State Farm Mut. Auto. Ins. Co. v. LaRoque

• Citation: 486 N.W.2d 235
• Decision Date: 25 June 1992
• Docket Number: No. 910352,910352
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Appellee, v. Leon LaROQUE, Defendant, and Monica Baker, a minor child, and Donna White Tail, individually and as parent and guardian of Monica Baker, a minor child, Defendants and Appellants. Civ.
• Court: United States State Supreme Court of North Dakota

Page 235

486 N.W.2d 235

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Appellee, v. Leon LaROQUE, Defendant, and Monica Baker, a minor child, and Donna White Tail,

individually and as parent and guardian of Monica

Baker, a minor child, Defendants and

Appellants.

Civ. No. 910352.

Supreme Court of North Dakota.

June 25, 1992.

Thomas E. Rutten (argued) of Traynor, Rutten & Traynor, Devils Lake, for plaintiff and appellee.

Maureen White Eagle (argued) of Foughty, Christianson, White Eagle & Berg, Devils Lake, for defendants and appellants.

LEVINE, Justice.

Monica Baker, a minor child, and Donna White Tail, individually and as parent and guardian of Baker, appeal from a summary judgment declaring that a motor vehicle liability policy issued by State Farm Mutual Automobile Insurance Company [State Farm] to Leon LaRoque did not provide coverage for injuries sustained by Baker and White Tail. We affirm.

In June 1989, White Tail and Baker began living with LaRoque in a house rented by him in Sheyenne, North Dakota. LaRoque and White Tail were not married, and Baker is not LaRoque's biological or adopted child. On December 4, 1989, White Tail and Baker were seriously injured while riding in a vehicle owned by White Tail but driven by LaRoque.

White Tail and Baker received basic no-fault benefits from White Tail's insurer, but they also sought coverage under a policy issued by State Farm to LaRoque for his 1974 Chevrolet Blazer. That policy covered LaRoque's use of a "non-owned car," which it defined as "a car not: ... furnished or available for the regular or frequent use of: you." According to a claim superintendent, State Farm issued the policy to LaRoque in June 1988 with Amendatory Endorsement 6025J, effective July 7, 1988. The endorsement said that the definition of a "non-owned car" was changed to read "a car not owned by or registered or leased in the name of ... any other person residing in the same household as you...."

State Farm commenced this declaratory judgment action against LaRoque, White Tail, and Baker to determine its obligations under its policy with LaRoque. The district court granted summary judgment, declaring that State Farm's policy with LaRoque did not provide coverage for the injuries sustained by Baker and White Tail. The court concluded that the definition of a "non-owned car" in Amendatory Endorsement 6025J was in effect at the time of the accident and unambiguously excluded coverage for LaRoque's use of White Tail's vehicle. The court alternatively concluded that, as a matter of law, White Tail's vehicle was "furnished or available for the regular or frequent use" of LaRoque under the original definition of "non-owned car." The court also concluded that the definition of "non-owned car" was not contrary to Chapters 39-16.1 and 26.1-41, N.D.C.C., or to public policy. White Tail and Baker [hereinafter collectively referred to as White Tail] appealed.

White Tail initially contends that State Farm's policy with LaRoque is ambiguous and should be strictly construed against State Farm. She argues that a reasonable person would conclude that State Farm's policy provided liability coverage when LaRoque drove a "non-owned car." She contends that State Farm created an ambiguity by defining "non-owned car" to exclude coverage in some instances and by amending that definition. State Farm responds that Amendatory Endorsement 6025J unambiguously excludes coverage for White Tail's claims because it clearly defines a "non-owned car" as a car not owned by "any other person residing in the same household as" the insured.

Our review is under the standards applicable to summary judgment. Summary judgment is a procedural device for the prompt and expeditious disposition of a controversy without a trial if there is no genuine issue of material fact or inferences to be drawn from undisputed facts, or if only a question of law is involved. E.g., United Electric Service & Supply, Inc. v. Powers, 464 N.W.2d 818 (N.D.1991); Rule 56, N.D.R.Civ.P.

Our first task is to consider which of the two definitions of "non-owned car" governs this case. State Farm issued its automobile liability insurance policy to LaRoque in June 1988 and that policy was in effect when the accident occurred on December 4, 1989. State Farm's preprinted policy with LaRoque defined "non-owned car" as a "car not ... furnished or available for the regular or frequent use of" LaRoque. ¹ However, the uncontroverted affidavit of the company's claim superintendent says that Amendatory Endorsement 6025J was effective July 7, 1988, and was attached to the policy form issued by State Farm to LaRoque. ² It defined a "non-owned car" as "a car not owned by ... any other person residing in the same household as" LaRoque. If there is a conflict between the provisions of a policy form and an attached endorsement, the provisions of the endorsement prevail. Haugen v. Auto-Owners Ins. Co. of Lansing, 191 N.W.2d 274 (N.D.1971). We conclude that Amendatory Endorsement 6025J was in effect on the date of the accident. We therefore review the insurance contract with that definition of "non-owned car."

