Source: http://cabadvantage.com/articles/monterey-ins-co-v-peerless-indem-ins-co/
Timestamp: 2019-04-19 13:05:07+00:00

Document:
Monterey Ins. Co. v. Peerless Indem. Ins. Co.
MONTEREY INSURANCE COMPANY, Plaintiff and Appellant, v. PEERLESS INDEMNITY INSURANCE COMPANY, Defendant and Respondent.
Prior History: [*1] APPEAL from a judgment of the Superior Court of Imperial County, No. ECU09231, L. Brooks Anderholt, Judge.
Monterey Insurance Company (Monterey) appeals a judgment entered in favor of Peerless Indemnity Insurance Company (Peerless) following Peerless’s successful motion for summary judgment. We affirm.
Peerless provided a business auto insurance policy (Peerless Policy) that covered M. David Fish and Joe Martinez Hay Farming (Fish/Martinez). As relevant here, Fish/Martinez owned a tractor-trailer, which was insured under the Peerless Policy.
Monterey provided a commercial auto policy (Monterey Policy), which insured David Shafer, doing business as Shafer Hay Company (Shafer Hay). Shafer Hay owned and operated a hay squeeze vehicle (squeeze) that was covered under the Monterey Policy.
Fish/Martinez hired Robert Deleon to pick up a load of hay at Jack Seiler Farms and transport it, driving a tractor-trailer [*2] owned by Fish/Martinez and insured under the Peerless Policy. Deleon arranged to meet a Shafer Hay representative with the squeeze at Jack Seiler Farms on February 24, 2014.
On the morning of February 24, 2014, Deleon drove the tractor-trailer to Jack Seiler Farms. He brought his friend, Cory Miller, with him to help load the hay onto the tractor-trailer. Larry Shafer (Larry), who was operating the squeeze, met Deleon and Miller at Jack Seiler Farms as well. Larry identified the stack of hay Deleon was picking up and told Deleon that he would need to untarp the stack before any hay could be loaded.
With Larry operating the squeeze, Deleon stood on one of the squeeze’s forks and then was lifted to the top of the stack.1 There, he untarped the stack and was then lowered, by the squeeze, back to the ground. After he returned to the ground, Deleon returned to the tractor-trailer, got into the cab, and made a couple telephone calls. At that point, Miller was watching the hay being loaded on the tractor-trailer so he could tie it down. After the hay was loaded on the trailer, Miller tied down the hay, which took about 10 to 15 minutes. Once the hay was loaded and tied to the trailer, Deleon [*3] completed his paperwork and started to drive off in the tractor-trailer. Larry stopped him and told him he had to retarp the haystack. Deleon responded to Larry’s direction with an expletive, but eventually agreed to return so he could retarp the haystack when Larry threatened that Deleon would not be permitted to return to Jack Seiler Farms unless he covered the haystack with the tarp. Before that day, Deleon had never retarped haystacks at Jack Seiler Farms.
Deleon parked the truck about 50 to 75 feet from the haystack and returned to retarp it. Deleon again stood on the squeeze’s fork and was lifted to the top of the haystack. After retarping the stack, Deleon was being lowered by the squeeze when the squeeze was moved too close to the stack and Deleon was “brushed off” of the fork and injured himself.
On June 2, 2014, Deleon and his wife sued Shafer Hay and Jack Seiler Farms based on his injuries caused by falling off the squeeze’s fork. Monterey defended and indemnified Shafer Hay in response to Deleon’s lawsuit. However, Shafer Hay also tendered the defense and indemnification of Deleon’s lawsuit to Peerless as the insurer of the tractor-trailer driven by Deleon. [*4] On October 6, 2015, Peerless refused Shafer Hay’s tender, arguing that Shafer Hay was not potentially insured under the Peerless Policy. Over a month later, Monterey responded to Peerless’s denial, explaining the alleged facts of the Deleon lawsuit as well as informing Peerless of a statutory offer to compromise in the amount of $849,999. Monterey requested Peerless’s assistance and participation in the defense and indemnification of Shafer Hay.
