Aetna Cas. & Sur. Co. v. McMichael

• Decision Date: 30 October 1995
• Docket Number: No. 94SC225,94SC225
• Citation: 906 P.2d 92
• Court: Colorado Supreme Court
• Parties: AETNA CASUALTY & SURETY COMPANY, Petitioner, v. Phillip McMICHAEL, Respondent.

Page 92

906 P.2d 92

AETNA CASUALTY & SURETY COMPANY, Petitioner, v. Phillip McMICHAEL, Respondent.

No. 94SC225.

Supreme Court of Colorado,

En Banc.

Oct. 30, 1995.

Long & Jaudon, P.C., Frederick W. Long, Lee A. Lindsay, Denver, for Petitioner.

Lloyd C. Kordick & Associates, Lloyd C. Kordick, Colorado Springs, for Respondent.

Justice LOHR delivered the Opinion of the Court.

We granted certiorari to review the Colorado Court of Appeals' decision in McMichael v. Aetna Insurance Co., 878 P.2d 61 (Colo.App.1994), which reversed the trial court's grant of summary judgment for the defendant, Aetna Casualty & Surety Company (Aetna), ¹ and against the plaintiff, Phillip McMichael, in a declaratory judgment action brought to establish the scope of coverage under an automobile insurance policy. McMichael sought uninsured/underinsured motorist ("UM/UIM") benefits pursuant to a Business Auto Coverage Policy that Aetna issued to McMichael's employer. McMichael pursued these benefits for injuries he incurred while sawing concrete joints in a highway in front of his employer's vehicle. The court of appeals held that the public policy of section 10-4-609, 4A C.R.S. (1994), required insurers to provide UM/UIM coverage to a class of individuals as broad as the class provided with liability coverage under the terms of the automobile insurance policy. 878 P.2d at 63. Because the Aetna policy provided permissive users of covered vehicles with liability coverage, and permission was undisputed, the court of appeals concluded that McMichael would be entitled to UM/UIM benefits if he was using a covered vehicle at the time of the accident. Id. at 64. The court of appeals further determined that McMichael was using a covered vehicle as a barricade and a warning device and, thus, was entitled to compensation for his injuries under the policy. Id. We now interpret section 10-4-609(1) to require insurers to offer UM/UIM coverage to a class of individuals as broad as the class covered under the liability provisions of an automobile insurance policy. In addition, we agree with the court of appeals that the salient facts are undisputed and that McMichael was using a covered vehicle at the time of the accident. Therefore, we affirm the court of appeals' reversal of the trial court's grant of summary judgment for Aetna and the direction on remand that the trial court enter judgment declaring McMichael to be within the scope of the UM/UIM coverage of the policy at issue.

I.

The trial court resolved this case on Aetna's motion for summary judgment. The following facts, therefore, are taken from the parties' submissions to the trial court directed to that motion.

McMichael was employed by Irving F. Jensen Company, Inc. (Jensen) as an assistant superintendent of construction. ² On February 1, 1990, Jensen assigned McMichael to saw concrete joints in the median of a divided highway. McMichael, along with another employee, drove a company-owned truck to the median and parked. The truck was specially equipped with an overhead beacon and emergency flashers. After McMichael parked the truck, he left it running, turned on the overhead beacon and emergency flashers, and began his work. McMichael was in the process of sawing joints in the concrete some distance in front of the truck when a car approaching from the opposite direction swerved into the median and struck him. The record suggests that the windows of the car were frosted over, making it difficult for the driver to see. As a result of this collision, McMichael suffered injury to his neck.

The motorist who struck McMichael did not maintain enough automobile insurance to compensate McMichael for his injuries. To obtain full compensation, McMichael filed an underinsured motorist claim with Aetna, the insurer for Jensen's vehicles. Jensen carried a Business Auto Coverage Policy through Aetna (the Aetna policy). The Aetna policy covered more than eighty of Jensen's company-owned vehicles. It provided UM/UIM coverage to the following individuals:

B. WHO IS AN INSURED

1. You.

2. If you are an individual, any "family member."

3. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, loss or destruction.

4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."

The term "You" referred to the "Named Insured" as shown in the Declarations to the policy. The Aetna policy listed "Irving F. Jensen Co., Inc." as the named insured. In response to McMichael's claim for UM/UIM benefits, Aetna denied coverage. Aetna informed McMichael that his loss was not covered by the terms of the policy. In response to this denial, McMichael filed a complaint for declaratory relief and to compel arbitration against Aetna in El Paso County District Court.

