American States Ins. Co. v. Broeckelman

• Decision Date: 24 November 1997
• Docket Number: No. 21361,21361
• Citation: 957 S.W.2d 461
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff-Respondent, v. Allen BROECKELMAN, Defendant-Appellant, and Christopher Thornton, Defendant-Respondent. Division One
• Court: Missouri Court of Appeals

Page 461

957 S.W.2d 461

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Respondent, v. Allen BROECKELMAN, Defendant-Appellant, and Christopher Thornton, Defendant-Respondent.

No. 21361.

Missouri Court of Appeals,

Southern District,

Division One.

Nov. 24, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Dec. 16, 1997.

Application for Transfer Denied

Jan. 27, 1998.

Joseph P. Winget, Michael J. Patton, Springfield, for Defendant-Appellant.

James P. Barton, Jr., Kansas City, for Defendant-Respondent.

GARRISON, Presiding Judge.

Allen Broeckelman ("Broeckelman") ¹ appeals from an adverse judgment entered in a declaratory judgment action filed by American States Insurance Co. ("American States"). At issue is whether American States' policy provides coverage to Christopher Thornton ("Chris") for a personal injury claim made against him by Broeckelman. We reverse and remand.

American States issued a policy which provided both business auto and commercial general liability coverage to Bob Thornton ("Bob") and his wife, Carolyn Thornton ("Carolyn"), d/b/a A-1 Construction. The uncontested evidence, however, was that A-1 was the sole proprietorship of Bob, and that Carolyn was not an owner of the business.

A-1 used a 1971 International truck which contained a permanently mounted crane. The truck, which was titled in Bob's name, was apparently used only to transport the crane from job to job, and its engine was the power source to operate the crane and its boom.

On October 30, 1989, Broeckelman was working for A-1 Construction at a job site where the truck and crane were being used. As Chris was lifting debris with the crane, the boom broke, striking and injuring Broeckelman. Broeckelman filed suit against Chris seeking damages for his injuries. American States, when notified of the suit, provided a defense to Chris under a reservation of rights, and filed this declaratory judgment against Chris and Broeckelman. The trial court held that the policy provided no coverage for the claims against Chris, and entered judgment in favor of American States. It is from this judgment that Broeckelman appeals.

In reviewing a declaratory judgment, we are to affirm the decision of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. McDermott v. Carnahan, 934 S.W.2d 285, 287 (Mo.banc 1996) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)).

In one of his three points on this appeal, Broeckelman contends that the trial court erred in holding that Chris was not insured for Broeckelman's claim against him under American States' business auto policy ("auto policy"). Contrary to the trial court's finding, he argues that, because of the provisions of an endorsement to the policy, his claim against Chris was not excluded by the fellow-employee exclusion.

The declaration page of the American States' business auto policy includes the 1971 International truck as a "covered 'auto.' " The policy contains the following pertinent provisions:

A. COVERAGE

We will pay all sums an "insured" legally must pay as damages because of "bodily injury" ... to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."

....

1. WHO IS AN INSURED

The following are "insureds:"

a. You for any covered "auto."

b. Anyone else while using with your permission a covered "auto" you own

....

The policy provides that the "autos" described in the declarations, as well as the following equipment, were "covered 'autos' ":

C. CERTAIN TRAILERS, MOBILE EQUIPMENT AND TEMPORARY SUBSTITUTE AUTOS

....

2. "Mobile equipment" while being carried or towed by a covered "auto."

The "DEFINITIONS" section of the policy contains the following:

....

B. "Auto" means a land motor vehicle, trailer or semitrailer designed for travel on public roads, but does not include "mobile equipment."

....

G. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:

....

4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

a. Power cranes, shovels, loaders, diggers or drills....

It is thus apparent that the business auto policy first declares that the 1971 International truck in question is a "covered 'auto,' " it indicates that a premium was charged for that vehicle, but it then would exclude it from coverage because it meets the definition of "mobile equipment."

