Johnson v. Allstate Ins. Co.

• Decision Date: 27 March 1987
• Citation: 505 So.2d 362
• Parties: Henry P. JOHNSON v. ALLSTATE INSURANCE COMPANY. 85-1129.
• Court: Alabama Supreme Court

Page 362

505 So.2d 362

Henry P. JOHNSON v. ALLSTATE INSURANCE COMPANY.

85-1129.

Supreme Court of Alabama.

March 27, 1987.

Henry L. Thompson, Birmingham, for appellant.

Henry E. Simpson and Sally S. Reilly of Lange, Simpson, Robinson & Somerville, Birmingham, for appellee.

HOUSTON, Justice.

Henry P. Johnson appeals from a summary judgment in favor of Allstate Insurance Company.

Johnson was president of a nonprofit corporation, Kiddie Kollege Day Care Center, Inc. ("Kiddie Kollege"), which operated a day care center for children in Birmingham. Sometime in 1980 or 1981, Kiddie Kollege started rendering a daily pick-up service to transport children to and from the day care center. Those parents who wanted their children to use this transportation service signed a form indicating this. Kiddie Kollege charged $1.00 each way for each child transported to and from the center. On September 10, 1984, a van transporting children enrolled in Kiddie Kollege was involved in an accident and several children were injured as a result. Kiddie Kollege had liability insurance with USF & G that covered the children while in Kiddie Kollege's care, whether at the center or being transported in the van. The question involved in this action is whether Johnson has coverage under an Allstate policy.

Sometime in 1978 or 1979, Johnson as an individual obtained insurance for his personal vehicles through Allstate from its agent, Johnny Angry. In 1981, Kiddie Kollege obtained the use of the van involved in the accident. The title to the van was in the State of Alabama. Johnson added this van to his personal Allstate policy.

In a written statement given by Johnson four days after the accident, he said:

"The 1977 Dodge was put on the policy [Johnson's personal policy with Allstate] in 1984. The 1981 Dodge van was put on the policy in 1981. When these vans were added to the policy agent Johnny Angry was not advised that they were going to be used for business purposes nor did he realize Day Care students were being transported in these vans to & from home to the Center. I don't remember if my agent was aware two of the vehicles were owned by the State of Alabama...."

In his deposition, Johnson testified that he did not recall if he ever told Angry the purpose or use to which he planned to put the van. Nor did he recall if he ever told Angry that a charge was being made for transporting children in it. Johnson did not inform Angry that title to the van was held by the State, not by Johnson personally, because that question never came up.

The contract of insurance issued by Allstate to Johnson (the "contract") contained various exclusions from coverage. Part I of the contract, pertaining to liability coverage, provides that Allstate will pay all damages a person insured is legally obligated to pay because of bodily injury or property damage. Specifically excluded from coverage is the following:

"This coverage does not apply to liability for

"(1) your insured auto [which included the van involved in the accident] while used to carry persons or property for a charge, or any auto you are driving while available for hire by the public. This exclusion does not apply to shared expense car pools." (Emphasis added.)

Part VI provides protection against loss to the "auto," including collision, towing, and labor costs and rental reimbursement coverage. However, Part VI provided that these coverages do not apply to "any auto used for the transportation of people or property for a fee," and that "This exclusion does not apply to shared expense car pools."

Johnson filed a declaratory judgment action, alleging that a number of parents and guardians of the children involved in the accident had filed claims for injuries and expenses resulting from the accident; that the policy issued by Allstate provided liability coverage for personal injury and property damage and automobile collision coverage for the van; that Allstate refused to recognize Johnson's "coverage for either collision and or bodily injuries resulting from the accident." Johnson prayed for a judgment "declaring that the defendant [Allstate] has a duty to honor, defend, and satisfy any claims arising out of the accident mentioned herein to the extend [sic] of terms and conditions of the policy."

The complaint was amended to allege fraud. Johnson alleged that Allstate, through Angry, falsely represented that the van was "fully insured by the Defendant [Allstate] to the extent of the policy issued from the date of issuance" and that this representation was relied upon by Johnson in purchasing the policy. Johnson alleged that Allstate "still refuse[s] to honor valid claims presented by" him. The complaint as amended also alleged bad faith: "Allstate has failed and refused to abide by the terms and conditions of its contract and through its conduct has acted in bad faith in providing compensation for plaintiff's losses as agreed upon" in the contract.

