TWIN CITY FIRE INS. COMPANY v. Alfa Mut. Ins. Co.

• Decision Date: 26 October 2001
• Parties: TWIN CITY FIRE INSURANCE COMPANY v. ALFA MUTUAL INSURANCE COMPANY.
• Court: Alabama Supreme Court

817 So.2d 687

TWIN CITY FIRE INSURANCE COMPANY v. ALFA MUTUAL INSURANCE COMPANY.

1001305.

Supreme Court of Alabama.

October 26, 2001.

W. Gregory Smith of Spain & Gillon, L.L.C., Birmingham; and Wade H. Baxley of Ramsey, Baxley & McDougle, Dothan, for appellant.

Henry Steagall, Ozark, for appellee.

STUART, Justice.

This is an appeal from a declaratory judgment. It presents as the primary issue whether an insured's employee was operating a "covered auto" under the subject insurance policy. The trial court found that the employee was operating a "covered auto" under her employer's policy and that she was, therefore, an "insured" and was entitled to coverage. We affirm.

Facts

In August 1997, Carolyn Glass was employed as a home health aide by the Southeast Alabama Medical Center Health Care Authority ("the Health Care Authority"). Glass traveled to patients' homes and provided in-home care to those patients. Glass's employment with the Health Care Authority was conditioned upon Glass's providing her own transportation to perform her duties. As compensation for her employment, the Health Care Authority paid Glass an hourly rate. Additionally, the Health Care Authority paid Glass a sum for mileage, based upon the number of miles driven by Glass in the performance of her duties.

On August 15, 1997, Glass reported to the Health Care Authority to obtain her schedule of patient visits for the day. Glass then went about visiting her patients. Glass was driving her personal car. While en route to a patient's home, Glass entered U.S. Highway 84 in Houston County and collided with a car driven by Mildred A. Avant. Avant was seriously injured in the accident, and Glass died as a result of the injuries she sustained in the accident.

Avant and her husband sued Glass's estate, the Health Care Authority, and Alfa Mutual Insurance Company ("Alfa"). The Avants claimed that Glass's negligence and/or wantonness had caused the accident, that the Health Care Authority was vicariously liable for Glass's alleged misconduct, and that Avant was entitled to underinsured motorist benefits under the automobile liability insurance policy issued to Avant by Alfa.

At the time of the August 15, 1997, accident, Glass was insured under a personal automobile liability insurance policy issued by AIG.¹ Under that policy, the coverage for bodily injury was limited to $20,000. The Health Care Authority was insured under a automobile liability insurance policy issued by Twin City Fire Insurance Company ("Twin City") that provided coverage for bodily injury, with a limit of $1,000,000. Avant was insured under an automobile liability policy issued by Alfa that provided underinsured motorist benefits up to $320,000.

In an effort to dispose of the Avant lawsuit before trial, the parties entered into settlement negotiations. On behalf of Glass's estate, AIG tendered its policy limits of $20,000. A dispute arose between Alfa and Twin City as to the amount Twin City should contribute to a settlement. Twin City took the position that the vicarious liability of the Health Care Authority was limited to $100,000 by § 11-93-2, Ala. Code 1975,² and it tendered $100,000 toward the settlement on behalf of the Health Care Authority. Twin City also took the position that Glass was not an insured under the Health Care Authority's policy and that Twin City was not otherwise obligated to contribute to the settlement on behalf of Glass. Alfa contended that Glass was an insured under the policy Twin City issued to the Health Care Authority and that § 11-93-2 did not limit Twin City's liability on behalf of the Health Care Authority.³ Alfa's position was that it was not obligated to pay any underinsured motorist benefits to Avant until Twin City's policy limits ($1,000,000) had been exhausted by payments on behalf of the Health Care Authority and/or Glass.

In order to finally settle the Avants' claims and ultimately the lawsuit, Alfa tendered $320,000 toward the settlement, but expressly reserved the right to settle its dispute with Twin City at a later date. On June 11, 1998, the Avants settled their claims against Glass's estate, the Health Care Authority, and Alfa for $440,000: of that amount, $20,000 had been paid by AIG on behalf of Glass; $100,000 had been paid by Twin City on behalf of the Health Care Authority; and $320,000 had been paid by Alfa pursuant to the underinsured-motorist-benefits provisions of its policy with Avant.

