Title: GRAHAM v. TRAVELERS INSURANCE COMPANY
Citation: 2002 OK 95, 61 P.3d 225
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: December 17, 2002

GRAHAM v. TRAVELERS INSURANCE COMPANY Annotate this Case GRAHAM v. TRAVELERS INSURANCE COMPANY 2002 OK 95 61 P.3d 225 Case Number: 95318 Decided: 12/17/2002 Modified: 12/30/2002 THE SUPREME COURT OF THE STATE OF OKLAHOMA WINFRED NIMROD GRAHAM, Plaintiff/Appellant, v. TRAVELERS INSURANCE COMPANY, Defendant/Appellee. ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION II ¶0 The Court of Civil Appeals, Division II, reversed the trial court's grant of summary judgment to defendant/appellee and remanded the cause upon its determination that plaintiff/appellant Graham is insured under the liability provision of his employer's insurance policy, and therefore CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; JUDGMENT OF THE DISTRICT COURT AFFIRMED. Rex K. Travis, Patricia Travis and C. Ronald Britton, Oklahoma City, Oklahoma, for appellant Winfred Nimrod Graham. Mark. E. Bialick, Rodney D. Stewart, Durbin, Larimore & Bialick, Oklahoma City, Oklahoma, for appellee Travelers Insurance Company. Chris Harper, Phillip P. Owens II, Chris Harper, Inc., Oklahoma City, Oklahoma, for amicus curiae GuideOne Mutual Insurance Company. Chris L. Rhodes, William D. Perrine, Kerry R. Lewis, Tulsa, Oklahoma, for amicus curiae Carroll Fisher, Insurance Commissioner of the State of Oklahoma. WINCHESTER, J. ¶1 The issue before us is whether in a commercial insurance policy, uninsured/underinsured (UM/UIM) coverage that is pro-[61 P.3d 226]-vided for vehicles owned by the named insured, must also be provided to employees using their own vehicles, which are limited by an endorsement to liability coverage. FACTS AND PROCEDURAL HISTORY ¶2 Winfred Nimrod Graham, the plaintiff/appellant, was stopped at a red traffic light in Oklahoma City, Oklahoma, when his car was struck from behind by a second car. Graham's vehicle was struck again when a third car collided with the second car. The record reveals that as a result of this accident, Graham sustained significant injuries, including a fractured neck. ¶3 According to the record, at the time of the accident, Graham was driving his personal vehicle while on business for his employer, CKE Restaurants. CKE had an automobile insurance policy that included UM/UIM coverage with Travelers Indemnity Company of Illinois, the defendant/appellee. Graham sought UIM benefits, but Travelers denied his claim. ¶4 Graham sued the two drivers, their principals, and the owners of one of the vehicles for personal injury, property damage and lost wages. He also sought punitive damages. In his Second Amended Petition, Graham added "Travelers Insurance Company" ¶5 Travelers moved for summary judgment on the basis that no UM/UIM motorist coverage exists under the Travelers' policy for CKE employees operating a vehicle CKE does not own. In his response, Graham moved for an interlocutory order ¶6 In its September 26, 2000, Journal Entry of Judgment, the trial court found there was no UM/UIM coverage for Graham under the insurance policy issued by Travelers to CKE. The court determined Graham was an occupant of a non-owned automobile, that he was not an insured of Travelers and that Travelers was entitled to judgment on Graham's claim of bad faith. Graham appealed.[61 P.3d 227] ¶7 The Court of Civil Appeals, Division II, reversed the judgment of the trial court and remanded the cause to the trial court for further proceedings, holding STANDARD OF REVIEW ¶8 Summary judgment is appropriate where it appears there is no substantial controversy as to any material fact and one party is entitled to judgment as a matter of law. Daugherty v. Farmers Coop. Ass'n, INSURANCE POLICY PROVISIONS ¶9 CKE's insurance policy includes UM/UIM coverage limited in amount to $1,000,000.00 for each accident. The declarations page designates the number 2 as the covered auto symbol. The Business Auto Coverage Form explains the covered auto designation symbols. Symbol "2 = OWNED 'AUTOS' ONLY. Only those 'autos' you own. . . . This includes 'autos' you acquire ownership of after the policy begins." ¶10 The policy included in the record has separate explanations for "WHO IS AN INSURED" for the liability coverage, and for the UM coverage. The UM coverage is in the form of an endorsement, which states in bold letters at the top "THIS ENDORSEMENT CHANGES THE POLICY. READ IT CAREFULLY." In a larger font, the next line reads "OKLAHOMA UNINSURED MOTORISTS COVERAGE." Under section B, "WHO IS AN INSURED," the policy provides: 1. You. 2. If you are an individual, any "family member." 3. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. 