Am. States Ins. Co. v. Flathead Janitorial & Rug Servs., Inc.

• Decision Date: 11 August 2015
• Docket Number: No. DA 14–0803.,DA 14–0803.
• Citation: 355 P.3d 735,380 Mont. 308,2015 MT 239
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff and Appellee, v. FLATHEAD JANITORIAL & RUG SERVICES, INC. and Mark Ray Noland and Katherine Ann Noland, as permanent co-guardians of Bridgett Noland, an incapacitated person, Defendants and Appellants.
• Court: Montana Supreme Court

380 Mont. 308

355 P.3d 735

2015 MT 239

AMERICAN STATES INSURANCE COMPANY, Plaintiff and Appellee

v.FLATHEAD JANITORIAL & RUG SERVICES, INC. and Mark Ray Noland and Katherine Ann Noland, as permanent co-guardians of Bridgett Noland, an incapacitated person, Defendants and Appellants.

No. DA 14–0803.

Supreme Court of Montana.

Submitted on Briefs May 20, 2015.

Decided Aug. 11, 2015.

Rehearing Denied Sept. 16, 2015.

For Appellant: James M. Ramlow, Ramlow & Rudbach, PLLP, Whitefish, Montana, P. Sterling Kerr, Law Offices of P. Sterling Kerr, Henderson, Nevada.

For Appellee: Carey E. Matovich, Katherine S. Huso, Matovich, Keller & Murphy, P.C., Billings, Montana.

Opinion

Justice LAURIE McKINNON delivered the Opinion of the Court.

¶ 1 Flathead Janitorial & Rug Services, Inc. (Flathead Janitorial), Mark Ray Noland, Katherine Ann Noland, and Bridgett Noland (Nolands) appeal from an order entered by the Eleventh Judicial District Court, Flathead County, granting summary judgment for American States Insurance (American States). We affirm.

¶ 2 We consider the following issue on appeal:

Did the District Court err in concluding that Bridgett was not covered under the commercial automobile policy issued to Flathead Janitorial?¹

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Bridgett suffered severe, permanent, and debilitating injuries in a December 2011 accident near Orem, Utah when the bicycle she was riding collided with a truck making a negligent turn. Due to her injuries, she requires full-time care from her parents. At the time of the accident, Bridgett was attending college in Utah, had a Utah driver's license, and was employed by a Utah business. It was undisputed that Bridgett was not employed for Flathead Janitorial or occupying a company vehicle at the time of the accident.

¶ 4 Flathead Janitorial is a closely held corporation principally located in Kalispell, Montana, and owned by Bridgett's parents, the Nolands. Flathead Janitorial was the Named Insured under a policy issued by American States running from September 25, 2011 to September 25, 2013 (Policy). There were 27 company-owned vehicles identified in the Schedule of Covered Autos in the Policy's Declarations. Attached to the Policy was a letter from American States requesting review of the Policy's list of drivers before its renewal date to ensure accurate coverage. The correspondence provided:

Your policy has been issued based on the driver's listing below. In order to insure that your policy is issued with the most current information, please review this list and update as necessary.

Bridgett was listed as a driver in this correspondence.

¶ 5 After the accident, Bridgett received the liability policy limits from the truck driver's insurance company, and Underinsured Motorist (UIM) and Medical Payment (MP) benefits under two personal automobile insurance policies for which Bridgett was the insured. The Nolands allege, however, that these amounts are insufficient to cover Bridgett's medical needs and accordingly seek UIM and MP coverage under the American States commercial automobile policy issued to Flathead Janitorial.

¶ 6 American States denied Bridgett coverage and filed a complaint seeking a declaratory judgment that Bridgett was not covered under the UIM or MP sections of the Policy. The Nolands counterclaimed, arguing that Bridgett was an Insured under the Policy and, additionally, that the UIM and MP benefits should be “stacked.”

¶ 7 After completion of discovery, both parties filed cross-motions for summary judgment on the issue of coverage and stacking of benefits. The District Court ruled in favor of American States concluding that “[b]ecause Bridgett was not occupying a vehicle owned by Flathead Janitorial and covered by the Policy when she was injured, she does not qualify for coverage under the Policy as a matter of law.” Having concluded that Bridgett was not covered by the Policy, the District Court did not address the stacking issue.

STANDARDS OF REVIEW

¶ 8 This Court reviews a grant for summary judgment by the district court de novo. Lee v. Great Divide Ins. Co., 2008 MT 80, ¶ 9, 342 Mont. 147, 182 P.3d 41. Pursuant to M.R. Civ. P. 56(c), summary judgment is proper if the facts and record demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Matters involving interpretation of insurance contacts are issues of law which this Court reviews for correctness. Fisher v. State Farm Mut. Auto. Ins. Co., 2013 MT 208, ¶ 15, 371 Mont. 147, 305 P.3d 861.

