Case Title: FITZGERALD v AETNA INSURANCE CO

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1978-04-02T00:00:00Z

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No. 13822 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 DONNA S. FITZGERALD, Individually and as Administratrix of the Estate of RONALD E. FITZGERALD, Deceased, Plaintiff and Respondent, AETNA INSURANCE COMPANY, MARKEL INSURANCE COMPANY and CANADIAN SURETY COl4PANY, Defendants and Appellants. Appeal from: District Court of the Eiqhth Judicial District, Honorable William Coder, Judge presiding. Counsel of Record: For Appellants: Church, Harris, Johnson and Williams, Great Falls, Xontana Cresap S . PlcCracken argued, Great Falls, Montana For Respondent: Marra, Wenz and Iwen, Great Falls, Montana Joseph Flarra argued, Great Palls, Montana Dola Wilson, Great Falls, Montana Submitted: January 18, 1978 M r . Chief J u s t i c e Frank I. H a s w e l l delivered t h e Opinion of t h e Court. Aetna Insurance Company appeals from an order of t h e D i s t r i c t Court, Eighth J u d i c i a l D i s t r i c t , Cascade County, denying its motion f o r summary judgment and granting p a r t i a l summary judgment i n favor of t h e p l a i n t i f f Fitzgerald. I n December 1973, Donna Fitzgerald f i l e d s u i t i n S t a t e D i s t r i c t Court a g a i n s t Turner Valley Transport (Turner Valley), and Emmanuel St. Louis (St. Louis), both motor c a r r i e r s from Edmonton, Alberta, Canada, and Rudolph C o l l i c o t t , a truck d r i v e r , f o r allegedly causing t h e wrongful death of her husband, Ronald E. Fitzgerald. Fitzgerald was k i l l e d November 2 3 , 1973, i n a c o l l i s i o n near Lewistown, Montana, between h i s truck and a t r a c t o r - t r a i l e r u n i t driven by C o l l i c o t t . C o l l i c o t t was transporting a load of pipe f o r Turner Valley from Edmonton, Alberta, t o G i l l e t t e , Wyoming. Turner Valley owned t h e t r a i l e r involved i n t h e c o l l i s i o n , b u t had hired both t h e t r a c t o r and t h e d r i v e r C o l l i c o t t from S t . Louis. The defendants Turner Valley, St. Louis, and C o l l i c o t t removed t h e wrongful death s u i t t o Federal Court. A nonjury t r i a l t h e r e r e s u l t e d i n a judgment a g a i n s t Turner Valley and C o l l i c o t t f o r $190,739.00, plus c o s t s , and i n a finding t h a t S t . Louis w a s n o t bound t o indemnify Turner Valley. N o appeal w a s taken from t h i s judgment. A t t h e t i m e of t h e accident Turner Valley was insured by Markel Insurance Company of Canada (Markel) under a primary v e h i c l e policy covering wholly owned and scheduled vehicles, and by Aetna Insurance Company (Aetna) under a composite mercantile policy affording a limited form of automobile l i a b i l i t y coverage. Aetna defended Turner Valley i n t h e Federal D i s t r i c t Court t r i a l a f t e r Markel dropped i t s defense of Turner Valley. S t . Louis w a s insured by Canadian Surety Company (Canadian Surety). O n J u l y 30, 1975, Donna Fitzgerald f i l e d t h i s s u i t i n t h e Cascade County D i s t r i c t Court a g a i n s t Aetna, Markel, and Canadian Surety t o c o l l e c t on t h e judgment granted her i n Federal Court. I n her complaint she prayed f o r t h e amount of t h e judgment she had received i n Federal Court, plus i n t e r e s t ; f o r punitive damages; f o r attorney f e e s and c o s t s ; and f o r damages f o r mental d i s t r e s s allegedly caused her because of t h e defendants' lack of good f a i t h and malicious and oppressive conduct. Aetna twice removed t h e s u