovich; Schindel, Farman & Lipsius
LLP; 14 Penn Plaza, Suite 500, New York, New
York 10122; and Higgs, Fletcher & Mack LLP; 401
West “A” Street, Suite 2600, San Diego, CA 92101
for Plaintiff-Appellee.
The Clerk of this court shall submit an original and ten (10)
copies of this Order to the Supreme Court of California, with
a certificate of service on the parties. The Clerk shall also for-
ward copies of all relevant briefs to the Supreme Court of
California.
7828 SENTRY SELECT INS. v. FIDELITY & GUARANTY

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© 2006 Thomson/West.

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