Atlantic Mutual Insurance v. Travelers Insurance

Opinion

TROTTER, P. J.

Atlantic Mutual Insurance Company and Centennial Insurance Company (Atlantic Companies) defended their insureds, Roger Miller Chevrolet (Miller) and Tommy Ayres Chevrolet (Ayres), in two wrongful death actions arising out of an automobile accident. Atlantic Companies filed an action for declaratory relief against the Travelers Insurance Company (Travelers), Ayres’ insurer at the time the allegedly defective vehicle involved in the accident was sold and repaired. The court ordered Travelers to pay Atlantic Companies half of the settlement reached in the wrongful death actions, plus half of the attorney’s fees incurred by Atlantic Companies in defending Miller and Ayres.

[1056]

Travelers insured Ayres against bodily injury liability in the form of a garagekeeper’s policy from December 1, 1971, to December 1, 1974. This policy covered “bodily injury . . . caused by an occurrence and arising out of the business operations hazard.”

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“Occurrence” is defined as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.”

On December 1, 1974, Atlantic Companies issued a garagekeeper’s policy to Ayres which specifically excluded coverage for “[fjaulty workmanship or materials in the making of repairs or adjustments.” Ayres later sold its business to Miller, and Atlantic Companies transferred coverage under its policy accordingly.

During Travelers’ policy period Ayres both sold and repaired the fuel system of the vehicle involved in the accident. The accident occurred during Atlantic Companies’ policy period. Atlantic Companies tendered Ayres’ and Miller’s defense to Travelers when discovery in the ensuing wrongful death actions revealed a basis of recovery was Ayres’ allegedly defective repairs to the fuel system. Travelers declined to defend its former insureds and Atlantic Companies filed this declaratory relief action.

The primary issue before the trial court (and on appeal) was whether Travelers’ policy covered an event which occurred subsequent to its policy period but was caused by conduct during the time the policy was in effect.