U.S. Fidelity & Guar. Co. v. Lightning Rod Mut. Ins. Co.

• Decision Date: 31 December 1997
• Docket Number: No. 96-2516,96-2516
• Citation: 687 N.E.2d 717,80 Ohio St.3d 584
• Court: Ohio Supreme Court
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant, v. LIGHTNING ROD MUTUAL INSURANCE COMPANY, Appellee.

Page 584

80 Ohio St.3d 584

687 N.E.2d 717

UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant, v. LIGHTNING ROD MUTUAL INSURANCE COMPANY, Appellee.

No. 96-2516.

Supreme Court of Ohio.

Submitted Sept. 24, 1997.

Decided Dec. 31, 1997.

Robert H. Willard, Columbus, for appellant.

Andrew J. Mollica, Athens, for appellee.

COOK, Justice.

The issue in this case is whether Lightning Rod's policy excluding coverage for operation of a vehicle carrying property "for a fee" covers an insured who is paid an hourly wage and is reimbursed for mileage for making deliveries but is not paid per delivery.

"[W]ords and phrases used in an insurance policy must be given their natural and commonly accepted meaning." Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 167-168, 24 O.O.3d 274, 275, 436 N.E.2d 1347, 1348. A "fee" is defined as "[a] recompense for an official or professional service or a charge or emolument or compensation for a particular act or service. A fixed charge or perquisite charged as recompense for labor; reward, compensation, or wage given to a person for performance of services or something done or to be done." Black's Law Dictionary (6 Ed.1990) 614; see, also, Webster's Third New International Dictionary (1986) 833 (with definitions of "fee" as a fixed charge for various particular services). A determination of whether Spurlock was carrying property "for a fee" will differ depending on which part of the definition we look to, that is, whether a fee includes any "compensation, or wage * * * for performance of services" or must be "for a particular act or service."

Thus, Lightning Rod's policy can be read two ways: first, as excluding from coverage use of a vehicle to transport property when there is any kind of payment to the insured, and second, as excluding coverage only when a fee is paid specifically for the particular act of transporting property. Under the first reading, Spurlock's use of her car to deliver pizza would be excluded from coverage because Domino's was paying her an hourly wage. Under the second reading, however, this use would not be excluded by the Lightning Rod policy, since neither Domino's nor its customers paid Spurlock a fee specifically for delivering the pizza. Under either reading, the policy excludes taxicabs transporting persons specifically for a fee or moving vans transporting property specifically for a fee. Only the first reading, however, excludes Spurlock's errands on behalf of her employer.

"Where provisions of a contract of insurance are reasonably susceptible of more than one interpretation, they will be construed strictly against the insurer and liberally in favor of the insured." King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 519 N.E.2d 1380, at syllabus. "The insurer, being the one who selects the language in the contract, must be specific in its use; an exclusion from liability must be clear and exact in order to be given effect." Lane v. Grange Mut. Cos. (1989), 45 Ohio St.3d 63, 65, 543 N.E.2d 488, 490, citing Am. Fin. Corp. v. Fireman's Fund Ins. Co. (1968), 15 Ohio St.2d 171, 44 O.O.2d 147, 239 N.E.2d 33. Because the "for a fee" exclusion is susceptible of more than one interpretation, the trial court's construction of it against Lightning Rod was correct.

Whether Lightning Rod intended to cover commercial use of Spurlock's vehicle is irrelevant because the policy language is imprecise. In fact, more than commercial uses would be affected if Lightning Rod's policy could be read as excluding from coverage any use of a car to carry property when any payment to the insured is involved (the only proposed interpretation of "for a fee" that would exclude Spurlock). Incidental transport of items by an insured while "on the clock" for an employer would also be encompassed by such a reading.

Thus, as there is no genuine issue as to any material fact, USF&G is entitled to judgment as a matter of law, and summary judgment was properly granted. We therefore reverse the judgment of the court of appeals and remand the cause for consideration of the issue of attorney fees.

Judgment reversed and cause remanded.

MOYER, C.J., and FRANCIS E. SWEENEY, Sr. and PFEIFER, JJ., concur.

RESNICK, J., concurs separately.

