Retherford v. Kama

470 P.2d 517, 52 Haw. 91, 1970 Haw. LEXIS 98

• Court: Hawaii Supreme Court
• Decided: June 10, 1970
• Docket: 4895
• Status: Published

Opinions

OPINION OF THE COURT BY

KOBAYASHI, J.

On September 14, 1964, defendant Sea Life Incorporated, doing business as Sea Life Park (hereinafter called Sea Life), hired plaintiff Eobert Eetlierford as an independent contractor to photograph underwater formations in the vicinity of Eabbit Island. Defendant Leonard Kama, an employee of Sea Life (hereinafter called Kama), with the approval of Sea Life operated Sea Life’s boat to transport plaintiff to the reefs off Eabbit Island. Upon the direction of plaintiff, Kama towed plaintiff on a line in and near the waters surrounding Eabbit Island. In the course of said towing plaintiff was injured allegedly because of the negligence of Kama.

Plaintiff sued Sea Life and Kama. Thereafter Sea Life filed a third-party complaint against its insurance carrier, Consolidated Mutual Insurance Company (hereinafter called Consolidated), claiming that Consolidated should defend and pay any judgment and/or settlement to plaintiff as a result of an insurance policy issued by Consolidated to Sea Life.

Both Sea Life and Consolidated filed motions for summary judgment. The trial court denied Sea Life’s motion but granted Consolidated judgment on its motion.

Sea Life then settled with the plaintiff and the plaintiff’s complaint was dismissed with prejudice. Thereafter Sea Life appealed to this court. A correct decision of the case depends upon a proper construction of the words in the coverage clause, including an exclusion of the policy.

The pertinent parts of Sea Life’s contract with Consolidated are:

“COVEEAGE B — BODILY INJUEY LIABILITY— EXCEPT AUTOMOBILE

“To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sus■ tained by any person and caused by accident. (Emphasis added)

*****

“This policy does not apply:

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“(d) Under coverage B * * *, except with respect to operations performed by independent contractors * * *, to the ownership, maintenance, operation, use, loading or unloading of (1) watercraft if the accident occurs away from premises owned by, rented to or controlled by the named insured, * * (Emphasis added)

It is undisputed that plaintiff, an independent contractor, while performing his work was injured by insured’s employee during their joint use of Sea Life’s watercraft away from premises of the insured and that Sea Life has become obligated to pay plaintiff’s damages.

Consolidated argues in its brief that “Since this policy deals with liability incurred by the insured, the only common sense and ordinary meaning to the words ‘except with respect to operations performed by independent contractors’ in the context of Exclusion D must mean except with respect to liability incurred by the named insured with respect to operations performed by independent contractors. Third-party defendant [Consolidated] contends that the liability must arise with respect to operations performed by the independent contractor and not with the liability incurred to an indepndent contractor. * * *”

Thus, the issue is whether liability policy coverage for bodily injury “sustained by any person” “with respect to operations performed by independent contractors,” can be read only in the light advocated by Consolidated and fails to include injury negligently inflicted on the independent contractor by the insured employer, even though the independent contractor was in the midst of. performing Ms duties.

The express language of the contract fails to except the independent contractor as among the covered injured. Coverage B states “* * * injury * * * sustained by any person * * The apparent intent of the policy appears to be that liability Coverage B applies to “any person”. The basic question is: How restrictive a meaning are we to give to the clause “with respect to” operations performed by independent contractors?

Both Sea Life and. Consolidated express the opinion that there are no cases available which interpret the exact insurance provision involved in this case. Though the exact prepositional phrase “with respect to”, as far as we can determine, has never been construed in connection with the clause “operations performed by independent contractor”, the majority of the courts in interpreting almost indistinguishable liability coverages have held that the only requisite for coverage is that the accident occur during performance of work by the independent contractor. The causative factor between work done by the independent contractor and the injured is clearly rejected. And no weight is. given to the fact that an independent contractor is personally injured or that an independent contractor’s employee is injured or that an independent contractor’s sub-contractor is injured or that a stranger to the parties is injured by the independent contractor. Standard Oil v. Fidelity & Casualty Co. of N.Y., 66 F. Supp. 603 (W.D. Ky. 1946), aff’d 162 F.2d 715 (6th Cir. 1947); Duke Power Company v. Indemnity Insurance Company, 128 F. Supp. 262, rev’d 229 F.2d 588 (4th Cir. 1956); U.S. Fidelity & G. Co. v. Nat’l Pav. & Co., 228 Md. 40, 178 A.2d 872 (1962); Ocean Accident & Guarantee Corp. v. Northern Texas Traction Co., 224 S.W. 212 (Tex. Civ. App. 1920); Aetna Casualty and Surety Co. v. Ocean Accident & Guarantee Corp., 386 F.2d 413 (3d Cir. 1967); Continental Cas. Co. v. General Acc. F. & L. Assur. Corp., 175 F. Supp. 713 (1959), aff’d 287 F.2d 464 (9th Cir. 1961).

