Opinion
No. 104,573.
2012-06-29
David D. STEWART, Appellant, v. HORIZON BUILDING CORPORATION, et al., Appellees, Sarah Stewart and Ken Stewart, Appellants, v. Horizon Building Corporation, et al., Appellees, Atlantic Mutual Insurance Company, Garnishee/Appellee, Atlantic Mutual Insurance Company, Appellee, v. Karen Sloan and Robert Sloan, Appellees, Sarah Stewart, Ken Stewart, and David D. Stewart, Appellants.
Appeal from Johnson District Court; Thomas M. Sutherland, Judge. Charles H. Sitt and Richard F. Lombardo, of Shaffer Lombardo Shurin, of Kansas City, Missouri, and Salvador J. Mirabile, of Law Office of Salvador J. Mirabile, of Kansas City, Missouri, for appellants Ken Stewart and Sarah Stewart. G. Michael Fatall, of G. Michael Fatall, LLC, of Kansas City, Missouri, for appellant David D. Stewart.
Appeal from Johnson District Court; Thomas M. Sutherland, Judge.
Charles H. Sitt and Richard F. Lombardo, of Shaffer Lombardo Shurin, of Kansas City, Missouri, and Salvador J. Mirabile, of Law Office of Salvador J. Mirabile, of Kansas City, Missouri, for appellants Ken Stewart and Sarah Stewart. G. Michael Fatall, of G. Michael Fatall, LLC, of Kansas City, Missouri, for appellant David D. Stewart.
Patrick J. Murphy, of Wallace Saunders Austin Brown & Enochs, Chtd., of Wichita, and Kimberly A. Hartman, of Clausen Miller, P.C., of Chicago, Illinois, for appellee Atlantic Mutual Insurance Company.
Before GREEN, P.J., MALONE and McANANY, JJ.
MEMORANDUM OPINION
PER CURIAM.
David Stewart, Sarah Stewart, and Ken Stewart (the Stewarts), appeal the granting of summary judgment to Atlantic Mutual Insurance Company (Atlantic) in Atlantic's declaratory judgment action which sought the trial court's construction of its insurance policy issued to Karen Sloan and her husband, Robert Sloan. Finding that the trial court correctly construed the policy and applicable law, we affirm.
Facts
On July 22, 2006, Karen was driving a Ford F–250 truck owned by her employer Horizon Building Corp. (Horizon). While driving on the highway, Karen lost control of the truck causing it to leave the road, cross the median, become airborne, and land on top of a convertible driven by Lloyd Stewart and Katherine Stewart. Both Lloyd and Katherine were pronounced dead at the scene.
Lloyd and Katherine's families each filed wrongful death petitions against Karen, Horizon, and James Laybourne, who was the president of Horizon. These wrongful death cases were later consolidated. Horizon and Laybourne were later dismissed from the action when they settled for a combined total of $1,284,272. Karen agreed to a consent judgment in the amount of $2,750,000.
The Stewarts then initiated garnishment proceedings to collect the judgment against Karen—$1,465,728—not satisfied by Horizon and Laybourne's settlement payment. Although the truck involved in the accident was available for Karen and her husband's daily use, it was owned and insured by Horizon. The Stewarts, however, sought to collect a portion of the judgment against Karen from her personal insurer, Atlantic.
In response, Atlantic filed a petition for declaratory judgment against the Stewarts and Karen and Robert. Atlantic argued that it did not have a coverage obligation under the auto, umbrella, or home policies issued to Karen and Robert with respect to the underlying wrongful death actions. The declaratory judgment action was eventually consolidated with the underlying plaintiffs' lawsuits and garnishment proceedings.
The trial court entered summary judgment in favor of Atlantic, holding that there was no coverage under the auto, umbrella, and home policies for Karen's liability in the underlying accident. Specifically, the trial court held that there was no coverage under the auto or umbrella policies because the exception in the “other vehicles” exclusions applicable to “family members” does not encompass Karen or Robert Sloan—persons defined as “you” or “your.” The trial court further determined that the evidence established that the Stewarts died immediately upon impact, while Karen Sloan still occupied the Ford F–250 truck. The trial court also held that coverage was precluded under the home policy's exclusion for coverage for bodily injury “that occurs while an insured person is riding in or driving a motor vehicle.”
Standard of Review
When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The trial court is required to resolve all facts and inferences which may be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence. Osterhaus v.. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011).
We review de novo the trial court's grant of a motion for summary judgment. Kuxhausen v. Tillman Partners, 291 Kan. 314, 318, 241 P.3d 75 (2010).
