Universal Underwriters Ins. Co. v. Winton

• Decision Date: 08 April 2016
• Docket Number: 15–6052.,Nos. 15–6051,s. 15–6051
• Citation: 818 F.3d 1103
• Parties: UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Plaintiff–Appellee, v. Tammy WINTON, individually and as representative of the estate of Brant Matthew Winton, deceased; Marcus Allen Moore; Daniel Cosar; Alice Burgess, individually and as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Patrick Dooley, as co-personal representative of the estate of Rebekah Jane Burgess, deceased, Defendants–Appellants, and Raymond Roberts, as personal representative of the estate of Sofia Roberts, deceased, Defendants. Phoenix Insurance Company, Plaintiff–Appellee, and National Union Fire Insurance Company of Pittsburgh, PA, Intervenor Plaintiff–Appellee, v. Tammy Winton, individually and as representative of the estate of Bryant Matthew Winton, deceased; Alice Burgess, individually and as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Patrick Dooley, as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Marcus Allen Moore; Daniel Cosar, Defendants–Appellants, and Raymond Roberts, Defendant.
• Court: U.S. Court of Appeals — Tenth Circuit

818 F.3d 1103

UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Plaintiff–Appellee,

v.Tammy WINTON, individually and as representative of the estate of Brant Matthew Winton, deceased; Marcus Allen Moore; Daniel Cosar; Alice Burgess, individually and as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Patrick Dooley, as co-personal representative of the estate of Rebekah Jane Burgess, deceased, Defendants–Appellants,andRaymond Roberts, as personal representative of the estate of Sofia Roberts, deceased, Defendants.

Phoenix Insurance Company, Plaintiff–Appellee,

and

National Union Fire Insurance Company of Pittsburgh, PA, Intervenor Plaintiff–Appellee,

v.Tammy Winton, individually and as representative of the estate of Bryant Matthew Winton, deceased; Alice Burgess, individually and as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Patrick Dooley, as co-personal representative of the estate of Rebekah Jane Burgess, deceased; Marcus Allen Moore; Daniel Cosar, Defendants–Appellants,andRaymond Roberts, Defendant.

Nos. 15–6051

15–6052.

United States Court of Appeals, Tenth Circuit.

April 8, 2016.

Melissa S. Hedrick, Hedrick Law Firm, Oklahoma City, OK, and Blake Sonne, Sonne Law Firm, PLC, Norman, OK (Jose Gonzales, Jose Gonzales, PC, Purcell, OK, Steven L. Parker, Tecumseh, OK, Kirk A. Olson, Olson Law Firm, Oklahoma City, OK, and Joe E. White and Charles C. Weddle, III, White & Weddle, Oklahoma City, OK, with them on the briefs), for Defendants–Appellants.

Brittan Lance Buchanan, Buchanan DiMasi Dancy & Grabouski, Austin, TX (Laura J. Grabouski, Buchanan DiMasi Dancy & Grabouski, Austin, TX, and Daniel K. Zorn, Collins Zorn & Wagner, Oklahoma City, OK, with him on the brief), for Plaintiff–Appellee in 15–6051.

Jacqueline McCormick, Pierce Couch Hendrickson Baysinger & Green, Oklahoma City, OK, and Barbara Michaelides, Nicolaides, Fink, Thorpe, Michaelides & Sullivan, LLP, Chicago, IL (D. Lynn Babb, Pierce Couch Hendrickson Baysinger & Green, Oklahoma City, OK, Matthew J. Fink, Wen–Shin Cheng, and Jared K. Clapper, Nicolaides, Fink, Thorpe, Michaelides & Sullivan, LLP, Chicago, IL, with them on the brief), for Plaintiffs–Appellees in 15–6052.

Before HARTZ, BACHARACH, and PHILLIPS, Circuit Judges.

HARTZ, Circuit Judge.

In the early morning of Sunday, November 11, 2007, Sofia Roberts caused a motor-vehicle accident that killed five people (including herself) and severely injured two others. She was driving a Chrysler 300 that she had obtained from the Marc Heitz Auto Valley automobile dealership (Heitz) on November 9, 2007. The Chrysler had been delivered to Heitz by Bob Moore Auto Group (Moore) earlier that day. Her estate was sued by the estates of Brant Winton and Rebecca Burgess (two of the others killed in the accident) and two survivors, Daniel Cosar and Marcus Moore (collectively, the Victims). The suits were settled with judgments of $3,000,000 each for the survivors and the Winton estate and $5,000,000 for the Burgess estate.

Allstate Insurance Company (Allstate), the insurer on Roberts's personal automobile-liability policy, contributed its policy limit of $50,000. The judgment limited execution to other applicable insurance policies. Three insurance carriers (for the Heitz or Moore dealerships)—Universal Underwriters Insurance Company (Universal), Phoenix Insurance Company (Phoenix), and National Union Fire Insurance Company of Pittsburgh, PA (National) (collectively, the Insurers)—then sued the Victims in the United States District Court for the Western District of Oklahoma under diversity jurisdiction, see 28 U.S.C. § 1332, seeking declaratory judgments that their policies did not cover Roberts for the accident.

