Farm Bureau Town & Country Ins. Co. of Mo. v. Am. Alternative Ins. Corp..

• Decision Date: 14 June 2011
• Docket Number: No. WD 73046.,WD 73046.
• Citation: 347 S.W.3d 525
• Court: Missouri Court of Appeals
• Parties: FARM BUREAU TOWN & COUNTRY INSURANCE COMPANY OF MISSOURI, Appellant,v.AMERICAN ALTERNATIVE INSURANCE CORPORATION, Respondent.

347 S.W.3d 525

FARM BUREAU TOWN & COUNTRY INSURANCE COMPANY OF MISSOURI, Appellant,
v.
AMERICAN ALTERNATIVE INSURANCE CORPORATION, Respondent.

No. WD 73046.

Missouri Court of Appeals, Western District.

June 14, 2011.Motion for Rehearing and/or Transfer to

Supreme Court Denied Aug. 2, 2011. Application for Transfer Denied Oct. 4, 2011.

[347 S.W.3d 527]

Michael J. Schmid, Jefferson City, MO, for Appellant.Kent L. Brown, Jefferson City, MO, for RespondentBefore: VICTOR C. HOWARD, P.J., THOMAS H. NEWTON, and GARY D. WITT, JJ.THOMAS H. NEWTON, Judge.

Farm Bureau Town & Country Insurance Company (Farm Bureau) appeals the trial court's judgment requiring it to reimburse funds paid by American Alternative Insurance Corporation (AAIC) to settle claims arising from a motor vehicle accident. We reverse the trial court's finding that the driver was not AAIC's insured at the time of the accident, find that each insurer has a pro rata liability for the underlying plaintiffs' claims, and enter judgment for Farm Bureau in the amount of $52,816.22.

[347 S.W.3d 528]

Factual and Procedural Background

Mr. Darren Day was a volunteer firefighter for the Boone County Fire Protection District (Fire District). On February 8, 2002, at 6:50 a.m., Mr. Day was at his girlfriend's house when a page was dispatched for volunteers to go to an accident scene. He proceeded to drive to the scene in his car, but while he was on the Highway 63 North on-ramp, the call was cancelled. Mr. Day decided to return to his girlfriend's house, but before he could exit Highway 63 North, “he lost control of his car, presumably because of black ice, slid across a median,” and struck another vehicle. The vehicle's driver was killed and several other people were injured.

Mr. Day was insured under two policies issued by Farm Bureau to his parents. One of the Farm Bureau policies was a personal automobile insurance policy with a single liability coverage limit of $500,000. The second Farm Bureau policy was a personal/farm umbrella liability policy with a limit of $1,000,000. The Fire District had a commercial automobile insurance policy from AAIC with a coverage limit of $1,000,000. As a result of claims from the accident, Farm Bureau's automobile policy was exhausted to the policy limit of $500,000.

Farm Bureau paid an additional $186,132.43 from its umbrella policy. AAIC paid $80,500.00 for personal injury claims from the accident. Both Farm Bureau and AAIC reserved all rights to seek indemnity and/or contribution from the other. Farm Bureau subsequently filed a petition against AAIC seeking indemnity/contribution. It contended the liability payments it made under the umbrella policy were AAIC's responsibility, or, in the alternative, that both insurers shared a pro rata responsibility for the sums. AAIC filed counterclaims for reimbursement and unjust enrichment, contending Farm Bureau was obligated to pay AAIC the $80,500 it had paid out under the Fire District's policy.

The case was tried on stipulated facts. The trial court entered judgment in favor of AAIC for $80,500.¹ Its findings of fact incorporated the joint stipulation by reference. In its conclusions of law, the trial court found that “when determining insurance coverage in this context, a master-servant relationship must be established.” It held that AAIC's policy did not cover Mr. Day because he was not on Fire District business because he “did not reach” the scene and never came under the Fire District's control. It further concluded that even if Mr. Day was on Fire District business, he ceased being on Fire District business when the call was cancelled and he decided to return to the house, and even if he was on Fire District business, AAIC's policy did not cover him until Farm Bureau's umbrella policy was exhausted. Farm Bureau appeals.