. A detailed discussion of Standard Oil, supra, is appropriate. It involved insurance providing :■

“To pay.on behalf of. the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages * * * because of bodily injury, sustained by any person * * * caused by accident * * * and arising from the work * * * performed for the insured by independent contractors * * (Emphasis added)

The material facts in Standard Oil, supra, are practically the same as in the instant , case. Standard Oil Co., the insured, hired an independent contractor. An employee of the independent contractor was injured negligently by an employee of the insured. The respective employees were not doing related work.

. The insurance company in Standard Oil, supra, argued that if the work done by the. independent contractor was the proximate cause of its employee’s injury, then his injury was caused by and was one “arising from the Avork”. The court, however, held

“* * * the language used in the coverage clause of the policy is not susceptible to that narrow construction # * *

* * * * «

“* * * that no more is necessary than that the work subject the employee of the independent contractor to a peril which comes from the fact that he is required to be in the place where it strikes when it does so.” .

We fail to see any distinction in substance between the phrase “arising from” of Standard Oil, supra, and our phrase “with respect to”. Neither do we see any such distinction, in the phrase “arising out of” of Duke Power, supra,, or “restricted to” of Continental Cas. Co., supra, with the phrase “with respect to”. In those cases and others cited heretofore, the courts have consistently (1) rejected the causative factor; (2) refused to adopt the limited, narrow construction advocated by the insurance company; and (3) ruled in favor of coverage because of the existing ambiguity.

On the other hand there are two cases that can be read as supporting Consolidated’s contention. In both Chrysler Motors of California v. Royal Indemnity Co., 76 Cal. App. 2d 785, 174 P.2d 318 (1946), and Michigan Stamping Co. v. Michigan Employers’ Casualty Co., 235 Mich. 4, 209 N.W. 104 (1926), the courts narrowly construed the words “by reason of” expressly made coverage dependent upon a showing that acts performed (by independent contractors) in furtherance of the work caused the accident.

Our statute clearly requires that the purpose of the parties must be determined from the language of the policy as a whole and that the contract of insurance must be construed as to give éffect to the intention of the parties.¹ Following said requirement we see no justification in Consolidated’s contention that the words “with respect to” can only be read to mean, in essence, “with respect to accidents and injuries caused by independent contractors in the operations performed by independent contractors.” The exception proviso in Exclusion D does not contain language which either expressly or by implication injects a causation factor.

We are of the opinion that Standard Oil, supra, and other similarly held cases enunciate the correct construction of the pertinent provision. If the intent of the parties were as clearly restrictive as contended by Consolidated, we would not now be faced with the problem of resolving the proper construction of the liability coverage. To say the least, we are of the opinion that the Coverage B with its exclusion and exception to the exclusion is ambiguously phrased. We hold Consolidated responsible for the ambiguity and resolve the question of coverage herein in favor of Sea Life.² As stated in Standard Oil, supra, the work being done herein by plaintiff, the independent contractor, subjected him to a peril which came from the fact that he was required to be in the place where the peril struck. The perils encountered by plaintiff were incident to and “with respect to operations performed by independent contractors” and plaintiff certainly comes within the meaning of “any person”.

Alexander Marraek (Robertson, Castle <& Anthony of counsel) for defendant, third-party plaintiff-appellant. Joseph Schneider (Jenhs, Kidwell, Goodsill & Anderson of counsel) for defendant, third-party defendant-appellee.

Sea Life, on its motion for summary judgment is entitled to judgment in its favor as a mattér of law. Judgment of the trial court is reversed. Remanded for the entry of a judgment in conformity with this opinion.

1 HRS § 431-446.

2 Masaki v. Columbia Casualty Co., 48 Haw. 136, 395 P.2d 927 (1964); Law v. Hawaiian Life Insurance Co., 51 Haw. 288, 459 P.2d 195 (1969).