Amica Mut. Ins. Co. v. Cincinnati Ins. Co., 2-1184-A-344

• Decision Date: 30 June 1986
• Docket Number: No. 2-1184-A-344,2-1184-A-344
• Citation: 494 N.E.2d 358
• Parties: AMICA MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. CINCINNATI INSURANCE COMPANY, Appellee (Defendant Below).
• Court: Indiana Appellate Court

Page 358

494 N.E.2d 358

AMICA MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. CINCINNATI INSURANCE COMPANY, Appellee (Defendant Below).

No. 2-1184-A-344.

Court of Appeals of Indiana Second District.

June 30, 1986.

James P. Fenton, Ronald J. Ehinger, Barrett, Barrett & McNagny, Fort Wayne, for appellant.

Thomas C. Ewing, Thomas L. Wooding, Hunt, Suedhoff, Borror & Eilbacher, Fort Wayne, for appellee.

SULLIVAN, Judge.

The trial court granted declaratory relief in favor of appellee, Cincinnati Insurance Company, after determining that an auto liability policy issued by Amica Mutual Insurance Company provided coverage for the insured D. Richard Claassen. The judgment fixed Amica's liability at $80,000, its share of a $300,000 settlement of a wrongful death claim.

Only one issue is presented on appeal:

Whether the phrase "private passenger automobile" in Amica's insurance policy includes, within its definition, a 66-passenger school bus.

D. Richard Claassen (Claassen) purchased a 1969 Ford 66-passenger school bus from Kerlin Bus Sales and Service on August 17, 1982. It is not disputed that Claassen bought the school bus for his personal use, although there was testimony that he intended to deliver the bus for a friend's use in Florida. As Claassen was driving the school bus home, he collided with an automobile driven by Kirk D. Lavrack. Lavrack died as a result of injuries sustained in the accident.

The personal representative of Lavrack's estate demanded $300,000 as settlement of its wrongful death claim against Claassen and Kerlin Bus Sales. By agreement, and stipulation with Amica, Cincinnati Insurance Company, Kerlin's insurer, agreed to contribute $220,000 as its share towards settlement of the claim leaving $80,000 as Amica's share. After payment of the claim, pursuant to the agreement, Cincinnati Insurance deposited $80,000 in escrow to be paid to the successful litigant of the dispute regarding Amica's liability coverage. The trial court concluded that Claassen's school bus was insured by Amica's policy and that Cincinnati Insurance was entitled to the escrowed deposit and all accrued interest.

The Amica policy covered Claassen's "covered auto," which was defined as:

"1. Any vehicle shown in the Declarations.

2. Any of the following types of vehicles on the date you become the owner:

a. a private passenger auto; or

b. a pickup, panel truck or van, not used in any business or occupation other than farming or ranching." Record at 89.

Insurance policies are contracts and must be construed as a whole in accordance with the intent of the parties. Evans v. National Life Accident Insurance Co. (1984) 2d Dist., Ind.App., 467 N.E.2d 1216. Absent ambiguity, policy terms will be given their plain and ordinary meaning. Eli Lilly and Co. v. Home Insurance Co. (1985) Ind., 482 N.E.2d 467. If a term or provision is ambiguous and susceptible of differing interpretations, that interpretation most favorable to the insured will be adopted. Id. A contract or policy, however, is not ambiguous merely because the parties favor contrary interpretations. Northland Insurance Co. v. Crites (1981) 1st Dist., Ind.App., 419 N.E.2d 164. "Under Indiana law, an insurance policy is ambiguous if reasonable persons may honestly differ as to the meaning of the policy language." Eli Lilly and Co. v. Home Insurance, supra. See also, State Security Insurance Co. v. Ottinger (1985) 2d Dist., Ind.App., 487 N.E.2d 446.

Amica contends that its phrase, "private passenger auto," though undefined, is not ambiguous and that the plain and ordinary meaning of the phrase does not include a school bus. Cincinnati Insurance understandably argues to the contrary, to the effect that the phrase is ambiguous and should be construed in favor of coverage. Alternatively, Cincinnati Insurance argues that this court's definition of "automobile" in Blankenbaker v. Great Central Insurance Co. (1972) 2d Dist., 151 Ind.App. 693, 281 N.E.2d 496, includes a vehicle such as Claassen's school bus.

In Blankenbaker, supra, this court addressed the question whether a tire and rim assembly lying in the middle of the road constituted an automobile for purposes of determining whether coverage existed under a policy's uninsured motorist provision. The court held that "as a matter of law the tire and rim assembly which Blankenbaker struck is not a hit-and-run automobile within the terms of the policy." Id. 281 N.E.2d at 501. The court's statement that "[t]o be an automobile, the instrumentality must be a self-propelled four-wheeled landroving vehicle" was made solely in this context. Id. 281 N.E.2d at 500. It was not intended to be a benchmark for the definition of an automobile. Such a mechanistic application of Blankenbaker would lead to absurd results, such as extending coverage to certain vehicles clearly not within the contemplation of the parties, e.g., a riding lawnmower. An insurance policy, like any other contract, must be construed as a whole, giving effect whenever possible to the expressed intent of the contracting parties.

Construing the policy as a whole, it...