Arizona Court ofAppeals Division One Holds That Purchaser of a Vehicle Who Loses Financing for the Vehicle is Still Considered a “Customer” Under the Exclusion Provision of a Car Dealership’s Garage Coverage Insurance Policy.

On January 30, 2002, James Bookhammer entered into a sales contract with Midway Chevrolet (“Midway”) for a new Cavalier.  Bookhammer paid a down payment, secured financing, and took possession of the vehicle.  His check was later returned for insufficient funds and the financing bank declined to finance the vehicle.  Nine days later, Bookhammer crashed the vehicle head-on into Messina.  Within an hour of the collision, Bookhammer died.  Messina sustained injuries but survived.  Mesina sued Bookhammer’s estate and Midway, seeking a declaration that Bookhammer was an insured under Midway’s insurance policy, and thus, Midway was liable for the full deductible under that policy.  The relevant portion of the insurance policy provides that an insured includes any person using one of Midway’s covered autos with Midway’s permission except Midway’s customers.  The policy does, however, cover customers who are uninsured or who have insurance but do not have the minimum insurance coverage required by law.  

 Both Midway and Messina filed motions for summary judgment on whether the insurance policy applied to Bookhammer.  The trial court concluded that Bookhammer was Midway’s customer and therefore was not an insured under the policy.  The trial court denied Messina’s motion for summary judgment and granted Midway’s motion.  Messina timely appealed.             

The Arizona Appeals Court affirmed, concluding that Bookhammer was a customer of Midways.  The Court rejected Messina’s argument that Bookhammer’s failure to pay for the vehicle meant he was not a “customer” under the policy.  The Court reasoned that interpreting the term “customer” to require a completed purchase would render the customer exception of the policy meaningless.  The Court explained that Bookhammer met all of the “indicia” of being a customer:  he went to the dealership to buy a specific vehicle, he signed documents to execute the purchase of that vehicle, he completed paperwork for the financing of that vehicle, and he left with the vehicle.  The Court therefore further agreed with the trial court that an expert declaration was not necessary to determine the definition of customer. 

Judge Downie authored the opinion, Judges Brown and Barker concurred.