Aas v. Avemco Ins. Co.

• Decision Date: 04 February 1976
• Citation: 55 Cal.App.3d 312,127 Cal.Rptr. 192
• Court: California Court of Appeals Court of Appeals
• Parties: Eugene A. AAS, Plaintiff and Appellant, v. AVEMCO INSURANCE COMPANY, Defendant and Respondent. Civ. 34649.

Page 192

127 Cal.Rptr. 192

55 Cal.App.3d 312

Eugene A. AAS, Plaintiff and Appellant, v. AVEMCO INSURANCE COMPANY, Defendant and Respondent.

Civ. 34649.

Court of Appeal, First District, Division 1, California.

Feb. 4, 1976.

As Modified Feb. 20, 1976.

Hearing Denied March 31, 1976.

Robert E. Schulz, Edward M. Keech, Crist, Crist, Griffiths, Bryant & Schulz, Palo Alto, for plaintiff and appellant.

Kirtland & Packard, Robert E. Moore, Jr., Los Angeles, for defendant and respondent Avemico Ins. Co.

SIMS, Associate Justice.

Plaintiffs, the surviving husband and children of Rosemary E. Aas, who was killed in an airplane crash, have appealed ¹ from an order of the trial court which dismissed their action against defendant insurer, upon granting defendant's motion for judgment on the pleadings, and denying plaintiffs' motion for summary judgment. Plaintiffs, who have recovered a judgment against the estate of the pilot of the airplane, contend that the parties to the insurance policy contracted with a view toward the then-existing airplane guest statute, and that since the statute was subsequently respectively, repealed and found unconstitutional, the clause excluding liability to occupants should be construed as invalid. A review of applicable principles of law compels a conclusion, on the contrary, that the subsequent law changes have no effect on the provisions of the policy. The order must be affirmed.

The policy provides: 'Coverage A--Aircraft Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, Excluding any occupant unless specified as 'including occupants' in the declarations, caused by an occurrence and arising out of the ownership, maintenance or use of the aircraft.' (Emphasis added.)

The declarations refer to 'A Aircraft Liability (Excluding Occupants) $ NIL each occupant $300,000 each occurrence $77.00.' The emphasized language is typed in. A rider, which named Rosemary Aas, and others, as additional insureds and designated the pilots whose liability would be covered by the policy, reiterates the smae coverage and added $100,000 property damage under coverage A for an additional premium of $6,000.

The policy under 'Definitions' states: '(a) Occupant. The word 'occupant' means any person in, on or boarding the aircraft for the purpose of riding therein or alighting therefrom following a flight or attempted flight therein.'

At all times material the Aircraft Financial Responsibility Act has provided and now provides: 'The policy or bond need not cover: . . . (c) A guest, or any other person, riding in or upon any aircraft without giving compensation.' (Pub.Util.Code, § 24351. ^* The same law defines passenger as follows: "Passenger' means any person in, on or boarding an aircraft for the purpose of riding therein, or alighting therefrom following a flight or attempted flight therein.' (Pub.Util.Code, § 24238.)

The policy period ran from June 28, 1969 to June 28, 1970. The airplane crash occurred January 2, 1970. At that time, the airplane guest statute, ² which was in effect and considered constitutional, abrogated the common law right of a guest to recover for injuries as a result of a pilot's ordinary negligence. (See Mittelman v. Seifert (1971) 17 Cal.App.3d 51, 61, 94 Cal.Rptr. 654; and Stiles v. American Trust Co. (1955) 137 Cal.App.2d 472, 474--475, 290 P.2d 614. Cf. Callet v. Alioto (1930) 210 Cal. 65, 69, 290 P.2d 438.) The policy provision excluding liability to 'occupants,' therefore, approximated the statutory bar. The Legislature repealed the statute in 1973 (Stats.1973, ch. 803, § 3, p. 1426), thereby restoring the common law right to sue. It has also been held that the statute was unconstitutional. (Ayer v. Boyle (1974) 37 Cal.App.3d 822, 826--828, 112 Cal.Rptr. 636. See Brown v. Merlo (1973) 8 Cal.3d 855, 882, 106 Cal.Rptr. 388, 506 P.2d 212.)

