Cal-Farm Ins. Co. v. Fireman's Fund Ins. Co.

• Decision Date: 22 January 1976
• Docket Number: CAL-FARM
• Citation: 54 Cal.App.3d 708,126 Cal.Rptr. 704
• Court: California Court of Appeals Court of Appeals
• Parties: INSURANCE COMPANY et al., Plaintiffs and Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant, Cross-Complainant and Respondent, Cal-Farm Insurance Company, Cross-Defendant and Appellant. Civ. 2232.

Page 704

126 Cal.Rptr. 704

54 Cal.App.3d 708

CAL-FARM INSURANCE COMPANY et al., Plaintiffs and Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant, Cross-Complainant and Respondent, Cal-Farm Insurance Company, Cross-Defendant and Appellant.

Civ. 2232.

Court of Appeal, Fifth District, California.

Jan. 22, 1976.

R. W. Levy, Fresno, for plaintiffs, cross-defendant and appellants.

Stammer, McKnight, Barnum & Bailey and James N. Hays, Fresno, for defendant, cross-complainant and respondent.

OPINION

GEO. A. BROWN, Presiding Justice.

This case involves the interpretation of liability insurance policies to determine the coverage afforded by them. The facts are stipulated and can be stated briefly.

Klink Citrus Association (hereinafter 'Klink') owned a 1943 Burma jeep which had been converted into an agricultural chemical spray rig. It was not licensed, was used for spraying citrus groves, and was not operated on public roads for any purpose other than going to and coming from the groves and the repair shop.

On May 24, 1968, Steven D. Baker was driving the spray rig in the course of his employment for Klink on a public road, returning to the Klink plant from a spray job. George Burkett, a fellow employee of Baker, who was riding on the jeep in the course of his employment for Klink, fell under the wheels of the vehicle, sustaining injuries which resulted in his death.

On December 27, 1968, the heirs of Burkeet filed a wrongful death suit against Baker, William Jessup, Everett Standridge and Ted C. Bielefeldt, all employees of Klink, alleging Burkett's death was proximately caused by the reckless disregard for the safety of the decedent in the operation of the jeep (see Lab.Code, § 3601, subd. (a)(3), since repealed) by said fellow employees in the course of their employment for Klink. Klink was not a party to the action.

Cal-Farm Insurance Company (hereinafter 'Cal-Farm') and Fireman's Fund Insurance Company (hereinafter 'Fireman's') had issued policies of liability insurance to Klink. Farmers Insurance Exchange (hereinafter 'Farmers') had issued a policy of automobile liability insurance to Standridge, and State Farm Mutual Insurance Company (hereinafter 'State Farm') had issued policies of automobile liability insurance to Bielefeldt and to Jessup. All of said policies were in effect at the time of the accident.

Cal-Farm, Farmers and Fireman's undertook the defendant of the wrongful death action pursuant to a reservation of rights agreement. The wrongful death action was eventually settled by contributions from those three companies and others not parties to this litigation. State Farm did not participate in the settlement. After the settlement this action was commenced by Cal.-Farm and Farmers against Fireman's and State Farm, seeking reimbursement for the amounts paid by them in the defense and settlement of the wrongful death suit and for attorney's fees and costs they had expended. Fireman's cross-complained against Cal-Farm and Farmers for the amount it had expended in the defense and settlement of the third party suit.

After making its findings of fact and conclusions of law, the trial court entered judgment on November 12, 1973, in favor of Fireman's and State Farm and against Cal-Farm and Farmers on the complaint, in favor of Fireman's and against Cal-Farm only on the cross-complaint, and in favor of the Farmer's and against Fireman's on the cross-complaint.

Cal-Farm and Farmers have appealed only from that part of the judgment against them and in favor of the Fireman's on the complaint and in favor of Fireman's and against Cal-Farm on the cross-complaint. Thus the judgment of the court that neither the Farmer's policy nor the State Farm policy afforded coverage is not in issue on this appeal. The issue therefore is narrowed to a determination of whether the Fireman's and Cal-Farm policies, or either of them covered the accident in question. For the reasons about to be stated, we hold that the Fireman's policy does not afford such coverage and the Cal-Farm policy does and affirm the judgment.

CAL-FARM POLICY

The policy issued by Cal-Farm was an automobile liability insurance policy issued to Klink as the named insured, in which the jeep spray rig was described as an owned vehicle. It insured Klink and any persons using the vehicle with the permission of the named insured. Thus the individual employees of Klink, defendants in the wrongful death suit, as permissive users of the jeep spray rig, were additional insureds and covered under the policy unless validly excluded by other provisions.

