Martin v. United States Fidelity and Guaranty Co.

• Decision Date: 29 June 1999
• Docket Number: 81408
• Citation: 996 S.W.2d 506
• Parties: This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Donald R. Martin, Appellant, v. United States Fidelity and Guaranty Company, Respondent. Case Number: 81408 Supreme Court of Missouri Handdown Date: 0
• Court: Missouri Supreme Court

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court

Donald R. Martin, Appellant v United States Fidelity and Guaranty Company, Respondent

Case Number: 81408

Supreme Court of Missouri

Handdown Date: 06/29/99

Appeal From: Circuit Court of Cooper County, Hon. Michael L. Midyett

Counsel for Appellant: Wally Bley and Mark D. Pfeiffer

Counsel for Respondent: Kathy M. Wilke

Opinion Summary:

Donald Martin was working at the City of Boonville Waste Water Treatment Plant when a joint pipe flange assembly exploded and injured him. He sued, alleging his supervisor, Melvin Cauthon, negligently installed the joint pipe flange assembly. Boonville's liability insurer, United States Fidelity and Guaranty Company, denied coverage. Martin seeks a declaration that USF&G is obligated to compensate him.

The trial court entered judgment in favor of USF&G and against Martin, ruling he failed to establish Cauthon was insured under the insurance policy, which covers "executive officers." The court concluded Cauthon's duties as the plant's chief operator did not qualify him as an "executive officer" under the policy.

AFFIRMED IN PART; REVERSED IN PART; REMANDED.

Court en banc holds:

1. Under the policy, an "executive officer" is an insured while acting in the scope of his duties as an officer. "Executive officer" in not defined in the policy or Missouri caselaw. The dictionary definitions offer little assistance in defining the term's ordinary meaning. Legal authorities prove no more successful. The USF&G's brief does not provide a definition. The phrase, at least as applied to a municipality, is ambiguous. It could encompass a position such as Cauthon's. The evidence shows the plant's chief operator actively participated in the plant's control, supervision and management. He was, therefore, an executive officer of the city and an insured under the contract. He was performing his duties as such when his allegedly negligent conduct occurred. The trial court misapplied the law in failing to so declare, and its judgment is accordingly reversed and remanded.

2. The policy is a standard form commercial liability policy, which limits recovery to $800,000 per occurrence, but the policy also contains an amendatory endorsement, which modifies the standard form contract and provides that bodily injury recovery is limited to $100,000 per person. USF&G did not waive its claim that the contract was incomplete merely by failing to object when Martin submitted it as an exhibit without the endorsement, since the rest of the contract was simultaneously offered. While USF&G's reference to the endorsement in the contract could have been clearer, its inclusion in the insurance contract received by the city demands that its terms be included in the contract as specified. The $100,000 per person limit is not premised, as Martin suggests, on the alleged tortfeasor being a governmental subdivision. The policy's limits provide coverage up to the limits in section 537.610, RSMo 1986, and distinguish between a per person and a per occurrence limit. USF&G's failure to mention the $100,000 per person endorsement in its denial of coverage letter to Cauthon does not estop it from asserting the limit in this proceeding. The policy's coverage is limited to $100,000 per person for bodily injury. The trial court properly so declared, and its judgment on this point is affirmed.

Opinion Author: Ronnie L. White, Judge

Opinion Vote: AFFIRMED IN PART; REVERSED IN PART; REMANDED. All concur.

Opinion:

This appeal arises from an action seeking a declaration that USF&G, the liability insurer for the City of Boonville, is obligated to compensate appellant, Donald Martin, for the injuries he suffered as a result of the negligent conduct of Melvin Cauthon, his supervisor at the city's waste water treatment plant. The threshold question is whether Mr. Cauthon, the chief operator of the plant, is an "executive officer" within the meaning of USF&G's policy. The trial court concluded that he was not. We find that the term "executive officer," as it is used in this policy, is ambiguous and could encompass a position such as Mr. Cauthon's; we, therefore, hold that Mr. Cauthon was an insured under the contract. The judgment is reversed in part, affirmed in part, and remanded.

