III. Ownership, Maintenance or Use Requirement

• Library: The Law of Automobile Insurance in SC (SCBar) (2015 Ed.)

III. Ownership, Maintenance or Use Requirement

Section 38-47-140 requires a liability policy to insure against loss from the liability imposed by law for damages "arising out of the ownership, maintenance or use" of the insured motor vehicle.²²³ Generally, the term "arising out of is broader than "caused by." "Arising out of" has also been couched as "originating from," "having its origin in," "growing out of," "flowing from," or, in short, "incident to or having connection with," the use of the car.²²⁴ "The term 'use' in a policy must be considered with regard to the setting in which it is employed."²²⁵ "Use" has been defined as "[t]o put into operation, to cause to function;...to act with regard to; act of employing anything...."²²⁶

Exact definition of the term "use" is elusive, and is not capable of a definition which will leave everyone "comfortable." Whether or not an injury arose from the "use" of a motor vehicle within the contemplation of a liability policy or statute depends upon the factual context of each case. In this setting the term does not imply "remoteness," but does extend beyond actual physical contact. And it would seem to extend at least to the point, beyond physical contact, where control over the instrumentality is easily or reasonably at hand, and particularly when it is still being "utilized."²²⁷

In McPherson, the Supreme Court of South Carolina held that the Court of Appeals "improperly construed the exclusionary language in the [insured's] policy by interpreting the phrase 'arising out of' broadly to connote 'causal relation to,' ...or 'having connection with.'"²²⁸ The court stated that "[w]here the words of a policy are capable of two reasonable interpretations, that construction will be adopted which is most favorable to the insured."²²⁹ Taking this into consideration, the court stated that "for the purpose of construing an exclusionary clause in a general liability policy, 'arising out of' should be narrowly construed as 'caused by.'²³⁰

In the more recent case of Wausau Underwriters Insurance Co. v. Howser,²³¹ the Supreme Court adopted the analysis of the Minnesota Supreme Court contained in Continental Western Insurance Co. v. Klug.²³² The Minnesota court in Klug examined three factors in determining whether the damages arose out of the ownership, maintenance, or use of the insured vehicle: (1) the causal connection between the vehicle and the injury; (2) once causation was established, if an act of independent significance occurred which broke the causal link; and (3) was the use of the vehicle limited to providing transportation. In Wausau, the South Carolina Supreme Court examined factors one and two. Since the vehicle in Wausau was being used for transportation at the time of the accident, the court held that it did not need to determine whether this element was mandated under South Carolina law. Wausau involved the ownership, maintenance, or use of an uninsured motor vehicle. The Court of Appeals subsequently adopted the reasoning of Wausau in a liability insurance case, Home Insurance Co. v. Towe.²³³

Element three in the Kiug analysis, the requirement of which was reserved by the court in Wausau, was at issue in Canal Insurance Co. v. Insurance Co. of North America.²³⁴ The Supreme Court in that case construed section 38-77-140 to "define" 'use of a motor vehicle' as limited to transportation uses."²³⁵

A. Causal Connection Requirement

"The test for determining whether an injury arose out of the use of a vehicle turns on the causal connection between the vehicle and the injury. No distinction is made as to whether the injury resulted from a negligent, reckless, or intentional act."²³⁶ "The 'accident' upon which insurance coverage is claimed must bear a 'causal relation or connection' with the ownership, maintenance or use of the automobile."²³⁷ "An automobile policy cannot properly be construed to cover injuries that result from acts wholly disassociated from, independent of, or remote from the use of the vehicle."²³⁸

In Government Employees Insurance Co. v. Melton,²³⁹ the Federal District Court quoted three elements which must be present to satisfy the "use" or causal connection requirement:

1. The accident must have arisen out of the inherent nature of the automobile as such.
2. The accident must have arisen within the natural territorial limits of the automobile, and the actual use, loading, or unloading, must not have terminated.
3. The automobile must not merely contribute to the cause of the condition, but must itself produce the injury.²⁴⁰

In Government Employees Insurance Co. v. Melton the issue was whether an accident, in which one or more occupants in a pickup truck threw a soft drink bottle out of the back and struck two pedestrians, arose out of the ownership, maintenance or use of the insured vehicle. Finding no causal relationship between the use of the vehicle and the accident, the court stated "[t]he vehicle in question was not used for the purpose for which it was designed, for there can be no realistic conclusion that it was designed for the purpose of allowing, permitting, or encouraging bottles or injurious matter to be thrown therefrom."²⁴¹ The court stated in dicta, however, that it would have taken a different view if the facts had revealed any negligence on the part of the pickup truck driver. (As stated below, the South Carolina Supreme Court found coverage under similar facts.)

