Aetna Casualty & Surety Co. v. Richmond

• Citation: 76 Cal.App.3d 645,143 Cal.Rptr. 75
• Court: California Court of Appeals
• Decision Date: 22 December 1977
• Parties: AETNA CASUALTY & SURETY COMPANY, Plaintiff and Respondent, v. Lonnie RICHMOND, doing business as Lonnie's Sporting Goods, Defendant and Appellant. Civ. 49878.

Page 75

143 Cal.Rptr. 75

76 Cal.App.3d 645

AETNA CASUALTY & SURETY COMPANY, Plaintiff and Respondent, v. Lonnie RICHMOND, doing business as Lonnie's Sporting Goods, Defendant and Appellant.

Civ. 49878.

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

Dec. 22, 1977.

Hearing Denied Feb. 16, 1978.

Stump, Garner & Wright and William T. Garner, Long Beach, for defendant and appellant

Haight, Dickson, Brown, Bonesteel & Rigg, Kim H. Collins, and Roy G. Weatherup, Los Angeles, for plaintiff and respondent.

HANSON, Associate Justice.

Lonnie Richmond, doing business as Lonnie's Sporting Goods (hereinafter referred to as Richmond), appeals from a judgment by the trial court, sitting without a jury, declaring that Aetna Casualty & Surety Company (hereinafter referred to as Aetna) has no duty to indemnify Richmond for personal injury damages recovered by a

purchaser of skis on a theory of products liability.

FACTS

On or about December 19, 1968, Olivia Ascascio purchased from Richmond a complete set of ski equipment and an employee working on Richmond's premises affixed the bindings to the skis and specially adjusted the bindings to fit the purchaser. Ms. Ascascio subsequently was injured while skiing. On or about July 10, 1969, Ms. Ascascio filed suit against Richmond and others for personal injuries. In her complaint she alleged that on or about January 18, 1969, while utilizing the ski equipment purchased from Richmond, Ms. Ascascio fell while skiing at Mammoth Mountain and suffered injuries to both legs as a proximate result of the failure of the ski bindings to release properly. Among other things Ms. Ascascio alleged that Richmond negligently and carelessly adjusted the ski bindings; that such negligence caused the failure of the bindings to release when she fell; and that this was the proximate cause of her injuries.

Richmond demanded that Aetna defend and indemnify him. Although Aetna claimed nonliability, it did appear and defend the action. Eventually a $15,000 compromise settlement was reached between Ms. Ascascio and the defendants during the pretrial stages of the litigation; $10,000 was agreed to be the fair and reasonable amount of Richmond's liability.

Aetna on July 30, 1973, instituted an action for declaratory relief claiming it had no duty to defend or indemnify Richmond against Ms. Ascascio's claim. It based its claim to relief on a policy endorsement excluding products liability exclusion as follows: "It is agreed that such insurance as is afforded by the Bodily Injury Liability Coverage and the Property Damage Liability Coverage does not apply to bodily injury or property damage included within the Completed Operations Hazard or the Products Hazard." (Emphasis in original.) However, Aetna did undertake defense of the action and on December 9, 1974, it filed a first amended and supplemental complaint for declaratory relief alleging merely that it had no duty to indemnify.

In its complaint Aetna admitted that it was the insurance carrier on Richmond's liability insurance policy and acknowledged that Olivia Ascascio, who was injured while using ski equipment purchased from Richmond, had obtained a determination that Richmond was liable for damages. Aetna, however, alleged that it defended that action on behalf of Richmond under a reservation of rights; that the alleged liability of Richmond to Ms. Ascascio was not covered under the terms of the Aetna policy; and that the personal injury case was settled with Aetna and Richmond preserving their respective positions relating to insurance coverage. It was agreed that Ms. Ascascio's $10,000 award would be paid on behalf of Richmond by either Richmond or Aetna depending on the outcome of the declaratory relief action. Richmond claimed estoppel based on alleged representations by Charles Bell, Aetna's insurance agent, and the conduct of Aetna in defending the personal injury action.