On January 4, 2016, Monterey contacted Peerless, requesting a response to its November 2015 communication about defending and indemnifying Shafer Hay. Monterey eventually settled the claims against Shafer Hay for $75,000. On February 8, 2016, Peerless again refused to indemnify Shafer Hay for the claims alleged in Deleon’s lawsuit.
Peerless answered the complaint then filed a motion for summary judgment. In that motion, Peerless maintained that Shafer Hay was only covered under the Peerless Policy if Shafer Hay was a permissive user under the subject policy. Based on the undisputed facts, Peerless argued that Deleon’s injury did not arise from the loading or unloading of the hay on the tractor-trailer, but after the loading was completed. Thus, according to Peerless, at the time Deleon was injured, Shafer Hay was not a permissive user of the tractor-trailer under the Peerless Policy.
Monterey opposed the motion for summary judgment, arguing a disputed issue of material fact existed: “Was Deleon injured while Shafer Hay was involved in the loading operation of the Peerless-insured trailer?” Further, Monterey claimed this factual dispute established Peerless’s duty to defend Shafer Hay as a matter of law. In support of its position, Monterey asserted that the retarping of the haystack [*6] after the hay was loaded on the tractor-trailer is part of the loading and unloading process. Alternatively stated, when Deleon used the squeeze’s fork to travel to the top of the haystack to retarp the hay, Shafer Hay remained a permissive user of the Peerless insured tractor-trailer.
The superior court found that summary judgment was warranted because no disputed issue of material fact existed. Specifically, the court determined that Deleon’s accident was not the result of the use of the tractor-trailer. The court further concluded that the undisputed facts showed that the loading and unloading of the hay onto the tractor-trailer had ceased by the time Deleon started to drive away in the truck, but before he was lifted by the squeeze to the top of the haystack to retarp.
Monterey timely appealed the ensuing judgment.
Monterey contends the superior court erred in granting Peerless’s motion for summary judgment. Monterey argues that there exists a disputed issue of material fact, namely whether Deleon was injured while loading the Peerless insured tractor-trailer. As such, Monterey asserts summary judgment was improper. [*7] In addition, it maintains that Peerless had a duty to defend Shafer Hay based on the allegations of Deleon’s complaint and the extrinsic facts known at the time of tender. Thus, even if Peerless did not ultimately have to provide insurance coverage for Shafer Hay, it nevertheless had a duty to defend and breached that duty by denying the tender of defense. For this reason as well, Monterey claims that the superior court should not have granted the summary judgment motion. As we explain below, we reject these contentions.
Here, the facts are undisputed. Peerless insured a tractor-trailer owned by Fish/Martinez. Fish/Martinez hired Deleon to drive the tractor-trailer to pick up hay from Jack Seiler Farms and transport it to another location. Deleon contacted Shafer Hay to load the hay. Deleon with his friend, Miller, drove the Peerless insured tractor-trailer to Jack Seiler Farms. Larry of Shafer Hay met Deleon at Jack Seiler Farms. Larry was operating the squeeze, which Monterey insured. With Larry at the controls, the squeeze lifted Deleon to the top of the haystack so he could untie the tarp. After untying the tarp, Larry lowered Deleon back to the ground. Larry then used [*8] the squeeze to load the hay onto the tractor-trailer. Miller tied down the hay to the trailer. Deleon completed some paperwork and then started to drive away. Larry stopped him and told him he had to retarp the haystack. Deleon did not want to do so, but agreed after Larry said that he would not be allowed back to Jack Seiler Farms unless he retarped the haystack. Deleon parked the truck and walked 50 to 75 feet to the haystack. Larry, using the squeeze, lifted Deleon to the top of the haystack. After Deleon finished retarping it, while he was being lowered by the squeeze, Deleon fell off the squeeze’s fork, injuring himself.
