Opinion ID: 1478239
Heading Depth: 1
Heading Rank: 3

Heading: the insurance policies at issue

Text: This appeal turns largely on the provisions of specific insurance policies issued by USAA and by Northbrook. We conclude, based on a careful examination of the policies, that those issued by USAA to Major McCarden do not cover the accident in question, but that two of Northbrook's policies do apply to it.
At the time of the collision, Major McCarden was insured by USAA under four policies. These policies provided liability coverage to McCarden with limits of $100,000 per person and $300,000 per occurrence. [2] The USAA policies, by their explicit terms, require the insurer to pay damages for bodily injury or property damage for which any covered person becomes legally responsible. Covered person is defined in pertinent part as 1. You or any family member for the ownership, maintenance or use of any auto or trailer. 2. Any person using your covered auto. Subparagraph 1 does not apply to the collision which precipitated this case. It does not reach Major McCarden because he did not own the rented vehicle, nor does Northbrook allege that he was maintaining or using it. [3] Neither Adjusters nor Mlle. Claudel was a family member, as required by subparagraph 1. Subparagraph 2 is likewise inapplicable because the rental car did not fall within the definition of your covered auto. The definition of that phrase includes [4] [a]ny vehicle shown in the Declarations, and [a]ny auto or trailer you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its: a. breakdown; b. repair; c. servicing; d. loss; or e. destruction. (Emphasis added). The car which Mlle. Claudel was driving was not shown in the Declarations, nor was it a temporary substitute for any other vehicle which had become unavailable as a result of breakdown, repair, servicing, loss, or destruction. In fact, Major McCarden testified, and Northbrook does not deny, that he rented the car because all of his vehicles were in locations other than Washington, and because he needed one to drive during his visit here. Moreover, it is commonly understood in the car insurance business that a substitute automobile is one actually but only temporarily used in place of [a] specified automobile for the same use the insured automobile would have been used except for its withdrawal from all normal use and while such withdrawal is because of its breakdown, repair, servicing, loss or destruction. 6B JOHN A. APPLEMAN, INSURANCE LAW & PRACTICE § 4293.5, at 209 n. 38.30 (1979) (emphasis added) (citing Fulton v. Woodford, 17 Ariz.App. 490, 498 P.2d 564, 569 (1972)). The USAA policies were phrased in the very terms used in APPLEMAN, and were inapplicable to the scenario in the present case, which was a conventional short-term rental by someone who had no vehicle of his own in the Washington, D.C. area. [5]
At the time of the accident, Adjusters was insured by three separate Northbrook policies, with limits of $25,000, $1,000,000 and $5,000,000, respectively. Northbrook acknowledges that the $25,000 policy covered the accident. USAA concedes that the $5,000,000 policy does not apply. The parties are in disagreement only as to whether the $1,000,000 policy afforded coverage to Adjusters. Northbrook's $1,000,000 policy provides that [w]e will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto. In defining WHO IS INSURED, the policy states that 1. You are an insured for any covered auto. 2. Anyone else is an insured while using with your permission a covered auto you own, hire or borrow except ... [6] Covered auto is defined in pertinent part as including any vehicle rented by you to a rentee under a rental agreement the term of which is less than one year except an auto leased or rented under a Temporary Substitute Automobile Lease Agreement only. On its face, the policy plainly applies to the accident in question. Goodrum's injury resulted from the use of the rental car. It is undisputed that Mlle. Claudel was using that car with Adjusters' permission. Finally, as we have explained in connection with the discussion of USAA's policy, the rental was not pursuant to a Temporary Substitute Automobile Lease Agreement, as that phrase is used in the industry. [7] Northbrook, however, relies on Endorsement No. 3 to its $1,000,000 policy. That Endorsement provides in pertinent part as follows: Contingent Liability Coverage  Rented Automobiles (Coverage for Named Insured Only) It is agreed that such insurance as is afforded by the policy for Bodily Injury and for Property Damage applies with respect to each covered auto as described in the policy, subject to the following provisions: Definition: Who is insured. With respect to insurance afforded by this endorsement the unqualified word insured includes only the Named Insured as stated in Item One of the Declarations. According to Northbrook, Endorsement No. 3 makes [it] clear that, even if the leased vehicle was covered by the policy, only the named insured, i.e. Adjusters, would have coverage. USAA contends that Endorsement No. 3 is ambiguous. It points out, among other things, that the paragraph which attempts to redefine who is insured is limited to insurance afforded by this endorsement. [8] USAA claims that since coverage is afforded by the policy, not by the endorsement, the paragraph is ambiguous. According to USAA, the policy should therefore be construed against Northbrook, because [i]t is the duty of the insurer to spell out in plainest terms  terms understandable to the man in the street  any exclusionary or delimiting policy provisions.... American Ins. Co. v. Tutt, 314 A.2d 481, 484 (D.C.1974) (quoting Raley v. Life & Casualty Ins. Co., 117 A.2d 110, 113 (D.C.1955)). Northbrook responds that in this case, as in Medical Service of District of Columbia v. Llewellyn, 208 A.2d 734, 736 (D.C.1965), [n]o ambiguity exists in the present contracts if the language therein is given the meaning of common understanding. Ambiguities will not be sought out. The clear meaning will be adopted whether favorable to the insured or not. We are not disposed to resolve this conundrum regarding the existence vel non of one or more ambiguities in Endorsement No. 3, for it is unnecessary to do so in order to decide this case. This is because the District of Columbia's Motor Vehicle Safety Responsibility Act, D.C.Code § 40-408 (1990), provides that [w]henever any motor vehicle ... shall be operated upon the public highways of the District of Columbia by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed to be the agent of the owner of such motor vehicle, and the proof of the ownership of said motor vehicle shall be prima facie evidence that such person operated said motor vehicle with the consent of the owner. In the Goodrum suit, the federal district court applied § 40-408 and imposed liability against Adjusters because, [g]iven the answers to interrogatories provided by Adjusters Auto Rental, and its own inability to produce the lease agreement, the Court must conclude that [Mlle.] Claudel had Adjusters Auto Rental's permission to operate the vehicle. Mlle. Claudel was therefore Adjusters' agent within the meaning of § 40-408. See generally 6B APPLEMAN, supra, § 4313, at 332. Northbrook's $1,000,000 policy provides coverage to the insured for liability resulting from the ownership, maintenance or use of a covered auto. (Emphasis added). Thus, under the terms of the policy, Adjusters, as the owner of the vehicle, was insured by that policy for any liability resulting from the negligence of Mlle. Claudel in operating the rental vehicle with Adjusters' consent. Since Northbrook's $1,000,000 policy covered the accident and USAA's policies did not, USAA is entitled to recover from Northbrook the $100,000 which it contributed to the settlement. [9]