Scottsdale Ins. v. State Farm Mut. Ins.

• Decision Date: 28 June 2005
• Docket Number: No. B170163.,B170163.
• Citation: 130 Cal.App.4th 890,30 Cal.Rptr.3d 606
• Parties: SCOTTSDALE INSURANCE COMPANY, Plaintiff, Cross-defendant and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant, Cross-complainant and Respondent; Commercial Underwriters Insurance Company, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

30 Cal.Rptr.3d 606

130 Cal.App.4th 890

SCOTTSDALE INSURANCE COMPANY, Plaintiff, Cross-defendant and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant, Cross-complainant and Respondent Commercial Underwriters Insurance Company, Defendant and Respondent.

No. B170163.

Court of Appeal, Second District, Division 1.

June 28, 2005.

As Modified on Denial of Rehearing July 26, 2005.

Review Denied October 12, 2005.

Selman & Breitman, Alan B. Yuter and Rachel E. Hobbs, Los Angeles, for Plaintiff, Cross-defendant and Appellant.

Knapp, Petersen & Clarke, Peter J. Senuty, Mara L. Weber and Barry R. Gammell, Glendale, for Defendant, Cross-complainant and Respondent.

Lewis, Brisbois Bisgaard & Smith, Michael R. Velladao, Los Angeles, and Jeffry A. Miller for Defendant and Respondent.

SPENCER, P.J.

INTRODUCTION

Plaintiff and Cross-defendant Scottsdale Insurance Company (Scottsdale) appeals from a judgment entered in favor of defendant and cross-complainant State Farm Mutual Automobile Insurance Company (State Farm) and defendant Commercial Underwriters Insurance Company (CUIC) after the trial court granted their motions for summary judgment. We conclude the trial court erred in granting the summary judgment and therefore reverse the judgment.

FACTS

This case arises out of an accident that occurred on July 31, 1998. Miguel Llamas (Llamas), an employee of VCP Cable Construction, Inc., was injured when the bucket of a "cherry picker" in which he was riding fell. J.M.S.D. Telecommunications, Inc. (JMSD) owned the cherry picker and the truck to which it was attached. Llamas filed suit on July 30, 1999, naming JMSD as a defendant by amendment filed on January 24, 2000 (Llamas action).

Scottsdale issued a commercial general liability policy to JMSD. The policy had a liability limit of $1 million per occurrence. It was in effect on July 31, 1998.

Scottsdale also issued an excess commercial general liability policy to JMSD. This policy had a $3 million liability limit per occurrence. It was also in effect on July 31, 1998.

State Farm issued an automobile liability insurance policy to JMSD. This policy had a liability limit of $1 million per occurrence. It was in effect on July 31, 1998. It identified the truck involved in the accident in its schedule of insured vehicles.

CUIC issued an excess automobile liability policy to JMSD. The policy provided a $2 million liability limit per occurrence and was in effect on July 31, 1998. It identified the truck involved in the accident in its designated vehicles endorsement.

The Llamas action settled for $1.375 million. Of this amount, Scottsdale paid $620,000 and State Farm paid $655,000. CUIC paid nothing.

PROCEDURAL BACKGROUND

Scottsdale filed this action for declaratory relief and indemnification against State Farm and CUIC on September 28, 2001. It sought a declaration as to the parties' obligations and indemnification for the amounts it expended in defense of JMSD in the Llamas action.¹ State Farm filed a cross-complaint for declaratory relief and indemnification against Scottsdale on November 14, 2001. It sought a declaration that it had no duty to indemnify JMSD in the Llamas action and indemnification from Scottsdale as to the amounts it already had expended in defense of the action.

Scottsdale filed a motion for summary judgment on January 10, 2003. It sought judgment against both State Farm and CUIC on the ground their policies were primary and covered the accident.

CUIC filed its own motion for summary judgment or, in the alternative, summary adjudication on January 10, 2003. It sought either a summary judgment or an adjudication that it was an excess insurer and owed no duty to defend JMSD or to reimburse Scottsdale.

Also on January 10, 2003, State Farm filed a motion for summary adjudication. It sought adjudication of a number of causes of action in Scottsdale's complaint and its own cross-complaint.

The trial court issued a tentative ruling granting CUIC's and State Farm's summary judgment motions. It ruled that the Scottsdale commercial policy covered the accident and was a primary policy. The State Farm policy provided primary coverage, but the accident was not covered under that policy. The court explained that Llamas was an insured under the policy. The accident therefore fell within a policy exclusion for bodily injury to an insured. The CUIC policy provided excess coverage. Inasmuch as there was no liability under the State Farm policy, there was none under the CUIC policy. The court ordered that Scottsdale take nothing on its complaint and that State Farm recover $655,000 from Scottsdale on State Farm's cross-complaint.