DISCUSSION

¶ 9 Did the District Court err in concluding that Bridgett was not covered under the commercial automobile policy issued to Flathead Janitorial?

¶ 10 The Nolands argue that the Policy is ambiguous as a matter of law because the Policy's use of certain terms (“you,” “your,” “family members,” and “pedestrian”) creates an ambiguity as to who is an insured. The Nolands argue that because a corporation cannot “occupy” an auto, cannot be a “pedestrian”² , and cannot be struck by an auto, that the Policy is not clear as to who is the insured. The Nolands further maintain that the letter from American States requesting review of the Policy's list of drivers creates an ambiguity as to whether those drivers identified in the list were insured by the Policy. Finally, the Nolands assert that Bridgett's status as a family member of shareholders of a closely held corporation makes her an insured under the Policy.

¶ 11 American States contends that the Policy clearly and unambiguously states that the named insured is Flathead Janitorial. It argues that the Policy's terms do not extend coverage to drivers when not occupying a covered “auto” and that coverage does not extend to Bridgett as a “family member” because Flathead Janitorial is not a natural person.

¶ 12 Issues surrounding the terms of an insurance contract present questions of law and terms must be interpreted according to their usual, common sense meaning viewed from the perspective of a reasonable insurance consumer. Fisher, ¶ 15. The Court may not rewrite contracts, but must enforce them as written if their language is clear and explicit. Stutzman v. Safeco Ins. Co. of Am., 284 Mont. 372, 376, 945 P.2d 32, 34 (1997).

¶ 13 The Policy states that it is a commercial and business policy. The Named Insured shown in the Policy's Declarations is Flathead Janitorial. The business is identified, without exception, as the sole Named Insured throughout the Policy. The Policy states that “the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations.”

¶ 14 The policy further provides that the following are “insureds”:

a. You for any covered “auto”.

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:

(1) The owner or anyone else from whom you hire or borrow a covered “auto”. This exception does not apply if the covered “auto” is a “trailer” connected to a covered “auto” you own.

(2) Your “employee” if the covered “auto” is owned by that “employee” or a member of his or her household.

(3) Someone using a covered “auto” while he or she is working in a business or selling, servicing, repairing, parking or storing “autos” unless that business is yours.

(4) Anyone other than your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their “employees”, while moving property to or from a covered “auto”.

(5) A partner (if you are a partnership), or a member (if you are a limited liability company) for a covered “auto” owned by him or her or a member of his or her household.

c. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.

Based upon the foregoing language, coverage is provided, in addition to the Named Insured, for persons occupying a covered auto—which are “[o]nly those ‘Autos' described in Item Three of the Declarations for which a premium charge is shown,” i.e., one of the 27 vehicles identified on the Schedule.

¶ 15 The Nolands argue that the MP section creates an ambiguity as to who is an insured because a corporation cannot physically “occupy” a covered auto or be a “pedestrian” or “family member”. The Nolands maintain that because of this ambiguity the entire Policy is in doubt and must be construed in favor of coverage. The Policy defines an insured pursuant to its MP provision as follows:

B. Who Is An Insured

1. You while “occupying” or, while a pedestrian, when struck by any “auto”.

2. If you are an individual, any “family member” while “occupying” or, while a pedestrian, when struck by any “auto”.

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.

¶ 16 Under the clear language of the provision, Bridgett does not meet any of these definitions. “You” refers to the Named Insured, Flathead Janitorial, as expressly stated in the Declarations and throughout the Policy. Therefore, neither paragraphs 1 or 2 are applicable to Bridgett. If Bridgett is to qualify as an insured for MP benefits she must have been occupying a covered vehicle at the time of the accident as described in paragraph 3. It is undisputed, however, that Bridgett was not occupying a covered auto at the time of the accident. We will not expand the terms of a policy to provide coverage when the terms and phrases are clear and unambiguous. Lierboe v. State FarmMut. Auto. Ins. Co., 2003 MT 174, 316 Mont. 382, 73 P.3d 800 (denial of coverage was upheld where an injured passenger was in a vehicle that was not identified in the corporate policy); Chilberg v. Rose, 273 Mont. 414, 903 P.2d 1377 (1995) (coverage was limited to the insureds occupying vehicles listed in the policy at the time of accident). Here, we discern no ambiguity in the Policy when “you” has been defined as the Named Insured in the Declarations and...