Odom v. Farmers Ins. Co. of Arizona, No. 2 CA-CV 2007-0036.

• Court: Court of Appeals of Arizona
• Writing for the Court: Pelander
• Citation: 216 Ariz. 530,169 P.3d 120
• Parties: Jeffrey ODOM, a single man, Plaintiff/Appellant, v. FARMERS INSURANCE COMPANY OF ARIZONA, an Arizona corporation, Defendant/Appellee.
• Decision Date: 29 October 2007
• Docket Number: No. 2 CA-CV 2007-0036.

169 P.3d 120 216 Ariz. 530 Jeffrey ODOM, a single man, Plaintiff/Appellant,
v.
FARMERS INSURANCE COMPANY OF ARIZONA, an Arizona corporation, Defendant/Appellee. No. 2 CA-CV 2007-0036. Court of Appeals of Arizona, Division 2, Department A. October 29, 2007.

[169 P.3d 122]

Mesch Clark & Rothschild, P.C. By Douglas H. Clark and Paul A. Loucks, Tucson, Attorneys for Plaintiff/Appellant.

Jones, Skelton & Hochuli, P.L.C. By Donald L. Myles, Jr. and Randall H. Warner, Phoenix, Attorneys for Defendant/Appellee.

OPINION

PELANDER, Chief Judge.

¶ 1 In this motor vehicle insurance coverage dispute, plaintiff/appellant Jeffrey Odom appeals from the trial court's summary judgment entered in favor of defendant/appellee Farmers Insurance Company of Arizona. Because the parties agree no genuine issues of material fact exist and because the trial court correctly applied the law, we affirm.

Background

¶ 2 The pertinent facts are undisputed. In July 2001, Farmers' insured, Jay Good, rented a vehicle for ten days from a car rental agency in Oregon. Good was the only authorized driver under the rental agreement. Nonetheless, during the rental period, Good loaned the car to Roman Orona, who drove it after having consumed alcoholic beverages and crashed into a house in Oregon. Orona's passenger, Odom, was seriously injured in the collision.

¶ 3 At the time of the accident, Good was insured under a personal automobile insurance policy issued by Farmers in Arizona.¹ The policy specifically describes only Good's personal vehicle, a 1993 Ford pickup truck, as a covered vehicle and has liability limits of $250,000 per person and $500,000 per occurrence.

¶ 4 In 2002, Odom sued Orona and Good in Pima County Superior Court. After Farmers declined to extend coverage to Orona under Good's policy or provide Orona with a defense in that action, Odom obtained a judgment against Orona in the amount of $3,450,000. Thereafter, Odom agreed not to execute on the judgment against Orona in return for Orona's assigning to Odom any rights or claims Orona had against Farmers.

¶ 5 In 2005, Odom filed this action, claiming Farmers had breached its contractual obligation to Orona and acted in bad faith in denying him coverage. Thereafter, the parties filed cross-motions for summary judgment on the coverage issue and a joint statement of stipulated facts pursuant to Rule 56(c)(2), Ariz. R. Civ. P. After hearing argument, the trial court denied Odom's motion on his breach of contract claim and granted summary judgment in favor of Farmers, ruling that its policy did not cover Orona's driving of the rental car at the time of the accident. This appeal followed the court's entry of final judgment in favor of Farmers on all of Odom's claims.

Discussion

¶ 6 "Because the underlying facts are undisputed, we determine de novo whether the trial court correctly applied the law" and "will affirm if the trial court's ruling is correct on any ground." Rowland v. Great States Ins. Co., 199 Ariz. 577, ¶ 6, 20 P.3d 1158, 1162 (App.2001). Interpreting an insurance policy also raises a question of law subject to this court's de novo review. See Cal. Cas. Ins. Co. v. Am. Family Mut. Ins. Co., 208 Ariz. 416, ¶ 5, 94 P.3d 616, 618 (App.2004); Liristis v. Am. Family Mut. Ins. Co., 204 Ariz. 140, ¶ 13, 61 P.3d 22, 25 (App.2002).

¶ 7 We first focus on the pertinent liability coverage provisions in the Farmers policy issued to Good. The policy obligates Farmers to "pay damages for which any insured person is legally liable because of bodily injury to any person" arising out of the use of a car. The policy defines "[i]nsured person" to include Good, "any family member," and "[a]ny person using your insured car." The policy then states, "[i]nsured person does not mean . . . [a]ny person who uses a vehicle

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without having sufficient reason to believe that the use is with permission of the owner."