Cal-Farm relies upon an exclusion which provided that the policy did not apply:

'(c) to bodily injury to any employee of either the named insured or any additional insured arising out of and in the course of employment, other than domestic, by the named insured or any additional insured, or in domestic employment if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law, nor to any obligation for which the insured or any company as his insurer, may be held liable under any workmen's compensation law. . . .'

At all times relevant to this case Vehicle Code section 16454 provided:

'Any motor vehicle liability policy need not cover any liability for injury to the assured or any liability of the assured assumed by or imposed upon the assured under any workmen's compensation law nor any liability for damage to property in charge of the assured or the assured's employees or agents.'

This section is the statutory authority for the employee exclusion found in Cal-Farm's policy. The exclusion of employees from coverage constitutes an exception to the requirement that an automobile or motor vehicle liability policy cover permissive users of a covered vehicle. (Key Ins. Exchange v. Washington (1970) 7 Cal.App.3d 209, 213, 86 Cal.Rptr. 542; see Veh.Code, § 16451; Ins.Code, § 11580.1; Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 307 P.2d 359.)

It is conceded that the decedent, Burkett, was covered by Klink's workers' compensation insurance and that his dependents received benefits as a result of his death.

Cal-Farm argues that in addition to the employer, Klink, who was not a defendant in the wrongful death suit, the exclusion also applies to the individual employees and that they are therefore not covered by the Cal-Farm policy. We do not agree.

Cases which have discussed an employee exclusion have held that the exclusion applies only to employees of persons sought to be held liable. Thus, in U.S. Fire Ins. Co. v. Transport Indem. Co. (1966) 244 Cal.App.2d 110, 116, 52 Cal.rptr. 757, 762, it is said:

'The Pleasant Valley case, (Pleasant Valley Lima Bean Growers and Warehouse Ass'n. v. Cal-Farm Ins. Co.) supra, 142 Cal.App.2d 126, 298 P.2d 109, involved a somewhat similar provision. That policy excluded coverage for bodily injury to any employee of the insured while engaged in the employment . . . of the insured and to any obligation for which the insured or any company as his insurer might be held liable under any workmen's compensation law. The opinion in that case stated that the exclusionary clause meant only that coverage did not apply to any one with the right to protection under workmen's compensation laws or, in other words, that the clause excluded coverage only in those instances in which the injured party was an employee of the Particular insured--whether Named insured or Additional insured--seeking protection under the policy.'

(See also State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193, 204, 110 Cal.Rptr. 1, 514 P.2d 953; Indemnity Ins. Co. v. Pacific Clay Products Co. (1970) 13 Cal.App.3d 304, 312, 91 Cal.Rptr. 452; Campidonica v. Transport Indemnity Co. (1963) 217 Cal.App.2d 403, 407, 31 Cal.Rptr. 735; Pleasant Valley Assn. v. Cal-Farm Ins. Co. (1956) 142 Cal.App.2d 126, 131--134, 298 P.2d 109.) It follows that since the additional assured employees under Cal-Farm's policy were not employers of the decedent, Burkett, and are not liable under any workers' compensation law for his death, the exclusion did not eliminate coverage as to them.

It is true, as Cal-Farm argues, that the exclusion in the policies involved in those cases excluded coverage for bodily injury to any employee of the insured while engaged in his employment, whereas Cal-Farm's policy in this case excluded coverage '. . . to any employee of either the named insured or any additional insured arising out of and in the course of employment. . . .' Thus, Cal-Farm has added to the exclusion any employee of 'any additional insured.' The language, however, is too clear to require interpretation. We cannot perceive how, under the facts of this case, adding to the exclusion an employee of an additional insured can possibly change the result arrived at in the cases cited. This necessarily follows since the decedent, Burkett, was not an employee of his fellow employee additional insureds and the fellow employees were not liable under the workers' compensation laws.

Having concluded that the exclusion does not by its terms apply to the employees, we need not decide whether a policy could validly exclude coverage under the Financial Responsibility Law (Veh.Code, §§ 16451, 16454) to an employee who is not liable under the workers' compensation law to the injured claimant or his heirs. (See Saala v. McFarland (1965) 63 Cal.2d 124, 128, 45 Cal.Rptr. 144, 403 P.2d 400; Rollo v. Cal. State Automobile Assn. (1958) 159 Cal.App.2d 172, 323 P.2d 531.)

FIREMAN'S POLICY

Fireman's policy was denominated a 'Comprehensive Liability Policy,' which afforded under Coverage A 'Bodily Injury Liability--Automobile' and under Coverage B 'Bodily Injury Liability--Except Automobile.' It named Klink as the named insured and excluded coverage for automobiles owned by the named insured. The policy defined 'automobile' as '. . . the word 'automobile' means a...