Low, Ball & Lynch’s

WEEKLY LAW RESUME

September 16, 2004 Issue      By: Raymond Coates

Coverage - Automobile - Passenger

Ace American Insurance Company v. Jessica Walker

Court of Appeal, Third District

(August 24, 2026)

Jessica Walker was injured in a car accident while riding as a passenger in a vehicle driven by Kai Sheng Hou (Kai).  The vehicle was registered to Kai's father, Hsin Jen Hou (Hsin).  Walker sued Hsin, Kai, the Buta Buddhism Research Center (BBRC), and Hou's Institution.  Ace American Insurance Company (Ace) insured Hou's Institution under a CIGNA property and casualty commercial general liability policy.

Walker's claim was tendered to Hsin's automobile carrier, Farmers Insurance Group.  Farmers defended Hsin and BBRC.  A tender was also made to Ace, which indicated it would defend under a reservation of rights.  The Farmers policy limit was $25,000.  The Ace policy limit was $1 million.

Ace filed a complaint for declaratory relief against Hsin, BBRC and Hou's Institution seeking a declaration it had no duty to defend or indemnify.  Meanwhile, in the Walker action, a settlement was reached whereby the Walker defendants stipulated to liability, Farmers paid their policy limits of $25,000, and the defendants assigned to Walker any cause of action they had against Ace.  In return, Walker agreed not to execute on any judgment entered against the defendants.

In the declaratory relief action, Ace filed a motion for summary judgment.  The trial court granted Ace's motion.  It was based upon an exclusion in the policy for bodily injury arising from use of an automobile by the insured.  A judgment of dismissal followed.  Walker appealed.

The Court of Appeal affirmed.  The Court stated the Ace policy listed as named insured Hou's Institution and Hsin.  The policy indicated it was issued to an individual.  The policy provided coverage for the individual and with respect to the conduct of any business of which he or she was the sole owner.  The policy excluded coverage for bodily injury arising out of the use of an automobile owned or operated by any insured.  Ace contended the policy provided no coverage for the accident because the claim did not arise from the conduct of a business of which Hsin was the owner and because the policy excluded coverage for bodily injury arising out of the use of an automobile.  The Court felt the automobile exclusion was unambiguous and thus applied to this case.  Because there was no possibility of coverage, there was no duty to defend.

As a result, the Court further held that because there was no possibility of coverage, the claimant was barred from bringing any bad faith lawsuit.  The judgment in the declaratory relief action was therefore affirmed.

COMMENT

This case affirms the traditional rule that general liability policies do not provide coverage for automobile accidents.  The only unusual aspect of this case was the confusion as to the named insured and their role in this case.

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