Here, to determine whether summary judgment was proper, the trial court interpreted the policy language of the insurance contract. “The interpretation and legal effect of a written contract are matters of law over which an appellate court has unlimited review. [Citation omitted.] Regardless of the district court's construction of a written contract, an appellate court may construe a written contract and determine its legal effect. [Citation omitted.]” Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900–01, 220 P.3d 333 (2009).
Like any other contract, the language of an insurance policy must be construed in such a way as to give effect to the intention of the parties. O'Bryan v. Columbia Ins. Group, 274 Kan. 572, 575–76, 56 P.3d 789 (2002). “Because the insurer prepares its own contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage under the policy, it must use clear and unambiguous language; otherwise, the policy will be liberally construed in favor of the insured. [Citations omitted.]” O'Bryan, 274 Kan. at 575. On the other hand, if the insurance policy's language is clear and unambiguous, there is no need for judicial interpretation. If the language of the policy is clear, the court must enforce the contract as made. O'Bryan, 274 Kan. at 576.
Where, as here, the Stewarts have filed suit against Atlantic on behalf of Karen seeking coverage under Atlantic's insurance policy, the Stewarts have the burden of proving that Karen falls within the coverage provisions of Atlantic's policy. See Brumley v. Lee, 265 Kan. 810, 963 P.2d 1224 (1998). More specifically, “the insured has the burden of proof to establish the nature and extent of any loss and that the loss claimed was caused by one of the perils insured against (‘covered’) by the policy.” Kansas Farm Bureau Ins. Co. v. Reynolds, 16 Kan.App.2d 326, 823 P.2d 216 (1991). Once the insured has satisfied this burden, the insurer then has the burden of proving that any exclusionary clauses within the policy apply to preclude coverage. Exploration Place, Inc. v. Midwest Drywall Co., 277 Kan. 898, 89 P.3d 536 (2004).
Does Atlantic's Auto Policy and Umbrella Policy Exclude the Stewarts' Claimed Loss?
The Stewarts contend that the trial court erred in concluding that their claims under Atlantic's auto policy and umbrella policy fell within the scope of the policies' exclusions. The following exclusion applies to the auto policy:
“YOUR AGREEMENT WITH US
This document is your actual auto insurance policy. The Declarations Page and any endorsements named on the Declarations Page are included in it. Throughout this policy, the words, you, your, and yours mean each person named on the Declarations Page, and his or her spouse if they live together. The words we, us, our, and ours means the company named on the Declarations Page.
....
“DAMAGES WE WONT PAY
In this section of your Auto Policy, we describe certain exclusions. We won't pay for bodily injury, property damage or medical expenses that one of these exclusions applies to.
....
(8) Accidents involving your other vehicles.
We won't pay for any bodily injury, property damage or medical expenses arising out of a vehicle accident involving a vehicle owned by or available for the regular use of an insured person, unless it is named on the Declarations page. However, we do cover your liability and your medical expenses for an occurrence involving a vehicle that a family member owns or regularly uses.
....
“Family member means any of these people, but only if they are residents of your household:
Your children
Your other relatives
Other people under 21 years of age, such as wards, who are in the care of you or a family member.
....
“You, your and yours mean each person named on the Declarations Page, and his or her spouse if they live together.”
The subject Ford F–250 truck was not listed on the auto policy's declarations pages.
It is undisputed that both Karen and Robert are each named on the declarations page. It is also undisputed that Karen falls within the policy definition of “you” or “your.” The dispute arises over whether Karen fits within the definition of “family member” as used in the policy. The trial court held that Karen could not be a “family member” under the policy and also be the “you” or “your” under the policy. The trial court concluded that it was the intent of Atlantic that the term “family member” was to mean someone other than those persons defined as “you” or “your.”
The Stewarts argue that the trial court erred in reaching this conclusion because their claims fall within the family member exception to receive coverage. They contend that because Robert fits within the definition of “you” and that because Karen, as his wife, is a relative of Robert's, she fits within the definition of “your other relatives.” The Stewarts argue that Robert is Karen's other relative and that Karen is Robert's other relative under the policy. Thus, the Stewarts maintain that because Karen fits within the definition of “family member” then the exception to this exclusion applies and that Karen should have coverage under the auto policy.
On the other hand, Atlantic argues that the exception to the exclusion does not apply. The parties do not dispute that the truck involved in the accident was regularly used by both Karen and Robert, but Atlantic contends that because both Karen and Robert were named insureds they cannot also fall within the definition of “family member.” Atlantic further argues that the Stewarts' argument ignores the definitions listed in the policy. Atlantic notes that the policy defines “you” or “your” to mean “each person named on the Declarations Page.” Atlantic contends that in applying that definition, this would mean that both Karen and Robert are the “you” or “your” in the policy. Under this interpretation, the “your other relatives” language would mean Karen and Robert's other relatives which would preclude both Karen and Robert from being the “other relative.”
