Zurich-American Ins. Co. v. Amerisure Ins. Co.

Decision Date20 February 1996
Docket NumberZURICH-AMERICAN,Docket No. 166521
Citation547 N.W.2d 52,215 Mich.App. 526
PartiesINSURANCE COMPANY, Plaintiff-Appellant, v. AMERISURE INSURANCE COMPANY, Defendant-Appellee.
CourtCourt of Appeal of Michigan — District of US

Plunkett & Cooney, P.C. by Ernest R. Bazzana, Detroit, for plaintiff.

Garan, Lucow, Miller, Seward, Cooper & Becker, P.C. by Judith A. Moskus and Robert D. Goldstein, Detroit, for defendant.

Before CORRIGAN, P.J., and HOEKSTRA and DEEGAN, * JJ.

CORRIGAN, Presiding Judge.

Plaintiff Zurich-American Insurance Company brought this declaratory action against defendant Amerisure Insurance Company to determine the extent of the parties' liability, if any, under their respective insurance policies. The trial court granted defendant's motion for summary disposition, finding that plaintiff was solely liable under its policy of insurance. Plaintiff appeals as of right. We vacate the trial court's order and remand for further proceedings.

I

The underlying facts are not in dispute. Zurich's insured, K & R Trucking Company, was the owner of a 1980 International truck tractor. On July 27, 1987, K & R leased the tractor to Cimarron Express, Inc., a carrier operating under an Interstate Commerce Commission permit. The lease had no set expiration date, but was subject to cancellation by either party at any time by written notice. Under the terms of the lease, as required by federal regulations, Cimarron was granted exclusive possession, use, and control of the tractor for use in Cimarron's interstate trucking business. Cimarron also agreed to assume full responsibility for the operation of the equipment. The lease, however, required K & R to provide a driver for the tractor and to keep the tractor in "roadworthy condition and repair."

On January 2, 1988, while the lease was in effect, the tractor was involved in an accident with another motorist, Barbara Jean Travis, who died from her injuries. The tractor was insured under two different insurance policies at the time of the accident. The tractor was insured under a trucker's policy issued by Amerisure to Cimarron and also under a "bobtail" policy issued by Zurich to K & R that provided coverage when the tractor was not attached to any trailer and was not being used in Cimarron's business. At the time of the accident, the tractor was not attached to any trailer and was being driven by Kevin Pitts, an employee of K & R, to a facility in Ohio for repair of the heater motor.

After the accident, the personal representative of Barbara Travis' estate filed a lawsuit against both Pitts and K & R Trucking. K & R tendered defense of the action to its insurer, Zurich. Zurich thereafter demanded that Cimarron's insurer, Amerisure, assume the defense of the action, but Amerisure rejected that demand. Zurich then commenced this declaratory action against Amerisure, seeking a determination that Amerisure was "obligated to provide primary insurance coverage to Kevin Pitts and K & R Trucking" or, alternatively, to share in the defense and indemnification of Pitts and K & R on a pro-rata basis. The parties filed cross motions for summary disposition pursuant to MCR 2.116(C)(10) regarding the issue of coverage. The trial court granted summary disposition for Amerisure, holding that Amerisure's policy did not afford coverage for the accident in question and that Zurich was solely liable for the defense and indemnification of Pitts and K & R under its bobtail policy.

II

The standard for reviewing a motion for summary disposition under MCR 2.116(C)(10) is set forth in Allstate Ins. Co. v. Freeman, 432 Mich. 656, 662, 443 N.W.2d 734 (1989):

In reviewing a grant or denial of summary disposition under MCR 2.116(C)(10), [the court] consider[s] the pleadings, affidavits, depositions, admissions, and any other documentary evidence in favor of the party opposing the motion. A motion for summary disposition tests the factual basis for plaintiff's allegations and may be granted only if "there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law." MCR 2.116(C)(10); Velmer v. Baraga Area Schools, 430 Mich 385, 390; 424 NW2d 370 (1988). An insurer may utilize this procedure in a declaratory action....

