McBride v. Farmers Ins. Group

• Decision Date: 25 March 1982
• Parties: , 42 A.L.R.4th 1139 Elmer McBRIDE, Plaintiff and Respondent, v. FARMERS INSURANCE GROUP, Defendant and Appellant. Civ. 21017.
• Court: California Court of Appeals Court of Appeals

Page 539

181 Cal.Rptr. 539

130 Cal.App.3d 258, 42 A.L.R.4th 1139

Elmer McBRIDE, Plaintiff and Respondent, v. FARMERS INSURANCE GROUP, Defendant and Appellant.

Civ. 21017.

Court of Appeal, Third District, California.

March 25, 1982.

Rehearing Denied April 20, 1982.

Hearing Denied May 20, 1982.

Kroloff, Belcher, Smart, Perry & Christopherson and Christopher Engh, Stockton, for defendant and appellant.

Mills & Westerberg and Richard F. Mills, Sacramento, for plaintiff and respondent.

PUGLIA, Presiding Justice.

This appeal involves the interpretation of an insurance contract to resolve a question of coverage. The issue here is whether a liability insurance policy covering the insured's car supplies excess coverage for plaintiff's injuries; the injuries were sustained in an accident which occurred while the insured was driving her father's automobile rather than her own car. The trial court found the terms of the policy ambiguous and conflicting and construed the policy in favor of coverage. We shall reverse.

While the insured, Gaylene Perry, was driving her father's automobile with his permission, she was involved in an accident in which plaintiff Elmer McBride was injured. McBride filed suit against Gaylene to recover for injuries sustained in the accident.

At the time of the accident, Gaylene's automobile was in need of repair and unserviceable; consequently she had borrowed her father's car. At all relevant times, Gaylene and her father, George Perry, were residents of the same household.

George's automobile was insured by defendant Farmers Insurance Group (Farmers) with liability limits of $15,000 per person and $30,000 per accident. Gaylene's automobile was also insured by Farmers with identical limits.

After McBride filed suit against Gaylene, Farmers conceded that George's policy was applicable to the loss and paid to McBride the policy limits of George's policy. Thereafter, McBride brought the instant declaratory relief action, seeking a declaration that the policy issued to Gaylene applies as excess coverage to the accident in question. (The parties stipulated the present action could be filed by McBride without an assignment from Gaylene.) The trial court found certain provisions of the policy conflicting and ambiguous, and ruled in favor of a finding of coverage. Farmers appeals.

The principles applicable to the interpretation of insurance contracts are well established. Words used in a policy of insurance are to be interpreted according to the plain meaning which a layman would ordinarily attach to them, that is, "the policy should be read as a layman would read it and not as it might be analyzed by an attorney or an insurance expert." (Otter v. General Ins. Co. (1973) 34 Cal.App.3d 940, 949, 109 Cal.Rptr. 831.) "[A]ny ambiguity or uncertainty in an insurance policy is to be resolved against the insurer and ... if semantically permissible, the contract will be given such construction as will fairly achieve its object of providing indemnity for the loss to which the insurance relates." (Harris v. Glens Falls Ins. Co. (1972) 6 Cal.3d 699, 701, 100 Cal.Rptr. 133, 493 P.2d 861.) An "ambiguity [however] cannot be based on a strained instead of reasonable interpretation of a policy's terms." (Highlands Ins. Co. v. Universal Underwriters Ins. Co. (1979) 92 Cal.App.3d 171, 175, 154 Cal.Rptr. 683.) Thus, an "ambiguity is not to be found where none exists, and the contract must be interpreted as written, ..." (12 Couch on Insurance (2d ed. 1981) § 45:221, p. 513.) Finally, " 'In the construction of insurance policies, it is the settled rule that the whole of the contract is to be taken together, each clause helping to interpret the other.' [Citations.]" (Furtado v. Metropolitan Life Ins. Co. (1976) 60 Cal.App.3d 17, 25, 131 Cal.Rptr. 250.)

Turning to the applicable provisions of Gaylene's policy, in Part I, Coverages A and B, Farmers agrees:

"To pay all damages the insured [Gaylene] becomes legally obligated to pay because of: [p] (A) bodily injury to any person, and/or (B) damages to property arising out of the ownership, maintenance or use, including loading and unloading, of the described automobile or a non-owned automobile." (Emphasis added.)

A non-owned automobile is defined as "An automobile not owned by or regularly or frequently used by the named insured or any resident of the same household, other than a substitute automobile." (Emphasis added.)

The policy defines "substitute automobile" as "an automobile not owned by the named insured or any resident of the same household, while temporarily used with the permission of the owner, as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction."

Finally, the policy provides that "With respect to a substitute or non-owned automobile, Coverages A, B, ... shall be excess insurance over any other collectible insurance of any kind available to the insured irrespective of whether such other insurance was obtained by a person other than the named insured."

In reading and construing these provisions, the insured is first informed that coverage is provided for injury to person or property for which the insured is legally responsible whether the insured is driving the insured vehicle or a non-owned vehicle. The policy definition of "non-owned automobile" informs the insured that a "non-owned automobile" is every automobile other than the...