Standard of Review

We review a bench-tried case based on stipulated facts to determine whether the trial court drew the proper legal conclusion from the agreed facts. Schroeder v. Horack, 592 S.W.2d 742, 744 (Mo. banc 1979); see also Bank of Belton v. Bogar Farms, Inc., 154 S.W.3d 518, 520 (Mo.App. W.D.2005). Our review is thus to “address the legal consequences of the facts before us.”

[347 S.W.3d 529]

Schroeder, 592 S.W.2d at 744. Because an insurance policy is a contract, questions of its interpretation are likewise questions of law. Heringer v. Am. Family Mut. Ins. Co., 140 S.W.3d 100, 102 (Mo.App. W.D.2004). If the parties do not dispute the underlying facts, the application of the insurance contract is also a question of law. Crossman v. Yacubovich, 290 S.W.3d 775, 778 (Mo.App. E.D.2009).²Legal Analysis

Farm Bureau raises three points on appeal. It first contends Mr. Day was an insured under AAIC's policy. Second, it argues that AAIC was the primary insurer and Farm Bureau was not liable as an excess insurer. Finally, it contends in the alternative that both insurers were responsible for a pro rata share. We thus address “the perennial issue in which a particular loss may be covered by more than one insurance policy and ... each insurer disclaims liability on the ground that ‘other insurance’ is available to cover the loss.” See State Farm Mut. Auto. Ins. Co. v. Univ. Underwriters Ins. Co., 594 S.W.2d 950, 952–53 (Mo.App. E.D.1980).

In the first point, Farm Bureau argues that Mr. Day was an “insured” under the AAIC policy by analogy to worker's compensation law and the doctrine of respondeat superior. However, to determine whether an insurance policy provides coverage, we look to the insurance contract itself. Maryland Cas. Co. v. Huger, 728 S.W.2d 574, 578–79 (Mo.App. E.D.1987). While the trial court found that it needed to look to the law of “a master-servant relationship,” its reliance on Woods v. Kelley for such a proposition was misplaced. See 948 S.W.2d 634, 637 (Mo.App. W.D.1997). Woods looks to the law of respondeat superior to determine whether a volunteer was a public employee pursuant to a statute waiving sovereign immunity. Woods, 948 S.W.2d at 637. This concern is distinct from the present issue: the interpretation of a contract for insurance.

Because insurance coverage is a matter of contract, absent a statute or public policy that requires coverage, we enforce an insurance policy as written. Heringer, 140 S.W.3d at 102–03. “[A]s with other consensual undertakings, it must be given effect according to the plain terms of the agreement, consonant with the reasonable expectations, objectives and the intent of the parties.” State Farm, 594 S.W.2d at 953–54 (internal citation omitted). If the language used in the policy and the policy definitions reveals the intent of the parties, we must interpret the policy by that intent. Id. at 954. If the policy is unambiguous, we may not distort the language to create an ambiguity or to force a particular interpretation. Id.

AAIC's commercial auto policy provides in section A.1. that “insureds” are:

a. You for any covered “auto”

[347 S.W.3d 530]

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except [various exceptions]

c. Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.

The policy also carried an endorsement to its business auto coverage. The endorsement includes an addition to section A.1 above. The addition states:

VOLUNTEERS AND EMPLOYEES AS “INSUREDS ”

Coverage A.1., WHO IS AN INSURED, is modified by the addition of paragraph d., as follows:

d. Any volunteer or employee of yours while using a covered “auto” you don't own, hire or borrow in your business or your personal affairs. Insurance provided by this extension is excess over any other insurance available to any volunteer or employee.

The policy states that “the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations.” The Declarations define the Named Insured to be the Fire District. Consequently, applying the definitions of “you” and “your,” the endorsement addition adds to the definition of “insured”:

d. Any volunteer or employee of [the Fire District's] while using a covered ‘auto’ [the Fire District does not] own, hire or borrow in [the Fire District's] business or [its] personal affairs.

The parties argue that...