Stonehocker v. Gulf Ins. Co.

• Decision Date: 29 March 2016
• Docket Number: No. DA 15–0139.,DA 15–0139.
• Citation: 368 P.3d 1187,2016 MT 78,383 Mont. 140
• Parties: Marilyn "Mitzi" STONEHOCKER, Plaintiff and Appellant, v. GULF INSURANCE COMPANY and Travelers Indemnity Company of America, Defendants and Appellees.
• Court: Montana Supreme Court

383 Mont. 140

368 P.3d 1187

2016 MT 78

Marilyn "Mitzi" STONEHOCKER, Plaintiff and Appellant,

v.GULF INSURANCE COMPANY and Travelers Indemnity Company of America, Defendants and Appellees.

No. DA 15–0139.

Supreme Court of Montana.

Submitted on Briefs Feb. 17, 2016.

Decided March 29, 2016.

Rehearing Denied May 3, 2016.

For Appellant: James G. Hunt, Hunt Law Firm, Helena, Montana.

For Appellees: Kevin M. Funyak, Stacey & Funyak, Billings, Montana.

Justice PATRICIA COTTER delivered the Opinion of the Court.

¶ 1 Marilyn Stonehocker (Stonehocker) was seriously injured while working for her employer, Bear Creek Outfitters Inc. (Bear Creek). Because her injury was caused by the use of her personal automobile, she was able to recover benefits under her auto insurance policy. She then sought benefits under Bear Creek's commercial auto policy, but Bear Creek's insurer, Travelers Indemnity Company (Travelers), denied coverage. Stonehocker brought a claim for coverage in the Ninth Judicial District Court, Glacier County, arguing that she was a named insured under Bear Creek's policy, and that she was occupying a temporary substitute for an insured vehicle at the time of her injury. Stonehocker and Travelers filed cross motions for summary judgment. The District Court granted summary judgment to Travelers on both of Stonehocker's coverage theories. We affirm in part and reverse in part.

ISSUES

¶ 2 We address the following issues on appeal:

¶ 3 Did the District Court err in granting summary judgment to Travelers on the grounds that Stonehocker was not a named insured under the uninsured motorist provision of the Travelers policy?

¶ 4 Did the District Court err in granting summary judgment to Travelers on the grounds that at the time of Stonehocker's injury her personal pickup was not a "temporary substitute auto" under the Travelers policy?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 Marilyn Stonehocker worked as a camp cook for Bear Creek Outfitters, a guest ranch located west of East Glacier. Bear Creek offered guests the opportunity to accompany wranglers on multi-day cattle drives. Stonehocker owned a 1995 Dodge pickup, which she used to pull an 18–foot gooseneck horse trailer that her husband had modified to include a mobile kitchen and sleeping quarters. Under normal circumstances, Stonehocker would drive her pickup and trailer to each new campsite, and the guests' luggage would be transported in a 1996 GMC Suburban owned and insured by the ranch. Stonehocker stated in her affidavit that "[b]ecause the cook is always the first one up and makes noise when cooking, [her] final evening parking place was always away from the wall tents so [she] did not wake [the guests] when cooking in the morning."

¶ 6 On June 4 and 5, 2000, as guests were arriving for a cattle drive, Bear Creek's Suburban was undergoing mechanical work and was out of use. Consequently, although Bear Creek normally used its Suburban to transport guests and luggage, Stonehocker used her pickup to transport guests from Cut Bank and East Glacier to the ranch. She had to make multiple trips to transport all the guests because her pickup seats only two people in addition to the driver. Stonehocker then used her pickup and trailer to take the guests' luggage to the first campsite, also a task normally handled by an employee driving Bear Creek's Suburban.

¶ 7 During the course of the multi-day cattle drive, Stonehocker continued using her pickup and trailer to transport the mobile kitchen and the guests' luggage from campsite to campsite. Each night she would park the pickup near the guests' tents so they would not have far to carry their luggage, and then she would move the pickup away from the tents so as not to disturb the guests in the morning. On the last night of the drive, before moving her pickup away from the guest tents, Stonehocker fell asleep in her trailer with the pickup doors unlocked and the key still in the ignition. She awoke around 5:00 am to the sound of her pickup being started. She saw a man she did not recognize in the driver's seat. The stranger drove the pickup and attached trailer away from the campsite. When Stonehocker realized that her pickup and trailer were being stolen, she called 911. At some point, she either jumped or was thrown from the trailer and sustained a head injury that has prevented her from recalling other details of the incident.

¶ 8 Stonehocker's pickup was insured by State Farm Insurance Company. State Farm paid Stonehocker the uninsured motorist (UM) benefits owed to her under her policy, but denied liability coverage because the pickup had been stolen by a man who was not a permissive driver under the policy. Stonehocker then sought to recover UM benefits from Bear Creek's corporate auto policy, issued by Travelers.¹ Travelers denied UM coverage to Stonehocker, which resulted in this litigation. The parties filed two sets of cross motions for summary judgment. On July 19, 2012, the District Court found that Stonehocker was not a named insured under Bear Creek's policy and granted Travelers' motion for summary judgment. Then on February 18, 2015, the District Court found that Stonehocker's pickup was not an insured vehicle under Bear Creek's policy and granted Travelers' second motion for summary judgment. Stonehocker appeals from both orders.

