Nationwide Mut. Ins. Co. v. Thomas, 1101332.

Citation103 So.3d 795
Decision Date24 August 2012
Docket Number1101332.
PartiesNATIONWIDE MUTUAL INSURANCE COMPANY v. Scott THOMAS, Kenneth Gene Gooden, Jr., and Lori Touart Thomas.
CourtSupreme Court of Alabama

OPINION TEXT STARTS HERE

John W. Johnson and W. Steven Nichols of Christian & Small LLP, Birmingham, for appellant.

Larry Morris and Jeremy Knowles of Morris, Haynes & Hornsby, Alexander City, for appellees Scott Thomas and Lori Touart Thomas.

MAIN, Justice.

The United States District Court for the Northern District of Alabama, Eastern Division (“the district court), acting pursuant to Rule 18, Ala. R.App. P., has certified two questions of first impression to this Court. This Court accepted and now answers those questions.

I. Certified Questions

The two questions certified by the district court are as follows:

“Whether a coverage exclusion clause in an automobile liability [insurance policy] which provides: ‘This coverage does not apply to: use of any motor vehicle to carry persons or property for a fee’ is enforceable as to an insured who delivers newspapers for an employer and is compensated by the employer based on the number of newspapers delivered, regardless of the location of customers. A secondary issue is whether said exclusion applies when the subject accident takes place after the delivery of the last paper, but while the insured is driving back to his point of origin or some other location.1

“__________

1 The initial issue involves construction and applicability of the terms ‘carry,’ ‘property,’ and ‘fee.’ Also, whether the provision is ambiguous as a matter of law.”

The district court noted that it did not certify issues “related to (1) waiver and estoppel; (2) the enforceability of the ‘duty to notify’ clauses; or the relevance of Alabama mandatory insurance or uninsured-motorists statutes because it did not view any of these issues as controlling.

II. Factual Background and Procedural History

The district court set forth the following factual background in its certificate:

Facts and Circumstances Out of Which the Question(s) Arise

“The facts as stated are those found by the court after a non-jury trial held on June 20, 2011.

“This action arises out of a dispute between [Nationwide Mutual Insurance Company (‘Nationwide’) ] and the defendants as to insurance coverage. [Scott Thomas and Lori Touart Thomas (‘the Thomas defendants') ] were injured as the result of an automobile accident which occurred at approximately 5:30 a.m. on October 12, 2009. Lori Thomas was the driver of one of the vehicles. The Thomas defendants have recovered a judgment in state court against defendant [Kenneth Gene] Gooden, [Jr.,] the driver of the other vehicle. The dispute involves whether the Thomas defendants are entitled to recover from [Nationwide] under the provisions of a Nationwide automobile liability insurance policy naming Gooden as an insured. The subject policy was issued on January 18, 2008, based on an application dated and submitted by Gooden on December 21, 2007.2

“The pertinent provisions in the subject policy and the application are the following:

“ ‘POLICY

“ ‘1. Coverage Exclusions....

“ ‘This coverage does not apply to: Use of any motor vehicle to carry persons or property for a fee.

“ ‘2. General Policy Conditions....

“ ‘We, you, and anyone insured by this policy must do certain things in order for the provisions of the policy to apply. The following are policy conditions:

“ ‘1. HOW YOUR POLICY MAY BE CHANGED....

“ ‘1(e) The policyholder has a duty to notify us as soon as possible of any change which may affect the premium or the risk under this policy.... This includes, but is not limited to, changes in ... (3) use of the insured vehicles. (Emphasis added [by the district court].)

“ ‘DECEMBER 21, 2007, APPLICATION

‘I certify that the vehicles listed for coverage on this policy are not used for commercial use, the pick up and delivery of goods or people, which includes but is not limited to pizza, mail, newspapers[,] taxi, debris/snow removal, for hire or fee.’ 3

“At the time of the December 21, 2007, application, defendant Gooden's sole employment was with a Honda supplier named New South Express. He was not delivering newspapers or otherwise engaging in any commercial activity other than his job with New South. The December 21, 2007, application and attachments to it were the only documents signed by Gooden prior to the date of the accident. Gooden did not make any misrepresentations in the application or its attachments.4

“In February 2009, while continuing to work full time for New South Express, Gooden began the part-time job of delivering the Talladega Daily or Sylacauga Daily newspaper(s) about one to two hours per night. Neither Gooden nor his wife, another named insured, ever notified Nationwide that he had begun delivering newspapers.

