MacMillan v. John Deere Insurance

BREWER, J.,

dissenting.

The dispositive issue in this case is whether the Financial Responsibility Law (FRL) requires John Deere to provide a defense to Trus Joist. In my view, the majority has given the wrong answer to that question. Trus Joist’s employees did, in fact, use Newton’s truck when they loaded and secured joists on it to be transported on the public highways. Therefore, the FRL required coverage for that use under John Deere’s policy.

To explain why, I begin with a step in the analysis that the majority omits, namely, whether loading and unloading constituted use of the truck under the policy. The majority does not consider that issue because it decides that loading and unloading were excluded by the policy. I agree with that conclusion. However, the process of statutory construction in which the majority has engaged involves more than a trip to the dictionary. The ordinary meaning of terms used in insurance statutes is, or at least ought to be, informed by what insurers and insureds believe that those terms commonly mean in their particular corner of the world.

The omnibus clause of John Deere’s policy defines an “insured” as

“b. Anyone * * * while using with [the policyholder’s] permission a covered ‘auto’ you own, hire or borrow except:
«* * * * *
“(4) Anyone other than your employees, partners, a lessee or borrower or any of their employees, while moving *485property to or from a covered ‘auto.’ ” (Emphasis added.)

The policy does not define the terms “use” or “using.” The plain fact, however, is that “use,” for purposes of the omnibus clause in a liability insurance policy, has a broad legal meaning that includes the loading and unloading of vehicles. Liberty Mut. Ins. v. Truck Ins., 245 Or 30, 33, 420 P2d 66 (1966). In Liberty Mut. Ins., a log truck driver had been injured when a log fell off the truck he was operating while it was being unloaded. The driver brought a negligence action against the employer of the workers who unloaded the truck. The employer’s general liability carrier paid the claim and then brought an action against the driver’s employer’s motor vehicle liability insurer for contribution. The motor vehicle liability insurer argued that its insured’s employees were permissive users of the truck while they were unloading it. The Supreme Court agreed, holding that there “is adequate precedent for the view that when the contract is silent on the point loading and unloading is ‘using’ an insured motor vehicle.” Id. That construction also is entirely consistent with the dictionary meaning of “use.” To unload is to “use” a vehicle, because it involves the employment or utilization of the vehicle by removing cargo from it.

Nor is the meaning of “use” under the policy disputed seriously among the parties. John Deere’s counsel conceded at trial that loading an insured vehicle constitutes a permissive use under its policy. The trial court also arrived at the same conclusion, and it is fully supported by the Supreme Court’s decision in Liberty Mut. Ins. The majority attempts to confine the holding of that case to its own understanding of the dictionary meaning of “use.” However, the majority is simply unable to distinguish Liberty Mut. Ins. in any meaningful way. The fact that the general liability carrier’s insured had purchased the logs it unloaded did not make it more a user of the truck than was the case here, where Trus Joist had sold the joists that it loaded on Newton’s truck. In either case, the operation of loading or unloading was, in some respect, to the user’s advantage or presumably it would not have been performed. There is no logical reason to measure the degree or existence of a user’s economic interest in the *486product that it loads or unloads from a vehicle in deciding whether it has used the vehicle.

The majority’s view has been rejected by the substantial majority of courts that have considered whether loading and unloading constitute use of a vehicle for purposes of omnibus liability coverage. See, e.g., United States Steel Corporation v. Transport Indemnity Co., 241 Cal App 2d 461, 50 Cal Rptr 576 (1966) (in the loading and unloading of a truck, the negligent party is using the truck, and thus is an additional insured, even though the policy does not expressly include loading or unloading activities); Fid. & Cas. Co. v. North Carolina Farm Bureau Mut. Ins. Co., 16 NC App 194, 192 SE2d 113 (1972) (it is a matter of normal construction to hold that “use,” within terms of omnibus clause, includes loading and unloading of a motor vehicle, especially when the vehicle is a truck designed to transport goods); see also Bellafronte v. General Motors Corp., 151 NJ Super 377, 376 A2d 1294 (1977); Travelers Insurance Co. v. American Fidelity & Cas. Co., 164 F Supp 393 (D Minn 1958); D'Aquilla Bros. Contracting Co., Inc. v. Hartford Acc. & Ind. Co., 22 Misc. 2d 733, 193 NYS 2d 502 (1959).

