Flexi-Van Leasing, Inc. v. Aetna Cas. & Sur. Co.
| Decision Date | 20 July 1987 |
| Docket Number | No. 86-3515,FLEXI-VAN,86-3515 |
| Parties | LEASING, INC., a corporation, Plaintiff, and American Motorists Insurance Company, a corporation, Plaintiff-Appellee, v. AETNA CASUALTY & SURETY COMPANY, a corporation, James P. Reed, aka Jim Reed, dba Jim Reed Trucking, and Robert Arthur Belanger, Defendants, and Terry L. Wollam, Personal Representative of the Estate of Thomas E. Wollam, deceased, Marion D. Wollam, Wesley G. Varney and Francis M. Bedell, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Alan H. Johansen, Portland, Or., for plaintiff-appellee.
Ben Shafton, Vancouver, Wash., for defendants-appellants.
Appeal from the United States District Court for the District of oregon.
Before SNEED and HALL, Circuit Judges, and AGUILAR, * District Judge.
This appeal results from the district court's grant of summary judgment in a dispute over the provisions of an insurance contract. The major issue presented is whether the defendant judgment creditors can reach the insurance policy of the company that leased a trailer to an individual who negligently caused injuries in an automobile collision. We affirm the district court's grant of summary judgment.
The parties submitted the case on the following stipulated facts.
On 15 October 1980, Jim Reed, dba Jim Reed Trucking, leased a trailer from Gil Flex Rentals, a division of Flexi-Van Leasing, Inc. Reed's employee, Robert Belanger, picked up the trailer.
On 18 October 1980, Belanger was driving a tractor owned by Jim Reed and pulling the rented trailer. Belanger was acting within the course and scope of his employment when his vehicle collided with a vehicle driven by Thomas Wollam. Mr. Wollam died as a result of the collision. Marion Wollam also suffered various injuries in the collision.
Reed purchased liability insurance from Aetna Casualty & Surety Co. Flexi-Van purchased liability insurance from American Motorists Insurance Co. Aetna's policy limit was $750,000 and American Motorists' limit was $25,000.
In a lawsuit stemming from the accident, the appellants [hereafter collectively referred to as "the Wollams"] obtained a judgment against Reed and Belanger of $890,000 which exceeded Aetna's policy limit. The jury verdict exonerated Flexi-Van.
In this action for declaratory relief, the parties submitted cross motions for summary judgment on the issue of whether the Wollams may reach the American Motorists' policy to satisfy a portion of their judgment against Reed and Belanger. The district court granted the plaintiff American Motorists' motion for summary judgment and denied the defendant Wollams' motion, thereby finding that the Wollams could not reach the American Motorists policy to secure payment for a portion of their judgment against Reed and Belanger.
The Wollams appealed the district court's grant of summary judgment, and, on 12 August 1985, the Ninth Circuit reversed and remanded the district court decision for further consideration in light of a case which the parties had previously failed to bring before the district court, United Pacific Insurance Co. v. Truck Insurance Exchange, 273 Or. 283, 541 P.2d 448 (1975). On 12 December 1985, the district court, pursuant to the order of remand, and upon reconsideration reaffirmed its previous grant of summary judgment. This appeal results.
We review a grant of summary judgment de novo. Jackson Water Works, Inc. v. Public Utilities Commission of Cal., 793 F.2d 1090, 1092 (9th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1334, 94 L.Ed.2d 184 (1987). Summary judgment is proper only if there is no genuine issue of material fact and the moving party is entitled to prevail as a matter of law. Id. The parties submitted this case on stipulated facts. Therefore, resolution depends upon a de novo examination of questions of law. Id. The district court's interpretation and application of state law is entitled to no special deference and is reviewed de novo. Id.;
Matter of McLinn, 739 F.2d 1395, 1397 (9th Cir.1984) (en banc).
Initially this case confronts the court with the general rule that insurance contracts are to be construed liberally to afford coverage and against the insurer. O'Neill v. Standard Insurance Company, 276 Or. 357, 554 P.2d 997, 999 (1976). Appellees argue that the judgment creditors here are not entitled to the benefit of the liberal construction rule because they are not parties to the policy.
