Case Title: Employers Ins. Co. of Ala., Inc. v. Jeff Gin Co.

Citation: 378 So. 2d 693

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1979-11-21T00:00:00Z

Document:
378 So. 2d 693 (1979)
EMPLOYERS INSURANCE COMPANY OF ALABAMA, INC.
v.
JEFF GIN COMPANY, a Cooperative Association, et al.
78-520.

Supreme Court of Alabama.
November 21, 1979.
Rehearing Denied December 21, 1979.
William T. Mills, II of Dunn, Porterfield, Scholl & Clark, Birmingham, for appellant.
George A. Moore of Johnston, Johnston & Moore, Huntsville, for Jeff Gin Co., a Cooperative Assn., John W. Vandiver, individually and d/b/a Jeff Gin Co.
*694 EMBRY, Justice.
Employers Insurance Company of Alabama, Inc., brought this action seeking a declaratory judgment to determine its obligations to Jeff Gin Company, a cooperative association, under a policy of insurance it had issued to Jeff Gin. From the judgment declaring that Jeff Gin was entitled to coverage, and to be afforded a defense, Employers takes this appeal. We affirm.
The parties agree the sole issue presented for review is whether the trial court committed reversible error in holding that Employers was required to defend, under its standard workmen's compensation and employer liability policy, an action based entirely on negligence filed in Texas by a former employee of Jeff Gin for an accidental injury arising out of and in the course of his employment in Alabama. We hold the trial court without error in finding Employers had a duty to defend Jeff Gin and therefore affirm.
The parties stipulated before trial to the following concise statement of facts:
The relevant provisions of the insurance policy are:
"This policy does not apply:
Employers' basic contention is that the action filed in Texas by Castaneda does not involve a claim which falls within the insurance policy; therefore, it has no duty to defend Jeff Gin. The argument made is that the policy is clear, unambiguous, and provides only two types of coverage: A and B. The parties agree that Jeff Gin is not covered under coverage A because the action filed by Castaneda is based solely on negligence and does not seek workmen's compensation benefits under the Alabama or Texas statutes. The dispute centers on "Coverage B Employers' Liability." Employers argues that Jeff Gin is not covered under coverage B because of the clear and unambiguous wording of exclusion "(f)."
Jeff Gin argues that the policy is ambiguous regarding whether it covers lawsuits such as the one here involved and, therefore, the trial court correctly construed the policy provisions in its favor. We agree.
Employers and Jeff Gin appear to be in agreement that Castaneda's action has little chance of success; however, this does not affect the outcome of this appeal because the insurance policy provides, in II(a), that Employers will defend any action seeking recovery of damages payable under insurance afforded by other provisions of the policy, regardless of the fact such action is groundless, false, or fraudulent.
It is a fundamental rule of insurance law that courts construe insurance contracts in a manner to give effect to the intent of the parties; however, any ambiguities in the policy are to be resolved in favor of the insured. Billups v. Alabama Farm Bureau Mutual Casualty Ins. Co., 352 So. 2d 1097 (Ala.1977). This court has frequently held that provisions of insurance policies must be construed in light of the interpretation that ordinary men would place on the language used. Universal Underwriters Ins. Co. v. Marriott Homes, Inc., 286 Ala. 231, 238 So. 2d 730 (1970).
When coverage B of the policy is read in conjunction with II(a) and exclusion (f), it is not clear to this court whether any loss, resulting from the occurrence made the basis of Castaneda's action against Jeff Gin, was intended by the parties to be insured against by the policy provisions. That being the case it necessarily follows that there is an ambiguity in the policy.
It is a general rule of construction that exceptions to coverage must be interpreted as narrowly as possible in order to provide maximum coverage for the insured. Further, such exceptions must be construed most strongly against the company drafting and issuing the policy. See Westchester Fire Insurance Company v. Barnett Millworks, *696 Inc., 364 So. 2d 1137 (Ala.1978). Applying this rule of construction, along with the others to which we have referred, to the policy and facts of this case, we must conclude the trial court correctly construed the policy in favor of Jeff Gin.
For the reasons assigned, the judgment is due to be, and is hereby, affirmed.
AFFIRMED.
FAULKNER, JONES, ALMON and BEATTY, JJ., concur.