Aetna filed an answer and a motion for summary judgment. In its motion for summary judgment, Aetna argued that because McMichael was not a named insured under the policy, he could recover underinsured motorist benefits only if he was injured while "occupying" an insured vehicle. See par. B3 of insurance policy, supra, at p. 4. Because it was uncontroverted that McMichael was not occupying an insured vehicle at the time of the accident, Aetna claimed McMichael was not entitled to benefits.

In his response to Aetna's motion for summary judgment, McMichael argued that because the policy listed Jensen, a corporation, as the named insured, the employees of the corporation should be considered named insureds. In the alternative, McMichael argued that underinsured motorist coverage under the insurance policy should be extended to cover the same class of persons covered by the liability provision of the policy. The liability provision listed the following individuals as insureds:

1. WHO IS AN INSURED

The following are "insureds":

a. You [ ³] for any covered "auto."

b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except [listing exceptions not applicable here].

The liability provision of the Aetna policy covered permissive users of insured automobiles while the UM/UIM provision covered only permissive occupiers. See par. B3 of insurance policy, supra, at p. 4. McMichael argued that as a matter of public policy, UM/UIM coverage should be extended to cover a class as broad as that covered by the liability portion of the policy, in this case permissive users. In addition, McMichael argued that he was "using" Jensen's truck, an insured vehicle, for protection at the time of the accident. ⁴ Therefore, McMichael claimed that he was entitled to underinsured motorist coverage.

The district court granted summary judgment for Aetna. It found there were no disputed issues of material fact and concluded that:

[T]he Auto Business Policy [Aetna policy] at issue here is clear and unambiguous and, as a matter of law, does not afford UM/UIM coverage for Plaintiff because he was not a named insured and was not occupying a covered vehicle at the time of the accident.

The court noted that there was nothing in the record to indicate that McMichael, as an employee, was intended to be a named insured. In addition, both parties agreed that McMichael was not occupying an insured vehicle at the time of the accident. Thus, the trial court determined that McMichael was not entitled to underinsured motorist coverage under the terms of the insurance policy. McMichael appealed the district court's ruling to the Colorado Court of Appeals.

The court of appeals reversed the district court's ruling and remanded the case with directions to enter judgment declaring McMichael to be covered by the UM/UIM provision of the Aetna Policy. McMichael, 878 P.2d at 65. The court of appeals held that automobile insurers may not issue an automobile insurance policy including UM/UIM coverage that covers a class of persons that is narrower than the class covered under the liability provision of the policy. Id. at 63. Because the liability provision of the Aetna insurance policy covered permissive users of covered autos, the court of appeals held that the UM/UIM provision also must cover permissive users. Id. at 64; see par. 1b of insurance policy, supra, at p. 6. Thus, McMichael was entitled to UM/UIM coverage if he was using Jensen's truck, a covered auto, at the time of the injury. After a review of the undisputed facts in the record, the court of appeals concluded that McMichael was using Jensen's truck for warning and protection at the time of the accident and, therefore, was covered by the policy. 878 P.2d at 64-65.

Aetna sought review of the court of appeals' decision by this court. We granted certiorari to resolve the following two issues:

Whether the court of appeals erred in holding that the petitioner must extend UM/UIM coverage to anyone using an insured vehicle with the permission of the named insured.

Whether [the] court of appeals erred in holding that the respondent was "using" his employer's truck when he was injured.

We hold that section 10-4-609, 4A C.R.S. (1994), requires insurers to offer UM/UIM coverage to a class as extensive as the class covered under the liability provision of an automobile insurance policy. In the context of this case, Aetna was required to offer Jensen UM/UIM coverage for permissive users of company-owned automobiles. In addition, considering the undisputed facts in the record, we agree with the court of appeals that McMichael has established that he was using a covered auto at the time of the accident. We therefore affirm the court of appeals' reversal of the trial court's grant of summary judgment and its remand of the case to the trial court for entry of judgment declaring that McMichael is within the scope of the UM/UIM coverage of the policy at issue.

II.

Aetna argues that section 10-4-609, 4A C.R.S. (1994), does not require insurers to extend...