Hager v. American West Ins. Co.

• Decision Date: 11 October 1989
• Docket Number: No. CV-88-185-GF.,CV-88-185-GF.
• Citation: 732 F. Supp. 1072
• Court: U.S. District Court — District of Montana
• Parties: Colleen L. HAGER, Plaintiff, v. AMERICAN WEST INSURANCE COMPANY (formerly known as Implement Dealers Mutual Insurance Company), Defendant.

732 F. Supp. 1072

Colleen L. HAGER, Plaintiff, v. AMERICAN WEST INSURANCE COMPANY (formerly known as Implement Dealers Mutual Insurance Company), Defendant.

No. CV-88-185-GF.

United States District Court, D. Montana, Great Falls Division.

October 11, 1989.

Michael W. Cotter, Cotter & Cotter, Great Falls, Mont., for plaintiff.

Paul Haffeman and Edward W. Borer, Cure, Borer & Davis, Great Falls, Mont., for defendant.

MEMORANDUM AND ORDER

HATFIELD, Chief Judge.

The plaintiff, Colleen Hager, instituted the present diversity action seeking compensatory damages under the Uninsured Motorist provision of a general liability automobile insurance policy issued by the defendant, American West Insurance Company ("American West") to the closely held family corporation, Hager's, Inc. Hager seeks coverage under the uninsured motorist provision of the policy for injuries she sustained after being struck by a hit and run vehicle as she was walking in a parking lot in Bozeman, Montana. The matter is presently before the court on the parties' cross motions for summary judgment.

In denying coverage to Hager, American West maintains Hager was neither a named insured under the policy, nor was she entitled to coverage as a family member of Hager's, Inc., the policy's sole named insured. Additionally, American West, contending that, at best, Hager was a permissive user of a covered vehicle at some point in time during the term of the subject policy, submits that as a non-insured under the policy, Hager cannot be afforded coverage under the uninsured motorist provision in that she was a pedestrian and not "an occupant" of a covered vehicle at the time of the mishap.

The determinative issue is whether or not Hager was an insured within the meaning of the subject policy. Because the court finds the answer to this query to be in the affirmative, Hager is clearly entitled to coverage under the uninsured motorist provisions of the policy. This point can hardly be disputed by the defendant in light of the Montana Supreme Court's decision in Jacobson v. Implement Dealers Mutual Ins. Co., 196 Mont. 542, 640 P.2d 908, 911 (1982).¹ Hager concedes that she was not a "named" insured under the subject policy, since the policy was issued to Hager's, Inc., a corporate entity. Hager contends, however, that even though she is not a named insured under the subject policy, as a minority shareholder of Hager's, Inc., she is an additional insured under the liability provisions of the policy and is covered as an insured under the uninsured motorist provision of the policy. In support of her position, Hager emphasizes the undisputed fact that she consistently paid a premium to insure a vehicle she owned under the subject policy.

The operative provisions of pertinence to the issue sub judice are as follows:

First, at Part 1, Words and Phrases, "insured" is defined:

"Insured" means any person or organization qualifying as an insured in the "Who is Insured" section of the applicable insurance.

Second, the "Who is Insured" section of the policy defines insured as follows:

1. You are an insured for any covered auto.

2. Anyone else is an insured while using with your permission a covered auto you own, hire or borrow....

Third, the uninsured motorist provisions define an insured as follows:

1. You or any family member.

2. Anyone else occupying a covered auto or a temporary substitute for a covered auto.

The thrust of the defendant's position is that Hager is not the named insured or a "family member" of the named insured, i.e., Hager's, Inc., and consequently, is not entitled to coverage under the uninsured motorist provisions of the policy. The defendant acknowledges that Hager is a shareholder in Hager's, Inc., a closely held family corporation, but reasons a priori from the fact that Hager's, Inc., is a corporate entity, that it cannot have any "family member" in the literal sense.

The provisions of the subject policy affording protection against uninsured motorists define the term "insured" in the acknowledged standard form to mean the named insured, and any relative of the named insured while a resident in the same household as the insured. The definition also includes any other person while occupying an insured vehicle. The first of the two classes of insured claimants consists of the named insured, and any member of the named insured residing in that individual's household. As noted, Jacobson establishes that members of the first class need not be occupying an automobile in order to be afforded coverage under the uninsured motorist provisions. Jacobson, 640 P.2d at 911-912. See also, Lopez v. Foundation Reserve Ins. Co., 98 N.Mex. 166, 646 P.2d 1230 (1982). Any attempt to exclude persons falling within the purview of the class created by the provisions of the policy are appropriately rejected in favor of a construction of policy provisions consistent with the remedial nature of uninsured motorist statutes. See, e.g., Hulsey v. American Family Mutual Ins. Co., 142 Wis.2d 639, 419 N.W.2d 288 (1987); Cadillac Mutual Ins. Co. v. Bell, 50 Mich.App. 144, 212 N.W.2d 816 (1973); California Casualty Indemnity Exchange v. Stevens, 5 Cal. App.3d 304, 85 Cal.Rptr. 82 (1970). This conclusion is consistent with the generally accepted principle that the uninsured motorist coverage of an insurance policy may not limit the class of persons covered under the endorsement to a group smaller than that covered under the liability provisions of the same policy. See, e.g., Girrens v. Farm Bureau Mutual Ins. Co., 238 Kan. 670, 715 P.2d 389 (1986); Welch by Richards v. State Farm Mutual Auto Ins. Co., 122 Wis.2d 172, 361 N.W.2d 680 (1985); State Farm Mutual Auto Ins. Co. v. Jackson, 462 So.2d 346 (Ala.1984); Abshere v. Prudential Ins. Co., 38 Wash.App. 1, 683 P.2d 625 (Wash.Ct.App.1984); Anderson v. State Farm Mutual Auto Ins. Co., 471 N.E.2d 1170 (Ind.App.1984).²

With the foregoing general observations in mind, the court turns to consider the present situation where a corporate entity is the named insured under an automobile liability policy providing uninsured motorist coverage. At first blush, it would appear reasonable to accept the proposition offered by the defendant to the effect that where a corporate entity is the named insured, a particular individual would be covered under the uninsured motorist provisions of a liability policy only if separately named as an insured. In fact, as the defendant accurately notes, a number of courts have accepted this proposition. See, e.g., Berry v. Aetna Casualty and Ins. Co., 607 F.Supp. 397 (S.D.Miss.1985); General Ins. Co. of America v. Icelandic Builders, Inc., 24 Wash.App. 656, 604 P.2d 966 (1979). The court has no quarrel with the general rule that the employees or officers of a corporate entity are not entitled to claim coverage under an uninsured...