Martinez v. U.S. Fidelity & Guaranty Co.

• Decision Date: 16 March 1978
• Docket Number: No. 2,CA-CIV,2
• Parties: Antonio O. MARTINEZ, Appellant, v. UNITED STATES FIDELITY & GUARANTY CO., a corporation, Appellee. 2675.
• Court: Arizona Court of Appeals

Page 248

581 P.2d 248

119 Ariz. 403

Antonio O. MARTINEZ, Appellant, v. UNITED STATES FIDELITY & GUARANTY CO., a corporation, Appellee.

No. 2 CA-CIV 2675.

Court of Appeals of Arizona, Division 2.

March 16, 1978.

Rehearing Denied April 26, 1978.

Review Denied June 6, 1978.

Miller, Pitt & Feldman, P. C. by Stanley G. Feldman, Hirsh & Shiner, P. C. by James A. Shiner, Tucson, for appellant.

Everett, Bury & Moeller, P. C. by David C. Bury, Tucson, for appellee.

OPINION

RICHMOND, Chief Judge.

The issue in this case is whether the "cross employee" exclusion in an automobile liability insurance policy violates the Arizona Financial Responsibility Act. The trial court found that it does not, and entered summary judgment for the insurer. We agree and affirm.

Appellant Antonio O. Martinez was awarded damages for personal injuries in an action against the personal representative of Harold Brasfield arising out of an accident that occurred while Martinez and Brasfield were acting within the scope and course of their common employment. Martinez was a passenger and Brasfield the driver of an automobile owned by their employer, William J. Flanagan, doing business as Bill Flanagan Motors. After entry of the personal injury judgment, Martinez commenced an action for declaratory judgment against United States Fidelity & Guaranty Company (USF&G) as insurer and Flanagan as the named insured on a comprehensive general liability policy including garage liability insurance, seeking a determination that the policy covered Brasfield's operation of the vehicle at the time of the accident. Portions of the policy pertaining to the "automobile hazard" include:

"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 . . . .

"Exclusions:

"This insurance does not apply under the Garage Liability coverages:

"(d) to bodily injury to any employee of the Insured arising out of and in the course of his employment by the Insured . . . ."

Under its definition of "PERSONS INSURED" the policy provides further:

"None of the following is an Insured:

"(i) any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment."

The parties agree that neither the exclusion nor restriction on the definition of persons insured (both being in violation of the omnibus clause of the Arizona Financial Responsibility Act, A.R.S. § 28-1170, subsec. B. 2.) is effective unless authorized by A.R.S. § 28-1170, subsec. E., which provides:

"The motor vehicle liability policy need not insure liability under any workmen's compensation law nor liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, * * * of the insured, * * *."

Martinez concedes that a "cross employee" exclusion similar in all material respects to the exclusion in the USF&G policy was held effective in Limon v. Farmers Insurance Exchange, 11 Ariz.App. 459, 465 P.2d 596 (1970), but contends that Limon was overruled by the supreme court in Farmers Insurance Group v. Home Indemnity Co., 108 Ariz. 126, 493 P.2d 909 (1972), construing the same exclusion. Our reading of the latter opinion compels a contrary conclusion. After holding that the exclusion could not be applied to the permissive insured for the injury or...