Sidelnik v. American States Ins. Co., 03-95-00209-CV

• Citation: 914 S.W.2d 689
• Decision Date: 17 January 1996
• Docket Number: No. 03-95-00209-CV,03-95-00209-CV
• Parties: Joel SIDELNIK, Individually and as Independent Administrator of the Estate of Debra V. Sidelnik, Deceased, Appellant v. AMERICAN STATES INSURANCE COMPANY, Appellee.
• Court: Court of Appeals of Texas

Page 689

914 S.W.2d 689

Joel SIDELNIK, Individually and as Independent Administrator of the Estate of Debra V. Sidelnik, Deceased, Appellant v. AMERICAN STATES INSURANCE COMPANY, Appellee.

No. 03-95-00209-CV.

Court of Appeals of Texas Austin.

Jan. 17, 1996.

Rehearing Overruled Feb. 21, 1996.

Gary F. DeShazo and Jon M. Smith, Gary F. DeShazo & Associates, Austin, for Appellant.

Jess M. Irwin III, Small, Craig & Werkenthin, Austin, for Appellee.

Before POWERS, ABOUSSIE and KIDD, JJ.

ABOUSSIE, Justice.

Appellant Joel Sidelnik brought a declaratory judgment action seeking a determination that, as a matter of law, his umbrella insurance policy issued by appellee American States Insurance Company provides uninsured motorist coverage for the car accident in which his wife was killed. The trial court granted summary judgment in favor of appellee.

We will affirm the trial court's judgment.

BACKGROUND

Appellant's wife, Debra Sidelnik, was killed in a car accident involving Jose Ayala, an uninsured motorist. The Sidelniks were covered under an automobile liability insurance policy which provided uninsured/underinsured motorist ("UM") coverage of $50,000 per person and $100,000 per accident. The Sidelniks received the full $100,000 under the UM coverage portion of their automobile liability insurance policy.

The Sidelniks also were covered under an umbrella indemnity insurance policy which provided one million dollars in coverage and was in force on the date of the accident. Appellant sued for declaratory judgment, claiming that the umbrella policy covers the accident in question. In response, appellee contended that the umbrella policy does not provide any coverage that would inure to the Sidelniks' benefit. On cross-motions for summary judgment, the trial court ruled in favor of the appellee.

DISCUSSION

Ambiguity

In points of error one and two, Sidelnik claims that the trial court erred in concluding that the umbrella policy was unambiguous and did not provide coverage for the accident in question. He contends that the allegedly ambiguous umbrella policy could be construed to cover Ayala as an insured party. Thus, appellant argues, appellee is required to indemnify Ayala to the extent of the umbrella policy limits for the amount of damages he is legally obligated to pay the Sidelniks. See Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984) (when insurance policy is ambiguous, the courts shall adopt construction favoring coverage); Glover v. National Ins. Underwriters, 545 S.W.2d 755, 761 (Tex.1977).

Insurance policies are controlled by rules of interpretation and construction applicable to contracts generally. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.1994); Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987). The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. Forbau, 876 S.W.2d at 133. If a written contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951). Parol evidence is not admissible for the purpose of creating an ambiguity. Universal, 243 S.W.2d at 157; Lewis v. East Texas Fin. Co., 136 Tex. 149, 146 S.W.2d 977, 980 (1941).

If, however, the language of a policy or contract is subject to two or more reasonable interpretations, it is said to be ambiguous. Glover, 545 S.W.2d at 761; Coker, 650 S.W.2d at 393; Universal, 243 S.W.2d at 157. Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present at the time the contract was executed. See Coker, 650 S.W.2d at 394; R & P Enter. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex.1980). Only where a contract is first determined to be ambiguous may the court consider the parties' interpretation, see Sun Oil Co. (Delaware) v. Madely, 626 S.W.2d 726, 732 (Tex.1981), and admit extraneous evidence to determine the true meaning of the instrument. See id.; R & P Enter., 596 S.W.2d at 519.

An ambiguity in a contract may be either "patent" or "latent." A patent ambiguity is evident on the face of the contract. See Universal Home Builders, Inc. v. Farmer, 375 S.W.2d 737, 742 (Tex.Civ.App.--Tyler 1964, no writ). If a contract which is unambiguous on its face is applied to the underlying subject matter of the contract and an ambiguity appears by reason of some collateral matter, the ambiguity is latent. See Murphy v. Dilworth, 137 Tex. 32, 151 S.W.2d 1004, 1005 (1941); see also Bache Halsey Stuart Shields, Inc. v. Alamo Sav. Ass'n, 611 S.W.2d 706, 708 (Tex.Civ.App.--San Antonio 1980, no writ). In resolving latent ambiguities, parol evidence is admissible for the purpose In the instant cause, the language of the umbrella policy is clear on its face and not patently ambiguous. ¹ Furthermore, applying the policy's language to the facts surrounding this car accident does not produce an uncertain or ambiguous result. Rather, the language leads to only one reasonable conclusion: the umbrella policy covers either the named insured or drivers who operate a car with permission of the named insured. Ayala fits neither of these categories. We overrule points of error one and two.

of ascertaining the true intent of the parties as expressed in the agreement. See Murphy, 151 S.W.2d at 1005.

