Erie Ins. Exchange v. Transamerica Ins. Co.

• Decision Date: 31 March 1986
• Citation: 352 Pa.Super. 78,507 A.2d 389
• Parties: ERIE INSURANCE EXCHANGE, Appellant, v. TRANSAMERICA INSURANCE COMPANY.
• Court: Pennsylvania Superior Court

Page 389

507 A.2d 389

352 Pa.Super. 78

ERIE INSURANCE EXCHANGE, Appellant, v. TRANSAMERICA INSURANCE COMPANY.

Superior Court of Pennsylvania.

Argued Oct. 24, 1984.

Filed Jan. 17, 1986.

Reargument Denied March 31, 1986.

Charles Kirshner, Pittsburgh, for appellant.

Robert A. Arcovio, Pittsburgh, for appellee.

Before SPAETH, President Judge, and BROSKY and OLSZEWSKI, JJ.

BROSKY, Judge.

This appeal is from a declaratory judgment in a civil dispute over insurance coverage of an automobile accident when the automobile was set in motion by a three-year-old child. The parties are the insurer in an automobile policy, appellant, and the insurer in a homeowner's policy, appellee. The court below held that the appellant as writer of the automobile policy was solely liable for coverage. We agree and, accordingly, affirm.

The relevant facts and procedural history were accurately summarized in the trial court opinion.

On March 19, 1976, Landis Robinson visited the home of Mr. and Mrs. Gilbert to sell insurance to them. She parked her car facing downhill in the street. Erin Gilbert, the daughter of the Gilbert couple, somehow obtained the keys to Robinson's car and put the car in motion. It traveled downhill and struck two children. Two separate suits were filed on behalf of the two injured children. In one case, the Gilberts were named as the original defendants, and in the other, they were joined as additional defendants. The liability was predicated on Erin's activity involving the setting of an automobile in motion. In the direct lawsuit, wherein the Gilberts were parties defendant, the allegations were that Erin drove the car.

In the other lawsuit, the negligence was predicated on the parents jointly and/or alternatively allowing their minor daughter to attempt to operate a motor vehicle and permitting the child to drive the automobile.

The Plaintiff, Erie Insurance Exchange, had issued an automobile policy to husband, Bobby G. Gilbert. The defendant, Transamerica, had issued a homeowners policy to both Gilberts as owners of their household. Both policies were in effect on March 19, 1976.

After the filing of the aforementioned lawsuits against the Gilberts, they were settled. Erie had appeared and defended and both carriers paid one-half of the settlement amount.

The above cross-declaratory judgment actions seek to establish sole liability of the other as mentioned before, seeking the entire cost of defense and the entire amount of settlement to be imposed on the other.

The pertinent portions of the policies are excerpted here. The automobile insurance policy, written by appellants provides:

I. Coverage A--Bodily Injury Liability: To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury, ... caused by accident and arising out of the ownership, maintenance or use of the automobile.

The homeowner's policy, written by appellee, is the mirror image of the other:

This policy does not apply:

1. Under coverage E--Personal Liability ...

(a) to bodily injury or to property damage arising out of the ... operation, use ... of

(2) any motor vehicle ... operated by ... any insured....

Two questions, then, are presented in this appeal. First, given the circumstances of this accident, can the automobile policy be said to provide coverage? In other words, can a three-year-old child be said to "use" an automobile so as to come within the terms of the policy? Second, can a claim on the part of the victims of negligent entrustment by the parents of the automobile to the child be covered by a homeowner's policy which excludes coverage for events arising out of the operation or use of a motor vehicle? In other words, is that negligent entrustment tort claim essentially independent of the nature of what was entrusted?

Each of these two issues will be treated in turn.

Can an automobile be used by a child?

A. Out of state precedent.

Four of our sister states have considered the issue before us: does an insurance policy covering the "use" of a vehicle include the consequences of a young child setting the vehicle in motion? ¹ Three of these cases--Tucker, O'Brien and Assurance --concluded that there was no "use" of the automobile so as to invoke the policy's coverage. One case-- Bartels --came to the contrary conclusion. However, an examination of the rationale of each of these two contrary lines fails to inspire an inclination in either direction.

Bartels applied a test laid down in an earlier case out of the Superior Court of New Jersey:

The inquiry should be whether the negligent act which caused the injury, although not foreseen or expected, was in the contemplation of the parties to the insurance contract a natural and reasonable incident or consequence of the use of the automobile, and thus a risk against which they might reasonably expect those insured under the policy would be protected.