STANDARD OF REVIEW

¶ 9 We review a district court's entry of summary judgment de novo. McClue v. Safeco Ins. Co., 2015 MT 222, ¶ 8, 380 Mont. 204, 354 P.3d 604 (citing Albert v. City of Billings, 2012 MT 159, ¶ 15, 365 Mont. 454, 282 P.3d 704 ). "Summary judgment is appropriate when the moving party demonstrates both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law." Albert, ¶ 15 (citing M. R. Civ. P. 56 ).

¶ 10 The interpretation of an insurance contract is a question of law which we review de novo. Tidyman's Mgmt. Servs. v. Davis, 2014 MT 205, ¶ 13, 376 Mont. 80, 330 P.3d 1139 (citing Newman v. Scottsdale Ins. Co., 2013 MT 125, ¶¶ 20–24, 370 Mont. 133, 301 P.3d 348 ).

DISCUSSION

¶ 11 The UM portion of Bear Creek's commercial auto policy says that Travelers "will pay all sums the ‘insured’ is legally entitled to recover as compensatory damages from the owner or driver of an ‘uninsured motor vehicle.’ The damages must result from ‘bodily injury’ sustained by the ‘insured’ caused by an ‘accident.’ " The policy goes on to define an "insured" as "you," a "family member," or "[a]nyone else ‘occupying’ a covered ‘auto’ or a temporary substitute for a covered ‘auto,’ " as long as "[t]he covered ‘auto’ [is] out of service because of its breakdown, repair, servicing, loss or destruction."

¶ 12 Stonehocker relied on this language to make two arguments for coverage. First, she argued that as an employee of Bear Creek, she was insured as a "you" under the policy. Second, she argued that her pickup was a temporary substitute for the covered Suburban at the time of her injury, and she is thus entitled to coverage because the Suburban was out of service for repairs.² The District Court denied coverage under both theories. We address both arguments below.

¶ 13 Did the District Court err in granting summary judgment to Travelers on the grounds that Stonehocker was not a named insured under the uninsured motorist provision of the Travelers policy?

¶ 14 The declarations page of Bear Creek's commercial auto insurance policy, entitled "Business Auto Declarations," is addressed to "Bear Creek Outfitters, Inc." and lists the insured's form of business as "Guest Ranch." The "named insured" on the "Montana Uninsured Motorist Coverage" page is also "Bear Creek Outfitters, Inc." Stonehocker argued to the District Court and argues now on appeal that the insured entity under the policy is not a corporation but rather a guest ranch. According to Stonehocker, Montana's statutory definition of "guest ranch," found at § 50–51–102(5), MCA, implies that a guest ranch cannot function without employees, and because Stonehocker is an employee of Bear Creek, she is an insured under the policy. Stonehocker's interpretation of the policy language is incorrect.

¶ 15 We have had occasion to apply the reasonable expectations doctrine to resolve coverage questions; "the objectively reasonable expectations of insurance purchasers regarding the terms of their policies should be honored." Am. States Ins. Co. v. Flathead Janitorial & Rug Servs., 2015 MT 239, ¶ 22, 380 Mont. 308, 355 P.3d 735. When we apply the doctrine, we interpret an insurance contract "from the viewpoint of a consumer with average intelligence, with no training in the law or insurance." Flathead Janitorial, ¶ 22 (citing Leibrand v. National Farmers Union Property & Casualty Co., 272 Mont. 1, 7, 898 P.2d 1220, 1224 (1995) ). The parties agree that Montana law allows an insurer to limit coverage to a corporation or other business entity. See e.g. Lee v. Great Divide Ins. Co., 2008 MT 80, ¶ 16, 342 Mont. 147, 182 P.3d 41 (interpreting a policy that "limit[s] coverage to the corporation and to anyone else occupying a covered auto or temporary substitute for a covered auto").

¶ 16 The District Court concluded that a reasonable person of average intelligence would understand the insured party under the Travelers policy to be the business entity Bear Creek. We agree. The mailing address on the declarations page is a P.O. Box for "Bear Creek Outfitters, Inc." The " Inc." clearly identifies Bear Creek as a corporate entity. Immediately below the address, the insured's form of business is identified as a "Guest Ranch," thereby indicating the kind of business in which the corporate entity engages. Throughout the rest of the policy, the named insured is identified as "Bear Creek Outfitters, Inc." At no point in the policy is the named insured identified as a human person or persons or as a business entity other than a corporation. A reasonable person of average intelligence would not take the fact that the corporation Bear Creek Outfitters,...