Greer v. Northwestern Nat. Ins. Co.

• Decision Date: 05 January 1984
• Docket Number: 10340-7-I,Nos. 10558-2-,s. 10558-2-
• Citation: 674 P.2d 1257,36 Wn.App. 330
• Parties: John GREER, Appellant, v. NORTHWESTERN NATIONAL INSURANCE COMPANY, Respondent. Lynda PETERSON, Respondent, v. John GREER, Respondent, v. NORTHWESTERN NATIONAL INSURANCE COMPANY, Appellant.
• Court: Washington Court of Appeals

Page 330

36 Wn.App. 330

674 P.2d 1257

John GREER, Appellant, v. NORTHWESTERN NATIONAL INSURANCE COMPANY, Respondent.

Lynda PETERSON, Respondent, v. John GREER, Respondent, v. NORTHWESTERN NATIONAL INSURANCE COMPANY, Appellant.

Nos. 10558-2-I, 10340-7-I.

Court of Appeals of Washington Division 1.

Jan. 5, 1984.

Larry E. Levy, Edward S. Winskill, Davies, Pearson & Anderson, P.S., Tacoma, for John Greer.

Robert P. Karr, Rodney J. Vessels, Philip Talmadge, Karr, Tuttle, Koch, Campbell, Mawer & Morrow, P.S., Seattle, for Northwestern Nat. Ins. Co.

Timothy J. Lowenberg, Schweinler & Lowenberg, Tacoma, for Lynda Peterson.

CALLOW, Judge.

John H. Greer appeals the order of the superior court, Pierce County, entered in Greer v. Northwestern National Insurance Company, cause 298999, which denied his motion for partial summary judgment and which granted Northwestern National Insurance Company a summary judgment of dismissal on the issue of passenger liability coverage of a motorcycle insurance policy. Northwestern appeals a judgment of the superior court, Pierce County, which denied its motion to intervene and set aside the default judgment entered in Peterson v. Greer, cause 288437. Both appeals have been transferred and consolidated for hearing and disposition by this court.

Two issues are presented:

(1) Whether the guest liability exclusionary clause of the insured's motorcycle insurance contract excluded coverage for claims brought by an injured motorcycle passenger against the named insured.

(2) Whether an insurer's motion to intervene in and set aside a default judgment entered against its insured is timely where the insurer knew of the pending litigation but unequivocally refused to defend or appear on behalf of the insured.

On August 29, 1978, John H. Greer, appellant/cross-respondent, was issued a liability coverage insurance policy for his 1978 Kawasaki motorcycle by Northwestern National Insurance Company, cross-appellant/respondent, through his agent, Fleming, Gibson & Wood, Inc. The policy had an added exclusionary clause entitled "Guest Liability Exclusion" which read:

Part A of the policy is amended as follows:

Exclusion 17 is added.

17. For any person while occupying your covered motorcycle. This exclusion does not apply to you.

Thereafter, on May 28, 1979, Greer lost control of his motorcycle and was involved in an accident. Lynda Peterson, respondent, who was riding as a passenger on the back seat was seriously injured. Greer filed a claim and on June 19, 1979, was sent a letter from Marvin L. Matson, a claims representative for Northwestern, informing him that Northwestern had determined that his claim was barred by the "Guest Liability Exclusion."

On July 7, 1979, in response to an inquiry by Greer's attorney, who was representing Greer only for the traffic charges which arose as a result of the accident, the office of the Insurance Commissioner sent Greer a letter informing him that in their opinion Greer had liability coverage with respect to an action brought by a passenger. Northwestern was never informed of this letter.

In November or December of 1979, Greer and Peterson began living together. On January 17, 1980, Peterson filed a lawsuit against Greer in King County Superior Court, Peterson v. Greer, cause 288437. Greer was served a copy of the summons and complaint by Peterson in their mutual residence. Greer contacted an attorney, Vincent L. Gadbow, and was advised to provide Matson with the summons and complaint. On January 18, 1980, Greer met with Matson who refused to accept the summons and complaint on behalf of Northwestern, as per Northwestern's instructions. Greer then returned to Gadbow's office and signed an affidavit of acceptance of service of the summons and complaint. The affidavit was on stationery from the offices of Peterson's attorney and was notarized by Gadbow. On January 21, 1980, Greer was sent another letter by Matson who reaffirmed the lack of coverage for any claim by Peterson and encouraged Greer to obtain legal counsel at his own expense and defend the action.

On March 6, 1980, a Covenant not to Execute on Judgment was executed in which Peterson agreed to look exclusively to Northwestern to satisfy any judgment she might recover against Greer. An order of default was entered against Greer in King County on March 11, 1980, and venue was changed to Pierce County for the presentation of formal proof for the convenience of Peterson and the witnesses. Formal proof was presented on July 18, 1980. Greer appeared pro se and testified briefly. On October 17, 1980, findings of fact, conclusions of law and a judgment in the amount of $555,297.86 for Peterson were entered.

