Econ. Premier Assurance Co. v. W. Nat'l Mut. Ins. Co.

• Citation: 839 N.W.2d 749
• Decision Date: 25 November 2013
• Docket Number: No. A13–0621.,A13–0621.
• Parties: ECONOMY PREMIER ASSURANCE COMPANY, Appellant, v. WESTERN NATIONAL MUTUAL INSURANCE COMPANY, Respondent.
• Court: Court of Appeals of Minnesota

839 N.W.2d 749

ECONOMY PREMIER ASSURANCE COMPANY, Appellant,

v.WESTERN NATIONAL MUTUAL INSURANCE COMPANY, Respondent.

No. A13–0621.

Court of Appeals of Minnesota.

Nov. 25, 2013.

Syllabus by the Court

The doctrine of contra proferentem, which ordinarily guides courts to interpret ambiguous insurance-contract language against the insurer-drafter and in favor of finding coverage for the insured policy holder, does not influence the interpretation of allegedly ambiguous language in an insurance policy that is the subject of a coverage suit between the drafting insurer and another insurance company.

William L. Davidson, Timothy J. O'Connor, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, MN, for appellant.

James T. Martin, Gislason, Martin, Varpness & Janes, PA, Edina, MN, for respondent.

Considered and decided by HUDSON, Presiding Judge; HALBROOKS, Judge; and ROSS, Judge.

OPINION

ROSS, Judge.

This is a coverage dispute between two insurance companies. Luke Hylden was driving his father's pickup truck when he collided with another car and injured the driver. Hylden's father had lent him the truck because the car Hylden usually drove, owned by his mother, was broken down. Hylden was insured under the policies that each of his parents had taken out for his and her respective vehicle. Hylden's father's insurer, Economy Premier, paid damages to the victim and then sued Western National, the insurer for Hylden's mother, seeking a declaratory judgment for reimbursement stating that Western National, not Economy Premier, is responsible for the primary coverage. The district court interpreted the policy language and granted summary judgment to Western National. Because we read Western National's policy as providing only excess liability coverage and not primary coverage under the circumstances, we affirm.

FACTS

Luke Hylden collided with Sheila Smith while he was driving his father's pickup truck in 2009. Smith was injured. Luke's parents are divorced, and Luke, then 18 years old, was living with his mother. She owned two vehicles insured by Western National Mutual Insurance Company. Hylden was an insured driver under that policy, and he customarily drove his mother's Ford LTD. But the LTD was inoperable in March 2009, pending repair. So Hylden got permission from his father to drive his Ford F–150 pickup truck. Hylden's father insured the F–150 under a policy issued by Economy Premier Assurance Company. Hylden was also an insured under that policy. After the collision, Smith negotiated with Economy Premier and Western National, settling on a total payment of $212,000.

Economy Premier then brought this action. It claims that Western National has the primary coverage for Hylden's collision even though the pickup he was driving is expressly identified in Hylden's father's Economy Premier policy. It argued to the district court that the pickup constituted a “temporary loaned vehicle” as that term appears in Hylden's mother's Western National policy, and that Western National's policy assumes primary coverage for that category of vehicle. The district court construed both companies' policies, rejected Economy Premier's proposed interpretation, deemed Economy Premier responsible for primary coverage, and entered summary judgment in Western National's favor. Economy Premier appeals that decision.

ISSUE

Does the truck Luke Hylden was driving qualify as a “temporary substitute vehicle” under the Western National insurance policy at issue?

ANALYSIS

Economy Premier contends that the district court improperly decided the parties' competing summary judgment motions. We review an appeal from a grant of summary judgment on undisputed material facts de novo, as a question of law. Kelly v. State Farm Mut. Auto. Ins. Co., 666 N.W.2d 328, 330 (Minn.2003). The parties have stipulated to the relevant facts. Interpreting an insurance policy also poses a question of law that we review de novo. Mitsch v. Am. Nat'l Prop. & Cas. Co., 736 N.W.2d 355, 358 (Minn.App.2007), review denied (Minn. Oct. 24, 2007).

Economy Premier argues that Western National bears the primary liability coverage for the collision. The argument must overcome a general presumption against it. That is, automobile insurance typically follows the vehicle rather than the driver. Hilden v. Iowa Nat'l Mut. Ins. Co., 365 N.W.2d 765, 769 (Minn.1985). And in this case, Economy Premier issued the policy that covers the specific vehicle involved in the collision. So Economy Premier must rebut the presumption to prevail.

