Hartford Accident & Indemnity Co. v. Civil Service Employees Insurance

Opinion

This appeal involves a coverage dispute between a homeowner’s insurance carrier (plaintiff; hereinafter, “Hartford”) and an automobile insurance carrier (defendant; “Civil Service”).

The matter came before us upon a somewhat inconclusive record.. At the heart of the dispute is a claim made by Mrs. Elizabeth Ehrenburg that she suffered personal injury on October 24, 1966. As we hereafter show, her claim was settled by Hartford prior to trial, hence there has been no finding as to the facts underlying her claim. The coverage dispute was submitted to the trial court upon an agreed statement which recited inter alia that Mrs. Ehrenburg alleged to have been injured in the manner hereinafter described. The judgment from which plaintiff appeals was entered on findings which did not determine how (or whether) Mrs. Ehrenburg was injured; in this respect, the findings merely reiterated her allegations of the fact and manner of her injury. At oral argument in this court, however, counsel stipulated that Mrs. Ehrenburg suffered an injury in the manner and of the type alleged by her, and as more specifically described

Although the issue is not free of difficulty, we are of the opinion that the trial court erred.

In determining whether the events of the accident were within the coverage of the Civil Service policy, that policy must be considered alone as though the Morrisons had no other insurance available. (Monolith Portland Cement Co. v. American Home Assur. Co. (1969) 273 Cal.App.2d 115 , 123 [ 78 Cal.Rptr. 113 ]; Universal Underwriters Ins. Co. v. Aetna Ins. Co. (1967) 249 Cal.App.2d 144 , 148-149 [ 57 Cal.Rptr. 240 ].) “If the insurer uses language which is uncertain any reasonable doubt will be resolved against it; if the doubt relates to extent or fact of coverage, [such] as to peril insured against . . . , the language will be understood in its most inclusive sense, for the benefit of , the insured.” (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423 , 437-438 [ 296 P.2d 801 , 57 A.L.R.2d 914 ]; see also, Universal Underwriters Ins. Co. v. Aetna Ins. Co., supra.) We must ascertain “that meaning of the contract which the insured would reasonably expect.” (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263 , 270 [ 54 Cal.Rptr. 104 , 419 P.2d 168 ].)

“In deciding whether peripheral activity involving a vehicle amounts to a ‘use,’ the courts follow the rule that uncertainties in policy language are construed in favor of imposing liability on the insurer; hence, that ‘use’ must be understood in its most comprehensive sense. The term is not confined to motion on the highway, but extends to any activity in utilizing the insured vehicle in the manner intended or contemplated by the insured.” (Pacific Indem. Co. v. Truck Ins. Exch. (1969) 270 Cal.App.2d 700 , 703 [ 76 Cal.Rptr. 281 ].) (Fns. omitted.) “[T]he acts coming within such use are not necessarily those arising out of or related to the operation of the vehicle.” (Glens Falls Ins. Co. v. Consolidated Freightways (1966) 242 Cal.App.2d 774 , 783 [ 51 Cal.Rptr. 789 ].) (Original italics.) The word “use” may apply though the insured vehicle is at rest. (St. Paul Fire & Marine Ins. Co. v. Hartford Acc. & Indem. Co. (1966) 244 Cal.App.2d 826 , 831 [ 53 Cal.Rptr. 650 ].)

The concept of loss arising out of the use of an insured vehicle “imports some kind of sequential relationship between the vehicle and the

The transportation of household pets in family cars is commonplace. In the case at bench, the fact that the scottie was riding in the Morrisons’ automobile clearly involved a “use” of that vehicle. In National Indemnity Co. v. Corbo (Fla.App. 1971) 248 So.2d 238 , in a case of nationwide first impression, the court held that the plaintiff’s injury arose out of the use of the insured’s automobile where the plaintiff—a guest passenger—was bitten in the parked car by the insured’s watchdog while the car was transporting the dog to the insured’s place of business. In so holding, the Florida court relied on the proposition that “arising out of” is a phrase of much broader significance than “caused by,” and is ordinarily understood to mean “incident to, or having connection with” the use of the car. (Id. at p. 240.)

