Continental Insurance Co. v. United States Fidelity & Guaranty Co.
528 P.2d 430
Alaska
1974
Check Treatment

*1 CO., INSURANCE CONTINENTAL Appellant, AND STATES FIDELITY

UNITED Appellee. CO., GUARANTY

No. 2052.

Supreme Court of Alaska.

Nov. *2 quar- two rock Chugach Electric. When exhausted, were

ries near the dam rock for remaining accessible source of opposite end project quarry became eco- the dam. The most of the lake from nomically moving method of feasible the frozen lake rock was to haul end, entered To that Northern in winter. Cooper agreement into with Robert paid hauling whereby Cooper was for with his trucks and drivers. the ice un- Northern officials considered heavy rock-laden safe for the traffic of ap- Jacobus, Anchorage, for Kenneth P. expert advice despite some pellant. contrary. Northern tested to the In Houston, Clyde Anchorage, ap- for C. pro- determined to by drilling the ice pellee. expert haul without further ceed with the RABINOWITZ, of Northern’s J., Before C. advice. the direction CON- Under BOOCHEVER, Bowdish, Jr., vice-president, NOR and Meredith E. JJ. employees scraped snow off Northern BOOCHEVER, blade, caterpillar form- frozen lake with a Justice. After 50 to 60 feet wide. attempt Corpo- Northern ill-fated tested roadway was ration to haul rock across frozen (five hauling of half-loads Chugach Lake at the behest of Electric weight of yards, cubic a total truck and load gives litigation. Association1 rise to this 35,000 began Febru- pounds) about of rock This is a contest between Northern’s in- load, Coop- ary the fourteenth 1968. On trucking surer and that of the subcontrac- through er’s the ice and sank. truck broke actually tor who hauled the rock to deter- fifteenth saw The driver of the load mine shall bear the cost Coop- spot” area of “rough avoided a wrongful claims of the families of death into the next driver drove er’s demise—but two drivers whose trucks broke and was by the the hole made the ice and sank to the bottom of the lake. also lost. The central issues are whether Northern brought The estates of the two drivers Corporation party qualifies as an insured Northern, against wrongful actions death under the of automobile here Chugach defendants not trucking to the subcontractor tendered defense of material. Northern Fidelity Guaranty United Com- States G., theorizing that & and, action to U.S.F. pany (hereinafter if G.);& Northern was omnibus insured not, complaints death & G. issued U.S.F. policy of insurance Northern and the facts available at the time refused & Cooper trucks. U.S.F. G. Continental, on the insurer, and its de- tendered the tender of defense.' duty to fense to & G. established a suits, regard- defend Northern un- Continental of non- less of the ultimate determination automo- liability and an der both a part for the actual on U.S.F. G’s defended liability policy. Continental bile wrongful-death recoveries. wrongful death actions. in the settled actions were Ultimately, the two Corporation contracted $300,000, slightly more aggregate belonging strengthen the Lake dam rhg., 1974), opn. Assoc., Chugach P.2d 76 Electric See 523 P.2d 1243 vehicle is a user of a deciding who $250,000. Con- bore which Northern coverage, of omnibus purposes entirety of Northern’s paid tinental who universally require that if one courts settlement. share of the driving actually user was be a claims pendency During vehicle, must have exercised subject he ac- actions, brought parties it.2 control over some form su- declaratory judgment *3 reaching rule, cite cases but agree with of impose the costs court, seeking to perior somewhat similar opposite on conclusions recovery the actual defense and user the of of issue Resolution facts. case upon death actions case-by-case upon a necessarily turns status superior the jury, a and without was tried facts, analysis we must therefore the and of by a supported judgment a entered court the circumstances in more detail review recovery denying any opinion written Cooper the and surrounding the deaths of appeal followed. This Continental. other driver. I. NORTHERN INSURED WAS perform the Cooper agreed to ice haul & ? BY is, operated-hour-per-truck That basis. Cooper trucks insured the Cooper supply U.S.F. & G. required to sufficient was a automobile standard the equipment and drivers complete the covering arising upon out the use task, payment and based vehicles, containing following and the defi- hourly’scale. contract took form, nition of “insured”: quanti- rather than the more common rate, ty job inade- or because feared bodily respect to the insurance for With quate compensation might result from the injury liability . . the unqualified . risky work. tentative nature the and the word “Insured” includes In- Named paid the room and board sured . . . also includes the drivers no but made deductions person using while taxes, union dues or the like. The drivers’ re- organization legally wages paid by Cooper. were sponsible provided thereof, the use actual use the automobile is bladed the over spouse or such Named Insured weeks three before permission [emphasis of either add- permit haul was to commence order to ’ ed]. freezing. deeper The construction of persons language insuring upon expert road was advice solicited based the named insured is often to as referred haul, days Northern. before the Several clause”, an “omnibus and those insured and Bowdish tested driv- are language referred to as “omnibus fully-loaded truck the road. across insureds”. straight path of the road actual did, To lake, could, obtain shelter of another’s insurance but across the drivers insured, as an omnibus one must be very deviate from the shal- road a “user” legally Immediately of the insured vehicle or com- low snow cover. before responsible use, injury haul, or mencing opera- Northern’s blade death must “arise out of” the use of tor cut a return from the dam to road vehicle. quarry. Eagle Co., 893, (1970) 452, ;