On February 18, 1986, Allstate filed a motion for summary judgment. The motion was set for hearing on March 21, 1986. After oral argument on the motion and briefs had been filed in support of and in opposition to the motion, Johnson filed an affidavit. The affidavit flatly contradicted the written statement given by him to Allstate and generally contradicted his deposition testimony. The trial court refused to consider Johnson's affidavit to determine whether it created a genuine issue of material fact which would preclude summary judgment. Rule 56(c), Ala.R.Civ.P., provides that affidavits submitted in opposition to a motion for summary judgment shall be served prior to the day of the hearing on the motion. Johnson had 30 days' notice of the hearing on the motion but did not serve his affidavit on Allstate until after the hearing. Consequently, it was within the circuit court's discretion not to consider the affidavit. Our standard of review is whether the trial court abused its discretion. See Real Coal, Inc. v. Thompson Tractor Co., 379 So.2d 1249 (Ala.1980); State v. Norman Tie & Lumber Co., 393 So.2d 1022 (Ala.Civ.App.1981); 2 C. Lyons, Alabama Rules of Civil Procedure Annot., § 56.3, at 248 (2d ed. 1986). In the absence of a showing of excusable neglect, the trial court does not abuse its discretion when it refuses to accept out-of-time affidavits. Farina v. Mission Investment Trust, 615 F.2d 1068, 1076 (5th Cir.1980); Jones v. Menard, 559 F.2d 1282, 1285 (5th Cir.1977). There was no showing of excusable neglect.

The liability provision of Johnson's Allstate policy excluded liability for the insured auto "while used to carry persons or property for a charge," but the exclusion did not apply to "shared expense car pools."

The collision provision of Johnson's Allstate policy excluded coverage for "any auto used for the transportation of people or property for a fee," but that exclusion "does not apply to shared expense car pools."

The amended complaint alleged that Allstate provided liability coverage for bodily injuries and automobile collision coverage for the van and that Allstate refused to recognize such coverage.

A "car pool" is "a joint arrangement by a group of private automobile owners or drivers in which each in turn drives his car and takes the other passengers." Webster's Third New International Dictionary, Unabridged (1971).

At the time of the accident made the basis of this complaint, the van which was covered under this policy was being used to transport children to and from Johnson's day care center for $1.00 each way. Is liability and collision coverage excluded because of this?

Any ambiguities in an insurance contract must be construed liberally in favor of the insured. United States Fidelity & Guaranty Co. v. Baker, 24 Ala.App. 274, 134 So. 894, cert. denied 223 Ala. 172, 134 So. 896 (1931). A corollary to this rule is that exceptions to coverage must be interpreted as narrowly as possible in order to provide maximum coverage to the insured. However, courts are not at liberty to rewrite policies to provide coverage not intended by the parties. Newman v. St. Paul Fire & Marine Insurance Co., 456 So.2d 40, 41 (Ala.1984). In the absence of statutory provisions to the contrary, insurance companies have the right to limit their liability and write policies with narrow coverage. United States Fidelity & Guaranty Co. v. Bonitz Insulation Co. of Alabama, 424 So.2d 569, 573 (Ala.1982). If there is no ambiguity, courts must enforce insurance contracts as written and cannot defeat express provisions in a policy, including exclusions from coverage, by making a new contract for the parties. Turner v. United States Fidelity & Guaranty Co., 440 So.2d 1026, 1028 (Ala.1983).

We have consistently held that coverage under an insurance policy cannot be enlarged by waiver or estoppel, since these doctrines can have a field of operation only when the subject matter is within the terms of the policy. Mooradian v. Canal Insurance Co., 272 Ala. 373, 379, 130 So.2d 915, 920 (1961). The reason behind this rule is that waiver and estoppel cannot operate to change the terms of a policy so as to cover additional matter. Hanover Fire Insurance Co. of New York v. Salter, 254 Ala. 500, 505, 49 So.2d 193, 197 (1950). We stated in Home Indemnity Co. v. Reed Equipment Co., 381 So.2d 45, 50-51 (Ala.1980):

"Although the doctrine of waiver may extend to practically every ground on which an insurer may deny liability based on forfeiture, the doctrine is not available to bring within the coverage of a policy risks not covered by its terms or risks expressly excluded therefrom...."

This policy has precluded the application of waiver or estoppel to exclusion clauses in insurance contracts in several Alabama cases. See, e.g., Home Indemnity Co. v. Reed Equipment Co., 381 So.2d 45 (Ala.1980); Inland Mutual Insurance Co. v. Hightower, 274 Ala. 52, 145 So.2d 422 (1962) (on rehearing). See also McGee v. Guardian Life Insurance Co., 472 So.2d 993 (Al...