The trial court found that under these circumstances there was an ambiguity in the policy which should be resolved in favor of the insured, and held that the truck, with the attached crane, was a "covered 'auto.' " American States argues that this was an erroneous finding, and that the International truck should be considered as a "covered 'auto' " when it was being driven as an auto, but should be considered as excluded mobile equipment when the crane was being used as an independent immobile unit at a job site. It would thus distinguish between the type of use being made of the vehicle at the time of the accident. In support, it cites cases which distinguish between the uses being made of mobile equipment such as State Farm Mut. Auto. Ins. Co. v. Farmers Ins. Group, 569 P.2d 1260 (Wyo.1977) (a self-propelled concrete pumping machine), and Home Indem. Co. v. Transport Indem. Co., 263 Cal.App.2d 100, 69 Cal.Rptr. 504 (1968) ( a self-propelled crane). In our view, however, this argument ignores the fact that no such distinction is found in the policy. Rather, the policy first describes the truck as a covered auto, and then, by definition, seeks to exclude it from coverage entirely. ²

If an insurance policy is unambiguous, it is to be enforced according to its terms, but if it is ambiguous, it is construed against the insurer. Rice v. Fire Ins. Exch., 946 S.W.2d 40, 42 (Mo.App. S.D.1997). Whether or not the language of an insurance policy is ambiguous is a question of law. Id. If the language of a policy is ambiguous (if there is duplicity, indistinctness or uncertainty in its meaning), and therefore open to different constructions, then it will be interpreted in the manner that would ordinarily be understood by the lay person who bought and paid for the policy. Id. Additionally, exclusionary clauses of policies are strictly construed against the insurer, and if they are ambiguous they will be construed favorably to the insured. Id. We conclude that under these standards, and the facts of this case, the trial court did not err in concluding that the truck in question was a "covered 'auto' " under the policy.

The trial court, however, found that Chris was not covered under the business auto policy because of an exclusion for bodily injuries to a fellow employee. This was based on the following provisions in the policy:

B. EXCLUSIONS

This insurance does not apply to any of the following:

....

5. FELLOW EMPLOYEE

"Bodily injury" to any fellow employee of the "insured" arising out of and in the course of the fellow employee's employment.

As indicated earlier, "insured" is defined in the policy as the named insureds, and also anyone else who was using a "covered 'auto' " with the named insured's permission. By reason of the severability clause of the policy, ³ "insured" in the Fellow Employee exclusion means any person or organization who qualifies as an insured. Baker v. DePew, 860 S.W.2d 318, 320 (Mo.banc 1993). The trial court, therefore, correctly found that Chris was an insured under the policy.

The parties stipulated that Chris and Broeckelman were fellow employees and that Broeckelman was injured in the course and scope of his employment. Accordingly, the trial court also found that coverage for Broeckelman's injuries fell within the "Fellow Employee" exclusion.

Broeckelman argues, however, that an endorsement to the policy effectively avoids the "Fellow Employee" exclusion. It provides:

The FELLOW EMPLOYEE Exclusion does not apply to "bodily injury" to your or any "family member's" fellow employees.

The policy defines "you" and "your" to be the named insured shown in the declarations. Because Carolyn is a named issured, Broeckelman argues that the fellow employee exclusion does not apply because she was a fellow employee of Broeckelman. The trial court concluded, however, that it was not relevant whether Carolyn was a fellow employee, because she was not the party who was sued.

Under Broeckelman's theory, the endorsement would eliminate the Fellow Employee exclusion as to any fellow employees of a named insured, ⁴ whether that insured was the subject of a claim or not. The parties cite no Missouri cases relating to the effectiveness of the endorsement when the named insured is not named in the suit or claim in issue, and our research has revealed none. ⁵

The plain language of the endorsement does not contain a requirement that the named insured be the person against whom the claim is made. If it had been American States' intent to make that a condition of the endorsement, it could easily have done so by adding words to that effect. Because American States did not do so, it is our duty to interpret and enforce the contract of insurance as written. Protective Cas. Ins. Co. v. Cook, 734 S.W.2d 898, 905 (Mo.App. E.D.1987).

The endorsement, as interpreted and applied by Broeckelman in this case, would read, "(t)he FELLOW EMPLOYEE" Exclusion does not apply to "bodily injury" to [Carolyn's] or any "family member's" "fellow employees." ⁶ The issue then, as framed by Broeckelman, is whether he was a fellow employee of Carolyn. If so, the endorsement provides coverage.

Bob operated A-1 as a sole proprietorship. Carolyn often performed various duties for A-1, including running errands, answering the phone, writing checks to suppliers and for payroll, taking information to the...