Hillabrand v. American Family Mut. Ins.
| Decision Date | 12 May 2006 |
| Docket Number | No. S-05-049.,S-05-049. |
| Citation | 713 N.W.2d 494,271 Neb. 585 |
| Parties | Robert S. HILLABRAND, appellant v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, appellee. |
| Court | Nebraska Supreme Court |
Jerome A. Merwald, Omaha, for appellant.
Jane D. Hansen for appellee.
HANNON, Judge, Retired.
The plaintiff was seriously injured in an automobile collision while driving a personal vehicle in the course of the business of a corporation of which he was an owner, officer, director, and employee. The other driver was at fault, and that driver's insurance company paid the $25,000 limits of its liability policy. The company insuring the plaintiff's personal vehicle paid the limits of the $25,000 of underinsured motorist (UIM) coverage on that vehicle. The plaintiff's corporation had several vehicles which were insured by the defendant for UIM coverage with limits of $100,000, and the plaintiff sued the defendant to recover on these policies for the damages he suffered in the collision, praying for judgment of $100,000. The defendant denied coverage.
Both parties filed motions for summary judgment to raise the issue of whether the UIM coverage provisions in the insurance contracts issued by the defendant covered injuries suffered by the plaintiff while he was driving a personal vehicle on company business. The trial court concluded that the defendant's policy did not provide UIM coverage for the plaintiff under the circumstances of this collision, overruled the plaintiff's motion, sustained the defendant's motion, and dismissed the plaintiff's petition. We find there is a split among the jurisdictions on this issue, but we conclude that the majority and better view is that the defendant's policy provided no coverage. Therefore, we affirm.
The plaintiff, Robert S. Hillabrand, was an owner, officer, director, and employee of Hillabrand, Inc., doing business as Parker Heating & Cooling (Parker Heating). At the time of the accident, Robert was driving a vehicle that was owned by him and his wife, and he was making a service call to a customer's home to repair a furnace. The collision occurred when another vehicle crossed the centerline and struck Robert's van head on. As a result of the accident, Robert sustained severe and permanent injuries.
Each of Parker Heating's seven motor vehicles was covered by a policy issued by American Family Mutual Insurance Company (American Family) and provided for UIM coverage up to a limit of $100,000 for injury to any one person and to a limit of $300,000 per accident. The seven policies were identical, and we will therefore refer to the policies as if there was one policy. The parties do not dispute that Robert suffered sufficient damage to be entitled to recovery if the UIM coverage provisions of the policy covered the accident in which he was injured.
In summary, Robert assigns as error that the trial court erred in determining that he was not covered under American Family's insurance policy, in sustaining American Family's motion for summary judgment, and in denying his motion for summary judgment.
Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Andres v. McNeil Co., 270 Neb. 733, 707 N.W.2d 777 (2005).
The issue in this case is whether the insurance policy issued by American Family insuring the motor vehicles owned by Parker Heating provided UIM coverage for Robert, who was an owner, officer, director, and employee of that closely held corporation, when he was injured in the course of the corporation's business while driving a vehicle he owned personally.
We begin with the familiar proposition that an insurance policy is a contract. See Molina v. American Alternative Ins. Corp., 270 Neb. 218, 699 N.W.2d 415 (2005). The interpretation of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the lower court. Allied Mut. Ins. Co. v. City of Lincoln, 269 Neb. 631, 694 N.W.2d 832 (2005).
The UIM coverage endorsement of the policy at issue provided in significant part:
We will pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle. The bodily injury must be sustained by an insured person and must be caused by accident and arise out of the use of the underinsured motor vehicle.
(Quoted language that is in bold-face type throughout this opinion reflects the appearance of the original insurance policy.)
The endorsement defined the term "insured person" as follows:
1. Insured person means:
a. You or a relative.
b. Anyone else occupying your insured car.
c. Anyone, other than a person or organization claiming by right of assignment or subrogation, entitled to recover damages due to bodily injury to you, a relative or another occupant of your insured car.
The general definitions section of the policy stated: "You and your mean the policyholder named in the declarations." The declaration page identified the policyholder and named insured as "Parker Heating & Cooling." The policy defined a relative as "a person living in your household, related to you by blood, marriage or adoption." The UIM coverage endorsement also provided that UIM coverage did not apply for bodily injury to a person "[w]hile occupying, or when struck by, a motor vehicle that is not insured under this policy, if it is owned by you or any resident of your household."
Robert asserts that he was an insured under the UIM coverage endorsement because the policy is ambiguous. Under Nebraska law, a court interpreting a contract, such as an insurance policy, must first determine, as a matter of law, whether the contract is ambiguous. Guerrier v. Mid-Century Ins. Co., 266 Neb. 150, 663 N.W.2d 131 (2003). A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. Gary's Implement v. Bridgeport Tractor Parts, 270 Neb. 286, 702 N.W.2d 355 (2005). When the terms of the contract are clear, a court may not resort to rules of construction, and the terms are to be accorded their plain and ordinary meaning as the ordinary or reasonable person would understand them. Guerrier, supra.
Robert argues that the section of the UIM coverage endorsement defining an insured person as "[y]ou or a relative" is ambiguous. He admits that the definitions of these terms are not ambiguous on the surface, but he argues that they become ambiguous when applied to Parker Heating. Robert asserts that the UIM coverage endorsement applied to "bodily injury which an insured person is legally entitled to recover" and that, of course, Parker Heating cannot suffer bodily injury. He argues, "Hence, if these provisions were to be interpreted literally, there could never be any coverage afforded under the underinsured motorist provisions of this policy." Brief for appellant at 17. In view of the fact that Robert and other Parker Heating employees would clearly be covered when driving the vehicles named in the policy in the course of Parker Heating's business, this assertion is simply incorrect. We realize that under the policy definition of an insured person, no one individual would be covered, but it cannot be said that the policy did not afford any UIM coverage.
Because the policy was issued to a corporation, the policy's terminology which applies only to individuals seems likely to lead to unnecessary litigation. The definitions in the policy, however, leave no doubt as to the meaning of these terms, and the fact that the named insured is a corporation does not change the meaning of these terms. We recognize that some language in the definitions may be surplus when the named insured is a corporation.
The volume of litigation we have found nationally convinces this court that the use of such terminology by insurance companies is problematic. A few courts have adopted a variation of Robert's argument. In support of his position, Robert relies on Hawkeye-Sec. Ins. v. Lambrecht & Sons, 852 P.2d 1317 (Colo.App.1993), and Scott-Pontzer v. Liberty Mut. Fire, 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999).
In Hawkeye-Sec. Ins., the policy at issue named a corporation as the insured. The spouse of the corporation's owner was injured while in a vehicle not owned by the corporation. The policy provided coverage for only the named insured or a family member related to the named insured by blood, marriage, or adoption. Unlike the situation in the case at bar, the opinion in Hawkeye-Sec. Ins. did not mention whether the policy provided any coverage for persons injured while in the insured vehicle. The court found coverage because without such, under the terms as stated in the opinion, the insurance company would have no liability under a provision for which it charged a separate premium.
In General Ins. Co. of America v. Smith, 874 P.2d 412 (Colo.App.1993), another division of the same court refused to follow Hawkeye-Sec. Ins. because the policy in General Ins. Co. of America provided family member coverage only if the named insured was an individual. Under the policy in General Ins. Co. of America, the court also observed, as we observe in this case, that while the corporation could not suffer bodily injury, there would still be liability under the policy because UIM coverage was extended to anyone occupying the insured vehicle. Hence, the General Ins. Co. of America court found that the policy provided coverage to the...
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