A personal auto policy’s “non-owned” auto coverage did not apply where the insured had “regular use” of a company vehicle furnished by her employer. ( Medina v. GEICO Indemnity Co. (2017) — Cal.App.5th —-, 2017 WL 510878)
Facts
Leigh Ann Flores was employed by Pacific Bell Telephone Company. Flores worked out of a Pacific Bell office in Fresno, but also would travel to various other Pacific Bell offices in California. Because Flores’ job required her to transport company equipment, and because she was not allowed to use her personal vehicle for such purposes, Pacific Bell assigned her the use of a GMC van owned by Pacific Bell. Flores had her own set of keys to the van, which was permanently assigned to her for her exclusive use.
When Flores worked in Fresno, she would drive her personal car to the Fresno office, pick up the van, and then drive the van during the work day. At the end of the work day, she would drop off van at the office and then drive her personal car home. Flores never took the van home overnight.
When Flores traveled out of town for work, Flores would drive her personal car to the Fresno office on Monday morning, pick up the van, and drive it to her out-of-town destination. Once she arrived at her out-of-town destination, she would check into a motel and then drive the van to the work site. On Friday, she would drive back to the Fresno office, drop off the van, and drive her personal vehicle home.
Whether Flores was working in Fresno or out of town, she used the van during the day to run personal errands such as banking or shopping. Also, when Flores was working out of town, the van was her only means of transportation, so she used it during non-work hours to go to restaurants, go shopping, etc.
In August 2009, Flores was on an out-of-town assignment. During lunch Flores consumed some wine, and then after lunch Flores, while intoxicated, drove the van to another city on a personal errand. While on this personal errand, Flores collided with a car driven by Javier Medina, resulting in serious injuries to Medina.
Following the accident, Medina sued Pacific Bell and Flores. Pacific Bell, which was self-insured for company cars such as the van, refused to defend or indemnify Flores against Medina’s lawsuit. Pacific Bell conceded that at the time of the accident Flores had been operating the van with Pacific Bell’s “permission,” and that Pacific Bell thus had $15,000 statutory “owner liability.” However, Pacific Bell sought and obtained a ruling that at the time of the accident Flores was not acting in the “course and scope” of her employment, and that Pacific Bell therefore was not “vicariously liable” for Flores’ negligence.
At the time of the accident, Flores was the named insured on a personal auto policy issued by GEICO Indemnity Company. The GEICO policy provided Flores with coverage for bodily injury and property damage arising out of the use of a “non-owned auto,” which the policy defined as “an automobile … not owned by or furnished for the regular use of either you or a relative ….” GEICO refused to defend or indemnify Flores against Medina’s lawsuit, asserting among other things that the Pacific Bell van Flores was driving at the time of the accident was available for her “regular use” and thus was not a “non-owned auto.”
Medina and Flores entered into a settlement agreement pursuant to which (1) Medina took an assignment of Flores’ rights against GEICO, and (2) Medina agreed not to enforce any judgment against Flores’ personal assets. Medina and Flores then stipulated that an arbitrator would decide Medina’s personal injury lawsuit against Flores. The arbitrator subsequently awarded Medina over $500,000 against Flores, which award was confirmed as a judgment.
Medina as assignee and judgment creditor of Flores then sued GEICO to collect the judgment that had been rendered against Flores in the underlying lawsuit. GEICO moved for summary judgment on the ground that the van had been furnished to Flores for her “regular use,” and thus the van did not qualify as a “non-owned auto” as defined in the GEICO policy. The trial court granted GEICO’s motion. Medina appealed.
Holding
The Court of Appeal affirmed the summary judgment in favor of GEICO.
The appellate court reasoned that Pacific Bell had assigned the van to Flores for her exclusive use and had authorized her to use the van for both business and personal purposes. Although Flores was required to return the van to the Fresno office at the end of her work day both when she was working in the local area and when she returned from out-of-town business trips, Flores had unlimited use of the van when it was in her possession . When Flores was out of town on business, the van was her only means of transportation and Flores could use the van for both business and personal use. Thus, at the time of the accident, Flores had “regular use” of the van, which meant that the van was not a “non-owned auto” within the meaning of the GEICO policy.
The appellate court rejected Medina’s argument that because Pacific Bell provided the van to Flores “primarily” for business purposes, Flores’ use of the van for personal purposes at the time of the accident was not “regular use.” The court emphasized that Pacific Bell had furnished the van to Flores for both business and personal use during her work days and while on out-of-town business trips, and that Flores’ personal use of the van at the time of the accident was not a departure from the customary use for which the van was furnished. Thus, Flores’ use of the van for a personal errand during the workday constituted “regular use” for which coverage was not available.
Comment
“Non-owned” auto coverage is intended to provide coverage for an insured’s occasional use of a non-owned vehicle without requiring the payment of additional premiums. By the same token, the exclusion of coverage for regular use of non-owned vehicles is intended to prevent abuse by precluding the insured and family members from regularly driving two or more vehicles while only insuring one vehicle. Coverage is not intended to include the regular use of non-owned cars because the insurer would necessarily bear an increased risk without receiving any premium for the increased risk.
Note the seeming conundrum in the above case: the employee was not entitled to indemnity from her employer (because she was not in the course and scope of her employment), and at the same time she was not entitled to insurance coverage from her insurer (because the vehicle had been furnished for her regular use). The appellate court suggested that the employee could have avoided this problem by purchasing an “extended non-owned automobile” endorsement which would have covered her while she was driving a company-owned car on her personal time.