The biting of Mrs. Ehrenburg presents as strong a case for coverage as did the facts in National Indemnity Co. v. Corbo, supra, 248 So.2d 238 , for here the injury occurred while the Morrisons’ dog was trying to get out of the car.

The “use” of a vehicle includes its loading and unloading, even though, as in the Civil Service policy in the instant case, there is no specific provision covering such activities. (International Business Machines Corp. v. Truck Ins. Exch., supra, 2 Cal.3d at p. 1029 & fn. 1; Truck Ins. Exch. v. Webb (1967) 256 Cal.App.2d 140 , 144 [ 63 Cal.Rptr. 791 ].) In Morari v. Atlantic Mutual Fire Insurance Company (1970) 105 Ariz. 537 [ 468 P.2d 564 ], the insured accidentally shot a passenger when the insured, standing beside his parked pickup-camper, attempted to take out a hunting rifle from behind the seat, causing the loaded gun (not on safety) to discharge. The court distinguished cases involving the accidental

“An insurer . . . bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy.” (Gray v. Zurich Insurance Co., supra, 65 Cal.2d at pp. 276-277.) (Italics added.) “Since modern procedural rules focus on the facts of a case rather than the theory of recovery in the complaint, the duty to defend should be fixed by the facts which the insurer learns from the complaint, the insured, or other sources.” (Id. at p. 276; see also, State Farm Mut. Auto Ins. Co. v. Flynt (1971) 17 Cal.App.3d 538 , 548-549 [ 95 Cal.Rptr. 296 ].) The issue is whether such facts “created the possibility that the insurer would be liable for the claim.” (Paramount Properties Co. v. Transamerica Title Ins. Co. (1970) 1 Cal.3d 562 , 571 [ 83 Cal.Rptr. 394 , 463 P.2d 746 ] (italics added); see also, Gray v. Zurich Insurance Co., supra, at p. 277.)

As we have seen, the Civil Service automobile policy obligated it to defend suits alleging personal injury arising out of the use of the Morrisons’ automobile even if such suits were “groundless, false or fraudulent.” “While it is true, the duty to defend litigation brought against an insured may exist even where coverage is in doubt and ultimately does not develop, ‘The “groundless, false, or fraudulent” clause, . . . does not extend the obligation to defend without limits; it includes only defense to those actions of the nature and kind covered by the policy.’ (Gray v. Zurich Insurance Co., supra, 65 Cal.2d 263 , 274.)” (State Farm Mut. Auto. Ins. Co. v. Flynt, supra, 17 Cal.App.3d at p. 548.)

Accordingly, the refusal by Civil Service to defend the Morrisons was wrongful; the Ehrenburg claim created the possibility of liability on the part of Civil Service. (Note Civ. Code, § 3342 (“dog bite” statute); compare Veh. Code, § 17158 (“guest” statute, in effect at the time of Mrs. Ehrenburg’s injury; see Brown V. Merlo (1973) 8 Cal.3d 855 [ 106 Cal. Rptr. 388 , 506 P.2d 212 ]).)

We have shown, in our recital of the “other insurance” clauses of the two policies, that the Civil Service policy (although providing for proration) was primary, and that Hartford’s policy was excess. “[I]n the case of multiple insurance policies covering the same loss, one of which contains a provision for pro-ration in the event o-f other insurance and the other a clause that it shall be treated as ‘excess insurance’ to any other policy, the policy with the proration clause is primary and must bear the loss to its policy limits.” (Fireman’s Fund etc. Ins. Companies v. State Farm etc. Ins. Co. (1969) 273 Cal.App.2d 445 , 448-449 [ 78 Cal.Rptr. 38 ]; see, Pacific Employers Ins. Co. v. Maryland Casualty Co. (1966) 65 Cal.2d 318 , 328 [ 54 Cal.Rptr. 385 , 419 P.2d 641 ]; Donahue Constr. Co. v. Transport Indem. Co. (1970) 7 Cal.App.3d 291 , 302-303 [ 86 Cal.Rptr. 632 ].)