At trial Aetna introduced a stipulated statement of facts in which it was agreed that Aetna's policy of liability insurance issued to Richmond was in full force and effect as of the time of Ms. Ascascio's injuries, and a full, complete and correct copy of the policy was attached to the stipulation of facts and incorporated therein. Also attached and incorporated by reference was a complete copy of Ms. Ascascio's complaint in the products liability action. It was stated that after the complaint was served on Richmond, he demanded that Aetna defend and indemnify him under their insurance policy and Aetna responded by a letter which was attached as another exhibit to the stipulation. Aetna therein acknowledged receipt of a copy of the complaint filed by Ms. Ascascio against Richmond in which it was alleged that the damages she sustained were caused by the use of a product assembled and sold by Richmond but said that the Aetna policy did not provide coverage for claims involving products or After the Ascascio claim was settled, Aetna and Richmond stipulated that the coverage issue between them would be determined solely on the first cause of action in Ms. Ascascio's complaint which alleged that her injuries were the proximate result of the defendants' negligence.

completed operations hazards and that in any event the claimed damages exceeded the $100,000 policy limits. The letter further stated: "This Company will provide a defense for you as per the terms of the insurance policy, but this Company does not waive any of its Rights under the terms, conditions and provisions of the insurance policy. [76 Cal.App.3d 650] Therefore, if a judgment is entered against you for damages that are not covered under the policy, this Company will not be responsible for that judgment."

At the time of trial Charles Bell, agent for Aetna, testified that he had handled Richmond's business insurance for a number of years before the time the policy in question was issued on June 25, 1968, and that at one time products coverage had been included. Mr. Bell testified that he dealt more with Mrs. Richmond than with anyone else when insurance matters were to be decided. A year or two before the policy in effect at the date of Ms. Ascascio's injuries was issued, Mrs. Richmond told Mr. Bell that they did not want products liability coverage. She said this was true because the premiums were based on gross receipts which required the auditing of their books. She said to him at that time: "Don't ever do that to us again."

Lonnie Richmond testified that he had told Mr. Bell that he wanted "full coverage" for his business and had been assured that that had been provided. He denied telling Mr. Bell that he did not like the insurance company auditing his books and that he would rather not have products coverage if it required auditing. He further testified that it was not his wife but he who personally handled business insurance matter while she did the accounting. He said that he recalled receiving the subject policy in the mail but that he merely put it away without reading it. Lonnie Richmond's wife was unavailable to testify because she died June 9, 1970.

The trial court, resolving conflicts in the evidence, found that prior to the issuance of the Aetna policy Richmond was paying premiums for products and completed operations coverage; that these premiums were calculated on an audit and gross receipt basis; and that the Aetna premiums for such coverage were calculated only on an audit and gross receipt basis. The court further found, inter alia, that Mrs. Richmond, wife and employee of Richmond, instructed Mr. Bell before the subject Aetna policy was issued that he should cancel the coverage for products and completed operations. As a consequence, such coverage was excluded from the policy subsequently issued to Richmond and these exclusions were in effect at the time of Ms. Ascascio's purchase of skis and her eventual injuries. Finally, the court concluded that Aetna did not, by appearing and defending the litigation instituted by Ms. Ascascio, show any intention to relinquish its right to deny coverage; its conduct concerning the coverage under the policy showed a consistent intention to adhere to the exclusionary provisions.

ISSUES

Richmond contends on appeal that (1) certain findings are unsupported by the evidence; (2) there was no finding that Mrs. Richmond had authority to limit insurance coverage; (3) Aetna is estopped to rely on exclusionary products and completed operations hazard clauses; (4) Aetna waived these exclusionary clauses; and (5) the exclusionary clauses do not immunize Aetna from liability for injuries due to Richmond's negligence.

DISCUSSION

Richmond initially attempts to argue the propriety of the inferences to be drawn from certain evidence by disputing the correctness of various findings. The findings in question were based upon the resolution by the trial court of conflicts in the testimony of Richmond and that of the Richmond further attacks the sufficiency of the findings to support the judgment insofar as he claims there was no evidence that Aetna was authorized to exclude products and completed operations coverage and no finding that Mrs. Richmond was authorized to order the cancellation of such coverage. There is, however, a finding that Mrs. Richmond "the wife of Lonnie Richmond and the employee of Lonnie Richmond dba Lonnie's Sporting Goods, specifically directed Charles Bell, the insurance agent, to cancel the products and completed operations coverage from the defendant's policy." Agency is a determination on a question of fact (Skyways Aircraft Ferrying Service, Inc. v. Stanton (1966) 242 Cal.App.2d 272, 284, 51 Cal.Rptr. 352). This finding, which is based on substantial evidence in the record as to Mrs. Richmond's status and her conversations with Charles Bell, is sufficient to establish both her authority and her instructions.

insurance agent Bell....