Who Is An User Of A Vehicle?

Fort Worth insurance lawyers can tell you about all kinds of situations they get questions about. A 1997, Dallas Court of Appeals case is a case not seen everyday. The style of the case is American Economy Insurance Co. v. USAA.
This is one insurance company suing another. In the underlying case, Scott Johnson was driving a vehicle belonging to his father. Three friends, including Benjamin Ellis, were passengers. Scott and the passengers were intoxicated. The vehicle collided with a second car and Scott was killed. The passengers injured.
The occupants of the second car brought suit against the father, alleging that the vehicle crossed over the center line while traveling at an excessive speed. The plaintiffs also alleged that the passengers had encouraged, aided, and abetted Scott’s negligent acts and reckless driving, and that the passengers’ occupancy of the vehicle constituted a “use” of the vehicle.
The father was insured by USAA. Passenger, Ellis, was insured by AEIC. When Ellis was served with citation, the complaint was delivered to an AEIC agent with a request for defense. AEIC wrote to USAA requesting that USAA assume the defense. USAA refused stating that there was doubt whether Ellis qualified as a permissive “user” of the Johnson vehicle. AEIC assumed Ellis’s defense. The plaintiffs settled their claim against Ellis and Ellis executed a general release in favor of USAA in return for $11,000 in payment. Plaintiffs then dismissed their suit against Ellis with prejudice. AEIC wrote to USAA requesting reimbursement for defense costs. USAA refused.
AEIC filed a declaratory judgment action to interpret the USAA policy. The trial court entered judgment against AEIC and in favor of USAA indicating that AEIC had failed to prove that Ellis was a “user” of an automobile insured by USAA.
This appeal followed wherein the trial court was reversed and the case remanded for further proceedings.
The USAA policy was a standard Texas personal auto policy. The AEIC policy contained an “other insurance” clause which provided that AEIC’s liability would be considered excess of other applicable liability insurance. Therefore, if the USAA policy was applicable to Ellis, then the USAA policy would be considered the primary policy and the AEIC policy excess.
Ellis’s conduct constituted a “use” of the Johnson vehicle within the meaning of the USAA policy. Citing a number of previous cases, the Dallas Court of Appeals stated that the courts have “reasoned that coverage as a ‘user’ should be extended to the passenger because the accident need not be proximately caused by the act of the passenger, but only that the accident arise out of the use of the automobile.”
In this case, the underlying case alleged that Ellis had actively encouraged, urged, aided and abetted the driver to consume alcoholic beverages and to drive the vehicle in a reckless manner while intoxicated. Therefore, Ellis and other companions were engaged in a continuing course of reckless and negligent conduct.
The release signed by Ellis in the underlying case did not bar AEIC’s claim for reimbursement for defense costs. Since USAA was legally obligated to provide a defense for Ellis and refused to do so, AEIC, as Elli’s excess insurer, was entitled to reimbursement for providing that service upon USAA’s refusal to do so.