No issue has been raised as to whether the deceased pilot, against whose estate the judgment was obtained, was an additional insured under the policy definition of 'insured.' It included permissive users, provided, according to the declarations, such use in flight is by a certificated private or commercial pilot. If the policy covered the loss suffered by plaintiffs from the death of Rosemary Aas, they were entitled to recover the amount of the judgment, which was within the policy limits, from the insurance company. (Ins.Code, § 11580, subd. (b)(2); Zander v. Texaco, Inc. (1968) 259 Cal.App.2d 793, 803--807, 66 Cal.Rptr. 561; Bonfils v. Pacific Auto. Ins. Co. (1958) 165 Cal.App.2d 152, 159--163, 331 P.2d 766; Lamb v. Belt Casualty Co. (1935) 3 Cal.App.2d 624, 631, 40 P.2d 311.) Nevertheless, it would appear from the clear language of the policy that the coverage excluded damages for the death of Rosemary Aas which occurred while she was an occupant of the airplane, riding therein. 'An insurance company has the right to limit the coverage of a policy issued by it and when it has done so the plain language of the limitation must be respected. (Citations.)' (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 432, 296 P.2d 801, 806; Cravens, Dargan & Co. v. Pacific Indem. Co. (1972) 29 Cal.App.3d 594, 600, 105 Cal.Rptr. 607; State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co. (1970) 9 Cal.App.3d 508, 525, 88 Cal.Rptr. 246; and Fullerton v. Houston Fire & Cas. Ins. Co. (1965) 234 Cal.App.2d 743, 750--751, 44 Cal.Rptr. 711.) Plaintiffs seek to avoid the plain meaning of the policy on several theories.

A

In Travelers Ins. Co. v. Industrial Indem. Co. (1971) 18 Cal.App.3d 628, 96 Cal.Rptr. 191, the plaintiff company had issued a general liability insurance policy to the employer of a worker who was injured in 1949 in the course of his employment when he came into contact with a utility's electric wire. After the worker recovered a judgment against the utility company, the latter sued the employer on the theory of implied indemnity. The plaintiff company provided a defense and demanded that the defendant company, which had issued workmen's compensation and employer's liability coverage to the employer, join in the defense. The latter company had agreed 'To indemnify this Employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained . . ..' (P. 631, 96 Cal.Rptr. p. 193.) The defendant claimed that the policy language limited the policy coverage to claims made directly by the employee against the employer. The trial court interpreted the language to include liability for indemnity claims of third parties against the employer which arose out of injuries to the latter's employee; and it awarded the plaintiff company a pro rata share of its outlay to litigate and settle the utility's claim against the employer. (See 18 Cal.App.3d at pp. 630--631, 96 Cal.Rptr. 191.)

In 1949, when the injury occurred and when the policy was in effect, the courts of California had not recognized the right of a third party tortfeasor whose negligence concurred with that of the employer to recover from the negligent employer under the theory of implied indemnity. (See S.F. Unified Sch. Dist. v. Cal. Bldg. etc., Co. (1958) 162 Cal.App.2d 434, 328 P.2d 785.) The indemnity suit was commenced in 1962 after the decision last cited. The court on appeal noted that the case involved the question of 'whether changes In the scope of liability under an insurance policy, resulting from court decisions handed down after a policy is issued, inure to the benefit of the policyholder.' (18 Cal.App.3d at p. 631, 96 Cal.Rptr. at p. 193, emphasis added.) It answered the question as follows: 'We conclude that where the Scope of liability covered by language contained in an insurance policy has been enlarged by judicial pronouncement, the language defining coverage embraces the total liability ascribed to it by the courts, so long as the policy remains in force. At first blush this appears to be a harsh rule, particularly here because of the extremely unusual circumstance that the policy was written in 1949 and liability is being determined some 20 years later. However, a contrary view would bring about an even more discordant result for it would mean that where courts enlarge liability during the effective period of a liability policy, An insured who contracted for complete coverage of a possible risk would be left without coverage because the scope of the risk had been enlarged by decisional law. Many examples come to mind where liability has been enlarged by a novel judicial interpretation of the law or by an expanded application of existing law. A good example is the liability of owners and occupiers of real property, as articulated in Rowland v. Christian, 69 Cal.2d 108, 70 Cal.Rptr. 97, 443 P.2d 561. . . .' (Id., p. 632, 96 Cal.Rptr. p. 194, emphasis added.)

Reference to the emphasized language demonstrates that plaintiffs' reliance the principle set forth in the last quotation is unavailing in this case. When the insurer agrees to indemnify the policyholder for 'loss by reason of the liability imposed upon him by law' it may take the risk that the law will impose a greater liability than was contemplated at the time of contracting. Here, however, there never was such a broad promise of indemnity. A change in the liability of the insured with respect to non-paying occupants of the airplane cannot affect an insurer who has never assumed any liability for damages because of bodily injury, sickness or disease, including death, to occupants.

Insofar as the terms of the policy itself are concerned, as distinguished from the liability of the pilot for his negligence, the...