Celina Mut. Ins. Co. v. Citizens Ins. Co.

• Decision Date: 19 October 1984
• Docket Number: Docket No. 70835
• Parties: CELINA MUTUAL INSURANCE COMPANY, an Ohio based insurance company, Individually and as Subrogee of New Hudson Corporation, a Michigan corporation, Plaintiff- Appellee, v. CITIZENS INSURANCE COMPANY, a Michigan based insurance company, Defendant- Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 916

355 N.W.2d 916

136 Mich.App. 315

CELINA MUTUAL INSURANCE COMPANY, an Ohio based insurance company, Individually and as Subrogee of New Hudson Corporation, a Michigan corporation, Plaintiff- Appellee, v. CITIZENS INSURANCE COMPANY, a Michigan based insurance company, Defendant- Appellant.

Docket No. 70835.

Court of Appeals of Michigan.

Submitted March 15, 1984.

Decided July 16, 1984.

Released for Publication Oct. 19, 1984.

Kohl, Secrest, Wardle, Lynch, Clark & Hampton by Wayne D. Gardner, Detroit, for plaintiff-appellee.

Garan, Lucow, Miller, Seward, Cooper & Becker, P.C. by James L. Borin, Detroit, for defendant-appellant.

Before WAHLS, P.J., and BRONSON and N.J. KAUFMAN, ^* JJ.

BRONSON, Judge.

Defendant, Citizens Insurance Company (Citizens) appeals as of right from an order of summary judgment granting declaratory relief to plaintiff Celina Mutual Insurance Company (Celina). Celina insured New Hudson Corporation (New Hudson) under a general premises liability policy and a special multi-peril policy while Citizens insured New Hudson under a commercial vehicle policy. The instant indemnity action arose out of a damage judgment for Hobert Stephens (Stephens) against New Hudson. The circuit court ruled that Citizens was primarily liable to New Hudson under the automobile policy.

The facts are undisputed. Stephens was the owner of a tractor-trailer unit (the truck), which he leased to Ace Doran Hauling & Digging Company under a "trip lease". The trip lease required Stephens to transport a load of steel tubing from New Hudson's plant to an out-of-state destination.

The steel tubing was loaded on the evening of March 30, 1978, but Stephens was forced to return to the plant because the bundles of tubing were not properly secured. Since New Hudson's regular loading crew had left, Stephens spent the night in the cab of his truck at New Hudson's loading dock while a crew unloaded and reloaded the cargo. This process involved the operation of an overhead crane affixed to the loading dock's ceiling. After removing a bundle of tubes from Stephens' truck, the crane operator, a New Hudson employee, stacked the bundles into piles of two (double-deck) before reloading them onto the truck.

When Stephens awoke, the crew was still reloading his truck. Stephens exited from the cab, went to the washroom, and returned to the shipping desk which was about 60 feet from his parked truck and began conversing with the shipping clerk. In attempting to double-deck a pile, the crane operator accidentally knocked a bundle off a previously stacked pile and that bundle rolled into and injured Stephens.

Stephens sued New Hudson for negligent operation of the crane during the loading process. New Hudson tendered its defense to Celina. Before trial, Celina attempted to tender its defense to Citizens, but received no response. After trial, Celina instituted the instant indemnification action against Citizens.

Defendant Citizens raises two issues on appeal. Citizens first claims that the circuit court erred in finding it liable to New Hudson under the automobile insurance policy.

Defendant's policy provides insurance for damages to persons and property "caused by an occurrence arising out of the automobile hazards for which insurance is afforded". "Automobile hazards" is defined in the policy to include both a "non-owned automobile hazard" and a "hired automobile hazard". The policy defines a "non-owned automobile hazard" as:

"The use, including loading and unloading, by any person other than the named insured, of any non-owned private passenger automobile in the business of the named insured as stated in the Declarations, and the use in such business, by any employee of the named insured, of any non-owned automobile of the commercial type if such use of such automobile is occasional and infrequent."

The circuit court found that Stephens' injury was caused by an occurrence arising out of the loading and unloading operations being carried on by New Hudson's employees, and therefore, Citizens, under its policy, was liable for insurance coverage. We agree.

