Staker & Parson Co., Inc. v. Scottsdale Ins. Co. – 7/10/2024
Arizona Supreme Court holds that use of the motor vehicle (1) encompasses any purpose for which the vehicle was intended, but does not extend beyond the scope of the insured purpose, (2) does not arise independently from the injured party’s use of a vehicle over private roads maintained by the additionally insured, and (3) does not encompass managerial functions of an additionally named insured.
In an insurance dispute, the United States District Court for the District of Utah certified four questions of Arizona law to the Arizona Supreme Court:
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- Is an additionally named insured on a commercial automobile policy “using” an independent contractor’s covered vehicle when that vehicle is being operated by the independent contractor’s employee to transport the additionally named insured’s cargo?
- Is an additionally named insured “using” an independent contractor’s covered vehicle when that vehicle is being operated by an employee of the independent contractor to transport the additionally named insured’s cargo over private roads that are owned and maintained by the additionally named insured?
- Are managerial functions of an additionally named insured considered use of an independent contractor’s covered vehicle?
- If the answer to any of questions (1) – (3) is yes, is there a sufficient causal link between the additionally named insured’s “use” of the covered vehicle and liability for personal injuries sustained by the independent contractor’s employee to trigger the insurer’s duty to defend the additionally named insured?
The Court affirmatively answered the first question. Arizona’s insurance coverage statute requires that:
all motor vehicle liability policies insure the person named in the policy as the insured and any other person, as insured, using the motor vehicle or motor vehicles with the express or implied permission of the named insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of the motor vehicle or motor vehicles.
A.R.S. § 28-4009(A)(2) (emphasis added).
At issue was the definition of “use of the motor vehicle.” Interpreting § 28-4009 and Arizona case law, the Court acknowledged that loading and unloading a vehicle constitutes use of that vehicle. It noted that loading and unloading is a continuous process that also includes transporting cargo in between. Accordingly, the Court defined “use” as the permissive user taking action that involves the inherent nature of the particular vehicle, such as driving, transporting cargo, loading, unloading, or fueling. Use encompasses any purpose for which the vehicle was intended but does not extend beyond the scope of the insured purpose.
On the second question, the Court held that use of a covered vehicle does not arise independently from the injured party’s use of a vehicle over private roads owned by the additionally insured. Despite the Court’s broad definition of “use,” use must still relate to the operation of the covered vehicle, which requires actually doing something with the vehicle. Failure to maintain premises—the claim at issue here—does not meet this definition.
The Court also answered the third question in the negative, holding that managerial functions of an additionally named insured do not constitute use of a covered vehicle. Neither the case law nor the statute’s text extends use to managerial functions. Looking to the purpose of the statute—to prevent injured drivers from being uncompensated—the Court held that excluding managerial functions from the definition of use would not leave injured persons uncompensated. The statute did not prevent the failure to train or failure to maintain premises claims at issue here. Including managerial functions in the definition of use, however, would disincentivize companies to train employees or maintain premises because the insurer would ultimately be liable for any deficiencies.
Finally, the Court declined to address whether there was a causal link between use of the vehicle and the injuries sustained because causation is a question of fact.
Justice Beene authored the opinion in which Chief Justice Timmer, Vice Chief Justice Lopez, and Justices Brutinel, Bolick, Montgomery, and King joined.
Posted by: Allie Karpurk