Truck Ins. Exchange v. Webb

• Decision Date: 20 November 1967
• Citation: 256 Cal.App.2d 140,63 Cal.Rptr. 791
• Court: California Court of Appeals Court of Appeals
• Parties: TRUCK INSURANCE EXCHANGE, etc., Plaintiff and Respondent. v. Earl S. WEBB et al. and Northwestern Mutual Insurance Co., Defendants and Appellants. Civ. 8305.

Page 791

63 Cal.Rptr. 791

256 Cal.App.2d 140

TRUCK INSURANCE EXCHANGE, etc., Plaintiff and Respondent. v. Earl S. WEBB et al. and Northwestern Mutual Insurance Co., Defendants and Appellants.

Civ. 8305.

Court of Appeal, Fourth District, Division 2, California.

Nov. 20, 1967.

[256 Cal.App.2d 141] Wilson, Wilson & Borror, San Bernardino, for defendants and appellants Earl S. Webb and others.

John W. Moran, Los Angeles, for defendant and appellant Northwestern Mut. Ins. Co.

Thompson & Colegate, Riverside, by Richard C. Field, Los Angeles, for plaintiff and respondent.

OPINION

TAMURA, Associate Justice.

This is a declaratory relief action to determine whether a comprehensive liability policy issued by plaintiff (Truck Insurance Exchange) covered the destruction by fire of two buildings occupied under a lease by the named insured, Reliable Foods, Inc., (Reliable).

The agreed facts on which the matter was submitted were as follows:

Reliable leased two commercial buildings from defendants Earl and Valah Webb for the conduct of its business. Robert Smith, Reliable's employee, while acting in the course and scope of his employment took a load of cardboard boxes from the buildings in a pickup truck owned by Reliable, drove to an area 'west of the buildings' and deposited the boxes on the ground. He thereafter ignited the boxes, got into the truck and drove back to the building. The fire spread to the buildings and damaged or destroyed them. A comprehensive liability policy issued by plaintiff to Reliable was then in effect.

Following the fire two actions were filed in the Superior Court in San Bernardino County, both of which are still pending. In one, the Webbs sued Reliable to recover damages for the destruction of the buildings, the damages sought including the subrogated claims of several insurance companies for amounts paid to the Webbs under fire insurance policies. In the second action Northwestern Mutual Insurance Co. sued Reliable and Robert Smith on a subrogated claim for payments made to the Webbs under its fire insurance policy.

Thereafter plaintiff instituted the present action against the Webbs and their fire insurance carriers to determine the extent, if any, of plaintiff's obligation under its comprehensive liability policy to indemnify the defendants in the two pending actions should judgment be recovered against them.

Plaintiff's policy insured against all damages which the insured becomes legally obligated to pay because of '(B) damage to property, arising out of the ownership, maintenance or use of any automobile, and (B-1) damage to property, except automobile.' Under coverage '(B)' the unqualified word 'insured' included any permissive user of an owned automobile. With exceptions not here material, the policy excluded from coverages '(B)' and '(B-1)' property owned, occupied or leased by the insured. The policy did not contain a 'loading and unloading' provision in connection with the coverage for the use of an automobile.

On the basis of the foregoing facts the court decreed that plaintiff's policy did not provide coverage for the destruction of the buildings and that, by virtue of the policy provision excluding damage to property owned, occupied or rented by the insured, plaintiff was not obligated to indemnify Reliable on any judgment which might be rendered against it in the pending actions. Defendants appeal from the judgment.

Defendants do not challenge the correctness of the court's determination that the exclusionary clause relieved plaintiff of any obligation to indemnify Reliable. They base their claim of coverage on the fact that Robert Smith, a defendant in one of the pending actions, is an additional insured under plaintiff's policy and against whom plaintiff may not invoke the exclusionary clause because he was neither an owner, lessee, or occupier of the buildings. On that assumption, defendants contend that the stipulated facts establish as a matter of law that Smith's liability is within the scope of coverage provided by the policy provision obligating plaintiff to indemnify against liability for damage to property 'arising out of the use of any automobile.'

Thus the issues presented on this appeal are (1) whether plaintiff may invoke the exclusionary clause as to Smith, and (2) if not, whether the destruction of the buildings was a loss 'arising out of the use of any automobile.'

On the first issue, the court in Globe Indem. Co. v. Universal Underwriters Ins. Co., 201 Cal.App.2d 9, 20 Cal.Rptr. 73, held that a similar exclusionary clause in a public liability policy did not exclude from coverage the liability of a permissive user of an automobile for damage to property of the named insured. In that case, Hacker, a used car dealer, was insured under an 'automobile-garage liability policy' issued by Universal which policy contained an exclusion for damages to 'property owned by or rented to the insured * * *.' Moore, a prospective customer borrowed a car from Hacker and while driving it with the permission and consent of Hacker collided with a car driven by a third person damaging both vehicles. In holding that the exclusion of damage to property owned by the named insured could not 'necessarily' be invoked when the automobile was operated by a permissive user, the court stated at page 19, 20 Cal.Rptr. at page 79:

'But here, Moore, the permissive user, did not own the car. He became an additional assured under the policy by operation of law. Moore damaged Hacker's car; Moore is liable; the policy protects him because the damaged car was not 'property owned' by him but by Hacker. We construe the policy against the insurer because it 'prepared the policy' (Narver v. California State Life Ins. Co. (1930) 211 Cal. 176, 180, 294 P. 393, 71 A.L.R. 1374); the 'presumption favors' the insured (Lagomarsino v. San Jose etc. Title Ins. Co. (1960) 178 Cal.App.2d 455, 464, 3 Cal.Rptr. 80). Universal cannot invoke the language of the exclusion, which it limited to the insured's 'owned' property, to embrace property not owned, but borrowed by, an additional insured.'

