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Parties Involved:
Glen Canyon Marine, Inc.
Not Party
Susan Maldonado
Not Party
Gregory P. Nelson
Appellant
Nescher, Inc.
Not Party
St. Paul Fire And Marine Insurance Company
Appellee
The Home Insurance Company
Appellant

Document Text:

FILED 

Uflited States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

J ~ 1 8 1990 

A.OBERT L. HOECKER 

Clerk 

SUSAN MALDONADO, 

Plaintiff, 

v. 

GREGORY P. NELSON, NESCHER, INC., and 

GLEN CANYON MARINE, INC., 

Defendants. 

GREGORY P. NELSON, and THE HOME 

INSURANCE COMPANY, 

Plaintiffs-Appellants, 

v. 

ST. PAUL FIRE AND MARINE INSURANCE 

COMPANY, 

Defendant-Appellee. 

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) No. 89-4074 

) (D.C. Nos. 85-C-1073J 

) & 

) 87-C-0329G) 

) (Consolidated) 

) (D. Utah) 

) 

) 

ORDER AND JUDGMENT* 

Before MOORE, BRIGHT,** and BRORBY, Circuit Judges. 

**Honorable Myron H. Bright, Circuit Judge, United States Court of 

Appeals for the Eighth Circuit, sitting by designation. 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36. 3. 

Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 1 
This case comes to us on appeal after the district court 

denied the plaintiffs-appellants' motion for summary judgment. In 

doing so, the district court rejected the plaintiffs' contention 

that Gregory P. Nelson (Nelson) is included within the definition 

of an insured under a liability policy issued by St. Paul Fire & 

Marine Insurance Company (St. Paul) to its named insured, Randall 

G. Cecala, d/b/a Glen Canyon Marine, Inc. The district court 

entered its judgment as a final judgment and granted St. Paul's 

motion for certification pursuant to Rule 54(b). 

On appeal Nelson argues that the insurance policy is 

ambiguous regarding whether he was a "protected person'' and should 

therefore be construed against St. Paul. Nelson also argues that 

the doctrine of reasonable expectations, as applied to insurance 

policies, should afford him coverage. 

This case arises out of an accident which occurred on Lake 

Powell, in Utah. In late 1983 or early 1984, Nelson had delivered 

his boat to Glen Canyon Marine for repairs and maintenance, 

intending to pick it up when he arrived at Lake Powell in July 

1984 for his vacation. When Nelson arrived, his boat was not yet 

repaired; he was offered the use of a boat belonging to the 

general manager of Glen Canyon Marine. After being assured by the 

owner of the loaner boat that it was insured, Nelson accepted the 

offer to use it. While he was operating the boat, an accident 

occurred injuring one of Nelson's passengers. The injured party 

filed suit against Nelson, who tendered the defense of the action 

to St. Paul. St. Paul refused to defend Nelson on the ground that 

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Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 2 
he was not an additional insured under its policy with Glen Canyon 

Marine. 

Nelson and his insurance company filed a complaint against 

St. Paul requesting a declaration that St. Paul's policy affords 

coverage to Nelson, and that St. Paul wrongfully refused to defend 

and indemnify Nelson under the terms of its policy with Glen 

Canyon Marine. The district court entered summary judgment for 

St. Paul declaring that Nelson was not included within the 

definition of an insured. We review a grant of summary judgment 

de novo. Morgan v. Mobil Oil Corp., 726 F.2d 1474, 1477 (10th 

Cir. 1984). 

Nelson argues that an endorsement to the original policy 

creates an ambiguity which was incorrectly resolved by the 

district court. The original policy at issue is a comprehensive 

general liability policy containing a section entitled "Who is 

Protected Under this Agreement." The section contains a number of 

paragraphs identifying the parties covered by the insurance 

contract. At the time the policy was issued, it was accompanied 

by an endorsement entitled "Multiple Protected Persons 

Endorsement." That endorsement provided in its entirety: 

What This Endorsement Does 

This endorsement replaces the first paragraph of the 

"Who is Protected Under this Agreement" section with the 

following: 

"Protected persons" are people 

protected under this agreement. 

