Workmen's Auto Insurance Company v. Chubb Customer Center, Inc.

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Workmen's Auto Insurance Company,
Plaintiff and Appellant,

v.

Chubb Customer Center, Inc.,
dba Chubb Group of Insurance Companies,
Defendant and Appellee.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 981413-CA

F I L E D
December 31, 1998
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Third District, Salt Lake Department
The Honorable William W. Barrett

Attorneys:
Trent J. Waddoups, Salt Lake City, for Appellant
Eric Singleton, Salt Lake City, and Brett Marshall Godfrey, Denver, Colorado, for Appellee

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Before Judges Billings, Greenwood, and Jackson.

PER CURIAM:

Appellant appeals from summary judgment entered against it in the district court after a hearing on the parties' cross-motions for summary judgment. We affirm.

The issue raised on appeal is whether appellee, as insurer of Wagon Tongue, Inc., the employer of Catherine Jacobsen, provides primary liability coverage for damage resulting from an automobile accident negligently caused by Ms. Jacobsen while acting within the course and scope of her employment and while driving her own automobile insured by appellant. For the reasons set forth below, we hold that appellee does not provide primary coverage under the circumstances of this case, and is entitled to summary judgment as a matter of law.

Appellee insures Wagon Tongue under a business auto policy. The named insured is Wagon Tongue, Inc., a corporation. Under Item Two of the policy, appellee provides general liability coverage to Wagon Tongue for any "auto" whether owned by the insured or not. Thus, liability coverage under the policy extends to Ms. Jacobsen's automobile.

Section II, Part A of the policy defines the liability coverage provided. Appellee will pay all sums the insured is legally obligated to pay for property damage caused by an accident and resulting from the use of a covered auto. Subpart 1 defines "insured" as (1) Wagon Tongue for any covered auto or (2) anyone else while using a covered auto owned, hired or borrowed by Wagon Tongue except an employee if the covered auto is owned by that employee or a member of his or her household. Thus, under the circumstances of this case, where Ms. Jacobson was using, while acting within the course and scope of her employment, a covered auto owned by her husband, the only insured under the policy is Wagon Tongue, and the only coverage available is for sums Wagon Tongue is legally obligated to pay. Moreover, Section IV, Part B, Subpart 5(a) of the policy provides that for any unowned auto with liability coverage, coverage is excess. Thus, unless an exception to this limitation applies, appellee's liability coverage for damage resulting from the use of Ms. Jacobsen's car is excess.

One exception is set forth in Section II, Part F, Subpart 5, and provides primary coverage for any liability assumed under an "insured contract." "Insured contract" is defined, in relevant part, as "any other contract or agreement pertaining to [Wagon Tongue's] business . . . under which [Wagon Tongue] assume[s] the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization."

Appellant asserts that appellee's coverage under the circumstances is primary, rather than excess, pursuant to this exception. Appellant argues that an implied employment contract exists between Ms. Jacobsen and Wagon Tongue, and that the doctrine of respondeat superior is an implied contractual clause thereof. By virtue of this implied contract, appellant asserts, appellee "assumed the tort liability" of Ms. Jacobsen to pay for damage to a third party, and thus had an "insured contract" with Ms. Jacobsen. Because Wagon Tongue would be held liable under the "insured contract" for damages resulting from the accident, appellant concludes, appellee's liability is primary.

Appellant misconstrues the meaning of the phrase "any contract under which Wagon Tongue assumes the tort liability of another." The phrase "liability assumed by the insured under any contract" has been plainly and reasonably construed by courts "to apply only to indemnification and hold-harmless agreements, whereby the insured agrees to 'assume' the tort liability of another." See Gibbs M. Smith, Inc. v. U.S. Fidelity, 949 P.2d 337, 341 (Utah 1997) (citations omitted). In such cases, assumption of another's liability is affirmative and intentional, and constitutes the substance of the contract.

In the case at hand, Wagon Tongue did not enter into a contract with Ms. Jacobsen whereby it affirmatively agreed to assume and thereby relieve Ms. Jacobsen of her tort liability when it hired her. Wagon Tongue never, either expressly or by operation of the doctrine of respondeat superior, agreed to indemnify her for and hold her harmless against her own tortious conduct. It merely, by operation of law, became jointly and concurrently and tangentially liable at the whim of the injured party for damages resulting from Ms. Jacobsen's tortious acts committed within the course and scope of her employment.

Thus, under the terms of its policy, appellee did not provide primary coverage for the liability at issue in this case, and is entitled to summary judgment at a matter of law. Accordingly, we affirm the district court.
 

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Judith M. Billings, Judge
 

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Pamela T. Greenwood, Judge
 

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Norman H. Jackson, Judge