SCOTT-PONTZER, APPELLANT, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY ET AL., APPELLEES.
No. 98-442
Supreme Court of Ohio
Decided June 23, 1999
85 Ohio St.3d 660 | 1999-Ohio-292
Submitted December 16, 1998. Appeal from the Court of Appeals for Stark County, No. 1997CA00152.
{¶ 2} Before his death, Pontzer was an employee of Superior Dairy, Inc. At the time of the accident, Superior Dairy was insured under a policy of commercial automobile liability insurance with Liberty Mutual Fire Insurance Company (“Liberty Fire“). Superior Dairy‘s policy of insurance with Liberty Fire contained a provision for underinsured motorist coverage. In addition to the liability policy provided by Liberty Fire, Superior Dairy also had in effect at the time of Pontzer‘s death an “umbrella/excess” insurance policy with Liberty Mutual Insurance Company (“Liberty Mutual“).
{¶ 3} On July 9, 1996, appellant brought, in the Court of Common Pleas of Stark County, an action as surviving spouse and executor of her husband‘s estate against Liberty Fire and Liberty Mutual. In the complaint appellant alleged that
{¶ 4} On appeal, the court of appeals affirmed the judgment of the trial court, but based its decision on different reasons than those of the trial court. Specifically, the court of appeals determined that the policies in question were “ambiguous as to the ‘insureds’ under the underinsured motorist coverages.”1 The court of appeals concluded that, pursuant to our decisiоn in King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 519 N.E.2d 1380, Pontzer, as an employee of
{¶ 5} This matter is now before this court pursuant to the allowance of a discretionary appeal.
John S. Coury, for appellant.
Jan A. Saurman Law Offices and John V. Rasmussen, for appellees.
Allen Schulman, Jr. and Christopher J. Van Blargan, urging reversal for amicus curiae, Ohio Academy of Trial Lawyers.
DOUGLAS, J.
{¶ 6} The parties present us with three issues for our determination. The first issue is whether Pontzer, as an employee of Superior Dairy, was an “insured,” for purposes of underinsured motorist coverage, under the policies issued to Superior Dairy by Liberty Fire and Liberty Mutual. If he was, then thе second issue is whether Pontzer, for coverage to be afforded, would have had to be in the course of his employment at the time of the accident. The third question, which pertains only to the Liberty Mutual policy, is whether, after underinsured motorist coverage is inserted into a policy by operation of law, the exclusions in the policy that have been written in so as to apply to the coverage for liability also pertain to the underinsured coverage.
{¶ 8} In discussing the foregoing, hereinafter “Liberty Fire” and “Liberty Mutual” will also be referred to jointly as “appellees,” since they submitted a joint brief to this court.
I. Liberty Fire Policy
{¶ 9} In regard to the commercial automobile liability policy issued through Liberty Fire, appellees argue that the court of appeals erred in concluding that Pontzer was an insured. Appellees contend that the Liberty Fire policy unambiguously shows that Superior Dairy was the only named insured, that Pontzer could not be considered an insured under any language in the policy, and that, therefore, appellant cannot claim entitlement to underinsured motorist benefits. We disagree.
{¶ 10} Regrettably, as so many of these types of cases do, this issue centers on construing certain words and phrases contained within the Liberty Fire policy. The declarations page of the Liberty Fire policy names Superior Dairy, Inc. as the named insured. The business auto coverage form of that policy states that “[t]hroughout this policy the words you and your refer to the [n]amed [i]nsured shown in the [d]eclarations.” The policy also contains an Ohio uninsured motorist
“B. Who Is An Insured
“1. You.
“2. If you are an individual, any family member.
“3. Anyone else occupying a covered auto or a temporary substitute for a covered auto. The covered auto must be out of service because of its breakdown, repair, servicing, loss or destruction.
“4. Anyone for damages he or she is entitled to recover because of bodily injury sustained by another insured.”
