Court Opinion

ID: 5081981
Source: CourtListenerOpinion
Date Created: 2021-10-01 12:46:13.255162+00
Date Added: 2024-06-11T08:20:15.366299
License: Public Domain

SHANGLER, Judge, concurring in result.
The employee Vassholz waged her contention for coverage under the business liability policy of employer Sin Suk Ulmer on the premise that her injury did not arise out of and in the course of the employment by the insured. The policy issued by Truck Insurance Exchange to employer Sin Suk Ulmer excluded coverage for bodily injury to an employee of the insured arising out of and in the course of his employment by the insured. The policy also excluded coverage for any obligation for which the insured ... as employer may be held liable under any workmen’s compensation law. The circuit court entered summary judgment for the employer’s insurer, Truck Insurance Exchange, on its petition for declaratory judgment that coverage to the employer Sin Suk Ulmer was excluded by the “bodily injury to an employee of the insured arising out of and in the course of his employment by the insured” exclusion of the policy. The principal opinion, and correctly, sustains the order of the trial court that there was no genuine issue of material fact that the injury to Vassholz arose out of and in the course of her employment by Sin Suk Ulmer, the insured. That fact was concluded in favor of the insurer Truck Insurance Exchange as a matter of law through the deposition testimony of the claimant Vassholz and insured Sin Suk Ulmer.
I concur in that rationale, and, if I read aright, the only adjudicated rationale, of the principal opinion. I do not concur, however, in the incidental advice that “the employee exclusion from liability coverage is applicable where there is actually no workers’ compensation coverage.” The employer Sin Suk Ulmer had fewer than four employees, so Vassholz was not within the scheme of workers’ compensation. How that fact impinges on coverage under the policy, and hence the obligation of the insurer under the policy to indemnify the employer for any liability adjudged in favor of the employee, is a question of law neither presented nor decided by the summary judgment proceeding. It is the rule that on appeal the grant of summary judgment must be affirmed if, as a matter of law, it is sustainable on any theory. McCready v. Southard, 671 S.W.2d 385, 887[1] (Mo.App.1984).
It was the theory of the declaratory judgment petition that Vassholz’ injury arose out of and in the course of employment by Sin Suk Ulmer, and so was excluded from coverage by the provision of the policy. It was the theory of the Vassholz counterclaim for declaratory judgment that her injury was outside her employment by Sin Suk Ulmer, so that the policy exclusion was not applicable. That issue of fact, and thus the operation of the exclusion to deny coverage, was concluded in favor of the insurer. That is the summary judgment *25the principal opinion sustains. That is the opinion in which I concur.
That theory of litigation and of summary judgment and of appellate opinion assume the validity of the exclusion. I am unwilling to subscribe to the notion, even if only as benign dictum, that “[t]he meaning or validity of the employee exclusion from public liability coverage ... does not depend upon the presence or absence of actual workers’ compensation coverage.” It is a question of law that remains open. It is only recently that the validity and even fairness of such “employee of an insured” exclusion provisions in a liability policy, when inserted without purpose to the insured as an employer, have been brought into question. That is because the purpose of policy exclusions is to limit the insurer’s liability, whereas the policy’s reason for being is to protect the insured against liability.
In this case, the literal language of the employee exclusion — assumed as valid by the litigants and hence by our opinion— contradicts the purpose of the policy Truck Insurance Exchange issued to Sin Suk Ul-mer. Its purpose was to protect Sin Suk Ulmer against liability from her delicatessen-liquor store business activity. That business employed less than four employees and so Vassholz was not covered by the workers’ compensation law. Yet the policy excluded not only “bodily injury to an employee of the insured arising out of and in the course of his employment by the insured,” but also excluded “any obligation for which the insured as employer may be held liable under any workmen’s compensation law.”
