Langer v. U.S. Fidelity & Guar. Co.

• Decision Date: 20 December 1988
• Citation: 552 A.2d 20
• Parties: Tammy A. LANGER v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: Maine Supreme Court

Page 20

552 A.2d 20

Tammy A. LANGER v. UNITED STATES FIDELITY & GUARANTY CO.

Supreme Judicial Court of Maine.

Argued Nov. 16, 1988.

Decided Dec. 20, 1988.

Arlyn H. Weeks (orally), J. Michael Conley, Conley, Haley & O'Neil, Bath, for plaintiff.

Jonathan A. Piper (orally), Preti, Flaherty, Beliveau & Pachios, Portland, for defendant.

Before McKUSICK, C.J., and ROBERTS, WATHEN, GLASSMAN, CLIFFORD and COLLINS, JJ.

McKUSICK, Chief Justice.

Here on report, this case presents a question novel to us and apparently to all other jurisdictions: whether the "family coverage" provision of the "business auto policy" issued to the State of Maine on its fleet of motor vehicles covers a ward of the State injured in an accident involving no state employee, no state vehicle, and no state supervision. We conclude that the language of the policy issued by United States Fidelity & Guaranty Company (USF & G) cannot reasonably be construed to grant such coverage.

The Superior Court (Sagadahoc County; Chandler, J.) has reported this case on agreed facts pursuant to M.R.Civ.P. 72(b). Although the court has reported a set of questions of law, a Rule 72(b) report brings up to us the entire action and our duty is to "determine" the whole case, as if we were sitting at nisi prius, on the basis of the stipulated facts and the reasonable inferences flowing therefrom. See Buck v. Kilgore, 298 A.2d 107, 108 (Me.1972); Vachon v. Town of Lisbon, 295 A.2d 255, 258-59 (Me.1972).

On August 29, 1985, Tammy Langer was seriously injured when the motorcycle on which she was a passenger collided with a Volkswagen Rabbit in Woolwich. She was then seventeen years old and was a ward of the State residing in the Military and Naval Children's Home, a State-operated institution located in Bath. At the time of the accident, she was visiting her friend, the operator of the motorcycle. The two operators were jointly at fault in the accident, but their available insurance did not fully compensate Langer for her injuries: the motorcycle was uninsured and the Volkswagen was insured only for the statutory minimum of $20,000 per person, 29 M.R.S.A. § 787(1) (1978).

After settling with the Volkswagen's insurer for the $20,000 policy limit, Langer filed a claim with USF & G, the liability insurer on all motor vehicles owned by the State, under the policy endorsements entitling "You [i.e., the State] or any family member" to recover up to $40,000 for personal injuries caused by uninsured or underinsured motorists, and up to $1,000 for medical expenses arising from any automobile accidents. ¹ For purposes of both medical payments and uninsured motorist coverage, the State's insurance policy defines a "family member" to be "a person related to you, by blood, marriage or adoption who is a resident of your household, including a ward or foster child." (Boldface in original) Thus a claimant under the family coverage provisions must satisfy two tests: both relationship to the policyholder and membership in the policyholder's household. It would distort the meaning of the "ward or foster child" clause to read it as conferring automatic "family member" status because that reading would give substantially greater protection to wards and foster children than the policy gives to biological and adopted children. The additional test the biological or adopted child must meet to be covered is not dependency, which is inherent in the concept of wardship, but rather residence, which is not. To be covered, Langer must therefore demonstrate that, in addition to being a ward of the State, she was a "resident of [the State's] household" within the meaning of the policy.

Langer would have us answer a different question. Rather than focusing directly on whether there is such a thing as "the State's household," she argues that she is covered because the State is the head of her household. In support of this subtle expansion of the scope of coverage, she invokes the canon that standard form insurance policies, being drafted by the insurer, must be construed to meet the reasonable expectations of the policyholder and that language may be interpreted as limiting coverage only if it would be so understood by an ordinary person in the shoes of the policyholder. See Gross v. Green Mountain Ins. Co., 506 A.2d 1139, 1141 (Me.1986); Baybutt Constr. Corp. v. Commercial Union Ins. Co., 455 A.2d 914, 921 (Me.1983).

"The rule of strict construction," however, "is a rule of last resort which must not be permitted to frustrate the intention the parties have expressed, if that can otherwise be ascertained." Tinker v. Continental Ins. Co., 410 A.2d 550, 554 (Me.1980). It is important to remember that the State of Maine, which is not a party to this proceeding, is the policyholder; it was the State that contracted for and paid the premiums required for whatever risk is covered by USF & G. We see no sign that the State as the policyholder had any expectation that persons in Langer's situation would be covered, let alone that such an expectation would be reasonable in light of the language of the policy. We see no sign that the State understood it was incurring the cost of insuring against the open-ended risk urged by Langer.

If there is ambiguity in a given passage of a contract, the intention of the parties is to be ascertained by examining the instrument as a whole. Gross v. Green Mountain Ins. Co., 506 A.2d at 1141; Baybutt Constr. Corp. v. Commercial Union Ins. Co., 455 A.2d at 921. In the case at bar, the instrument as a whole is styled a "business auto policy," and the policyholder's business is designated as "State Government." This language by itself is hardly dispositive, ² but it provides some insight into the intent of the contracting parties. Our conclusion that the parties never intended to provide blanket coverage for all wards of the State, at all times and places, is reinforced by the language of the family coverage clause itself, which is altogether inappropriate to the task to which Langer seeks to put it. The...