How we interpret the insurance contracts will determine how we answer the question of coverage. We interpret insurance contracts under the general rules of contract law, giving terms their plain and ordinary meaning to honor the intent of the parties. Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628, 636 (Minn.2013).

Economy Premier begins with the broad argument that Western National agreed to provide primary coverage, even though it was not required to do so, by promising expansively to “pay damages for ‘bodily injury’ or ‘property damage’ for which any ‘insured’ becomes legally responsible because of an auto accident.” This argument is unpersuasive. We construe contract terms in light of the whole and will not read the policy language to negate a term if a viable alternate reading is consistent with the parties' general intent and would give meaning to every term. Eng'g & Const. Innovations, Inc. v. L.H. Bolduc Co., 825 N.W.2d 695, 705 (Minn.2013). Economy Premier reads narrowly language that is qualified by the “other insurance” provision in Western National's contract, which imposes limits on the coverage guaranteed elsewhere in the policy. Because we read the contract as a whole in light of all provisions, we believe that the broad statements of coverage on which Economy Premier relies do not end the analysis; they must instead be considered together with the limitations in Western National's contract.

Hylden's father's Economy Premier policy—the policy that names the pickup involved in the accident—contains an “other insurance” provision. The provision states that “[i]f you or anyone else insured by [this policy] for liability claims also have coverage under some other policy providing liability coverage, [this policy] will be excess over the other liability insurance.” By contrast, Hylden's mother's policy commits Western National to “pay damages for ‘bodily injury’ or ‘property damage’ for which any ‘insured’ becomes legally responsible because of an auto accident.” The policy also includes an “other insurance” provision, outlined in an endorsement that amends policies underwritten in Minnesota:

1. If there is other applicable insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. Except as provided in 2. below, any insurance we provide for a vehicle you do not own, including any vehicle while used as a temporary substitute for “your covered auto,” shall be excess over any other collectible insurance.

2. With respect to a vehicle you do not own which is a “rental vehicle” or “temporary loaned vehicle,” we will provide coverage on a primary basis.

The first paragraph of the amended “other insurance” provision of Western National's policy is nearly identical to the provision found in Western National's standard policy, but the second paragraph, which includes the disputed term “temporary loaned vehicle,” is only present in a Minnesota-specific amendment to the policy. The Minnesota-specific amendment also defines “rental vehicle” and “temporary loaned vehicle,” terms included in the second paragraph of the amended “other insurance” provision. Western National's policy therefore effectively creates two categories of vehicles for purposes of its “other insurance” provision in Minnesota insurance policies like the one issued to Hylden's mother: those vehicles (such as “rental vehicles” or “temporary loaned vehicles”) for which Western National assumes primary liability coverage, and those vehicles (such as “temporary substitute” vehicles) for which it will provide only excess insurance coverage over the coverage provided by some other insurer.

The epicenter of this lawsuit is the term “temporary loaned vehicle” in Western National's policy. Western National's policy defines the term, in pertinent part, as “a ... pickup ... if such a vehicle is loaned as a replacement for ‘your covered auto’ being serviced or repaired regardless of whether the customer, who is provided the replacement vehicle, is charged a fee for the use of such vehicle.” The policy does not define the term “temporary substitute.”

The parties hotly contest the meaning we should ascribe to these terms. Economy Premier contends that Hylden's father's pickup fits the definition of a “temporary loaned vehicle” and that Western National therefore must provide primary coverage for the damages caused by the accident and Economy Premier is only secondarily liable. It urges that because Western National drafted an ambiguous “other insurance” provision, Western National's coverage is primary. The allegedly ambiguous provision states that Western National will provide primary coverage for any accident that occurs while an insured is driving a “temporary loaned vehicle” but only excess coverage if the insured is driving a “temporary substitute” vehicle. Economy Premier contends that the truck fits the definition of a “temporary loaned vehicle” because it was “loaned [to Hylden] as a replacement for ‘your covered auto’ being serviced or repaired.” Western National asserts that the truck was instead a “temporary substitute” for Hylden's “covered auto,” insisting that the “temporary loaned vehicle” category applies only to vehicles provided temporarily by repair shops while a covered vehicle is being serviced. Because the policy does not expressly support either position, Economy Premier...