Green v. Farmers Ins. Co., Inc.
| Citation | 57 F.Supp.2d 729 |
| Decision Date | 13 July 1999 |
| Docket Number | No. Civ. 98-3088.,Civ. 98-3088. |
| Parties | Winford GREEN and Mary Green, Plaintiffs, v. FARMERS INSURANCE CO. INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Frank H. Bailey, Bailey Law Firm, Mountain Home, AR, for plaintiff.
Jon P. Robinson, Benson, Robinson & Wood, Fayetteville, AR, Steven B. Davis, Davis & Goldie, Harrison, AR, for defendants.
Plaintiffs commenced this civil action seeking a declaratory judgment that coverage exists for damages Winford Green ("Green") incurred as a result of an automobile accident. Currently before the court is the motion for summary judgment brought on behalf of separate defendant Farmers Insurance Company ("Farmers"). For the reasons set forth below, the motion will be denied.
On December 22, 1996, Green was stopped in a 1980 Volkswagen Rabbit ("Rabbit"), when a 1991 Pontiac Firebird ("Firebird") struck the rear of the Rabbit. The Rabbit was owned by "Windy's Used Cars," an Arkansas general partnership of which both plaintiffs are partners. See Farmers' Exhibit "B;" Farmers' Exhibit "D," at 49-50.
Plaintiffs were insured at the time of the accident through an automobile insurance policy issued by Farmers. The policy specifically provided coverage for a 1970 Antique Chevrolet Malibu ("Malibu"). In addition, the policy provided uninsured and underinsured motorist coverage. Plaintiffs assert that the uninsured motorist provision of the policy provides coverage for the damages that resulted from the accident.1
The policy contains the following provision regarding uninsured motorists:
[w]e will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured person. The bodily injury must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle.
Farmers' Exhibit "A," at 6.
The policy contains an exclusion, however, that states "[t]his coverage does not apply to bodily injury sustained by a person ... [w]hile occupying any vehicle owned by you or a family member for which insurance is not afforded under this policy or through being struck by that vehicle." Id., at 7. Further, an endorsement attached to the end of the policy states that: "[u]ninsured motorist coverage ... does not apply to damages arising out of the ownership, maintenance, or use of any vehicle other than your insured car ..., which is owned by or furnished or available for the regular use by you or a family member." Id. Pursuant to the restricted use endorsement attached to the policy, the Malibu was the only vehicle within the meaning of "your insured car" for purposes of the policy. Id.
Farmers asserts that there is no coverage under the policy for the damages suffered by plaintiffs for two reasons. First, Farmers relies on the provision of the policy that excludes damages sustained while occupying a vehicle owned by plaintiffs for which insurance is not afforded under the policy. Farmers takes the position that because the accident occurred while Green was occupying the Rabbit — a vehicle owned by plaintiffs but for which insurance was not afforded under Farmers's policy — coverage is specifically excluded. Farmers contends that although "Windy's Used Cars" held title to the Rabbit, a partnership cannot own property as an entity under Arkansas law, and, thus, the plaintiffs, as the general partners, are the actual owners of the Rabbit and the exclusion applies.
Plaintiffs dispute the contention that a partnership cannot own property under Arkansas law. Rather, plaintiffs assert that a partnership can own property in its own name and, thus, because they were not the owners of the Rabbit, the exclusion does not apply.
Second, Farmers seeks to deny coverage based on the regular use exclusion in the policy. Namely, Farmers asserts that because Green had available to him the regular use of the Rabbit, the uninsured motorist provision does not apply.
Plaintiffs similarly dispute that the regular use exclusion applies in this case. Plaintiffs assert that there is no evidence that Green regularly used the Rabbit. On the contrary, plaintiffs assert that Green's use of the Rabbit was casual or incidental.
"Summary judgment is only appropriate when no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law." Callanan v. Runyun, 75 F.3d 1293, 1296 (8th Cir. 1996) (citations omitted). See also Fed. R.Civ. P. 56(c). All disputed facts are to be resolved and all inferences drawn in favor of the nonmoving party. Id.
The Eighth Circuit has stated that "summary judgment is an important method of promoting judicial economy by preventing the trial of cases in which no genuine issue of material fact remains." Inland Oil & Transport Co. v. United States, 600 F.2d 725, 728 (8th Cir.1979). Thus, the party opposing summary judgment may not rest on the pleadings, but must set forth facts that show there is a genuine issue for trial. Id.
