American Family Ins. Group v. Hemenway

• Decision Date: 06 March 1998
• Docket Number: No. S-96-528,S-96-528
• Citation: 575 N.W.2d 143,254 Neb. 134
• Parties: AMERICAN FAMILY INSURANCE GROUP, Appellant, v. Rodney L. HEMENWAY, Appellee.
• Court: Nebraska Supreme Court

Page 143

575 N.W.2d 143

254 Neb. 134

AMERICAN FAMILY INSURANCE GROUP, Appellant, v. Rodney L. HEMENWAY, Appellee.

No. S-96-528.

Supreme Court of Nebraska.

March 6, 1998.

Syllabus by the Court

1. Summary Judgment. Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

2. Summary Judgment: Final Orders: Appeal and Error. Although the denial of a motion for summary judgment, standing alone, is not a final, appealable order, when adverse parties have each moved for summary judgment and the trial court has sustained one of the motions, the reviewing court obtains jurisdiction over both motions and may determine the controversy which is the subject of those motions or make an order specifying the facts which appear without substantial controversy and direct such further proceedings as it deems just.

3. Insurance: Contracts: Appeal and Error. The interpretation and construction of an insurance contract or policy involve questions of law, in connection with which an appellate court has an obligation to reach its conclusions independent of the determinations made by the court below.

4. Insurance: Contracts: Parties. The parties to an insurance contract may contract for any lawful coverage, and an insurer may limit its liability and impose restrictions and conditions upon its obligation under the contract not inconsistent with public policy or statute.

5. Insurance: Contracts: Intent: Appeal and Error. In appellate review of an insurance policy, the policy must be construed as any other contract and effect must be given to the parties' intentions at the time the contract was made. Where the terms of such a contract are clear, they are to be accorded their plain and ordinary meaning.

6. Insurance: Contracts. The language of an insurance policy should be read to avoid ambiguities, if possible, and the language should not be tortured to create them.

7. Insurance: Contracts. When an insurance contract can fairly be interpreted in more than one way, there is ambiguity to be resolved by the court as a matter of law.

8. Insurance: Contracts. An ambiguous insurance contract will be construed in favor of the insured, but ambiguity will not be read into insuring language which is plain and unambiguous in order to construe it against the preparer of the contract.

9. Insurance: Contracts. In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous.

10. Insurance: Contracts. The interpretation of an unambiguous term or provision in an insurance policy also presents a question of law.

Eugene L. Hillman and Patricia McCormack, of McCormack, Cooney, Hillman & Elder, Omaha, for appellant.

Kathleen Koenig Rockey, of Domina & Copple, P.C., Norfolk, for appellee.

CAPORALE, WRIGHT, CONNOLLY, GERRARD, and STEPHAN, JJ.

STEPHAN, Justice.

American Family Insurance Group appeals from an order of the district court for Antelope County denying its motion for summary judgment and granting the cross-motion for summary judgment of Rodney L. Hemenway. The district court determined that an exclusion contained in an automobile liability insurance policy which American Family issued to Hemenway was ambiguous and, therefore, should be construed in Hemenway's favor. Based upon our determination that the exclusion is unambiguous and that the uncontroverted facts fall within its scope, we reverse the judgment of the district court and remand the cause with directions to enter judgment in favor of American Family.

FACTUAL AND PROCEDURAL BACKGROUND

On October 20, 1994, Hemenway was operating a 1985 Ford F82D straight truck (the straight truck) owned by his employer, Keith Wortman, which collided with another vehicle, near the intersection of Highways 13 and 20 in Antelope County, Nebraska. Hemenway had previously purchased a "Family Car Policy," No. 2615-0171-11-53-FPPA-NE, issued by American Family, which was in force at the time of this accident. This policy was not issued for the purpose of certifying proof of financial responsibility under Neb.Rev.Stat. § 60-528 et seq. (Reissue 1993).

The family car policy's declarations listed Hemenway as the named insured and described a 1987 Chevrolet vehicle by its vehicle identification number. The policy contained the following definitions which are pertinent to this case:

3. Car means your insured car, a private passenger car, and a utility car.

....