2. Hake v. Picher 406 F.2d Nicollet 456-457 (7th 1969) ; Liberty Properties Co., Mercury Cir. v. Mutual Inc. v. St. Ins. Paul Steenberg Co., 294, Constr. 225 F.2d 271 Minn. 135 N.W.2d 132-133 (8th ; 1955) County Indemnity Wyoming, (1965) ; Cir. New Woodrich Co. v. Constr. Ry. Co., York v. Erie Lackawanna F.Supp. 89 N.W.2d (W.D.N.Y.1973); (1958) ; Ind Southern California emnity Ins. Co. of North v. Pacific America 70 N.M. Clay Cal.App.3d 304, (N.M.1962). Products 409-410 commenced, that, aside days the haul This review demonstrates before Three loader broke construction and maintenance front-end from the one wheel of a road, along the road. On the entire concerns of the North through the ice haul, Cooper employees job two of site ern officer and night before the along loading unloading of the ve pickup were his drivers drove area, safety, particularly Except unloading re hicles. road to check accident, em through. broke The mote from the no Northern area where the loader ployee Cooper’s trucks or drivers morning, and Bowdish directed following route, spacing regarding speed, to commence haul or even discussed not, wait; therefore, check find weight Bowdish left the discussion to of load. We do and, Co.,4 upon previous break-through Eagle Picher the case the area of the Hake reliance, return, begin places principal gave an order to pick- persuasive. the lake in a There the narrowness of a Bowdish crossed work. and, up first loaded truck road a dam con truck behind the *4 dam, employees every an or- after at the radioed tractor’s direct move he arrived 5 begin. ment of the truck involved the accident der for the other trucks Subse- speed place set their own at the time and where occurred. quent drivers trucks; activity persuaded are the host of cases proximity to other Nor affecting speed finding general contractors to be omnibus of Northern manner job-site injuries insureds where pacing or of the trucks was resulted by general speed loading operation. from misdirection a of its contractor’s employee operated by of a vehicle the em There was trucks carried half-loads. All ployee supplier.6 subcontractor or of a dispute regarding whether considerable applicable considerations ascertain light decision to take loads was made employs independ one who court found: or The trial Bowdish. regarded ent may contractor be as a “user” testimony indicates weight of [T]he well stated in the of vehicles are case light half- his men to take told v. Southern California loads, pow- and . . . the men had 7 Royal Indemnity Co.: given a load was er to determine that employing that one It has been held sufficient. may using contractor be independent finding accepted has not independent contrac- the vehicle of such position appeal, although arguing its super- employer tor such exercises when specifically at the argument no is directed time, control, over visory at some . finding is finding. superior court’s movement thereof. vehicles or the evidence, and, supported by adequate ac- beyond recognize going use as decisions appeal.3 controlling on this cordingly, is operation of the vehi- actual mechanical dump the drivers where to told encompassing the broader cle and “as at the dam. He also checked the con- employing putting the vehi- concept of spot ice at dition of the by an act which as- service cle to one’s where the accident occurred after a driver any time —with the consent at sumes rising through informed him that water was supervisory agent the owner or a crack in the ice. Indemnity 1219-1220; F.Supp. 52(a). Ins. Co. 3. See Alaska at R.Civ.P. See Nel- Clay Co., 1225, Products Pacific America v. son Green 515 of North v. Constr. 1228 304, Co., Cal.App.3d 1973). at 455- 91 Indemnity 457; v. Constr. Co. Woodrich (7th 1969). 4. 406 F.2d 893 Cir. Liberty 418; Co., Mutual at N.W.2d Co., Liability Ins. Mutual American v. Id. at Co. 894-896. N.J.Super. 17, A.2d 815-817. Liberty Steenberg Mutual Ins. v.Co. Constr. (1962). 295; County Wyoming, N.M. 225 F.2d at 7.70 Ry. New v. Erie York Lackawanna may guidance of its look to the vehicle control or movements.” contractors policies liabilities of others for all Woodrich Construction v. America, job-site accidents. resulting of North vehicular Ins. Co. See, also, interpretation is Persellin v. believe such an 89 N.W.2d 412. We cannot Ass’n, policies buy who draft or 75 N.D. intended those State Automobile Ins. 647; af- Hardware Mut. automobile insurance. therefore 32 N.W.2d We Mitnick, holding 180 Md. A.2d firm the trial court’s that Northern Cas. Co. 393; Steenberg merely Liberty prepared a antecedent Mut. Ins. Co. condition vehicles,8 But, Cir., use user 225 F.2d of the was not a Const. trucks.9 absent exercise of an independ over vehicle of control contractor, employing one ent A DUTY II. & G. HAVE DID U.S.F.

