Scottsdale Insurance v. Van Nguyen

HATHAWAY, Judge.

Scottsdale Insurance Company (Scottsdale) appeals the granting of a summary judgment affording coverage under a housemover’s liability insurance policy issued to Ngoi Van Nguyen, doing business as Interstate Industrial Movers. Scottsdale claims that the automobile exclusion clause of the policy eliminates comprehensive and contractor’s liability coverage under the facts of this case because the death of a worker, Roger H. Jenkins (Jenkins), was a claim “arising out of the operation, maintenance or use of a motor vehicle.” We agree with the result of the trial court, although for different reasons, and therefore affirm.

On April 1, 1985, Jenkins was electrocuted while employed by Interstate in the transportation of a two-story house in Phoenix, Arizona. At the time of his death, Jenkins was standing on top of the house when the steel guide poles attached to the house came in contact with a 7200-volt power line which spanned the street at the intersection of Oak and Thirty-second streets. The house was in transit at the time of Jenkin’s death, and had been jacked up on dollies and placed on steel and wooden beams. The rolling building was being towed by an Interstate tractor. Jenkin’s surviving spouse brought a wrongful death action against Van Nguyen and the driver of the tractor.

The comprehensive general liability and contractor’s liability insurance provisions of the Scottsdale policy provided coverage of $500,000 and contained the standard automobile exclusion:

This insurance does not apply:

(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading, or unloading of

(1) any automobile or aircraft owned or operated by or rented or loaned to any insured, ...

The record shows that, prior to Nguyen’s confession of judgment, he admitted in response to requests for admissions, that the height, length and width of the structure moved was greater than that allowed by the city permit; the structure moved did not have the number of dollies required by the city permit; and appellees did not notify the utility company of the move, as required, nor seek its assistance as may have been prudent. Additionally, appellees used dangerously conductive galvanized guides which were intended to deflect overhead wires but were ineffective without manual assistance. There is further evidence that the instruction and supervision of those assisting in the move were inadequate. Van Nguyen himself directed movement of the house as it passed underneath the overhead power lines. Police and investigative reports before the trial court so indicate. Some of these violations constitute evidence of negligence per se in the operation of the vehicle that was towing the structure, as well as negligence in the preparation of the structure for movement. Thus, the evidence supports a finding of concurrent negligence in both the preparation and movement of the structure.

Scottsdale argues that because the use of the automobile in this case is causally connected with the liability-producing event, the automobile exclusion is applicable to deny coverage. Brenner v. Aetna Insurance Co., 8 Ariz.App. 272, 445 P.2d 474 (1968). However, where concurrent negligence has been established, despite the presence of a causal connection between the negligent use of the automobile and the accident, a policy exclusion “does not preclude coverage when an accident results from the concurrence of a non auto-related cause and an auto-related cause; coverage cannot be defeated simply because a separate excluded risk constitutes an additional cause of injury.” 7A J. Appleman, Insurance Law and Practice § 4500 at 179 (Berdal ed. 1979). Caselaw from other jurisdictions supports this theory-

In Gonzalez v. St. Paul Mercury Ins. Co., 60 Cal.App.3d 675, 131 Cal.Rptr. 626 (1976), the exclusion clause in a homeowner’s policy did not bar coverage with respect to liability for an accident occurring when, as a result of the insured’s negligence in repairing his automobile brakes on the insured premises, the insured struck and killed the plaintiffs’ son while driving the car at a point away from the premises. The insured’s liability arose from concurrent causes; he negligently drove the automobile at the time of the accident, and he negligently repaired the brakes five weeks earlier. Concurrent negligence gave rise to overlapping coverage of the homeowner’s and automobile liability policies. In Gonzalez, the California Court of Appeals relied upon State Farm Mutual Auto. Ins. Co. v. Partridge, 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123 (1973). The Gonzalez court reasoned that in Partridge, “an accident covered by an automobile policy may nevertheless be covered by a homeowner’s policy if concurrent causes of the injury arise from conduct insured by both.” Gonzalez v. St. Paul Mercury Ins. Co., 60 Cal.App.3d at 680, 131 Cal.Rptr. at 628.