“The subject policy came up for further renewal on about July 18, 2009.5 The only renewal notice which [Nationwide] sent to Gooden was basically a statement of the premium due.6 At the time of the July 18, 2009, renewal, Gooden was still delivering the Talladega/Sylacauga newspapers and was still working full-time for New South Express.

“In August 2009, Gooden began delivering newspapers for The Birmingham News. At about the same time, he terminated his employment with New South Express, and the Birmingham News delivery became his only job. No notice of the Birmingham News newspaper delivery was given to Nationwide prior to the accident.

“On October 9, 2009, Gooden's second child was born. There is a reasonable inference that this event affected Gooden's normal newspaper delivery situation. This event, coupled with Gooden's not being able to remember anything from Sunday night October 11, 2009 to Wednesday October 14, 2009, creates difficulty with regard to determining the circumstances immediately prior to the accident. Among the circumstances were:

(1) Gooden planned on October 11, 2009, to pick his wife up at the hospital on the morning of October 12, 2009.

(2) Unlike the usual circumstance when his wife or someone else stayed with Gooden's older child and took him to day care at 6:00 a.m., Gooden carried the child with him on October 12, 2009, when he was delivering newspapers and the child was with Gooden at the time of the accident. This change may have affected the timing of the deliveries. Gooden has no explanation as to why he would have been at the location of the accident at the time of the accident other than in connection with newspaper deliveries.

“The accident occurred on Houston Road. Ms. Thomas was heading north on Houston Road and Gooden was heading south on Houston Road, both near the intersection of Houston Road and McCedar Road. Ms. Thomas testified that the accident occurred south of the McCedar Road intersection.

“There is no direct evidence as to why Gooden was on the wrong side of the road as he approached Ms. Thomas' vehicle. A possible inference is that he had started to turn left to go to Sparrow Lane where he had customers. Any determination by the court as to whether deliveries had been completed would be primarily speculative.

“At the time of the accident, Gooden was headed in a direction away from both his home and the day care center his child attended.

“The parties have agreed that the only factual dispute is whether Gooden was still in the process of delivering newspapers at the time of the accident. He was either still in the process of delivering newspapers or he had completed the delivery and was proceeding back home, to the day care center, or to another location.7 There is no question that Houston Road and Sparrow Lane were on Gooden's delivery route.

“On October 13, 2009, a representative of Nationwide took a photograph of the inside of Gooden's vehicle which revealed approximately 15 Birmingham News newspapers dated October 12, 2009. Gooden normally carried 129 newspapers plus some excess newspapers to cover unexpected circumstances. Gooden testified, without rebuttal, that he could not think of any reason he would have been out at 5:30 a.m. on October 12, 2009 other than in connection with delivering newspapers. There was no evidence at trial as to the location of the hospital. The newspapers were picked up at a location north of the insured's house and, contrary to some suggestions in argument at trial, deliveriesbegan substantially north of McCedar Road.

“The insured's Birmingham News supervisor testified that if the insured was in the area of the accident he would have completed his delivery route. This is perhaps inconsistent with the fact of there being customers on Houston Road and Sparrow Lane. Gooden testified that he normally would have been to Houston Road by 1:00 to 1:30 a.m. and that he knew of no reason for him to be there at 5:30 a.m. and had ‘no idea’ why he was. Gooden's supervisor offered testimony that she did not receive any calls about missed deliveries on October 12 and that would normally occur if there had been such misses. Gooden testified that he was usually back home by 5:30 a.m. Gooden picked up his newspapers at a spot north of his house. The accident location was substantially south of his house. Gooden has testified, and the court believes, that he never read the subject policy. Gooden was paid by the Birmingham News based upon the number of newspapers he delivered regardless of the location of the customers.

Positions of the Parties
[Nationwide's] Positions

“1. There is no coverage because the policy provides that coverage is excluded because the policy states, ‘This coverage does not apply to: Use of any motor vehicle to carry persons or property for a fee.’ Further, the exclusion applies even if actual delivery has been concluded and Gooden was returning home or going elsewhere.

“2. There is no coverage because the insured did not notify [Nationwide] ‘as soon as possible of any change which may affect the premium or risk under this policy. This includes, but is not limited to, changes in use of the insured...

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