State Farm Fire & Casualty Co. v. Pinson

OPINION

K.K. HALL, Circuit Judge:

State Farm Fire and Casualty Company appeals the district court’s grant of summary judgment for State Farm’s insured in this declaratory action. We must decide whether a boatowner’s liability insurance policy covers injuries caused by a collision between a vehicle and a boat being towed by another vehicle. Finding that coverage exists, we affirm the district court’s grant of summary judgment against State Farm.

I.

On June 17, 1990, Donald Rider was towing his pontoon boat behind his pickup truck in Waterloo, South Carolina. Because vandals had removed the stop sign at the intersection of highways 54 and 6, Rider entered the intersection without stopping. Rider’s truck and boat were struck by a vehicle driven by Joseph Pinson. Pin-son was seriously injured.

Rider’s truck was insured by South Carolina Insurance Company; his boat by State Farm. Rider’s State Farm Boatown-ers Liability Policy (“Policy”) stated:

COVERAGE L — WATERCRAFT LIABILITY

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage resulting from the ownership, maintenance or usé of your watercraft, we will:

1. [Pay the policy limits] for the damage for which the insured is legally liable; and

2. [Provide a defense.]

State Farm filed this action seeking a declaratory judgment that the Policy did not cover Pinson’s injuries. Pinson and his un-derinsurance carrier, Nationwide Mutual Insurance Company, moved for summary judgment, arguing that Pinson’s injuries arose in part from the boat’s “use” or “ownership” or both.

The district court ruled that the boat was in “use,” and that there was a causal connection between the boat’s use and Pin-son’s injuries. Accordingly, the court granted the motion for summary judgment. State Farm filed this appeal.

II.

Summary judgment is appropriate where there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. This Court reviews the district court’s ruling de novo. United States v. Lee, 943 F.2d 366, 368 (4th Cir.1991).

The issue is whether the district court properly determined that coverage was provided under the “use” clause of Rider’s Policy.¹ To resolve this issue, we must make two² separate inquiries: (a) whether the boat was in “use” within the meaning of the Policy’s language, and (b) whether Pinson’s injuries “resulted from” the boat’s “use.” Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d 106, 108 (S.C.1992). Because this is a diversity case, we apply South Carolina’s substantive law. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

A. Was Rider’s boat in “use?”

As a threshold matter, we must determine whether a towed boat is in “use.” For the following reasons, we find that it is.

First and foremost, this Court has already held that a towed vehicle is a “used” vehicle. American Fire & Casualty Co. v. Allstate Ins. Co., 214 F.2d 523 (4th Cir.1954) (applying South Carolina law to identical policy language); see also Bray v. Ins. Co. of State of Pennsylvania, 917 F.2d 130, 133 (4th Cir.1990) (applying Virginia law, cites American Fire with approval); see generally cases collected in Annotation, Automobile liability insurance: what are accidents or injuries “arising out of ownership, maintenance, or use” of insured vehicle. 89 A.L.R.2d 150 § 9(f) (1963 & Supp.). Although these cases address towed automobiles rather than boats, the policy language is identical, and, therefore, the analysis is the same. Arguably a towed boat presents a stronger case for coverage than a towed vehicle. Usually, a vehicle is towed only when its owner is unable to put it to its intended purpose. A boat, on the other hand, must be towed in order for a landlocked owner to derive any enjoyment from boat ownership.

Second, we find State Farm’s principal argument — that South Carolina law “clearly mandates a narrow interpretation of the term ‘use’ in an insurance contract” — unpersuasive. Significantly, the principal case upon which State Farm’s argument is based, Wausau Underwriters Ins. Co. v. Howser, 727 F.Supp. 999 (D.S.C.1990), was reversed by this court in Wausau Underwriters Ins. Co. v. Howser, 978 F.2d 1257 (4th Cir.1992) (conforming to certified questions answered in Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d 106 (S.C.1992)), after State Farm’s brief was filed.

In South Carolina, the term “use” has been broadly, not narrowly, construed. For example, in Hite v. Hartford Acc. & Indem. Co., 288 S.C. 616, 344 S.E.2d 173, 175 (1986), the court stated that the concept of “use” was broader than the “operation” of a motor vehicle. The South Carolina Supreme Court has frequently cited with approval cases from other jurisdictions defining the concept of use very broadly. See Howser, 422 S.E.2d at 107; Coletrain v. Coletrain, 238 S.C. 555, 121 S.E.2d 89 (1961). One case cited approvingly in both Coletrain and Howser is Fidelity & Casualty Co. of N. Y. v. Lott, 273 F.2d 500 (5th Cir.1960). In Fidelity, the driver of the insured vehicle was using its roof as a gun rest to shoot a deer when, “[f]or some unexplained reason, ... the bullet tore through the top of the car, was deflected downward and inflicted the fatal injuries [to the passenger].” Id. at 501. The Fifth Circuit found that using the car as a gun rest was within the liability policy. The court explained that the policy language was “not restricted to occasions when the insured party was hurt either because of the running of the automobile or because of its standing after normal use.” Id. at 502. Certainly, resting a gun on a car is a more obscure “use” of a vehicle than the commonplace occurrence in this case.