Bartels, supra, 171 N.J.Super. at 27, 407 A.2d at 1250, quoting Westchester Fire Ins. Co. v. Continental Ins. Co., 126 N.J.Super. 29, 38, 312 A.2d 664, 669 (1973), aff'd o.b. 65 N.J. 152, 319 A.2d 732 (1974).

Quite obviously, difficulties would arise in applying this test to an actual situation. No doubt the Superior Court of New Jersey confronted just this difficulty for, without any further analysis, they make the following conclusory statement, disposing of the issue:

Using the same criterion, the conclusion follows that the rolling of the automobile down the sloping driveway with the Romano children in occupancy was a consequence of the use of the automobile, and encompassed by the automobile policy coverage.

Bartels, supra, 171 N.J.Super. at 27, 407 A.2d at 1250.

The lack of predictability inherent in this approach is demonstrated by the fact that Tucker, using a nearly identical test, comes to the contrary conclusion.

In determining whether the negligent act that caused a bodily injury arose out of the 'use' of a motor vehicle within the coverage of a motor vehicle liability policy, the court must consider whether it was a natural and reasonable incident or the consequence of the use of the vehicle for the purposes shown by the declaration, though not foreseen or expected.

Tucker, supra, at 228.

The remaining case uses a similar test--the intentions of the parties to the contract. " ... it is unreasonable to conclude that the parties to this insurance contract intended to insure the truck's use as the plaything of a six-year-old child." O'Brien, supra, at 1282. See also Tucker, supra, at 229. It is a highly dubious proposition, however, that insurance only covers those situations which the parties visualized at the time the contract was made. The history of the insurance industry is replete with bizarre situations, barely conceivable--much less actually in the consciousness of the parties--in which insurance protects the individual. Indeed, it is to guard against such unlikely and unthought of occurrences that insurance is, at least partially, purchased in the first instance.

What was foreseen, contemplated or intended by the parties at the time the contract was entered into is a standard so vague and difficult of objective resolution that we must reject its application in the instant case.

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Another tack was also used in the three cases holding that there was no use. It is equally unprofitable.

"No reasonable purpose could have been accomplished by Ronald's 'driving' the truck when his mother was engaged in unloading cans full of water from the rear of the truck." O'Brien, supra, at 1282. If only reasonable purposes were the subject of insurance coverage, then all those activities negligently or recklessly engaged in by adults would be uninsurable. This is plainly not the case. It is against the consequences of our oversights and carelessness that we wish to be insured--not merely against those occurrences in which we are totally blameless victims.

In a similar vein, Assurance held that the releasing of the emergency brake by a three-year-old was not a use of the vehicle qua vehicle, but as a plaything. The results gainsay that. It was the effective use of the vehicle which, in fact, put it in motion. O'Brien states, quite perceptively, "It is, in fact, quite possible that Ronald intended, by childish fantasy or otherwise, to 'drive' the truck when the accident occurred." O'Brien, supra, at 1281. If, then, the child had the intent to operate the vehicle and succeeded in doing so, how is that to be meaningfully distinguished from the same intent and actions performed by an adult?

Finding little guidance in the cases on point, we will now examine general principles of insurance interpretation to determine if they are more helpful in the resolution of the issue before us.

B. Principles of Interpretation.

The construction of a writing like the one at issue is, of course, a question of law over which this court need not defer to the lower court. See Cowen v. Krasas, 438 Pa. 171, 264 A.2d 628 (1970) and cases cited therein. In the course of such review, the standards to be applied are well established. ²

First, the words included in the instrument must be given their ordinary meaning. Pines Plaza Bowling, Inc. v. Rossview, Inc., 394 Pa. 124, 145 A.2d 672 (1958); Masters v. Celina Mut. Ins. Co., 209 Pa.Super 111, 114-15, 224 A.2d 774, 776 (1966) (Montgomery, J.). Second, while ambiguous terms in an insurance policy should be construed against the insurer, Nusbaum v. Hartford Fire Ins. Co., 276 Pa. 526, 529, 120 A. 481, 482 (1923), the court should not "torture" the language to create an ambiguity where none exists. Bishop v. Washington, 331 Pa.Super. 387, 397-98, 480 A.2d 1088, 1093 (1984). Third, a term will be held ambiguous only "if reasonably intelligent men on considering it in the context of the entire policy would honestly differ as to its meaning." Celley v. Mut. Benefit Health & Accident Ass'n., 229 Pa.Super....