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GENERAL ACCIDENT, FIRE & LIFE ASSUR. CORP. v. NATI

October 31, 1980

GENERAL ACCIDENT, FIRE & LIFE ASSURANCE CORPORATION, LTD.
v.
NATIONWIDE MUTUAL INSURANCE CO.



The opinion of the court was delivered by: FULLAM

MEMORANDUM AND ORDER

Plaintiff General Accident, Fire & Life Assurance Corporation, Ltd. ("General Accident") seeks in this action to establish that the defendant Nationwide Mutual Insurance Company ("Nationwide") was the primary insurer under its liability policy, and should therefore be required to reimburse plaintiff for sums paid by plaintiff in litigating and settling a claim. The facts are not in dispute.

 General Accident insured Bob Dougherty Auto Repairs. Nationwide insured Grand Auto Sales, a used-car dealership. Dougherty Auto Repairs regularly provided repair and maintenance service for the used-car dealership. Usually, Grand Auto Sales delivered the vehicles in need of service to the repair shop, and picked them up at the repair shop. On the date in question, however, a vehicle which had just been repaired was being returned to Grand Auto Sales by an employee of Bob Dougherty Auto Repairs, when it struck and injured a pedestrian.

 It is clear that, as a matter of tort law, the accident was caused by the negligence of the driver, whose negligence is imputed to his employer, insured by plaintiff. But that proposition does not provide the final answer to questions concerning the proper allocation of the liabilities of the respective insurance carriers under the pertinent policies.

 The vehicle was owned by Nationwide's assured, which had plainly consented to its operation by an employee of plaintiff's assured. Nationwide's policy defined "insured" to include not only the owner of the vehicle, but also persons operating the vehicle with the consent of the owner. On the other hand, it also included the standard "garageman's exclusion":

 
"IV. Persons Insured.
 
"... None of the following is an insured
 
"... (ii) any person or organization.. while acting within the scope of their duties... (as) independent contractors for the named insured."

 Since the vehicle was being operated by an employee of an independent contractor at the time of the accident, it seems clear that the Nationwide policy was intended to provide no coverage in this situation.

 The precise issue presented by the parties for decision in this case, asserted to be a matter of first impression in Pennsylvania, is whether the exclusion quoted above is valid and effective in view of the provisions of the Pennsylvania No-Fault Motor Vehicle Insurance Act, 40 Pa.C.S.A. § 1009.101 et seq. I am not persuaded, however, that that statute is really involved in this case.

 The statute obligates owners of vehicles to provide security (normally, in the form of liability insurance) for "basic loss benefits" as defined in § 109.103, "added loss benefits," as defined therein by reference to § 1009.207. Neither of these terms includes "non-economic detriment," defined in § 1009.103, to include "pain, suffering, inconvenience, physical impairment, and other non-pecuniary damage recoverable under the tort law applicable to injury arising out of the maintenance or use of a motor vehicle."

 Article III of the statute abolishes tort liability, with certain exceptions. § 1009.301. Subsection (5) provides:

 
"(5) A person remains liable for damages for non-economic detriment if the ...

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