Farmer's insurance policy does not contain a stipulation as to governing law. To determine which state's law applies, the court must examine "`the nature and quantity of each state's "contacts" with the transaction at issue.'" Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1321 (8th Cir.1991) (quoting Snow v. Admiral Ins. Co., 612 F.Supp. 206, 209 (W.D.Ark.1985)).
Under the facts of this case, the court believes that Arkansas has the most significant relationship with the insurance policy at issue. First, the plaintiffs were residents of Arkansas at the time the policy was issued and at the time of the accident. Second, Farmers' policy was issued to cover an automobile, the Malibu, that was owned by plaintiffs in Arkansas. Thus, Arkansas was the place "the parties understood was to be the principal location of the insured risk during the term of the policy." Restatement (Second) Conflicts of Laws § 193 (1971).
Finally, the situs of the accident was in Baxter County, Arkansas. Thus, the court holds that with respect to the policy at issue, the most significant relationship lies with Arkansas, and, thus, Arkansas law governs this case.
Farmers contends that under Arkansas law, a partnership is not an entity distinct from its members, and, thus, a partnership cannot own property as an entity. Therefore, Farmers asserts that plaintiffs are the owners of the Rabbit and, as a result, uninsured motorist coverage is excluded under the provision in the policy that states "coverage does not apply to bodily injury sustained by a person ... [w]hile occupying any vehicle owned by you or a family member for which insurance is not afforded under this policy...." Farmers' Exhibit "A," at 7.
As indicated, this Court is obliged to look to Arkansas law to construe the terms of the insurance policy. If the terms of the policy are plain and unambiguous, they are to be applied as written without resort to construction techniques. On the other hand, if the provisions are ambiguous, the court is required to construe them against the interests of the insurer which drafted them. See Allstate Ins. Co. v. U.S. Fidelity and Guar. Co., 663 F.Supp. 548, 553 (W.D.Ark.1987), aff'd, U.S. Fidelity and Guar. Co. v. Cumpton, 846 F.2d 1147 (8th Cir.1988).
In addition, the law is well-settled that a policy of insurance is nothing more than a contract between the insurance carrier and its insured, and is to be governed by the ordinary rules of interpretation of a contract. See Perkins v. Clinton State Bank, 593 F.2d 327, 334 (8th Cir.1979); Tri-State Ins., Co. v. Sing, 41 Ark.App. 142, 145, 850 S.W.2d 6, 8 (1993). The Court "must construe the insurance contract between the parties to give effect to the parties' intent." Dupps v. Travelers Ins. Co., 80 F.3a 312, 314 (8th Cir.1996).
A common sense approach should be used and generally the words employed in the policy are to be construed in their plain, ordinary, and popular sense. See Wommack v. United States Fire Ins. Co., 323 F.Supp. 981, 986 (W.D.Ark.1971). "[U]ndefined terms of an insurance policy ... must be construed in their plain, ordinary and everyday sense and the parameters of the definition should reflect the legal characteristics most frequently attributed to the word." Eagle Star Ins. Co., Ltd. v. Deal, 474 F.2d 1216, 1220 (8th Cir.1973). "Such guidelines suggest that economic reality and substance, rather than legalistic form, should be determinative of the word's meaning." Id.
Furthermore:
[c]ontracts of insurance should receive a practical, reasonable and fair interpretation consonant with the apparent object and intent of the parties in the light of their general object and purpose. The terms of an insurance contract are not to be rewritten under the rule of strict construction against an insurer so as to bind the insurer to a risk which is plainly excluded and for which it was not paid.
Sing, 41 Ark.App. at 145, 850 S.W.2d at 8 (citations omitted).
"The initial determination of whether a contract is ambiguous rests with the court, ... and when a contract is unambiguous, its construction is a question of law for the court." Farm Bureau Mutual Ins. Co. v. Whitten, 51 Ark.App. 124, 126-27, 911 S.W.2d 270, 271 (1995) (citation omitted). However, if the contract is found to be ambiguous, the meaning of the contract becomes a question of fact. Id.
"When the language of an insurance contract is unambiguous, and only one reasonable interpretation is possible, it is the duty of the court to give effect to the plain wording of the policy." Id. Rules of construction are not resorted to in the absence of an ambiguity. Id.
"In order to be ambiguous, a term in an insurance policy must be susceptible to more than one reasonable construction." Id. "If some ambiguity...
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