Barnette v. Hartford Ins. Group, 5687

• Decision Date: 19 November 1982
• Docket Number: No. 5687,5687
• Citation: 653 P.2d 1375
• Parties: Gibson A. BARNETTE, Appellant (Plaintiff), v. The HARTFORD INSURANCE GROUP, a Connecticut corporation, Appellee (Defendant), Ray S. Hake, Jr., d/b/a Hake Agency, and Barnette Enterprises, Inc., a Wyoming corporation, (Defendants).
• Court: Wyoming Supreme Court

Page 1375

653 P.2d 1375

Gibson A. BARNETTE, Appellant (Plaintiff), v. The HARTFORD INSURANCE GROUP, a Connecticut corporation, Appellee (Defendant) Ray S. Hake, Jr., d/b/a Hake Agency, and Barnette Enterprises, Inc., a Wyoming corporation, (Defendants).

No. 5687.

Supreme Court of Wyoming.

Nov. 19, 1982.

Rehearing Denied Dec. 14, 1982.

Jerry A. Yaap of Bishop, Bishop & Yaap, Casper, for appellant.

William S. Bon of Schwartz, Bon, McCrary & Walker, Casper, for appellee.

Before ROSE, C.J., and RAPER, THOMAS, ROONEY and BROWN, JJ.

ROSE, Chief Justice.

A judgment against Gibson A. Barnette (the appellant here) in favor of Michael L. Doyle was affirmed by this court in Barnette v. Doyle, Wyo., 622 P.2d 1349 (1981). Mr. Barnette then brought this action against The Hartford Insurance Group, Hake Agency and Barnette Enterprises, Inc., a Wyoming corporation, seeking indemnity for the loss he suffered as a consequence of the Doyle judgment. The complaint against Hartford asked for a construction of Hartford's automobile liability insurance policy issued to Barnette Enterprises, Inc., as the named insured, and sought damages for the amount of the judgment together with the attorney's fees that were incurred in the Doyle litigation. In response, the insurance company admitted the authenticity, existence and issuance of the policy and that it had been issued by one of its companies in the Hartford group.

Hartford filed a motion for summary judgment, which the court granted holding that the Hartford policy did not afford coverage to Gibson A. Barnette for the accident We will reverse.

and the judgment rendered in Doyle v. Barnette, supra. Ray S. Hake, Jr., and Barnette Enterprises, Inc. are not parties to this appeal.

FACTS

The relevant facts which formulate the basis for the verdict and judgment in the Doyle case, and for which Mr. Barnette now seeks to be indemnified by Hartford, are set forth in the reported decision in Barnette v. Doyle, supra. In brief, Doyle was injured in worker's compensation-covered employment when the brakes of a Barnette Enterprises, Inc. truck driven by a co-employee named Lenise Williams failed, causing the vehicle to roll backwards, knock Doyle to the ground and run over his legs. It was for these injuries that Doyle recovered damages from Mr. Barnette. At the time, Barnette was the president of Barnette Enterprises, Inc., but was actively engaged in day-to-day employment with Casper Mud Service, a division of the corporation. In Barnette v. Doyle, supra, this court agreed that Barnette was a co-employee with Doyle and liable for the breach of any duty that one employee owes to a fellow employee. We held that the record contained sufficient evidence to support a finding that Barnette owed a duty to Doyle to furnish him reasonably safe equipment (the truck). For his failure to do that, he was found 100% culpably negligent by the jury and this court found no reason for disturbing that result. We also agreed that the evidence was sufficient to support the jury's finding that Barnette was culpably negligent in failing to have the defective brakes repaired.

THE ISSUE

The sole issue for our review is whether the trial court erred in deciding as a matter of law that Gibson A. Barnette was not covered by the terms of the liability insurance policy issued by The Hartford Insurance Group to Barnette Enterprises, Inc. for the damages and costs incurred by Mr. Barnette in Barnette v. Doyle, supra.

THE LAW

The principal inquiry for our attention has to do with the interplay between the policy's "cross-employee exclusionary clause" and the "severability-of-interest clause". Paraphrased, the cross-employee exclusionary clause says that an employee who injures a fellow employee while in the scope of employment is not an insured under the employer Barnette, Inc.'s motor vehicle public-liability policy. The severability-of-interest clause says that the insurance applies separately to each "person insured" and "executive officers" of the named insured are "persons insured" under the policy. Barnette was an executive officer of Barnette, Inc. as well as Doyle's co-employee in the services of Barnette, Inc. when the injury was inflicted.

Given these seemingly contradictory provisions, the case asks: Was Barnette, the additional insured, covered? As we have said, we will hold that he was.

