Anthony Vasquez, App. v. American Fire & Casualty Co., Resp.

• Court: Court of Appeals of Washington
• Decided: March 18, 2013
• Docket: 67702-1
• Status: Published

Opinion

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IN THE COURT OF APPEAL OF THE STATE OF WASHINGTON

ANTHONY VASQUEZ, individually, No. 67702-1-1 Appellant, DIVISION ONE

AMERICAN FIRE AND CASUALTY COMPANY, an Ohio corporation, PUBLISHED OPINION

Respondent. FILED: March 18,2013

Becker, J. — Anthony Vasquez, the president of Benchmark Construction,

was injured when he was struck by an underinsured motorist while walking in a

crosswalk on personal business. Vasquez made a claim for underinsured

motorist (UIM) coverage under the business auto policy American Fire and

Casualty Company issued to Benchmark. He had no other auto insurance. We

affirm the summary judgment dismissal of his claim for UIM benefits. Vasquez

was not a named insured under the policy and was not using a covered vehicle

when he was injured.

Anthony Vasquez is the president, majority owner, and an employee of

Benchmark Underground Construction Inc. Vasquez was hit by an underinsured No. 67702-1-1/2

motorist on September 15, 2008, while he was walking in a marked crosswalk on

personal business. He was seriously injured.

Before the accident, Vasquez had purchased a package of commercial

insurance policies for Benchmark, including a business automobile policy.

Benchmark, but not Vasquez personally, was the insured entity named in the

declarations of the business auto policy. The policy covered seven vehicles, two

of which were trailers. Among the covered vehicles listed in the policy was a

2007 Ford pickup that Vasquez bought and registered in his own name.

Vasquez used the pickup both for work and for his personal affairs.

Vasquez did not have an auto liability policy in which he was the named

insured. He was specifically excluded from his wife's automobile policy.

According to Vasquez, this was because he rarely drove his wife's car and he

believed he had full coverage under Benchmark's business auto policy with

American Fire.

Through Benchmark, Vasquez paid a total of $5,682 in premiums for the

business auto policy for the period of December 1, 2007, to December 1, 2008.

The policy provided liability coverage for five employees of Benchmark, including

Vasquez. The premiums paid included a charge for "underinsured motorist

bodily injury" coverage at the rate of $95 each for five of the seven covered vehicles, including the Ford pickup. The premium payments also included a

charge of $49 for "non-ownership liability coverage." Vasquez sought UIM No. 67702-1-1/3

benefits under the business policy. American Fire denied his claim. Vasquez

sued for declaratory relief. On cross motions for summary judgment, the court

determined that the policy did not cover Vasquez for injuries suffered as a

pedestrian. Vasquez appeals.

Summary judgment is appropriate only ifthere are no genuine issues of

material fact and the moving party is entitled to judgment as a matter of law.

Clements v. Travelers Indem. Co.. 121 Wn.2d 243, 249, 850 P.2d 1298 (1993).

The interpretation of insurance policy language is a question of law, reviewed de

novo. Butzberqer v. Foster, 151 Wn.2d 396, 401, 89 P.3d 689 (2004). An

insurer issuing liability coverage "with respect to any motor vehicle registered or

principally garaged in this state" must provide UIM coverage "for the protection of persons insured thereunder who are legally entitled to recover damages." RCW 48.22.030(2). Because the UIM statute is to be liberally construed, Washington

courts will void "any provision in an insurance policy which is inconsistent with

the statute, which is not authorized by the statute, or which thwarts the broad

purpose ofthe statute." Clements, 121 Wn.2d at 251. The statute is read into and becomes part of the contract of insurance, overriding exclusionary language

in the policy that would narrow UIM coverage below what the statute requires.

Clements, 121 Wn.2dat251.

Under the plain language of RCW 48.22.030, once it is determined that a

person is an insured under the liability section of the policy, that person is also No. 67702-1-1/4

entitled to uninsured motorist coverage. Federated Am. Ins. Co. v. Ravnes. 88

Wn.2d 439, 444, 563 P.2d 815 (1977). And this is true "whatever her activity

may have been when she was injured by an underinsured motorist." Kowal v.