independent contractor DEFEND NORTHERN? TO meaning “using” such vehicle within determine proper time clause, when actual omnibus is liable whether an insurer use thereof is the named all is after the relevant of insurance employees. ascertained; however, have been duty in the in creates

All insurance contract the cases in which there has surer lawsuits which finding been a to defend of “use” manifest more scope of coverage, could subject intimate control fall within over the vehicle pleadings in *5 duty than the is established building mere and occasional that checking by of the facts known road, action and which are the extent of Northern’s reasonably de involvement with ascertainable at the time trucks. this case fense to the pre Northern did no more is tendered insurer.10 Since pare policy duty the ice road and contract & created a U.S.F. G. defend,11 duty his trucks and must decide drivers to travel we whether that it. Were we insured, to find Northern at the time ignored breached it North omnibus would, effect, in defense, con- despite establish a that ern’s tender of our rule 8. See Southern A deter- California The case road. settled. ' responsibility” Indemnity Co., “legal therefore 369 P.2d at 409-410. of mination by required of fact a fresh determination Judge Carlson, 9. in his well-reasoned mem- judge The classi trial instant action. tbe decision, of orandum held not that North- “inherently activity dan as of an fication ern was not a user of the truths but also that development thorough gerous” requires a user, if even it were such the -deaths did Neither of Con of in the trial court. any not arise out of such use developed arguments has been tinental’s of the trucks. In view of our affirmance authority, supported adequately facts nor grounds on the that Northern was a user below, them and we do not consider here or vehicles, of the we do not reach this second Development, Inc. reasons. Fairview those issue. Fairbanks, City v. 19701, 475 P.2d further We by decline to consider raised issue denied 402 91 S.Ct. cert. U.S. interpretation regarding the DeLay, 642; L.Ed.2d Williams language policy. certain in the U.S.F. & G. (Alaska 1964). omnibus clause includes as an insured “any person legally organization responsible Flesher, 469 10. Co. v. National for cursorily the use” of the vehicles. Continental legally contends that Northern was responsible Cooper vehicles, policy provides that the use company legally first because “it has been shall: pay against alleging damages accident”, suit the insured because of defend sickness, second, might injury, destruction because the work be in- such disease or deemed thereof, herently dangerous. original damages wrongful seeking on account groundless, false or death action even if suit sev- contained Company may fraudulent, recovery, prominent make such eral theories of the most but negotiation negligence investigation, of properly and settlement which was direct in failure expedient; design, suit as deems construct maintain the claim or operation was not an insurer far more control over elusion that U.S.F. & G. as- than the trial court after all the facts were he had. It was Bowdish’s this case found certained. testimony deposition court that trial previously held that insurer have We Cooper gave rejected finding complaint must a suit where the al defend half-loads. further note order to haul We may leges facts that be within the that