Obviously, the latter exclusion provision, standing alone, could not have prevented coverage for the claim of employee Vassh-olz even if — as the summary judgment concludes — it arose out of and in the course of employment. That is because there was no obligation for which the insured employer might be held to the claimant employee under the workers’ compensation law. Yet, although not unanimous, the authority abounds that where an employer’s public liability insurance policy excludes from coverage claims by employees of the insured, “that term is treated as the equivalent of a reference to those persons who are entitled to compensation under the workmen’s compensation act.” 12 Couch on Insurance 2d § 44A:73 (Rev ed. 1981); Ron Burton, Inc. v. Villwock, 477 So.2d 596, 600 (Fla.App.1985).1 That is because the objective of both exclusions is to protect the employer from duplicate expense for work related injury to an employee already covered by workers’ compensation insurance. Baker v. DePew, WD 45187, adopted June 9,1992.
It is not enough to say, as does the principal opinion, that “[i]f the employee exclusion of the public liability policy were applicable only in cases of actual workers compensation coverage, the exclusion would be redundant, for the injury would be excluded under the workers’ compensation exclusion.” It is not its redundancy that makes the “employee exclusion” as well as the “workers compensation exclusion” egregious: it is its presence in the policy to Sin Suk Ulmer at all. That insured employer was not operating under the workers’ compensation law, and never was. It was not exposed to double payment for an employment injury, and so the exclusions accomplished nothing for the insured except to expose her as employer to uninsured personal liability.
It is not quite to the point to argue that § 303.190.5 specifically permits the employee exclusion in a policy of automobile liability insurance. First of all, I do not argue or even suggest that an employee exclusion provision in a liability policy is invalid. I argue only that as a matter of “contract,” or more nearly precisely, liability policy provision, that an exclusion that subtracts coverage arbitrarily is of suspect validity. The requirement of coverage or allowance of an exclusion by statute, of course, is an entirely different matter. Section 303.-190.5, in any event, expresses as public policy, what many authorities conclude the *26“employee exclusion” and “workers’ compensation exclusion” subserve: that only one compensation for the same injury will be recovered. Baker v. DePew, supra.
That the “employee exclusion” may not violate “some public policy,” does not end the matter, as the principal opinion seems to suppose. The exclusion is suspect as a matter of standardized agreements. It is too late in the day to continue to cling to the mythology of a liability insurance policy as a “contract” in the classic sense of terms negotiated by actual consent. It is, rather, a contract of adhesion. Estrin Constr. Co. v. Aetna Casualty & Sur. Co., 612 S.W.2d 413, 422 (Mo.App.1981). These contracts come in standard forms. The coverages are standard as are the exclusions. The “employee exclusion” and the “workers’ compensation exclusion,” for instance, are typically inserted in automobile, premises, homeowners, business, and other liability policies, whether they have a due function or not. It is because the insured literally adheres from want of choice, and not by negotiated choice, that the law treats them differently. Id. at 419.
It is enough to say that under § 211(3), Standardized Agreements, Restatement (Second) of Contracts (1981), where the party who prepared the form agreement “has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.” In the circumstance of an employer operating outside the workers’ compensation law, the “employee exclusion” was without function to protect the employer insured from liability for injury to an employee. The insurer, the preparer of the form agreement, had reason to believe that the insured Sin Suk Ulmer, who assented by adherence only, would not have done so had. she known that the exclusion arbitrarily denied her coverage for claims against her by employees for tortious injury arising out of the employment, injuries not otherwise compensable.
I believe that under the developed and enlightened law, the efficacy of the “employee exclusion” in the liability policy issued to Sin Suk Ulmer depended upon an obligation of that employer to the injured employee Yassholz for workers’ compensation. In the circumstances presented, that law would allow coverage to the employer insured for the injury claim of the employee. I believe that under the developed and enlightened law the “employee exclusion” was an unexpected term to which the drafter of the agreement, the insurer, had reason to believe the insured would not assent had it been known to her.
For these reasons I concur only in the result of the principal opinion.

. Contra, American Family Mutual Insurance Co. v. Flaharty, 710 S.W.2d 5 (Mo.App.1986), a decision of this court cited by the principal opinion, is without rationale and stands alone.