{¶ 11} It is well settled that an insurance policy is a contract and that the relationship between the insured and the insurer is purely contractual in nature. Nationwide Mut. Ins. Co. v. Marsh (1984), 15 Ohio St.3d 107, 109, 15 OBR 261, 262, 472 N.E.2d 1061, 1062. Appellees contend that the above-quoted policy language indicates the intent of the parties to the insurance contract to provide that Superior Dairy is the only named insured. According to appellees, the inclusion of the phrase “[i]f you are an individual, any family member” removes any doubt that “you” refers to Superior Dairy and, thus, that Superior Dairy is the sole named insured. In other words, appellees contend that by the insertion of this conditional language a distinction is made between “you” and an “individual,” thereby clearly evincing the intent of the parties that the corpоrate entity, Superior Dairy, be the sole named insured. While that is one interpretation of the policy, it is not the only interpretation.
{¶ 12} In King, 35 Ohio St.3d 208, 519 N.E.2d 1380, syllabus, Chief Justice Moyer, speaking for the court, said that “[w]here 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.”
{¶ 13} Contrary to appellees’ contentions, the policy language of the Liberty Fire policy can be interpreted to include company employees. Assuming arguendo that “you” does refer solely to Superior Dairy, this does not foreclose the inclusion of Pontzer as an insured under the policy. We note again, as we have often in the past, that uninsured motorist coverage, mandated by law pursuant to
{¶ 14} We rеcognize that insurers can draft policy language that provides varying arrays of coverage to any number of individuals. However, in drafting contracts of insurance, insurers must do so with language that is clear and unambiguous and that comports with the requirements of the law. See King, 35 Ohio St.3d 208, 519 N.E.2d 1380, and Martin, 70 Ohio St.3d 478, 639 N.E.2d 438.
II. Liberty Mutual Policy
{¶ 16} We also conclude that Pontzer was an insured under the umbrellа/excess policy issued to Superior Dairy through Liberty Mutual. Liberty Mutual failed to offer uninsured/underinsured motorist coverage under Superior Dairy‘s umbrella/excess insurance policy. Thus, unlike the Liberty Fire policy, the Liberty Mutual umbrella policy did not contain an uninsured motorist coverage form that defined insureds for purposes of underinsured motorist coverage.
{¶ 17} In Duriak v. Globe Am. Cas. Co. (1986), 28 Ohio St.3d 70, 72, 28 OBR 168, 170, 502 N.E.2d 620, 622-623, we held that excess liability insurance must comport with
III. Scope of Employment
{¶ 18} Having concluded that Pontzer was an insured under both policies at issue, we must now determine whether appellant is entitled to underinsured motorist benefits. Appellant argues that the court of appeals erred when it determined that underinsured motorist benefits under both the Liberty Fire and Liberty Mutual policies would be available to appellant only if her husband was acting during the scope of his employment when he was killed. We agree with appellant.
{¶ 19} In King v. Nationwide Ins. Co., 35 Ohio St.3d at 214, 519 N.E.2d at 1386, we noted that “[i]n the construction of insurance contracts, ‘[w]here exceptions, qualifications or exemptions are introduced into an insurance contract, a general presumption arises to the effect that that which is not clearly excluded from the operation of such contract is included in the operation thereof.’ ” (Quoting Home Indemn. Co. v. Plymouth [1945], 146 Ohio St. 96, 32 O.O. 30, 64 N.E.2d 248, paragraph two of the syllabus.) The Liberty Fire policy contains no language requiring that employees must be acting within the scope of their employment in order to receive underinsured motorist coverage. Thus, we find that appellant is entitlеd to underinsured motorist benefits under the Liberty Fire policy.
