LDS Hospital, a Division of Intermountain Health Care, Inc. v. Capitol Life Insurance Co. , 94 Utah Adv. Rep. 16 ( 1988 )

HALL, Chief Justice:

Plaintiffs LDS Hospital and Inter-Mountain Clinic (“Hospitals”) appeal a trial court order denying Hospitals’ motion for summary judgment and granting defendant Capitol Life Insurance Company’s (“Capitol”) motion for no cause of action in regard to its liability under an accident insurance contract. We reverse.

The facts are not in dispute. In October 1981, defendant Joel Miller (“Miller”), while driving intoxicated, struck a vehicle driven by Robert Heinz. The accident was a head-on collision. Heinz died approximately five minutes after the accident occurred, while Miller lived and incurred medical expenses of over $150,000. After Heinz’s death, Miller pleaded guilty to manslaughter pursuant to the provisions of Utah Code Ann. § 76-5-205 (1978) (amended 1985). Prior to trial on this cause of action, the parties stipulated that Miller did not deliberately injure or intend to harm Heinz or cause his death. Furthermore, the parties agreed that Miller was an insured under his wife’s policy with Capitol. However, Capitol alleged that in this case Miller was not covered under the health and accident policy inasmuch as his medical expenses arose out of an exception provision of the insurance contract. That exception provides in part as follows:

General Exceptions.

If the Insured Person is not legally liable for payment, this policy will not pay a benefit. In addition, it does not pay charges:

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G. arising out of an attempt at assault or felony....

Upon consideration, the trial court denied Hospitals’ motion for summary judgment against Capitol, granted Capitol’s motion for no cause of action, and assessed liability for the incurred medical expenses against Miller. On appeal, the cases were consolidated. Hospitals argue that since Capitol’s insurance policy, and specifically the exclusion upon which Capitol relied to deny coverage, is ambiguous and uncertain, the trial court failed to apply the recognized rules of construction and erred in denying Hospitals’ motion for summary judgment and granting Capitol’s motion for no cause of action. We agree.

The interpretation of a written contract may be a question of law determined by the words in the agreement.¹ In this regard, wé recently stated that a cardinal rule in construing the contract is to give effect to the intentions of the parties and, if possible, these intentions should be gleaned from an examination of the text of the contract itself.² Additionally, it is axiomatic that a contract should be interpreted so as to harmonize all of its provisions and all of its terms, which terms should be given effect if it is possible to do so. íf a trial court interprets a contract as a matter of law, as was the case here, we accord its construction no particular weight and review its actions under a correction-of-error standard.³

Recognizing such principles, this Court, similar to courts in many jurisdictions, has long subscribed to the view that any ambiguity or uncertainty in the language of an insurance policy must be resolved in favor of coverage. Also, since the policy is drawn by the insurer, ambiguities are construed against that party.⁴ One acknowledged rationale underlying this sound determination is the need to afford the insured the protection he or she endeavored to secure by paying premiums.⁵ The test to be applied in determining the ambiguity of a contract has been stated by this Court as follows:

Would the meaning [of the language of the insurance contract] be plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of the words, and in the light of existing circumstances, including the purpose of the policy[?]⁶

We have previously applied this test and the liberal construction requirement when interpreting an exclusionary clause contained in an insurance policy. Indeed, in Browning v. Equitable Life Assurance Society, ⁷ we stated:

When an insured claims a right to recover under the accident provisions of the policy, all he need do is bring himself within the field therein defined and show his injury or disability was proximately and predominantly caused through violent, external and accidental means. He then has brought himself within the policy, and the terms thereof have been met.... When he brings himself within the insuring clause he has made his case ... and any exceptions or conditions which would then deny him relief, take him out of the indemnity provisions, render them inoperative as to him, are matters of defense, and the burden thereof rests upon the insurer....

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... [Limitations, exceptions or conditions which may relieve the insurer from liability, which may be set forth in the policy outside of the language of the insuring clause, or which may exist outside of the policy entirely, must be made and established by the insurer to escape liability thereunder.⁸

Similarly, the Supreme Court of Washington, sitting en banc, has reiterated:

There are certain basic principles that apply in any examination of exclusionary clauses in insurance contracts. Chief among these is that exclusionary clauses are to be most strictly construed against the insurer. The policy should be interpreted in accordance with the way it would be understood by the average person purchasing insurance. It must not be forgotten that the purpose of insurance is to insure, and that construction should be taken which will render the contract operative, rather than inoperative. A construction which contradicts the general purpose of the contract or results in a hardship or absurdity is presumed to be unintended by the parties.

