The word “use” in an automobile liability insurance policy is generally given a broad, general and comprehensive meaning that results in broad coverage. The word “use” includes “loading and unloading” of the motor vehicle. The determination of whether an injury arose out of the loading or unloading of a motor vehicle is typically focused upon whether the loading or unloading had begun or had ceased at the time of the accident. Courts have formulated two doctrines regarding the process of loading and unloading in determining whether vehicle use has occurred.
The first doctrine is the “coming to rest” doctrine and the second is the “completed operation” doctrine. Under the “coming to rest” doctrine, the concept of loading and unloading is construed more strictly to include only those activities beginning with the actual movement of the goods onto the insured vehicle and ending when the goods had been removed from the vehicle and have first “come to rest.”
The “completed operation” doctrine takes into consideration the entire process of loading and unloading that is involved in the movement of goods from the moment they begin their movement toward the insured vehicle to be placed therein until they have been turned over to the place of destination to the party to whom the delivery is to be made.
The foregoing doctrines work well when considering inanimate objects such as cargo or personal property that is being transported in the vehicle. However, given the broad interpretation of the term “use” to include a broad interpretation of “loading and unloading,” courts have encountered many unusual factual scenarios in this context. An example of this can be found in the recent United States Ninth Circuit Court of Appeals decision in Encompass Ins. Co. v. Coast National Ins. Co., 2014 WL 3930197 (9th Cir. (Cal), Aug. 13, 2014). Interpreting California law and CAL. INS. CODE § 11580.06(g), the Ninth Circuit Court held that extricating an injured victim from a vehicle involved in a motor vehicle accident constituted unloading of that vehicle which constituted a “use” of that vehicle for purposes of automobile liability coverage.
The Encompass case involved an automobile accident where Alexandra Van Horn was riding as a passenger in a vehicle driven by Anthony Watson. Watson lost control of the vehicle and crashed into a light pole. A second vehicle, which was not involved in the crash, stopped at the scene to render aid. Lisa Torti was a passenger in the second vehicle. Torti believed that the crashed vehicle would catch fire or explode while Van Horn was in it. Because of this, Torti grabbed Van Horn and physically removed her from Watson’s vehicle. As a result of her forceful removal, Van Horn suffered a severe spinal cord injury. Van Horn sued Torti in California state court alleging that Torti caused the severe spinal injuries.
At the time of the accident, Torti was directly insured by Mid-Century Insurance Company under a policy that covered “damages for which any insured person is legally liable because of bodily injury to any person … arising out of the … use of a private passenger car.…” Torti’s Mid-Century policy also provided permissive use coverage for Torti’s use of other vehicles. A second policy was involved that was issued by Coast National Insurance Company to Watson which provided permissive use coverage. Both Mid-Century and Coast National rejected Torti’s tender, refusing to accept any responsibility for her legal defense. At the time of the accident, Torti was insured under a package policy which included automobile insurance, homeowners insurance and a personal excess liability insurance which was issued by Encompass Insurance Company. Torti also had tendered the defense of the Van Horn lawsuit to Encompass. Encompass accepted the tender and assumed responsibility for Torti’s defense. Encompass defended Torti and ultimately settled the Van Horn claim against Torti for $4 million.
Encompass brought a lawsuit against Mid-Century and Coast National seeking contribution for the expenses Encompass incurred in defending and indemnifying Torti. Encompass argued that both policies insured Torti when she removed Van Horn from Watson’s vehicle because the act of removing Van Horn constituted permissive use of Watson’s vehicle.
The district court entered judgment in favor of Mid-Century and Coast National finding that Torti did not use Watson’s vehicle when she removed Van Horn. However, the district court did not reach the issue of permission. On appeal all of the parties agreed that Torti “unloaded” Van Horn from Watson’s vehicle. Therefore, the issue before the Ninth Circuit was whether “unloading” an injured passenger from an automobile constituted use of the automobile within the meaning of the Mid-Century and Coast National policies.
The Court began its analysis by focusing on the text of the California Insurance Code which made clear that “unloading” a motor vehicle constituted use of that motor vehicle. See CAL. INS. CODE § 11580.06(g). That section of the code unambiguously equated the unloading of a motor vehicle with the use of the motor vehicle. Additional, California courts had consistently defined the term “use” of a vehicle to include unloading. On appeal, Mid-Century and Coast National argued that the unloading of a motor vehicle only constituted a use of that vehicle if the unloading was integral to the function of the vehicle as a means of transportation so that the person doing the unloading gained a benefit from the vehicle. The Court rejected this argument relying upon the plain text of INS. CODE § 115880.06(g) which clearly equated the act of unloading a vehicle with that vehicle’s use.
Mid-Century and Coast National argued that if unloading a vehicle constituted use of that vehicle then absurd results would follow. As an example, a person breaking a car window and stealing a purse would be construed as using the vehicle. Addressing this argument, the Ninth Circuit noted as an initial matter, that it did not seem absurd to suggest that a burglar had used the vehicle he burgles because the burglar certainly has availed himself of the vehicle or exploited the vehicle. However, the Court rejected this hypothetical by noting that the mere fact a burglar might be said to use the vehicle he burgles did not mean the burglar would be covered by a California insurance policy. Even if the insurance policy did not otherwise limit its unloading coverage to certain persons (which it was free to do under California law, see CAL. INS. CODE § 11580.1(b)(4)(A)), the coverage afforded needed to only apply to a person who unloaded the vehicle with the permission of the named insured and then the person acted within the scope of that permission. See CAL. INS. CODE § 11580.1(b)(4).