Alfa filed this declaratory-judgment action to settle its dispute with Twin City. Twin City filed an answer and a counterclaim for a declaratory judgment against Alfa. After Twin City amended its pleadings, each party filed a motion for a summary judgment pursuant to Rule 56, Ala. R. Civ. P., with the appropriate evidentiary submissions. Twin City also filed motions to strike the additional documents Alfa had filed with its motion for a summary judgment and the proposed affidavit of Johnny Johnson. Each party filed briefs in opposition to the other party's motion for a summary judgment. After oral argument, the trial court granted Alfa's motion for a summary judgment and denied one of Twin City's motions to strike materials submitted by Alfa in support of its summary-judgment motion. Twin City appealed.

Analysis

I.

As a preliminary issue, Twin City argues that the trial court erred in denying Twin City's motions to strike materials submitted by Alfa in support of its motion for a summary judgment. Twin City acknowledges that it does not know which motion to strike the trial court denied. In the trial court's minute entry, the trial court denied one of Twin City's motions to strike, but did not specify which one it was denying.

From the record we can infer that the trial court denied Twin City's motion to strike additional documents to Alfa's motion for summary judgment rather than its motion to strike the proposed affidavit of Johnny Johnson. Johnny Johnson is an employee of the Alabama Department of Insurance. Twin City argues that his affidavit is an impermissible expression of opinion on the ultimate issue in the case. Alfa's position is that his affidavit is proper expert witness testimony intended to enlighten the trier of fact. The record indicates that at the hearing on the crossmotions for summary judgment, Alfa requested leave to cure the defects in its proposed affidavit of Johnny Johnson. The trial judge granted Alfa an opportunity to supplement Johnson's affidavit, but he stated that he was not accepting or considering the affidavit and that he would not accept or consider any supplementation of the affidavit that Alfa submitted. Further, the trial court ruled on the crossmotions for summary judgment on March 8, 2001 — four days before Alfa filed its supplement to the affidavit of Johnny Johnson on March 12, 2001. Fourteen days later, on March 26, 2001, Twin City filed its motion to strike the supplement to the affidavit of Johnny Johnson. The trial court declined to rule on this motion, presumably because it was moot.

Additionally, Twin City's motion to strike the additional documents attached to Alfa's motion for a summary judgment is based on its objection that the business documents of the Health Care Authority submitted by Alfa as exhibits in support of its motion for a summary judgment were not properly authenticated. A proper foundation for the admission of business records requires sworn testimony or a certification that the documents were made in the regular course of the business of the keeper of the records and that the documents were made or created at the time of the act, transaction, occurrence, or event, or within a reasonable time thereafter. Rule 44(h), Ala. R. Civ. P. Although Alfa asserts that it has such a certification executed by the custodian of records of the Health Care Authority and by stipulation it has supplemented the record on appeal with that certification, the record does not reflect that the certification was filed with the exhibits to Alfa's motion for a summary judgment before the trial court ruled on that motion. Even assuming no proper foundation was laid for the Health Care Authority's business records, the case was submitted on cross-motions for summary judgment in which each party asserted that there were no genuine issues of material fact. Further, Twin City states in its brief that, notwithstanding the allegedly inadmissible evidence submitted by Alfa, the motions for a summary judgment were submitted on materially undisputed facts, essentially stipulated to by Twin City and Alfa. The facts the documents submitted by Alfa attempt to prove were undisputed by the parties. We will not reverse the trial court's judgment on a technical error — here, the failure to grant a motion to strike unauthenticated exhibits — which is immaterial to the outcome of the only substantive issue in the case.

II.

We now turn to the essential issue in this case: whether at the time of the accident Glass was operating a "covered auto" and, therefore, was an insured under the insurance policy issued to the Health Care Authority by Twin City.

Because the facts of this case are undisputed, the sole substantive issue before this Court requires us to determine the legal significance of the terms of the Twin City policy issued to the Health Care Authority.

A contract of insurance, like other contacts, is governed by the general rules of contracts. Pate v. Rollison Logging Equip., Inc., 628 So.2d 337 (Ala.1993). Insurance companies are entitled to have their policy contract enforced as written. Gregory v. Western World Ins. Co., 481 So.2d 878 (Ala.1985). "Insurance contracts, like other contracts, are construed so as to give effect to the intention of the parties, and, to determine this intent, a court must examine more than an isolated sentence or term; it must read each phrase in the context of all other provisions." Attorneys Ins. Mut. of Alabama, Inc. v. Smith, Blocker & Lowther, P.C., 703...