Northland Ins. Co. v. Boise's Best Autos & Repairs

• Decision Date: 29 August 1997
• Docket Number: No. 23221,23221
• Parties: NORTHLAND INSURANCE COMPANY, Plaintiff-Appellant, v. BOISE'S BEST AUTOS & REPAIRS and Robert C. Pruitt and Nancy Pruitt, Defendants-Respondents. American States Insurance Company, Plaintiff, v. Janet Rice d/b/a A Vista Pawn, Defendant.
• Court: Idaho Court of Appeals

Page 21

970 P.2d 21

NORTHLAND INSURANCE COMPANY, Plaintiff-Appellant, v. BOISE'S BEST AUTOS & REPAIRS and Robert C. Pruitt and Nancy Pruitt, Defendants-Respondents.

American States Insurance Company, Plaintiff, v. Janet Rice d/b/a A Vista Pawn, Defendant.

No. 23221.

Court of Appeals of Idaho.

Aug. 29, 1997.

Hawley, Troxell, Ennis & Hawley, Boise, for plaintiff-appellant.

Sallaz Law Offices, Chtd., and Sisson & Associates, Boise, for respondent, Boise's Best Auto & Repairs.

Substitute Opinion the court's prior opinion dated July 18, 1997, is hereby withdrawn.

PERRY, Judge.

This case involves a dispute over the interpretation of an insurance policy. The insurer filed this declaratory judgment action, seeking a statement that the policy did not provide coverage for a truck which was involved in an accident. Upon cross-motions for summary judgment, the district court concluded that the insurance policy applied to the truck and determined that the insurer was obligated to defend and indemnify the insured. The insurer appeals asking to review the district court's order. We affirm.

I. FACTS AND PROCEDURE

Roy Rice operated A Vista Pawn (hereinafter "Vista Pawn"). Vista Pawn offered and extended pawn agreements on vehicles, as well as other merchandise. Rice held an automobile dealer's license in his name, doing business as Vista Pawn. Rice determined that for liability and business purposes the sale of the vehicles forfeited to the pawn shop should be handled by a separate entity.

In the summer of 1991, Rice started the process of forming Boise's Best Autos & Repairs to manage the used car sales. Rice took steps toward incorporating Boise's Best and toward transferring his dealer's license to that entity. Boise's Best obtained a garage coverage insurance policy from Northland Insurance Company. Boise's Best began operating the used car lot in July 1991. Vista Pawn and Boise's Best car lot were on opposite ends of the same block on Vista Avenue.

The underlying personal injury suit involved a 1972 Ford truck, previously owned by a truck rental company in Kentucky. The truck was purchased by Vista Pawn from Idaho Auto Auction in April 1989. At that time, Vista Pawn received an unendorsed Kentucky title for the truck. In December 1989, Vista Pawn sold the truck to Blue Mountain Mining Co., Inc. The truck remained in Blue Mountain's possession until January 12, 1991, when Blue Mountain pawned the truck back to Vista Pawn. Blue Mountain defaulted on the loan in February 1991 and, according to Rice, Vista Pawn took ownership of the truck. Although Blue Mountain had applied for an Oregon title prior to the events in this case, the title was not issued until after the accident. At all times relevant to this case, the only known title for the truck was the unendorsed Kentucky title. The pawn slip and Kentucky title for the truck were, at some point, physically transferred from Vista Pawn's office to the office of Boise's Best.

On August 8, 1991, a shipment of matchbooks, which Vista Pawn used for advertising, was being delivered to Vista Pawn. The truck being used to deliver the matchbooks was too large to maneuver into position to unload the matchbooks on Vista Pawn's loading dock. Rice contacted his manager at Boise's Best, Patrick Taylor. Rice instructed Taylor to use the truck at issue in this case to assist in delivering the matchbooks to the loading dock. The matchbooks were transferred to the smaller truck and then taken to Vista Pawn's loading dock. It was during this process that Robert Pruitt was allegedly injured by the truck operated by Taylor.

Robert Pruitt filed suit against Boise's Best, Vista Pawn, Roy and Janet Rice and others. Boise's Best sought indemnification and defense from their insurer, Northland. Vista Pawn was separately insured by American States Insurance Company. Northland accepted service in the underlying action and retained counsel to defend Boise's Best. Northland controlled the defense of the action on behalf of Boise's Best. Northland investigated the claim and determined that coverage under the insurance policy did not extend to the truck involved in the accident. Northland filed this action, seeking a declaration that the policy did not provide coverage for this accident. Northland moved, and Boise's Best cross-moved, for summary judgment. The relevant facts were not in dispute, and the district court had only to decide whether, under the facts as set forth by the parties, coverage was required under the terms of the policy. The district court concluded that Northland was obligated to indemnify and defend Boise's Best in this matter and granted summary judgment for Boise's Best. The district court also concluded that Boise's Best was entitled to an award of attorney fees under I.C. § 41-1839.