To support its argument, Atlantic relies on Geico General Ins. Co. v. Hanzlik, 32 Kan.App.2d 951, 92 P.3d 1121 (2004). As in this case, the parties in Hanzlik disputed what the term “you” meant in the Geico policy. The Hanzliks argued that because Wendy Hanzlik, Tim Hanzlik's wife, was not listed as a policyholder then she was not included in the policy's definition of “you.” The court noted the definition of “you” in the Geico policy which stated that “you” means the policyholder named in the declarations and his or her spouse if a resident of the same household. Based on this definition, our court held that “[w]ithout exerting a herculean effort to manufacture a convolution of the plain and straightforward policy language, a reasonable insured would have no difficulty understanding that when a Section I policy provision refers to ‘you’ it means both Tim and Wendy.” Hanzlik, 32 Kan.App.2d at 957–58.
Atlantic also cites to Sunshine Ins. Co. v. Sprung, 452 N.W.2d 782 (S.D.1990), to support its argument. And although this case is not from Kansas, the facts are directly on point. As in this case, in Sprung, James and Audrey, husband and wife, argued that they could fit within the definition of “you” and also fit within the definition of “family member,” allowing them to fit within an exception to receive coverage. The court rejected their argument. The court held that whenever the words “you” and “your” were used in the policy, both James and Audrey were included. Sprung, 452 N.W.2d at 784. The court further held that the term “family member” was defined with reference to the previously defined term “you,” which included both James and Audrey. The court concluded that “ ‘[r]eading these two defined terms together, it is apparent that persons who fall within the definition of “you” are not included among the persons who fall within the definition of “family member.” ‘ “ Sprung, 452 N.W.2d at 785.
Similarly, in Sheldon v. Hartford Ins. Co., 144 N.M. 562, 567, 189 P.3d 695 (Ct.App.2008), where Hartford's policy defined the terms “you” and “family member” similar to Atlantic's definitions, the court held that the terms “spouse” and “family member” did not overlap because “under the policy definitions, the spouse of the insured could not be logically included within the term ‘family member.’ “
Each of these cases is applicable to our case. Here, as in the cases cited earlier, Atlantic defined the term “you” to mean the policyholders listed in the declarations and his or her spouse if they live together. Therefore, we adopt the reasoning in these cases and hold that Atlantic's definition of “you” is clear and unambiguous and that the term “you” means both Karen and Robert. Additionally, as in Sprung, the term “family member” is defined with reference to the previously defined term “you” which we already determined includes both Karen and Robert. When reading these two defined terms together, it is clear that persons who fall within the definition of “you” are not included with the persons who fall within the definition of “family member.” Under this interpretation, Karen does not fit within the exception, and therefore, she is not entitled to coverage.
Next, the Stewarts contend that the trial court erred in concluding that their claims under Atlantic's umbrella policy fell within the scope of the policy's exclusions. Using the same terms and definitions as the auto policy, the umbrella policy generally excludes liability coverage arising out of the use of a vehicle not listed on the declarations:
“DAMAGES WE WON'T PAY
In this section, we describe certain exclusions that apply to your Personal Umbrella Policy.
(14) Liability for owned vehicles. We won't pay for any bodily injury, personal injury, or property damage arising out of the ownership, care or use of a vehicle owned by or available for the regular use of you or a family member unless it is named on the Declarations Page or covered by your underlying insurance. However, we do cover your liability for an occurrence involving a vehicle that a family member owns or regularly uses.”
As in the auto policy, the Ford F–250 truck is not listed on the umbrella policy's declarations page.
In their briefs, both parties argue the applicability of exclusion # 8 and exclusion # 14 together. Exclusion # 14 under the Umbrella Policy is essentially identical to exclusion # 8 under the Auto Policy. We determine that exclusion # 14 also applies for the same reasons that exclusion # 8 applies. As a result, exclusion # 14 bars coverage for damages caused by Karen's vehicle collision on July 22, 2006.
Homeowners Policy
Finally, the Stewarts contend that the trial court erred in concluding that their claims under the homeowners policy of Atlantic fell within the scope of the policy's exclusions.
Exclusion # 18 under the Homeowners Policy
Atlantic's homeowners policy excludes coverage for bodily injury “that occurs while an injured person is riding in or driving a motor vehicle.” Atlantic was granted summary judgment on this issue when the trial court held that exclusion # 18 prevented Karen from receiving coverage under the homeowners policy.
