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Encompass Insurance Co. v. Coast Nat'l Insurance Co.

United States Court of Appeals, Ninth Circuit

August 13, 2014

ENCOMPASS INSURANCE COMPANY, an Illinois Corporation; GLENS FALLS INSURANCE COMPANY, an Illinois Corporation, Plaintiffs-Appellants,
v.
COAST NATIONAL INSURANCE COMPANY, a corporation; MID-CENTURY INSURANCE COMPANY, Defendants-Appellees

Argued and Submitted, Pasadena, California: February 6, 2014.

Appeal from the United States District Court for the Central District of California. D.C. No.2:10-cv-06421-GHK-PJW. George H. King, Chief District Judge, Presiding.

SUMMARY[***]

California Insurance Law

The panel reversed the district court's judgment in a diversity insurance coverage action concerning coverage for injuries sustained as part of an automobile accident.

The panel held that unloading an injured passenger from a motor vehicle constituted " use" of that motor vehicle under California law. Specifically, the panel held that as used in the insurance policies at issue, the term " use" was defined by California Insurance Code § 11580.06(g). The panel further held that as defined by California Insurance Code § 11580.06(g), " use" of an automobile included unloading that automobile, and therefore, the car in this case was " used" when the injured passenger was removed.

Tenth Circuit Judge Murphy dissented, and he would hold that unloading the passenger did not constitute use of the vehicle because the person unloading the passenger did not avail herself of the vehicle simply by unloading it.

Daniel P. Barer (argued), Girard Fisher, and Scott J. Vida, Pollak, Vida & Fisher, Los Angeles, California, for Plaintiffs-Appellants.

Limor Lehavi (argued) and Mariyetta A. Meyers-Lopez, Archer Norris, APLC, Newport Beach, California, for Defendants-Appellees.

Before: Harry Pregerson, Michael R. Murphy[*], and N. Randy Smith,[**] Circuit Judges. Opinion by Judge Pregerson; Dissent by Judge Murphy.

OPINION

Page 982

PREGERSON, Circuit Judge:

We must decide whether unloading an injured passenger from a motor vehicle constitutes " use" of that motor vehicle, under California law. We conclude that it does.

BACKGROUND

This case arises out of an automobile accident. Alexandra Van Horn was a passenger in a car driven by a man named Anthony Glen Watson. Watson lost control of his vehicle; the car ran off the road and crashed into a light pole. A second car, which was not involved in the crash, stopped at the scene of the accident to render aid. A woman named Lisa Torti was a passenger in the second car. Torti saw Van Horn inside the wrecked car, and allegedly feared that Van Horn might be in danger. (Torti later testified that Watson's car was smoking and leaking fluid, causing her to fear that the car might catch fire or explode.) Torti grabbed Van Horn and physically removed her from Watson's car.

Van Horn suffered severe spinal injuries after the car accident, and became a paraplegic. Van Horn sued Torti in California

Page 983

state court, alleging that Torti caused Van Horn's injuries when she removed Van Horn from Watson's car. See Van Horn v. Watson, 45 Cal.4th 322, 86 Cal.Rptr.3d 350, 197 P.3d 164, 166 (Cal. 2008).[1]

At the time of the accident, Torti was insured under a " Package Policy" -- including car insurance, homeowners insurance, and personal excess liability insurance -- issued by Encompass Insurance Company.[2] Torti tendered her defense against Van Horn's lawsuit to Encompass. Encompass accepted the tender, and assumed responsibility for Torti's defense.

Torti also sought to tender her defense to two additional insurance companies -- Mid-Century Insurance Company and Coast National Insurance Company.

Mid-Century had issued a car insurance policy to Torti. The Mid-Century policy covered " damages for which an insured person is legally liable because of bodily injury to any person . . . arising out of the . . . use of a private passenger car . . . ." Though Torti obtained the Mid-Century policy in connection with her own car (which was not involved in the accident), the policy also covered Torti's " use" of " any other private passenger car" -- if such " use" was " with the permission of the owner." Thus, if Torti " used" Watson's car with Watson's ...


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