Northland appeals, claiming that the insurance policy provides coverage only for "owned autos" and that Boise's Best did not own the truck. Further, Northland submits that the truck was not being used for "garage operations" at the time of the accident and was therefore not within the terms of the policy. Finally, Northland argues that the district court erred in awarding attorney fees under I.C. § 41-1839.

Boise's Best argues that the district court's declaratory judgment was appropriate and that the accident was covered by the insurance policy. Boise's Best also claims that even if the terms of the policy do not encompass this accident, Northland should be estopped from denying coverage.

II. ANALYSIS

We first note that summary judgment under I.R.C.P. 56(c) is proper only when there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. On appeal, we exercise free review in determining whether a genuine issue of material fact exists and whether the moving party is entitled to judgment as a matter of law. Edwards v. Conchemco, Inc., 111 Idaho 851, 852, 727 P.2d 1279, 1280 (Ct.App.1986). When assessing the motion for summary judgment, all controverted facts are to be liberally construed in favor of the nonmoving party. Furthermore, the courts must draw all reasonable inferences in favor of the party resisting the motion. G & M Farms v. Funk Irrigation Co., 119 Idaho 514, 517, 808 P.2d 851, 854 (1991); Sanders v. Kuna Joint School Dist., 125 Idaho 872, 876 P.2d 154 (Ct.App.1994).

A. Owned Autos

The insurance policy issued by Northland extended coverage to "owned autos" only. The first issue is whether the truck was owned by Boise's Best within the meaning of the policy.

Insurance policies are first and foremost a matter of contract between the insurer and the insured. Brinkman v. Aid Ins. Co., 115 Idaho 346, 352, 766 P.2d 1227, 1233 (1988). Our standard of review of a lower court's interpretation of a contract depends on whether the contract was ambiguous. DeLancey v. DeLancey, 110 Idaho 63, 65, 714 P.2d 32, 34 (1986). If a contract is reasonably subject to conflicting interpretations, then it is ambiguous. Id. The question of whether a contract is ambiguous is a question of law, over which we exercise free review. Id. In the absence of ambiguity, the contract must be construed in its plain, ordinary and proper sense, according to the meaning derived from the plain wording of the contract. Juker v. American Livestock Ins. Co., 102 Idaho 644, 645, 637 P.2d 792, 793 (1981). Interpretation of an unambiguous document is a question of law and, therefore, a matter of free review. DeLancey, 110 Idaho at 65, 714 P.2d at 34. If the contract is ambiguous, the reviewing court should consider extrinsic matters such as the intent of the parties, the purpose sought to be accomplished, the subject matter of the contract and circumstances surrounding the issuance. Bonner County v. Panhandle Rodeo Association, Inc. 101 Idaho 772, 776, 620 P.2d 1102, 1106 (1980). Interpretation of an ambiguous contract presents a question of fact, and we will therefore defer to the findings of the trial court so long as they are supported by substantial competent evidence. DeLancey, 110 Idaho at 65, 714 P.2d at 34; Staggie v. Idaho Falls Consol. Hosps., Inc., 110 Idaho 349, 351, 715 P.2d 1019, 1021 (Ct.App.1986).

The meaning of "owned autos" as used in the insurance policy is simply defined as "only those autos you own." In deciding what the term "owned autos" meant under this contract, the district court rejected the narrow definition of ownership offered by Northland, which was based solely on possession of a valid certificate of title, and concluded that such a definition applied primarily to title disputes. The district court then reasoned that ownership, for purposes of financial responsibility, was a much broader concept.

To decide whether there was coverage in this case, the district court determined that it was the intent of the parties for the truck to qualify as an auto owned by Boise's Best. The district court noted that the truck was maintained on the used car lot and carried dealer plates assigned to Boise's Best when operating on the highway. Thus, the district court determined that a certificate of title was not necessary for ownership from a standpoint of insurance and that the indicia of ownership held by Boise's Best was sufficient to precipitate insurance coverage under the policy.

On appeal, Northland argues that the district court erred by determining that the vehicle was an "owned auto" when no valid certificate of title was held by Boise's Best. Northland notes that insurance contracts are governed by the statutory and decisional law in force at the time the contract is entered into, and the law becomes a part of the contract. See Smith v. Idaho Hosp. Serv., Inc., 89 Idaho 499, 503, 406 P.2d 696, 698 (1965). Northland claims that the applicable Idaho statutes define ownership as a function of title and that an individual has no interest in a vehicle until a certificate of title to that vehicle is issued in that individual's name.

See I.C. §§...