Texaco, Inc. v. Hartford Acc. & Indem.

• Decision Date: 20 June 1978
• Docket Number: No. 77-293-C.,77-293-C.
• Parties: TEXACO, INC., Plaintiff, v. HARTFORD ACCIDENT AND INDEMNITY, Defendants.
• Court: U.S. District Court — Eastern District of Oklahoma

453 F. Supp. 1109

TEXACO, INC., Plaintiff, v. HARTFORD ACCIDENT AND INDEMNITY, Defendants.

No. 77-293-C.

United States District Court, E. D. Oklahoma.

June 20, 1978.

Knight & Wagner, Tulsa, Okl., for plaintiff.

Michael G. Smith, Ada, Okl., for defendants.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT

MORRIS, Chief Judge.

This action has been submitted to the court for a determination on motions for summary judgment. Plaintiff filed a written motion on March 1, 1978 and defendant orally moved for summary judgment during the pretrial conference held on March 8, 1978. The parties have filed briefs and exhibits in support of their motions.

Plaintiff seeks a declaratory judgment to the effect that defendant insurer has a duty to defend and indemnify plaintiff in case No. C-77-58, District Court of Pittsburg County, Oklahoma. Plaintiff also seeks its costs and attorneys' fees allegedly incurred on account of defendant's refusal to so defend. Defendant insurer contends that plaintiff is not an insured within the definition of the insurance policy in question and that defendant has accordingly no duty to defend plaintiff in the state court action.

There is an action pending brought by one A. P. Vaughn and his wife, Gladys, in the District Court of Pittsburg County, Oklahoma, case No. C-77-58, against plaintiff Texaco and defendant Hartford's insured, Crowl Oil, Inc., and James L. Crowl. The Vaughns allege in their petition that defendant's insured, acting through its agent, Roy Jameson, delivered gasoline products to the Vaughns' filling station and grocery store premises near Lake Eufaula on May 31, 1976. While gasoline was being unloaded a fire erupted on the premises burning them down and allegedly inflicting personal injury upon A. P. Vaughn. The Vaughns allege that Crowl, Inc. and Crowl individually were agents, servants and representatives and acted within the scope of their employment for Texaco. The Vaughns also allege that Texaco placed the tank for the filling station improperly and was negligent in so placing the tank.

Texaco has at all times denied that any agency relationship existed between it and Crowl. Texaco and Hartford have stipulated in the pretrial order in the instant case that (1) there is no agency between Texaco and Crowl; (2) the gasoline truck owned by Crowl and insured by Hartford was not owned by Texaco and Texaco was not the lessee of that truck; (3) Texaco was not the employee sic of Crowl; and (4) Texaco did not locate, place, instruct or direct the placement of the gasoline tank on the Brooks premises, which were Vaughn premises at the time of the fire.

The insurance policy in question contains the following pertinent provisions:

1. Coverage C — Bodily Injury Liability Coverage D — Property Damage Liability

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage C bodily injury or

Coverage D property damage

to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use, including loading and unloading, for the purposes stated as applicable thereto in the schedule, of an owned automobile or of a temporary substitute automobile, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

. . . . .

II. Persons insured

Each of the following is an insured under the insurance to the extent set forth below:

(a) the named insured;

(b) any partner or executive officer thereof, but with respect to a temporary substitute automobile only while such automobile is being used in the business of the named insured;

(c) any other person while using an owned automobile or a temporary substitute automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is:

(1) a lessee or borrower of the automobile, or

(2) an employee of the named insured or of such lessee or borrower;

(d) any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a), (b) or (c) above.

Plaintiff claims that it qualifies as an insured under Paragraph II(d) in that it is alleged in the state court petition that the named insured under the policy Crowl through its employee Jameson was negligent and that both were agents of Texaco. In support of its contention plaintiff relies upon the general rule that "the obligation of a liability insurance company under a policy provision requiring it to defend an action brought against the insured by a third party is to be determined by the allegations of the complaint or petition in such action, even if they are groundless or false." 44 Am.Jur.2d Insurance Par. 1539, at 419 (1969) (footnotes omitted). See Carter v. Aetna Casualty & Surety Co., 473 F.2d 1071, 1075 (8th Cir. 1973); Boutwell v. Employers' Liability Assurance Corp., 175 F.2d 597, 599 (5th Cir. 1949); Ritter v. United States Fidelity & Guaranty Co., 434 F.Supp. 1127, 1130 (W.D.Ark.1977); Maryland Casualty Co. v. Willsey, 380 P.2d 254, 258 (Okl. 1963); Annot., 50 A.L.R.2d 458, 465 (1956).

