Grisham v. Allstate Ins. Co.

Decision Date30 September 1999
Docket NumberNo. 20114.,20114.
Citation992 P.2d 891,128 N.M. 340
PartiesThomas GRISHAM, as Personal Representative of the Estate of Lealon Spaulding, deceased, Plaintiff, v. ALLSTATE INSURANCE COMPANY, an Illinois Corporation, Plaintiff-Appellee, v. Employers Insurance of Wausau, a Wisconsin Corporation, Defendant-Appellant, and Northbrook National Insurance Company, an Illinois Corporation, Defendant-Appellee, and Richard Shamas and Sandy Shamas, Defendants.
CourtCourt of Appeals of New Mexico

Edward Ricco, Jocelyn Drennan, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, for Appellant Wausau.

Gordon J. McCulloch, Kathleen M. Mixon, Bradley & McCulloch, P.A., Albuquerque, for Appellee Allstate.

Kim E. Kaufman, Leroi Farlow, The Farlow Law Firm, Albuquerque, for Appellees Northbrook National Ins. Co. & Southwest Products.

Certiorari Denied, No. 26,011, November 17, 1999.

OPINION

BOSSON, Judge.

{1} This is an appeal from a declaratory judgment arising from a dispute among insurance companies over which company's liability policy provided primary coverage in regard to a personal injury claim from an automobile accident. The specific issue on appeal concerns the meaning and interpretation of an automobile business exclusion in one company's policy, and whether it is a complete defense to coverage. On cross-motions for summary judgment the district court held that the automobile business exclusion did not apply to the facts of this claim, but we do not agree. We reverse and grant summary judgment based on that exclusion.

{2} All parties to this appeal agree that the interpretation of this automobile business exclusion is governed by Colorado law. See Shope v. State Farm Ins. Co., 1996-NMSC-052, ¶ 9, 122 N.M. 398, 925 P.2d 515 (New Mexico interprets insurance contracts according to the law of the jurisdiction where the contract was executed). The parties also agree that the central facts are not in dispute, and they have filed cross-motions for summary judgment requesting this Court to rule on the issue as a matter of law. Where cross-motions for summary judgment are presented on the basis of a common legal issue, this Court may reverse both the grant of one party's motion and the denial of the opposing party's cross-motion and award judgment on the cross-motion. See Benavidez v. Sierra Blanca Motors, 120 N.M. 837, 907 P.2d 1018 (Ct.App.1995),

rev'd in part on other grounds, 1996-NMSC-045, 122 N.M. 209, 210, 922 P.2d 1205, 1206.

BACKGROUND

{3} Southwest Products Corporation (Southwest), situated in Phoenix, Arizona, is in the business of manufacturing bodies that go on trucks. Specifically, Southwest manufacturers self-contained lube systems and installs them on its customers' trucks. Southwest takes a customer's truck with cab and chassis, builds a platform, mounts tanks on the platform, and puts pumps in the tanks that pump oil products out of a reel. When attached to the truck, this product allows the customer to use its truck to service equipment in the field.

{4} In this case, Sturgeon Electric Company (Sturgeon), a Colorado company, ordered such a self-contained, custom-designed lube system from Southwest, which Southwest was to install on one of Sturgeon's trucks. Southwest hired a driver, Spaulding, to drive Sturgeon's truck from Denver to Phoenix, so that Southwest could install the lube system. An accident occurred en route to Phoenix, causing injuries to a third party who made liability claims against the truck driver, as well as against Sturgeon and Southwest. In due course Spaulding, Sturgeon, and Southwest submitted coverage claims to their respective insurance companies, and a dispute arose among the carriers as to which company had primary coverage.

{5} Northbrook National Insurance Company (Northbrook) and Allstate Insurance Company (Allstate) insured Southwest and the truck driver, respectively. Employers Insurance of Wausau (Wausau) insured Sturgeon. Northbrook and Allstate identify Wausau as the primary carrier. Wausau denies any coverage based on an automobile business exclusion in its policy with Sturgeon. We examine the automobile business exclusion in some detail so as to decide whether it properly applies to the undisputed facts of this case.

THE AUTOMOBILE BUSINESS EXCLUSION AND THE TERM "SERVICING"

{6} The Wausau policy excludes a Sturgeon vehicle or its driver from coverage in certain circumstances when the vehicle is being driven by someone else; that is, "[s]omeone using a covered `auto' while he or she is working in a business of selling, servicing, repairing, parking or storing `autos' unless that business is[, Sturgeon's]." According to Wausau, the district court should have held as a matter of law that Southwest was using a "covered auto" owned by Sturgeon while Southwest was working in the business of "servicing" autos, an activity expressly excluded under the policy. Accordingly, the district court should have held the exclusion applicable as a matter of law. We agree.