The minority view seems to be that loading and unloading are merely incidental parts of overall use and therefore do not fall within omnibus coverage. See, e.g., Travelers Ins. Co. v. Buckeye Union Cas. Co., 172 Ohio St 507, 178 NE2d 792 (1961) (bulk oil tank employee who spilled oil on truck driver was not an insured under truck policy even though engaged in a loading operation). However, no case that we have found follows the majority’s reasoning; in fact, the Ohio court took precisely the opposite view, concluding that the bulk fuel employee did not use the truck because he was not acting for the benefit of the owner of the truck. Id. at 514. Neither that distinction nor the majority’s, however, is persuasive. There is nothing inherent in the meaning of “use” that requires a user to have any particular economic relationship to either the insured vehicle or the product transported upon it.

It is also significant that the policy purports to exclude loading and unloading activities from coverage. If loading were not a use, there would be no reason to exclude it *487expressly from liability coverage. It would, instead, be excluded by definition alone. In fact, the exclusion that the majority upholds was engrafted in motor vehicle liability policies in order to reduce the scope of coverage, in light of the fact that use includes loading and unloading operations. See Protective Ins. Co. v. Coca-Cola Bottling Co., 423 NE 2d 656, 660 (Ind App 1981). Thus, it is readily apparent that, in the ordinary parlance of liability insurance coverage, Trus Joist used Newton’s truck when its employees loaded and secured the joists onto it.

With the ordinary meaning of use in mind, I turn to the decisive issue on appeal: whether the FRL requires coverage in this case, irrespective of the policy exclusion. Exclusions from coverage must be given effect “absent a conflict with the FRL.” Harlan v. Valley Ins. Co., 128 Or App 128, 134, 875 P2d 471, rev den 319 Or 407 (1994). The policy provides for its conformation by self-amendment to the extent that it does not otherwise comply with the FRL:

“The certificate of the policy, as proof of financial responsibility under the provisions of any * * * State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby[.]”

Trus Joist contends that its employees were permissive users of the insured vehicle and that the exclusion was prohibited by ORS 806.080, which provides, in part:

“(1) A motor vehicle liability insurance policy used to comply with financial responsibility requirements under ORS 806.060 must meet all of the following requirements:
“(b) It must insure the named insured and all other persons insured under the terms of the policy against loss from the liabilities imposed by law for damages arising out of the ownership, operation, use or maintenance of those motor vehicles by persons insured under the policy. The policy must include in its coverage all persons who, with the consent of the named insured, use the motor vehicles insured *488under the policy, except for any person specifically excluded from coverage under ORS 742.450.” (Emphasis added.)

ORS 806.080(l)(b) was amended in 1991 to require coverage for “all persons who, with the consent of the named insured, use the motor vehicle insured under the policy * * ORS 806.080(l)(b) (as amended by Oregon Laws 1991, chapter 768, section 8) (emphasis added). Trus Joist contends that the statute requires coverage despite the exclusion, because its employee, with the consent of Newton, used the insured truck by loading it.

We interpret words of common usage found in insurance statutes in accordance with their ordinary meaning. Marcilionis v. Farmers Ins. Co., 318 Or 640, 645, 871 P2d 470 (1994). The term “use” is one of common understanding and, when not otherwise defined in an insurance statute, should be given its ordinary meaning. Carrigan v. State Farm Mutual Auto. Ins. Co., 326 Or 97, 101-02, 949 P2d 705 (1997). The majority purports to follow those principles, but it overlooks a fundamental synergy between the construction of statutes and insurance policies. At the first levels of statutory construction and insurance policy construction our missions are comparable: We seek to ascertain the ordinary meaning of words. Loading a motor vehicle is a “use” in the ordinary sense contemplated by the omnibus provision of John Deere’s policy. Liberty Mut. Ins., 245 Or at 33. Nothing in the text or context of the statute suggests that the legislature intended a more restrictive meaning for the term. See Wallett v. Thompson, 165 Or App 365, 370, 998 P2d 1273 (2000) (in enacting amendments to statutes, the legislature is considered to be aware of the Supreme Court’s decisions).

