Opinion ID: 2514213
Heading Depth: 3
Heading Rank: 3

Heading: Coverage Under the Alaska Podiatry Associates Business Liability Policy

Text: At the time of the accident, Holderness was insured under a business liability policy held by Alaska Podiatry Associates for those acts he undertook with respect to [his] duties as [an executive] officer[ ]. The liability section of the policy covers those sums that the insured becomes legally obligated to pay as damages because of bodily injury, property damage, personal injury or advertising injury to which this insurance applies. Although the Business Liability Exclusions section of the policy specifically excludes coverage for injuries arising out of an insured's use of an automobile, the same section states an exception to this exclusion that results in coverage for liability arising from use of a non-company-owned auto: Under [the liability coverage], this insurance does not apply: .... 7. to bodily injury or property damage arising out of the ownership, maintenance, use or entrustment to others of any aircraft, auto or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and loading or unloading. This exclusion does not apply to: .... e. bodily injury or property damage arising out of the use of any non-owned auto in your business by any person other than you[.] Like Holderness's umbrella policy, this business insurance is an automobile liability policy under AS 21.89.020(a) because its coverage includes circumstances in which liability arises for causing injury, death, or property damage by driving an automobile. Thus, as the superior court correctly recognized, if the provisions of the policy's liability coverage extend to Holderness's accident, then AS 21.89.020 and Harrington would require reformation of the policy to provide underinsured motorist coverage that parallels its liability coverage. Accordingly, we must inquire whether the policy's liability coverage might extend to Holderness's accident. The policy defines non-owned auto to mean any auto you do not own, lease, hire or borrow which is used in connection with your business. The policy also specifies that, throughout its provisions, `you' and `your' refer to the Named Insured shown in the Declarations and any other person or organization qualifying as a Named Insured under this policy. The Named Insured in this case was Alaska Podiatry Associates. And since the policy nowhere indicates that another person or organization would qualify as a Named Insured, it follows that Holderness's personal automobile was a non-owned auto under the terms of the policythat is, it was not an auto owned by Alaska Podiatry Associates, the only Named Insured. The remaining question, then, is whether Holderness was an insured under the Alaska Podiatry Associates policy at the time of the accident; if he was an insured, his injuries would be covered by the policy. In describing who it insures, the policy distinguishes between the insured company's employees and its executive officers. Under the policy, the corporation's employees, other than ... executive officers, are insureds only for acts within the scope of their employment. By contrast, the corporation's executive officers ... are insureds ... only with respect to their duties as ... officers. Accordingly, the executive officers of Alaska Podiatry Associates were covered for personal liability arising from their own negligence while carrying out their duties as executive officers. It is undisputed that Holderness was an executive officer of Alaska Podiatry Associates. Holderness argues that driving from home to the hospital to perform surgery qualifies as conduct performed with respect to his duties as a corporate officer. Therefore, he claims, he was covered by the liability policy at the time of the accident, and the policy, when reformed under Harrington, insures him for the injuries he sustained at the hands of an underinsured motorist. State Farm responds that because Holderness was not attending a director's meeting or a shareholder's meeting[,] ... signing payroll checks for the corporation's employees, or the like, he was not acting with respect to his duties as a corporate officer. But the non-managerial nature of Holderness's activity does not necessarily determine whether he was acting with respect to his duties. For in the absence of a policy provision more narrowly defining the policy's reference to duties of office, Holderness's duties as an executive officer of Alaska Podiatry Associates would have encompassed not just his managerial duties, but all duties related to the corporation's business that Holderness usually performed as an executive officer. Two cases illustrate this point. In Martin v. United States Fidelity & Guaranty Co., [33] the Supreme Court of Missouri, holding that a policy's use of the term duties as your officers was ambiguous, resolved the ambiguity by concluding that the term could include a non-managerial duty, such as fitting a pipe flange, if that duty was one of the executive officer's actual responsibilities. [34] By contrast, in Creel v. Louisiana Pest Control Insurance, Inc., [35] the Court of Appeal of Louisiana construed similar policy language narrowly, to include only managerial duties; but the court based its decision on the trial testimony of Ray's Pest Control's president, who specifically described his responsibilities as president to be limited to attending and participating in corporate meetings, the hiring and firing of personnel, handling financial dealings, and making corporate decisions. [36] Noting that Ray's president had been on his way to spray a house for pests when the accident occurred, the court concluded that he was not an insured at the time of the accident. [37] Read together, Martin and Creel suggest that, absent a narrower definition of duties of office, when a policy extends coverage to executive officers acting with respect to their duties as ... officers, the coverage should be construed to include all work-related activities performed by executive officerswhether menial or managerialunless case-specific evidence establishes that an officer actually undertook to perform a narrower range of duties in that capacity. Here, no record evidence suggests that Holderness's role as an executive officer of Alaska Podiatry Associates was actually limited to managerial or purely executive functions. Accordingly, we reject State Farm's contention that Holderness was necessarily acting outside the scope of his duties as an executive officer at the time of the accident merely because he was not performing managerial functions. But this conclusion does not resolve the issue specifically presented here. The superior court's ruling did not focus on whether Holderness was performing uniquely executive functions at the time of the accident; instead, the ruling more broadly concluded that driving to work falls outside the scope of any kind of work-related activity: Holderness has raised no factual issue that he was involved in anything other than a completely ordinary commute to work. As the court's ruling recognizes, Alaska follows the general rule that going to work and coming home fall outside the scope of employment. [38] Although the going-and-coming rule allows for exceptions on certain occasionsas when special errands call a worker away from work [39] or force the worker to take an unusually dangerous route to work [40] the record presents no evidence suggesting that Holderness was responding to any unique or special demands when he left home for the hospital on the day of the accident. [41] Nor does the record contain any case-specific evidence indicating that Alaska Podiatry Associates actually considered commuting to work to be an integral aspect of Holderness's duties as an executive officer. Absent such evidence, we conclude, the superior court properly ruled that Holderness was not performing his duties as an executive officer and was not covered by the [Alaska Podiatry Associates] policy.