4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured." ¶11 Graham admits in his response to Traveler's motion for summary judgment that the policy provisions limit UM/UIM coverage to owned autos, but argues those facts are "narrowly technically correct." He claims that the policy contains endorsements that expand the basic coverage. Under an endorsement entitled "Employees as Insureds" the policy provides, "The following is added to the 'LIABILITY COVERAGE WHO IS AN INSURED provision." On the next line it adds, "Any employee of yours is an 'insured' while using a covered 'auto' you don't own, hire or borrow in your business or your personal affairs." The Business Auto Coverage Part Declarations page shows a covered auto symbol of "1" for liability coverage. The limit of insurance is $1,000,000.00. Symbol "1" on the Business Auto Coverage Form indicates that "1 = ANY 'AUTO.'" Graham emphasizes that the endorsements, "Hired or Borrowed Covered Auto Coverage," "Nonowned Liability coverage," and liability coverage for employees all [61 P.3d 228]work together to modify the "WHO IS AN INSURED" section of the UM/UIM endorsement. Subsection 3 provides, "Anyone else 'occupying' a covered 'auto' or a temporary substitute for a covered 'auto'. . . ." ¶12 Graham argues that these endorsements modify the basic coverage in the following manner. Graham was using his own vehicle to perform duties for his employer. That vehicle became either a borrowed or a non-owned vehicle as to the named insured, CKE. Because Graham was occupying that vehicle, he became an insured as a person 'occupying' a covered 'auto.' Graham concludes that being insured for liability also insures him for UM/UIM. ¶13 But even after Graham's argument on this point, we are still left with this undisputed fact: The endorsements clearly show that CKE and Travelers agreed that the parties intended UM/UIM coverage for vehicles owned by CKE. Graham's vehicle was not owned by CKE. Therefore, he was not covered for UM/UIM. Graham then attempts to make an argument that the policy is ambiguous, but the facts stated above show that this argument must fail. Graham's vehicle clearly was insured for liability and was not insured, under the provisions of the policy, for UM/UIM. REQUIREMENTS OF § 3636 ¶14 Graham argues that ¶15 The only question to be decided is whether ¶16 Shepard involved a certified question from the United States District Court for the Western District of Oklahoma. That question asked whether a clause was unconscionable or against public policy as expressed in Oklahoma's Uninsured Motorist Act. The clause denied coverage for a relative of the insured living in the same household because that relative or the relative's spouse, owned an automobile. The Court held that the exclusionary language was "consistent with sound principles of contract law and . . . neither unconscionable nor violative of the public policy expressed in Oklahoma's Uninsured Motorist Act." Shepard, ¶17 Shepard observed that insurance policies are issued pursuant to statutes, and the provisions of those statutes are treated as though they were written into the policy. The parties are nevertheless free to agree upon the terms of the contract and may limit or restrict an insurer's liability. Although the court will interpret the policy consistent with the statute, it will not rewrite the contract. Shepard, ¶18 CKE and Travelers are the parties to this contract. CKE paid the premiums and agreed to the terms. CKE's liability policy for nonowned vehicles benefits the company since it insures CKE for the negligent acts of its employees who are in the course of their employment. It has an indirect benefit to the employee, who must by law insure his own vehicle for liability. Beavin v. State ex rel. Dept. of Public Safety, ¶19 As stated above, Graham agrees that the policy in question is one policy insuring multiple vehicles. Section 3636 does not require that every vehicle covered in one policy have a separate document that separately accepts or rejects UM/UIM coverage for that vehicle. CKE accepted UM/UIM coverage and limited it to company-owned vehicles. The parties to the contract agreed to those provisions, those provisions are not ambiguous, and there is no public policy in § 3636 that is violated by the agreement of the parties. ¶20 The law required that Graham insure his vehicle for liability, and § 3636 provided him the opportunity to accept or reject UM/UIM coverage for his personal protection. Moser v. Liberty Mut. Ins. Co., ¶21 The Shepard case allows parties to agree to exclude a relative living in the same house from liability coverage. CKE and Travelers are free to exclude employees operating their own vehicles from UM/UIM coverage through the method of limiting UM/UIM coverage to vehicles owned by the company. No public policy is violated by such a limitation. CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; JUDGMENT OF THE DISTRICT COURT AFFIRMED. ¶ 22 HARGRAVE, C.J., WATT, V.C.J., HODGES, LAVENDER, OPALA, SUMMERS and WINCHESTER, JJ., concur. ¶ 23 KAUGER and BOUDREAU, JJ., dissent. FOOT