Grange Ins. Ass'n. 110 Wn.2d 239, 245, 751 P.2d 306 (1988). Such coverage

has been referred to as "rocking chair" coverage because the insured need not

be occupying or using a particular vehicle to be eligible for it:

[Ujninsured motorists coverage [is] applicable if, at the time of sustaining injury ... a named insured, was occupying the Ford described in his policy, or was on foot, or on horseback, or while sitting in his rocking chair on his front porch or while occupying a nonowned automobile furnished for his regular use .. . This so- called uninsured protection is limited personal accident insurance chiefly for the benefit of the named insured.

Motorists Mut. Ins. Co. v. Bittler. 14 Ohio Misc. 23, 32-33, 235 N.E.2d 745

(1968), quoted in Grange Ins. Ass'n v. Great Am. Ins. Co., 89 Wn.2d 710, 718,

575 P.2d 235 (1978).

In Ravnes, Kowal, Grange Insurance, and Bittler, the injured person was a

named insured. Vasquez contends that even though he was not named in

person as an insured, he was similarly entitled to unrestricted "rocking chair"

coverage because the policy did provide him with liability coverage in certain

situations.

The liability coverage section of the "Business Auto Coverage Form"

designates Benchmark ("You") as the named insured. It then designates other

persons as "insureds" in specified circumstances: No. 67702-1-1/5

1. Who is An Insured The following are "insureds": a. You for any covered "auto." b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except: (1) The owner or anyone else from whom you hire or borrow a covered "auto". This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own. (2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household.

c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability.

An endorsement to the business auto policy, the "Master Pak for Commercial

Automobile," expands the "Who Is An Insured" section of liability coverage to

add: "Any employee of yours while using a covered 'auto' you don't own, hire or

borrow in your business or your personal affairs."

American Fire agrees that under these provisions, Vasquez had liability

coverage as an employee when he was using a covered vehicle on Benchmark

business. And under 1(c), he would be covered in a situation where, perhaps as

a construction supervisor, he became liable for the conduct of someone else

insured under the policy. In these situations, he would belong in the statutory

category of "persons insured thereunder," RCW 48.22.030(2), even though he

was not a named insured, and therefore he would have been entitled to UIM

coverage. Rau v. Liberty Mut. Ins. Co., 21 Wn. App. 326, 331, 585 P.2d 157

(1978) (claimant, though not the named insured, was using the insured truck with No. 67702-1-1/6

the owner's permission at the time of the accident; because this made him an

"insured" for liability purposes, he was also entitled to UIM coverage), abrogated

in p_art on other grounds by Butzberger. 150 Wn.2d 396.

At the time of the accident, Vasquez was a pedestrian in a crosswalk. He

was not using a covered auto, and he had not become liable for the conduct of

anyone else insured under the policy. Accordingly, American Fire contends

Vasquez was not covered for liability at the time of the accident, and as a result

did not have UIM coverage.

Vasquez contends that RCW 48.22.030 does not permit insurers to deny

UIM coverage on the basis of restrictions contained in the liability provisions of

the policy. He cites Tissell Bv & Through Cavce v. Liberty Mutual Insurance Co..

115 Wn.2d 107, 111, 795 P.2d 126 (1990). Tissell involved a personal

automobile policy. The accident victim, a family member, was covered as a

named insured. The court held that the statute would not permit the insurer to

deny UIM coverage based on a liability coverage exclusion. The victim was "the

purchaser" of the policy and "could not have purchased UIM coverage

elsewhere." Tissell, 115 Wn.2d at 111. Vasquez argues that he, as the "de

facto" purchaser of the Benchmark policy, likewise was entitled to unrestricted

UIM coverage. But unlike the claimant in Tissell, Vasquez was not a named

insured. And what he purchased was a business policy, not a personal policy as

in Tissell. Tissell does not require an insurer to treat unnamed employees of a No. 67702-1-1/7

business as named insureds.

