Engle v. Zurich-American Insurance Group

549 N.W.2d 589 (1996) 216 Mich. App. 482

Paul E. ENGLE, Plaintiff-Appellee/Cross-Appellant,
v.
ZURICH-AMERICAN INSURANCE GROUP, Defendant-Appellant, and
Liberty Mutual Insurance Company, Defendant-Appellee/Cross-Appellee, and
Beverly McConnell, Defendant.

No. 174552.

Court of Appeals of Michigan.

Submitted January 9, 1996, at Detroit. Decided May 7, 1996, at 9:05 a.m. Released for Publication June 20, 1996.

Powers, Chapman, DeAgostino, Meyers & Milia, P.C. by Ward M. Powers, Troy, for Paul E. Engle.

Plunkett & Cooney, P.C. by Robert G. Kamenec, Detroit, for Zurich-American Insurance Group.

Beresh & Prokopp by David G. Sekerak, Novi, for Liberty Mutual Insurance Company.

Before WAHLS, P.J., and REILLY and O'CONNELL, JJ.

PER CURIAM.

In this declaratory action for determination of insurance coverage, defendant Zurich-American Insurance Group appeals as of right the trial court's March 31, 1994, grant of summary disposition against it and in favor of plaintiff. Plaintiff cross appeals the court's entry of summary disposition in favor of defendant Liberty Mutual Insurance Company. We affirm.

Plaintiff is a truck driver who owned a 1987 International Cab tractor (hereinafter "truck") that was leased to B & W Cartage Company, a carrier operating under a permit issued by the Interstate Commerce Commission. The lease provided that plaintiff rented the truck "complete with drivers, to B & W for use in loading and transporting such property as B & W may require."

On May 26, 1992, plaintiff used the truck to make deliveries that were assigned to him by B & W. His last delivery was to Guardian Glass. According to his deposition, after dropping off a trailer there, he considered the day's work over. Because the delivery to Guardian Glass was a one-way haul, plaintiff explained, he "never got paid a dime for going no place after [he] left Guardian." He drove the truck to a restaurant for dinner, ate there, and left. While plaintiff was en route to B & W, at approximately 6:30 p.m., the truck collided with a vehicle driven by defendant Beverly McConnell.

After the accident, plaintiff went to B & W's yard, parked the truck, checked for messages, and went home in his pickup truck. Plaintiff had no obligation to return to B & W after the delivery. He knew that the dispatcher's office would be closed. (The normal hours of operation were 6:00 a.m. to 6:30 p.m.) Although plaintiff routinely parked the truck at the B & W lot because he had no other place to park it, he was not required to do so.

In accordance with the terms of the lease between plaintiff and B & W, both plaintiff and B & W insured the truck. Plaintiff had a "bobtail" insurance policy with Zurich, and B & W insured the truck through Liberty. After McConnell sued plaintiff for personal injuries sustained in the accident, plaintiff brought this action against Zurich and Liberty for a declaration of his rights under the two insurance policies.

Following cross-motions for summary disposition, the trial court ruled that the policy from Zurich, but not Liberty, provided coverage.

The Zurich policy contained a provision that excluded coverage "[w]hile the automobile is being used in the business of any person or organization to whom the automobile is rented." The issue in this case is whether this exclusion applies, specifically, whether the truck was being used "in the business" of B & W at the time of the accident.^[1]

Zurich argues that coverage was excluded because at the time of the accident plaintiff was furthering the commercial interests of B & W:

Although parking his truck at the yard was coincidentally a matter of convenience for Engle, it also benefited B & W because it permitted the truck to be ready for use at any time. The fact that Engle stopped at the yard every night also allowed for the two way exchange of information between trucker and carrier, a fact which also indicates a business purpose.

Zurich primarily relies on St. Paul Fire & Marine Ins. Co. v. Frankart, 69 Ill. 2d 209, 13 Ill. Dec. 31, 370 N.E.2d 1058 (1977). In that case, Frankart leased his truck and trailer to Wilson Freight Company. He was involved in an accident after he completed a delivery for Wilson and was heading in the direction of his home with an empty trailer. The court concluded that a clause identical to the provision at issue in this case excluded coverage.

Wilson's failure to have another assignment for Frankart at its Illinois terminal did not terminate its "exclusive possession, control, responsibility and use" of Frankart's tractor-trailer provided under the lease. It is the nature of Wilson's business that its owner-drivers will be relieved of a load at a point of delivery, and that, unless another load can be picked up on the return trip, the owner-drivers must make their return trip pulling an empty trailer. As Wilson's vice president conceded, the original assignment does not terminate at the point of delivery. We find that it continues at least until the owner-driver returns to the point where the haul originated..., to the terminal from which the haul was assigned ..., or to the owner-driver's home terminal from which he customarily obtained his next assignment. [Id. At 218, 13 Ill. Dec. at 35, 370 N.E.2d at 1062.]

