Carl's Italian Rest. v. Truck Ins. Exchange

• Citation: 183 P.3d 636
• Decision Date: 29 November 2007
• Docket Number: No. 06CA2183.,06CA2183.
• Parties: CARL'S ITALIAN RESTAURANT and Angie Arellano, Plaintiffs-Appellants, v. TRUCK INSURANCE EXCHANGE (Members of the Farmers Insurance Group of Companies), Defendant-Appellee.
• Court: Court of Appeals of Colorado

183 P.3d 636

CARL'S ITALIAN RESTAURANT and Angie Arellano, Plaintiffs-Appellants, v. TRUCK INSURANCE EXCHANGE (Members of the Farmers Insurance Group of Companies), Defendant-Appellee.

No. 06CA2183.

Colorado Court of Appeals, Div. A.

November 29, 2007.

Certiorari Denied May 12, 2008.

Dennis McElwee, Lakewood, Colorado; Sawaya & Rose, P.C., Michael G. Sawaya, Judith K. Funderburg, Denver, Colorado, for Plaintiffs-Appellants.

Levy, Morse & Wheeler, P.C., Marc R. Levy, Scott C. Kreider, Englewood, Colorado, for Defendant-Appellee.

Opinion by Chief Judge DAVIDSON.

In this declaratory judgment action concerning a business owner's liability insurance policy, plaintiffs, Carl's Italian Restaurant and Angie Arellano, appeal from the trial court's determination that defendant, Truck Insurance Exchange (Members of the Farmers Insurance Group of Companies), had no duty to defend Carl's against Arellano's complaint and no duty to indemnify Carl's for any damages sought by Arellano. Because we agree with the trial court that Truck had no duty to defend, we affirm the judgment and do not reach the question of Truck's duty to indemnify.

I. Background

The underlying complaint alleged that Arellano was injured in an automobile collision with another driver, Buck Perigo, and that Perigo was, as relevant here, an employee or apparent agent of Carl's at the time of the accident. Arellano's complaint requested damages on several theories of tort liability against Perigo, Carl's, and the owner of the restaurant, who is not a party to this appeal.

At the time of the accident, Carl's had a business owner's liability policy with Truck. The policy contained an "auto exclusion" clause, which excluded coverage for "`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" (emphasis added). The policy defined an insured to include Carl's employees "while acting within the scope of their employment or performing duties related to the conduct of Carl's business."

Carl's sent the complaint to Truck and asked it to defend and to indemnify Carl's for any damages awarded to Arellano. Relying on the auto exclusion, Truck refused. Plaintiffs then brought this declaratory judgment action, seeking to determine whether Truck had a duty to defend and indemnify under the policy. Truck moved to dismiss, arguing that it had no duty to defend or indemnify as a matter of law. The court agreed and granted the motion.

On appeal, plaintiffs do not dispute the trial court's determination that, as an employee of Carl's, Perigo was an insured and the exclusion applied. Instead, they assert, as they did in the trial court that under the facts of the underlying complaint, Perigo could be deemed a temporary worker or an apparent agent of Carl's, in which case he would not be an insured to whom the policy exclusion applied, and thus Truck would have a duty to defend. However, regardless whether Perigo's status as a temporary worker or an apparent agent would trigger Truck's duty to defend, we agree with the trial court that, based on the allegations of the underlying complaint, Perigo was neither one.

II. Duty to Defend — Standard of Review

The duty to defend concerns an insurance company's duty to affirmatively defend its insured against pending claims, while the duty to indemnify involves the insurer's duty to satisfy a judgment entered against the insured party. See Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 299 (Colo.2003). When a court properly finds that there is no duty to defend, there is no need to decide whether there is a duty to indemnify. Id. at 300.

A duty to defend arises when factual allegations in the underlying complaint, if sustained, would impose a liability on the insured that is arguably covered by the policy. Thompson v. Md. Cas. Co., 84 P.3d 496, 502 (Colo.2004). To determine a duty to defend, a court must restrict its examination to the complaint and the insurance policy. Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1089 (Colo.1991). If the complaint alleges even one claim that is arguably covered by the policy, the insurer must defend its insured against all claims presented in the complaint. Bainbridge, Inc. v. Travelers Cas. Co., 159 P.3d 748, 756 (Colo.App.2006).

But, if the insurer establishes that the situation is "solely and entirely within the exclusions in the insurance policy" and "that the exclusions are not subject to any other reasonable interpretations," then there is no duty to defend. Hecla, 811 P.2d at 1090.

Whether there is a duty to defend is a question of law. Therefore, our review is de novo. Thompson, 84 P.3d at 501; State Farm Mut. Auto. Ins. Co. v. Kastner, 77 P.3d 1256, 1261 (Colo.2003).