Under Oregon law, "the primary and governing rule of the construction of insurance contracts is to ascertain the intention of the parties." Totten v. New York Life Ins. Co., 298 Or. 765, 696 P.2d 1082, 1086 (1985). Furthermore, the liberal construction rule I-L Logging Co. v. Mfgrs. & Whlse. Ind. Exc., 202 Or. 277, 320, 273 P.2d 212, reh'g. denied, 275 P.2d 226 (1954).
Each party submits authority for its position on the applicability of the liberal construction rule in this case. However, we are convinced by our reasoning in Travelers Indem. Co. v. United States, 543 F.2d 71, 74 (9th Cir.1976), where we stated:
The general rule is the familiar one that an insurance policy must be construed most stongly against the insurer and reasonable doubt as to the meaning of the language of the policy must be resolved against the insurance company. [Citation omitted.] This rule, however, yields to the primary rule that policies of insurance, like other contracts, are to be construed so as to ascertain and declare the true intent of the parties. [Citations omitted.] Another maxim of interpretation applicable here is that a third party who is not a party to the contract is not usually entitled to a strict construction in his favor in determining whether the contract was made for his benefit. Milchem, Inc. v. M.A. Smith Well Service, Inc., 351 F.Supp. 1307 (E.D.La.1972).
It is clear in this case that Flexi-Van is the named insured. Reed and Belanger are not parties to the insurance contract at issue. When looking to determine whether we should construe the terms of the policy in favor of Reed and Belanger, Milchem provides us with guidance. That Louisiana district court case concerned a subrogation claim against a sub-lessee of certain mechanical equipment which was negligently destroyed during preparation for a hurricane. In that context the court stated:
The general rule that doubtful language contained in an insurance policy is to be construed in favor of the insured and against insurer ... operates only after insured has been determined and not in deciding whether a certain individual belongs to the insured class described in the policy, and a third person who is not a party to the contract of insurance usually is not entitled to a strict constuction in his favor in determining whether the contract was made for his benefit.
Id. at 1311, quoting 44 C.J.S. Insurance Sec. 308, at 1226.
The major contested issue is whether Reed and/or Belanger were insured under the policy. Under the above analysis, and for the purposes of determining the issue of whether they are insured, the appellants are not entitled to the general liberal construction given to insurance contracts.
Reed and Belanger were permissive users of the Flexi-Van trailer and thus meet the terms of the initial "persons insured" clause of the policy. However, the policy further expressly provides:
None of the following is an insured:
* * *
(ii) The owner or lessee (of whom the named insured is a sublessee) of a hired automobile or the owner of a non-owned * * *
automobile, or any agent or employee of any such owner or lessee ... [Hereinafter, this provision will be called the "non-owned automobile" provision.]
(iv) Any person or organization, other than the named insured, with respect to:
* * *
(2) A trailer while used with any motor vehicle owned or hired by such person or organization and not covered by like insurance in the company; [Hereinafter, this provision will be called the "trailer" provision.].
The terms of the policy do not provide coverage for non-owned automobiles, and it is clear that the tractor here constitutes a non-owned automobile for the purposes of this policy.
The appellants argue that the non-owned automobile provision does not apply for three reasons. First, appellants argue that the provision is ambiguous as to its extent. They claim that, by its terms, the provision would apply to any person who owned an automobile, including, for example, a Flexi-Van employee involved in an accident while driving a Flexi-Van vehicle in the course of his employment because he also owns his family car.
The court here should be guided by the intent of the parties. To determine that intent the court should give to words "their plain, ordinary and popular" meaning, and the court should not strain to create an ambiguity in order to assert coverage. Mortgage Bancorp v. New Hampshire Ins. Co., 67 Or.App. 261, 677 P.2d 726, 728, review denied, 297 Or. 339, 683 P.2d 1370 (1984). See also, Totten v. New York Life Ins. Co., 298 Or. 765, 696 P.2d 1082, 1086 (1985). The non-owned automobile provision here excludes from coverage persons who use their own automobile in conjunction with a Flexi-Van vehicle. Reed and Belanger fall literally within the terms of the provision, and the court should not strain the provision's language to remove them. The non-owned automobile provision is not ambiguous on its face, and there is no reason for the court to look beyond...
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