Defendant on the other hand contends that plaintiff does not qualify as an insured under Paragraph II(c)(1) & (2) of the policy dealing specifically with coverage for injury and property damage arising out of the loading and unloading of the insured automobile since it is neither a lessee or borrower of the automobile nor an employee of the named insured or of such lessee or borrower. Defendant further contends that plaintiff could not be exposed to liability on account of acts or omissions of an insured under the policy, since it has been stipulated in this action that there was no agency between Texaco on the one hand and Crowl and Jameson on the other, and without agency there is no basis for imputing Jameson's or Crowl's negligence, if any, to plaintiff.

In this court's view Hartford has no duty to defend Texaco in any event because the stipulations of the parties in this declaratory judgment action establish that there was in fact no agency relationship between Hartford's insured and Texaco and that Texaco had nothing to do whatsoever with the placement of the gasoline tank involved. Hartford is not obligated to defend Texaco because, notwithstanding the general rule that the duty of an insurer to defend an action brought against its insured is to be determined from the allegations of the complaint in such action, it is also a general rule "that the obligation of an insurance company to defend its insured is determined by the actual facts brought to the attention of the company rather than pertinent allegations contained in the complaint or petition of a complainant against the insured which are not true." American Motorists Insurance Co. v. Southwestern Greyhound Lines, Inc., 283 F.2d 648, 649 (10th Cir. 1960); see Culp v. Northwestern Pacific Indemnity Co., 365 F.2d 474, 477 (10th Cir. 1966); Hardware Mutual Casualty v. Hilderbrandt, 119 F.2d 291, 299 (10th Cir. 1941); Southern Underwriters v. Dunn, 96 F.2d 224, 226 (5th Cir. 1938); Butler v. Maryland Casualty Co., 147 F.Supp. 391, 395 (E.D.La.1956); Kepner v. Western Fire Insurance Co., 109 Ariz. 329, 509 P.2d 222 (1973) (in banc); United States Fidelity & Guaranty Co. v. Briscoe, 205 Okl. 618, 239 P.2d 754, 758 (1951); Granite State Insurance Corp. v. Mountain States Telephone & Telegraph Co., 117 Ariz. 432, 573 P.2d 506 (Ct.App.1977); Travelers Insurance Co. v. Tymkow, 87 N.J.Super. 107, 208 A.2d 176 (Chancery Div. 1965); cf. Harbin v. Assurance Company of America, 308 F.2d 748 (10th Cir. 1962); Albuquerque Gravel Products Co. v. American Employers Insurance Co., 282 F.2d 218, 220 (10th Cir. 1960). See also Annot., 50 A.L.R.2d 458, 497 (1956); 44 Am.Jur.2d Insurance § 1540 (1969); but see Allstate Insurance Co. v. Lumbermen's Mutual Casualty Co., 204 F.Supp. 83, 91 (D.Conn.1962).

Judge Skelly Wright's reasoning in Butler is particularly applicable to the situation presented in the instant action:

It is true that in Louisiana, as elsewhere, the obligation to provide a defense for an assured is determined by the allegations of the petition or complaint, irrespective of the fact that the suit may be entirely groundless. But before that principle applies, it must be shown that the defendant in the personal injury action is in fact an assured, named or omnibus, under the policy. Obviously, the insurer's obligation is not to provide a defense for a stranger merely because the plaintiff alleges that the strange defendant is an assured or alleges facts which, if true, would make him so. Conversely, the insurer may not renege on its obligation to provide a defense, even for an omnibus insured, merely because the allegations in the complaint are groundless. For example, where a person is driving the named insured's car with his permission, the permittee is an omnibus assured under the policy and the insurer owes him a defense when sued even though the charge of negligence against him cannot be proved. On the other hand, if permission was not granted for the use of the car, the user thereof is not entitled to a defense under the policy irrespective of proof of negligence. In short, allegations in the plaintiff's petition cannot create an obligation on the part of the

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