Fiscus Motor Freight, Inc. v. Universal Sec. Ins. Co., 9083-3-III

• Decision Date: 04 April 1989
• Docket Number: No. 9083-3-III,9083-3-III
• Citation: 770 P.2d 679,53 Wn.App. 777
• Court: Washington Court of Appeals
• Parties: FISCUS MOTOR FREIGHT, INC., a Washington corporation, Respondent, and American Economy Insurance Co., an Indiana corporation, Appellant, v. UNIVERSAL SECURITY INSURANCE CO., a Tennessee corporation, Cross Appellant. and Jesse Andrew Griggs, a single man, Defendant.

Page 777

53 Wn.App. 777

770 P.2d 679

FISCUS MOTOR FREIGHT, INC., a Washington corporation, Respondent and American Economy Insurance Co., an Indiana corporation, Appellant, v. UNIVERSAL SECURITY INSURANCE CO., a Tennessee corporation Cross Appellant and Jesse Andrew Griggs, a single man, Defendant.

No. 9083-3-III.

Court of Appeals of Washington Division 3, Panel Three.

April 4, 1989.

Norman Nashem, Nashem & Wagner, Yakima, for appellant.

Douglas Wilson, Wilson & Mikesell, Walter Meyer, Meyer & Fluegge, Yakima, for respondent.

THOMPSON, Chief Judge.

In this action for declaratory judgment, American Economy Insurance Company and Universal Security Insurance Company contest their duties related to a personal injury lawsuit against their insured, Fiscus Motor Freight, Inc. American contends its policy does not apply because of the application of its "other insurance" provision. On cross appeal, Universal argues its policy does not apply because the accident did not arise out of the use of an insured vehicle. We decide both issues in favor of American, and remand the case to the superior court.

Robert Wright was a truck driver for Fiscus Motor Freight. On March 29, 1986, he made a fertilizer delivery to a Full Circle, Inc., plant in Eltopia, Washington. A friend, Jesse Andrew Griggs, accompanied Mr. Wright because he wanted to learn to drive a truck.

Outside the Full Circle plant were two adjacent pits; an underground auger was designed to move the fertilizer from the pits to a storage building. The pit closer to the building (pit 1) was under a railroad spur and was covered with a metal grate. The pit farther from the building (pit 2) was in the center of a driveway.

When Mr. Wright arrived with two belly dump trailers, he positioned his truck so the fertilizer would fall into pit 2. A Full Circle employee turned on the auger, told Mr. Wright it may overheat and stop, and showed him where the switch was located. The Full Circle employees then left to perform other tasks.

As the trailers were being emptied, the auger stopped several times, and Mr. Wright or Mr. Griggs had to throw the circuit breaker switch to start it again. At one point, fertilizer piled up around pit 2, and fertilizer that had been moved by the auger built up inside pit 1. Mr. Wright believed it was necessary to remove the fertilizer from the pits, and moved the truck away from pit 2. He removed the grate from pit 1 and shoveled the fertilizer from both pits, piling it near the edges. He again restarted the auger.

Meanwhile, Mr. Griggs had gone to a nearby store. As he returned with two bottles of pop, he "apparently" slipped and fell into pit 1, severely injuring his leg. At the time, the trailers were parked away from the pits and the dump doors were closed.

Mr. Griggs sued Fiscus, which had insurance policies with both American and Universal. American concedes an endorsement to its comprehensive general liability policy provided coverage in these circumstances. Universal's policy provided basic automobile liability and physical damage protection.

American filed this action for declaratory judgment, and both insurance companies moved for summary judgment. The trial court held both policies provided coverage, and ordered both insurers to defend Fiscus. The court also ordered both companies to indemnify Fiscus on a pro rata basis. American's claim against Universal for attorney fees and expenses of defense has not yet been resolved. This matter is before the Court of Appeals pursuant to RAP 2.2(d).

We first address Universal's cross appeal. It contends its policy's "loading and unloading" clause does not afford coverage in these circumstances. Universal's policy provides:

The company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of

bodily injury ...

to which this Insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use, including loading and unloading, for the purposes stated as applicable thereto in the declarations, of an owned automobile ... and the company shall have the right and duty to defend any suit against the Insured seeking damages on account of such bodily injury ...

The policy does not define the phrase "loading and unloading". This issue is resolved by McDonald Indus., Inc. v. Rollins Leasing Corp., 95 Wash.2d 909, 912-15, 631 P.2d 947 (1981), in which the court held:

In determining the meaning of the "loading and unloading" clause the normal rules of construing insurance policies must be employed. Much depends upon whether there is an ambiguity in the language of the contract. Coverage is considered ambiguous "when, on its face, it is fairly susceptible to two different interpretations, both of which are reasonable". Morgan v. Prudential Ins. Co. of America, 86 Wn.2d 432, 435, 545 P.2d 1193 (1976) and cases cited therein. If ambiguous it should be interpreted in accordance with the way it would be understood by the ordinary man buying insurance, "even though a different meaning may have been intended by the insurer." It is fundamental that ambiguities in the policy must be construed against the insurer and in favor of the insured. This rule applies with added force in the case of exceptions and limitations to the policy's coverage.