The Cross-Employee Exclusionary Clause

If it were not for the severability of interest clause, which makes executive officer Barnette a separate insured under the policy, it could be presumed that he might be denied coverage by the cross-employee exclusionary clause contained in the Hartford contract. At least it can be said that prior to the introduction of the severability-of-interest clause to the standard automobile liability insurance policy, the courts of the country were in rampant disarray with respect to whether coverage would extend to an additional insured seeking protection from the claim of a co-employee and who was not himself or herself the claimant's employer.

The severability clause in the definitions section of the Hartford policy provides:

" 'insured' means any person or organization qualifying as an insured in the 'Persons Insured' provision of the applicable insurance coverage. The insurance afforded applies separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the company's liability;" (Emphasis added.)

Included in the "persons insured" category are the named insured and "any partner or executive officer thereof." (Emphasis added.) As we have said, Barnette was an "executive officer" in Barnette Enterprises, Inc.

The Cross-Employee Exclusion Clause Section II of the automobile part of the policy provides:

"None of the following is an insured:

"(i) any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment;" (Emphasis added.)

Given the above-quoted provisions, ¹ and absent the severability-of-interest clause which we will discuss later, the policy excludes from the definition of insured any person who, while engaged in the business of his employer (Barnette was functioning as an employee of Casper Mud, a division of Barnette Enterprises, Inc., the named insured), inflicts bodily injury upon a fellow employee (Doyle was a co-employee of Barnette, the tortfeasor) where the injury occurs in the course of employment. It is conceded that the injury was inflicted when both Barnette and Doyle were engaged in the course and scope of their employment as they discharged their co-employee obligations to Casper Mud Service, a division of Barnette Enterprises, Inc., the named insured.

Looking to the rationale of the cross-employee exclusionary clause, it is said in Couch on Insurance 2d, § 45:545, "Validity of exclusion provision":

"Provisions excluding from the coverage of automobile liability policies liability for injury or death of the insured's employees have generally been recognized as a valid attempt to limit the coverage of the policy by excluding therefrom the special hazards incident to the master-servant relationship, coverage for which is usually available through workmen's compensation or employer's liability insurance, * * *."

Therefore, the protection furnished by an automobile liability policy is not imperative where employee injuries are concerned because--at least where employees are engaged in hazardous occupations--these injuries are usually compensated through worker's compensation. This being so, the courts, in giving force and effect to the cross-employee exclusionary clause, have held that it is not necessary to impose upon the employer the extra expense of insuring his employees. See Annot., 45 A.L.R.3d 288, 295, Construction and Application of Provision of Automobile Liability Policy, § 3.

In Myers v. Fidelity and Casualty Co. of New York, La.App., 152 So.2d 96 (1963), the court said that the reason for the employee exclusionary clause was that the remedy for one employee injuring a fellow employee should be workmen's compensation. The court in Bevans v. Liberty Mutual Ins. Co., 356 F.2d 577 (4th Cir.1966) explained that the employer is exposed to two types of claims--one from the public and the other from the workers. The court said that the employer in computing premium cost should be able to rely on the liability policy for protection from public claims and workmen's compensation contributions for protection against workers' claims from injuries suffered at the hands of fellow employees.

As reported in 45 A.L.R.3d, 296, supra, the rationale of the Bevans court goes like this:

"If the insurer were to be liable for injuries to an employee committed by his fellow employee, the court continued, it would have to increase its premiums and would require the employer to pay twice for protection against claims of employees, once under his employer liability policy and again under his general liability In Stirratt v. Kane, 273 Minn. 205, 140 N.W.2d 345 (1966), injuries to one police officer arising out of the negligent operation of the police vehicle by his fellow officer were excluded from coverage by the cross-employee exception, the court holding that the purpose of the clause was to exclude from coverage the named insured employer in those cases where the injured person was covered by workmen's compensation. See also: Campbell v. American Farmers Mut. Ins. Co., 238 F.2d 284 (8th Cir.1956); Merchants Indemnity Corp. of N.Y. v. Victory Iron Works, Inc., 80 N.J.Super. 7, 192 A.2d 592 (1963), aff'd 42 N.J. 364, 200 A.2d 782 (1964); Morfoot v. Stake, 174 Ohio St. 506, 23 Ohio Ops. 2d 144, 190 N.E.2d 573 (1963); Allstate Ins. Co. v. Hill, 378 F.2d 112 (6th Cir.1967); Henderson v. International Service Ins. Co., 65 Wash.2d 300, 396 P.2d 877 (1964).

policy, so that it became necessary to include the 'employee...