Highlands Insurance v. Universal Underwriters Insurance

Opinion

STEPHENS, J. Defendant, Universal Underwriters Insurance Company, appeals from an adverse declaratory judgment. Although the facts are not substantially in dispute, defendant contends that the trial court erred both in its interpretation of an automobile insurance policy issued by plaintiff, Highlands Insurance Company, and in its finding of sufficient evidence to sustain a judgment in favor of plaintiff. We disagree, and affirm the judgment of the trial court, for the reasons set forth below.

Plaintiff was the insurer for Robert H. Cleveland. Cleveland was involved in an accident while driving a 1971 Cadillac owned by Modem [174]Motors but in his custody for purposes of a potential sale to him. Defendant was the insurer for Modern Motors. At the time of the accident, Cleveland had been driving the Cadillac about six weeks. He had orally agreed with the son of the owner of Modem Motors, Paul Speights, to buy the car for $5,600; Speights was also going to arrange financing. As Cleveland stated in his deposition, which was admitted into evidence in its entirety, the only reason he had not yet actually bought the car was that they were waiting for special tires he had ordered to come in. No limitation of any kind had been placed on Cleveland’s use of the car. Cleveland had two other vehicles at the time, a Datsun and a GMC pickup truck, which were described in his insurance policy with plaintiff. After the accident, plaintiff denied liability on the Cadillac but paid $15,000 in settlement to the other driver solely to avoid a bad faith claim. Plaintiff then brought its successful action for declaratory judgment; the court concluded that plaintiff’s insurance policy did not afford coverage for the Cadillac driven by its insured, Cleveland, and that defendant’s insurance policy covering Modern Motors was the insurer for the collision.

At issue is the meaning of an exclusionary clause in plaintiff’s automobile insurance policy. The policy covered described automobiles owned by Cleveland and nonowned automobiles defined as follows: “ ‘Non-owned automobile’ means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile.”1 Defendant contests the trial court’s finding of fact that the Cadillac was furnished for Cleveland’s regular use, arguing first that “regular use” in plaintiff’s exception from coverage is vague, undefined and ambiguous, and secondly that the evidence did not establish regular use. As a result defendant maintains, the court below erroneously concluded that plaintiff’s insurance policy did not afford coverage on the Cadillac.