Defendant's policy unambiguously specifies that, for purposes of coverage, use of a vehicle includes loading and unloading. Shinabarger v. Citizens Mutual Ins. Co., 90 Mich.App. 307, 315, 282 N.W.2d 301 (1979), lv. den. 407 Mich. 895 (1979). "Arising out of the loading and unloading" operations, at minimum, covers injuries which would be covered under the loading exception to the parking exclusion in § 3106(1)(b) of the no-fault act. ¹ Section 3106(1)(b) makes compensable injuries which are a direct result of physical contact with property being lifted onto or lowered from the parked vehicle in the loading or unloading process. Arnold v. Auto-Owners Ins. Co., 84 Mich.App. 75, 269 N.W.2d 311 (1978), lv. den. 405 Mich. 804 (1979). ²

Dowdy v. Motorland Ins. Co., 97 Mich.App. 242, 293 N.W.2d 782 (1980), presented a factual situation similar to the case at bar. In Dowdy, the plaintiff truck driver was injured when a bundle of steel, which had been previously unloaded from another truck into stacks, collapsed. The bundles of steel were supported by pieces of wood. The Court denied recovery under § 3106(1)(b) of the no-fault act because plaintiff was not injured due to contact with property which was being lifted onto or lowered from the vehicle in the loading process.

Using the same reasoning, this Court recently denied recovery to a plaintiff who was injured when the bale elevator frame he was using to load trees onto his truck collapsed and fell on him while he was standing at the rear of his truck. Royston v. State Farm Mutual Automobile Ins. Co., 130 Mich.App. 602, 344 N.W.2d 14 (1983). The Court stated:

"In this case, plaintiff's injuries were not caused by contact with the property being loaded--the trees. The bale elevator was never 'loaded' on the truck so that the act of wheeling the elevator away from the vehicle cannot be said to be encompassed within the 'loading process'. Instead, plaintiff was injured when the bale elevator, a piece of equipment which was never loaded onto the truck, collapsed at an unfortunate moment, outside of the normal loading process." 130 Mich.App. at 606, 344 N.W.2d 14 (citation omitted).

The hypothetical posed in Royston, supra, is the factual situation at bar. Stephen's injuries were caused by contact with the property being loaded and unloaded, the steel. As in Dowdy, supra, plaintiff's injury was due to contact with a steel bundle which had already been unloaded and stacked; however, there is a critical distinction between Dowdy and the instant case. In Dowdy, the cause of the collapse of the bundle of steel was independent from the loading operation whereas, here, the very act of unloading knocked the bundle into Stephens. Mindful of the rule that an insurance policy should be strictly construed against the insurer, Nickerson v. Citizens Mutual Ins. Co., 393 Mich. 324, 224 N.W.2d 896 (1975), we conclude that Stephens's injuries were caused by an occurrence arising out of the loading and unloading process.

Defendant argues that an insufficient causal connection existed between the truck and the injury.

"An accident, in order to be covered by the 'loading and unloading' clause, must not only have occurred during the process of loading or unloading but must also be causally connected with such act of loading or unloading. An accident is causally connected with the process of loading or unloading within the meaning of the clause only if the loading or unloading was the efficient and predominating cause of the accident and there was a connection between the accident and the use of the vehicle insured. The vehicle must have been directly connected with the work of loading or unloading or it must have been an active factor in the operation." (Footnotes omitted.) 12 Couch, Insurance (2d), § 45:136, pp 392-395.

We believe the requisite causal connection existed notwithstanding the fact that the proximate cause of the accident may have been negligent operation of the crane. See Michigan Mutual Liability Co. v. Ohio Casualty Ins. Co., 123 Mich.App. 688, 694-695, 333 N.W.2d 327 (1983) (recovery allowed where employee was injured when a vehicle described as a Case Loader rolled back and pinned him against the insured vehicle which employee had been preparing to tow). Also see Bituminous Casualty Corp. v. American Fidelity & Casualty Co., 22 Ill.App.2d 26, 159 N.E.2d 7 (1959) in which employees of plaintiff's insured were unloading an engine from a truck insured by defendant under an automobile insurance policy. The engine was being removed by a hoist which was not connected to the truck and which was owned and operated by plaintiff's insured. Either through negligent operation or some failure of the hoist, the engine fell and injured an individual employed by the manufacturer of the engine. The Illinois Court held that the injury was covered under defendant's loading and unloading clause in the automobile insurance policy.

We further find that the instant policy does not require Stephens himself to have been involved in the loading and unloading process. See Lowry v. R H Macy & Co., 119 N.Y.S.2d 5 (1952) (coverage extended where cabinets which had been unloaded by an employee from the insured truck fell as they were being moved on a dolly, injuring a pedestrian); State Automobile & Casualty Underwriters, Inc. v. Casualty Underwriters, Inc., 266 Minn. 536, 124 N.W.2d 185 (1963) (coverage extended to a consignee where its employee was opening a trap door in a sidewalk as a part of the unloading process and injured a passing pedestrian).

The New...