In light of the “going and coming” rule’s “required vehicle” exception, an employee was an “insured” for an auto accident while driving to work, with the result that his employer’s liability was barred from coverage by an “auto” exclusion in a CGL policy. ( Sprinkles v. Associated Indemnity Corp. (2010) 188 Cal.App.4th 69)
Facts
Sinco Co., Inc. (Sinco) was a property management company which required its employee, Juan Babinz (Babinz), to use his own vehicle to transport himself to various job sites each day. While Babinz was driving to work in the vehicle which he used to visit job sites, he caused an automobile accident which resulted in the death of Michael Sprinkles (Sprinkles).
Sprinkles’ heirs filed a wrongful death action against Sinco and Babinz, alleging that Sinco was vicariously liable for the acts of its employee Babinz, and that Sinco had negligently hired Babinz. Sinco and Babinz sought defense and indemnity under various policies issued to Sinco, including a $1 million commercial general liability policy issued by Fireman’s Fund Insurance Company (Fireman’s Fund). However, Fireman’s Fund declined to participate in defending or indemnifying Sinco and Babinz under the CGL policy, citing that policy’s exclusion for injuries “arising out of the ownership, maintenance, use or entrustment to others of any … auto … owned or operated by or rented or loaned to any insured. ” The policy defined an “insured” so as to include “your [Sinco’s] employees, but only with respect to acts within the scope of their employment by you while performing duties related to the conduct of your business .”
Sprinkles’ heirs entered into a settlement with Sinco and Babinz. Among other things the settlement agreement provided that Sprinkles’ heirs would receive $2 million under two other policies issued to Sinco; that Sprinkles’ heirs would submit their claims against Sinco and Babinz to arbitration; and that Sinco and Babinz would give Sprinkles’ heirs an assignment of any rights against Fireman’s Fund in exchange for Sprinkles’ heirs’ agreement not to enforce any judgment against Sinco’s and Babinz’s personal assets.
Thereafter, an arbitrator issued an award of over $27 million in favor of Sprinkles’ heirs and against Sinco and Babinz. The award included a finding that at the time of the accident, Babinz was acting within the course and scope of his employment with Sinco pursuant to the “required vehicle” exception to the “going and coming” rule. The superior court confirmed the award as a judgment.
Sprinkles’ heirs, as assignees of Sinco and Babinz, then filed a bad faith action against Fireman’s Fund. In the bad faith action, Sprinkles’ heirs argued that the Fireman’s Fund CGL policy’s “auto” exclusion only applied to the use of an auto by an “insured,” and that at the time of the accident Babinz was not an “insured.” Specifically, Sprinkles’ heirs argued that under the particular wording of the Fireman’s Fund policy, an employee was an “insured” only if the employee was both acting “within the scope of [his or her] employment” by [Sinco]” and “performing duties related to the conduct of [Sinco’s] business.” According to Sprinkles’ heirs, at the time of Babinz’s accident while driving to work, Babinz may have been acting “within the scope of [his] employment by [Sinco],” but he was not “performing duties related to the conduct of [Sinco’s] business.” Sprinkles’ heirs thus asserted that since Babinz was not an “insured,” the CGL policy’s “auto” exclusion did not bar coverage for Sinco’s liability arising out of Babinz’s use of his car.
The trial court concluded that Babinz was an “insured” under the Fireman’s Fund CGL policy, and that the policy’s “auto” exclusion thus barred coverage for any liability Sinco had in the underlying wrongful death action. The trial court thus entered judgment in favor of Fireman’s Fund. Sprinkles’ heirs appealed.
Holding
The Court of Appeal affirmed the judgment in favor of Fireman’s Fund. The appellate court noted that under the so-called “going and coming rule,” an employee is not deemed to be acting within the scope of his employment while going or coming from his place of work. However, the “going and coming” rule is subject to the “required vehicle” exception, which applies when an employer requires an employee to use his or her own vehicle for transportation on the job.
Here, pursuant to the “going and coming” rule’s “required vehicle” exception, Babinz’s act of driving to work was deemed to be an “act within the scope [his] employment by [Sinco].” Further, because the accident occurred while Babinz was on the way to work, Babinz was “performing duties related to the conduct of [Sinco’s] business.” Under such circumstances, Babinz was an “insured” under the Fireman’s Fund CGL policy, and that policy’s “auto” exclusion thus barred coverage for any liability Sinco had to Sprinkles’ heirs in the underlying wrongful death action.
Comment
A standard CGL policy defines an “insured” so as to include the named insured’s employees “for acts within the scope of their employment by you or while performing duties related to the conduct of your business.” In contrast, the Fireman’s Fund CGL policy’s definition of “insured” dropped the disjunctive word “or,” so that an “insured” included the named insured’s employees “for acts within the scope of their employment by you while performing duties related to the conduct of your business.” However, according to the appellate court, this slight difference in wording did not affect coverage under the Fireman’s Fund CGL policy. According to the court, it is difficult to conceive of “acts within the scope of employment” that would not also constitute “duties related to the conduct of the business.”