{7} The automobile business exclusion is a common provision in liability insurance policies. See Wendt v. Wallace, 185 Minn. 189, 240 N.W. 470, 471 (1932); Tindall Pontiac, Inc. v. Liberty Mut. Ins. Co., 441 S.W.2d 948, 949 (Tex.Civ.App.1969); see also Eliot J. Katz, Annotation, Who Is "Employed or Engaged in the Automobile Business" Within Exclusionary Clause of Liability Policy, 55 A.L.R.4th 261, 268 (1987). Its genesis lies in the assumption that when an insured automobile is turned over to an independent automobile business for servicing, repairing, parking, and so forth, it is likely to be driven by an agent of that business over whom the insured has no control. See Wendt, 240 N.W. at 471; Tindall, 441 S.W.2d at 949; 55 A.L.R.4th at 268; 7 Am.Jur.2d Automobile Insurance § 262 (1997). Lack of control increases risk to the owner's insurer, a risk that is neither included in the policy nor calculated in the premium charged to the owner. See Wendt, 240 N.W. at 471; see also Haley v. State Farm Mut. Auto. Ins. Co., 130 Ga.App. 258, 202 S.E.2d 838, 840 (1973); 55 A.L.R.4th at 268

; 7 Am.Jur.2d, supra, § 262. Accordingly, once the independent automobile business assumes control over the vehicle, it is reasonable that the business, and not the owner, bear the cost of insuring for such risks under its own liability policy. See Wendt, 240 N.W. at 471; 55 A.L.R.4th at 268.

{8} For purposes of this particular policy, the operative term is "servicing," which is not defined in the policy. Undefined words in an insurance policy are given their plain and ordinary meaning if that can reasonably be ascertained. See Lopez v. Dairyland Ins. Co., 890 P.2d 192, 195 (Colo.Ct.App.1994)

; State Farm Mut. Auto. Ins. Co. v. Bencomo, 873 P.2d 47, 49 (Colo.Ct.App.1994); Gulf Ins. Co. v. State, 43 Colo.App. 360, 607 P.2d 1016, 1018 (1979). Our question, therefore, is whether the term "servicing" in Wausau's policy is capable of a plain and ordinary meaning. We believe it is.

{9} The common definition of "servicing" includes to make "fit for service"; "inspecting, adjusting, repairing, refueling, etc." Webster's New World Dictionary 1331-32 (college ed.1968). It is defined similarly in The Random House Dictionary of the English Language 1304 (unabridged ed.1969) as "to make fit for use; to repair; restore to condition for service: to service an automobile." It has also been defined as "[t]o perform services of maintenance, supply, repair, installation, distribution, etc. for or upon; as, to service a car...." Webster's New International Dictionary 2288 (unabridged 2d ed.1955). We focus on the phrase "fit for service" and the word "install." {10} Under similar language in an automobile business exclusion, it has been held that "servicing" reasonably can be construed to include cleaning, waxing, vacuuming, and filling an automobile with gasoline, and therefore the exclusion applied once the owner turned the vehicle over to another business for any of those purposes. See Metropolitan Property & Liab. Ins. Co. v. Mr. Pride of Atlanta, Inc., 258 Ga. 770, 374 S.E.2d 82, 82-83 (1988)

. Similarly, the term "servicing" in an exclusionary clause has been held to include washing the exterior of a vehicle, "just as if [the vehicle] were being rustproofed, oiled or painted." Sutton v. Spencer, 56 Ohio App.3d 147, 565 N.E.2d 854, 856 (1989). The Florida court in Sanz v. Reserve Insurance Co., 172 So.2d 912, 913 (Fla.Dist.Ct.App.1965), refused to limit the word "servicing" to a vehicle being mechanically disabled. Although interpreting a different kind of clause, the Sanz court noted that a narrow construction of "servicing" would defeat the plain and ordinary meaning of the word and held that the ordinary meaning of servicing a vehicle included contracting to have a business name painted on it. See id. Within the meaning of a substitute automobile provision, the federal court in Houston General Insurance Co. v. American Fence Co., 115 F.3d 805, 808 n. 3 (10th Cir.1997), construing Oklahoma law, noted that the installation of a cellular telephone in an automobile would likely be "servicing." "Installing" probably comes the closest to the fact scenario in the present case.

{11} We see no reasonable basis for concluding that Southwest was not "servicing" Sturgeon's truck within the meaning and purpose of the exclusion in Wausau's policy. Southwest makes vehicles "fit for service." Southwest designs and "installs" its lube systems on the chassis of its customers' vehicles. In this case Southwest was to make Sturgeon's truck "fit for service" by "installing" the custom-designed lube system on the chassis of Sturgeon's truck. Southwest was in the business of providing this service to its customers and their trucks. There can be no doubt that the insured owner, Sturgeon, relinquished complete control over its truck once releasing it to Southwest's driver for transport to Phoenix.

{12} Northbrook indicates on...

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