Bills v. U.S. Fidelity & Guar. Co.

• Decision Date: 11 February 2002
• Docket Number: No. 00-16369.,00-16369.
• Citation: 280 F.3d 1231
• Parties: Jason W. BILLS, Plaintiff-Appellant, v. UNITED STATES FIDELITY & GUARANTY COMPANY, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

280 F.3d 1231

Jason W. BILLS, Plaintiff-Appellant, v. UNITED STATES FIDELITY & GUARANTY COMPANY, Defendants-Appellees.

No. 00-16369.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 4, 2001.

Filed February 11, 2002.

COPYRIGHT MATERIAL OMITTED

Mack T. Jones and Robert Bohm, Hagen, Bohm, Boyle & Jones, Phoenix, AZ, for the plaintiff-appellant.

Steven Plitt, Goodwin Raup PC, Phoenix, AZ, for the defendants-appellees.

Appeal from the United States District Court, for the District of Arizona, H. Russel Holland, Chief District Judge, Presiding. D.C. No. CV-98-01112-HRH.

Before: BRIGHT,^* B. FLETCHER, and FISHER, Circuit Judges.

BETTY B. FLETCHER, Circuit Judge.

Jason Bills brings this diversity action against United States Fidelity and Guaranty Company and Fidelity and Guaranty Insurance Company (collectively "USF & G") to recover under an insurance policy issued by USF & G to Bills' employer, Archon, Inc. ("Archon"). Bills was injured by an uninsured motorist while flagging traffic to protect other Archon employees who were repairing a water main in the roadway. A front loader was positioned to give added protection. Bills claims that, under Arizona law, uninsured motorist ("UM") coverage for the front loader under these circumstances is required as a part of the commercial general liability ("CGL") portion of Archon's Business Insurance Policy even though it was not expressly stated as a part of the coverage. If UM coverage is imputed, he claims that he is entitled to insurance payments based on his use of the front loader at the time of the accident.

The district court granted summary judgment in favor of USF & G. We have jurisdiction over the appeal from the summary judgment pursuant to 28 U.S.C. § 1291. We review the district court's grant of summary judgment de novo. Devereaux v. Abbey, 263 F.3d 1070, 1074 (9th Cir.2001). We reverse and remand.

I.

Imputing UM Coverage Into the CGL policy

The parties agree that the front loader in question was mobile equipment not covered under Archon's business auto policy. Bills also concedes that, by the terms of the insurance contract, there is no UM coverage available to Bills based on the use of the front loader. However, the CGL policy provided liability coverage for "bodily injury" arising out of the use of mobile equipment, with two exceptions not applicable here. The initial question presented on this appeal is whether Arizona law requires UM coverage for the front loader as part of the CGL policy. We conclude that UM coverage for the front loader is imputed as a matter of Arizona law.

A recent decision of the Arizona Court of Appeals provides guidance on this issue.¹ Castillo v. Miller's Mut. Fire Ins. Co., 200 Ariz. 211, 25 P.3d 13 (Ct.App. 2001). In Castillo, the court found that the vehicle in question, a Loral, was mobile equipment excluded from the employer's automobile coverage but included under the CGL coverage. Id. at 16. The court imputed underinsured motorist coverage for the Loral into the CGL policy. Id. at 17.

UM coverage "will not be imputed into a policy unless the insurer was required to offer it to the insured" under the Uninsured Motorist Act ("UMA"). Id. The UMA requires "[e]very insurer writing automobile liability or motor vehicle liability policies" to offer UM coverage. Ariz.Rev.Stat. § 20-259.01(A) (2001). Accordingly, we must determine whether the CGL coverage of the front loader constituted either a "motor vehicle liability policy" or "automobile liability policy" for which an insurer must make UM coverage available. Castillo, 25 P.3d at 17.

According to Castillo, "motor vehicle liability policy" refers, in part, to liability policies mandated by the Motor Vehicle Safety Responsibility Act ("SRA"), Ariz. Rev.Stat. § 28-4001 et seq. (2001). The SRA mandates liability policies for "every motor vehicle operated on the highway in this state" and defines "motor vehicle," for purposes of the SRA, to mean "any self-propelled vehicle that is registered or required to be registered under the laws of this state." Ariz.Rev.Stat. §§ 28-4135(A) & 28-4001(3). Bills concedes that the front loader was not registered or required to be registered. In contrast, the liability policy at issue in Castillo covered a vehicle that the court determined was required to be registered, meeting the SRA definition of a "motor vehicle liability policy." Castillo, 25 P.3d at 17-18. Thus, the court of appeals was not forced to decide whether a policy that did not meet the SRA definition would meet the UMA definition, and it did not express an opinion on this issue.

