Cont'l W. Ins. Co. v. James Black, JJ Bugs, Ltd.

• Decision Date: 16 November 2015
• Docket Number: No. S–15–0068.,S–15–0068.
• Citation: 2015 WY 145,361 P.3d 841
• Parties: CONTINENTAL WESTERN INSURANCE COMPANY, Appellant (Plaintiff), v. James BLACK, JJ Bugs, Ltd., Andrew Gustafson, individually, and as Personal Representative of Stephanie Gustafson, Charles Adsit, Joe Patterson, and Mia Patterson, Appellees (Defendants).
• Court: Wyoming Supreme Court

361 P.3d 841

2015 WY 145

CONTINENTAL WESTERN INSURANCE COMPANY, Appellant (Plaintiff),

v.James BLACK, JJ Bugs, Ltd., Andrew Gustafson, individually, and as Personal Representative of Stephanie Gustafson, Charles Adsit, Joe Patterson, and Mia Patterson, Appellees (Defendants).

No. S–15–0068.

Supreme Court of Wyoming.

Nov. 16, 2015.

Representing Appellant: Marianne LaBordeand David C. Fawleyof Montgomery Amatuzio Dusbabek Chase, LLP, Denver, CO. Argument by Mr. Fawley.

Representing Appellees: Cameron S. Walkerof Schwartz, Bon, Walker & Studer, LLC, Casper, WY for Appellees James Blackand JJ Bugs, Ltd.; Thomas G. Taskerof Hillyard Wahlberg Kudla Sloane & Woodruff, Denver, CO; and Patrick J. DiBenedettoof Metier Law Firm LLC, Fort Collins, CO for Appellee Andrew Gustafson; Richard Wolfof Wolf, Tiedeken Woodard, P.C., Cheyenne, WY for Appellee Charles Adsit; and

Donald J. Sullivanof Sullivan Law Offices, P.C., Cheyenne, WY for Appellees Joe and Mia Patterson; and Philip White Jr., Laramie, WY for Appellees Gustafson, Adsit, and Pattersons. Argument by Messers. Walker and White.

Opinion

HILL, Justice.

[¶ 1] Keizer Trailer Sales, Inc. (Keizer), who is insured by Continental Western Insurance Company (CWIC), sold three refrigerated trailers to James Black. Mr. Black took immediate possession of the trailers, but the installment purchase agreement pursuant to which he bought the trailers specified that Keizer would remain the owner of the trailers until the purchase price was paid in full. Mr. Black was subsequently in an accident with one of the trailers while traveling on Interstate 80 in Wyoming, and wrongful death and personal injury actions were filed against him and his business.

[¶ 2] CWIC was notified of potential claims against the policies it issued Keizer on the trailer involved in the accident. CWIC thereafter filed a complaint for declaratory judgment in the district court for the First Judicial District, seeking a declaration that the policies issued to Keizer do not provide coverage for the claims arising from Mr. Black's accident. The district court ruled against CWIC and found that Mr. Black was insured under the policies' omnibus clauses because he was driving a vehicle owned by Keizer with Keizer's permission. We affirm.

ISSUES

[¶ 3] CWIC states the issues on appeal as follows:

1. Did the trial court err in finding that Keizer Trailer Sales, Inc. was the owner of the trailer for purposes of liability insurance despite the fact that James Black had purchased it under a conditional sales agreement?

2. Did the trial court err in finding that James Black was operating the trailer on the day of the accident pursuant to Keizer Trailer Sales, Inc.'s permission?

FACTS

[¶ 4] On December 27, 2010, James Black purchased three refrigerated trailers from Keizer Trailer Sales, Inc. (Keizer). The purchase was made pursuant to an Offer of Purchase Agreement (Purchase Agreement) prepared by Keizer. On its front side, the Purchase Agreement set forth the total price of the trailers and specified the following terms (with our emphasis added):

These trailers are being purchased through a “Lease to Purchase” and [Keizer] will remain the owner of the equipment until the loan is paid in full.

Buyer agrees to the payment schedule on the Promissory Note–Guaranty dated 12/27/2010.

Buyer agrees to provide insurance showing [Keizer] as both the loss payee and additional insured.

Buyer agrees that if he becomes more than two payments past due the trailers will be returned to one of our locations and all monies paid to date will be forfeited.

Buyer understands the trailers are being sold on this date with a current DOT inspection and that the buyer will be responsible for getting a new DOT inspection every 12 months from this day forward.

[¶ 5] On the Purchase Agreement's reverse side, under the paragraph entitled “Title–Risk of Loss,” the Purchase Agreement again specified that: “All products sold to Buyer hereunder shall remain the property of Seller until fully paid for in cash.” Mr. Black also signed a separate Promissory Note–Guaranty, promising to pay to Keizer the sum of $81,946.64, with interest at the rate of 14% per annum, in thirty-six monthly installments beginning on January 26, 2011.

