Graham v. Travelers Ins. Co.

• Citation: 61 P.3d 225,2002 OK 95
• Decision Date: 17 December 2002
• Docket Number: No. 95,318.,95,318.
• Parties: Winfred Nimrod GRAHAM, Plaintiff/Appellant, v. TRAVELERS INSURANCE COMPANY, Defendant/Appellee.
• Court: Supreme Court of Oklahoma

61 P.3d 225

2002 OK 95

Winfred Nimrod GRAHAM, Plaintiff/Appellant, v. TRAVELERS INSURANCE COMPANY, Defendant/Appellee.

No. 95,318.

Supreme Court of Oklahoma.

December 17, 2002.

Rex K. Travis, Patricia Travis and C. Ronald Britton, Oklahoma City, OK, for appellant Winfred Nimrod Graham.

Mark. E. Bialick, Rodney D. Stewart, Durbin, Larimore & Bialick, Oklahoma City, OK, for appellee Travelers Insurance Company.

Chris Harper, Phillip P. Owens II, Chris Harper, Inc., Oklahoma City, OK, for amicus curiae GuideOne Mutual Insurance Company.

Chris L. Rhodes, William D. Perrine, Kerry R. Lewis, Tulsa, OK, for amicus curiae Carroll Fisher, Insurance Commissioner of the State of Oklahoma.

WINCHESTER, J.

¶ 1 The issue before us is whether in a commercial insurance policy, uninsured/underinsured (UM/UIM) coverage that is provided for vehicles owned by the named insured, must also be provided to employees using their own vehicles, which are limited by an endorsement to liability coverage.

FACTS AND PROCEDURAL HISTORY

¶ 2 Winfred Nimrod Graham, the plaintiff/appellant, was stopped at a red traffic light in Oklahoma City, Oklahoma, when his car was struck from behind by a second car. Graham's vehicle was struck again when a third car collided with the second car. The record reveals that as a result of this accident, Graham sustained significant injuries, including a fractured neck.

¶ 3 According to the record, at the time of the accident, Graham was driving his personal vehicle while on business for his employer, CKE Restaurants. CKE had an automobile insurance policy that included UM/UIM coverage with Travelers Indemnity Company of Illinois, the defendant/appellee. Graham sought UIM benefits, but Travelers denied his claim.

¶ 4 Graham sued the two drivers, their principals, and the owners of one of the vehicles for personal injury, property damage and lost wages. He also sought punitive damages. In his Second Amended Petition, Graham added "Travelers Insurance Company"¹ as a defendant, praying for compensatory and punitive damages.

¶ 5 Travelers moved for summary judgment on the basis that no UM/UIM motorist coverage exists under the Travelers' policy for CKE employees operating a vehicle CKE does not own. In his response, Graham moved for an interlocutory order² arguing he was entitled to UM/UIM motorist coverage under the policy Travelers issued to CKE because that policy provides liability coverage for employees while using their own automobiles, and those covered for liability must also be covered for UM/UIM under Oklahoma's UM statute, 36 O.S.2001, § 3636.³ The trial court granted Travelers' motion.

¶ 6 In its September 26, 2000, Journal Entry of Judgment, the trial court found there was no UM/UIM coverage for Graham under the insurance policy issued by Travelers to CKE. The court determined Graham was an occupant of a non-owned automobile, that he was not an insured of Travelers and that Travelers was entitled to judgment on Graham's claim of bad faith. Graham appealed. ¶ 7 The Court of Civil Appeals, Division II, reversed the judgment of the trial court and remanded the cause to the trial court for further proceedings, holding 36 O.S.2001, § 3636 requires insurance carriers to provide UM/UIM motorist coverage to the same class of persons covered under the liability provision of an insurance policy, unless such coverage is rejected in writing. The court also held that the $10,000.00 statutory minimum did not apply, and Travelers' refusal to compensate Graham did not constitute bad faith because the issue is one of first impression. We granted certiorari.

STANDARD OF REVIEW

¶ 8 Summary judgment is appropriate where it appears there is no substantial controversy as to any material fact and one party is entitled to judgment as a matter of law. Daugherty v. Farmers Coop. Ass'n, 1984 OK 72, ¶ 5, 689 P.2d 947, 949; Crockett v. McKenzie, 1994 OK 3, ¶ 3, 867 P.2d 463, 464. "[T]he inquiry on appeal concerning the propriety of the entry of summary judgment is limited to potential controversies concerning any issue raised by the pleadings." Wabaunsee v. Harris, 1980 OK 52, ¶ 9, 610 P.2d 782, 785. Our ruling must be made on the record that the parties actually presented and not on a record that is potentially possible. Weeks v. Wedgewood Village, Inc., 1976 OK 72, ¶ 12, 554 P.2d 780, 784. An order that grants summary relief disposes of legal issues. Therefore, on appeal, the review we conduct is de novo. Brown v. Nicholson, 1997 OK 32, ¶ 5, n. 1, 935 P.2d 319, 321, n. 1; Manley v. Brown, 1999 OK 79, ¶ 22, n. 30, 989 P.2d 448, 456, n. 30. "An appellate court claims for itself plenary, independent and non-deferential authority to re-examine a trial court's legal rulings." Manley, 1999 OK 79, ¶ 22, n. 30, 989 P.2d at 456, n. 30.

