Eddy v. Fidelity and Guar. Ins. Underwriters, Inc.

• Decision Date: 27 July 1989
• Docket Number: No. 55978-3,55978-3
• Citation: 776 P.2d 966,113 Wn.2d 168
• Court: Washington Supreme Court
• Parties: Daniel EDDY and Darcy Eddy, individually and as husband and wife, Petitioners, v. FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., a/k/a U.S.F. & G. Insurance, an insurance company selling insurance in the State of Washington, Respondent.

Page 168

113 Wn.2d 168

776 P.2d 966

Daniel EDDY and Darcy Eddy, individually and as husband and wife, Petitioners, v. FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., a/k/a

U.S.F. & G. Insurance, an insurance company

selling insurance in the State of

Washington, Respondent.

No. 55978-3.

Supreme Court of Washington,

En Banc.

July 27, 1989.

Lawrence Cary Smith, Patrick J. Downey, Spokane, for petitioners.

Lukins & Annis, P.S., Eugene I. Annis, Erika Balazs, Spokane, for respondent.

Bryan P. Harnetiaux, Robert H. Whaley, Spokane, amicus curiae for petitioners on Behalf of Washington State Trial Lawyers Ass'n SMITH, Justice.

Petitioners ¹ Daniel and Darcy Eddy, husband and wife, seek coverage under the underinsured and personal injury protection provisions of their automobile insurance. Their claims arose when an uninsured motorist crossed the centerline, colliding with an automobile driven by Daniel Eddy. Mr. Eddy was driving a Dodge station wagon belonging to his employer, AT & T Information Systems, Inc., (AT & T). The other driver was at fault. Mr. Eddy had exclusive use of the company vehicle. He claims he had consumed alcohol just prior to the accident in violation of AT & T rules for drivers authorized to drive its vehicles and that he therefore did not have "regular use" of the automobile assigned to him.

The Eddys' insurer, Fidelity and Guaranty Insurance Underwriters, Inc., (USF & G) denied payment of their claims, citing a provision in their policy specifically excluding coverage for injuries sustained while operating a vehicle "available" or "furnished" for the insured's "regular use" which is not insured for liability coverage under USF & G's policy.

We conclude that, under the circumstances of this case, any violation by Mr. Eddy of his employer's no-alcohol restrictions while driving the vehicle did not annul his exclusive and "regular" use of the company vehicle, and hold that dismissal on summary judgment of the claims of both Daniel and Darcy Eddy is proper.

We therefore reverse in part and affirm in part the decision of the Court of Appeals.

Two issues are presented by this case:

(1) Whether violation of a condition for use of a company vehicle provided by an employer for the exclusive use of an employee in the regular course of employment and for commuting to work removes that vehicle from "regular use" contemplated by the "other vehicle" exclusion of USF & G's insurance policy covering the employee's personal vehicles; and

(2) Whether, under the circumstances of this case, a claim by the employee's spouse for loss of consortium survives the "other vehicle" exclusion of USF & G's insurance policy covering the employee's personal vehicles.

AT & T Information Systems, Inc., (AT & T) provided a Dodge station wagon for the exclusive use of Petitioner Daniel Eddy to drive on company business and between work and his home. The employer permitted Mr. Eddy to use the automobile for personal errands. However, AT & T forbade use of its vehicles by drivers after they had consumed alcohol.

On August 23, 1984, on the way home from work, Mr. Eddy stopped at a tavern for a drink with co-workers. At about 11:00 p.m. he left the tavern and drove the AT & T station wagon toward his home. An uninsured motorist crossed the centerline and collided head-on with the vehicle driven by Mr. Eddy. The motorist died. Mr. Eddy was seriously injured. He was not at fault.

At the time of the accident, Petitioners Daniel Eddy and his wife, Darcy Eddy, owned two automobiles. Respondent Fidelity & Guaranty Insurance Underwriters, Inc., (USF & G) insured them. Mr. Eddy sought coverage under the underinsured motorist and personal injury protection provisions of the USF & G policy. Similarly, Mrs. Eddy sought compensation for loss of consortium.

The USF & G policy included these provisions:

We do not provide Underinsured Motorists Coverage for property damage or bodily injury sustained by any person:

1. While operating, or occupying, any motor vehicle owned by or available for the regular use of you or any family member which is not insured for Liability coverage under this policy.

. . . . .

This insurance does not apply:

. . . . .

(e) to the named insured or any relative while occupying any automobile owned by the named insured or furnished for the named insured's regular use and not insured for AUTOMOBILE PERSONAL INJURY PROTECTION;

(Italics ours.) Respondent refers to these as "other vehicle" exclusions.

USF & G denied coverage for both claims, asserting that the AT & T vehicle driven by Mr. Eddy had been provided to him for his "regular use." The Eddys then filed this action.

