Bequette v. National Insurance Underwriters, Inc.

• Decision Date: 21 July 1970
• Docket Number: No. 22929.,22929.
• Parties: Wanda J. BEQUETTE, Administratrix of the Estate of William T. Fouche, Deceased, et al., Appellants, v. NATIONAL INSURANCE UNDERWRITERS, INC., Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

429 F.2d 896 (1970)

Wanda J. BEQUETTE, Administratrix of the Estate of William T. Fouche, Deceased, et al., Appellants, v. NATIONAL INSURANCE UNDERWRITERS, INC., Appellee.

No. 22929.

United States Court of Appeals, Ninth Circuit.

July 21, 1970.

Clayton Parr, Savage, Erwin & Curran, Burr, Boney & Pease, Chancy Croft, Croft & Bailey, Anchorage, Alaska, for appellants.

W. C. Arnold, Anchorage, Alaska, for appellee.

Before BARNES, ELY, and HUFSTEDLER, Circuit Judges.

ELY, Circuit Judge:

This is an appeal from a summary judgment in an action brought by National Insurance Underwriters, Inc., the appellee, for a declaration of its liability under a policy of insurance issued to Captain William T. Fouche and Major Wilder Rice to cover them for certain risks attendant to the operation of their private single engine airplane. The controversy arose after the airplane crashed, killing Captain Fouche, the pilot, and his two passengers, Roger Clark Schuette and Byron B. Powelson. After wrongful death actions against Fouche's estate had been filed in the state court of Alaska by the heirs of Schuette and Powelson and the representatives of their estates, National initiated suit in the District Court against the estates of all three men, alleging that coverage was not provided under the terms of its policy and seeking a declaratory judgment to that effect.

The District Court's conclusion of no coverage was based on an exclusion clause of the policy which provides that liability coverage does not apply:

"While the aircraft is in flight whenever the pilot operating the aircraft is not qualified in accordance with the requirements specified in Item 7."

The relevant requirements, as specified in Item 7, read as follows:

"Item 7. Pilots: This policy applies when the aircraft is in flight, only while being operated by the pilots named or designated in Section 1, while holding a pilot certificate at least equal to the type described in Section 2, with appropriate ratings required for the flight involved, having not less than the minimum pilot experience indicated in Section 3, and having received a dual checkout from a qualified pilot previously checked out in the model of aircraft insured." (Emphasis added.)

The "pilots named or designated in Section 1" are listed as Rice. Fouche and "any pilot employed by a fixed base operator." According to the District Court's findings, the exclusion clause unambiguously means that Fouche was not insured against liability if he did not have the appropriate ratings for the ill-fated flight. Since it was uncontroverted that Fouche, who was carrying passengers when the accident occurred, did not have the ratings required to carry passengers, the District Court held that the policy did not provide coverage for the accident. We affirm.

Appellants contend that the exclusion clause relied on by the District Court is ambiguous and that, when interpreted in the light most favorable to the insured, it does not exclude coverage in this case. They cite Fireman's Fund Insurance Company v. McDaniel, 187 F. Supp. 614 (N.D.Miss.1960), aff'd 289 F.2d 926 (5th Cir. 1961), and Insurance Company of North America v. Butte Aero Sales & Service, 243 F.Supp. 276 (D.Mont.1965), as support for their argument that the limitations in Item 7 should be construed so as to apply only to the class of pilots referred to in Section 1 as "any pilot employed by a fixed base operator."

In Fireman's Fund the insurer's claim of non-coverage was based on a policy exclusion providing that the policy did not apply when the aircraft was operated by an insured who was flying in violation of any Civil Aeronautics Administration (C.A.A.) Pilots Certificate. Although the insured pilot in that case admittedly was flying in violation of his C.A.A. certificate at the time of the accident, the court nevertheless held that there was coverage, finding that another provision of the policy, which was typewritten rather than printed, controlled. That provision recited that the aircraft would be operated only by

"T. H. McDaniels or any currently certified commercial pilot having a minimum of 500 logged solo flying hours including at least 50 hours as first pilot of multi-engine aircraft."

187 F.Supp. at 616. The typewritten provision had been the subject of special negotiations between the insurer and insured and, according to the court, had resulted in a lowering of the pilot requirements and an increase in premium to account for the increase in risk. The court stated that "the plain meaning of this typewritten language is that McDaniel could pilot the aircraft in flight * * * and the coverage would be in effect, whether he was certificated or rated as a pilot by the Civil Aeronautics Administration * * * or not." 187 F.Supp. at 618.

In Insurance Company of North America, the insurer's claim of non-coverage was based on an exclusion clause providing that the policy would not apply while the aircraft was being operated by an individual not properly authorized by the appropriate government agency. The insured pilot was not authorized to make the flight that led to the fatal accident, but the court found the exclusion inapplicable. Again the decision turned on the interpretation of a specially prepared typewritten endorsement which read

"`In consideration of the premium charged * * * coverage * * * shall not apply unless the pilot in command of the aircraft is JACK ELDERKIN or any other pilot who is properly certificated and rated for the flight and the aircraft, and has logged\' certain hours in specified aircraft."

243 F.Supp. at 277. The court concluded that the endorsement "was attached to the policy to make the insurance effective when Jack Elderkin was pilot in command, regardless of his certification or rating * * *." 243 F.Supp. at 279.

Since both of these cases involved specially prepared typewritten endorsements which had been added for the purpose of qualifying printed exclusion clauses, they are clearly distinguishable from the case at hand. Here there was no comparable special endorsement relaxing the standard form printed exclusions which plainly restricted the coverage afforded to the "pilots named or designated in Section 1."

Appellants suggest that since another section of the policy shows that the term "permissive users" can be equated with the phrase "pilots * * * designated in Section 1," Item 7 can be read, with appropriate and indicated substitutions, as follows:

"The policy applies when the aircraft is in flight, only while being operated by Rice or Fouche or permissive users, while holding a pilot certificate at least equal to * * *."

According to appellants, when Item 7 is read in this manner it becomes ambiguous because it is unclear whether the limitations of Item 7 are applicable to Rice, Fouche and the permissive users or only to the permissive users. We do not agree. The placing of the comma is significant. As in the insurance policy, appellants' suggested version separates the phrase containing both the named insureds and the general class of insureds from the phrases listing the limitations on coverage. Since both the named insureds and the general class of insureds are set off together from the list of limitations, the limitations are applicable to both groups. Even if Item 7 were ambiguous when read as appellants suggest, the short answer to their argument is that Item 7 is not written as they suggest. When read as written, Item 7 is, on this point, not ambiguous.

Appellants' second contention is based on a paragraph of the policy entitled "Financial Responsibility Laws." The provisions of this paragraph are in standard form and read as follows:

"When * * * this policy is certified as proof of financial responsibility for the future under the provisions of any aircraft financial responsibility law such insurance as is afforded by

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