In December of 1980, Greer and Peterson were married. On December 11, 1980, Greer commenced an action in Pierce County Superior Court against Northwestern, Greer v. Northwestern, cause 298999, seeking indemnification for the default judgment and other damages arising out of the allegedly "bad faith" actions of Northwestern in failing to defend. Northwestern's answer was filed on March 5, 1981, and included a counterclaim and a third party complaint against Peterson. Concurrently with the filing of its answer, Northwestern filed a motion to intervene and to set aside the order of default entered March 11, 1980, and the judgment on the default entered October 17, 1980. These motions were denied by the trial court by an order entered April 10, 1981. Northwestern now appeals from that order of the trial court.

On May 1, 1981, Northwestern moved for summary judgment of dismissal in Greer v. Northwestern alleging that Greer's claim was barred by virtue of the "Guest Liability Exclusion" provision. Greer moved for a partial summary judgment on that same issue of liability. The trial court granted Northwestern's motion and denied Greer's motion by an order dated June 5, 1981. Greer now appeals the order of the trial court entered June 5, 1981. The appeals by Northwestern and Greer were subsequently transferred to this division and consolidated for hearing and disposition.

The first issue presented is whether the guest liability exclusionary clause of the insured's motorcycle insurance contract excluded coverage for claims brought by an injured motorcycle passenger against the named insured.

Greer contends that Part A, Exclusion 17 clearly and unambiguously excludes coverage for liability of a passenger, i.e., a passenger on the motorcycle will not have liability coverage for property damage or injuries to others that he or she becomes legally responsible for, but does not exclude liability coverage to the named insured for injuries to a passenger. Moreover, he maintains that even if the exclusion is ambiguous, it must be strictly construed in favor of the insured. Northwestern, however, contends that the insurance contract, read in its entirety, unambiguously excludes from coverage any injury sustained by a passenger unless that passenger is the named insured.

The interpretation of an insurance contract is a question of law. Pacific Indem. Co. v. Bloedel Timberlands Dev., Inc., 28 Wash.App. 466, 468, 624 P.2d 734 (1981). "Unless there is an ambiguity in the terms of a contract and contradictory evidence is introduced to clarify the ambiguity, summary judgment is proper despite a difference between the parties as to the legal effect of the provision in question." Hallauer v. Certain, 19 Wash.App. 372, 375-76, 575 P.2d 732 (1978); see Murray v. Western Pac. Ins. Co., 2 Wash.App. 985, 472 P.2d 611 (1970).

Ambiguous exclusionary clauses in insurance policies generally are construed strictly against the insurer. Puget Sound Nat'l Bank v. St. Paul Fire & Marine Ins. Co., 32 Wash.App. 32, 37, 645 P.2d 1122 (1982); Dairyland Ins. Co. v. Ward, 83 Wash.2d 353, 358, 517 P.2d 966 (1974). However, this general rule cannot be utilized "to rewrite the contract or override the apparent intention of the parties where the language is clear and unambiguous." Milliron v. United Benefit Life Ins. Co., 18 Wash.App. 68, 71, 566 P.2d 582 (1977). "Clear and unambiguous language is not to be modified under the guise of construing the policy." Farmers Ins. Co. v. Miller, 87 Wash.2d 70, 73, 549 P.2d 9 (1976); see Pierce v. Aetna Cas. & Surety Co., 29 Wash.App. 32, 627 P.2d 152 (1981).

The rule of strict construction of exclusions contained in an insurance policy is merely an aid at arriving at the intention of the parties to that policy. It is not intended that the rule should be applied to override the otherwise apparent clear intention of the parties. Handley v. Oakley, 0 Wash.2d 396, 116 P.2d 833 (1941). The intention of the parties to the insurance policies must control concerning the coverage provided.

Aetna Ins. Co. v. Kent, 85 Wash.2d 942, 946, 540 P.2d 1383 (1975). The intention of the parties is to be determined from the language of the contract "viewed against the setting in which it is formed." Continental Volvo, Inc. v. Ross, 17 Wash.App. 316, 317-18, 562 P.2d 1002 (1977); see Morrison v. Anchor Cas. Co., 53 Wash.2d 707, 336 P.2d 869 (1959).

Exclusion 17 when read together with the provisions of the primary policy reads:

We do not provide Liability Coverage:

....

Guest Liability Exclusion

Part A of the policy is amended as follows:

Exclusion 17 is added.

17. For any person while occupying your covered motorcycle. This exclusion does not apply to you.

As defined in the contract, " 'occupying' means in, upon, getting in, on, out or off." There is no dispute that "occupying" refers to a passenger riding on the covered motorcycle.

A liability policy applicable to a motorcycle may exclude liability while carrying a passenger ... and such an exception is effective to avoid liability. Likewise an exclusion in a motorcycle liability policy as to anyone riding on or in or driving the motorcycle is valid and bars recovery by a passenger on the rear seat of the motorcycle.

(Footnotes omitted.) 12A...