State Farm Fire & Casualty Co. v. Salas

• Decision Date: 20 July 1990
• Docket Number: No. C,C
• Citation: 271 Cal.Rptr. 642,222 Cal.App.3d 268
• Court: California Court of Appeals Court of Appeals
• Parties: STATE FARM FIRE & CASUALTY CO., Plaintiff and Appellant, v. Frank SALAS, et al., Defendants and Respondents. iv. C005072.

Page 642

271 Cal.Rptr. 642

222 Cal.App.3d 268

STATE FARM FIRE & CASUALTY CO., Plaintiff and Appellant, v. Frank SALAS, et al., Defendants and Respondents.

No. Civ. C005072.

Court of Appeal, Third District, California.

July 20, 1990.

As Modified Aug. 15, 1990.

Review Denied Oct. 25, 1990.

Eugene W. Saeltzer, William O. Morris, J. Martin McAllister, McDonald, Saeltzer, Morris, Creeggan & Waddock, Michael A. Bishop and Matheny, Poidmore and Sears, Sacramento, for plaintiff and appellant.

David M. Blackman, Blackman and Blackman, Peter A. Sapunor, A. Jeffrey Dehart, William Chaffin, Dana, Dehart and Price, Jesse M. Rivera, Porter, Scott, Weiberg and Delehant, Sacramento, for defendants and respondents.

DAVIS, Associate Justice.

Plaintiff State Farm Fire & Casualty Co. (State Farm) appeals from the trial court's judgment in favor of defendants Frank Salas (insured), Louis and Carol Molteni, and Nationwide Industries, Inc. ¹ State Farm had sued the defendants for a declaration that it owed its insured under a homeowner's policy no duty to defend or indemnify for injuries to Louis Molteni. The injuries allegedly occurred when Molteni welded the insured's auto tire rim on which sat a tire the insured had filled with a flammable tire leak sealant. State Farm claimed that its policy's automobile "ownership, maintenance [or] use" exclusion applied. On cross-motions for summary judgment and adjudication, the court ruled that the insured's failure to warn Molteni "is as a matter of law independent of any maintenance of the insured's vehicle for purposes of determining the applicability of the exclusionary clause...." Because we find the instant injuries within the automobile maintenance exclusion, we shall reverse.

BACKGROUND

In reviewing a summary judgment, we determine whether the moving party demonstrated both the absence of a material factual dispute and a right to judgment. (See, e.g., Gigax v. Ralston Purina Co. (1982) 136 Cal.App.3d 591, 596-597, 186 Cal.Rptr. 395.) In the case before us, the material facts appear undisputed. The case turns on the purely legal question of the insurance policy exclusion's application to these undisputed facts. (See 9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 295, p. 306.)

On May 12, 1986, Frank Salas had in force a homeowner's insurance policy issued by State Farm. That policy insured Salas for "damages because of bodily injury or property damage...." It excluded "bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of ... a motor vehicle owned or operated by or rented or loaned to an insured...."

In late April 1986, Salas had purchased three new tires from Dob's Tire Store (Dob's) just prior to leaving on a trip to On the trip to British Columbia, the right front tire developed a slow leak. After returning from British Columbia and before leaving for Reno, Salas purchased a can of tire leak sealant from an auto parts store. Salas purchased the sealant to stop the leak in the right front tire and to ensure a problem free drive to Reno. A warning label he read instructed him not to use the product near heat or flame. He then injected the sealant into the right front tire and soon left for Reno.

British Columbia. The same day that he purchased the tires, the new left front tire went flat. Dob's claimed that the wheel's rim had caused the flat. It put a tube in the tire.

During the Reno trip, Salas's tire problems continued. The sealant did not seal the right front leak. The left front tire, into which Dob's had placed the tube, went flat. A Reno service station attendant told Salas that the problem with the left front tire lay with the rim. He sold Salas a used rim, removed the tube, and remounted the tire.

After he returned home, Salas went back to Dob's. Dob's again refused to compensate him. So, just four days after he had injected the tire sealant into the right front tire, Salas went to Louis Molteni's welding shop for rimwork. Salas removed the old left front rim from his trunk so that Molteni could weld a crack in the rim. No problems occurred during this welding.

Salas then either took the right front tire and rim off of the car or removed it from the trunk where it had been placed as a spare. ² Neither Salas nor Molteni remember Salas mentioning anything to Molteni about Salas's tire leak sealant use. As Molteni began welding the right front rim with the tire still attached, the tire exploded and seriously injured Molteni.

On February 6, 1987, Molteni and his wife sued Salas, and Nationwide Industries, Inc. (Nationwide). Nationwide allegedly manufactured the tire leak sealant Salas had used. Among other things, the complaint alleged that Salas had negligently failed to warn Molteni that Salas had previously used the sealant.