In Partridge, a passenger in a car was injured when the driver’s pistol accidentally discharged when the automobile hit a bump that was part of the terrain adjacent to the paved road. The driver had previously filed the trigger mechanism on the gun so that it would discharge more easily. The California Supreme Court found that the homeowner’s exclusion clause did not bar coverage because of the presence of concurrent negligence, even where an excluded risk was a cause of the injury. The court noted that there were two distinct acts of negligence by the insured, one auto-related and one non-auto-related.

It is the interpretation of this auto vs. non-auto distinction that provides the split of authority between the California Court of Appeals. The Gonzalez court noted that the insurer sought to avoid:

... the inevitable conclusion flowing from Partridge by focusing upon language in that opinion distinguishing between “auto-related” and “non-auto-related” conduct, [citation omitted] The language, however, is used in the context of distinction between types of insurance and not generically. The import of the words used is that an accident covered by an automobile policy may nevertheless be covered by a homeowner’s policy if concurrent causes of the injury arise from conduct insured by both.

Gonzalez v. St. Paul Mercury Ins. Co., 60 Cal.App.3d at 680, 131 Cal.Rptr. at 629. In Gonzalez, if the car had never been driven, no injury would have resulted from the negligent repair of brakes. Similarly, in the instant case, if the house had not been moved, no injury would have resulted from its negligent loading and preparation. We agree with the conclusion of the Gonzalez court and apply its reasoning in barring the exclusion clause in the present case. See also State Farm Fire & Casualty Co. v. Kohl, 131 Cal.App.3d 1031, 182 Cal.Rptr. 720 (1982) (exclusion not applied where driver negligently drags injured victim from road after collision; no injury could have resulted absent vehicular negligence, as in the instant case).

There is a split of authority on this issue, not only between various jurisdictions, but within the California Court of Appeals itself. In State Farm Fire and Casualty Co. v. Camara, 63 Cal.App.3d 48, 133 Cal. Rptr. 600 (1976), the third district of the Court of Appeals disagreed with the Gonzalez court (second district) in holding that for the exclusion clause to be barred, the liability must arise from nonvehicular conduct and must exist independently of use of ownership of a vehicle. The Camara court cites Partridge as authority for this proposition. We disagree that Partridge sets forth such an absolute rule.

The Gonzalez reasoning is also exemplified in other jurisdictions. In Pennsylvania General Ins. Co. v. Cegla, 381 N.W.2d 901 (Minn.App.1986), the Minnesota Court of Appeals found a similar exclusion clause not applicable where a motorcycle rider was killed as a result of negligent loading of a roll of wire mesh into a truck, which subsequently rolled onto the highway, causing the death of the motorcycle rider following behind the truck. The court found concurrent negligence between the nonvehicular act (negligently loading the mesh) and the vehicular act (driving). Cegla is analogous to the instant case. See also Waseca Mutual Ins. Co. v. Noska, 331 N.W.2d 917 (Minn.1983); Frazier v. State Farm Mutual Auto. Ins. Co., 347 So.2d 1275 (La.App.1977), cert. den. 351 So.2d 165 (La.1977) (exclusion barred where small child was run over by automobile of insured where insured was also responsible for attending the child and negligently did so); Cooperative Fire Ins. Co. of Catskill, N.Y. v. Vondrak, 74 Misc.2d 916, 346 N.Y.S.2d 965 (1973).

In further support of our decision, the general rule is that while coverage clauses are interpreted broadly so as to afford maximum coverage to the insured, exclusionary clauses are interpreted narrowly against the insurer. Adherence to this rule would support coverage by both policies in the instant case. State Farm Mutual Auto. Ins. Co. v. Partridge, supra; Warfe v. Rocky Mountain Fire & Casualty Co., 121 Ariz. 262, 589 P.2d 905 (App.1978).

An exception to the exclusion clause is created where concurrent negligence is present, thereby eliminating the mischief of fragmentation of coverage and the avoidance of responsibility by the insurer. This result is particularly equitable where Scottsdale issued a policy to one in the business of moving; to allow Scottsdale to insure one in the business of moving houses and yet except out that precise activity from its coverage boggles the imagination. We do not believe it reasonable to require towing of the rolling house by horses, oxen or people to avoid the exclusion. In light of our decision, we find it unnecessary to address the additional arguments raised by appellant regarding the completed operations and incidental contract provisions.

Appellees are awarded attorney’s fees on appeal, upon compliance with Ariz.R.Civ. App.P. 21(c), 17A A.R.S.

Affirmed.

HOWARD, P.J., concurs.