Opinion
Oct. 24, 1973.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 1144
George J. Strate, Denver, for plaintiff-appellee.
Wood, Ris & Hames, Eugene S. Hames, Denver, for defendants-appellants.
PIERCE, Judge.
This appeal emanates from a declaratory judgment action which was instigated to determine whether or not an alleged insured had coverage under a designated policy of automobile liability insurance. Phoenix Insurance Company (Phoenix), which at the time of trial was a subsidiary of Travelers Insurance Company, insured a truck owned by Scientific Supply Company (Scientific). Northwestern Insurance Company had issued a garage liability insurance policy covering A--1 Truck Service. Scientific delivered the insured truck to A--1 for repairs and gave the owner and employees of A--1 permission to drive the truck during the repair operation. A--1 is an automobile business as defined in both the Phoenix and the Northwestern policies.
After A--1 had completed the repairs, either the owner of A--1 or one of his employees, parked the truck in A--1's parking lot in anticipation of its being returned to Scientific. Approximately one-half hour later, the truck, rolled, unattended, out of the parking lot and injured a pedestrian, Lansville.
Lansville sued both Scientific and A--1. Phoenix became actively engaged in the case in the defense of Scientific. Since A--1's employees were permissive users of the truck, Phoenix was also requested to undertake the defense responsibilities for A--1 under the primary insurance contract covering the truck. However, Phoenix refused to represent A--1 on the basis of an exclusion in the contract which is now the center of dispute. Northwestern assumed the defense of A--1, and was able to reach a settlement with Lansville. Phoenix was kept fully informed of the negotiations, but it continued to deny coverage to A--1.
The instant suit filed by Northwestern against Phoenix and Travelers asked declaratory relief to establish that A--1 was covered under the Phoenix policy, and asked to recover the sum of money Northwestern had paid to Lansville and its attorneys' fees and other expenses. The parties stipulated as to the facts set forth above, and only one witness was called who, in essence, only confirmed many of the stipulated facts. The parties also stipulated that the settlement entered into between Northwestern and Lansville was reasonable and that Northwestern charged reasonable fees for its services in undertaking A--1's defense and completing the settlement. The trial court granted all of the relief prayed for by Northwestern, and defendants appeal. We reverse. I.
Under the omnibus clause of the policy issued by Phoenix, the persons insured include:
'any person while using an owned automobile . . . with the permission of the named insured . . ..'
Following the omnibus clause are some stated exclusions, among which is the following:
'any person while employed in or otherwise engaged in duties in connection with an automobile business, other than an automobile business operated by the named insured.'
The policy also contains the following definition:
"automobile business' means the business or occupation of selling, repairing, servicing, storing or parking automobiles . . ..'
The trial court concluded that the exclusion applied to operators or employees of an automobile repair shop who were permissive users when and only when the accident over which the claim is made 'arose out of the operation of' that repair shop. The court then found that the accident did not arise out of the operation of the repair shop and, thus concluded that A--1 was covered as a permissive user. We cannot agree with these conclusions.
An automobile business exclusion which is clear and stated in plain language must be respected as to the particular peril that it describes. Young's Market Co. v. American Home Assurance Co., 4 Cal.3d 309, 93 Cal.Rptr. 449, 481 P.2d 817; American Casualty Co. v. Myrick, 5 Cir., 304 F.2d 179, 96 A.L.R.2d 1352. Such an exclusion is given effect notwithstanding the limits which it places upon the broad coverage of the contract. National Life Insurance Co. v. Coughlin, 72 Colo. 440, 212 P. 486; See G. Couch, Cyclopedia of Insurance Law, s 15:93 at 838 (2d ed.).
The proper inquiry to make in this case is whether or not the employees of A--1 were 'employed in or otherwise Engaged in duties In connection with' A--1's business when their conduct, which was allegedly the proximate cause of Lansville's injuries, occurred. The parties stipulated that 'Charles P. VanDyke, d/b/a A--1 Truck and Auto Service, was on September 9, 1969, (the date of the accident) Employed in and Operating an automobile business as it is defined in defendant's . . . policy . . ..' The acts of the employees of A--1 for which A--1 is allegedly legally responsible were acts committed while those employees were engaged in A--1's business and which acts may have been a proximate cause of the loss.
We hold that on the basis of the stipulated facts, A--1 was excluded from coverage under the Phoenix policy and that, therefore, Phoenix is not responsible for the expenses incurred by Northwestern in effecting the settlement with Lansville, nor for the amount of settlement paid by Northwestern.
II.
The trial court also ruled that the exclusion was not applicable because it did not comply with the provisions of the Motor Vehicle Financial Responsibility Act, 1965 Perm.Supp., C.R.S.1963, 13--7--1 et seq. The court based its ruling on the holding in Traders and General Insurance Co. v. Pioneer Mutual Compensation Co., 127 Colo. 516, 258 P.2d 776. However, later amendments to the statute and later decisions by the Supreme Court make it clear that where, as in this case, the policy was not issued pursuant to, nor certified in accordance with the statute as proof of financial responsibility, the financial responsibility act has no application. Western Mutual Insurance Co. v. Wann, 147 Colo. 457, 363 P.2d 1054; American Service Mutual Insurance Co. v. Parviz, 153 Colo. 490, 386 P.2d 982.
Judgment is reversed and cause remanded with directions to enter judgment for defendants.
SILVERSTEIN, C.J., and ENOCH, J., concur.