I. Factual and Procedural Background

While working at the City of Boonville waste water treatment plant on July 5, 1988, Donald Martin was injured when a joint pipe flange assembly exploded and a portion of the assembly struck him in the head. In June 1993, after recovering $125,000 in workers' compensation, Mr. Martin filed a petition in Cooper County Circuit Court alleging that Melvin Cauthon negligently installed the joint pipe flange assembly that injured Mr. Martin. Mr. Cauthon tendered defense of the case to USF&G, the city's commercial liability insurance carrier. After USF&G denied coverage, Mr. Cauthon filed a motion to dismiss alleging that he was immune from suit because he was a supervisory employee. The motion was denied, and Mr. Martin and Mr. Cauthon then entered into an agreement whereby Mr. Cauthon withdrew his responsive pleadings and Mr. Martin agreed that he would not attempt to collect any judgment against Mr. Cauthon's personal assets.¹ Mr. Martin agreed to collect judgment only against the insurance proceeds from USF&G. On January 8, 1996, a default hearing was held and the trial court entered judgment against Mr. Cauthon in the sum of $800,000.

On April 11, 1996, Mr. Martin filed this declaratory judgment action against USF&G, seeking a declaration that Mr. Cauthon was an insured under the policy. USF&G counterclaimed. Evidence was heard, and the trial court entered judgment in favor of USF&G and against Mr. Martin, ruling that he had failed to establish that Mr. Cauthon was an insured under the terms of the city's commercial general liability insurance policy. Specifically, the court concluded that Mr. Cauthon's duties as chief operator of the plant did not qualify him as an "executive officer" under the policy.

II. "Executive Officer"

Under the commercial general liability policy at issue here, an "executive officer" is an insured while acting in the scope of his duties as an officer, while "employees other than executive officers" are not insureds for injuries caused to co-workers:

1. If you are designated in the declarations as . . . an organization other than a partnership or joint venture, you are insured. Your executive officers and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders.

2. Each of the following is also an insured:

A. Your employees other than your executive officers, but only for acts within the scope of their employment by you. However, none of these employees is an insured for (1) 'bodily injury' or 'personal injury' to you or to a co-employee while in the course of his or her employment.

The phrase "executive officer" is not defined in the policy, and the parties agree that the phrase has not been defined in previous Missouri caselaw. Mr. Martin contends that an executive officer is one "who actively participate[s] in the control, supervision and management" of an enterprise, or that the phrase is ambiguous. At trial, Mr. Martin presented evidence showing that, as chief operator of the plant, Mr. Cauthon was responsible for supervising from two to five employees and that he had input into the hiring and firing of these subordinates but was not ultimately responsible for such decisions. The evidence also showed that Mr. Cauthon was responsible for preparing a budget for the plant, which was submitted to his superior, the Director of Public Works, who submitted the budget to the city council for final approval. Mr. Cauthon also had discretionary spending authority up to $150.00, but to exceed that limit Mr. Cauthon needed permission from the Director of Public Works and the City Administrator. USF&G argues that the term is unambiguous and that the evidence presented is sufficient to demonstrate that Mr. Cauthon was not an executive officer.

In a bench-tried case, the judgment of the trial court will be affirmed "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law."² Whether an insurance policy is ambiguous is a question of law.³ "An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions."⁴ "When policy language is ambiguous, it must be construed against the insurer."⁵ "When interpreting the language of an insurance policy, this Court gives a term its ordinary meaning, unless it plainly appears that a technical meaning was intended. The ordinary meaning of a term is the meaning that the average layperson would reasonably understand."⁶ "To determine the ordinary meaning of a term, this Court consults standard English language dictionaries."⁷

Dictionary definitions offer little assistance in defining what "executive officer" means. Webster's Third New International Dictionary defines "executive officer" as the second in command in a military unit, a definition that is inapplicable here.⁸ An "officer" is "one who holds an office: one who is appointed or elected to serve in a position of trust, authority, or command . . . ."⁹ The adjective "executive" has several meanings possibly appropriate here: "relating to execution or carrying into effect"; "qualified for, concerned with, or relating to the execution of the laws or the conduct of public and national affairs"; "active, effectual, or skillful in managing, directing, or accomplishing."¹⁰ Thus, the ordinary meaning of "executive officer" ...