In the subsequent Fourth Circuit case of Nationwide Mutual Insurance Co. v. Brown,²⁴² the insured had an employee pick him up in the insured's pickup truck for the purpose of locating the insured's estranged wife. The insured told the employee that he had a gun and would kill his wife if she refused to speak with him. The insured and the employee eventually found the wife while she was driving her car. As her vehicle approached, the insured shoved the employee and the steering wheel causing the pickup truck to collide with the wife's vehicle. Following the collision the insured jumped out of the truck and shot and killed his wife while she sat in her car.

No doubt seeking to come within the court's dicta in Melton, the administrator of the wife's estate premised his wife's claim of coverage upon a unique negligence theory: the employee's negligence in transporting a dangerous person in an insured vehicle to carry out a known threat; and that therefore the use of the truck to transport the insured to locate his wife constituted a normal "use" of a motor vehicle under the liability policy in force.

Stating that the cases relied upon by the administrator "gloss[ed] over the critical causal relation test,"²⁴³ the Fourth Circuit observed that "[i]n cases dealing with the specific situation here in issue — a shooting by a passenger in or operator of an insured vehicle — the decisions have uniformly applied and found unmet a comparable causal relation requirement."²⁴⁴

At issue in McPherson v. Michigan Mutual Insurance Co.²⁴⁵ was an automobile exclusion clause in the general liability clause in a general liability policy. The exclusion provided that no coverage was provided to personal injury arising out of the ownership, operation or use of an automobile. The plaintiff was a passerby struck by a city police car while a police officer was using it to "channel" a fleeing suspect. Channeling is a law enforcement procedure by which police officers use the patrol cars to block a suspect's path. The insurer argued that there was no coverage under the general liability policy because of the exclusion. The Court of Appeals agreed, holding that "[t]he operation of the vehicle bore a direct casual relation to the accident."²⁴⁶

The plaintiff further argued that the exclusion did not apply because the concurrent cause of his injuries was the city's failure to establish and enforce adequate procedures for the use of patrol cars. The court rejected this argument, stating that even under this theory the operation and use of a patrol car was the factual predicate for the plaintiff's concurrent cause of action. "Second, the city's general liability policy does not insure against theories of liability; it insures against occurrences that cause injuries. Coverage does not turn on the legal theory upon which liability is claimed, but on the type of occurrence."

In more recent cases, the South Carolina state courts have adopted a more lenient standard towards the insured when determining whether the incident in question arose out of the use of the vehicle. Those courts have rejected the reasoning in the federal court cases discussed above. In Wausau Underwriters Insurance Co. v. Howser,²⁴⁷ the insured was injured by gunfire from an unknown assailant. The record disclosed that prior to the shooting the insured vehicle was bumped from behind on several occasions by the assailant's vehicle. The unknown driver then shot at the insured vehicle, causing severe personal injuries to the driver. The gunman was never identified. The court noted that the injuries for which coverage was claimed were solely the result of the gunfire, and not the earlier bumping.

Finding coverage, the Supreme Court first considered the causal connection between the vehicle and the injury. The court noted that "[t]he Causation required is something less than proximate cause and something more than the vehicle being the mere site of the injury."²⁴⁸ The court found that the gunshot wounds did arise from the use of the vehicle in a manner sufficient to establish the necessary causal connection.²⁴⁹ "Only through use of his vehicle was the assailant able to closely pursue [the insured], thereby enabling him to carry out the pistol assault. The gunshot was the culmination of an ongoing assault, in which the vehicle played an essential and integral part."²⁵⁰

In State Farm Auto. Ins. Co. v. Bookert,²⁵¹ the South Carolina Supreme Court found that causal connection was lacking because the insured's injuries were not "foreseeably identifiable...