Continental Ins. Co. v. U.S. Fidelity & Guar. Co., 2052

CourtSupreme Court of Alaska (US)
Citation528 P.2d 430
Docket NumberNo. 2052,2052
Decision Date29 November 1974

Kenneth P. Jacobus, Anchorage, for appellant.

Clyde C. Houston, Anchorage, for appellee.



The ill-fated attempt of Northern Corporation to haul rock across frozen Cooper Lake at the behest of Chugach Electric Association 1 gives rise to this litigation. This is a contest between Northern's insurer and that of the trucking subcontractor who actually hauled the rock to determine which shall bear the cost of the wrongful death claims of the families of two drivers whose trucks broke through the ice and sank to the bottom of the lake. The central issues are whether Northern Corporation qualifies as an insured party under the policy of automobile insurance issued to the trucking subcontractor by United States Fidelity and Guaranty Company (hereinafter U.S.F. & G.); and, if not, whether the wrongful death complaints and the facts available at the time Northern and its insurer, Continental, tendered defense to U.S.F. & G. established a duty to defend Northern against the suits, regardless of the ultimate determination of nonliability on U.S.F. & G's part for the actual wrongful-death recoveries.

Northern Corporation contracted to strengthen the Cooper Lake dam belonging to Chugach Electric. When two rock quarries near the dam were exhausted, the only remaining accessible source of rock for the project became a quarry at the opposite end of the lake from the dam. The most economically feasible method of moving the rock was to haul it across the frozen lake in winter. To that end, Northern entered into an agreement with Robert Cooper whereby Cooper was to be paid for hauling the rock with his trucks and drivers.

Northern officials considered the ice unsafe for the heavy traffic of rock-laden trucks in 1967, despite some expert advice to the contrary. In 1968, Northern tested the ice by drilling and determined to proceed with the haul without further expert advice. Under the direction of Northern's vice-president, Meredith E. Bowdish, Jr., Northern employees scraped snow off the frozen lake with a caterpiller blade, forming a roadway 50 to 60 feet wide. After the roadway was tested by Bowdish and Cooper, the hauling of half-loads (five cubic yards, a total truck and load weight of about 35,000 pounds) of rock began February 1, 1968. On the fourteenth load, Cooper's truck broke through the ice and sank. The driver of the fifteenth load saw and avoided a 'rough spot'-the area of Cooper's demise-but the next driver drove into the hole made by the Cooper truck and was also lost.

The estates of the two drivers brought wrongful death actions against Northern, chugach and other defendants not here material. Northern tendered defense of the action to U.S.F. & G., theorizing that Northern was an omnibus insured under the policy of insurance issued by U.S.F. & G. on the Cooper trucks. U.S.F. & G. refused the tender of defense.

Northern was insured by Continental under both a general liability and an automobile liability policy. Continental defended Northern in the wrongful death actions. Ultimately, the two actions were settled for an aggregate of slightly more than $300,000 of which Northern bore $250,000. Continental paid the entirety of Northern's share of the settlement.

During the pendency of the wrongful death actions, Continental brought this action for declaratory judgment in the superior court, seeking to impose the costs of defense and actual recovery in the wrongful death actions upon U.S.F. & G. The case was tried without a jury, and the superior court entered a judgment supported by a written opinion denying any recovery to Continental. This appeal followed.


U.S.F. & G. insured the Cooper trucks under a standard automobile liability policy covering death arising out of the use of the vehicles, and containing the following definition of 'insured':

With respect to the insurance for bodily injury liability . . . the unqualified word 'Insured' includes the Named Insured and . . . also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the Named Insured or such spouse or with the permission of either (emphasis added).

The language insuring persons other than the named insured is often referred to as an 'omnibus clause', and those insured by such language are referred to as 'omnibus insureds'.

To obtain shelter of another's insurance policy as an omnibus insured, one must be a 'user' of the insured vehicle or legally responsible for its use, and the injury or death must 'arise out of' the use of the vehicle.