In point of error three appellant claims that the trial court erred in failing to consider extrinsic summary judgment evidence, namely the affidavits of Gary Beck and William Gammon, as well as filings with the Texas Department of Insurance.

Because the contract is unambiguous as a matter of law, the trial court could not have considered any extraneous evidence of the parties' intentions. See R & P Enter., 596 S.W.2d at 518; Birdwell v. Birdwell, 819 S.W.2d 223, 229 (Tex.App.--Fort Worth 1991, writ denied). Therefore, the court did not err in failing to consider the extraneous evidence. We overrule point of error three.

Uninsured/Underinsured Motorist Coverage Implied as a Matter of Law

Appellant claims that Article 5.06-1 of the Texas Insurance Code ("Code") mandates that the umbrella policy in question include UM coverage as a matter of law. Tex.Ins.Code.Ann. art. 5.06-1 (West 1981). Article 5.06-1(1) of the Code states in pertinent part:

No automobile liability insurance ... covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state unless coverage is also provided therein or supplemental thereto, in at least the limits described in the Texas Motor Vehicle Safety Responsibility Act, under provisions prescribed by the Board, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, or property damage resulting therefrom.

Id. (emphasis added). ² Thus, every automobile liability policy must provide UM coverage. We are called upon to answer whether the mandatory UM coverage required under Article 5.06-1 of the Code applies to an umbrella indemnity policy designed to provide excess liability coverage to the insured.

By its own terms, the statute applies only to "automobile liability insurance." Therefore, as a threshold issue, we must determine whether the umbrella policy issued by appellee is an "automobile liability insurance" policy as contemplated by the statute.

Appellant argues that because the umbrella policy can provide excess liability coverage arising from an automobile accident, it is an "automobile liability insurance" policy as contemplated by the statute. Appellee argues that the statute applies only to the primary coverage of the underlying automobile liability policy.

The statute is intended to protect injured motorists by insuring that they will be able to recover at least an amount equivalent to what would have been available if the insured had been injured by a driver who maintained the required statutory minimum liability coverage. This purpose is achieved by requiring that underlying policies provide UM coverage. See e.g., Todd v. Federated Mut. Ins. Co., 305 S.C. 395, 409 S.E.2d 361, 365 (1991).

Numerous other jurisdictions concur that UM statutes are inapplicable to umbrella policies. See O'Hanlon v. Hartford Accident & Indemnity Co., 639 F.2d 1019 (3d Cir.1981) (construing Delaware law); Trinity Universal Ins. Co. v. Metzger, 360 So.2d 960 (Ala.1978); Matarasso v. Continental Casualty Co., 82 A.D.2d 861, 440 N.Y.S.2d 40 (1981), aff'd, 56 N.Y.2d 264, 451 N.Y.S.2d 703, 436 N.E.2d 1305 (1982); Hartbarger v. Country Mut. Ins. Co., 107 Ill.App.3d 391, 63 Ill.Dec. 42, 437 N.E.2d 691 (1982); Moser v. Liberty Mut. Ins. Co., 731 P.2d 406 (Okl.1986); Continental Ins. Co. v. Howe, 488 So.2d 917 (Fla. DCA 3d 1986) (construing Rhode Island law); United Services Automobile Assn. v. Wilkinson, 132 N.H. 439, 569 A.2d 749 (1989); Mass v. U.S. Fidelity and Guar. Co., 222 Conn. 631, 610 A.2d 1185 (1992); but see Ormsbee v. Allstate Ins. Co., 176 Ariz. 109, 859 P.2d 732 (1993) (holding that an umbrella policy is an automobile liability policy for purposes of Arizona UM statute). These cases all focus on the inherent differences between primary liability and umbrella policies.

Commenting on the purpose of umbrella policies, the Alabama Supreme Court has stated:

[Automobile liability insurance] policies insure against the risk of loss through the operation of specific automobiles. An umbrella policy, on the other hand, is fundamentally excess insurance designed to protect against catastrophic loss. Before an umbrella policy is issued, a primary policy (the 'underlying policy') must be in existence and this primary policy must...