St. Paul Insurance v. Industrial Underwriters Insurance

The appellant asserts the lower court erred in deciding a customer of an auto dealership was not the dealership’s “agent” for purposes of the application of Insurance Code section 11580.9, subdivision (a). At stake is the responsibility, as between the customer’s insurer (appellant) and the dealership’s insurer (respondent), for bearing the costs of defense and settlement of a personal injury lawsuit brought by the occupants of a vehicle which collided with a used automobile owned by the dealership and driven by the customer. We affirm.

Facts

At about 9 a.m. on August 31, 1983, James H. Brown and Mattie Brown, husband and wife, arrived at the Kingsrow Ford Lincoln Mercury, Inc. (Kingsrow), auto dealership in Hanford. In the market for transportation, they had come to Kingsrow for the sole purpose of shopping for a car. There they met, for the first time, a salesman, one Ervin Ash, who offered them a test drive of a 1978 Ford LTD. The Browns decided to try out the car.

Before the Browns left the Kingsrow premises, Ash suggested they stop at a nearby Chevron service station during the test drive to “get some gas” on Kingsrow’s account, because the car was “low on gas.”…