Safeco Ins. v. AMERICAN HARDWARE MUT. INS.

• Decision Date: 30 August 2000
• Citation: 169 Or. App. 405,9 P.3d 749
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Appellant, v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY, an Ohio corporation, Respondent.
• Court: Oregon Court of Appeals

9 P.3d 749

169 Or. App. 405

SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Appellant, v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY, an Ohio corporation, Respondent.

(97-4286-E1; CA A105111)

Court of Appeals of Oregon.

Argued and Submitted January 7, 2000.

Decided August 30, 2000.

Garrison F. Turner, Ashland, argued the cause and filed the briefs for appellant.

Andrew C. Balyeat, Bend, argued the cause for respondent. With him on the brief was Merrill O'Sullivan, LLP.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER, Judges.

EDMONDS, P.J.

Plaintiff appeals from a declaratory judgment, ORS 28.010, that awarded defendant summary judgment. ORCP 47. The judgment declares that a permissive user of a vehicle of defendant's insured was not "an insured" under defendant's insured's policy and that the policy did not violate Oregon's Financial Responsibility Law (FRL).¹ We reverse.

For purposes of summary judgment, the following facts are not in dispute. Butler Ford is an automobile dealership that was insured by American Hardware under a garage liability policy. On November 2, 1995, Joshua Zander, a customer of Butler Ford, was given permission to test drive a vehicle from Butler's car lot. During the test drive, Zander was involved in an automobile accident with Ignacia Ariza. Ariza sued Zander for personal injuries arising out of the accident. Zander was an insured under a policy issued by Safeco. Safeco defended Zander in the litigation and eventually settled with Ariza, paying an amount within Zander's policy limits and apparently an amount in excess of the minimum payment required by the FRL.

Safeco then filed the complaint for declaratory relief against American Hardware in this case. It requested, in part:

"a declaration that American Hardware Mutual Insurance Company's insurance Policy No. 5-2327097 violates the financial responsibility law, [that it] provides coverage for the above-referenced auto accident to Joshua Zander, and that it is required to participate on a pro-rata basis with Safeco Insurance company in defending him and indemnifying him for all damages [that] he is legally obligated to pay to Ignacia Ariza in the above referenced law suit, or otherwise."

Thereafter, the parties filed cross-motions for summary judgment.²

The trial court granted American Hardware's motion and denied Safeco's motion. The trial court reasoned:

"The purpose of the [FRL] is to protect victims who are injured or damaged as a result of motor vehicle accidents. In this case, two insurance companies are arguing over who should pay and[,] if both, how much each should pay. Under both policies, the `victim' is covered in the required amount. Safeco contends that American Hardware cannot shift its statutory obligation to Safeco. If the goal is to create equality between all types of insurance policies that cover automobile accidents, then Safeco's position is well taken. However, the appropriate goal is the one set by the Oregon legislature. That goal is to protect victims of accidents. American Hardware's policy does this. It limits its coverage to tortfeasors driving its named insureds' vehicles that do not have adequate insurance and limits the total coverage to the minimums required by law. It is clear that the Oregon legislature did not intend to make equality between insurance carriers its goal. ORS 806.080(2) indicates that the financial responsibility law requirements may be fulfilled by policies of one or more carriers when taken together. It is clear that the goal is to require the tortfeasor to maintain adequate insurance to fulfill the requirements of the law and protect the victim. American Hardware's policy excludes from its definition of an insured the tortfeasor in this case. That exclusion does not violate the requirements of the [FRL] nor does it violate the Oregon Insurance Code."

Accordingly, the trial court ruled that Zander was not an insured under American Hardware's policy and that the policy did not violate the FRL.

On appeal, Safeco's first assignment of error reasserts its argument that American Hardware's policy violates the FRL. Specifically, Safeco argues that the FRL requires that all motor vehicle liability policies cover all permissive users unless ORS 742.450 authorizes an exception and that ORS 742.450 does not authorize the exclusion of permissive users who have other available insurance. American Hardware's policy provides that a customer of Butler Ford, who is using a vehicle of Butler's with its permission, is not an insured unless the customer has "no other available insurance" or "[h]as other available insurance * * * less than the compulsory or financial responsibility law limits * * *." It follows, according to Safeco, that American Hardware has excluded permissive users in violation of the FRL, and its policy must be read to include coverage for Zander.