when tendered defense coverage or where such facts are known G., regarding state & the law of this reasonably insure ascertainable scope clauses was uncer- of omnibus complaint wrongful r.13 The death al ; the Marwell15 case was not decided tain leged Trucking that Northern hired C & C vagaries in both law until Given Company, operated by owned and Robert C. fact, wrongful death actions were Cooper, for the ttse of its trucks and drivers potentially at least within the allega haul rock across lake. This U.S.F. & G. as October placed U.S.F. & on con notice of should have undertaken North- U.S.F. & G. tention that Northern was a user of the defense, the failure to do so was ern’s vehicles. duty to defend created breach of the highly complaint detailed the insurance contract. alleged death actions at least one we established the In Marwell cause of specific action based negli damages applied measure of gence in failing of Bowdish danger heed wrongfully fails to an in insurer defend signs, ordering the haul to continue and sured : misrepresenting dangerous portion that the principle equitable employ the We road was safe.14 Defense of the subrogation and rule that the defense wrongful death actions was tendered on pro costs must be rata between shared October three months after Bow- proportion insurers in to the concurrent deposition dish’s had been taken coverage they prov amounts of have plaintiffs in action; ided.16 *6 certainly the deposition material in that was liability17 general issued policy reasonably ascertainable to U.S.F. G.& aggregate Continental to Northern had an deposition indicated that Bowdish had Const., 15. Inc. v. at 12. Marwell Underwriters Theodore v. Zurich General Accident & London, Lloyd’s, Liability Ins. 364 P.2d 1961). Const., Inc. v. at Marwell Underwriters Lloyd’s, London, 465 P.2d at 313. Mere Flesher, National Co. duty breach of the to defend does not create P.2d at 366. liability upon policy. Hogan Mid- full the land National Cal.3d complaint 14. The amended Cal.Rptr. 153, (1970). alleged among things death action that wrongfully insurer who fails to defend inspected, Northern drilled holes in the ice will, precluded relitigating however, be thickness; and measured its Northern laid necessarily pri- in issues detez-mined out and constructed an ice road across the mary action, and will be to indem- lake for use the trucks which would haul nify policy at limits im- least to rock; Northern, through Bowdish, that ad- posed upon in that action based 'the vised the truck drivers that the ice had been upon theories within properly tested, and that the ice road was safe policy. Hogan v. Midland National relevant hauling it; to commence rock across that C & P.2d at 832. Trucking Company, operated C owned and deceased, Cooper, held For the same reasons that we Robert was C. hired Northern under to be an insurer of for the use of its trucks and drivers haul & not policy lake; issued to of automobile across the that Bowdish took it argument reject layman that himself as a Continental’s to determine Northern, policy safe, issued to whether or not the ice was and as a liability policy, ought result, misrepresented negligently rather determining in the amounts drivers that the haul road was safe and that to be considered coverage proration purposes. they operations accordingly. could commence dish, per vice-president Northern, tested the $500,000, smaller limits without

