Facts

On Oct. 26, 2002 Rocco Cimarusti gave Chester Linder and Douglas Brown a ride in his dune buggy at the Imperial Sand Dunes in Imperial County. Rocco inadvertently drove the dune buggy off a 70-foot dune lip and crashed. As a result of the accident, both Rocco and Brown were rendered paraplegics. Linder also received serious injuries. Linder and Brown subsequently brought an action against Rocco for the catastrophic injuries they received in the accident ("Linder action").

The defense of the Linder action was tendered to Rocco’s homeowner's insurer, AMCO Insurance Company ("AMCO"). AMCO refused to defend or indemnify Rocco on the basis the dune buggy did not meet one of the two alternative conditions for covering off-road vehicles; it was not owned by Rocco and it was not being used on an "insured location."

Rocco had been given the dune buggy six months earlier by his father. However, the vehicle was never registered or "identified" with the DMV as belonging to Rocco.

Counsel for Linder and Brown subsequently made a demand for the $300,000 policy limits and AMCO refused. The Linder action later went to trial and resulted in a judgment in favor of Linder and Brown and against Rocco in the amount of $8 million. Rocco assigned his rights under the policy to Linder and Brown while retaining his personal rights.

Rocco, Linder, and Brown then brought an action against AMCO for its failure to pay the policy limits. During the litigation AMCO raised another coverage defense, that the policy excluded the use of vehicles required to be registered under the law and, in California, the dune buggy was required to be registered.

PLAINTIFF’S CONTENTIONS:
The plaintiff contended that AMCO improperly failed to defend and settle within the policy limits. Rocco was covered for his use of the dune buggy. He did not "own" the dune buggy because he was not the legal owner. He also was using the dune buggy at an "insured location," the sand dunes, because he was "temporarily residing" there while on vacation. Additionally, the dune buggy did not need to be "registered" because it was an off-road vehicle that was subject to "identification" laws.

DEFENDANT’S CONTENTIONS:
AMCO asserted that the policy did not cover vehicles that were required to be registered and that off-road vehicles are required to be registered. AMCO also asserted that Rocco owned the dune buggy because his father had given it to him; and that Rocco was not operating the dune buggy on an "insured location" at the time of the accident.

Result

The court determined that the phrase “not owned” was ambiguous and would be interpreted to apply to the dune buggy, which was not registered to Rocco. The court also determined that the dune buggy was not subject to registration but a different statutory scheme for identification of off-road vehicles. AMCO was found responsible for the underlying judgment.

Other Information

The court refused to take judicial notice of the legislative history of the Vehicle Code sections that concerns off-road vehicles. AMCO contended that those documents show that the legislation was enacted to require registration of off-road vehicles. AMCO is appealing from the judgment. Earlier, the court granted the co-defendant business carrier’s motion for summary judgment, ruling that Rocco could not have been entertaining business contacts, as he contends. The plaintiffs are appealing.