i t t o Federal Court, b u t each time p l a i n t i f f was successful i n remanding it t o s t a t e court. Markel and Canadian Surety were eventually dismissed from t h e s u i t f o r lack of personal j u r i s d i c t i o n . Following p r e t r i a l discovery, Aetna moved f o r summary judgment on a l l i s s u e s and Donna Fitzgerald moved f o r p a r t i a l summary judgment as t o t h e amount Aetna allegedly owed her a s Turner Valley's i n s u r e r under t h e Federal Court judgment. The D i s t r i c t Court entered an order denying Aetna's motion f o r s m n a r y judgment and granting p l a i n t i f f ' s motion f o r p a r t i a l summary judgment. Aetna appeals from t h i s order. It has a l s o f i l e d a p e t i t i o n f o r a w r i t of supervisory c o n t r o l ( ~ o c k e t No. 13888) i n conjunction with its appeal requesting t h i s Court t o d i r e c t t h e D i s t r i c t Court t o dismiss p l a i n t i f f ' s claims f o r punitive damages and t o e n t e r summary judgment i n its favor on t h e m e r i t s of t h e case. Aetna r a i s e s t h e following i s s u e s on appeal and i n i t s application f o r a w r i t of supervisory control: 1. Did t h e ~ i s t r i c t Court e r r i n denying Aetna's motion f o r summary judgment and i n entering p a r t i a l summary judgment f o r p l a i n t i f f ? 2. Is a claim f o r punitive damages allowable under s e c t i o n 17-208, R.C.M. 1947, i n a s u i t by a t h i r d p a r t y a g a i n s t an automobile l i a b i l i t y i n s u r e r t o c o l l e c t a judg- ment previously entered a g a i n s t t h e insured? The f i r s t i s s u e r e l a t e s t o policy coverage and t o t h e v a l i d i t y of c e r t a i n policy defenses which Aetna a s s e r t s p r o t e c t s it from l i a b i l i t y a g a i n s t t h e insured, and t h e r e f o r e from l i a b i l i t y a g a i n s t p l a i n t i f f : (1) Aetnals insurance c o n t r a c t w i t h Turner Valley covered only "nonowned" vehicles; and ( 2 ) c e r t a i n " s t a t u t o r y conditions" i n Aetnals policy, i n s e r t e d i n compliance with Alberta, Canada law, suspended coverage while a covered vehicle w a s engaged i n an i l l e g a l operation o r while an intoxicated d r i v e r was driving a covered vehicle. Aetna contends t h a t any one of these i s s u f f i c i e n t t o bar it from l i a b i l i t y . Fitzgerald responds t h a t Aetna's policy covered t h e t r a c t o r - t r a i l e r u n i t and t h a t Turner Valley d i d not v i o l a t e any of t h e " s t a t u t o r y conditions". Fitzgerald f u r t h e r argues t h a t even i f Turner Valley d i d v i o l a t e any of those conditions, I n t e r s t a t e Commerce Com- mission regulations prevent Aetna from a s s e r t i n g them a s defenses. Aetna counters t h a t i f Turner Valley and thus, Aetna, i s t o be held t o I.C.C. regulations even though Turner Valley d i d not have an I.C.C. permit t o operate, Fitzgerald should a l s o be held t o those same regulations. The I.C.C. regulations i n f o r c e a t t h e t i m e of t h e accident waived an i n s u r e r ' s policy defenses a s t o t h e f i r s t $25,000.00 of insurance. Because of our decision t h a t no policy con- d i t i o n s were v i o l a t e d , w e need n o t discuss the i s s u e of whether and t o what e x t e n t I . C . C . r e g u l a t i o n s waived Aetna's policy defenses. The insurance policy which Aetna s o l d t o Turner Valley was a "Composite Mercantile Policy" f o r f i r e insurance, inland marine insurance, robbery and burglary insurance, a s w e l l a s general comprehensive l i a b i l