On August 13, 1987, Salas's insurer, State Farm, filed the instant declaratory relief action against Salas, the Moltenis, and Nationwide. It sought a declaration that the automobile maintenance exclusion set forth above applied.

On February 8, 1988, State Farm moved for summary judgment. On March 30, 1988, the trial court denied the motion without prejudice to refile. It concluded that State Farm's statement of undisputed facts was inadequate.

On April 14, 1988, the Moltenis moved for summary adjudication of issues. They asked the court to determine whether the exclusion applied. On May 3, 1988, State Farm renoticed its earlier summary judgment and included an ampler undisputed facts statement.

On May 9, 1988, Salas joined the Moltenis's motion in so far as it sought adjudication of the coverage issue. Salas, however, objected to those portions of the Moltenis's motion that purported to seek adjudication of the underlying liability issues. Similarly, Nationwide agreed with Salas and the Moltenis on the coverage issue. It merely disputed whether Salas had purchased its sealant.

At oral argument on June 16, 1988, all parties and the court agreed that Moltenis's summary adjudication motion should be treated as a summary judgment motion. The court then denied State Farm's motion and granted the Moltenis's motion. From the ensuing judgment in favor of the defendants, State Farm then timely appealed. ³

DISCUSSION

Where the material facts are undisputed, "the interpretation of the exclusionary clause in [an insurer's] policy is a question of law upon which we must make our own independent determination. [Citation.]" (Ohio Casualty Ins. Co. v. Hartford Accident & Indemnity Co. (1983) 148 Cal.App.3d 641, 644, 196 Cal.Rptr. 164.)

State Farm claims that the trial court failed to apply an unambiguous exclusion to deny coverage. Salas finds the exclusion ambiguous and urges us to construe it narrowly in its favor. Either as part of this argument, or in addition, Salas claims that his failure to warn Molteni of the tire sealant's use independently caused the injury and brought it beyond the exclusion's scope.

Salas's argument "ask[s] us to employ the familiar rule of insurance contract construction that an ambiguity in an insurance policy is to be construed in favor of coverage if semantically permissible. [Citations.] The necessary condition for invocation of this rule is a material ambiguity in the policy language, i.e., a 'material uncertainty in the application of the policy language to the facts upon which the claim of coverage is predicated.' [Citation, fn. omitted.]

" 'The question of meaning is framed by the competing claims of the parties regarding the application of the policy language to the material facts of the case. [Citation.]' [Citation.] They must be 'tested against the permissible uses of the language upon which the claims are founded, for the meaning of language is to be found in its usage and the occasion of a usage is an application of the language to particular circumstances.' (Ibid.) In applying this measure we are directed to read the policy 'as employing the ordinary usages of its terms as they might be understood by the layman in the context of the policy and the purposes which it serves.' [Citation.]" (United Services Automobile Assn. v. Lilly (1990) 217 Cal.App.3d 1396, 1399, 266 Cal.Rptr. 691.)

Salas argues that the exclusion for injury or damage "arising out of the ... maintenance ... of ... a motor vehicle owned or operated by ... an insured...." is ambiguous. He focuses his argument on the initial terms, "arising out of...." He claims that the ambiguity arises because the phrase, undefined in the policy, is reasonably susceptible to at least two interpretations. On the one hand, it could connote any bare connection between vehicle maintenance and the resultant injury or damage. On the other hand, it could denote only a narrow range of more intimate relationships, akin to tort concepts of proximate cause. (See Eichelberger v. Warner (1981) 290 Pa.Super. 269, 434 A.2d 747, 749-752 [finding an ambiguity and construing "arising out of" broadly in coverage provision and narrowly in exclusion clause].) Given this proffered semantic range, he argues that we should apply the cited construction rules and interpret the exclusion narrowly in favor of coverage. ⁴

We do not consider ambiguity in the abstract. Rather, ambiguity arises only through the application of language to specific circumstances. As applied to the circumstances before us, we conclude that a layperson would find that the disputed policy The disputed exclusion mirrors standard policy language. (See Ohio Casualty, supra, 148 Cal.App.3d at pp. 644-645, 196 Cal.Rptr. 164; Transport Indemnity Co. v. Schnack (1982) 131 Cal.App.3d 149, 152, 182 Cal.Rptr. 256; see also 12 Couch on Insurance (Supp.1989) §§ 44A:127 & 44A:129, pp. 71-81.) Although California courts have considered other portions of the exclusion, we have found no reported case that focuses on the clause's "maintenance" provision. Rather, the cases primarily focus on the clause's companion exclusion for damage "arising out of ... the use...