CONTENTIONS

Scottsdale contends that under the prevailing law, the trial court erred in finding that State Farm's exclusion for bodily injury to any insured applied to bar coverage for Llamas's injuries under the State Farm policy. We agree. Under Insurance Code section 11580.06, subdivisions (f) and (g), Llamas was not an insured under the policy.

Scottsdale additionally contends that Insurance Code section 11580.9, subdivision (d), should have been applied here to render the State Farm and CUIC insurance policies primary to its own. We disagree. This section does not apply to the Scottsdale policy.

Finally, Scottsdale contends that even if Insurance Code section 11580.9, subdivision (d), did not create a conclusive presumption that State Farm's and CUIC's policies were primary, Scottsdale's excess other insurance provision would yield this same result. We do not resolve this question but leave it for the trial court on remand.

DISCUSSION

Applicability of the State Farm Policy

The trial court found the accident was not covered under the State Farm policy, in that Llamas was an insured under the policy. The accident therefore fell within a policy exclusion for bodily injury to an insured. Scottsdale's first contention is that this finding was erroneous as a matter of law.

In the absence of conflicting extrinsic evidence, interpretation of an insurance policy is a question of law which may be resolved by the court on summary judgment. (Pacific Employers Ins. Co. v. Superior Court (1990) 221 Cal.App.3d 1348, 1354, 270 Cal.Rptr. 779; Pepper Industries, Inc. v. Home Ins. Co. (1977) 67 Cal. App.3d 1012, 1018, 134 Cal.Rptr. 904.) On appeal, we independently determine the meaning of the policy. (Pacific Employers Ins. Co., supra, at p. 1354, 270 Cal.Rptr. 779.)

The State Farm policy provides that State Farm will "pay damages which an insured becomes legally liable to pay because of: [¶] (a) bodily injury to others . . . [¶] caused by accident resulting from the ownership, maintenance or use of your car . . . ." (Para. 1, SECTION I — LIABILITY — COVERAGE A.) The policy's definition of "insured" includes "any other person while using such a car if its use is within the scope of consent of you or your spouse; and [¶] . . . any other person or organization liable for the use of such a car by one of the above insureds." (Paras. 4, 5, Who Is an Insured.) The policy provides no coverage "FOR BODILY INJURY TO: [¶] . . . [¶] b. ANY OTHER INSURED UNDER THE POLICY." (Para. 6, When Coverage A Does Not Apply.)

Scottsdale's challenge to the trial court's finding that Llamas was an insured and therefore not covered under the State Farm policy is threefold. First, it claims the finding "does not comport with the Legislature's intent to protect the public from the negligence of permissive drivers." (Emphasis omitted.) Second, it claims the State Farm policy is ambiguous, at best, as to the meaning of "use." Inasmuch as there is a question as to whether Llamas was using the insured vehicle within the meaning of the policy, the trial court was obligated to construe the policy in favor of coverage. Finally, it claims the trial court erred in refusing to apply Insurance Code section 11580.06, which is dispositive as to the meaning of "use" for the purpose of determining who is a permissive user of an insured vehicle and thus an insured under the policy.

We turn first to Scottsdale's final claim. If Insurance Code section 11580.06² is indeed dispositive, then we need not address any of Scottsdale's other claims.

Section 11580.06 provides definitions applicable to liability insurance policies. Subdivision (g) provides: "The term `use' when applied to a motor vehicle shall only mean operating, maintaining, loading, or unloading a motor vehicle." Subdivision (f) provides: "The term `operated by' or `when operating' shall be conclusively presumed to describe the conduct of the person sitting immediately behind the steering controls of the motor vehicle. The person shall be conclusively presumed to be the sole operator of the motor vehicle."

Courts have applied the foregoing provisions, without analysis, to a determination of who is a permissive user of a vehicle under an automobile liability policy. (State Farm Mutual Automobile Ins. Co. v. Grisham (2004) 122 Cal.App.4th 563, 568, 18 Cal.Rptr.3d 809; City of San Buenaventura v. Allianz Ins. Co. (1992) 9 Cal.App.4th 402, 405, 11 Cal.Rptr.2d 742; National Union Fire Ins. v. Showa Shipping Co. (9th Cir.1995) 47 F.3d 316, 321.) State Farm argues that the provisions do not apply to limit coverage for permissive use. Subdivision (g) of section 11580.06 merely codifies existing law as to permissive use, and subdivision (f) does not apply. In support of this argument, State Farm relies on other sections of the Insurance Code in which the defined terms are found.

Section 11580.1 sets forth the required and optional provisions of an automobile liability insurance policy. Subdivision (b)(4) requires that the policy contain a "[p]rovision affording insurance to the named insured . . ., and to the same extent that insurance is afforded to the named insured, to any other person using the motor vehicle, provided the use is by the named insured or with his or her permission, express or implied,...