{¶ 20} On the other hand, Liberty Mutual‘s umbrella/excess insurance policy did restrict coverage to employees acting within the scope of their employment. However, we have already found that Liberty Mutual had failed to offer underinsured motorist coverage through the umbrella policy issued to Superior Dairy. Thus, any language in the Liberty Mutual umbrella policy restricting insurance coverage was intended to apply solely to excess liability coverage and not for purposes of underinsured motorist coverage. See, e.g., Demetry v. Kim (1991), 72 Ohio App.3d 692, 698, 595 N.E.2d 997, 1001.
IV.
{¶ 21} We realize that the conclusion reached herein may be viewed by some as a result that was not intended by the parties to the insurance contracts at issue. Nonetheless, we believe that to adopt appellees’ position in this matter would clearly produce absurd results. For instance, appellees’ position is that only those employees occupying a “covered auto” are insureds under the Liberty Fire policy. Appellees’ attorney conceded during oral argument that this position precluded coverage for employees driving their personal motor vehicles while acting during the scope of thеir employment. As a result, through the doctrine of respondeat superior, Superior Dairy would be potentially liable, without the protections afforded by automobile liability insurance (not to mention uninsured/underinsured motorist coverage), for tortious conduct by such employees. It could hardly have been the intent of Superior Dairy to place itself in such a precarious position. In any event, as the law is clear in this regard, we will not guess at the intent of the parties to the insurance contract when the insurer introduces ambiguous terms into the policy.
{¶ 22} Accordingly, we reverse the judgment of the court of appeals and we vacate the judgment of the trial court. We remand this matter to the trial court with instructions to enter judgment in favor of appellant on the issue of coverage as to both policies.
Judgment reversed and cause remanded.
RESNICK, F.E. SWEENEY and PFEIFER, JJ., concur.
MOYER, C.J., and COOK, J., dissent.
COOK, J., dissenting.
{¶ 23} I differ with the majority‘s UIM coverage analysis as to both policies. As to the commercial automobile policy, I would hold that it covers Superior Dairy‘s insurable interests. As to the excess policy, I would hold that even if UIM coverage is deemed provided by operation of law, it is provided to the named insured, Superior Dairy, but not to its off-duty employee.
The Commercial Auto Policy
{¶ 24} Despite the named insured (“you“) being Superior Dairy, the majority finds coverage for an off-duty employee driving his wife‘s car by saying that because UIM coverage protects persons and not vehicles, and because corporations cannot drive cars or sustain injuries, UIM coverage cannot protect a corporate entity. But, of course, a corporate entity has insurable interests for which countless policies are issued every day. See, e.g., Indemn. Ins. Co. of N. Am. v. Dow (C.A.6, 1949), 174 F.2d 168, 169-170, citing Wurzburg v. New York Life Ins. Co. (1918), 140 Tenn. 59, 203 S.W. 332 (manufacturing company had an insurable interest in the life of its manager). See, also,
{¶ 25} Moreover, public policy would prevent Superior Dairy from validly insuring its business against damages to Scott-Pontzer‘s personal automobile, or insuring against Scott-Pontzer‘s liability arising outside the scope of Superior Dairy‘s business. As a matter of public policy, the validity of an insurance contract is dependent upon the insured having an insurable interest in the subject of the
{¶ 26} Thus, no legitimate reasоn supports the judgment of the majority that this policy covers this employee‘s injuries in this accident; Scott-Pontzer is not an “insured” under the commercial auto policy.
The Excess Policy
{¶ 27} The majority‘s holding that the UIM coverage provided by operation of law in the Liberty Mutual excess policy covers this off-duty employee is likewise untenable.
Conclusion
{¶ 28} The effect of the majority opinion is to afford comprehensive automobile insurance coverage to any employee working for an employer prudent enough to insure itself. This cannot be what the majority means to do. I therefore respectfully dissent.
MOYER, C.J., concurs in the foregoing dissenting opinion.
