Title: Columbia Mut. v. State Farm Mut. Auto.

State: alaska

Issuer: Alaska Supreme Court

Document:

905 P.2d 474 (1995) COLUMBIA MUTUAL INSURANCE COMPANY, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. No. S-6058. Supreme Court of Alaska. November 9, 1995. Robert C. Erwin, Anchorage, for Appellant. Sheldon E. Winters, Lessmeier & Winters, Juneau, for Appellee. Before MOORE, C.J., and RABINOWITZ, MATTHEWS, COMPTON and EASTAUGH, JJ. RABINOWITZ, Justice. The principal issue in this appeal is whether the parties' insurance policies conflict. Also raised is the issue of whether contribution calculations should be based on the face value of the alleged conflicting policies or upon the actual amount available for a given accident. Finally, we must determine whether an exclusion in Columbia's policies is applicable. This appeal arises out of an auto accident that occurred near Ketchikan on August 25, 1990. Jim Burks Sr., driving an automobile owned by Jackie Lee, collided with a motorcycle carrying two persons. As a result, State Farm Mutual Automobile Insurance Company (State Farm) paid $100,000, its policy limit, to each injured cyclist in full settlement of all claims. State Farm insured Lee's automobile and permissive users thereof, and Columbia Mutual Insurance Company (Columbia) insured Burks. More precisely, Columbia insured two of Burks' automobiles in his home state of Missouri. In addition to providing coverage for Burks' two listed automobiles, the Columbia policies contained standard clauses which insured Burks when he drove other automobiles under certain circumstances. After settling the underlying claims, State Farm sought contribution from Columbia as a joint insurer. Columbia denied any liability, claiming that its policies provided only excess coverage. Specifically, both Columbia policies stated: Given that Burks was driving Lee's car a "non-owned" automobile under the terms of Columbia policies Columbia argued that its coverage was excess, and that since the claims were settled within State Farm's policy limits, no excess exists and contribution was thus inappropriate. State Farm moved for summary judgment, claiming that its policy conflicted with Columbia's and therefore, pursuant to our holding in Werley v. United Services Automobile Association, 498 P.2d 112 (Alaska 1972), the loss should have been prorated between the two insurers.[1] In relevant part, State Farm's policy stated: The superior court concluded that the policies did in fact conflict, and granted State Farm's motion for summary judgment. The superior court also concluded that the policy coverage limits available in this particular case, rather than the overall policy limits, formed the basis of the contribution calculation. Furthermore, the superior court ruled that "the evidence does not show a genuine issue that the car was available for all purposes." It thus denied Columbia's claim that a policy exclusion was applicable. Columbia now appeals the superior court's grant of summary judgment. A motion for summary judgment is granted only when the record indicates 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. Alaska R.Civ.P. 56(c). In determining whether State Farm is entitled to judgment as a matter of law, we must construe the relevant provisions of the State Farm and Columbia policies. "The construction of an insurance contract is a matter for the court, unless its interpretation is dependent upon the resolution of controverted facts." O'Neill Investigations v. Illinois Employers Ins. of Wausau, 636 P.2d 1170, 1173 (Alaska 1981). In Horace Mann Insurance Co. v. Colonial Penn Insurance Co., 777 P.2d 1162 *476 (Alaska 1989), we considered a fact pattern almost identical to that now posed. In that case, Horace Mann made the same type of argument that Columbia makes here: Id. at 1164. Id. Finding a conflict, we concluded that "the insurers must prorate the loss." Id. Of significance is the fact that the provisions in State Farm's and Columbia's insurance policies are essentially identical to those which were held to be conflicting in Horace Mann.[2] The only differences between the policies reviewed in Horace Mann and those now before us are the adjectives employed, a distinction of no substantive significance.[3] Accordingly, application of Horace Mann leads to the conclusion that State Farm's and Columbia's "other insurance" clauses conflict. We additionally note that Columbia does not assert that Horace Mann is inapplicable nor does it ask us to overrule it. Instead, Columbia contends that this case is distinguishable and, as Horace Mann argued, more readily likened to Providence Washington Insurance Co. of Alaska v. Alaska Pacific Assurance Co., 603 P.2d 899, 902-03 (Alaska 1979). However, our reason for rejecting the application of Providence Washington in Horace Mann is also appropriate here: Horace Mann, 777 P.2d at 1164-65. Similarly, neither Columbia's nor State Farm's policies state that they are "primary." Consequently, Columbia's assertion that Providence Washington controls is unpersuasive. Columbia next contends that even if contribution is appropriate, the superior court overstated its contribution share. Specifically, Columbia argues that contribution shares should be calculated based on overall policy limits, not per accident limits. The issue presented is whether the superior court applied the correct formula for calculating Columbia's pro rata share of contribution. In this instance, State Farm's policy has limits of one hundred thousand dollars ($100,000) per person and three hundred thousand dollars ($300,000) per accident (100/300). Columbia has two policies: one has a single limit of sixty thousand dollars ($60,000), and the other has a limit of twenty-five thousand dollars ($25,000) per person and fifty thousand dollars ($50,000) per accident (25/50). In calculating contribution shares, the superior court used per accident shares. More precisely, since two individuals were injured in the accident, State Farm was potentially liable for $200,000, its per person policy limits, while Columbia was potentially liable for $110,000, its per person policy limits of $50,000 and single limit policy of $60,000. Together, State Farm and Columbia's per person exposure totaled $310,000 (200,000 + 110,000) for this accident. Consequently, the superior court held that Columbia should contribute 11/31, or $70,967.74 (11/31 X 200,000). Columbia argues that its contribution share should be 11/41, thus reflecting State Farm's overall policy limits of $300,000. In relying upon Continental Insurance Co. v. United States Fidelity and Guaranty Co., 528 P.2d 430, 436 (Alaska 1974), the superior court correctly concluded that contribution "should be based upon the theories available within the coverage of the relevant policy."