II. Perigo Was Not a Temporary Worker

The policy defines "temporary worker" as "a person who is furnished to you to substitute for a permanent `employee' on leave or to meet seasonal or short-term work conditions." According to the policy, a temporary worker is not an "employee." Thus, plaintiffs argued to the trial court that Truck had a duty to defend because "temporary worker" was not included in the category of "insured" to which the auto exclusion applied.

The court rejected the argument, determining that, under the policy, a temporary worker must be "furnished" by a third party. The court reasoned that Perigo could not be a temporary worker because "there is no indication [in the complaint] that Perigo was furnished to Carl's by a temporary worker agency or any other entity." On appeal, plaintiffs contend that the trial court erred in determining that the term "furnished" requires that a temporary worker be supplied by a third party. We disagree.

An insurance policy is a type of contract and "should be interpreted consistently with the well settled principles of contractual interpretation." Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 750 (Colo.1990). We give terms in an insurance policy "their plain and ordinary meanings" unless it is clear from the policy that the parties intended an alternative interpretation. Id.; State Farm Mut. Auto. Ins. Co. v. Nissen, 851 P.2d 165, 167 (Colo.1993) (a term in question should be construed as it would be "understood by a person of ordinary intelligence").

In determining whether a term is ambiguous, we must consider the term in the context of the policy as a whole. See Allstate Ins. Co. v. Juniel, 931 P.2d 511, 513 (Colo. App.1996). An alternative interpretation that is unreasonable will not render a word or phrase ambiguous. See Atmel Corp. v. Vitesse Semiconductor Corp., 30 P.3d 789, 793 (Colo.App.2001), abrogated in part on other grounds by Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d 116 (Colo.2007); see also Sunshine v. M.R. Mansfield Realty, Inc., 195 Colo. 95, 98, 575 P.2d 847, 849 (1978) (when there is only one "reasonable meaning under the circumstances," both parties are "bound to that reasonable meaning of the contract's terms").

Plaintiffs argue that the word "furnished" is ambiguous because it could mean that a worker could "furnish himself" to an employer. However, in the context of the insurance policy, we conclude that plaintiffs' interpretation is unreasonable. If a person could furnish himself to an employer, every worker could choose to "furnish himself" or be told to "furnish himself" by his employer, and become a "temporary worker" whenever such a classification would be convenient. Any time a worker did a task that was not strictly within his job description (for example, picking up a ringing phone of a permanent employee who was absent from the office during lunch hour), the worker's employer could claim for insurance purposes that he was a "temporary worker" while performing that task. See Monticello Ins. Co. v. Dion, 65 Mass.App.Ct. 46, 836 N.E.2d 1112, 1115 (2005)(because "[a]ny employee of a business, at least since the abolition of slavery, can be said to `furnish his services' to his employer, a phrase synonymous with `work for' his employer," the policy's phrase would have no meaning if it were read to include the ability for one to furnish oneself).

Interpreting the word "furnished" to require the actions of a third party is also consistent with Colorado appellate decisions defining the term in similar contexts. See Nissen, 851 P.2d at 169-70 (interpreting a provision of an automobile insurance policy, the court determined, "A person does not `furnish' himself or herself with something for his or her own use. Rather, the reasonable meaning of the phrase is that a third party, whether employer, friend or relative, has provided a car for one's use."); Cruz v. Farmers Ins. Exch., 12 P.3d 307, 310 (Colo. App.2000) (same); Allstate Ins. Co. v. Willison, 885 P.2d 342, 344 (Colo.App.1994)(same).

Other jurisdictions interpreting insurance policies or statutes containing the same definition of "temporary worker" as here have reached a similar result. See Monticello Ins. Co., 836 N.E.2d at 1115 (the definition of a temporary worker necessarily connotes some involvement by a third person); see also Brown v. Ind. Ins. Co., 184 S.W.3d 528, 538 (Ky.2005)(same); Nationwide Mut. Ins. Co. v. Allen, 83 Conn.App. 526, 850 A.2d 1047, 1055 (2004) (same); AMCO Ins. Co. v. Dorpinghaus, No. 05-1296, 2007 WL 313280, at *5 (D.Minn., Jan.12, 2007)(unpublished memorandum opinion and order)(same); cf. Am. Family Mut. Ins. Co. v. Tickle, 99 S.W.3d 25, 30 (Mo.Ct.App.2003) (describing the history and purpose behind the term "temporary worker").

To the extent that Bituminous Casualty Corp. v. Mike Ross, Inc., 413 F.Supp.2d 740, 745 (N.D.W.Va.2006), and American Family Mutual Insurance Co. v. As One, Inc., 189 S.W.3d 194, 198 (Mo.Ct.App.2006), reach a contrary result, we note that neither opinion analyzes the term in the context of the insurance policy in which it is contained.

Additionally, we do...