limit of by loading progressively a truck with The U.S.F. & G. or occurrence. backing heavier the ice. limits loads onto contained issued question, $300,000 per morning in Bowdish and $100,000per person occur- On liability. bodily discussed whether the ice was safe injury rence for Shortly hauling. would after this conversa- coverage U.S.F. .amount place, gave order to ultimately found Bowdish provided had it been took have should the haul. $200,000. U.S.F. & G. to commence liable was of Continen- therefore bear two-sevenths personally Coop- then followed defending the tal’s costs of ice, com- er’s initial haul We remand actions behalf. on Northern’s one his em- municating radio with of that sum. for the calculation detaining Cooper’s other ployees who was part, awaiting Bowdish. part, in while word from reversed Affirmed Cooper’s After trucks success- the first of remanded. site, fully dam traversed RABINOWITZ, dissenting. J.,C. Cooper’s employee Bowdish radioed that hauling.1 At other trucks could commence FITZGERALD, not JJ., ERWIN patrolled the various times Bowdish road- participating. way, directing the as to as well as drivers they dump the rock. should RABINOWITZ, (dissent- Chief Justice n ). haul, During the course of the one of the crossing Bowdish that on drivers informed con- agree majority’s I cannot coming the ice he had noticed water not Corporation was clusion that Northern through a crack in the ice.2 This same omnibus insured checking the driver later observed Bowdish Guaranty Fidelity United States coming through area where water Cooper. Robert Whether Subsequently, cracked ice. Bowdish told must of the vehicles “user” arqa right”. this driver that the was “all by ascertaining whether be determined super- some form Northern exercised From these facts I would hold that during the visory the trucks control over supervised hauling directly period view, su- question. my operation. particularly, More am com I perior court erred when it case, concluded pelled, record holding that did not warrant a the record conclusion that exercised suf exercised control over degree within ficient of control to come rock-hauling operation at- which was reach omnibus insured clause. For *7 tempted Cooper’s trucks. it was Northern which ordered the trucks proceed to and also determined before and evidence, analysis my Under during operation the haul whether or not exer- record demonstrates the ice was safe for truck Unlike traffic. bring degree cised a sufficient control to require the majority, I find these facts Cooper’s within the omnibus holding that Northern was a user of the rely policy. reaching I conclusion, vehicles under the criteria of Southern essentially facts to which same California Petroleum In majority Briefly, has alluded. these demnity N.M. Approximately are: three weeks before ap (1962). There the court articulated accidents, Northern bladed propriate following test in the manner: part 50 to 60 feet width across the ice in days recognize going use permit freezing. decisions as greater to Several beyond operation prior accidents, Cooper to Bow- actual mechanical deter The crack was located The record shows that each driver pro speed proximity later ice. two trucks broke mined his own ceeding trucks. encompassing the the vehicle and “as putting concept employing

broader one’s service an act

the vehicle to any time —with the assumes at agent or his consent of the owner guidance of its

supervisory control (quoting

movements.” from Woodrich Indemnity Ins. Co.

Construction Co. v. America,

of North (1958))

N.W.2d

Further, imply think it I inaccurate holding

that a effect that Northern permit general

an omnibus insured would

contractors look to the vehicle

policies job-site of others for all vehicular case, In the

accidents. instant regard

made direct decisions in precisely the area where the accidents

occurred.

Since I would hold that Northern is cov- by Cooper’s policy,

ered I would also hold

that the within accidents come Northern’s liability coverage rather liability coverage policies

which Continental Insurance

Northern. M., minor,

B. A. Appellant, Alaska, Appellee.

STATE

No. 2144.

Supreme of Alaska. Court 29, 1974.

Nov.