Jackson v. Nationwide Mutual Insurance Company (9/30/2011)
Arizona Court of Appeals Division Two Holds That The Uninsured Motorist Act Does Not Require an Insurer to Offer Uninsured Motorist Coverage under a Commercial General Liability Policy That Also Includes Automobile Liability Coverage.
In 2005, Anthony Jackson had mechanical problems with his car and stopped at a Chevron repair station. Instead of leaving his car at the station for repairs, Jackson agreed to allow an employee of the station to show him how to drive the car with its mechanical problems. With the station employee driving and Jackson riding as passenger, Jackson’s car was hit by another car driven by Eduardo Martinez. Neither Martinez, who was at fault, nor his vehicle was insured.
Chevron had two Nationwide insurance policies, which were issued by the same agent at the same time as part of the same transaction. The first policy was a Business Auto Policy (“BAP”), which contained an uninsured motorist (“UM”) endorsement. Jackson recovered under the UM endorsement to the BAP. The second policy was a Businessowner’s Policy (“BOP”), a commercial general liability (“CGL”) policy with an endorsement providing liability coverage for bodily injury and property damage caused when an insured under the policy was operating a customer’s automobile in the course of garage operations. The BOP did not have a UM endorsement, and Nationwide did not offer UM coverage to Chevron under the BOP.
Jackson filed a declaratory judgment action seeking a judicial determination that UM coverage should be imputed to the BOP under A.R.S. § 20-259.01, Arizona’s Uninsured Motorist Act (“UMA”), which requires insurers to offer UM coverage under automobile liability policies unless certain exceptions apply. If the coverage is not offered, UM coverage is imputed by operation of law. The parties filed cross-motions for summary judgment on the issue, and the superior court ruled in favor of Nationwide.
The Court of Appeals affirmed, concluding that the exception in the UMA for CGL policies and excess policies applied. A.R.S. § 20-259.01(L). The Court rejected Jackson’s argument that both the BAP and the BOP were primary policies because the BOP was intended to provide primary coverage when a garage employee was driving a customer’s car. Relying on Petrusek v. Farmers Insurance Co. of Ariz., 193 Ariz. 552, 975 P.2d 142 (App. 1998), the Court held that the statutory exception for CGL policies was intended to apply even when a CGL policy includes automobile liability coverage. Thus, because the BOP was a CGL policy and because the BAP, which was issued in connection with the same transaction, provided for the coverage typical in automobile policies, the BOP was not intended to be the primary source for automobile liability coverage and the UMA did not apply.
The Court also rejected Jackson’s argument that A.R.S. § 28-4010 rendered the BOP the primary automobile insurance in this situation. That statute creates a conclusive presumption that a policy owned by a repair station is the primary coverage policy when an employee of the repair station is driving the vehicle. The statute did not apply in this situation, however, because both policies at issue were held by the same garage owner, and the statute was intended to apply when there are multiple policies issued to multiple parties. Thus, because the BOP was not intended to provide primary coverage, it fell within the exception for excess policies in the UMA.
Judge Kelley authored the opinion; Judges Vasquez and Espinosa concurred.