i t y insurance. Included within t h e l i a b i l i t y insurance was an "S.P.F. No. 6 Standard Non-owned Automobile Policy". Section A of t h a t p o l i c y , e n t i t l e d "Third P a r t y L i a b i l i t y " contained t h e b a s i c auto- mobile insuring agreement: "The I n s u r e r agrees t o indemnify t h e Insured a g a i n s t t h e l i a b i l i t y imposed by l a w upon t h e Insured f o r l o s s o r damage a r i s i n g from t h e use o r operation of any automobile n o t owned i n whole o r i n p a r t by o r licensed i n t h e name of t h e Insured * * *." Both p a r t i e s agree t h a t t h e t r a c t o r - t r a i l e r u n i t is an "automobile" w i t h i n t h e t e r m s of t h e policy. The d i f f i c u l t y a r i s e s because of t h e s p l i t ownership of t h e u n i t . Turner Valley owned only t h e t r a i l e r ; it h i r e d both t h e t r a c t o r and t h e d r i v e r C o l l i c o t t from S t . Louis. I t e m 5 i n t h e d e f i n i - t i o n s e c t i o n of t h e policy, however, provides t h a t f o r purposes of t h e I n s u r e r ' s l i a b i l i t y under Section A of t h e policy, a n o t o r v e h i c l e and a trailer attached t o it consti- t u t e one automobile. Therefore, w e s h a l l t r e a t t h i s u n i t a s one automobile. Additionally, Turner Valley's insurance policy form i s expressly made a p a r t of t h e insurance c o n t r a c t . I t e m 5 of t h a t form designates t h e coverage provided f o r "hired auto- mobiles". Typed i n t h i s space a r e t h e s e words: "NOT ANTICIPATED, COVERED IF ANY". Both p a r t i e s contend t h a t t h e language of t h e b a s i c automobile insuring agreement i n t h e policy i s unambiguous, although each i n t e r p r e t s t h i s language d i f f e r e n t l y : F i t z - g e r a l d argues t h a t it covers automobiles which a r e p a r t i a l l y owned by t h e insured; Aetna argues t h a t it does not. I n our view, t h e language of t h e b a s i c automobile i n s u r i n g agreement i s ambiguous because it i s s u b j e c t t o two repugnant and i n c o n s i s t e n t meanings. The language could be construed t o provide coverage f o r an automobile n o t wholly owned o r n o t p a r t i a l l y owned by Turner Valley i n which case coverage would be afforded here. O n t h e o t h e r hand, t h e language could be construed t o provide coverage only f o r an automobile which i s n e i t h e r owned i n whole nor i n p a r t by Turner Valley i n which c a s e t h e r e would be no coverage i n t h i s accident. Where an ambiguity i n an insurance c o n t r a c t e x i s t s , every doubt should b e resolved i n favor of t h e insured and t h e policy should be s t r i c t l y construed a g a i n s t t h e i n s u r e r . Alpha Real E s t a t e Development, Inc. v. Aetna L i f e & Casualty Co., (1977), Mont. , 570 P.2d 585, 34 St.Rep. 1130; Fassio v. Montana Physicians' Service, (1976), Mont. , 553 P.2d 998, 33 St.Rep. 457; Mountain West Farm Bur. v. Neal, (1976), 169 Mont. 317, 547 P.2d 79. There a r e l o g i c a l reasons f o r t h i s r u l e of policy construction. I n ordinary c o n t r a c t law, t h e language is construed most s t r o n g l y a g a i n s t t h e p a r t y who d r a f t e d t h e c o n t r a c t , because it i s h i s language which c r e a t e d t h e ambiguity or u n c e r t a i n t y of meaning. Section 13-720, R.C.M. 1947; Scinski v. Great Northern L i f e Ins. Co., (1940), 1 1 0 Mont. 106, 111, 99 P.2d 218, ~ d d i t i o n a l l y , an insurance policy i s an adhesion c o n t r a c t . Equal bargaining s t r e n g t h between t h e insured and