Contrary to the dissent’s statements that our decision is “driven by a desire to create coverage,” Dissent Op. at p. 617, we feel that the parties to the contract intended a towed boat to be in “use.” In determining the scope of Rider’s coverage, it is critical to consider the Policy’s subject matter. Obviously, there is a significant distinction between boats, vehicles, and the dissent’s travelling tubs and water heaters. Dissent Op. at p. 616. A water heater is taken to the consumer’s home when purchased and left there, even if the original purchaser moves, until it is disposed of. On the other hand, unless a boat is permanently moored, it must be frequently transported to-and-from the water to be put to its intended purpose.

Because many boats are not permanently moored, an insurance company writing a boatowner’s liability policy knows that landlocked policyholders will frequently tow their boats. This is clearly distinguishable from the dissent’s strained analogies to transported water heaters under a general homeowner’s liability policy. This is a complex and lengthy policy. If State Farm had wanted to exclude towing from the boat’s liability coverage, it could easily have done so.

Therefore, we disagree with the dissent’s conclusion that South Carolina would follow the smattering of courts that have ruled that a towed boat is cargo and is not in “use.” See Hannah v. Erie Ins. Exchange, 537 A.2d 182 (Del.1987); State Farm Fire & Casualty Co. v. Thomas, 1986 WL 9001 (Tenn.App.); but see State Farm Fire & Casualty Co. v. Erwin, 393 So.2d 996 (Ala.1981) (towing a boat in order to have it repaired was within the “maintenance” clause of the boat’s policy). The term “cargo” is defined as a “load (i.e. freight) of a vessel, train, truck, airplane or other carrier.” Black’s Law Dictionary (5th ed. 1979). The term “freight” means “goods transported by ... carriers.” Id. Clearly, the term cargo has a strong commercial connotation. To find that a boat being towed by an individual boatowner becomes cargo would restrict this Policy far beyond the parties’ intent. We also note a difference between the method used to transport Rider’s boat and the transportation of “cargo.” We are not faced with a situation where a tractor trailer was involved in a collision — Rider’s trailer was nothing more than a flimsy rack with wheels on it.

For the aforementioned reasons we believe that South Carolina would continue to construe “use” broadly and find that a towed boat is in “use.”

B. Whether Pinson’s injuries “resulted from” the boat's use.

In response to this Court’s recent certification of an analogous issue of state law, the South Carolina Supreme Court enunciated the test for determining whether an injury “arises” out of a vehicle’s “use.” See Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d 106 (S.C.1992).³ We think the same causal test would be applied to the slight variation of policy language presented in this case: whether the injuries “result from” the boat’s use.

In Wausau, the insured driver was pursued by an unknown assailant driving another car. During the chase, the insured driver’s car was bumped several times before the insured was shot by the other driver. In resolving whether the assailant’s vehicle was in “use” within the meaning of the insured’s uninsured motorist coverage, the South Carolina Supreme Court stated that the test was “something less than proximate cause and something more than the vehicle being the mere site of the injury” or, more simply, whether “the use of the vehicle causally contributed to the claimant’s injuries.” Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d at 108, relying on Continental Western Ins. Co. v. King, 415 N.W.2d 876 (Minn.1987). Applying this test, the South Carolina Supreme Court determined that the uninsured vehicle’s “use” causally contributed to the claimant’s injuries.

In this case, there is no question that the towing of the boat causally contributed to Pinson’s injuries. As the district court noted, the causal connection is particularly strong because Pinson actually struck the boat, as well as Rider’s truck, during the accident.⁴ In sum, the causal link in this case is much stronger than Wausau; Pin-son’s injuries “resulted” from Rider’s “use” of his boat.

III.

For the aforementioned reasons, the district court’s judgment is affirmed.

AFFIRMED.

1 . The district court did not address whether coverage was also provided under the Policy's "ownership” clause. We also decline to address this issue.

2 . South Carolina cases have sometimes failed to clearly differentiate whether the vehicle was in "use" and whether the vehicle's “use" contributed to the injuries. See Hite v. Hartford Acc. & Indent. Co., 288 S.C. 616, 344 S.E.2d 173, 176 (1986) (“What appears to be crucial to many courts in determining whether an injury produced by another vehicle or person falls within the ambit of ‘use’ is the existence of a causal connection between an accident or injury and the use of the vehicle." (citations omitted)). Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d 106, 108 (S.C.1992), indicates that these are separate inquiries.

3 . The following question was certified: "Is the insurer liable under the uninsured motorist provision involving injuries ‘arising out of the ownership maintenance, or use’ of an uninsured vehicle ... for gunshot injuries sustained by a person traveling on a public highway in an insured vehicle and inflicted during a vehicular chase by an unknown operator of an unidentified vehicle?" Wausau Underwriters Ins. Co. v. Howser, 422 S.E.2d 106 (S.C.1992) (relied upon by this Court to reverse Wausau Underwriters Ins. Co. v. Howser, 727 F.Supp. 999 (D.S.C.1990), in Wausau Underwriters Ins. Co. v. Howser, 978 F.2d 1257 (4th Cir.1992)).

4 . Of course, we express no opinion on whether the Policy would have provided coverage if Pin-son’s vehicle had only come into contact with Rider's truck.