INSURANCE POLICY PROVISIONS

¶ 9 CKE's insurance policy includes UM/UIM coverage limited in amount to $1,000,000.00 for each accident. The declarations page designates the number 2 as the covered auto symbol. The Business Auto Coverage Form explains the covered auto designation symbols. Symbol "2 = OWNED `AUTOS' ONLY. Only those `autos' you own. . . . This includes `autos' you acquire ownership of after the policy begins."

¶ 10 The policy included in the record has separate explanations for "WHO IS AN INSURED" for the liability coverage, and for the UM coverage. The UM coverage is in the form of an endorsement, which states in bold letters at the top "THIS ENDORSEMENT CHANGES THE POLICY. READ IT CAREFULLY." In a larger font, the next line reads "OKLAHOMA UNINSURED MOTORISTS COVERAGE." Under section B, "WHO IS AN INSURED," the policy provides:

1. You.

2. If you are an individual, any "family member."

3. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction.

4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."

¶ 11 Graham admits in his response to Traveler's motion for summary judgment that the policy provisions limit UM/UIM coverage to owned autos, but argues those facts are "narrowly technically correct." He claims that the policy contains endorsements that expand the basic coverage. Under an endorsement entitled "Employees as Insureds" the policy provides, "The following is added to the `LIABILITY COVERAGE WHO IS AN INSURED' provision." On the next line it adds, "Any employee of yours is an `insured' while using a covered `auto' you don't own, hire or borrow in your business or your personal affairs." The Business Auto Coverage Part Declarations page shows a covered auto symbol of "1" for liability coverage. The limit of insurance is $1,000,000.00. Symbol "1" on the Business Auto Coverage Form indicates that "1 = ANY `AUTO.'" Graham emphasizes that the endorsements, "Hired or Borrowed Covered Auto Coverage," "Nonowned Liability coverage," and liability coverage for employees all work together to modify the "WHO IS AN INSURED" section of the UM/UIM endorsement. Subsection 3 provides, "Anyone else `occupying' a covered `auto' or a temporary substitute for a covered `auto'. . . ."

¶ 12 Graham argues that these endorsements modify the basic coverage in the following manner. Graham was using his own vehicle to perform duties for his employer. That vehicle became either a borrowed or a non-owned vehicle as to the named insured, CKE. Because Graham was occupying that vehicle, he became an insured as a person `occupying' a covered `auto.' Graham concludes that being insured for liability also insures him for UM/UIM.

¶ 13 But even after Graham's argument on this point, we are still left with this undisputed fact: The endorsements clearly show that CKE and Travelers agreed that the parties intended UM/UIM coverage for vehicles owned by CKE. Graham's vehicle was not owned by CKE. Therefore, he was not covered for UM/UIM. Graham then attempts to make an argument that the policy is ambiguous, but the facts stated above show that this argument must fail. Graham's vehicle clearly was insured for liability and was not insured, under the provisions of the policy, for UM/UIM.

REQUIREMENTS OF § 3636

¶ 14 Graham argues that 36 O.S.2001, § 3636 requires that UM/UIM must be provided in every motor vehicle liability policy unless rejected in writing. He reasons that once an individual is defined as an insured under the contract, as Graham is here by reason of the endorsement to the liability portion of the contract, he is an insured under the UM/UIM portion of the contract. He continues that having chosen to insure Graham and other employees under the liability coverage, § 3636 requires UM/UIM coverage for them. He asserts that this insurance contract is made up of liability and UM/UIM coverages, and that these coverages are not separate contracts.

¶ 15 The only question to be decided is whether 36 O.S.2001, § 3636 requires UM/UIM coverage over every vehicle this commercial auto policy covers for liability. This is a public policy decision based on statute, not strictly on contract. However, Shepard v. Farmers Ins., 1983 OK 103, 678 P.2d 250, reveals that contractual agreements have an impact on the terms of an insurance policy even though insurance policies are issued pursuant to statute.

¶ 16 Shepard involved a certified question from the United States District Court for the Western District of Oklahoma. That question asked whether a clause was unconscionable or against public policy as expressed in Oklahoma's Uninsured Motorist Act. The clause denied coverage for a relative of the insured living in the same household because that relative or the relative's spouse, owned an automobile. The Court held that the exclusionary language was "consistent with sound principles of contract law and . . . neither unconscionable nor violative of the public policy expressed in Oklahoma's Uninsured Motorist Ac...