Bp America v. State Auto Property & Cas.

• Decision Date: 20 September 2005
• Docket Number: No. 102,299.,102,299.
• Citation: 148 P.3d 832,2005 OK 65
• Parties: BP AMERICA, INC., Plaintiff/Appellant, v. STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, Defendant/Appellee.
• Court: Oklahoma Supreme Court

Page 832

148 P.3d 832

2005 OK 65

BP AMERICA, INC., Plaintiff/Appellant, v. STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, Defendant/Appellee.

No. 102,299.

Supreme Court of Oklahoma.

September 20, 2005.

Rehearing Denied and As Corrected October 30, 2006.

Certified Questions of Law from the United States District Court for the Northern District of Oklahoma.

¶ 0 The United States District Court for the Northern District of Oklahoma certified two first impression questions of Oklahoma law under the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. First, the federal court asks:

"Whether, under Oklahoma Law, the term `any insured' in an `Auto Exclusion' clause of a commercial general liability policy excludes from coverage all automobile occurrences attributable to any of the insureds?"

The tribunal also questions:

"Whether, under Oklahoma Law, the inclusion of both an `Auto Exclusion' clause and a `separation of insureds' clause in a commercial general liability policy creates an ambiguity in the contract?"

We answer the initial question, "yes", and, under the facts presented, the second question, "no".

CERTIFIED QUESTIONS ANSWERED.

James C. Lang, G. Steven Stidham, Brian S. Gaskill, Sneed Lang, P.C., Oklahoma City, OK, for the plaintiff/appellant.

Lawrence R. Murphy, Jr., Pansy Moore-Shrier, Robinett & Murphy, Tulsa, OK, for the defendant/appellee.

WATT, C.J.

¶ 1 The United States District Court for the Northern District of Oklahoma certified two first impression questions of Oklahoma law to this Court under the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. The federal court asks:

"1. Whether, under Oklahoma Law, the term `any insured' in an `Auto Exclusion' clause of a commercial general liability policy excludes from coverage all automobile occurrences attributable to any of the insureds?; and

2. Whether, under Oklahoma Law, the inclusion of both an `Auto Exclusion' clause and a `separation of insureds' clause in a commercial general liability policy creates an ambiguity in the contract?"

We answer the initial question, "yes". Our answer to the second question is "no". Our first determination: is supported by the plain language of the commercial general liability policy (general liability policy) clearly excluding all coverage for automotive incidents involving any insured;¹ aligns us with the overwhelming majority of courts addressing the issue; and is supported by this Court's jurisprudence. As to the second question, we are convinced that the position taken by those jurisdictions recognizing that a clear and unambiguous exclusion should not be negated by a severability clause is consistent with Oklahoma law. We also find significant the clear and unambiguous exclusion coupled with no indication that any premium was paid for that automotive liability coverage under the general liability policy.

CERTIFIED FACTS² AND PROCEDURAL BACKGROUND

¶ 2 In June of 2001, the plaintiff/appellant, B.P. America, Inc. (insured/BP), entered into a construction contract with Doyal W. Rowland Construction, Inc. (Rowland). Besides being obligated under the contract to do certain construction work, the contract also required B.P. to obtain $1,000,000.00 in general liability coverage and automotive liability insurance.³

¶ 3 As required under the construction contract, the defendant/appellee, State Auto and Casualty Insurance Company⁴ (insurer), issued two policies. The first was issued on January 20, 2002, covering the general liability requirements of the contract. It listed Rowland as the named insured and BP as an additional insured. Less than a month later, on February 7, 2002, the second policy issued covering automotive liability containing the same designations for Rowland and BP as named insured and additional insured, respectively. Both policies were in full force and effect from April 16, 2002, to April 16, 2003.

¶ 4 On July 23, 2002, a multi-car accident occurred involving a dump truck driven by a Rowland employee. Three individuals were fatally injured and a fourth sustained significant injuries. Multiple lawsuits were filed as a result of the accident. In different combinations, the suits named the employee, Rowland, BP and the insurer as defendants. All the personal injury and wrongful death lawsuits were settled with the insurer contributing $1,000,000.00 to the settlement pursuant to the automotive liability policy.

¶ 5 On June 16, 2004, the insured filed suit against the insurer in federal court seeking recovery under the general liability policy. Recognizing that the lawsuit involved issues of first impression Oklahoma law, the federal court certified questions to this Court pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. We set a briefing cycle which was concluded on August 16, 2005.