t h e i n s u r e r concerning t h e t e r m s of t h e policy simply does n o t e x i s t ; t h e i n s u r e r d r a f t s t h e language of t h e policy and o f f e r s it t o t h e insured on a take-it-or-leave-it b a s i s ; t h e insured has no voice i n its terms o r language. Steven v. F i d e l i t y and Casualty Co. of N e w York, (1962), 27 Cal-Rptr. 172, 377 P.2d 284, 292-93. Finally, t h e e x t e n t of coverage i s capable of c l e a r , l u c i d and unambiguous d e f i n i t i o n which t h e i n s u r e r , by accident o r design, f a i l e d t o express; here, f o r example, had Aetna intended t o l i m i t its coverage t o automobiles n e i t h e r owned i n whole nor i n p a r t , it could c l e a r l y have so s t a t e d . Accordingly, we construe t h e ambiguity a g a i n s t t h e insurer and i n favor of t h e insured. W e construe t h e b a s i c automobile insuring agreement i n Section A of the policy t o mean t h a t coverage is provided f o r an automobile not owned i n p a r t by t h e insured. A s t h e automobile i n question i s one u n i t and p a r t of t h a t u n i t was owned by S t . Louis, coverage i s afforded Turner Valley here. This construction i s f u r t h e r strengthened by t h e policy a p p l i c a t i o n which is expressly made a p a r t of t h e insurance contract. I t provides t h a t "hired automobiles" coverage, while "not anticipated" i s "covered i f any". An insurance policy i s t o be read a s a whole and, i f possible, t h e various p a r t s a r e t o be reconciled and given meaning and e f f e c t . Aleksich v. Mutual Benefit Health & Accident Assn., (1945), 118 Mont. 223, 164 P.2d 372. Since t h e t r a c t o r u n i t w a s c l e a r l y a "hired automobile", it was covered by t h e express t e r m s of t h e policy. To hold otherwise would deny e f f e c t t o t h i s provision of t h e policy i n our view. The second and t h i r d policy defenses which Aetna a s s e r t s a r e based upon conditions required by Alberta l a w t o be included i n every insurance c o n t r a c t w r i t t e n i n t h e province of Alberta, Canada. ALTA. REV. STAT., Ch. 187, 8288. ~ h e s e s t a t u t o r y conditions a r e attached as endorsements t o Aetna's policy with Turner Valley. They provide i n p e r t i n e n t p a r t : "Prohibited U s e by Others. " ( 2 ) The insured s h a l l not permit, s u f f e r , allow o r connive a t t h e use of t h e automobile " ( a ) by any person under t h e influence of intoxicating l i q u o r o r drugs t o such an e x t e n t a s t o be f o r t h e t i m e being incapable of the proper control of t h e automobile; o r " (c) f o r any i l l i c i t o r prohibited t r a d e o r transportation". The Alberta Lnsurance Act, ALTA. REV. STAT., Ch. 187, 8288, requires t h a t p o l i c i e s issued thereunder include as a p a r t of t h e policy provisions c e r t a i n " s t a t u t o r y conditions". P l a i n t i f f contends t h a t t h e s e s t a t u t o r y conditions do not apply t o a covered v e h i c l e involved i n an accident occurring outside of Alberta, Canada. She argues t h a t the phrase " i n these s t a t u t o r y conditions" i n d i c a t e s t h a t these conditions a r e applicable only i n Alberta. W e hold t h a t t h i s contention i s untenable. These conditions by s t a t u t e are deemed t o be a p a r t of every insurance c o n t r a c t w r i t t e n i n Alberta. ALTA REV. STAT., ch. 187, §288(1) ( a ) . Additionally, they w e r e s p e c i f i c a l l y w r i t t e n i n t o t h e "Endorsement" Section of t h i s policy. N o language i n t h i s policy l i m i t s t h e i r