Rocky Mountain Fire & Cas. Co. v. Allstate Ins. Co.
| Decision Date | 27 May 1971 |
| Docket Number | No. 10291--PR,10291--PR |
| Citation | 485 P.2d 552,107 Ariz. 227 |
| Parties | ROCKY MOUNTAIN FIRE & CASUALTY COMPANY, a Washington corporation, Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation et al., Appellees. |
| Court | Arizona Supreme Court |
Burch, Cracchiolo, Levie & Guyer by Daniel Cracchiolo, Phoenix, for appellant.
Moore, Romley, Kaplan, Robbins & Green by Craig R. Kepner, Phoenix, for appellee Allstate Ins. Co.
Hunter, Bartlett & Lerch by William C. Penn, Phoenix, for appellee Quinlan.
Samuel R. Hutchison, Phoenix, for appellees Quinlan and Foster.
The facts of this case are not in dispute. On March 12, 1968, plaintiff-appellant, Rocky Mountain Fire & Casualty Company (hereinafter referred to as Rocky Mountain) insured Raymond E. Hodgson, dba Ray's Auto Body Shop, under a garage liability insurance policy with a face amount of $100,000.00. This policy provided insurance coverage under certain circumstances to garage customers using 'loaner' automobiles owned by Hodgson. The Rocky Mountain policy contained the following exclusionary clause:
'In consideration of the reduced rate of premium made applicable to the Garage Liability Insurance, it is agreed that garage customers are not insureds with respect to the automobile hazard except in accordance with the following additional provisions:
1. If there is other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer and the limits of such insurance are sufficient to pay damages up to the amount of the applicable financial responsibility limit, no damages are collectible under this policy.
2. If there is other valid and collectible insurance available to the garage customer, whether primary, excess or contingent, and the limits of such insurance are insufficient to pay damages up to the amount of the applicable financial responsibility limit, then this insurance shall apply to the excess of damages up to such limit.
3. If there is no other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer, this insurance shall apply but the amount of damages payable under this policy shall not exceed the applicable financial responsibility limit.
4. As used in this endorsement: 'applicable financial responsibility limit' refers to the applicable limit of the financial responsibility law of the state where the automobile is principally garaged.'
On March 12, 1968, James J. McGowan delivered his automobile to Ray's Auto Body Shop (hereinafter referred to as Ray's) for repairs and was provided with a 'loaner' automobile. This 'loaner' vehicle was insured under a garage liability policy issued by Rocky Mountain. While driving this 'loaner' vehicle, McGowan was involved in an accident with an automobile being driven by the appellee, Paul E. Quinlan, which resulted in McGowan's death and the serious injury of Quinlan.
At the time of this accident, McGowan was insured by the defendant-appellee, Allstate Insurance Company (hereinafter referred to as Allstate) pursuant to an automobile liability policy which contained the following clause:
'(T)he insurance with respect to a temporary substitute automobile or A non-owned automobile shall be excess insurance over any other collectible insurance.'
A suit for damages was subsequently brought against the estate of McGowan by Quinlan. The two insurance companies, Rocky Mountain and Allstate, were unable to agree as to which company had the primary duty to defend McGowan's estate in the Quinlan action and which policy had primary liability for the damages. As a result, Rocky Mountain instituted a declaratory judgment action in the Superior Court of Maricopa County to determine the respective duties and liabilities of the two insurers.
The Superior Court, on cross-motions for summary judgment, rendered judgment for Allstate. On appeal, the Court of Appeals reversed and held that both Rocky Mountain and Allstate had a pro-rata duty to defend the suit and cover the damages. Rocky Mountain Fire & Casualty v. Allstate Insurance Company, et al., 13 Ariz.App. 31, 474 P.2d 38 (1970); 13 Ariz.App. 405, 477 P.2d 279 (1970). Opinions of the Court of Appeals are vacated.
There are two primary issues for our consideration in this appeal. First, may an automobile owner's liability insurer, Rocky Mountain, exclude from liability coverage individuals using 'loaner' vehicles if there is other valid and collectible insurance available to such individuals in an amount sufficient to satisfy the requirements of the omnibus clause of the Arizona Financial Responsibility Act? Secondly, does the Arizona Financial Responsibility Act permit less coverage for an omnibus insured, McGowan, than for the named insured, Ray's, if the liability limitation is in the policy of insurance and in an amount sufficient to satisfy the requirements of the Act?
The omnibus clause of the Arizona Financial Responsibility Act, A.R.S. § 28--1170, provides the following:
B. The owner's policy of liability insurance must comply with the following requirements:
1. It shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted.
2. It shall insure the person named therein and any other person, as insured, using the motor vehicle or motor vehicles with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of the motor vehicle or motor vehicles within the United States or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle as follows:
(a) Ten thousand dollars because of bodily injury...
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