5. Private passenger car means a four-wheel car of the private passenger type.

....

9. Use means ownership, maintenance, or use.

10. Utility car means:

a. A car with a rated load capacity of 2,000 pounds or less, of the pickup, van, sedan delivery or panel truck type if not used in any business or occupation.

b. A truck used for farming purposes.

c. A motor home not used for business purposes.

....

14. Your insured car means:

a. Any car described in the declarations and any private passenger car or utility car you replace it with. You must tell us within 30 days of its acquisition.

b. Any additional private passenger car or utility car of which you acquire ownership during the policy period, provided:

1) If it is a private passenger car, we insure all of your other private passenger cars; or

2) If it is a utility car, we insure all of your other private passenger cars and utility cars.

You must tell us within 30 days of its acquisition that you want us to insure the additional car.

c. Any utility trailer you own.

d. Any car or utility trailer not owned by you being temporarily used as a substitute for any other vehicle described in this definition, because of its withdrawal from normal use due to breakdown, repair, servicing, loss, or destruction.

Under the heading "Part I--Liability Coverage," the policy stated:

We will pay compensatory damages an insured person is legally liable for because of bodily injury and property damage due to the use of a car or utility trailer.

We will defend any suit or settle any claim for damages payable under this policy as we think proper.

Under the heading "Exclusions," the policy provided: "This coverage does not apply to: ... 9. Bodily injury or property damage arising out of the use of any vehicle, other than your insured car, which is owned by or furnished or available for regular use by you or any resident of your household."

In its operative petition filed on June 28, 1995, American Family alleged that it had denied Hemenway's written demand for liability coverage with respect to the October 20, 1994, accident because the vehicle which Hemenway was operating at the time of the accident had been furnished by his employer for his regular use, and, therefore, the exclusion quoted above was applicable. American Family sought a declaratory judgment that its policy provided no coverage to Hemenway with respect to the accident. In his answer, Hemenway admitted that the straight truck was owned by his employer, Wortman, and was insured by Farmers Mutual Insurance Company of Nebraska. However, he denied that the vehicle was "owned by him or furnished or available for his regular use by him or residents of his household" and alleged that American Family improperly applied the coverage exclusion contained in its policy. Both parties filed motions for summary judgment. Evidence received during a hearing on these motions disclosed the following uncontroverted facts:

Hemenway worked as a general farm laborer for Wortman since 1983. He tended cattle and hogs, worked with crops, and performed maintenance. In addition to a salary, Wortman provided Hemenway with a 1986 Ford pickup truck, owned and insured by Wortman, which Hemenway drove to and from work on a daily basis. As additional compensation, Wortman also provided Hemenway with the use of a house located on Wortman's property.

In the early 1990's, Wortman purchased the straight truck equipped with an 18-foot, steel grain box for use in his farming operation. When not in use, the straight truck was sometimes garaged in a building located on the property where Hemenway lived. The key was always left in the ignition. Hemenway did not have a separate set of keys for the vehicle.

The straight truck was used by Hemenway and Wortman's other employees to haul silage, corn screenings, and feed grain in conjunction with Wortman's farming operation. Hemenway did not have to ask Wortman's permission each time he used the straight truck; they had an "understanding" that he would use the straight truck when needed "within reason." Although Hemenway had Wortman's permission to use the straight truck in connection with his work, he usually told Wortman when he planned to use it. Wortman was generally aware of when his employees would be using the straight truck because he usually met with them in the morning to discuss the work to be performed that day. Hemenway used the straight truck more frequently than Wortman's other employees and referred to himself as the "main driver" and "principal driver" of the vehicle. Hemenway used the straight truck only in connection with his employment by Wortman and not for personal purposes. Wortman considered Hemenway's use of the straight truck to be "part of his job."

The frequency of use varied. During two or three winter months, the straight truck was seldom used. At other times, Hemenway used the straight truck as necessary in the performance of his duties--never on a daily basis but sometimes as often as four to five times a week. Hemenway estimated The district court entered summary judgment for Hemenway based upon its determination that the "regular use" exclusion was ambiguous and should therefore be construed against American Family. The district court determined that the "insurance policy issued...