application s o l e l y t o t h e province of Alberta, Canada. They therefore form a p a r t of t h e c o n t r a c t f o r a l l purposes. I n its findings of f a c t and conclusions of law i n Donna F i t z g e r a l d ' s s u i t a g a i n s t Turner Valley, S t . Louis, and C o l l i c o t t , t h e Federal D i s t r i c t Court found t h a t a t t h e time of t h e accident C o l l i c o t t was drunk and t h a t C o l l i c o t t ' s drunkenness was s u f f i c i e n t t o impair h i s driving capacity. Fitzgerald v. Turner Valley Transport, Civ. No. 3213 (D. Mont. 1975). Aetna contends t h a t under t h e s t a t u t o r y con- d i t i o n s i n i t s policy with Turner Valley, t h i s finding absolves Aetna from l i a b i l i t y t o Turner Valley and hence, t o t h e p l a i n t i f f . The s t a t u t o r y condition involved here, however, provides t h a t t h e insured s h a l l not "permit, s u f f e r , allow o r connive" a t t h e use of an insured automobile by a person who is incapacitated because of liquor. Webster's defines "permit" t o mean consent t o o r authorize; " s u f f e r " t o mean not t o forbid o r hinder; "allow" t o mean approve o r sanction; and "connive" t o mean f a i l t o take a c t i o n a g a i n s t a known wrongdoing o r misbehavior. Webster's Third I n t e r n a t i o n a l Dictionary (Unabridged, 1971). A s used here we understand these t e r m s t o mean t h a t t h e insured must f i r s t have knowledge t h a t t h e user i s engaged i n a prohibited a c t i v i t y before he may "permit, s u f f e r , allow o r connive" a t such use. For Aetna t o successfully assert t h i s s t a t u t o r y condi- t i o n , it must show t h a t Turner Valley had knowledge t h a t C o l l i c o t t w a s operating t h e t r a c t o r - t r a i l e r u n i t while he was incapacitated because of drink. Aetna has shown no such knowledge by Turner Valley, and during o r a l argument has admitted t h a t Turner Valley i n f a c t had no knowledge of C o l l i c o t t ' s drunkenness. This policy defense, t h e r e f o r e , f a i l s . The t h i r d policy defense involves t h e i n s u r e d ' s use of t h e t r a c t o r - t r a i l e r u n i t i n i l l i c i t o r prohibited t r a d e or transportation. The Federal Court found t h a t n e i t h e r Turner Valley, St. Louis nor C o l l i c o t t had e i t h e r a Montana ail road Commission o r an I n t e r s t a t e Commerce Commission permit t o operate i n Montana. Fitzgerald v. Turner v a l l e y Transport, supra. Aetna contends t h a t i n t h e absence of such permits, Turner Valley, S t . Louis, and C o l l i c o t t w e r e engaged i n " i l l i c i t o r prohibited t r a d e o r transportation", and conse- quently, coverage under t h e policy w a s suspended. ~ i t z g e r a l d r e l i e s upon Travelers Mut. Casualty Co. v. Rector, (8th C i r . 1943), 138 F.2d 396, t o conclude t h a t Turner Valley's t r a n s p o r t a t i o n i n t o Montana without I . C . C . and Montana permits does n o t c o n s t i t u t e " i l l i c i t o r pro- h i b i t e d t r a d e o r transportation". I n Rector p l a i n t i f f ' s deceased was k i l l e d i n an auto- mobile-truck c o l l i s i o n i n Louisiana. Ford Brothers Van & Storage Company (Ford Co.), a motor carrier o u t of Omaha, Nebraska, owned and operated t h e truck. The p l a i n t i f f obtained judgment a g a i n s t Ford Co. f o r $10,000.00. When execution on t h e judgment was returned u n s a t i s f i e d , she brought s u i t a g a i n s t Travelers Mutual Casualty Co., Ford CO.'S insurer. Travelers defended t h e s u i t on two bases: (1) t h