Senior Circuit Judge Michael R. Murphy issued a dissent. Judge Murphy began his dissenting analysis by noting that the insurance policies did not define the term “use.” The MERRIAM-WEBSTER DICTIONARY defined “use” in relevant part, as “to put into action or service,” to “avail oneself of,” “to carry out a purpose or action by means of.” That definition suggested that an individual does not use a motor vehicle unless the individual employs it as a vehicle. In the context of statutorily mandated permissive use coverage, Judge Murphy noted that the California Insurance Code defined the term use to “only mean operating, maintaining, loading, or unloading a motor vehicle.” See § 11580.06(g). While the majority believed the statute was clear on its face and unambiguously stated that any act of unloading a motor vehicle was a use and therefore covered, Judge Murphy noted that when read in concert with the dictionary definition of use and the California case law, he concluded that the unloading of a vehicle constituted use of the vehicle only when the unloading was part of the user’s act of availing herself of the vehicle. Therefore, while loading and unloading a vehicle may constitute a use of the vehicle, it must be a component of some broader employment of the vehicle.
According to Judge Murphy, the California case law relied upon by the majority all focused on the function of the insured vehicle as a means of transporting goods to arrive at a conclusion that loading and unloading of a vehicle was integral to the mission of transporting. However, in the case facts, Torti was not engaged in the transportation of goods and her unloading of Van Horn was not integral to such a transportation. Additionally, the cases relied upon by the majority drew no distinction between commercial and non-commercial vehicles and whether a non-commercial vehicle could be loaded by an individual who was not also employing that vehicle as a vehicle. The cases relied upon by the majority concluded that the unloading of the vehicle constituted a use of the vehicle because the person using the vehicle was also the person operating the vehicle. However, the majority did not identify a single California case, not involving the commercial transportation of goods, in which an individual who was neither the driver of nor a passenger in a vehicle, the vehicle was ruled to be using the vehicle by unloading it. Therefore, Judge Murphy concluded his dissent by indicating that the most reasonable interpretation of CAL. INS. CODE § 11580.06(g) was that the mere unloading of a vehicle did not constitute vehicle use without more.
The dissent relied upon Travelers Ins. Co. v. Northwestern Mut. Ins. Co., 27 Cal.App.3d 959, 104 Cal.Rptr. 283 (1972). In Travelers, the Court held that performing maintenance on a motor vehicle, without more, did not necessarily constitute use of the vehicle. In Travelers, the owner of a service station caused a fire that damaged the customer’s real and personal property when the service station owner was engaged in the process of changing a customer’s tire at the customer’s home. Travelers argued that the mechanic was using the customer’s vehicle thereby making the mechanic an additional insured under the customer’s policy. Travelers argued that changing the tire constituted maintenance and, therefore, use because the concept of use expressly included maintenance. Although California law at that time expressly required coverage for vehicle maintenance, the California Court of Appeals in Travelers held that there was no coverage under the customer’s policy because the mechanic’s actions in changing the tire did not constitute a use of the vehicle. The Court in Travelers distinguished California cases in which there was no coverage because the maintenance of the customer’s vehicle was disassociated from the actual operation of the vehicle, from cases in which service station employees were covered under a vehicle owner’s policy because the employees drove the vehicle as an incident of the maintenance work.
The majority of the Court responded to the dissent’s reliance upon the Travelers case. First, the majority noted that Travelers was decided in 1972, long before CAL. INS. CODE § 11580.06(g) was enacted in 1984. Therefore the Court was bound by the Legislature’s enactment of § 11580.06(g) and not by the Travelers decision. On a more fundamental note, the Court found that there was no conflict between the Travelers case and the idea that “unloading” a vehicle constituted “use” of that vehicle. The Travelers Court accepted the observation that “use” had also been defined to mean loading and unloading of a motor vehicle. Even before the California Legislature’s adoption of § 11580.06(g), California courts had found that unloading a motor vehicle constituted a use of that motor vehicle.
Next, turning to the dissent’s attempt to draw a distinction between commercial vehicles and other kinds of vehicles—suggesting that unloading the former is use but that unloading the latter may not be—the majority was not convinced by the purported distinction. First, § 11580.06(g) did not distinguish between commercial and non-commercial vehicles. Section § 11580.06(g) states that “[t]he term ‘use’ when applied to a motor vehicle shall only mean operating, maintaining, loading, or unloading a motor vehicle.” The same section of the insurance code defined “motor vehicle” as “any vehicle designed for use principally upon streets and highways and subject to motor vehicle registration under the law of this state.” Therefore, there was no support for drawing a commercial/non-commercial distinction in relation to § 11580.06(g). Following the enactment of § 11580.06(g), the California courts had consistently defined “use” of a vehicle to include “unloading” that vehicle.
In closing, the majority recognized that the idea that Torti had “used” Watson’s car was counterintuitive: unloading an injured passenger is not the way most people “use” a car. However, the majority also noted that it was not being asked to decide what “use” of a car meant to most people. Instead, the majority was being asked to decide what “use” of a vehicle means in the insurance policies at issue. Both the Mid-Century and Coast National policies followed § 11580.06(g) to define “use” which included unloading. The effect of the Court’s ruling was that Torti was insured under her own automobile policy as well as Watson’s automobile policy for the “unloading” injury to Van Horn.
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