The reasoning in Globe is applicable to the present case. Smith, the additional insured, was not an owner, occupant or lessee of the buildings. The policy must be strictly construed against the insurer and any ambiguity must be resolved in favor of coverage. (Prickett v. Royal Ins. Co. Ltd., 56 Cal.2d 234, 237, 14 Cal.Rptr. 675, 363 P.2d 907, 86 A.L.R.2d 711; Exchange Cas. & Surety Co. v. Scott, 56 Cal.2d 613, 619, 15 Cal.Rptr. 897, 364 P.2d 833; Hendricks v. Meritplan Ins. Co., 205 Cal.App.2d 133, 138, 22 Cal.Rptr. 682.) Plaintiff may not avail itself of the benefit of the exclusionary clause with respect to the liability, if any, of Smith.

It is, therefore, necessary to consider defendants' contention that the damage to the buildings was one 'arising out of the use' of an automobile.

'The term 'using', when used in a policy without restrictive terms, must be understood in its most comprehensive sense. It does not require that the injury be the direct and proximate result in any strict legal sense of the active movement of the motor vehicle covered by the policy.' (Columbia Southern Chemical Corp. v. Manufacturers & Wholesalers Indem. Exch., 190 Cal.App.2d 194, 202, 11 Cal.Rptr. 762, 767 (overruled on other grounds in Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 38, 17 Cal.Rptr. 12, 366 P.2d 455); Universal Underwriters Ins. Co. v. Aetna Ins. Co., 249 Cal.App.2d --- ¹, 57 Cal.Rptr. 240; St. Paul Fire & Marine Ins. Co. v. Hartford Acc. & Indem. Co., 244 Cal.App.2d 826, 831, 53 Cal.Rptr. 650; 12 Couch on Insurance (2d ed.) § 45.64, p. 153.)

'Use' thus includes 'loading and unloading,' even though, as in the policy involved in the present case, there is no specific provision covering such activities. (Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 33, 17 Cal.Rptr. 12, 366 P.2d 455; California Steel Buildings, Inc. v. Transport Indemnity Co., 242 Cal.App.2d 749, 753--754, 51 Cal.Rptr. 797; General Pump Service, Inc. v. Travelers Ins. Co., 238 Cal.App.2d 81, 84--87, 47 Cal.Rptr. 533.) But a specific provision covering 'loading and unloading' has been construed both in California as well as in other jurisdictions as an extension, rather than a limitation, on the meaning of the term 'use of an automobile.' (Amer. Auto Ins. Co. v. Amer. Fid. & Cas. Co., 106 Cal.App.2d 630, 635, 235 P.2d 645; see Entz v. Fidelity & Casualty Co., 64 Cal.2d 379, 387, 50 Cal.Rptr. 190, 412 P.2d 382; San Fernando Valley Crane Service, Inc. v. Travelers Ins. Co., 229 Cal.App.2d 229, 236, 40 Cal.Rptr. 165; Pacific Automobile Ins. Co. v. Commercial Cas. Ins. Co., 108 Utah 500, 161 P.2d 423, 160 A.L.R. 1251; August A. Busch & Co. of Mass. v. Liberty Mut. Ins. Co., 339 Mass. 239, 158 N.E.2d 351, 353; 12 Couch on Insurance (2d ed.) § 45.126, p. 195.) Thus, it has been stated that the 'loading and unloading' provision brings within the scope of the policy some actions in which the vehicle itself does not play any part. (Pacific Automobile Ins. Co. v. Commercial Cas. Ins. Co., supra; Amer. Auto Ins. Co. v. Amer. Fid. & Cas. Co., supra.) In Entz v. Fidelity & Casualty Co., supra, 64 Cal.2d 379, at p. 387, 50 Cal.Rptr. 190, at p. 196, 412 P.2d 382, at p. 388, the court stated that the effect of a 'loading and unloading' provision '* * * is simply to expand the term 'use of the vehicle' so that coverage will extend from the commencement of loading until the completion of unloading.' In construing a policy containing a 'loading and unloading' provision, California is committed to the more liberal 'complete operations' rule, instead of the 'coming to rest' rule. (Entz v. Fidelity & Casualty Co., supra, at p. 384, 50 Cal.Rptr. 190, 412 P.2d 382.) The former doctrine embraces all activities required to effect a completed delivery. (Amer. Auto Ins. Co. v. Amer. Fid. & Cas. Co., supra, 106 Cal.App.2d 630, 634, 235 P.2d 645.)

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