Plаintiff North Pacific Insurance Company (North Pacific) brought a declaratory judgment action against American Manufacturers Mutual Insurance Company (American) asserting that American had a duty to defend and indemnify Brad Morgan and Linda Likens for monies paid by North Pacific to defend and settle a tort claim brought against Morgan and Likens by Robert Farrell for injuries he suffered in an automobile accident. The trial court denied North Pacific’s mоtion for partial summary judgment, granted American’s cross-motion for summary judgment, and entered a judgment of dismissal of North Pacific’s action. ORCP 47. North Pacific appeals, and we affirm.
We review the trial court’s grant of summary judgment to determine whether the moving party was entitled to judgment as a matter of law. Jones v. General Motors Corp.,
In February 1999, Jerry Brown Company (Brown) leased a 1999 Chevrolet Suburban from Felco Auto Lease (Felco) for a three-year term with an option to purchase the vehicle at the end of the term. In January 2001, American was Brown’s insurer, and the vehicle was listed as a covered automobile in Brown’s insurance policy with American. That same month, Brown sold the vehicle to Troy Likens. The sale was evidenced by a writing entitled “Bill Of Sale” that was signed by Brown and Troy Likens. The document recites,
“On January 1, 2001 The Jerry Brown Co., Inc. (seller) sold one 1999 Chevrolet Suburban * * * to Troy Likens (buyer) for the amount of $21,000. Buyer will continue to make lease payments to Felco AutoLeasе in the monthly amount of $575.08 until such time as buyer secures other means of financing. As buyer pays each monthly lease payment the principal amount owed to seller will be reduced by $330.*476 “Additionally, buyer agrees to purchase and have in force full coverage auto insurance on the above vehicle from the date of purchase forward.”
By March 5, 2001, Likens had obtained insurance coverage for the vehicle from North Pacific. Likewise, Brown had requested that American eliminate the coverage for the vehicle from its policy. However, Brown did not notify Felco of the transaction even though its lease with Felco prohibited Brown from assigning, transferring, or conveying its leasehold interests. Despite the terms of the sale agreement, Likens made the monthly payments required by the sale agreement to Brown, who in turn forwarded them to Felco as its lease payments.
In May 2001 and before Brown’s lease with Felco expired, Likens’ stepson, Brad Morgan, while driving the vehicle with Linda Likens, Troy’s wife, as a passenger, collided with a vehicle driven by Farrell. At all times before the accidеnt, the title to the vehicle listed Felco as the lessor and Brown as the lessee. Farrell filed an action against Morgan and Linda Likens for injuries arising out of the accident, and North Pacific undertook their defense. Evеntually, North Pacific paid $650,000 to Farrell to settle Farrell’s lawsuit against Morgan and Likens. This action by North Pacific seeks a declaration that American had a duty under its policy issued to Brown to defend Farrell’s action аgainst Morgan and Likens and a duty to indemnify North Pacific for the monies that it expended in that defense. Both parties moved for summary judgment, resulting in the trial court’s determination that American had no duty to defend and the dismissal of North Pаcific’s action.
On appeal, North Pacific argues that Morgan and Likens were insureds under American’s policy at the time of the accident because the vehicle was a “hired” vehicle within the meaning of the policy and they were using the vehicle with Brown’s “permission.” “Hired” autos are described by the policy as autos “you lease, hire, rent or borrow.” American’s policy defines as an insured “[ajnyone [other than the named insured] while using with your permission a covered ‘auto’ you own, hire or borrow[.]” A “covered” vehicle is defined in the policy, for purposes of liability, as “any auto.”
North Pacific reasons, based on the above terms of American’s policy, that Likens was using the vehicle with Brown’s permission and that the vehicle was a “hired vehicle” because Brown continued to leasе the vehicle from Felco at the time of the accident. In addition, North Pacific points to the facts that the lease prohibited Brown from conveying its lease rights without Felco’s consent, that the Likens made their payments to Brown and not to Felco, and that Brown never notified Felco that it had sold the vehicle to Likens. North Pacific concludes, “In sum, the Vehicle lease between [Brown and Felco] remained in effect аt the time of the Accident. Thus, the Vehicle remained a ‘hired’ auto under [American’s] policy.”
American counters that the sale agreement between Brown and Troy Likens constituted a conveyance of all Brown’s leasehold interests in the vehicle, including its right to procure title from Felco to the vehicle when full payment was made and the option to purchase was exercised. According to American, it follows that, bеcause at the time of the accident Brown had no residual right to possess or use the vehicle or any right to control or restrict Likens’ use of it, the vehicle was not being operated with Brown’s “permission” as required by American’s policy for coverage. For that reason, American concludes that Morgan and Likens were not insureds under its policy and, therefore, it does not owe a duty to defend or indemnify them.
The issue whether American’s policy covers Likens and Morgan as insureds turns on the construction of American’s policy with Brown. Generally, as a contract, the construction of an insurance policy is a question of law. May v. Chicago Insurance Co.,
“we identify the ordinary meaning of the term and examine both the immediate context in which it is used and the broader context of the policy as a whole to determine whether there remains any ambiguity about what the parties [to the policy] intended.”
Mutual of Enumclaw Ins. Co. v. Rohde,
Thus, from the perspective оf the “ordinary purchaser of insurance,” what did Brown and American intend when they entered into their insurance contract? American’s policy provides that insureds under the policy include those who use with Brown’s “permission a covered ‘auto’ you own, hire or borrow.” A “hired” auto is described by the policy as an auto “you lease, hire, rent or borrow.” The word “permission” is not defined in the policy. However, the ordinary meaning of the word “рermission” as used in the context of the policy of this case means “the act of permitting : formal consent : AUTHORIZATION.” Webster’s Third New Infl Dictionary 1683 (unabridged ed 2002). “Permission” and “consent” are synonymous in this context. See Mathews v. Federated Service Ins. Co.,
The language of the bill of sale and the testimony about that agreement unambiguously show a transfer of the incidents of ownership from Brown to Likens; in other words, Brown conveyed whatever property interests in the vehicle it held to Likens. The nature of that transaction is therefore fundamentally аt odds with the proposition that Likens continued to use the vehicle with Brown’s permission as the policy uses the term. The fact that the lease agreement remained in effect between Brown and Felco does not change the circumstances that gave rise to Likens’ use of the vehicle at the time of the accident with Farrell. For instance, in Wisbey v. Nationwide Mut. Ins. Co.,
Nonetheless, North Pacific argues that the mere transfer of possessory rights under a lease is unlike the transfer of ownership that occurs when а buyer acquires ownership interests in a vehicle subject to the condition of paying off an encumbrance against it and that that is particularly the case when Brown never obtained Felco’s consent to make the transfer to Likens and remained liable under the
Affirmed.
Notes
Compare Mathews,