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United Financial Casualty Co. v. Smith

United States District Court, N.D. California

April 11, 2017

UNITED FINANCIAL CASUALTY COMPANY, Plaintiff,
v.
JOSHUA SMITH, et al., Defendants.

          ORDER RE SUMMARY JUDGMENT

          JAMES DONATO, United States District Judge.

         United Financial Casualty Company (“UFCC”) brought this declaratory judgment action for a determination of its obligations in an underlying California state lawsuit based on a commercial auto insurance policy issued to defendant Joshua Smith. The underlying case involves a car accident on August 5, 2014, in which Joshua's son, Brenton Smith, was driving his 1999 Subaru back home from the beach with friends. Brenton worked for his father's concrete company and had his work tools in the car. The main dispute is whether the “non-owned auto” provision in Joshua's commercial policy covered the Subaru at the time of the accident.

         Several of the defendants named by UFCC defaulted, including Brenton, Joshua, Jennie Smith, Joshua's business entities (Smith's Concrete, Inc. and/or Smiths Concrete Construction, Inc.), and Lariza Gonzalez. Dkt. Nos. 36, 37, 44, 76. UFCC filed a motion for summary judgment against the two remaining defendants, Nathan Richard and Chonondra Gialdini, who were injured passengers and are the plaintiffs in the state action. Dkt. No. 74. The motion is granted.

         BACKGROUND

         Joshua Smith is a licensed cement contractor and the owner of Smiths Concrete Construction, Inc., which he incorporated as a business in 2013. Joshua Smith Dep. (Dkt. No. 74- 2) at 10:3-11:8. At the time of the accident, the company had approximately 10-14 employees, including his son Brenton Smith who worked as a cement mason. Id. at 14:5-15:6, 20:1-4. The employees used their own vehicles to get to jobsites and were required to have their own masonry tools. Id. at 20:5-24. Brenton drove his 1999 Subaru for this purpose and generally kept his tools in his car at all times during the work week, even during personal use. Dkt. No. 71 ¶¶ 5-7. He was a registered owner of the 1999 Subaru, along with his mother Jennie Smith. Id. ¶ 4.

         On August 5, 2014, Brenton was working at a jobsite for Smiths Concrete Construction, Inc. Id. ¶ 8. He left work around 2:00 p.m. and drove home where he lived with his parents in Ukiah. Id. ¶¶ 8-9. Later that night, he went to a beach near Fort Bragg with friends in his Subaru. Id. ¶ 15. Before midnight, Brenton drove Chonondra Gialdini, Nathan Richard, and Lariza Gonzalez home from the beach. Id. ¶¶ 19-20. He lost control of the Subaru and it crashed. Id. ¶ 21. He was not working when he left for the beach, at the beach, or on his way back to Ukiah before the accident. Id. ¶¶ 13, 18, 24. At the scene of the accident, Brenton reported to a California Highway Patrol officer that the weight of the tools and equipment in the Subaru “caused the car to bottom out.” Id. ¶ 25.

         In 2015, Richard and Gialdini filed personal injury lawsuits in Mendocino County Superior Court against Joshua, Jennie, Brenton, and Smiths Concrete Construction, Inc. Id. ¶¶ 29-30; see also Dkt. No. 71-2 at 1-7. The cases have been consolidated for all purposes and are referred to here as the Richard litigation. Dkt. No. 71 ¶ 31.

         On the day of the accident, Joshua Smith carried a commercial auto insurance policy issued by UFCC. Id. ¶ 2. Joshua was the only named insured on the declarations page. Id.; Dkt. No. 71-1 at 5. The scheduled insured vehicles on the policy were a 2000 Ford F350, a 2011 Dodge Ram 3500, and a 1998 Chevrolet C3500/K3500. Dkt. No. 71-1 at 6. The rated drivers on the policy included Joshua, Jennie, and Jeremiah Douglas. Id. Under the liability coverage part of the policy, UFCC promised to defend and indemnify an “insured” against bodily injury and property damage claims arising out of the ownership, maintenance or use of an “insured auto.” Id. at 16.

         Joshua added an Employer's Non-Ownership Liability Endorsement so that the definition of an “insured auto” was modified to include a “non-owned auto.” Id. at 38-39. A “non-owned auto” is defined as:

an auto that you do not own, lease, hire, rent, or borrow, and that is used in connection with your business. This includes autos owned by your employees, partners (if you are a partnership), members (if you are a limited liability company), or members of their households, but only while such autos are used in your business or your personal affairs.

Id. at 39. “You, ” “your” and “yours” refer to the named insured shown on the declarations page, Joshua Smith. Id. at 15 ¶ 17.

         UFCC filed this action for a declaration that it has no duty to defend or indemnify the Smith family members or the corporate entities against claims arising out of the car accident. Dkt. Nos. 1, 55. Richard and Gialdini filed counterclaims seeking competing declarations. Dkt. Nos. 20, 66.

         DISCUSSION

         The parties' primary dispute is whether the “non-owned auto” provision covered the 1999 Subaru at the time of the accident. A plain ...


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