{¶ 29} Once again, a majority of this court has extended the reach of uninsured/underinsured motorist coverage as mandated by
{¶ 30} The majority reiterates the legal principle that an insurance policy is a contract and the relationship between an insurer and an insured is contractual. It is equally well settled that “[c]ontracts are to be interpreted so as to carry out the intent of parties, as that intent is evidenced by contractual language.” Skivolocki v. E. Ohio Gas Co. (1974), 38 Ohio St.2d 244, 67 O.O.2d 321, 313 N.E.2d 374, paragraph one of the syllabus. Insurance coverage is determined by reasonably construing the contract ” ‘in conformity with the intention of the parties as gathered from the ordinary and commonly understood meaning of the language employed.’ ” (Emphasis added.) King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 211, 519 N.E.2d 1380, 1383; Dealers Dairy Products Co. v. Royal Ins. Co. (1960), 170 Ohio St. 336, 10 O.O.2d 424, 164 N.E.2d 745, paragraph one of the syllabus. Where the intent of the parties to a contract is evident from the clear and unambiguous language used, a court must not read into the contract a meaning not contemplated or placed there by an act of the parties to the contract. Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 168, 24 O.O.3d 274, 276, 436 N.E.2d 1347, 1348.
{¶ 31} It appears from the overall policy that the company‘s general intent was to purchase a commercial automobile liability insurance policy to insure Superior Dairy as a legal entity against liability arising from the use of certain Superior Dairy vehicles. The fact that Superior Dairy is the only named insured
{¶ 32} The majority admits that its conclusion is one not intended by the parties to the insurance contracts at issue, and yet it proceeds to find ambiguity. There is nothing ambiguous in the Liberty Fire policy‘s definition of “insured” for purposes of underinsured motorist coverage. “Common words appearing in a written instrument will be given their ordinary meaning unless manifest absurdity results, or unless some other meaning is clearly evidenced from the face or overall contents of the instrument.” Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 N.E.2d 146, paragraph two of the syllabus. “You” unambiguously means the named insured, Superior Dairy. The policy definition of “insured” also states that if “you” is an individual, then a family member is also an insured. The ordinary and commonly understood meaning of individual is a single human being. This language is not susceptible of more than one interpretation. In this case, “you” is an entity, not an individual. Therefore, this subsection is inapplicable in this case. There is no ambiguity and no reason to resort to conjecture that “you” must include employees because a corporation acts by and through its employees, or that having a corporate insured is meaningless unless the coverage extends to some person or persons.
{¶ 33} Assuming arguendo that the decedent was a potential insured under the Liberty Fire policy for purposes of uninsured or underinsured motorist coverage, there can also be no coverage if the decedent was acting outside the scope of his employment. A commercial policy cannot be reasonably construed to provide uninsured or underinsured motorist coverage in the case of the personal, nonemployment-related activities of an employee. Neither party to the contract intended to provide free uninsured motorist coverage for employees’ personal, nonemployment-related activities, regardless of individual risk factors such as
{¶ 34} The majority reasons that the policy contains no language requiring that employees be acting within the scope of their employment in order to reсeive underinsured motorist coverage. However, it is inherent that a commercial policy, purchased by and written for a corporation, applies to the corporate entity and those acting within the scope of employment for that entity. There is no language in the policy that would create a presumption that it applies in situations other than events relating to Superior Dairy and its operation. Here, the decedent was engaged in a personal, nonemplоyment-related activity in a noncovered vehicle. Coverage under a commercial liability policy cannot be extended in these circumstances. Common sense alone dictates that this was an extension of coverage that the parties did not contemplate, bargain for, rate, or purchase. Is the extension of liability coverage next?
{¶ 35} Because contract law should control the interpretation of insurance policies, and because the intent of the parties remains the foundation of a contract, I cannot agree with the majority‘s conclusion. Superior Dairy and Liberty Mutual did not intend for the commercial policy at issue to provide uninsured/underinsured motorist coverage for the private activities of Superior‘s employees who were injured while outside the scope of their employment. Therefore, I respectfully dissent.