However, the Arizona Supreme Court has indicated that liability policies mandated by the SRA are not the only policies encompassed by the term "motor vehicle liability policies" as that term is used in the UMA. St. Paul Fire & Marine Ins. Co. v. Gilmore, 168 Ariz. 159, 812 P.2d 977, 982 (1991) (in banc) ("We have ... an instruction from the legislature that counsels against using the SRA's definition of motor vehicle liability policy for the purposes of other acts such as the UMA.").²

Rather, a liability policy that covers a "motor vehicle" constitutes a "motor vehicle liability policy" under the UMA even if it would not be a "motor vehicle liability policy" under the SRA. Id. at 983. While the term "motor vehicle" is not defined in the UMA, it is defined in the Arizona transportation statute, consistently with its ordinary meaning, as "a self-propelled vehicle." Ariz.Rev.Stat. § 28-101(29) (2001). Given the Arizona Supreme Court's resistance to applying the narrow definitions found in the SRA for purposes of the UMA, see Gilmore 812 P.2d at 982, we find it appropriate to apply the broader definition of "motor vehicle" found in Ariz.Rev. Stat. § 28-101(29) rather than the narrower definition found in the SRA, Ariz.Rev. Stat. § 28-4001(3).

In Gilmore, the supreme court stated that the UMA is remedial and should be liberally construed. Gilmore, 812 P.2d at 983. The opinion goes on to explain that the purpose of the UMA is to provide full coverage, including UM coverage, to those with the foresight to protect themselves against the public. Id. at 985. It would be contrary to the purposes of the UMA, as explained by the Arizona Supreme Court, to bar those who insure a motor vehicle from having the opportunity to fully insure by obtaining UM coverage. Id. Thus, if an insurance policy covers a motor vehicle, as defined in Ariz.Rev.Stat. § 28-101(29), UM coverage must be offered, regardless of whether the motor vehicle falls within the limited scope of the SRA or whether the coverage is provided in a traditional auto liability policy. See id. at 983("[T]he fact that [the employer's] policy with [the insurer] is labeled as a comprehensive general liability policy does not mean it is not also an automobile liability policy under the UMA.").

Since a front loader is a self-propelled vehicle, it fits the definition of "motor vehicle." The CGL policy issued to Archon by USF & G provided liability insurance for this motor vehicle, thus making it a "motor vehicle liability policy" for which an offer of UM coverage generally is required under the UMA.

Nonetheless, USF & G argues that the CGL's coverage of the front loader falls within an exception to the UMA. The UMA provides:

An insurer is not required to offer, provide or make available coverage conforming to this section in connection with any general commercial liability policy, excess policy, umbrella policy or other policy that does not provide primary motor vehicle insurance for liabilities arising out of the ownership, maintenance, operation or use of a specifically insured motor vehicle.

Ariz.Rev.Stat. § 20-259.01(L). However, this provision does not apply if the policy is intended to be the primary insurance for the motor vehicle. See Castillo, 25 P.3d at 19(noting that this provision "applies as long as the policy is not intended to be the first or only source of insurance coverage") (quoting Petrusek v. Farmers Ins. Co., 193 Ariz. 552, 975 P.2d 142, 146(Ct.App.1998)). Here the front loader was not covered by any other insurance policy. Therefore, the primary insurance for liabilities arising out of its use was Archon's CGL policy. Consequently the CGL policy does not fall within the exception to the UMA.

When an insurer fails to offer a UM policy in connection with a motor vehicle liability policy, UM coverage is imputed as a matter of law. Castillo, 25 P.3d at 18. As a result, we impute UM coverage for the front loader, which would provide coverage to Bills if he can establish that he was using the front loader when the uninsured motorist hit him.

II. Use

Bills was an insured under the CGL policy because he was an Archon employee acting in the scope of his employment at the time of the accident.³ As discussed above, the CGL policy was the primary motor vehicle insurance for the front loader, covering liabilities arising out of the "ownership, maintenance, operation or use" of the front loader. Ariz.Rev.Stat. § 20-259.01(L). The imputed UM coverage, upon which Bills bases his claim, is only as extensive as the liability coverage. Ariz.Rev.Stat. § 20-259.01(A). Therefore, to trigger the UM coverage of the front loader, Bills is required to have been maintaining, operating, or using the front loader.

It is clear from the undisputed facts that Bills was neither maintaining nor operating the front loader when the accident occurred; he was flagging traffic several feet in front of the front loader. The question before us is whether Bills has raised a triable issue of fact as to whether he was "using" the front loader at the time of the accident. The Arizona Court of Appeals has defined "use" broadly to include the employment of a specialized vehicle "for functions that are reasonably dictated by the nature of the work in which the business is engaged and for which the vehicle in question has been equipped and may...