National Union Fire Ins. Co. of Pittsburgh v. Dixon

• Decision Date: 05 May 2005
• Docket Number: No. 30398.,30398.
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A., Plaintiff-Respondent, v. Douglas Grant DIXON, Defendant-Appellant, and Clifford D. Barnett, Debra S. Barnett, Donald E. Olson and Dianna C. Olson, Defendants.
• Court: Idaho Supreme Court

112 P.3d 825

141 Idaho 537

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A., Plaintiff-Respondent, v. Douglas Grant DIXON, Defendant-Appellant, and Clifford D. Barnett, Debra S. Barnett, Donald E. Olson and Dianna C. Olson, Defendants.

No. 30398.

Supreme Court of Idaho, Boise, February 2005 Term.

May 5, 2005.

Nicholas Theodore Bokides, Weiser; Aherin, Rice & Anegon, Lewiston, for appellant. Darrel W. Aherin argued.

Jones, Gledhill, Hess, Andrews, Fuhrman, Bradbury & Eiden, P.A., Boise, for respondent. Scott D. Hess argued.

BURDICK, Justice.

This case involves the interpretation of an insurance contract. While driving a company vehicle insured by National Union Fire Insurance Company of Pittsburgh, PA (National Union), Douglas Dixon hit and killed three people. National Union filed a declaratory action in the district court alleging it had no duty to defend or indemnify Dixon in connection with the underlying action (a wrongful death suit) because Dixon had no rights under the insurance contract. Upon motion for summary judgment, the district court found and concluded that the material facts were not disputed in that Dixon was bar hopping immediately prior to the accident and his conduct did not fall within the language of the insurance policy which limited coverage to employees acting within their duties. Dixon appeals the district court's finding that he was not acting within his duties at the time of the accident. Additionally, Dixon argues that the insurance policy provisions are ambiguous and illusory, therefore the insurance company should defend or indemnify him in the underlying action. We affirm the district court's order granting summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Anderson & Wood Construction Co, (Anderson & Wood) employed Dixon from January 1994 through October 1998. As a foreman, Dixon was required to work for months at a time at job sites located a significant distance from his residence near New Meadows, Idaho. On all but one work assignment, Dixon's employer provided him with a company vehicle. Dixon had the company vehicle continuously in his possession for approximately fourteen months before the accident.

On October 6, 1996, the day before Dixon was scheduled to leave for a job site in Washington, he went steelhead fishing taking his own vehicle. On that same day, Dixon consumed approximately five beers, four of which he consumed within a two hour and forty-five minute period before returning home. Dixon arrived home around 7:45 pm. Between ten and twenty minutes later, Dixon drove the company vehicle into New Meadows to refuel so he could leave the next day for the Washington job site.

After fueling the vehicle, Dixon stopped at two bars where he drank beer and visited with friends. Thereafter, Dixon walked to a friend's house before driving towards his home approximately an hour and a half later. During this time Dixon consumed several more beers and became intoxicated. On his way home Dixon failed to stop at a stop sign and as a result he struck another vehicle, killing all three occupants. Subsequently, Dixon pleaded guilty and was sentenced to three counts of felony vehicular manslaughter.

Dixon's employer maintained written company policies prohibiting alcohol and drug use while on the job or with the use of company vehicles. Dixon was aware of the written policies. However, there are factual allegations that Anderson & Wood's owners and managers continuously disregarded its written policy against operating company vehicles after consuming alcohol, as well as other substance abuse related policies.

After the accident, Dixon continued to be employed by Anderson & Wood. Approximately eight days after the accident, Anderson & Wood notified Dixon in writing that he could no longer use a company vehicle to go to and from work and could not use a company vehicle for personal use, but still allowed him to operate a company vehicle while on the job at the company's Washington project. After the Washington job was completed, Dixon's employer prohibited him from operating their vehicles.

National Union and Anderson & Wood entered into a contract effective June 1, 1996 to June 1, 1997. At issue in this case is an umbrella policy, not the minimum insurance coverage required by I.C. § 49-117(18). The declarations page of the National Union Policy identifies the named insured as "Anderson & Wood Construction Co., Inc." The contract provides in pertinent part as follows:

I. Coverage

We will pay on behalf of the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay by reason of liability imposed by law or assumed by the Insured under an Insured Contract because of Bodily Injury or Advertising Injury that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world. The amount we will pay for damages is limited as described in Insuring Agreement III, Limits of Insurance.