As stated earlier, where there is no factual dispute, appellate review of an order regarding summary judgment is de novo. Kuxhausen, 291 Kan. at 318.
On appeal, the Stewarts argue that the trial court erred in concluding that they failed to meet their burden of showing a possibility of coverage under the Policy. The Stewarts maintain that Atlantic failed to meet its burden of proof for summary judgment. The Stewarts contend that Atlantic failed to prove that the deaths of Lloyd and Katherine occurred while Karen was driving or occupying the truck. The Stewarts also argue that the evidence that Atlantic presented to meet its burden was not competent and contained several hearsay statements. Thus, the Stewarts contend that the trial court's summary judgment should be reversed.
There is no dispute that Lloyd and Katherine Stewart died as a result of the injuries they sustained when Karen caused the Ford F–250 truck she was driving to collide and land on top of the Stewarts' convertible. Although the exact timing of the Stewarts' deaths is unknown, they did not survive the crash. Immediately after the accident, Jason Hamlin, a witness, removed Karen from the Ford F–250 truck. He then “ran back down and checked the pulse of the two in the [Lloyd and Katherine's] car and felt none.” The EMT responders arrived approximately seven (7) minutes after the accident occurred and pronounced both Lloyd and Katherine “dead on scene.” The investigative fatality report states that Lloyd and Katherine “died as a result of the injuries they received in the collision.” The coroner likewise concluded that Lloyd and Katherine succumbed to their injuries at the scene.
Nevertheless, the Stewarts argue that Atlantic, as the moving party below, failed to unequivocally establish that Lloyd and Katherine died while Karen Sloan was still driving the Ford F–250 truck, and not before she was pulled from the truck. They claim that the failure to establish the exact moment of the deaths demonstrates a dispute of material fact which should have precluded the entry of summary judgment in favor of Atlantic. In support of their argument, the Stewarts attack the sufficiency of Atlantic's reliance upon police and emergency reports and eyewitness accounts—which although undisputed, are unsworn documents—to establish that Lloyd and Katherine's deaths occurred upon impact.
Moreover, the Stewarts contend that Atlantic failed to sustain its burden as the responding party to the Stewarts' motion for summary judgment. They argue that because Atlantic's factual materials did not comply with K.S.A. 60–256(c), which require material facts to be established or disproved by the use of pleadings, depositions, answers to interrogatories, admissions, or affidavits, Atlantic failed to sustain its burden, as a nonmovant, on the issues in question. Nevertheless, the evidence provided for summary judgment purposes does not have to be in the form required to be admissible at trial. “The court may consider any material that would be admissible or usable at trial.” Arceo v. City of Junction City, Kansas, 182 F.Supp. 1062, 1080 (D.Kan.2002). Obviously, the investigative fatality report would be admissible at trial as a business record exception to the hearsay rule under K.S.A. 60–460(m) and the coroner's report under K.S.A. 60–460(o). See State v. Bell, 239 Kan. 229, 233, 718 P.2d 628 (1986) (autopsy report of Colorado coroner was admissible under subsection [o] as an official record). Consequently, we reject the Stewarts' argument that Atlantic's evidence was insufficient for summary judgment purposes.
Finally, we reject the Stewarts' interpretation of exclusion # 18 that they were entitled to summary judgment with regard to coverage under the homeowners policy because Atlantic failed to show that Lloyd and Katherine's deaths occurred before Karen was pulled from the Ford F–250 truck. It is undisputed that Lloyd and Katherine sustained life-ending physical harm in the accident. Indeed, the Stewarts have pled this undisputed fact in their pleadings. For example, in his second amended petition, David averred that “[w]hile operating [the Ford F–250 pickup] under the influence of alcohol, [Karen] crossed the median of Highway 69 ... and struck the vehicle operated by Lloyd E. Stewart, [who] suffered and died as a result of injuries sustained in the automobile collision.” Sarah Stewart and Ken Stewart similarly pled that both Lloyd and Katherine “suffered and died as a result of injuries sustained in the automobile collision.”
The exclusion language of # 18 refers to “bodily injury” (defined under the policy as physical harm, sickness, mental anguish, or death) occurring while an insured person is riding in or driving a motor vehicle. The Stewarts have admitted that the “physical harm,” which resulted in the deaths of Lloyd and Katherine, was sustained during the automobile collision. Moreover, this “physical harm” constitutes a “bodily injury ... that occur[red] while an insured person [was] riding in or driving a motor vehicle.” Thus, it does not matter whether the exact time of Lloyd and Katherine's deaths occurred before or after Karen was removed from the Ford F–250 truck because the “physical harm” element, which occurred while Karen was still driving the Ford F–250 truck, precludes coverage.
Affirmed.