DOUGLAS and LUNDBERG STRATTON, JJ., dissent.

ALICE ROBIE RESNICK, Justice, concurring.

I concur in the majority's resolution of this case, and join in reversing the judgment of the court of appeals and reinstating the judgment of the trial court on the certified issue. I write separately to underscore the ambiguity of the "for a fee" exclusion.

A special category of cases has emerged to cover the general fact pattern presented by this case. These cases could be labeled "pizza delivery cases," although the basic issue could arise in any case which involves a similar delivery of a product by an employee. Courts in various states have found the same or like exclusions unenforceable in this type of "pizza delivery" case, concluding that coverage was available to the delivery driver despite the exclusion. Illustrative cases include Progressive Cas. Ins. Co. v. Metcalf (Minn.App.1993), 501 N.W.2d 690; Am. Motorists Ins. Co. v. Travelers Ins. Co. (1993), 604 N.Y.S.2d 475, 158 Misc.2d 257; RPM Pizza, Inc. v. Automotive Cas. Ins. Co. (La.1992), 601 So.2d 1366; Pizza Hut of Am., Inc. v. W. Gen. Ins. Co. (1991), 36 Ark.App. 16, 816 S.W.2d 638; United Serv. Auto. Assn. v. Couch (Tenn.App.1982), 643 S.W.2d 668.

Several Ohio courts of appeals addressing the issue have found the exclusion inoperative and have required coverage. See, e.g., Progressive Ins. Co. v. Heritage Ins. Co. (1996), 113 Ohio App.3d 781, 682 N.E.2d 33; Colonial Ins. Co. of California v. Jermann (1995), 102 Ohio App.3d 384, 657 N.E.2d 336. Like most of the decisions from other jurisdictions cited above, these courts have employed an "ambiguity" analysis to find the exclusion unenforceable, generally focusing on various definitions of what is a "fee" or a "charge."

However, as evidenced by the fact that this case comes to us as a certified conflict, the view that the exclusion is unenforceably ambiguous is not a unanimous one. In addition to the opinion below in the case sub judice, see, e.g., the dissenting opinion in Jermann, 102 Ohio App.3d at 389, 657 N.E.2d at 339 (Deshler, J., dissenting); Dhillon v. Gen. Acc. Ins. Co. (Apr. 11, 1991), Tex.App. No. C14-90-00714-CV, unreported, 1991 WL 51470; Krauss v. DeRocili (Aug. 2, 1988), Del.Super.Ct. No. 86C-NO-60, unreported, 1988 WL 90532.

Although the decisions that find the "for a fee" exclusions ineffective to deny coverage typically on their faces narrowly rely on an "ambiguity" analysis focusing on the word "fee," many of the decisions, often without directly so stating, appear to be influenced by the practical implications that would accompany allowing the exclusion to operate. See, e.g., Progressive Cas. Ins. Co. v. Metcalf, 501 N.W.2d at 693-694 (Davies, J., concurring specially), recognizing some of the practical considerations underlying these types of cases, and finding the exclusion unenforceable both on public policy grounds and upon consideration of the consumer expectations of the insurance purchasing employee.

A narrow analysis focusing solely on the ambiguity of the word "fee," with differing results depending on how the employee is paid, or on whether the employee's delivery duties were minimal compared to other tasks, seems to be incomplete, and to miss the additional point of a consideration of what the exclusion actually attempts to accomplish, and of the context surrounding its invocation. My ambiguity analysis thus goes beyond a narrow consideration of the word "fee." The ambiguity of the exclusion is broader, and is based both on the imprecision in the word "fee" and on the practical considerations involved. This ambiguity is present in all of these pizza delivery "for a fee" cases regardless of the minor differences in details among the cases, and militates against enforcement of the exclusion.

My understanding of this issue is based on the conviction that these "pizza delivery" cases have underlying policy considerations distinctly different from cases which do not involve localized product delivery, e.g., a case involving an over-the-road semi-trailer truck driver. Because my analysis focuses on some unique aspects of the "pizza delivery" cases, the foregoing lists of cited cases include only cases specifically presenting a pizza delivery fact pattern. Whether, and to what extent, these considerations would apply in a case not involving "pizza delivery" would...