On appeal, Zurich and Amerisure both contend that their respective insurance policies do not provide coverage for the accident in question. An insurance policy is much the same as any other contract; it is an agreement between the parties. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, [215 Mich.App. 531] 566, 489 N.W.2d 431 (1992). When presented with a dispute, a court must determine what the parties' agreement is and enforce it. Fragner v. American Community Mutual Ins. Co., 199 Mich.App. 537, 542-543, 502 N.W.2d 350 (1993). An insurer is free to define or limit the scope of coverage as long as the policy language fairly leads to only one reasonable interpretation and is not in contravention of public policy. Heniser v. Frankenmuth Mutual Ins., 449 Mich. 155, 161, 534 N.W.2d 502 (1995).

We disagree with the parties' suggestion that a finding of coverage under one policy necessarily implies a lack of coverage under the other policy. Rather, the extent of Zurich's and Amerisure's insurance obligations is governed by the terms of each of their individual policies. See id. at 172, 534 N.W.2d 502; Citizens Ins. Co. of America v. Federated Mutual Ins. Co., 448 Mich. 225, 236, 531 N.W.2d 138 (1995). If both policies provide coverage by their own terms, we must then determine whether one coverage is primary or excess to that of the other. Accordingly, we first will examine each individual policy to determine whether it affords coverage for the accident in question.

Amerisure's Policy

Part IV, § A.1. of Amerisure's policy states that coverage is afforded for "all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." As Amerisure correctly recognizes, whether its policy affords coverage in this case is dependent upon whether K & R may be considered an "insured." Part IV, § D. of Amerisure's policy defines who is an insured for purposes of part IV, § A.1. and states, in pertinent part:

D. WHO IS INSURED.

1. You are an insured for any covered auto.

2. Anyone else is an insured while using with your permission a covered auto you own, hire or borrow except:

* * * * * *

b. Someone using a covered auto while he or she is working in a business of selling, servicing, repairing or parking autos unless that business is yours.

* * * * * *

4. The owner or anyone else from whom you hire or borrow a covered auto which is not a trailer is an insured while the covered auto:

a. Is being used exclusively in your business, and

b. Is being used pursuant to operating rights granted to you by a public authority.

In ruling that Amerisure's policy does not provide coverage for the accident in question, the trial court stated:

Cimarron's policy covered the tractor only while the vehicle was being used exclusively in the insured's business and pursuant to the public authority. It was not being so used while K & R was driving the tractor to secure its repair. [Emphasis added.]

We hold that the trial court erred in ruling that coverage exists under Amerisure's policy "only" when the vehicle is being used exclusively in Cimarron's business and pursuant to a public authority. Although part IV, § D.4. of Amerisure's policy states that an owner or anyone from whom a covered vehicle is hired or borrowed is an insured while the vehicle is being used exclusively in Cimarron's business and pursuant to operating rights granted by a public authority, that is not the only provision defining who is "an insured" for purposes of coverage. As noted above, under part IV, § D.2., a permissive user is also "an insured."

Amerisure does not dispute, and the submitted evidence establishes, that K & R's employee, Kevin Pitts, was a permissive user at the time of the accident. 1 Nonetheless, Amerisure contends that coverage is excluded under part IV, § D.2.b., which excludes coverage for a permissive user where the vehicle is being used by someone "while he or she is working in a business of selling, servicing, repairing or parking autos."

Exclusionary clauses in insurance policies are to be strictly construed. Farm Bureau Ins. Co. of Michigan v. Stark, 437 Mich. 175, 181, 468 N.W.2d 498 (1991). Amerisure argues that the exclusion in part IV, § D.2.b. applies because K & R had agreed to keep the tractor in "roadworthy condition and repair" and, at the time of the accident, Pitts was en route to a facility for repair of the tractor. For the exclusion to apply, however, Pitts must have been using the tractor "while ... working in a business of selling, servicing, repairing or parking autos." Contrary to Amerisure's suggestion, the mere fact that K & R had a contractual obligation to keep the tractor in "roadworthy condition and repair" does not establish that K & R was in the business of servicing or repairing vehicles. The undisputed facts disclose that, at the time of the accident, Pitts was not using the tractor "while ... working in a business of selling, servicing, repairing or parking autos." On the contrary, he was driving the vehicle to a repair facility so that it could be repaired by someone else. We conclude, therefore, that the exclusion of part IV, § D.2.b. is not applicable.

Amerisure does not cite any other provision in its policy that purports to deny coverage for the accident in question. Nor do any of the cases cited by Amerisure support its contention that its policy does not afford coverage. 2 Accordingly, because Pitts was a permissive user of the tractor at the time of the accident, we...

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