These are principles that are not confined to Washington law, but are of nationwide application. The courts of other states have elaborated upon these rules. As stated by the court in Aetna Casualty and Surety Company v. Haas [, 422 S.W.2d 316]:

“Exclusion clauses are strictly construed against the insurer, especially if they are of uncertain import. An insurer may, of course, cut off liability under its policy with a clear language, but it cannot do so with that dulled by ambiguity. As with the provisions of the policy as a whole, so also with the exceptions to the liability of the insured, the language must be construed so as to give the insurer the protection which he reasonably had a right to expect; and to that end any doubts, ambiguities and uncertainties arising out of the language used in the policy must be resolved in his favor.”

As noted by the court in Harris Jolliff & Michel, Inc. v. Motorists Mut. Ins. Co., [21 Ohio App.2d 81, 255 N.E.2d 302]: “Where exceptions, qualifications or exemptions are introduced into an insurance contract, a general presumption arises to the effect that that which is not clearly excluded from the operation of such contract is included in the operation thereof.”⁹

In the instant case, Capitol is seeking to escape liability by relying upon an exclusionary clause which is susceptible of several interpretations. However, in view of the above-noted rules and principles of construction, Capitol has not sufficiently demonstrated how the contract “exception” in question should allow it to “escape liability thereunder.”¹⁰ Instead, Capitol alleges that the language and terms of the policy are not ambiguous and that it has met its burden of proof in this case by the mere fact that the insured pleaded guilty to a felony.¹¹ We disagree.

First, even if Capitol’s construction of the subject provision was accurate, Capitol has not established the required causal relationship between the insured’s injuries and a felony violation of law. Indeed, as expressed by the Colorado Supreme Court in Penn Mutual Life Insurance Co. v. Gibson,¹² in order to relieve the insurer of liability in such situations, the insured must have been actually engaged in a felony at the time and place of the injury. In Penn Mutual, the insured, while driving under the influence of alcohol, caused an accident which resulted in his death. The insurer declined to pay accidental death benefits because the death resulted from “the commission by the [ijnsured of an assault or felony.”¹³ The Colorado Supreme Court, viewing the issue as one of causation, stated:

In the instant case the insured’s death is not the death “of another” under C.R.S. ’53, 40-2-10. And, the question of an assault under C.R.S. ’53, 40-2-11 is not involved since such was neither alleged nor was the requisite intent proved.... As to the insured, the event which caused his death, was his collision with another automobile which was precipitated by his wrongful (but non-felonious) acts of driving while intoxicated and operating his vehicle in a reckless manner. The fact that [another individual] was also injured is not what caused [the insured’s] death. A fortiori the death was not the result of a felony under the statute.¹⁴

In urging this Court to adopt the reasoning of the Penn Mutual case, Hospitals argue that Miller’s injuries in this case were caused by and were a direct consequence of the accident, which was precipitated by his wrongful (but nonfelonious) act of driving while intoxicated. As such, Miller’s injuries did not “arise out of” a felony. Indeed, the felony upon which Capitol erroneously relied to deny coverage did not occur or exist until approximately five minutes after the accident, a fact to which the parties stipulated. Therefore, since the “felony” was merely incidental to and occurred only after the victim died and not before or at the time the insured’s injuries were inflicted,¹⁵ Miller’s coverage, as well as Hospitals’ judgment against Capitol, was improperly denied in this case.

Second, the ambiguous language of the subject provision is susceptible to alternative interpretations. Indeed, Hospitals contend that the word “felony” is modified by the word “attempt.” They argue that the plain and ordinary use of the word “attempt” implies an “intent,” a mental state inapplicable to a manslaughter offense. Additionally, Hospitals note that if “attempt” modifies both “assault” and “felony,” Capitol has at least arguably assumed the risk of coverage for injuries resulting from completed assaults or felonies. In contrast, if the word “attempt,” as interpreted and urged by Capitol, only applies or refers to the word “assault,” the conclusion required is that injuries sustained out of an attempted felony or a completed assault are covered under the subject insurance policy, while injuries arising out of a completed felony or an attempted assault are not. Accordingly, since the interpretations are of equal plausibility and since Capitol drafted the policy, any ambiguity must be resolved in favor of the insured and in favor of coverage in this case.¹⁶

Third, since the general definition section of the policy defines accidental bodily injury as “that which is not intentional and not foreseen” and given the nature of other exclusions indicating that there had to be an intentional act on the part of the insured before coverage would be similarly excluded under the policy, a reasonable person could properly conclude therefrom that the exception for commission of a felony involved only conscious wrongdoings.¹⁷ The case of Harbeintner v. Crown Life Insurance Co.¹⁸ supports this determination. In that case, the insured was killed while driving under the influence of alcohol. In denying recovery, the insurer argued that the insured’s death was the result of a voluntary, intentional, and willful act and was not caused solely by “accidental means.” One exception upon which the insurer relied to deny payment was that which excluded recovery for injuries “incurred to which a contributing cause is the insured’s commission of, or attempt to commit, an assault or felony.”¹⁹ In rejecting the insurer’s argument, the court’s decision cited existing Oregon Supreme Court case law for the proposition:

“[W]e are guided by the principle that it is the common understanding of the term which must be used and not its technical meanings. The insurance company may, of course, insert in its policy any definition of ‘accident’ it chooses but, in the absence of doing so, it must accept the common understanding of the term by the ordinary member of the purchasing public.

