Salerno v. Atlantic Mut. Ins. Co.

• Decision Date: 06 July 2000
• Docket Number: No. 1 CA-CV 99-0311.,1 CA-CV 99-0311.
• Citation: 6 P.3d 758,198 Ariz. 54
• Parties: Angela SALERNO and Alcario Lucero, Plaintiffs-Appellees/Cross-Appellants, v. ATLANTIC MUTUAL INSURANCE COMPANY, a New York corporation, Defendant-Appellant/Cross-Appellee.
• Court: Arizona Court of Appeals

6 P.3d 758

198 Ariz. 54

Angela SALERNO and Alcario Lucero, Plaintiffs-Appellees/Cross-Appellants, v. ATLANTIC MUTUAL INSURANCE COMPANY, a New York corporation, Defendant-Appellant/Cross-Appellee.

No. -0311.

Court of Appeals of Arizona, Division 1, Department B.

July 6, 2000.

Law Offices of Joel R. Kirschbaum, P.L.C. by Joel R. Kirschbaum, Phoenix, for Appellees/Cross-Appellants.

The Cohen Law Firm by Larry J. Cohen, Phoenix, for Appellant/Cross-Appellee.

OPINION

TOCI, Judge.

¶ 1 Atlantic Mutual Insurance Company ("Atlantic") appeals from the grant of summary judgment to Angelo Salerno and Alcario Lucero ("Salerno") finding an Atlantic insurance policy covered Salerno's injuries. Salerno cross-appeals from summary judgment granted to Atlantic because Salerno failed to timely give notice of a claim under the policy's medical expense payments provision. We reverse both judgments and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 On appeal from summary judgment, we view the evidence most favorably to the non-moving party and draw all reasonable inferences in that party's favor. If reasonable persons could come to different conclusions from the evidence, summary judgment is improper. Transamerica Ins. Co. v. Doe, 173 Ariz. 112, 114, 840 P.2d 288, 290 (1992).

¶ 3 The facts here are largely undisputed. On November 5, 1993, Angela Salerno was in the library of Cotton Boll Elementary School ("the School") for a book fair when she fell and was injured. The school is part of the Peoria Unified School District ("the District"). Scholastic Book Fairs, Inc. ("Scholastic") provided the books for the fair.

¶ 4 In October 1994, Salerno sued the District and Scholastic, claiming that they negligently arranged the book fair in an area with a lowered floor and failed to warn of the change in level. She also claimed that the colorful books distracted her attention and contributed to her fall. The complaint further alleged that Atlantic provided insurance to Scholastic under a commercial general liability policy and that a vendor's endorsement provision provided more limited coverage to the District and School. Atlantic, however, denied coverage and declined to defend either the District or the School.

¶ 5 Salerno did not formally request payment of medical expenses under the medical payments provision of Atlantic's policy until March 1996. By letter, she stated her medical expense claim arose from the fall that prompted her suit against Scholastic.

¶ 6 In April 1996, the trial court dismissed Scholastic from the lawsuit, ruling that the School alone was responsible for any negligence because it controlled the premises and set up the book display. The District, on behalf of the School, then entered a Damron¹ agreement with Salerno and stipulated to entry of a $900,000 judgment. The District also assigned all of its rights against Atlantic to her. Salerno in turn agreed not to execute the judgment against the District.

¶ 7 On December 31, 1996, Salerno filed this lawsuit against Atlantic. The complaint alleged theories related to the vendor's endorsement to the policy,² as well as theories under the medical payments clause.³ It also alleged claims for bad faith and punitive damages and sought an award of attorney's fees.

¶ 8 The parties filed cross-motions for summary judgment. The trial court granted summary judgment to Atlantic on all medical payments-related counts; it granted partial summary judgment to Salerno on the vendor's endorsement coverage claims, finding coverage but leaving open the amount of damages. The bad faith and punitive damages claims under the vendor's endorsement and the attorney's fees claim were also unresolved. The judgment recited Arizona Rule of Civil Procedure 54(b) language. Atlantic timely appealed, and Salerno timely cross-appealed.

II. DISCUSSION

A. Jurisdiction

¶ 9 We may examine our jurisdiction of an appeal sua sponte. Arvizu v. Fernandez, 183 Ariz. 224, 226, 902 P.2d 830, 832 (App.1995). Atlantic's docketing statement asserted Arizona Revised Statutes Annotated ("A.R.S.") section 12-2101(B) (1994) as a ground for jurisdiction, but that section allows appeals from final judgments that "dispose of all claims and all parties." If a judgment disposes of fewer than all claims but ultimately disposes of one separate claim in a multi-claim action, the trial court may certify a judgment as final. Davis v. Cessna Aircraft Corp., 168 Ariz. 301, 304, 812 P.2d 1119, 1122 (App.1991). "The determination rests on whether the different claims could be separately enforced." Sisemore v. Farmers Ins. Co. of Ariz., 161 Ariz. 564, 566, 779 P.2d 1303, 1305 (App.1989).

