State Farm Mut. Auto. Ins. Co. v. Lane, 78219

• Decision Date: 19 June 1998
• Docket Number: No. 78219,78219
• Citation: 961 P.2d 64,25 Kan.App.2d 223
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire Insurance Company, Appellants/Cross-Appellees, v. Valorie LANE, Louie F. Lawyer, Edward Crumby, and T.J. Crumby, Defendants, and Carol Joanne Stevenson and John Stevenson, Appellees/Cross-Appellants.
• Court: Kansas Court of Appeals

Page 64

961 P.2d 64

25 Kan.App.2d 223

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State

Farm Fire Insurance Company, Appellants/Cross-Appellees, v. Valorie LANE, Louie F. Lawyer, Edward Crumby, and T.J.

Crumby, Defendants,

and

Carol Joanne Stevenson and John Stevenson, Appellees/Cross-Appellants.

No. 78219.

Court of Appeals of Kansas.

June 19, 1998.

Review Denied Sept. 10, 1998.

SYLLABUS BY THE COURT

1. Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.

2. The construction of an insurance policy is a question of law, and the policy may be construed and its legal effect determined by an appellate court. Whether an insurance policy is ambiguous is a matter of law to be decided by the court. This court's review of questions of law is unlimited.

3. When an insurance policy is unambiguous, the court may not make another contract for the parties.

4. The test to determine whether an insurance policy is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean. An insurance policy is not ambiguous unless there is a genuine uncertainty as to which of two or more possible meanings is proper. The policy must be read as a whole.

5. Language in an insurance policy which excludes coverage for non-owned cars "while used in any other business or occupation" unambiguously excludes coverage for non-owned cars used for business, including the business or occupation of the insured; thus, an insured's employee or agent who is driving a non-owned truck while working in the insured's hauling business when an accident occurs is not covered under the policy.

Douglas M. Greenwald and Clifford T. Mueller, of McAnany, Van Cleave & Phillips, P.A., Kansas City, for appellants/cross-appellees.

Donald W. Vasos and David A. Hoffman, of Law Offices of Donald W. Vasos, Shawnee Mission, for appellees/cross-appellants.

Before LEWIS, P.J., and GREEN, J., and JOHN W. WHITE, District Judge, Assigned.

GREEN, Judge.

This litigation involves a declaratory judgment action brought by State Farm Automobile Insurance Company and State Farm Fire Insurance Company (State Farm) for a determination of whether they owed any additional bodily injury liability coverage to Carol Joanne Stevenson (Carol), a car accident victim, and to her husband, John Stevenson. Both parties moved for summary judgment. The trial court denied State Farm's summary judgment motion but granted, in part, the Stevensons' summary judgment motion, holding that additional liability coverage existed for Carol's accident in the amount of $100,000. On appeal, State Farm contends that the trial court erred in stacking the liability coverages. We agree. The Stevensons cross-appeal and contend that State Farm has liability coverage up to $200,000. We disagree. Accordingly, we reverse the judgment of the trial court.

The underlying facts of this case are not disputed. On July 5, 1994, Louie F. Lawyer was involved in an accident with Carol. The accident occurred in Lee's Summit, Missouri. Lawyer was driving a dump truck owned by Valorie Lane. Lane was involved in a hauling business with brothers T.J. and Edward Crumby. Carol sustained severe physical injuries in the accident. As a result, Carol and her husband sued Lane, d/b/a Lane Hauling, Lawyer, and T.J. Crumby and Edward Crumby, d/b/a Crumby Auto Sales & Hauling Services, under several theories, in Jackson County, Missouri. The parties agreed that when the accident occurred, Lawyer was driving Lane's dump truck in the course and scope of his employment with Lane or the Crumbys, or both, and in furtherance of their hauling business.

Lane's dump truck was insured by State Farm. State Farm also insured Lane's two other dump trucks, with bodily injury liability limits of $100,000 per person; two dump trucks owned by T.J. Crumby, with bodily injury liability limits of $100,000 per person; Lane and Edward Crumby's Chevrolet Blazer, with a bodily injury liability limit of $25,000; and Edward Crumby's GMC pickup truck, with a bodily injury liability limit of $25,000. All of the policies were Kansas policies.

The Stevensons settled with the defendants and State Farm in the Missouri action. As part of the settlement, State Farm paid into the court $100,000, the bodily injury limit of liability on Lane's policy insuring the dump truck involved in the accident. The Stevensons released Lane, Lawyer, and the Crumbys from any personal liability but reserved their right to pursue all applicable insurance proceeds and interest "to the extent of any unpaid, applicable liability insurance coverage up to the amount of $200,000.00, plus interest at the statutory rate."