The insurance company moved for summary judgment asserting that, as a matter of law, there was no coverage under its policy. The Honorable John A. Schultheis, Spokane County Superior Court, denied the motion. USF & G appealed.

The Court of Appeals, Division Three, in a published opinion, agreed with USF & G that the AT & T vehicle was furnished to Daniel Eddy for his regular use. The appellate court reversed the trial court and ordered it to grant summary dismissal on Mr. Eddy's claim. But the Court of Appeals held that the trial court was correct in denying dismissal of Mrs. Eddy's loss-of-consortium claim. Eddy v. Fidelity and Guaranty Ins. Underwriters, Inc., 53 Wash.App. 189, 765 P.2d 1339 (1989). This court granted review. 112 Wash.2d 1016 (1989).

An exclusion from underinsured motorist coverage based upon the "regular use" of an automobile not insured under the liability provisions of a policy, the so-called "other vehicle" exception, is authorized by statute. See RCW 48.22.030(2). The Eddys concede that there is no coverage for Mr. Eddy's claim if his use of the company vehicle was a "regular use." See, 12A G. Couch, Insurance, § 45:636 at 135 (2d ed. 1981). However, they argue that his use of his employer's vehicle at the time of the collision was not a "regular" use because Mr. Eddy had consumed alcohol before continuing his drive home from the tavern in the company car, despite express prohibition by his employer against use of a company car by an employee who had just consumed alcohol. The question becomes whether such a deviation from permitted use of the vehicle converts it into an irregular use, thus placing it beyond the scope of the "other vehicle" exclusion in Mr. Eddy's own automobile insurance policy.

Petitioners argue that, as a matter of law, an unpermitted use cannot be a regular use. The Court of Appeals rejected that argument. Eddy v. Fidelity and Guar. Ins. Underwriters, Inc., 53 Wash.App. 189, 192, 765 P.2d 1339 (1989).

The Court of Appeals distinguished Moritz v. St. Paul Fire & Marine Ins. Co., 48 Wash.App. 521, 739 P.2d 731 (1987), relied upon by petitioners. The court stated: "We do not find Moritz applicable as it involved a question of coverage under the employer's policy rather than an exclusion under the employee's policy." Eddy v. Fidelity and Guaranty Ins. Underwriters, Inc., 53 Wash.App. 189, 192, 765 P.2d 1339 (1989).

The Court of Appeals did not address Palmer v. Glens Falls Ins. Co., 58 Wash.2d 88, 360 P.2d 742 (1961), a case cited by petitioners for the proposition that "the exclusion does not apply when the auto is not being put to its regular use." However, Palmer does not stand for that broad proposition.

In that case Robert B. Palmer had borrowed his son-in-law's automobile for more than 2 months and had used it regularly for business. The vehicle developed problems requiring repair. Mr. Palmer obtained specific authorization from his son-in-law to have the automobile repaired. En route to the repair shop, Mr. Palmer negligently struck another vehicle.

Palmer was seeking to avoid the "other vehicle" exclusion of the liability provisions of the policy covering his own car. He was seeking indemnity for his liability to a passenger in the vehicle he struck. He was not seeking to avoid exclusion of coverage under underinsured or personal injury provisions of his policy to compensate him for his own injuries. Moreover, the "irregular" use in that case was specially authorized by the owner of the "other vehicle." The "special" use was independent of Palmer's "regular" use of the vehicle.

In this case, Daniel Eddy was driving the company vehicle home. This was within the scope of his authorized and regular use of it. But for his regular use of the vehicle to commute between home and work, he would not have been using the AT & T station wagon at the time of the collision. His purpose, destination and route were not extraordinary. What was extraordinary was that he had apparently violated a company rule during this trip. There was neither specific authorization for nor specific prohibition of the particular trip. There was a general authorization and a general prohibition identical to those in force during Mr. Eddy's routine use of the vehicle. Further, the injured party (Mr. Eddy himself) created his own "irregularity" of use. We cannot accept petitioners' contentions. To do so would permit drivers to create "irregularity" of use merely by violating, however slightly, any restrictions owners place on drivers' use of vehicles provided for the regular use of those drivers.

This court stated in Grange Ins. Ass'n v. MacKenzie, 103 Wash.2d 708, 712, 694 P.2d 1087 (1985) that "[e]xclusive use necessarily constitutes regular use, regardless of the purposes of that use." Compare, 12A G. Couch, Insurance § 45:1084, at 740-41 (2d ed. 1981) (considering the effect of a "regular use" exclusion on liability coverage). The type of use not excluded under the "other vehicle" exception is the "sporadic, isolated incidence of driving of a noncovered car." Grange Ins. Ass'n v. MacKenzie, 103 Wash.2d 708, 712, 694 P.2d 1087 (1985). This enables the insurer to provide coverage for isolated use of vehicles not named in the policy without payment of additional premiums. But it disallows...