Opinion ID: 162130
Heading Depth: 2
Heading Rank: 2

Heading: The CGL Policy (the Airport Liability Policy)

Text: 33 Old Republic entered into another policy with the Insureds, the CGL Policy. Under that Policy, Old Republic agreed that it will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury.... The insurance afforded applies separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the company's liability. (App. 94-96 (italics added).) The amount of coverage available for each occurrence is limited to $1 million. (App.100.) 34 Thus, Watkins, who by reason of the state court wrongful death judgment is legally responsible to the Decedents' families under the Colorado Wrongful Death Act, would be entitled to up to $1 million in coverage under the CGL Policy if he is not excluded from coverage by the Policy. 35 The exclusionary provision of the Policy eliminates coverage for: 36 (B) ... bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of 37 (1) any ... aircraft owned or operated by ... the named insured, or 38 (2) any ... aircraft operated by any person in the course of his employment by the named insured. 39 (App.94.) The parties agree this exclusion precludes coverage with respect to Durango and Borcher, as the owner and operator of the airplane, respectively. They disagree, however, with respect to Watkins' coverage. 40 However, the CGL Policy contains Special Airport Provisions, one of which states that the exclusion cited above also applies only to aircraft ... in flight by or for the account of the insured. (App. 87 (italics added).) The parties' dispute as respects the CGL Policy therefore focuses on whether the flight that crashed on October 10, 1995 was a flight by or for the account of Watkins, a corporate officer of Durango and one of two Durango shareholders. 9 If it was for the account of Watkins, the policy would not cover Watkins' liability. If it was not for his account, as we hold here, Watkins is covered for up to $1 million. 41 Both parties note the silence of Colorado law interpreting the Special Airport Provision and therefore rely, inter alia, on Boeing Airplane Co. v. Firemen's Fund Indem. Co., 44 Wash.2d 488, 268 P.2d 654 (Wash.1954). See also State Farm Fire & Cas. Co. v. Keenan, 171 Cal.App.3d 1, 216 Cal.Rptr. 318, 328 (Cal.Ct.App.1985) (applying Boeing ). 42 Boeing had contracted with the government to modify a B 50 aircraft. In connection with that contract, Boeing had taken out insurance policies. After the aircraft crashed during a test flight, Boeing became responsible to pay some $58,000 in damages to other parties. Boeing sought to recoup those monies from the Fireman's Fund Insurance Co. For Boeing to be covered under its policy with the Fireman's Fund, any accident would have to occur after Boeing had relinquished possession of the aircraft; if Boeing had maintained possession, it was not covered. The policy also provided that it would not apply to the use of any aircraft and its coverage was not available where the aircraft was in flight by or for the account of the insured [Boeing]. The Washington Supreme Court summarized these conditions by stating: 43 Under the specific provisions of the ... policies, there can be no coverage and the judgment [in favor of the insurance company] must be affirmed if (1) the accident occurred before Boeing had relinquished possession of the plane to others, or (2) if the plane was in flight by or for the account of Boeing. 44 Id. at 658. 45 The Washington Supreme Court affirmed the trial court's finding that Boeing had not relinquished possession of the plane at the time of the crash, and therefore there was no coverage for Boeing. Additionally, the court also held that the insurance policy did not apply to Boeing, thereby denying coverage, because the test flight was by or for the account of Boeing, inasmuch as the completion of the test flight would have resulted in a direct benefit to Boeing. On the present appeal, we are concerned only with the court's discussion of for the account of, and not with the particulars of Boeing's liability or maintenance of possession of the plane. 46 Boeing, however, is not the answer to this appeal, although its analysis is of substantial assistance in resolving the present case. First, of course, Boeing is a Washington state case and therefore is not binding in the instant Colorado context. Second, Boeing, while interpreting a different insurance contract than the one at issue here, nevertheless holds that where a direct benefit is received by the insured (in that case Boeing), such a direct benefit satisfies the condition that the flight was by or for the account of the insured. Boeing, of course, while finding that a direct benefit was present in that case, does not address the more relevant question presented in this case of whether an insured (a stockholder and corporate officer) who does not receive a direct benefit profits sufficiently, if at all, from the use of a plane by its corporate owner so as to come within the insurance policy's condition of by or for the account of the insured, Watkins. This question of indirect or intangible benefit has not been resolved in the case law of Colorado or, to our knowledge, of any other jurisdiction. 10 47 Due to the lack of guiding precedent, we are left with only the language in Boeing that a direct financial benefit to the insured is evidence of an activity being for the account of the insured. See Boeing, 268 P.2d at 661. In the absence of Colorado law interpreting for the account of, we would be hard-pressed to expand and extend the direct benefit holding of Boeing so as to construe the account clause to apply to an indirect, intangible, or incidental benefit (if one existed) that an insured who is a shareholder and officer such as Watkins may have received. Corporations' shareholders and officers are not normally, if ever, on the front line of the benefits received by a corporation so as to individually profit from that corporation's activities. 48 Certainly, a stockholder and corporate officer of an airline cannot be said to receive a direct financial benefit from that airline's flights. To decide otherwise would be to blur, if not totally eliminate, the distinction between the plane's actual owner, in this case Durango, and Durango's shareholders. Although Watkins, as a shareholder, may possibly receive a minimal indirect or intangible benefit from each of Durango's flights, this benefit is simply not substantial enough to imply, let alone hold, that the crashed flight was by or for the account of Watkins. 49 Although Old Republic takes the position that the clause for the account of is unambiguous, (Appellant's Br. at 17), we are not that confident that Old Republic's characterization is a reasonable one in the present context. A policy provision is ambiguous if it is susceptible to more than one reasonable interpretation. See Terranova v. State Farm Mut. Auto. Ins. Co., 800 P.2d 58, 60 (Colo.1990). The CGL Policy provision excluding the owner and operator of the aircraft from coverage is certainly unambiguous. However, in the absence of a comparable express exclusion in the CGL Policy that denies coverage to a shareholder or officer of the company owning the aircraft, we are not prepared to say that the instant CGL Policy excludes such individuals from coverage. 50 At the very most, Watkins, as an officer and shareholder, is an indirect beneficiary of Durango's operations. Because it is established in Colorado jurisprudence, where an ambiguity is found, that an insurance policy is construed against the drafter, see Bengtson v. USAA Property & Cas. Ins., 3 P.3d 1233, 1235 (Colo.App. 2000), in this case Old Republic, we can not hold on this record that the crashed aircraft was in flight for the account of Watkins rather than for the account of Durango. But even if we were to accede to Old Republic's position that the exclusionary clause in this context is unambiguous, our reading of the policy provision in light of reason and the Boeing analysis would result in no different conclusion: i.e., that Watkins is covered to the extent of $1 million under the CGL Policy.