Reliance Ins. Co. v. Aetna Cas. & Sur. Co.
| Decision Date | 17 September 1984 |
| Citation | 393 Mass. 48,468 N.E.2d 621 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | RELIANCE INSURANCE COMPANY v. AETNA CASUALTY & SURETY COMPANY. |
Ellen S. Cooper, Boston (Philander S. Ratzkoff and Richard L. Neumeier, Boston, with her), for plaintiff.
Ann-Louise Levine, Brockton, for defendant.
Before HENNESSEY, C.J., and WILKINS, LIACOS, LYNCH and O'CONNOR, JJ.
In this case, Reliance Insurance Company (Reliance), insurer of a trailer, seeks a declaration under G.L. c. 231A that Aetna Casualty and Surety Company (Aetna), insurer of a tractor used with the trailer, is required by its policy to participate in the defense of a tort action to recover for personal injuries brought against Francisco Ortiz, the driver of the tractor-trailer unit, and to indemnify Ortiz against liability. A Superior Court judge determined that the driver was not entitled to coverage under Aetna's policy and dismissed the complaint. On appeal, the Appeals Court agreed with the reasoning of the judge, vacated the judgment of dismissal as inappropriate in a declaratory judgment action, and ordered the entry of a judgment declaring that Aetna's policy did not provide coverage. Reliance Ins. Co. v. Aetna Casualty & Sur. Co., 17 Mass.App. 218, 219-220, 222, 457 N.E.2d 645 (1983). We granted further appellate review. We reverse the judgment of the Superior Court and order that a judgment be entered declaring that Ortiz is entitled to a defense by Aetna of the tort action against him and to indemnity by Aetna against liability. The costs of defense and the indemnity payments are to be borne equally by Reliance and Aetna until each insurer has paid the lowest applicable limit of liability under one policy, or the full amount of the loss is paid. If each insurer pays the lowest applicable limit of liability under one policy without the full loss being paid, payment is to be made under the other policy until the full loss is paid or the limit of that policy is reached.
The tractor-trailer unit, driven by Ortiz, was involved in a collision with another vehicle on March 10, 1978, as a result of which occupants of the other vehicle brought an action to recover for bodily injuries against Ortiz and his employer, Rogers Foam Corporation (Rogers). Rogers owned the trailer portion of the unit and hired the tractor from its owner, Edart Truck Rental Corporation (Edart). The trailer was insured by Reliance and the tractor was insured by Aetna. Reliance undertook the defense of the tort action and called on Aetna to participate. Aetna disclaimed and this action followed.
The Aetna policy defines "persons insured" as including "any ... person while using an owned automobile or a hired automobile with the permission of the named insured." The policy also provides, however, that a "person or organization, other than the named insured," is not insured with respect to "a motor vehicle while used with any trailer owned or hired by such person or organization and not covered by like insurance in [Aetna]." Rogers is not insured under the Aetna policy because the insured tractor was being used with a trailer owned by Rogers and not covered by insurance in Aetna when the collision occurred. That is conceded by Reliance. Reliance contends that Ortiz is covered under the Aetna policy, however, because as the employee of Rogers, which hired the tractor, he was using the tractor with the permission of Aetna's named insured, Edart. Reliance asserts that Ortiz does not come within the clause excepting certain persons from the definition of insured persons because, although at the time of the collision he was using the insured tractor with a trailer owned by his employer, the trailer was neither owned nor hired by him. We agree.
The plain language of the quoted provisions requires the conclusion that Ortiz is an insured under the Aetna policy. The provision on which Aetna relies to exclude him is significantly different from exclusion (11) contained in the policy reviewed in Desrosiers v. Royal Ins. Co., 393 Mass. 37, 43, 468 N.E.2d 625 (1984). There, coverage was not provided under a policy insuring one component of a tractor-trailer unit when the other component was owned or hired by "the insured" and was not covered by like insurance in the same company. The term "the insured" was defined in the policy as including the named insured as well as any other person using the vehicle with the named insured's permission. We held, in light of the unmistakable purpose of the exclusionary provision, that the exclusion applied if any insured party owned or hired the uninsured tractor-trailer component. We arrived at that conclusion despite an apparently inconsistent severability of interests provision.
We recognize that the purposes of the exclusionary provisions in the Royal Insurance Company of America policy, at issue in Desrosiers, and in the Aetna policy, at issue here, may be the same. However, the language employed in the two policies is quite different. The language in the Aetna policy is not susceptible to the construction we gave to exclusion (11) in Desrosiers. The policy at issue here does not say that a person within the omnibus clause is not insured with respect to the tractor while it is being used with any trailer owned or hired by "the insured" and is not covered by like insurance in Aetna. Instead, it provides that a person within the omnibus clause is not insured with respect to the tractor while it is being used with a trailer owned or hired by "such person" and is not covered by like insurance with Aetna. "[S]uch person" necessarily refers to the person seeking coverage. 1 The several interests of the insured parties are recognized in the exclusionary provision as separate in the same way as might be accomplished in appropriate circumstances by a severability of interests provision.
In Desrosiers, we recognized an apparent inconsistency between the tractor-trailer exclusion and a severability of interests provision in the policy in question. The Aetna policy also contains a severability of interests provision, and it states that "[t]he insurance afforded applies separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the company's liability." Unlike the policy involved in Desrosiers, the severability of interests...
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