[¶ 6] Mr. Black took possession of the three trailers on December 27, 2010, but they remained titled and registered in Keizer's name. Keizer paid for and supplied license plates for the trailers throughout the duration of Mr. Black's possession. Keizer also continued to maintain and pay for two insurance policies on the three trailers, a commercial policy and an umbrella policy, both issued by Continental Western Insurance Company (CWIC). Keizer's commercial policy with CWIC lists the three trailers under the policy's “Schedule of Covered Autos You Own,” and the commercial policy defines an insured as:

a. You [Keizer] for any covered “auto.”

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow * * *.

[¶ 7] The commercial policy defines “auto” as:

1. A land motor vehicle, “trailer” or semitrailer designed for travel on public roads; or

2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

[¶ 8] The commercial policy then defines “trailer” to mean, in relevant part, “a semitrailer or a dolly used to convert a semitrailer into a trailer.” The umbrella policy uses substantially similar language to define an insured and auto and thereby operates to increase the liability coverage and provide that increased coverage under the same terms as the commercial policy.

[¶ 9] On April 29, 2012, Mr. Black was operating a tractor pulling one of the Keizer trailers and was involved in an accident on Interstate 80 just east of Cheyenne, Wyoming. The accident resulted in multiple injuries and one fatality. Following the accident, wrongful death and negligence claims were filed against Mr. Black and his business, and CWIC was notified of potential claims against the commercial and umbrella policies it issued Keizer on the trailer involved in the accident.

[¶ 10] On September 18, 2013, CWIC filed a complaint for declaratory judgment seeking a declaration that the commercial and umbrella policies issued to Keizer do not provide coverage for the claims arising from Mr. Black's accident. The defendants named in CWIC's declaratory judgment complaint included Mr. Black and his business and the plaintiffs in the underlying wrongful death and negligence actions.

[¶ 11] CWIC filed a motion for summary judgment, and Defendants filed their oppositions and requested that the court issue a judgment declaring that the CWIC policies provide coverage for the claims arising out of Mr. Black's accident. On November 25, 2014, the district court issued a decision letter denying CWIC's motion for summary judgment and directing entry of an order granting Defendants summary judgment. The district court noted the parties' agreement that there were no disputed issues of fact and then ruled (citations omitted):

Under the express terms of the Policy, coverage extends to Black if Keizer was the owner of the trailer at the time of the accident, and if Keizer gave Black permission to use the trailer. Conversely, coverage does not extend to Black if either one of these questions is answered in the negative. Because no party disputes the facts in this matter, the question of ownership is also a question of law.

The answer to the question of whether Black had possession of and was using the trailer with Keizer's permission flows directly from the answer to the ownership question. Keizer and Black entered into a sales agreement and there is no indication that Black unlawfully possessed the trailer at the time of the accident. Therefore, if Keizer retained ownership of the trailer, Black is patently using the trailer with Keizer's permission. If, however, Keizer divested its ownership of the trailer, Keizer could not have granted Black permission to use the trailer. Thus, the Court need only analyze the question of ownership.

The terms of the Offer of Purchase Agreement, which Keizer drafted and entered into with Black, are unambiguous and set forth only one meaning—that Keizer was to “remain the owner of the equipment until the loan was paid in full.” Therefore, the plain language of the contract establishes Keizer's express intent to retain ownership, not just retain title for the purpose of maintaining any formal or informal security interest in the trailer. If Keizer only intended to retain a security interest, it could have drafted its contract using different terms or remained silent on the issue of ownership if it felt the law supplied the answer to the ownership question. It did not. Keizer is bound by the terms of its own drafting, and in doing so chose to maintain ownership, and was the owner of the trailer at the time of the accident. * * * * * *Not only did Keizer maintain the trailer on the Policy listing it on the Policy's Schedule of Covered Autos You Own, but in exchange for premium payments, CWIC agreed to insure the trailers listed on the Policy. Therefore, the intent of the parties to the insurance contracts at issue here was to insure the trailer involved in the accident. While the insurance contract does not, of and by itself, create an actual or legal ownership interest in the trailer in Keizer, it does create a contractual insurable interest in Keizer and an obligation for CWIC to provide insurance coverage.

Furthermore, Black, by virtue of Keizer's ownership of the trailer had Keizer's permission to use the trailer. Because Keizer owned the trailer under the express terms of the Offer of Purchase Agreement and gave Black permission to use it, the coverage of the Policy extends to Black. Also, since Keizer contracted for coverage, listing the trailer on the CWIC Policy Schedule of Covered Autos You Own, CWIC's coverage extends to Black in regard

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