It was “common practice” to retarp haystacks. It was Jack Seiler Farms’ expectation that if a tarp was moved to obtain hay then it would be placed back to cover the haystack. However, Deleon had never retarped any haystack at Jack Seiler Farms before the date in question.
The instant action is somewhat unique because the parties are not offering dueling interpretations of the subject insurance policy. Instead, for purposes of the issues before us, the parties do not disagree that Shafer Hay could be covered under the Peerless Policy as a permissive user if Deleon was injured while loading or unloading the tractor-trailer. As such, this case does not turn on the interpretation of the Peerless Policy, but the application of that policy to undisputed facts.
Monterey asserts that it has raised a triable issue [*12] of material fact because it is disputed whether Deleon was injured during the loading and unloading of the tractor-trailer. In support of its position, Monterey cites Mirpad, LLC v. California Ins. Guarantee Assn. (2005) 132 Cal.App.4th 1058 at page 1068, 34 Cal. Rptr. 3d 136: “If coverage depends on an unresolved dispute over a factual question, the very existence of that dispute would establish a possibility of coverage and thus a duty to defend.” Although we do not quibble with the general legal principle espoused by the court in Mirpad, that rule does not apply here. Monterey correctly frames the primary disagreement between the parties, but it glosses over the fact that underlying that quarrel, the facts are undisputed. Thus, we do not have to resolve any factual issue, but instead, we must decide a legal issue based on undisputed facts. (See Waller, supra, 11 Cal.4th at pp. 25-26.) “If the facts are undisputed . . . then summary judgment may be entered on issues that otherwise would have been submitted to the jury. That is the function of summary judgment proceedings.” (Davis v. Consolidated Freightways (1994) 29 Cal.App.4th 354, 366, 34 Cal. Rptr. 2d 438.) Put differently, the instant matter is one that can be properly resolved by us as a matter of law. We thus can determine, based on the undisputed facts, whether Deleon was injured during the loading of the tractor-trailer.
Here, the subject tractor-trailer [*13] was loaded with hay. Miller tied down the load to the trailer. Deleon completed his paperwork and began to drive off with the hay. Larry stopped him and told him that he had to retarp the haystack. Deleon then exited the tractor-trailer, walked 50 to 75 feet to the haystack where Larry operated the squeeze to lift Deleon to the top of the haystack so he could retarp it. On the way down, Deleon fell off the fork of the hay squeeze and was injured. Monterey argues that it is unimportant that Deleon was injured after the hay was loaded and tied down because the untarping and retarping is part of the loading procedure. Further, Monterey points out it was custom for a trucker, who was picking up a load of hay, to untarp and retarp a haystack.
In support of its position, Monterey relies on Argonaut Ins. Co. v. Transport Indemnity Co. (1972) 6 Cal.3d 496, 99 Cal. Rptr. 617, 492 P.2d 673 (Argonaut), Encompass Ins. Co. v. Coast National Ins. Co. (9th Cir. 2014) 764 F.3d 981 (Encompass), American Auto. Ins. Co. v. American Fidelity & Casualty Co. (1951) 106 Cal.App.2d 630, 235 P.2d 645 (American Fidelity), and American Auto. Ins. Co. v. Transport Indemnity Co. (1962) 200 Cal.App.2d 543, 19 Cal. Rptr. 558 (Transport Indemnity). None of these cases are instructive here.
Argonaut, supra, 6 Cal.3d 496 is not helpful here. It does not aid us in determining whether Deleon was injured during the load or unloading process. Instead, it merely stands for the unremarkable principle that loading and unloading of a vehicle constitutes use of that vehicle. In other words, Argonaut does not answer the question presented in the instant action.
Here, it is undisputed that Deleon was not injured loading anything onto the tractor-trailer or unloading anything from the tractor-trailer. Thus, Torti’s removal of Van Horn from the vehicle in Encompass is not analogous to any of the facts in the instant matter. Here, the subject tractor-trailer was fully loaded, and Deleon was driving away when Larry stopped him and told him that he needed to retarp the stack. He then was injured in the process of retarping the haystack.