In essence, Vasquez proposes that an employee who is covered for

liability under a business policy only in limited circumstances is entitled to UIM

coverage for any injury caused by an underinsured motorist in any

circumstances. We disagree. The limiting phrases "while using" and "only to the

extent of are effective. They make Vasquez an "insured" under the liability

portion of the policy only when the activity he was engaging in at the time of the

injury fits within those limitations. See Tedeton v. Simpson, 39,940 (La. App. 2

Cir. 8/22/01); 795 So. 2d 451, 455 (noting that liability coverage is generally

extended to employees only under certain defined circumstances, and declining

to "make the leap from an insured for specific circumstances to an insured in all

circumstances for purposes of UM coverage"), writ denied. 803 So. 2d 977

(12/13/01).

Underinsured motorist coverage is limited personal accident insurance

chiefly for the benefit of the named insured. Limiting the scope of the definition of

who else is an "insured" does not run afoul of the public policy behind

Washington's UIM statute. Smith v. Continental Cas. Co., 128 Wn.2d 73, 83,

904 P.2d 749 (1995); see ajso Blackburn v. Safeco Ins. Co., 115 Wn.2d 82, 88-

89, 794P.2d 1259(1990).

In Smith, the UIM claimant, Roger Smith, was the sole proprietor of a

company that owned a tow truck. As the result of an endorsement to his father's No. 67702-1-1/8

garage policy for an "Additional Insu red-Lessor," the tow truck was designated as

a leased auto under that policy and its lessor became an additional insured.

Under a "Hired Autos" endorsement that augmented the definition of "Who is an

Insured" in the same policy, the truck's owner became an insured covered for

liability, but only for that truck, and only when the truck was being leased by and

used for Smith's father's business. Smith. 128 Wn.2d at 76-77. At the time he

was injured, Smith had finished using the tow truck and was driving a van owned

by a third party. The court's first holding was that because the van was not a

covered auto, Smith did not qualify for coverage under the UIM section of the

policy; he was not a named insured. Smith. 128 Wn.2d at 79-80. The second

holding, significant to our analysis in this case, addressed Smith's claim that he

had liability coverage as an additional insured-lessor. The court held it was not

reasonable to interpret the policy as providing UIM coverage to Smith when he

was not using a covered vehicle. Smith, 128 Wn.2d at 81-82.

In reading the insurance contract as a whole, it becomes obvious it was not intended to place upon the insurer responsibility for loss unrelated to use of the leased vehicle by the additional insured (Respondent), whose injury arose out of his driving a vehicle not covered by the endorsement.

Smith, 128Wn.2dat83.

Similarly here, the Benchmark policy was not intended to place upon the

insurer responsibility for loss unrelated to use of a covered auto. Adopting the

interpretation Vasquez advocates would make the business auto policy a

8 No. 67702-1-1/9

personal policy for all employees.

Vasquez alternatively argues that he actually is a named insured by virtue

of a Hired Autos endorsement included in the American Fire policy. The

endorsement states that any auto described in the declarations "will be

considered a covered 'auto' you own and not a covered 'auto' you hire, borrow or

lease under the coverage for which it is a covered 'auto.'" Vasquez reasons as

follows: (1) In the business auto policy, "You" refers to the named insured; (2)

the endorsement converts the Ford pickup into a vehicle "You" own; (3) Vasquez

is the legal owner of the Ford pickup; (4) therefore, the meaning of "You" has

been expanded to include Vasquez. This is an illogical interpretation of the

policy language. If for insurance purposes a car I own is treated as if it belongs

to you, it does not follow that I am you.

American Fire paid Vasquez's medical expenses. The "auto medical

payments" form, an endorsement that modified the business auto coverage form

and several other coverage forms, defined an insured as "You . . . while a

pedestrian, when struck by any 'auto.'" Vasquez contends that the payment of

his medical expenses under this coverage supports his claim that he is a named

insured "You" under the business auto coverage. We find this argument

unpersuasive. As evidence of contractual intent, the payment of medical

expenses is too weak to support an inference that Vasquez was a named insured

for liability coverage. No. 67702-1-1/10

In summary, Vasquez was not a named insured. And he was not insured

under the liability portion of the policy under the circumstances of the accident.

Therefore, he was not entitled to UIM coverage.

Affirmed. As respondent is the prevailing party, its request for costs under

RAP 14.3 is granted.

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WE CONCUR: 71

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