Connecticut Indem. Co. v. Cordasco

• Decision Date: 31 December 1987
• Citation: 369 Pa.Super. 439,535 A.2d 631
• Parties: CONNECTICUT INDEMNITY COMPANY, A Subsidiary of Security Insurance Group, Appellant, v. Nicholas CORDASCO; Juan Jaimie Fuentes; State Farm Mutual Automobile Insurance Company.
• Court: Pennsylvania Superior Court

Page 631

535 A.2d 631

369 Pa.Super. 439

CONNECTICUT INDEMNITY COMPANY, A Subsidiary of Security Insurance Group, Appellant, v. Nicholas CORDASCO; Juan Jaimie Fuentes; State Farm Mutual Automobile Insurance Company.

Superior Court of Pennsylvania.

Argued Oct. 15, 1987.

Filed Dec. 31, 1987.

James F. Manley, Pittsburgh, for appellant.

Frank M. Gianola, Pittsburgh, for State Farm, appellee.

Before BROSKY, DEL SOLE and HOFFMAN, JJ.

BROSKY, Judge.

This is an appeal from a judgment entered against appellant in a declaratory judgment action. ¹ Appellant is the provider of insurance coverage under a "garage policy" to Gillner Motors whose vehicle was involved in a traffic accident. Appellee State Farm provided appellee Juan Fuentes with automobile insurance. Fuentes, an employee of Gillner Motors, was driving the Gillner vehicle during the collision at issue. Appellant brought this action to determine which insurance provider was responsible for coverage of the accident. Upon consideration of oral and written argumentation of all parties. We affirm the judgment in part, reverse in part and remand for proceedings consistent with this opinion.

The facts in this case are undisputed. On October 2, 1982, Juan Fuentes was operating a motor vehicle which was owned by his employer, Gillner Motors, Inc., when he was involved in an accident with a vehicle driven by Nicholas Cordasco. Mr. Cordasco received personal injuries in the collision. Juan Fuentes was not operating the vehicle owned by Gillner Motors as an employee, or agent of Gillner Motors at the time of the accident. Mr. Fuentes' personal automobile was being repaired at Gillner Motors and needed a carburetor which was ordered through the Parts Department of Gillner Motors, an auto dealership. The Gillner Motor vehicle was loaned to Mr. Fuentes until the carburetor was received and installed in his automobile.

At the time of the accident in question, Mr. Fuentes carried automobile insurance on his personal automobile through State Farm Mutual. Gillner Motors had a garage policy through Appellant, Connecticut Indemnity Company. The trial court determined that appellant had a duty to provide coverage of the accident and that appellee State Farm had no duty to provide either primary or excess coverage.

Appellant's first argument is that Fuentes was a customer of Gillner Motors and therefore falls into the following exclusion in the Connecticut policy:

For Covered Autos.

a. You are an insured for any covered auto.

b. Anyone else is an insured while using with your permission a covered auto except:

* * *

(3) Your customers, if your business is shown in ITEM ONE of the declarations as an auto dealership. However, if a customer of yours:

* * *

Appellant argues that Fuentes was a customer of Gillner Motors as he purchased the carburetor to be installed from Gillner's Parts Department. The trial court found that Fuentes was not a customer and also suggested that the exclusion applied only to customers of the dealership part of the business where garage owner and dealership are one and the same. We agree with this interpretation of the policy. Simplifying the language quoted above the garage policy provides coverage for any individual using a "covered auto", one declared for coverage under the policy, with permission of the policyholder. The exception cited by appellant indicates non coverage of individuals using a covered auto who are customers if the policyholder's business is that of an auto dealership. In a previous section of the policy, coverage is excluded for covered autos while leased or rented to others. However, that exclusion does not apply if the covered auto is rented to "one of your customers while his or her auto is left with you for service or repair." (Emphasis in original). The latter exclusion would appear to provide coverage to customers of the garage who are given replacement vehicles while theirs are being serviced, while excluding coverage to those who lease or rent the vehicle without leaving their own for service or repair. Perhaps such rental transactions take place during periods where the garage no longer needs the vehicle and decides to rent it out instead of letting it sit around. When the sections are read together they make sense. Coverage is provided to individuals who are customers of the garage if they are using a covered vehicle while theirs is being serviced or repaired. However, customers of the auto dealership are not covered under the garage policy, unless they meet one of the subsections following that exclusion, nor are individuals who lease or rent a covered vehicle from the garage where their own auto is not being serviced or repaired. Consequently, we find the exclusion relied upon by appellant not applicable to this case.

Appellant next argues that the accident did not result from garage operations. However, "garage operations" is defined in the policy as including use of a covered auto which is the case here. Consequently, we find this argument to be without merit and at this juncture, we must conclude that coverage applies under appellant Connecticut's policy.

Appellant's third argument is that the State Farm policy issued to Fuentes provides primary coverage of the accident. The State Farm policy does provide liability coverage to an insured when using a "temporary substitute car." State Farm does not contend that the vehicle Fuentes was driving was not a temporary substitute vehicle. However, State Farm points to its "other insurance" provisions and argues that these provisions limit the extension of liability coverage so that it does not encompass the situation here. The key provision reads:

3. Temporary Substitute Car, Non-Owned Car, Trailer.

If a temporary substitute car, a non-owned car or a trailer designed for use with a private passenger car or utility vehicle has other vehicle liability coverage on it, then this coverage is excess. THIS COVERAGE SHALL NOT APPLY:

a. IF THE VEHICLE IS OWNED BY ANY PERSON OR ORGANIZATION IN A CAR BUSINESS; and

b. IF THE INSURED OR THE OWNER HAS OTHER LIABILITY COVERAGE WHICH APPLIES IN WHOLE OR IN PART AS PRIMARY, EXCESS OR CONTINGENT COVERAGE.

In light of this provision and the facts of the case, the trial court...