Highlands Ins. Co. v. Universal Underwriters Ins. Co.

• Decision Date: 20 April 1979
• Citation: 92 Cal.App.3d 171,154 Cal.Rptr. 683
• Court: California Court of Appeals Court of Appeals
• Parties: HIGHLANDS INSURANCE COMPANY, Plaintiff and Respondent, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY et al., Defendants and Appellants. Civ. 54006.

Page 683

154 Cal.Rptr. 683

92 Cal.App.3d 171

HIGHLANDS INSURANCE COMPANY, Plaintiff and Respondent, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY et al., Defendants and Appellants.

Civ. 54006.

Court of Appeal, Second District, Division 5, California.

April 20, 1979.

Vletas & Greer and Barry E. Shanley, Beverly Hills, for plaintiff and respondent.

Fernandes & LeBerthon, A Professional Law Corp. and Edward L. LeBerthon, Hollywood, for defendants and appellants.

STEPHENS, Associate Justice.

Defendant, Universal Underwriters Insurance Company, appeals from an adverse declaratory judgment. Although the facts are not substantially in dispute, defendant contends that the trial court erred both in its interpretation of an automobile insurance policy issued by plaintiff, Highlands Insurance Company, and in its finding of sufficient evidence to sustain a judgment in favor of plaintiff. We disagree, and affirm the judgment of the trial court, for the reasons set forth below.

Plaintiff was the insurer for Robert H. Cleveland. Cleveland was involved in an accident while driving a 1971 Cadillac owned by Modern Motors but in his custody for purposes of a potential sale to him. Defendant was the insurer for Modern Motors. At the time of the accident, Cleveland had been driving the Cadillac about six weeks. He had orally agreed with the son of the owner of Modern Motors, Paul Speights, to buy the car for $5,600; Speights was also going to arrange financing. As Cleveland stated in his deposition, which was admitted into evidence in its entirety, the only reason he had not yet actually bought the car was that they were waiting for special tires he had ordered to come in. No limitation of any kind had been placed on Cleveland's use of the car. Cleveland had two other vehicles at the time, a Datsun and a GMC pickup truck, which were described in his insurance policy with plaintiff. After the accident, plaintiff denied liability on the Cadillac but paid $15,000 in settlement to the other driver solely to avoid a bad faith claim. Plaintiff then brought its successful action for declaratory judgment; the court concluded that plaintiff's insurance policy did not afford coverage for the Cadillac driven by its insured, Cleveland, and that defendant's insurance policy covering Modern Motors was the insurer for the collision.

At issue is the meaning of an exclusionary clause in plaintiff's automobile insurance policy. The policy covered described automobiles owned by Cleveland and non-owned automobiles defined as follows:

" 'Non-owned automobile' means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile." ¹

Defendant contests the trial court's finding of fact that the Cadillac was furnished for Cleveland's regular use, arguing first that "regular use" in plaintiff's exception from coverage is vague, undefined and ambiguous, and secondly that the evidence did not establish regular use. As a result defendant maintains, the court below erroneously concluded that plaintiff's insurance policy did not afford coverage on the Cadillac.

[1-4] However, a common sense reading of the quoted provision in the policy makes it apparent that plaintiff's insurance covered a car owned by Cleveland or used as a temporary substitute for a car owned by him. If a car was Not owned by him and was Not being used as a temporary substitute vehicle but instead was furnished to him for his Regular use, it was excluded from coverage under plaintiff's policy. Absent a clear indication to the contrary, words in an insurance policy are to be read in their plain and ordinary sense. (Farmers Ins. Exch. v. Harmon (1974) 42 Cal.App.3d 805, 809, 117 Cal.Rptr. 117.) Ambiguity cannot be based on a strained instead of reasonable interpretation of a policy's terms. (California State Auto. Assn. Inter-Ins. Bureau v. Hoffman (1978) 77 Cal.App.3d 768, 775, 143 Cal.Rptr. 835.) Here, the trial court could properly find, as it did, that the Cadillac was not owned by him, was not a temporary substitute automobile, and was furnished for his regular use these findings are supported by substantial evidence.

[5-7] We reject the contention that the term "regular use" is vague, undefined and ambiguous. ² On the contrary, a review of the seven California cases which have ruled on regular use shows that our courts have not hesitated to define and apply the concept. ³ More than 40 years ago, the Supreme Court found that regular use "means the principal use, as distinguished from a casual or incidental use . . .." (Kindred v. Pacific Auto. Ins. Co. (1938) 10 Cal.2d 463, 465, 75 P.2d 69, 70.) Elements to be considered in making the determination whether or not a car was furnished for regular use were clearly articulated in Pacific Auto. Ins. Co. v. Lewis (1943) 56 Cal.App.2d 597, 600-601, 132 P.2d 846. These elements include time, place and manner of use, purpose or type of use, and restrictions on use. Primarily, the issue presents a question of fact which requires an interpretation of the language of the policy to the facts involved. (Ibid.) Thus, a finding of no regular use would be supported by the facts where the car was used infrequently (Communale v. Traders & General Ins. Co., supra, 116 Cal.App.2d 198, 253 P.2d 495) or occasionally with the permission of a parent (Juzefski v. Western Cas. & Surety Co., supra, 173 Cal.App.2d 118, 342 P.2d 928) or during the personal use of a car furnished mainly for business purposes (Safeco Ins. Co. v. Thomas, supra, 244 Cal.App.2d 204, 52 Cal.Rptr. 910; Communale v. Traders & General Ins. Co., supra; Pacific Auto. Ins. Co. v. Lewis, supra ). On the other hand, a finding of regular use has been upheld where a trucker continuously drove outside the 50-mile radius set forth in his insurance policy (Kindred v. Pacific Auto. Ins. Co., supra, 10 Cal.2d 463, 75 P.2d 69) and where a woman had used her mother's car as her own for over a year, but had failed to change its registration (Northwest Casualty Co. v. Legg, supra, 91 Cal.App.2d 19, 204 P.2d 106.)

In the latest case, on facts similar to those before us, the court found no regular use where a woman had been test-driving a car on loan from the dealer for several weeks before deciding to buy it. (Truck Ins. Exch. v. Wilshire Ins. Co., supra, 8 Cal.App.3d 553, 87 Cal.Rptr. 604.) There, however, the court emphasized that the trial court "could reasonably infer . . . that the use was for a limited period of time, restricted to a reasonable geographical area, and for a limited purpose." (Id. at p. 561, 87 Cal.Rptr. at p. 609.) This is readily distinguishable from the case before us, where the evidence revealed expressly that no limitations of any kind had been placed on Cleveland's use of the car. The instant case, then, falls under the general rule that a car "furnished for all purposes and at all times and places would clearly be for his regular use." (Pacific Auto. Ins. Co. v. Lewis, supra, 56...