American Hardware counters:

"The subject American Hardware policy is not violative of Oregon's Financial Responsibility Law for three reasons. First, ORS 806.080(2) specifically provides that financial responsibility requirements may be fulfilled by the policies of one or more insurance carriers which policies together meet such requirements. Second, the American Hardware policy satisfies the objective of Oregon's Financial Responsibility Law in that it ensures that motor vehicle drivers can respond in damages for liability. Finally, American Hardware's policy does not attempt to limit liability insurance, but rather, establishes priorities of coverage of different policies consistent with general underwriting principles."

When reviewing a summary judgment on appeal,

"[w]e review to ascertain whether the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. In so doing, we view the record in the light most favorable to the party opposing the summary judgment." Quillen v. Roseburg Forest Products, Inc., 159 Or.App. 6, 9, 976 P.2d 91 (1999). See also ORCP 47 C.

To resolve the issue raised by Safeco's argument, we must examine the pertinent policy language and interpret the relevant statutes. Because American Hardware relies on ORS 806.080(2), our task is to discern the legislature's intent by examining the text of that statute within the context of the FRL and other pertinent statutes. "As a part of context, [a] court considers, among other things, other provisions of the same statute, other related statutes, prior versions of the statute, and this court's decisions interpreting the statute." Jones v. General Motors Corp., 325 Or. 404, 411, 939 P.2d 608 (1997). Additionally, "any prior judicial construction of the same or similar language" by the Supreme Court is relevant to our examination. Magee v. Dyrdahl, 144 Or.App. 270, 275, 926 P.2d 319 (1996). If possible, we adopt "a construction that will give effect to all provisions of a statute." NW Alliance for Market Equality v. Dept. of Rev., 318 Or. 129, 133, 862 P.2d 1300 (1993); see also ORS 174.010.

The predicate to Safeco's argument is that Zander is an insured under American Hardware's policy. The provision in American Hardware's policy on which it relies for its argument that Zander is not an insured under its policy is derived from the policy's definition of "Who Is An Insured." The policy states:

"1. WHO IS AN INSURED

"a. The following are `insureds' for covered `autos'.

"* * * * *

"(2) Anyone else while using with your permission a covered `auto' you own, hire or borrow except:

"* * * * *

"(d) Your customers, if your business is shown in the Declarations as an `auto' dealership. However, if a customer of yours

"(i) Has no other available insurance (whether primary, excess or contingent), they are an `insured' but only up to the compulsory or financial responsibility law limits where the covered `auto' is principally garaged.

"(ii) Has other available insurance (whether primary, excess or contingent) less than the compulsory or financial responsibility law limits where the covered `auto' is principally garaged, they are an `insured' only for the amount by which the compulsory or financial responsibility law limits exceed the limit of their other insurance." (Emphasis in original.)

Safeco's argument arises because Zander was an insured under Safeco's policy at the time of the accident and Safeco settled with Ariza on behalf of Zander for an amount apparently in excess of the requirements of the FRL. In other words, Zander had other "available insurance" with Safeco that apparently met the requirements of the FRL. It follows that Zander is not an "insured" under the terms of American Hardware's policy. Based on those circumstances, Safeco contends that American Hardware's policy violates the FRL because the FRL requires that a policy cover all permissive users, and American Hardware's policy fails to comply with that requirement.

For purposes of this case, the pertinent statutes are ORS 742.450, ORS 806.080 and other related statutes. ORS 742.450 provides, in part:³

"(1) Every motor vehicle liability insurance policy issued for delivery in this state shall state the name and address of the named insured, the coverage afforded by the policy, the premium charged therefor, the policy period and the limits of liability.

"(2) Every motor vehicle liability insurance policy issued for delivery in this state shall contain an agreement or indorsement stating that, as respects bodily injury and death or property damage, or both, the insurance provides either:

"(a) The coverage described in ORS 806.070 and 806.080; or

"(b) The coverage described in ORS 806.270.

"(3) The agreement or indorsement required by subsection (2) of this section shall also state that the insurance provided is subject to all the provisions of the Oregon Vehicle Code relating to financial responsibility requirements as defined in ORS 801.280 or future responsibility filings as

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