a t under Travelers' t e r r i t o r i a l r e s t r i c t i o n s i n Ford Co.'s policy, t h e truck was n o t covered while being operated i n Louisiana; and ( 2 ) t h a t a t the time of t h e c o l l i s i o n t h e truck was being operated i n an " i l l i c i t t r a d e o r prohibited t r a d e o r transportation" because Ford Co. d i d n o t have an I . C . C . l i c e n s e t o operate i n Louisiana, thus excluding it from coverage under t h e t e r m s of t h e policy. The c o u r t i n Rector resolved t h e f i r s t i s s u e i n favor of t h e p l a i n t i f f . A s t o whether Ford Co. was engaged i n i l l i c i t o r prohibited t r a d e o r t r a n s p o r t a t i o n , t h e c o u r t held t h a t t h a t i s s u e was n o t properly before t h e court. It d i d , however, say t h a t i f it had been properly presented, it d i d not f e e l t h a t Ford Co.'s f a i l u r e t o have an 1.C.C. perinit t o operate i n Louisiana a t t h e t i m e of t h e accident was s u f f i c i e n t t o f i n d t h a t Ford Co.'s operation of t h e truck i n Louisiana was " i l l i c i t o r prohibited" within t h e meaning of t h e policy i n s u i t . W e agree with t h e conclusion of t h e Rector court. The t e r r i t o r i a l provision of t h i s policy s p e c i f i c a l l y makes t h e policy applicable t o t h e use o r operation of covered automobiles within Canada o r t h e United States. W e hold t h a t Turner Valley's f a i l u r e t o have an I.C.C. o r Montana permit f o r transporting goods i n t o and through Montana does n o t c o n s t i t u t e " i l l i c i t o r prohibited t r a d e o r transportation" within t h e meaning of t h i s policy under such circumstances. The only o t h e r remaining i s s u e relates t o Aetna's p e t i t i o n f o r a w r i t of supervisory control. P l a i n t i f f ' s complaint i n t h i s cause s t a t e d t h r e e counts: Count I t o recover t h e amount of t h e judgment awarded her i n Federal D i s t r i c t Court f o r t h e wrongful death of her husband; Count I1 f o r punitive damages, attorney f e e s and c o s t s f o r Aetna's alleged malicious, oppressive and fraudulent misconduct and lack of good f a i t h ; and Count I11 f o r compensatory damages f o r mental d i s t r e s s allegedly caused p l a i n t i f f by Aetna's conduct. O n November 18, 1975, Aetna moved t o s t r i k e t h e second and t h i r d counts of p l a i n t i f f ' s complaint. O n J u l y 1 2 , 1976, t h e D i s t r i c t Court denied Aetna's motion t o s t r i k e . Aetna now seeks review of t h e D i s t r i c t Court's d e n i a l by means of a p e t i t i o n f o r a w r i t of supervisory control. A n order denying a motion t o s t r i k e i s not an appealable order. Rule 1, I4.R.Agp.Civ.P. Such an order i s interlocu- t o r y i n character. I t i s reviewable on appeal from a f i n a l judgment. Rule 2 , M.R.App.Civ.P. To permit review of such a n order p r i o r t o f i n a l judgment through t h e device of supervisory c o n t r o l o r o t h e r extraordinary w r i t is t o accomplish i n d i r e c t l y t h a t which cannot be done d i r e c t l y . See State ex rel. Kosena v. District Court, (1977), Mont. , 560 P.2d 522, 34 St.Rep. 87. Accordingly, we decline to review the District Court's denial of defendant's motion to strike at this time as the issue is not properly before us. The District Court's order denying defendant summary judgment and granting plaintiff partial summary judgment is affirmed. Defendant's petition for a writ of supervisory control is denied. ? A & J f % 4 \ Chief ~ustice We Concur: Judge, sitting with the Court.