Allstate Insurance v. Pacheco

851 F.2d 257

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 1, 1988
• Docket: No. 87-2437
• Status: Published

Opinions

NOONAN, Circuit Judge:

Allstate Insurance Company (Allstate), an Illinois corporation, brings an action for declaratory relief to obtain the court’s construction of an insurance policy. The defendants are Moisés M.T. Fabia, Sr. and Ninfa C. Fabia, insureds under the policy; their minor son, Moisés; Raquel Pacheco, a minor, who was injured by Moisés Jr.; and her parents, Cecil A. and Laverne Pacheco. All are residents of the state of Hawaii. Diversity jurisdiction exists. The district court granted summary judgment to Allstate. The Pachecos appeal.

The injury to Raquel Pacheco occurred in June 1985 when Moisés Jr., then 13, was collecting money from his newspaper route customers. Moisés was driving a 1985 Suzuki moped which struck Raquel and ran over her right leg. The moped was a 49 cc machine propelled by a motor without pedal-assisted means of propulsion. The question we are asked to decide is whether as a matter of law the moped was excluded from coverage by the policy. There is no doubt that appellants, third party beneficiaries of the policy, have standing.

The policy is entitled “Allstate Deluxe Homeowners Policy.” The policy begins with two pages of definitions. The policy proceeds to set out the property covered. There is an elaborate definition of “earth movement” and “water damage,” both of which are excluded from coverage. The policy proceeds for another twenty pages until it reaches “Section II — Family Liability and Guest Medical Protection.” A subhead repeats the words “Family Liability Provision.” The section begins by declaring, “Allstate' will pay all sums arising from an accidental loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage covered by this part of the policy.”

The section goes on to list exclusions from coverage — injuries intentionally caused by an insured; bodily injury to an insured; injury to one covered by workman’s compensation provided by the insured; injuries caused by aircraft; and injuries caused by watercraft away from the insured’s premises. Between the exclusion of injuries from aircraft and watercraft is one for injury “arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motorized land vehicle or trailer.” It is on this provision that Allstate relies in maintaining that the Fabias’ moped was excluded from coverage.

On the face of the policy, Allstate argues, it has plainly not undertaken to provide liability insurance for any injury caused by an automobile. A moped propelled by a motor is as much a “motorized land vehicle” as a Lincoln Continental. The exclusion is not made ambiguous, Allstate adds, by additional clauses stating that the exclusion does not apply to a golf cart, to a motorized wheel chair, or to a vehicle used to service the insured’s premises and not designed for use on public roads and not subject to motor vehicle registration. Indeed, Allstate argues, these instances of what is not excluded put the insured on notice that anything that moves on land with a motor is excluded unless the contrary is explicitly specified. The district court accepted this line of reasoning and held that “a common sense definition of motorized land vehicle includes a moped and a reasonable lay person would expect the same.”

The difficulty with this reading of the policy begins with the fact that “motorized” does not mean what Allstate thought it meant. According to the dictionary, the term has four meanings:

a: to equip with motor-driven vehicles in substitution for those otherwise propelled <"a fire department > <~a farm> b: to equip (as groundfighting troops) with motor-driven vehicles for transportation — distinguished from mechanize c: to equip with automobiles <the population is becoming increasingly motorized —Harold Callender >< "the police > d: to design or adapt (as a machine or a tool) for direct operation esp. by an electric motor <~a lathe>. Webster’s Third New International Dictionary (1981)

Plainly, definitions b and c have no application here. Definition a, if used here, would exclude only vehicles where a motor has been substituted for some other original form of power. Automobiles would not be excluded. Definition d looks a bit more favorable to Allstate. If taken to be the meaning of “motorized” here, this definition would exclude a vehicle where adaptation of the vehicle had led to installation of a motor. The definition would exclude a moped where a motor had been added to a vehicle moved by foot. Definition d does not, however, in terms exclude either an automobile or a moped that has issued from the factory with a motor as its source of power.

But, Allstate may respond, automobiles are obviously excluded. The answer is, Not clearly by the policy. There is a doubt which in the case of an automobile is resolved by looking outside the policy to the statutory requirements for automobile insurance. See H.R.S. Chapter 294 (Motor Vehicle Accident Reparation). It is only in terms of that statutory scheme that it makes sense to hold that Allstate’s Deluxe Homeowners Policy does exclude automobiles from coverage.

The case is otherwise with mopeds. When one turns to the statutory scheme, one finds that there is no requirement that an owner insure mopeds as motor vehicles unless he is leasing them. See H.R.S. § 291C-207. One cannot say with confidence that it would make no sense for a Homeowners Policy to cover them. Indeed, the contrary is true. In today’s world every property owner is aware that any moving object he owns may cause damage and subject him to liability. If he is not compelled to insure his moped as a motor vehicle, he would naturally expect to have it covered by a policy covering “Family Liability.”

Each side has not implausible arguments. In doubt we look at the Hawaiian statutes to see if the doubt can be resolved. The Hawaiian Traffic Code, H.R.S. § 291C-1, provides that a moped is a vehicle subject to regulation. The Traffic Code also includes bicycles as vehicles. On the other hand, the Hawaiian Safety Act, H.R.S. § 286-2, regulates “motor vehicles” but expressly declares that the term “motor vehicle” does not include “mopeds.” The Taxation Code is similar, H.R.S. 249-1. We are left with our doubt. Hornbook law, good in Hawaii as elsewhere, requires that an ambiguity be construed against the insurer that issued the policy. Okada v. MGIC Indemnity Corp., 795 F.2d 1450 (9th Cir.1986). In doubt as to the meaning of “motorized land vehicles” in relation to mopeds, we hold that a moped is not excluded by Allstate’s Deluxe Homeowners Policy.

It is objected that with diligence an ambiguity may be found in almost any insurance policy. That observation is too sweeping. Mere disagreement between the parties does not create ambiguity. Sturla, Inc. v. Fireman’s Fund Ins. Co., 67 Hawaii 203, 209, 684 P.2d 960 (1984). Reasonable expectations of the applicants and beneficiaries control. Id. at 210, 684 P.2d 960. But insurance law has been developed by the course of life and human inventions revealing a difference between these reasonable expectations and what the draftsmen of insurance policies may have had in mind. The drafters get it right from their point of view the next time. The detailed definition of “earth movement” and “water damage” show what can be done.

Allstate was already on notice from a case that was in litigation in another jurisdiction well before the date of this accident that mopeds might fall within the policy. Lane v. Allstate Insurance Co., 472 So.2d 823 (Ct.App.Fla.1985). It could not reasonably have believed Hawaiian law to be less ambiguous than Florida’s. As an insurer operating throughout the country, Allstate is in an excellent position to be aware of what parts of its policy will cause ordinary readers difficulty. For the same reason, that the plaintiff is active nationally, we direct publication of this opinion. Even though only Hawaiian law is being decided, the uncertainty attached to “motorized land vehicle” is of interest to policyholders in other jurisdictions.

REVERSED AND REMANDED with directions to enter judgment for the appellants.