UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant, 1HE TRAVELERS INDEMNI1Y INSURANCE COMPANY, Appellee.

Transcription

1 In The Supreme Court of Virginia At Richmond RECORD NO UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant, V. 1HE TRAVELERS INDEMNI1Y INSURANCE COMPANY, Appellee. ADDITION TO THE JOINT APPENDIX Terry H. Davis, Jr. HARRIS, FEARS, DAVIS, LYNCH & MCDANIEL 5735 Poplar Hall Drive Norfolk, Virginia (804) Counsel for the Appellant Timothy M. Richardson HUFF, POOLE & MAHONEY 4705 Columbus Street Virginia Beach, Virginia (804) Counsel for Appellee

2 TABLE OF CONTENTS PAGE 15. Addit i on to the Joint Appendix "The Trial Memorandum filed by Travelers Indemnity Company on May 22, 1989" 135 CERTIFICATION OF MAILING I certify that Rule 5:26 has been complied with and t hat twenty (20) copies of the Addition to the Joint Appendix was mailed to David Beach, Clerk of the Supreme Court and three Copies of the Addition to the Joint Appendix were mailed to Timothy M. Richardson, Counsel for the Appellee, Huff, Poole & Mahoney, 4705 Columbus ~reet, Virginia Beach, Vi rginia on the j y day of May, 1990.

3 VIRGINIA: IN THE CIRCUIT COURT OF THE CITY OF NORFOLK THE TRAVELERS INDEMNITY COMPANY, v. Plaintiff, UNITED SERVICES AUTOMOBILE ASSOCIATION, t/a USAA CASUALTY INSURANCE COMPANY, Defendant... AT LAW NO. L88-32 TRIAL MEMORANDUM FACTS The facts in this matter have been stipulated to by the parties and are set forth in the Stipulation heretofore filed with the Court. The issue between the parties arises out of an automobile accident which occurred on September 26, 1983 on Ocean View Avenue in Norfolk. The injured motorcycle passenger, Allyson L. Duncan ("Duncan") brought suit against David Wayne Lewis ("Lewis") and Tidewater Pizza, Inc. t/a Domino's ("Tidewater Pizza") to recover for her serious personal injuries. Lewis was driving a 1970 Volkswagen Beetle with the permission of Mary J. Laine, a named operator of the vehicle owned by Mary's father, Lawrence L. Laine, and insured by United Services Automobile Association ("USAA"). At the time of the accident, Lewis was delivering pizzas in the course of his employment with Tidewater Pizza. Travelers Indemnity Company ("Travelers") tendered the defense of the Duncan suit

4 to USAA on several occasions asserting that USAA was the primary carrier and entered the suit to protect itself from an excess verdict. USAA did not deny coverage to Lewis or Laine and conducted a defense of the suit. As is reflected in the Stipulation, Travelers and USAA paid equal sums of $95,000 in settlement of the Duncan claim for a total of $190,000, reserving rights between themselves to pursue this action to determine the coverage issue. Travelers now seeks recovery of the amounts paid, plus interest and attorney's fees, from USAA as the primary coverage carrier in this claim. LAW AND ARGUMENT Travelers Indemnity Company has relied throughout this matter on the clear policy language and the well settled case law to support its position that the employer's coverage regarding a non-owned automobile is excess to that of USAA, which is the specific and primary insurance on the vehicle involved in the accident. Since USAA does not contend that the "other insurance" clause in their policy applies to this circumstance, the issue before the Court is whether the Traveler's policy is excess to that of USAA. The language in the Special General Liability Form in Tidewater Pizza's policy specifically excludes coverage for bodily injury and property damage "arising out of the ownership, maintenance, operation, use, loading or unloading of any. other automobile or 2

5 aircraft operated by any person in the course of his employment by any insured." (See Exhibit A to Motion for Judgment). One of the Amendatory Provisions in the Travelers policy extends coverage to "the use in the Named Insureds business of a non-owned private passenger automobile by any person other than the Named Insured", but continues on with standard language that the non-owned coverage "shall be excess over any other valid and collectible insurance available t o the Named Insured". The amendment provides the additional definition of a "non-owned automobile" as "an automobile which is neither owned or hired by the Named Insured". According to the St ipulation, the Volkswagen Beetle involved in this accident was a private passenger automobile owned by Lawrence L. Laine and was not a leased vehicle. The defendant has contended that the livery exclusion in the USAA policy applies to the Volkswagen, but the Stipulation sets forth that Lewis used the vehicle in his employment with Tidewater Pizza "to deliver pizzas only". Additionally, in order to be a "public or livery conveyance" within the exclusion of an automobile liability policy, the vehicle must be held out to the general public for the carrying of passengers for hire indiscriminately. Smith v. Stonewall Casualty, 212 Va. 765, 188 S.E.2d 82 (1972). Clearly, the livery exclusion is not applicable to the circumstances of this case. 3 / 3 '1