(Citations omitted.) Witherspoon v. St. Paul Fire & Marine Ins. Co., 86 Wn.2d 641, 650, 548 P.2d 302 (1976); accord, Shotwell v. Transamerica Title Ins. Co., 91 Wn.2d 161, 167-68, 588 P.2d 208 (1978), and cases cited therein....

In this case there is an obvious ambiguity regarding the meaning of the clause "arising from the loading and unloading of said vehicle". One cannot determine whether the clause was intended to apply only during the actual process of loading or unloading, whether it was to apply to the result of negligent loading operations that occurred well after accomplishment of the actual loading, or whether it was to apply to any incident in which the load was a causal factor. All interpretations are within the realm of reasonableness.

Furthermore, a reading of standard treatises would have put the drafter of a contract, such as this, on notice that the clause "arising from the loading and unloading" is ambiguous.... [T]here is a split of authority as to whether "loading and unloading" extends coverage to include that time when the goods are "at rest" or until there is a "completed operation"....

Since the language of the agreement is ambiguous, the court must give effect to the reasonable interpretation most favorable to the insured. See Witherspoon v. St. Paul Fire & Marine Ins. Co., supra; Shotwell v. Transamerica Title Ins. Co., supra. This is only logical since it was the insurer who used the ambiguous language. If it was intended that a more expansive exception be imposed, the insurer could have clarified its intent. 43 Am.Jur.2d Insurance § 279 (1969); 1 G. Couch, Cyclopedia of Insurance Law § 15:77 (2d ed. 1959); see also Starr v. Aetna Life Ins. Co., 41 Wash. 199, 203-04, 83 P. 113 (1905) quoted in Riordan v. Commercial Travelers Mut. Ins. Co., [11 Wash.App. 707, 711, 525 P.2d 804 (1974) ].

McDonald Indus. involved an exception clause, which the court interpreted narrowly. Anticipating the distinction between exception and coverage clauses, the court quoted 12 G. Couch, Insurance § 45:125 (2d ed. 1974):

It is necessary to bear in mind the distinction in the effect of the loading and unloading clause where it relates to coverage and where it is an exception to coverage. Where it relates to coverage, the presence of any ambiguity in the phrase requires that it be interpreted as broadly as is reasonably proper in order to provide the greatest coverage possible. Where it appears in the policy as an exception, the existence of ambiguity requires that it be interpreted as narrowly as possible, for the same purpose of providing the maximum coverage through making the least exception to the coverage of the policy.

McDonald Indus., at 915, 631 P.2d 947. The clause here relates to coverage, and thus should be interpreted broadly to provide coverage in these circumstances.

Universal contends, however, that other evidence in the record demonstrates the parties did not intend that the clause would apply here. Parol evidence may be considered to ascertain the intent of the parties to an ambiguous instrument. Levy v. North Am. Co. for Life & Health Ins., 90 Wash.2d 846, 852, 586 P.2d 845 (1978). Universal contends an affidavit of its underwriter "implies that it was not the intent of Universal to provide coverage to this type of incident because the possibility of such an incident would not have been considered in determining the premium on the policy since it did not arise out of the maintenance or use of the automobile". Brief of Cross Appellant, at 10. The underwriter's statement the accident did not "arise out of" a use of the vehicle is nothing more than an opinion on a legal issue to be decided by the court. See Kelly v. Aetna Cas. & Sur. Co., 100 Wash.2d 401, 670 P.2d 267 (1983). Also, Universal has referred to authority that underwriters' intent may be used to interpret insurance provisions. However, in United Pac. Ins. Co. v. Van's Westlake Union, Inc., 34 Wash.App. 708, 713, 664 P.2d 1262, review denied, 100 Wash.2d 1018 (1983), the court was interpreting provisions that were "substantially changed in an industry-wide revision of standard general liability insurance provisions ..." And in Weber v. Biddle, 4 Wash.App. 519, 528, 483 P.2d 155 (1971), which was cited in United Pac. Ins., 34 Wash.App. at 713, 664 P.2d 1262, a standard policy provision similarly was changed by the National Bureau of Casualty Underwriters. Neither case provides authority for consideration of individual rate-setting factors as evidence of intent of coverage provisions.

Evidence of customary usage also may be utilized in explaining contractual provisions. Point...