The district court granted summary judgment to the Insurers. The Victims appeal.¹ They argue that Heitz still owned the Chrysler at the time of the accident and that Universal is therefore responsible under the "garage" and "umbrella" coverages of its policy for Heitz. Alternatively, the Victims argue that Moore owned the vehicle at the time of the accident and that Phoenix and National are liable under their policies for Moore. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the district court's judgments. We agree with the court that (1) Universal is not liable under its garage coverage because it indemnifies a Heitz customer only to the extent that the customer's personal liability policy does not provide the statutory mandatory coverage of $50,000 (which the Allstate policy provided), (2) the Universal umbrella policy does not cover customer liability, and (3) Phoenix and National are not liable under their policies because Moore did not own the Chrysler at the time of the accident.

I. DISCUSSION

Our review of a summary judgment is de novo, applying the same standard as the district court is to apply. See Automax Hyundai S., LLC v. Zurich Am. Ins. Co., 720 F.3d 798, 803 (10th Cir.2013). Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). All agree that the issues before us are to be resolved under Oklahoma state law. See Automax Hyundai, 720 F.3d at 804 (federal court applies law of forum state in diversity actions).

"Under Oklahoma law, an insurance policy is a contract and is interpreted accordingly." Id. "We accept the contract language in its plain, ordinary, and popular sense." Broom v. Wilson Paving & Excavating, Inc., 356 P.3d 617, 628 (Okla.2015) (internal quotation marks omitted). While ambiguities in a policy are construed against the insurer, see id. at 629, "[i]nsurance contracts are ambiguous only if they are susceptible to two constructions," id. at 628 (internal quotation marks omitted). "We do not indulge in forced or constrained interpretations to create and then to construe ambiguities in insurance contracts." Id. (internal quotation marks omitted).

A. The Universal Policy

1. The Garage Coverage

Universal has raised several grounds for why it owes no duty to indemnify the Roberts estate under its garage coverage. We need address only one. In our view, the policy provided coverage to Heitz customers only up to $50,000 (the minimum liability coverage required by Oklahoma law) and only to the extent that the customer's personal policy did not provide that amount. Because the Allstate policy provided $50,000 in coverage, there was no obligation left for the garage coverage. For purposes of this argument, Universal concedes the Victims' assertion that Heitz owned the Chrysler at the time of the accident.

Garage coverage (Part 500 of the Universal policy) protects against liability for damages for injury "caused by an OCCURRENCE arising out of GARAGE OPERATIONS or AUTO HAZARD." Universal Underwriters Ins. Co. v. Winton, No. 15–6051, Aplt. App. (Universal App.), Vol. I at 212. Relevant here is Auto Hazard, which the policy defines to include "the ownership, maintenance, or use of any AUTO YOU own ... and ... furnished for the use of any person." Id. (The word YOU refers to the named insureds, which include Heitz.)

For Auto Hazard coverage the "WHO IS AN INSURED" section provides that the insureds include:

(1) YOU;

(2) Any of YOUR partners, paid employees, directors, stockholders, executive officers, a member of their household or a member of YOUR household, while using an AUTO covered by this Coverage Part, or when legally responsible for its use. The actual use of the AUTO must be by YOU or within the scope of YOUR permission;

(3) Any CONTRACT DRIVER;

(4) Any other person or organization required by law to be an INSURED while using an AUTO covered by this Coverage Part within the scope of YOUR permission.

Id. at 215 (emphasis added). Ms. Roberts would have been an insured under part (4). The extent of her liability coverage is set by the "MOST WE WILL PAY" section under garage coverage. The relevant language of that section is:

THE MOST WE WILL PAY —Regardless of the number of INSUREDS or AUTOS insured or premiums charged by this Coverage Part, persons or organizations who sustain INJURY or COVERED POLLUTION DAMAGES, claims made or SUITS brought, the most WE will pay is:

(1) With respect to GARAGE OPERATIONS and AUTO HAZARD, the limit shown in the declarations [$300,000], for any one OCCURRENCE.

....With respect to the AUTO HAZARD part (4) of WHO IS AN INSURED, the most WE will pay is that portion of such limit needed to comply with the minimum limits provision law in the jurisdiction where the OCCURRENCE took place. When there is other insurance applicable, WE will pay only the amount needed to comply with such minimum limits after such other insurance has been exhausted.

Id. at 218–19 (emphasis added). The emphasized language makes clear that the purpose of the garage coverage under part (4)—which is what applies to Ms. Roberts—is to ensure that the driver will be protected up to the statutory minimum liability coverage for Oklahoma drivers: if other coverage does not reach that minimum, Universal will supply the remainder needed. In Oklahoma the applicable statutory minimum is $50,000. See 47 Okla. Stat. § 7–324(b)(2) (2004). The Victims do not dispute that the above provisions would limit the coverage of Ms. Roberts to $50,000; and because Allstate paid $50,000 under its policy, Universal would owe nothing.

The Victims contend, however, that another policy provision overrides that limit in the "MOST WE WILL PAY" section. They rely on an amendment to the policy applicable in Oklahoma (called the "Oklahoma State Amendatory Part" (the Amendment)), which modifies the "OTHER INSURANCE" section in the garage coverage. To understand this argument, we start with the garage coverage's original "OTHER INSURANCE" condition. It states that garage coverage for part (4) insureds is "excess," instead of "primary":

The insurance afforded by [the garage coverage] is primary, except it is excess: ... (2) for any person or organization

...