6 The treatises and case law are replete with the general rule that an automobile owner's liability policy follows the vehicle as primary insurance. See, 16 Couch on Insurance 507, Section 62:60 (2d Ed. 1983); Christensen v. Farmer's Insurance Exchange, 21 Utah 2d 194, 443 P2d 385 (1968)(automobile liability policy covering the car is primary, and that of the non-owner driving the car is secondary). A leading Georgia case, citing Couch 2d, set forth a well-stated general rule: Generally, when automobile liability policies issued to owner and driver both cover an injury and one or both of the policies contained an excess clause pertaining to non-ownership coverage, the policy issued to the owner is primary and the insurer is liable up to the limits of the policy without apportionment, and the policy providing that it shall be excess is not regarded as collectible insurance until the limit of liability of the primary policy has exhausted. Chicago Insurance Company v. American Southern Insurance Company, 115 Ga. App. 799, 156 S.E.2d 143 (1967). Another leading authority has written that "as between a policy covering an automobile owner's employer and a policy covering the driver, the driver's insurer is primarily liable, when each purports to be excess insurance." 8A Appleman's Insurance Law and Practice, Section at 447 (1981). The Virginia case on point, State Farm v. USAA, 211 Va. 133, 176 S.E.2d 327 (1970), dealt primarily with coverage limitations on the uninsured motorist statute requirements. In that case, USAA covered a minor passenger (Sargent) injured in a vehicle which was driven with the owner's 4

7 permission by a State Farm insured (Call ). The c ar was i nsured by GEICO under a policy issued to t he o wne r (Lobi). The o ffending vehicle was driven by an uninsure d motorist. Following an opinion confirming the validity of the excess coverage c l ause, the Court went on to hold that "GEICO, which insured the vehicle i nvolved in the accident, i s primar ily l i able for. the full e xtent of its policy", and the other e xcess carriers including State Farm (the driver ' s policy), are secondarily l i a ble f o r t he e xcess judgment. Id., at 138. Thus, Virgi nia follows the general rule of construction that the owner's poli c y is primary a nd non-owner's coverage is only applicable to e xcess amounts. The general rule that vehicle owner's policy is primary is r eflect ed i n the following opini ons f rom other jurisdictions : Thomas v. Neeb-Kearney and Co., Inc., La. App., 334 So.2d 4 65 ( 1976)(vehicle owner/lessor's liability policy was primary whe r e les see's business poli c y provided only excess for lined o r non -owned vehicles ) ; Keysto ne Insurance Co. v. Atlantic Chr ylser Plymouth, 1 67 NJ Super. 353, 400 A.2d 872 (1979)(owner' s liability policy p r i ma ry where customer using garage owner 's vehicle with permission); Western Pacific Insurance Co. v. Farmers Insurance Exchange, 69 Wash.2d 11, 416 P.2d 4 68 (1966)(as between garageman's insurer with excess clause and vehicle owner ' s i n s urer with pro rata clause, owner ' s was primary coverage for subrogation, 5 II

8 contribution or apportionment purposes and was liable for garageman insurer's costs in settling claims within limits of owner's policy); American Surety Co. v. American Indemnity Co., 72 A.2d 798 (1950)(vehicle owner's policy primary and valid and collectible insurance available to excess coverage of non-owner); Universal Underwriters Insurance Co. v. Dairyland Mutual Insurance Co., 102 Ariz. 518, 433 P.2d 966 (1967)(insurer of driver under excess policy in case of nonowned vehicles has no liability until owner's policy is exhausted); Fairbault Canning Co. v. Northwestern National Casualty Co., 298 F.2d 58 (7th Cir. 1961)(owner's policy primary where owner's son drove vehicle on behalf of son's employer with consent of owner, and vehicle was "non-owned" and within excess clause of employer's policy). Applying the general rule to the facts in the instant case, it is clear that the USAA policy covering the vehicle driven by Lewis is liable as primary carrier for the payment of the entire settlement amount of $190,000, given that the limit of liability for the USAA policy is $300,000. (See Stipulation Number 14). Since the settlement amount does not exceed $300,000, the limit of liability on the primary policy is not exhausted and Travelers, therefore, does not become liable for any portion of the settlement amount. The Stipulation sets forth the "contention" of the defendant that their policy is not primary but pro-rata in proportion to the limits of liability of each policy. 6 I '-/ tj!i

9 However, this position is in direct conflict with the case law set forth above. As the Virginia Supreme Court stated in State Farm v. USAA, the coverage on the vehicle was primary to the "full extent of its policy" and the excess carrier is secondarily liable. This is not a case wherein the non-owned or excess clauses in two policies insuring the same risk are in irreconcilable conflict and operate mutually to reduce or eliminate the amount of valid and otherwise collectible insurance available to the insured for both policies. See, Aetna Casualty Company v. National Union Fire Insurance Company, 233 Va Rather, the USAA policy undeniably covers the vehicle through its owner and the permissive user, and the Traveler's policy, by its terms, only applies to the non-owned vehicle in an excess capacity. Thus, the overwhelming weight of authority dictates that defendant, USAA is liable for the entire settlement amount of $190,000 as the primary insurer of the Volkswagen driven by its permissive user, David W. Lewis, and for costs expended by Travelers in settling the lawsuit. CONCLUSION WHEREFORE, plaintiff prays that the Court award to plaintiff the amounts prayed for in its Motion for Judgment for the reasons set forth therein and supported by the 7 I~

10 Stipulation and the overwhelming weight of authority on the issue cited above. RESPECTFULLY SUBMITTED, By:~~~~~~~~~~~~~~~- Glen A. Huff Kevin B. Rack Attorney for Travelers Indemnity Co. CERTIFICATE OF SERVICE I hereby certify that a true and accurate copy of the foregoing Trial Memorandum was hand-delivered to Terry H. Davis, Jr., Esquire, this 22nd day of May, 1989 at the Circuit Court for the City of Norfolk prior to the trial of the case. 8 II

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