WELL-SETTLED OKLAHOMA STANDARDS FOR INSURANCE CONTRACT CONSTRUCTION

¶ 6 Insurance policies are contracts⁵ interpreted as a matter of law.⁶ Parties may contract for risk coverage and will be bound by policy terms.⁷ When policy provisions are unambiguous and clear, the employed language is accorded its ordinary, plain meaning; and the contract is enforced carrying out the parties' intentions.⁸ The policy is read as a whole, giving the words and terms their ordinary meaning, enforcing each part thereof.⁹ This Court may not rewrite an insurance contract to benefit either party.¹⁰ It is the insurer's responsibility to draft clear provisions of exclusion.¹¹ We will not impose coverage where the policy language clearly does not intend that a particular individual or risk should be covered.¹² Furthermore, a split in authority over whether a certain term is ambiguous will not, in itself, establish an ambiguity¹³ nor will the fact that the parties disagree,¹⁴ as the issue is one of law for the Court.¹⁵ Finally, payment of premiums is a crucial factor in determining whether a specific coverage is available to the insured.¹⁶

DISCUSSION

¶ 7 a. Usage of the term "any insured" in an exclusionary clause clearly and unambiguously indicates that coverage will be denied to all insureds — even innocent parties.

¶ 8 The exclusionary clause provides in pertinent part:

". . . 2. Exclusions

This insurance does not apply to:

. . . g. Aircraft, Auto Or Watercraft

`Bodily injury' or `property damage' arising out of the ownership, maintenance, use or entrustment to others of any . . . `auto' . . . owned or operated by or rented or loaned to any insured. Use includes operation and `loading or unloading'. . . ."

¶ 9 The insured maintains that the language is not so clear as to be unambiguous and that "any" should be read, not in the sense of "all", but as "the". Under this interpretation, the insured contends that only negligent insureds should be denied coverage. The insurer asserts that the exclusion clearly and unambiguously negates coverage to all insureds when any individual insured's actions fall within the exclusionary clause. It argues that the provision cannot be interpreted to allow coverage to an innocent insured when all automotive liability coverage of any insured is specifically disallowed.

¶ 10 The overwhelming number of courts, addressing policy language similar to that at issue here, determines, as a matter of law, that the term "any insured" in an exclusionary clause is unambiguous and expresses a definite and certain intent to deny coverage to all insureds — even to innocent parties.¹⁷ These jurisdictions recognize that to impose liability on the insurer would raise coverage where none was intended and no premium was collected.¹⁸ Furthermore, the majority acknowledges that only by ignoring the plain language of the contract relating to "any insured" will an ambiguity be created.¹⁹ Insureds have not been allowed to avoid the clear application of exclusions relating to "any insured" by conjuring up ambiguities nor have they convinced courts to apply tortured interpretations to create them.²⁰ One court has clearly instructed insurers that exclusions will be upheld where the clause refers to "any insured" as opposed to "a insured", "an insured" or "the insured".²¹

¶ 11 As does the majority, this Court upholds coverage exclusions where policy language is clear and unambiguous.²² Furthermore, we will not interpret an insurance contract to extend coverage where none is intended.²³ Finally, except where public policy concerns demand the imposition of coverage, insurers are not required to cover a loss for which no premium has been paid — as is the situation here.²⁴ Rather, we uphold clear and unambiguous exclusionary clauses.

¶ 12 In Bituminous Casualty Corp. v. Cowen Construction, Inc., 2002 OK 34, 55 P.3d 1030, 106 A.L.R.5th 713, we applied the well settled rules of insurance contract construction to a commercial general liability policy excluding coverage for bodily injury or property damage arising out of the "actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants". In so doing, we applied the clear and unambiguous contract language, giving it a plain and ordinary meaning. We determined that the total pollution exclusion of the policy was not limited to environmental pollution and would be applicable to lead poisoning from a release into a kidney dialysis center constructed by the insured.

¶ 13 We again addressed exclusions under a general liability policy in Dodson v. Saint Paul Ins. Co., 1991 OK 24, 812 P.2d 372. Dodson involved a general liability policy excluding coverage for liability assumed by the insured contractor except for a warranty of fitness and which excluded liability for property damage arising out of the named insured's products and property damage to work performed on behalf of the insured. The exclusionary provision was found to be unambiguous resulting in our holding that there was no coverage for liability of the...