¶ 10 Atlantic's judgment finally disposed of all claims related to the medical payments provision; those claims are enforceable apart from Salerno's other claims, and they require proof of different facts. Similarly, claims for coverage are separate from claims for breach of the duty of good faith and fair dealing. See Deese v. State Farm Mut. Auto. Ins. Co., 172 Ariz. 504, 509, 838 P.2d 1265, 1270 (1992)

(insurer may be liable for bad faith regardless of merits of claim under the policy). Thus, the trial court did not abuse its discretion in certifying the judgment on the medical payments claims as final.

¶ 11 Salerno's partial summary judgment under the vendor's endorsement, however, left undecided the amount of damages and was not an ultimate disposition of those claims. See Empress Beauty Supply, Inc. v. Price, 116 Ariz. 34, 35, 567 P.2d 350, 351 (App.1977)

(summary judgment is not final if damages are yet to be decided).

¶ 12 Nevertheless, section 12-2101(G) creates a statutory exception and allows a party to appeal from an "interlocutory judgment which determines the rights of the parties and directs an accounting or other proceeding to determine the amount of the recovery." A.R.S. § 12-2101(G) (1994). This exception applies if the judgment finally resolves the parties' rights as to liability, and the only unresolved question is the amount of recovery. See Cook v. Cook, 26 Ariz.App. 163, 168, 547 P.2d 15, 20 (1976)

. Although Rule 54(b) does not expressly refer to section 12-2101(G), use of Rule 54(b) language may "indicat[e] the finality of the judgment on the liability issue." Id.

¶ 13 Therefore, the trial court's judgment was a final decision on liability under the vendor's endorsement and left open only the amount of damages. We have jurisdiction of the appeal pursuant to section 12-2101(G) and of the cross-appeal pursuant to section 12-2101(B).

B. Vendor's Endorsement

¶ 14 Interpretation of an insurance contract is a question of law that we review de novo. See Benevides v. Arizona Property & Cas. Ins. Guar. Fund, 184 Ariz. 610, 613, 911 P.2d 616, 619 (App.1995)

. Only if an insured's claims fall within the coverage provisions will we address the meaning and effect of policy exclusions. See United States Fidelity & Guar. Corp. v. Advance Roofing & Supply Co., 163 Ariz. 476, 483, 788 P.2d 1227, 1234 (App.1989) (exclusions subtract from coverage granted). Ambiguous provisions are construed against the insurer if they are actually ambiguous. Thomas v. Liberty Mut. Ins. Co., 173 Ariz. 322, 325, 842 P.2d 1335, 1338 (App.1992). Thus, if a clause is susceptible to different constructions, we examine its purpose, relevant public policy concerns, and the entire transaction. See Ohio Cas. Ins. Co. v. Henderson, 189 Ariz. 184, 186, 939 P.2d 1337, 1339 (1997).

¶ 15 Atlantic contends that the trial court erred in finding coverage for Salerno's injuries under the vendor's endorsement because her injuries arose from maintenance of the School's premises and not from Scholastic's products. The endorsement covers " `bodily injury' ... arising out of `your [Scholastic's] products' ... which are distributed or sold in the regular course of the vendor's [the School's] business."⁴ No prior Arizona cases have considered the scope of coverage under a vendor's endorsement, but the language is similar to that in automobile liability and homeowners' policies referring to incidents "arising out of" the ownership, maintenance, use, loading, or unloading of vehicles. See, e.g., Allstate Ins. Co. v. Powers, 190 Ariz. 432, 434, 949 P.2d 521, 523 (App.1997)

.

¶ 16 In interpreting "arising out of" language, we have not required direct proximate cause between the vehicle and the injury but only some causal relation or connection between the two. State Farm Mut. Auto. Ins. Co. v. Loesl, 194 Ariz. 40, 42, 977 P.2d 140, 142 (App.1999). The vehicle, however, must do more than facilitate the injury, Ruiz v. Farmers Ins. Co., 177 Ariz. 101, 103, 865 P.2d 762, 764 (1993), and "the accident must be caused by a negligent act in the use of the motor vehicle." Associated Indem. Corp. v. Warner, 143 Ariz. 585, 588, 694 P.2d 1199, 1202 (App.1983), modified on other grounds, 143 Ariz. 567, 694 P.2d 1181 (1985)

.

¶ 17 By analogy, the books must have "caused and produced [the] injury." Ruiz, 177 Ariz. at 103,865 P.2d at 764. Salerno did not allege that the books themselves caused an injury. Even viewing the facts in her favor, at most the books facilitated her injury by attracting her attention. This attraction did not cause any injury, however, although it may have prevented her from paying proper attention to the actual cause of injury, the change in the floor level. The drop in the floor and the failure to warn of it, rather than the books, caused Salerno's injury. Cf. Ruiz, 177 Ariz. at 102-03,

865 P.2d at 763-64 (injury was caused by how shotgun was used rather than how car was used); Warner, 143 Ariz. at 588,

694 P.2d at 1202 (use of auto battery to charge airplane battery caused airplane to start and hit another plane; negligence was in airplane's use not automobile's use).

¶ 18 Other jurisdictions have reached similar conclusions. For example, an Illinois court held that when a delivery person slipped on a loading dock, the injury did not arise out of...