The construction of a written insurance contract is a question of law which is fully reviewable by this court. E.g., Cormier v. National Farmers Union Property & Casualty Co., 445 N.W.2d 644 (N.D.1989). If the language of an insurance contract is unambiguous, we construe that language according to its clear meaning. Id.; Section 9-07-02, N.D.C.C. If the language of an insurance contract is ambiguous, we apply our rules of construction in Ch. 9-07, N.D.C.C., to resolve the ambiguity. Walle Mutual Ins. Co. v. Sweeney, 419 N.W.2d 176 (N.D.1988); Section 9-07-03, N.D.C.C. Whether the terms of a contract are clear and unambiguous is a question of law for the court. Dawn Enterprises v. Luna, 399 N.W.2d 303 (N.D.1987). A contract is ambiguous when reasonable arguments can be made in support of contrary positions as to its meaning. Id.

A definition of a term in an insurance contract may exclude coverage if the language of the contract, as a whole, is clear. Haugen v. Auto-Owners Ins. Co. of Lansing, supra; Section 9-07-06, N.D.C.C. Here, the policy provides LaRoque coverage for his use of a "non-owned car." The Amendatory Endorsement defines "non-owned car" in clear and explicit language that expresses one idea unequivocally--that a "non-owned car" does not include a car owned by a person residing in the same household as LaRoque. We agree with other states' holdings that similar language clearly excludes coverage. Dairyland Ins. Co. v. Beekman, 118 Ariz. 294, 576 P.2d 153 (Ariz.Ct.App.1978) [member of the same household is not ambiguous]; Farmers Ins. Co. v. Plunkett, 687 P.2d 470 (Colo.Ct.App.1984) [resident of same household is not ambiguous]; see generally, Annot., Exclusion from "drive other cars" provision of automobile liability insurance policy of other automobile owned, hired, or regularly used by insured or member of his household, 86 A.L.R.2d 937, Sec. 5 (1962); Annot., What is a "non-owned" automobile within the meaning of the coverage clause of an automobile liability policy, 83 A.L.R.2d 926, Sec. 4 (1962). We conclude that the definition of "non-owned car" is unambiguous and excludes coverage when the insured drives a car owned by a person residing in the same household.

White Tail does not dispute that she resided in the same household as LaRoque and that he was driving her vehicle when the accident occurred. Under those circumstances, we conclude that there is no genuine issue of material fact that LaRoque was not driving a "non-owned car" as that term is defined in the insurance contract. LaRoque's insurance policy did not provide coverage for the claims by White Tail, and the district court properly granted summary judgment on that issue.

Relying upon Richard v. Fliflet, 370 N.W.2d 528 (N.D.1985), and Hughes v. State Farm Mutual Automobile Insurance Co., 236 N.W.2d 870 (N.D.1975), White Tail also argues that the definition of "non-owned car" is contrary to Chapters 39-16.1 and 26.1-41, N.D.C.C., and to public policy and is, therefore, void.

In Hughes, we considered the validity of a "household or family exclusion" ³ clause in a motor vehicle liability policy. We recognized that the basic purpose of Chapters 39-16 [Financial Responsibility of Owners and Operators] and 39-16.1 [Proof of Financial Responsibility for the Future], N.D.C.C., was to protect innocent victims of motor vehicle accidents from financial disaster. We said that the license suspension sanctions imposed by Chapter 39-16, N.D.C.C., were intended to guarantee financial responsibility for a first accident, in contrast to the requirements of Chapter 39-16.1, N.D.C.C., which were designed to establish proof of financial responsibility for future accidents involving a motor vehicle owner or operator who has already had an accident, or who has been convicted of certain traffic offenses. We concluded that our financial responsibility laws and public policy required a motor vehicle liability policy purchased to avoid the sanctions in Section 39-16-05, N.D.C.C., to provide the named insured, and any other person using the insured motor vehicle with permission of the named insured, with minimum coverage for damages arising out of the ownership, maintenance, or use of the insured motor vehicle. We held that the "household or family exclusion" clause violated our financial responsibility laws and public policy because that clause excluded coverage for a class of beneficiaries suffering damages arising out of the ownership, maintenance, or use of the insured motor vehicle.

In Richard v. Fliflet, supra, we held that Section 39-16.1-11(6), N.D.C.C., which prohibits cancellation of a motor vehicle liability policy after an accident, was also incorporated into policies purchased to avoid the sanctions in Section 39-06-05, N.D.C.C. We said that the basic purpose of our...