¶ 8 The policy defines "[y]our insured car" to include "[t]he vehicle described in the Declarations of this policy," which was Good's Ford pickup truck. In addition, the liability-coverage section of the policy states:

Your insured car as used in this part shall also include any other private passenger car . . . not owned by or furnished or available for the regular use of you or a family member. But no vehicle shall be considered as your insured car unless there is sufficient reason to believe that the use is with permission of the owner, and unless it is used by you or a family member.

¶ 9 In its summary judgment ruling, the trial court noted that the policy's "expanded definition" of "your insured car" in the liability coverage section "includes a rental car." And, the court noted, Farmers did not dispute that its insured, Good, had given Orona permission to drive the rental car. But, because Orona was not a member of Good's family and because Good was not personally using the rental car when the accident occurred, the court ruled the Farmers policy did not cover the rental car or Orona at that time. On a separate ground, the court also ruled Farmers was entitled to summary judgment because "Orona did not have permission of the owner, the rental car company, to use the rental car" at the time of the accident.

¶ 10 In reviewing de novo these rulings and interpreting the Farmers policy, "we construe the policy's provisions `according to their plain and ordinary meaning.'" Tritschler v. Allstate Ins. Co., 213 Ariz. 505, ¶ 12, 144 P.3d 519, 525 (App.2006), quoting Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 534, 647 P.2d 1127, 1132 (1982). But "[t]he language used in an insurance contract must be viewed from the standpoint of the average layman who is untrained in the law or the field of insurance." Liristis, 204 Ariz. 140, ¶ 13, 61 P.3d at 25-26. If a policy is reasonably "susceptible to different interpretations, we will attempt to discern its meaning by examining the language of the provision, the purpose of the transaction, and public policy considerations." Tritschler, 213 Ariz. 505, ¶ 12, 144 P.3d at 525. "If all else fails, and the clause remains ambiguous, the insurance policy will be construed to provide coverage." State Farm Mut. Auto. Ins. Co. v. Connolly, 212 Ariz. 417, ¶ 4, 132 P.3d 1197, 1198 (App.2006).

¶ 11 The trial court concluded "[t]he policy at issue is subject to only one interpretation[: a] rental car is not an insured car `unless it is used by [Good] or a family member.'" We agree. The policy's inclusion of other, non-owned cars, such as rental vehicles, in the expanded definition of "your insured car" is specifically qualified by two conditions stated in the very next sentence: "But no vehicle shall be considered as your insured car unless there is sufficient reason to believe that the use is with permission of the owner, and unless it is used by you or a family member." (Italics added.) In clear, unambiguous language that "the average layman who is untrained in the law or the field of insurance" could easily understand, the policy provides liability coverage for rental cars only if both of those conjunctive conditions are met. Liristis, 204 Ariz. 140, ¶ 13, 61 P.3d at 25-26. The policy is not reasonably susceptible to any other interpretation and, therefore, we need not explore any other factors to discern its meaning. See Tritschler, 213 Ariz. 505, ¶ 12, 144 P.3d at 525. Because the rental car was not being used by Good or a family member at the time of the accident, the Farmers policy does not cover that car or Orona.

¶ 12 Seeking to avoid that conclusion, Odom presents several arguments to support his primary contention that "Farmers' policy covers Orona as a permissive driver of the rental car." Odom argues the rental car falls within the policy's expanded definition of an "insured car" because it was "any other private passenger car . . . not owned by or furnished or available for the regular use of [Good] or a family member." According to Odom, "[t]he rental car became an insured car when Good rented it" and "drove it off the lot for the extended period of use." That fact, Odom asserts, did not change, regardless of who later drove the car. Rather, he

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argues, all that matters for coverage purposes is that the rental car was an "insured car" being driven with Good's permission by Orona.

¶ 13 Accordingly, Odom maintains that because the policy defines "[i]nsured person" to include "[a]ny person using [Good's] insured car," Orona was insured and covered under the Farmers' policy when he caused the accident. And, he asserts, "[t]he identity of the permissive driver of an insured car is immaterial to Farmers' coverage obligation." In other words, Odom contends the policy's coverage may not "wax and wane with the identity of the driver of [the] insured car."

¶ 14 We disagree with several premises underlying Odom's argument and, therefore, with his conclusion as well. First, we cannot agree with his assertion that "there is no question here that the rental car was a Farmers' insured car." That claim completely disregards the policy's dual requirement that "no vehicle shall be considered as your insured car unless there is sufficient reason to believe that the use is with permission of the owner, and unless it is used by you or a family member." See ¶¶ 8, 11, supra. As noted above, that provision imposes two prerequisites for coverage on a rental car or any other vehicle not owned by Good or a family member. As Farmers correctly notes, "[o]ther vehicles are included, first, only when they are used by Mr. Good or a...