In California, motor vehicle policies confer insured status on any person while “using” a motor vehicle with the permission of the owner.  The Ninth U.S. Circuit Court of Appeals recently addressed whether unloading an injured passenger from a motor vehicle constituted “use” of that motor vehicle under California law.  In holding that unloading an injured passenger from a motor vehicle constituted “use,” the court reasoned that the subject policy incorporated California Insurance Code § 11580.06(g), which defines “use” to include “unloading” a motor vehicle.

In Encompass Insurance Co. v. Coast National Insurance Co., decided Aug. 13, 2014, Encompass sought contribution from Coast National Insurance Co. and Mid-Continent Insurance Co. in connection with a settlement it paid on behalf of its insured, Lisa Torti, arising from the personal injury claim of Alexandra Van Horn.  Van Horn was a passenger in a vehicle operated by Anthony Glen Watson.  Watson lost control of his vehicle and struck a light pole.  Torti was the passenger in a vehicle passing by when she stopped to render aid.  Fearing that the Watson vehicle would catch fire, Torti removed Van Horn.  Van Horn claimed that Torti caused her severe spinal injuries.

Encompass issued a package policy to Torti providing, among other things, motor vehicle and personal excess liability coverage.  Mid-Continent issued a motor vehicle policy to Torti and Coast issued a motor vehicle policy to Watson (the driver of the vehicle in which Van Horn was a passenger).  The Mid-Continent and Coast policies provided coverage for the “use” of the vehicle if such use was with the permission of the owner.  The court addressed the meaning of the term “use,” but did not evaluate the issue of “permission.”

The court recognized that the Mid-Continent and Coast policies incorporated the definition of “use” from California Insurance Code § 11580.06(g), which unambiguously equates “unloading” of a motor vehicle with the “use” of a motor vehicle.  Hence, the court held that “use” included Torti’s unloading of Van Horn from the Watson vehicle.

The court rejected the dissent’s arguments that unloading of a vehicle constitutes use only when it is part of the user’s act of availing himself or herself of the vehicle because there was an absence of case law adopting such a theory.  The court also stated that the dissent’s attempt to create a distinction between commercial and noncommercial vehicles was unavailing in light of the fact that the statutory definition of “motor vehicle” included “any vehicle designed for use principally upon the streets and highways and subject to the motor vehicle registration under the law of this state.”  Moreover, the court noted that there were at least two cases where California courts held that unloading noncommercial vehicles constituted use of those vehicles.

The court also rejected the defendants’ argument that unloading only constitutes use when it is integral to the function of the vehicle as a means of transport such that the person unloading the vehicle gains a benefit.  In the case upon which the defendants relied, Travelers Ins. Co. v. Northwestern Mut. Ins. Co. (1972) 104 Cal. Rptr. 283, the California Court of Appeal held that performing maintenance on a vehicle without more was not necessarily use of the motor vehicle.  The Ninth Circuit stated that Travelers did not limit the circumstances under which maintaining a vehicle constitutes use, and therefore imposed no limits on “unloading.”  Travelersalso was decided 12 years prior to the enactment of § 11580.06(g) and to the extent that Travelers was inconsistent, the court was bound to follow the Insurance Code.

The court remanded the decision for further proceedings.  Notably, the court never determined whether Torti had Watson’s permission to use his motor vehicle.  With the issue of whether unloading constitutes use resolved, the ultimate coverage determination will likely turn on the issue of permission.