3 

and organizations 

Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 3 
Here's a list of "protected persons" and certain 

limitations to their protection. Each is protected 

separately. However, the limits of coverage are shared 

by all protected persons. We explain how in the "Limits 

of Coverage" section. 

Other Terms 

All other terms of your policy remain the same. 

Brief of Appellant at pt. 5. 

After reviewing the policy and its endorsement, we find no 

ambiguity in its terms. The endorsement directs that the first 

paragraph of the "Who is Protected Under this Agreement" section 

is to be replaced with the language of the endorsement. Nothing 

else in the policy is changed by the endorsement. The operation 

is a simple one of cutting and pasting. The list of protected 

persons is the list from the original policy, and includes 

specified individuals; partnerships and their individual partners; 

corporate officers, directors and shareholders; real estate 

managers, and mobile equipment operators. 1 An individual of 

Nelson's status is not included in this list of protected persons, 

and he, therefore, is not an insured party to whom St. Paul owes a 

duty to defend. 2 

1 Boats are 

equipment. 

not included within the definition of mobile 

2 Because this contract is unambiguous on its face, there is no 

need to refer to the extrinsic evidence identified in Nelson's 

brief to aid in its interpretation. See Mularz v. Greater Park 

City Co., 623 F.2d 139, 144 (10th Cir. 1980). Nor do we need to 

resort to artificial rules of construction favoring insurance 

coverage, as did the court in Government Employees Insurance Co. 

v. Dennis, 645 P.2d 672, 674 (Utah 1982), where the use of the 

word "residents" created an ambiguity regarding the scope of 

coverage. 

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Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 4 
Nelson also argues that the doctrine of reasonable 

expectations should afford him coverage. Under this doctrine, 

courts favor a liberal construction of insurance contracts "to 

accomplish the purpose for which the insurance was taken out and 

for which the premium was paid.'' Browning v. Equitable Life 

Assurance Soc'y, 94 Utah 532, 72 P.2d 1060, 1073 (1937)(Larson, 

J., concurring in part). We have found no Utah case, however, and 

none has been cited to us, in which the reasonable expectations 

doctrine has operated in favor of a stranger to the insurance 

contract. Nelson's argument that he is an insured under the 

policy and thus entitled to the benefit of the reasonable 

expectations doctrine begs the question. We agree with the Ninth 

Circuit that rules of construction favorable to an insured operate 

only after the insured has been determined. Flexi-Van Leasing, 

Inc. v. Aetna Casualty & Sur. Co., 822 F.2d 854, 856 (9th Cir. 

1987). Such rules are not factors in deciding whether a claimant 

belongs to the class of insureds, and third persons, not parties 

to the insurance contract, cannot avail themselves of generous 

rules of construction in determining their status as additional 

insureds. Id. Because we hold that Nelson is not an insured 

under the terms of the policy, it follows that he is not the type 

of claimant the doctrine of reasonable expectations was intended 

to benefit. 

Nelson's argument that he is covered because of St. Paul's 

failure to exclude coverage for the use and operation of boats 

misconstrues the issue. The question here is not whether this 

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Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 5 
type of accident was covered by St. Paul's policy, but whether 

Nelson was a "protected person" under its terms. 

Because we find that Nelson was not covered by this policy, 

his contention that St. Paul's coverage is primary must also fail. 

In view of our disposition of this case, Nelson's Motion to 

Certify a Question of Law to the Utah Supreme Court is denied; the 

judgment of the United States District Court for the District of 

Utah is AFFIRMED. 

ENTERED FOR THE COURT 

PER CURIAM 

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Appellate Case: 89-4074 Document: 010110036217 Date Filed: 06/18/1990 Page: 6