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“In situations in which ‘accident’ or ‘accidental’ are not defined in the policy, it is for the court to decide the definition which is properly applicable to the particular factual situation, taking into consideration what we believe to be the popular non-technical understanding of the term....”

We agree with Professor[s] Appleman:

“... While drunken driving is dangerous (and should be prevented) the public still regards such an accident as ‘accidental’. To rule to the contrary is to deny the terminology of the ordinary meaning given by the public. If the insurer wants to so restrict the meaning of accident, he should insert a specific exclusion as many do.”²⁰

This principle and the resulting conclusion are supported by our existing case law²¹ and our duty to interpret the contract so as to harmonize all of its provisions.²²

Accordingly, the trial court erred in granting judgment for Capitol. Inasmuch as our decision necessitates that plaintiffs be awarded judgment in this case, we reverse and remand for that purpose.

STEWART and DURHAM, JJ., concur.

1 . Buehner Block Co. v. UWC Assocs., 752 P.2d 892, 895 (Utah 1988).

2 . Id.

3 . Id.

4 . See Utah Farm Bureau Mut. Ins. Co. v. Orville Andrews & Sons, 665 P.2d 1308, 1309 (Utah 1983); Williams v. First Colony Life Ins. Co., 593 P.2d 534, 536 (Utah 1979); American Casualty Co. v. Eagle Star Ins., 568 P.2d 731, 734 (Utah 1977); Auto Lease Co. v. Central Mut. Ins. Co., 7 Utah 2d 336, 339, 325 P.2d 264, 266 (1958).

5 . See 1A J. Appleman & J. Appleman, Insurance Law & Practice § 360, at 447-54 (1981); see also id. vol. 13 at § 7401 (insurance contracts must be liberally construed in favor of policyholder or beneficiary thereof).

6 . Auto Lease Co., 7 Utah 2d at 339, 325 P.2d at 266 (footnote omitted).

7 . 94 Utah 570, 80 P.2d 348 (Utah 1938).

8 . Id. at 573-75, 80 P.2d at 350-51 (emphasis deleted; citations omitted).

9 . Phil Schroeder, Inc. v. Royal Globe Ins. Co., 99 Wash.2d 65, 68, 69, 659 P.2d 509, 511 (1983) (emphasis in original; citations omitted).

10 . Browning, 94 Utah at 575, 80 P.2d at 351.

11 . In deciding this case, we do not address whether a plea of guilty would satisfy the terms of the subject exception even given the construction Capitol wishes to place upon it.

12 . 160 Colo. 462, 418 P.2d 50 (1966) (en banc).

13 . Id. at 464, 418 P.2d at 51.

14 . Id. at 466, 418 P.2d at 52 (emphasis in original); see also Utah Code Ann. § 41-6-44(3) (1988) (driving under the influence of alcohol misdemeanor classifications).

15 . Compare Utah Code Ann. § 41-6-44(3) (1988) (driving under the influence of alcohol misdemeanor classifications) with Utah Code Ann. § 76-5-205 (Supp.1988) (manslaughter felony classification).

16 . See supra note 4 and accompanying text.

17 . See IB J. Appleman & J. Appleman, Insurance Law & Practice § 511, at 397-99 (1981).

18 . 46 Or.App. 579, 612 P.2d 334 (1980).

19 . Id. at 582 n. 1, 612 P.2d at 336 n. 1.

20 . Id. at 581, 612 P.2d at 335 (quoting Botts v. Hartford Accident & Indent. Co., 284 Or. 95, 585 P.2d 657 (1978); 1A J. Appleman & J. Appleman, Insurance Law & Practice § 467, at 83 (Supp.1979)); see also Safeco Ins. v. House, 80 Or.App. 89, 721 P.2d 862 (1986) (some consequences of voluntary intoxication may be accidental); 1A J. Appleman & J. Appleman, Insurance Law & Practice § 360, at 447-49 (1981) (definition of "accident”).

21 . See, e.g., supra notes 4, 6.

22 . See supra notes 1, 4 and accompanying text.