In American Fidelity, supra, 106 Cal.App.2d 630, the Second District considered whether an oil spill arose out of [*16] the unloading of a tanker truck and trailer carrying diesel oil. Ultimately, the court held that, “the accident falls within the coverage of the ‘loading and unloading’ provision of defendant’s policy since the accident occurred while unloading was in progress and before the oil had come to . . . its ultimate destination.” (Id. at p. 638.) Thus, American Fidelity does not offer any guidance to decide the issue before us, but instead, is simply another case supporting the principle that Peerless would have had to defend and/or indemnify Deleon if he was injured while loading the tractor-trailer.
Transport Indemnity, supra, 200 Cal.App.2d 543 suffers from the same shortcomings as the three previously discussed cases on which Monterey relies. There, Culy Transportation Company, by its driver Guerrero, drove its truck containing four steel blocks, each weighing 400 to 600 pounds, to General Grinding Company’s yard. Ordinarily, General would have removed the blocks with a crane, but the crane was out of order. Grinding’s foreman, Bardon, directed Guerrero to place the truck out in the street so that the blocks could be thrown into some dirt that was a part of the street. (If the blocks were thrown off in the yard, they would have broken the cement [*17] paving of the yard and the blocks would have been dented.) Bardon directed Rea, another employee of Grinding, to help Guerrero unload and then left the scene. The truck was placed in the street and Guerrero and Rea pushed a block off the truck, striking and injuring a little girl. Pertinent here is the fact that American Automobile Insurance Company (American) insured the Culy truck, giving coverage to any person for injuries arising out of the use of any automobile, including the loading and unloading thereof. The court held, as an alternative basis for holding that the American policy covered Bardon, that Bardon was “in substance a user of the truck.” (Id. at p. 551.) “Bardon’s liability arises from his own conduct, not from vicarious liability for the acts of Rea, whom he assigned to assist Guerrero in the unloading. The parties agree that American would not be liable for Bardon’s amenability as respondeat superior. But Bardon’s own, or independent, negligence lay in his failure to post a guard to warn persons using the street to watch for the danger.” (Ibid.) The court then held that Bardon was responsible for the “particular usage of the Culy truck” and hence was covered by the policy which [*18] insured a person “using the truck.” (Id. at p. 552.) Again, we observe the injury giving rise to insurance coverage in Transport Indemnity occurred during the unloading of the subject truck.
In short, all four cases on which Monterey relies simply stand for the proposition that Shafer Hay would be a permissive user of the Peerless insured tractor-trailer if Deleon was injured while loading the tractor-trailer. These cases, however, do not provide guidance regarding the undisputed facts before us, namely the tractor-trailer was fully loaded and was being driven away when Deleon was stopped, parked the tractor-trailer, walked 50 to 75 feet to the haystack, where he was injured when he fell off the hay squeeze’s fork after retarping the haystack. None of the cases cited by Monterey address a similar factual issue. They do not address whether Deleon was loading the tractor-trailer when he was retarping the haystack. In this sense, Monterey has not provided us with any authority to support its position, but instead, is asking us to expand what California law considers “use” of a vehicle.
Here, the tractor-trailer played no role in Deleon’s injuries. The tractor-trailer was completely loaded without Deleon suffering his injury. Further, Deleon was driving away before he was stopped to return some 50 to 75 feet to the haystack to retarp it. Therefore, the tractor-trailer had completed its purpose on the farm, i.e., to pick up hay and transport it away. It played no role in Deleon’s injuries. Indeed, Deleon was injured during the retarping process. That process did not involve the use of the tractor-trailer. It involved the squeeze only. As such, Shafer Hay, as operator of the squeeze, was not loading the Peerless insured tractor-trailer at that time. Because Deleon was injured after the tractor-trailer was fully loaded and was beginning to drive away, Shafer Hay was not a permissive user under the Peerless Policy when Deleon’s injury occurred.
The judgment is affirmed. Peerless is awarded its costs on appeal.

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