John Deere cites a number of cases that it asserts support a narrower meaning of “use” under the statute — a meaning limited to “normal driving activities.” However, none of those cases actually construed the term, much less restricted it. One case on which John Deere relies does, however, deserve brief discussion. In Shell Oil Co. v. Employers Ins. of Wausau, 69 Or App 179, 684 P2d 622 (1984), the omnibus provision for permissive users contained in the defendant’s liability policy was virtually identical to the policy language here. We held there that a former version of the FRL *489did not require coverage under the policy for Trus Joist’s vehicle-loading activities. Id. at 183-84. What John Deere overlooks is that Shell Oil was decided when the FRL did not require coverage for all permissive users but rather only for “ ‘the named insured and all other persons insured under the terms of the policy.’ ” Id. at 183 n 7 (quoting former ORS 486.011, repealed by Or Laws 1983, ch 338, § 978) (emphasis in original). As noted, the legislature amended ORS 806.080(l)(b) in 1991 to require, without regard to the language of the policy, coverage for “all persons who, with the consent of the named insured, use the motor vehicle insured under the policy * * Therefore, Shell Oil does not inform, much less govern, our inquiry.

John Deere ultimately argues that Trus Joist’s claim is not within the class of those with which the FRL is concerned. John Deere asserts that the FRL is designed to assure a minimum level of compensation for motor vehicle accident victims, rather than to provide for the “transfer or allocation of liability” for such compensation. ORS 806.080(1) prescribes mandatory coverage for motor vehicle liability policies “used to comply with financial responsibility requirements under ORS 806.060 * * ORS 806.060 provides, in part:

“A person who is required to comply with the financial responsibility requirements of this state must be able to respond in damages, in amounts required under this section, for liability on account of accidents arising out of the ownership, operation, maintenance or use of motor vehicles and must establish that ability by one of the methods required by this section. All of the following apply to the financial responsibility requirements of this state:
“(1) To meet the financial responsibility requirements, a person must be able to respond in damages in amounts not less than those established under the payment schedule under ORS 806.070.
“(2) A person may only comply with the financial responsibility requirements of this state by establishing the required ability to respond in damages in one of the following ways:
“(a) Obtaining a motor vehicle liability policy meeting the requirements under ORS 806.080 that will provide at *490least minimum limits necessary to pay amounts established under the payment schedule under ORS 806.070.” (Emphasis added.)

John Deere’s arguments reduce to the proposition that the FRL is designed to ensure a minimum level of compensation for motor vehicle accident victims rather than to provide for the “transfer or allocation of liability” for such compensation. Although that may be true, it does not follow that John Deere owes no defense to Trus Joist. We are concerned not with what the parties believe the statute should say but, rather, with what it actually does say. ORS 174.010. Likewise, we are not concerned here with allocating the ultimate risk of loss between John Deere and any liability carrier that directly insured Trus Joist’s activities. What is at stake here is a far more important question, namely, whether the FRL requires minimum liability limits covering those who load and secure cargo that is transported on our public highways. Because the ordinary meaning of the term “use” encompasses the loading of a vehicle, and because the claim made by Newton against Trus Joist arises from that use, the exclusion on which John Deere relies is in direct conflict with ORS 806.080(l)(b) and, thus, cannot be given effect. See Dowdy v. Allstate Insurance Co., 68 Or App 709, 717, 685 P2d 444, rev den 298 Or 172 (1984) (where exclusion is contrary to FRL coverage requirement, “the policy * * * ‘automatically provide[s] such coverage, regardless of its terms’ ”). Therefore, the trial court mistakenly concluded that John Deere owed no duty to defend the third-party complaint filed by Newton against Trus Joist and, in turn, erred by granting John Deere’s motion for summary judgment and by denying Trus Joist’s cross-motion for partial summary judgment. The majority errs by concluding otherwise.

I respectfully dissent.

Armstrong and Wollheim, JJ., join in this dissent.