In deciding who is a user of a vehicle for the purposes of omnibus coverage, courts universally require that if one who claims to be a user was not actually driving the subject vehicle, he must have exercised some form of control over it. 2 The parties agree with this rule, but cite cases reaching opposite conclusions on somewhat similar facts. Resolution of the issue of user status necessarily turns upon a case-by-case analysis of the facts, and we must therefore review in more detail the circumstances surrounding the deaths of Cooper and the other driver.

Cooper agreed to perform the ice haul on an operated-hour-per-truck basis. That is, Cooper was required to supply sufficient equipment and drivers to complete the task, and payment was to be based upon an hourly scale. The contract took that form, rather than the more common quantity or job rate, because Cooper feared inadequate compensation might result from the risky and tentative nature of the work. Northern also paid the room and board of the drivers but made no deductions for taxes, union dues or the like. The drivers' wages were paid by Cooper.

Northern bladed the roadway over the ice approximately three weeks before the haul was to commence in order to permit deeper freezing. The construction of the road was based upon expert advice solicited by Northern. Several days before the haul, Cooper and Bowdish tested the ice by driving a fully-loaded truck across the road. The actual path of the road was straight across the lake, but drivers could, and did, deviate from the road through a very shallow snow cover. Immediately before commencing the haul, Northern$'s blade operator cut a return road from the dam to the quarry.

Three days before the haul commenced, one wheel of a front-end loader broke through the ice along the road. On the night before the haul, Cooper and two of his drivers drove a pickup truck along the road to check its safety, particularly in the area where the loader broke through. The following morning, Cooper and Bowdish discussed whether to commence the haul or wait; Bowdish left the discussion to check the area of the previous break-through and, upon his return, gave an order to begin work. Bowdish crossed the lake in a pickup truck behind the first loaded truck and, after he arrived at the dam, radioed an order for the other trucks to begin. Subsequent drivers set their own speed and proximity to other trucks; the only activity of Northern in any manner affecting speed or pacing of the trucks was through the speed of its loading operation.

All trucks carried half-loads. There was considerable dispute regarding whether the decision to take light loads was made by Cooper or Bowdish. The trial court found:

(T)he weight of the testimony indicates Cooper told his men to take light or halfloads, and . . . the men had the power to determine that a given load was sufficient.

Continental has not accepted this finding in arguing its position on appeal, although no argument is directed specifically at the finding. The superior court's finding is supported by adequate evidence, and, accordingly, is controlling on this appeal. 3

Bowdish told drivers where to dump the rock at the dam. He also checked the condition of the ice at approximately the spot where the accident occurred after a driver informed him that water was rising through a crack in the ice.

This review demonstrates that, aside from the construction and maintenance of the road, the entire concerns of the Northern officer and employees at the job site were the loading and unloading of the vehicles. Except in the unloading area, remote from the accident, no Northern employee directed Cooper's trucks or drivers regarding speed, route, spacing or even weight of load. We do not, therefore, find Hake v. Eagle Picher Co., 4 the case upon which Continental places principal reliance, persuasive. There the narrowness of a road across a dam required the general contractor's employees to direct every movement of the truck involved in the accident 5 at the time and place where it occurred. Nor are we persuaded by the host of cases finding general contractors to be omnibus insureds where job-site injuries resulted from misdirection by a general contractor's employee of a vehicle operated by the employee of a subcontractor or supplier. 6 The considerations applicable to ascertaining whether one who employs an independent contractor may be regarded as a 'user' of vehicles are well stated in the case of Southern California Petroleum Corp. v. Royal Indemnity Co.: 7

It has been held that one employing an independent contractor may be using the vehicle of such independent contractor when such employer exercises supervisory control, at some time, over the vehicles or the movement thereof. The decisions recognize use as going beyond actual mechanical operation of the vehicle and 'as encompassing the broader concept of employing or putting the vehicle to one's service by an act which assumes at any time-with the consent of the owner or his agent-the supervisory control or guidance of its...

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