[4] In Continental, the court faced facts analogous to those now presented: Id. at 435-36 (footnote omitted). As in Continental, in this case two people were injured in the underlying accident. Thus, State Farm's exposure was, at most, $200,000 under its policy. Consequently, following Continental the contribution formula should only reflect State Farm's actual exposure $200,000 not its overall policy limit of $300,000.[5] Columbia alternatively argues that the above analysis is entirely unnecessary since a policy exclusion precludes coverage. Columbia's policies state: Columbia contends that there is a direct conflict in the testimony as to whether the vehicle was available for regular use by Burks, thus precluding summary judgment. The superior court first defined "regular use" to mean "steady or uninterrupted use for all purposes and without limitation." The superior court next discussed its summary judgment posture: The superior court then concluded: In addressing this issue, we must first determine whether the superior court's definition of "regular use" "steady or uninterrupted use for all purposes and without limitation" is appropriate and then determine whether any genuine issues of fact preclude summary judgment. The issue of what constitutes "furnished or available for regular use" is one of first impression. Although the superior court's interpretation of the "regular use" exclusion may seem narrow, it is appropriate in light of two factors. First, "insurance coverage provisions should be broadly construed while exclusions are to be interpreted narrowly." Whispering Creek Condominium Owner Ass'n v. Alaska Nat'l Ins. Co., 774 P.2d 176, 178 (Alaska 1989). Second, Columbia does not contest the superior court's definition of "regular use" but rather argues that Burks' and Lee's contradictory testimony precludes summary judgment. Thus, on this record the superior court's definition of "regular use" is appropriate. Columbia contends that genuine issues of material fact concerning Burks' use of the vehicle preclude summary judgment. In support, Columbia relies on allegedly conflicting deposition testimony of Burks and Lee, State Farm's insured and owner of the car. Review of the record persuades us that Columbia has failed to demonstrate the existence of a genuine issue of material fact. In making this conclusion, we note that it is undisputed that Burks used the car only three to six times over a four month period. Additionally, each time Burks used the car, he asked for and received permission from Lee. Thus we affirm the superior court's holding that as a matter of law the exclusionary clauses in Columbia's policies are inapplicable. State Farm's motion for summary judgment was properly granted for the following reasons. First, per Horace Mann, the "other insurance" clauses of the State Farm and Columbia policies conflict; thus, contribution is appropriate. Additionally, the superior court's contribution calculation correctly reflected the policy limits applicable to this accident rather than overall policy limits; thus, Columbia's contribution share was not overstated. Finally, as appropriately defined by the superior court, the auto was not furnished or available for Mr. Burks' "regular use"; thus, no policy exclusion is applicable. *479 Accordingly, the superior court's summary judgment decision is AFFIRMED. [1] In Werley, we held that when "other insurance" clauses conflict with one another, "`they are in fact repugnant and each should be rejected in toto.'" 498 P.2d at 118 (quoting Lamb-Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110, 119 (1959)). Under this rule, the loss is then prorated between the insurers up to their respective policy limits. Id. at 117. [2] Much like State Farm's policy, Colonial Penn's "other insurance" clause read: If a loss involves a listed auto. In a loss that involves a listed auto, an insured person may have other insurance against the same loss. If so, we won't be liable for more than our share of the loss. Our share of the loss will be the proportion this policy's coverage is of the total amount of all valid and collectible insurance. If a loss involves the use of a non-owned auto or a temporary substitute auto.... For losses that involve such autos this policy will be excess insurance. Horace Mann, 777 P.2d at 1163 n. 1. Similarly, much like Columbia's, Horace Mann's "other insurance" clause provided: OTHER INSURANCE If the insured has other insurance against a loss covered by bodily injury and property damage liability coverage of this policy the company shall not be liable under this policy for a greater proportion of such loss then [sic] the applicable limit of liability states in the declarations bears to the total applicable limit of liability of all collectible insurance against such loss[.] .... [T]he insurance with respect to any ... non-owned automobile shall be excess over other collectible insurance. Id. at 1163 n. 2. [3] Specifically, Colonial Penn's policy stated that it is to be prorated against the "total amount of all valid and collectible insurance", id. at 1163 n. 1, while State Farm's policy states that it is to be prorated against the "total of all vehicle liability coverage applicable to the accident." [4] Although Continental dealt with the proration of defense costs between potentially liable insurers, we find its logic equally compelling in the allocation of coverage. [5] In opposition, Columbia cites Marwell Construction, Inc. v. Underwriters at Lloyd's, London, 465 P.2d 298 (Alaska 1970). Columbia contends that Marwell states that overall policy limits form the proper basis for calculating contribution. However, in addition to pre-dating Continental, Marwell merely states a general proposition; it does not definitively hold that overall policy limits are appropriate nor does it discuss a specific application like the Continental court did. Instead, Marwell states: We employ the principle of equitable subrogation and rule that the defense costs must be shared pro rata between concurrent insurers in proportion to the amounts of coverage they have provided. Id. at 313. Columbia notes that sister states, including Oregon, upon whose law our decision in Werley was patterned, use overall policy limits in calculating contribution. However, the fact that we adopted a rule from another jurisdiction does not mean that the tangential holdings of that jurisdiction's courts must also be adopted in whole or in part. Furthermore, the per accident approach which we adopted in Continental reflects a more appropriate application of the contribution calculation than the alternative of simply looking to overall policy limits.