Next, State Farm moved for declaratory judgment, claiming that the $100,000 already paid to the Stevensons was the full limit of its liability under any of the six additional policies issued to Lane and the Crumbys. Both State Farm and the Stevensons moved for summary judgment. In a memorandum decision, the trial court denied State Farm's motion and granted the Stevensons' motion in part. The trial court held that the Stevensons could stack liability coverage under one of the Crumbys' dump truck policies on top of Lane's primary liability coverage and that the Stevensons could, therefore, recover an additional $100,000. In a supplemental memorandum, the trial court clarified its ruling and reiterated its earlier decision that State Farm's exposure to the Stevensons was limited to an additional $100,000 under one of the Crumbys' policies.

Both State Farm's and the Stevensons' arguments regarding any additional liability coverage, in addition to Lane's primary liability coverage for $100,000, were made under the "non-owned car" liability coverage included in each of the six additional policies. Nevertheless, in determining that the non-owned car coverage exclusion was inapplicable, the trial court stated:

"Stacking the employer's (Crumby's) policy on top of Lane's primary coverage is the issue here; not whether Crumby's policy should (additionally) cover Lane's 'non-owned' vehicle because it was or was not used in 'some business'.

"Even if it did, this Court finds that Lane's borrowed truck was not being used in the car business or any 'other' business, except the Crumby's venture, which was the named insured as declared in the policy." (Emphasis added.)

On appeal, both parties disagree with the trial court's stacking analysis and focus on the non-owned car business exclusion.

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Mitzner v. State Dept. of SRS, 257 Kan. 258, 260, 891 P.2d 435 (1995). Here, the facts are essentially undisputed. Whether the trial court erred in granting the Stevensons summary judgment depends upon the construction given the language of the policy.

Our Supreme Court has frequently observed that " '[a]s a general rule, the construction and effect of a contract of insurance is a matter of law to be determined by the court. If the facts are admitted, then it is for the court to decide whether they come within the terms of the policy.' Farm Bureau Mut. Ins. Co. v. Horinek, 233 Kan. 175, Syl. p 1, 660 P.2d 1374 (1983)." Harris v. Richards, 254 Kan. 549, 552, 867 P.2d 325 (1994). Moreover, this court recently reviewed the rules of construction for insurance contracts in Oetinger v. Polson, 20 Kan.App.2d 255, 257-58, 885 P.2d 1274 (1994), rev. denied 256 Kan. 996 (1995) (quoting U.S.D. No. 259 v. Sloan, 19 Kan.App.2d 445, 452-53, 871 P.2d 861 [1994] ):

" ' "The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court." [Citation omitted.] "Whether an instrument is ambiguous is a matter of law to be decided by the court." [Citation omitted.] This court's review of questions of law is unlimited. [Citation omitted.]' "

Turning our attention to the trial court's decision allowing the stacking of the Crumbys' policy on top of Lane's primary coverage policy, we determine that the trial court erred in stacking those two policies. Both policies contained the following anti-stacking language: "If two or more vehicle liability policies issued by us to you apply to the same accident, the total limits of liability under all such policies shall not exceed that of the policy with the highest limit of liability."

As stated earlier, Lane owned three dump trucks, each of which was separately insured by State Farm with per person bodily injury liability limits of $100,000. As to claims for coverage under these Lane policies, the Stevensons were limited to the $100,000 tendered into court in the underlying personal injury action because that amount represented the "highest limit of liability" of any single Lane policy. Because the Stevensons in their motion for summary judgment did not pursue a claim for additional insurance coverage under policies issued to Lane, there was no reason for the trial court to construe or apply the anti-stacking clause. On the other hand, had the Stevensons advanced a claim under the Lane policies, the anti-stacking clause would have been relevant.

State Farm defines a non-owned car as "a car not owned by or registered or leased in the name of ... you, your spouse; ... any relative ... any other person residing in the same household as you, your spouse or any relative; or ... an employer of you, your spouse or any relative." Because Lane owned the 1974 dump truck involved in the collision with Carol, the truck was not a non-owned car under Lane's other liability insurance policies but was a non-owned car under policies issued to the Crumbys.

Accordingly, if any additional liability coverage existed under the Crumbys' policies for use of the Lane dump truck...