. . . .

IV. Definitions

. . . .

E. Insured means each of the following to the extent set forth:

. . . .

5. Any of your partners, executive officers, directors, stockholders or employees but only while acting within their duties.

. . . .

8. Any person (other than your partners, executive officers, directors, stockholders, or employees) or organization with respect to any auto owned by you, loaned to you or hired by you or on your behalf and used with your permission.

National Union filed this declaratory action on May 21, 2003, alleging it had no duty to defend or indemnify Dixon in connection with the underlying action (the wrongful death suit) because Dixon had no rights under the insurance contract. The district court agreed and found that Dixon was not acting within his duties at the time of the accident. Dixon timely appealed.

ISSUES ON APPEAL

I. Did the district court err in granting summary judgment finding that Dixon was not acting within his duties when the accident occurred?

II. Is the National Union insurance policy illusory?

III. Is National Union entitled to attorney fees and costs on appeal?

STANDARD OF REVIEW

Summary judgment shall be rendered if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. I.R.C.P. 56(c). On review this Court construes the record in the light most favorable to the party opposing the motion, drawing all reasonable inferences and conclusions in that party's favor. Hardy v. McGill, 137 Idaho 280, 285, 47 P.3d 1250, 1255 (2002). Where there are no disputed issues of material fact, only a question of law remains, and this Court exercises free review. Construction Management Systems, Inc. v. Assurance Co. of America, 135 Idaho 680, 682, 23 P.3d 142, 144 (2001).

ANALYSIS

I. DIXON WAS NOT ACTING WITHIN HIS DUTIES WHEN THE ACCIDENT OCCURRED AND THEREFORE THE DISTRICT COURT DID NOT ERR IN GRANTING SUMMARY JUDGMENT.

This controversy concerns the interpretation of National Union's insurance policy and whether, given the set of facts in this case, it extends coverage to Dixon. If the insurance policy is clear and unambiguous, the determination of the insurance policy's meaning and legal effect are questions of law. City of Idaho Falls v. Home Indem. Co., 126 Idaho 604, 607, 888 P.2d 383, 386 (1995). The meaning of the insurance policy and the intent of the parties must be determined from the plain meaning of the insurance policy's own words. Id. This Court is being asked to determine if the definition of insured as defined in National Union's insurance policy is ambiguous. The phrase in dispute is "[a]ny . . . employees but only while acting within their duties."

Just last year a Pennsylvania court had the opportunity to interpret this exact language involving the respondent herein, National Union. The Pennsylvania court recognized that National Union did not define the term or the phrase "acting within their duties" in the policy. Leggett v. National Union Fire Insurance Co. of Pittsburgh, Pa., 844 A.2d 575, 577-78 (Pa.2004). The Leggett court rejected National Union's argument that the phrase was synonymous with the term "course and scope of employment." Id. at 578. The court stated that if the insurance company wanted "an exclusion defined under the term of art `within the course and scope of employment,' they would have used the term `within the course and scope of employment' rather than saying the insured had to be `acting within [his/her] duties.'" Id. The court also declined National Union's argument for a narrower interpretation of the phrase "acting within their duties." The Leggett court used the common ordinary meaning of the term as defined in WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY (1990) and BLACK'S LAW DICTIONARY. Id. at 578.

This Court has stated that "[w]ords in an insurance policy that have a settled legal meaning are not ambiguous merely because the policy does not contain a definition." North Pacific Ins. Co. v. Mai, 130 Idaho 251, 253, 939 P.2d 570, 572 (1997). Moreover, "not every word and phrase in an insurance contract needs to be defined in the contract." Perry v. Farm Bureau Mut. Ins. Co. of Idaho, 130 Idaho 100, 102, 936 P.2d 1342, 1344 (Ct.App.1997). "Where the policy language is clear and unambiguous, however, coverage must be determined in accordance with the plain meaning of the words used." Mutual of Enumclaw Ins. Co. v. Roberts, 128 Idaho 232, 235, 912 P.2d 119, 122 (1996). Duty is defined as "obligatory tasks, conduct, service, or functions that arise from one's position (as in life or in a group)." MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY 360 (10th ed.1993). The latest version of BLACK'S LAW DICTIONARY 543 (8th ed.2004), defines "duty" as "[a] legal obligation that is owed or due to another and that needs to be satisfied; an obligation for which somebody else has a...