In this case, the trial court rejected Zurich's arguments and determined that the exclusion did not apply. The court noted that plaintiff was not returning to the terminal to drop off property belonging to B & W, that he was not being paid, that he had made his final delivery and was not under any directive to return to the terminal. As for the significance of the plaintiff's returning to the terminal to park the truck and get his pickup truck, the court stated:

[T]he purpose of his return to the terminal, to park his truck, was entirely a personal matter. B and W did not exercise any control over where trucks were parked when not in use for B and W. Nor was B and W obligated to secure for its truckers a place to park. Rather B and W permitted Plaintiff as well as other truckers to park their rigs at its terminal as a convenience to them.

The courts of this state have not issued any published decisions discussing whether an exclusionary clause similar to the one at issue applies when the truck is being used after the driver has completed assigned deliveries.^[2] Courts of foreign jurisdictions confronted with similar facts and exclusions have reached different conclusions. See Frankart, supra; McLean Trucking Co. v. Occidental Fire & Casualty Co., 72 N.C.App. 285, 324 S.E.2d 633 (1985); Liberty Mutual Ins. Co. v. Connecticut Indemnity Co., 55 F.3d 1333 (C.A.7, 1995); Acceptance Ins. Co. v. Canter, 927 F.2d 1026 (C.A.8, 1991), and cases cited therein.

We conclude that the exclusion is subject to more than one reasonable interpretation, and construe it against Zurich. A provision is said to be ambiguous when its words may reasonably be understood in different ways. Clevenger v. Allstate Ins. Co., 443 Mich. 646, 654, 505 N.W.2d 553 (1993), quoting Raska v. Farm Bureau Mutual Ins. Co. of Michigan, 412 Mich. 355, 362, 314 N.W.2d 440 (1982). The view of the court in Frankart, essentially, that a vehicle is being used in the business of the carrier during the return trip, is a reasonable interpretation of the exclusionary provision. However, the view of the trial court is also a reasonable interpretation. Therefore, the provision is ambiguous, and must be construed against the insurer and in favor of coverage. Although Zurich may decide to include the Frankart definition of "in the business" in the policy, we do not believe it is appropriate for this Court to impose the definition by way of judicial interpretation.

On cross appeal, plaintiff contends that if this Court reverses the trial court's grant of summary disposition against Zurich, that it must also reverse the denial of summary disposition against Liberty. We recognize that the extent of the insurers' obligations is governed by the terms of their respective policies. Zurich-American Ins. Co. v. Amerisure Ins. Co., 215 Mich.App. 526, 547 N.W.2d 52 (1996). However, because plaintiff requests review of this aspect of the court's decision only if we reverse summary disposition against Zurich, we need not address the issues presented in the cross appeal.

Affirmed.

O'CONNELL, J., concurring in part and dissenting in part.

I agree with the majority's conclusion with respect to the policy issued by Zurich-American Insurance Group, but would also consider whether coverage was afforded under the policy issued by Liberty Mutual Insurance Company. In accordance with the recent opinion of this Court in Zurich-American Ins. Co. v. Amerisure Ins. Co., 215 Mich.App. 526, 547 N.W.2d 52 (1996), I would find coverage under both policies.

The provision of the Zurich-American policy that excludes coverage "[w]hile the automobile is being used in the business of any person or organization to whom the automobile is rented" suffers from a latent ambiguity under the facts of this case. I am persuaded that plaintiff was, in fact, effecting the business of B & W Cartage Company by returning the tractor to the terminal where he could check for work-related messages. See St. Paul Fire & Marine Ins. Co. v. Frankart, 69 Ill. 2d 209, 13 Ill. Dec. 31, 370 N.E.2d 1058 (1977). However, I agree with the majority that the particular facts of this case, such as the fact that plaintiff was under no directive to return to the terminal, could reasonably lead to the conclusion that the tractor was not being used "in the business of" B & W at the time the accident occurred. Because exclusionary clauses are strictly construed, Raska v. Farm Bureau Mutual Ins. Co. of Michigan, 412 Mich. 355, 361-362, 314 N.W.2d 440 (1982), against the drafting insurer, Clevenger v. Allstate Ins. Co., 443 Mich. 646, 654, 505 N.W.2d 553 (1993), I agree that the ambiguous exclusion must be read narrowly in favor of the insured. Accordingly, I would find coverage under the Zurich-American policy.

However, I would also find coverage under the Liberty Mutual policy for the reasons set forth in Zurich-American Ins. Co. v. Amerisure, supra. That decision, resting upon similar facts, dealt with identical provisions of insurance policies that were identical to those presently being considered, and concluded that coverage existed under both policies. The majority has declined to reach this issue because plaintiff's cross appeal is phrased in the alternative: if this Court finds no coverage under the Zurich-American policy, then this Court should consider whether coverage exists under the Liberty Mutual policy. However, the majority overlooks the fact that Zurich-American is the appellant and both plaintiff and Liberty Mutual are appellees.^[1] Zurich-American raises this issue in its brief on appeal, and the issue is, therefore, properly before this Court. Because Zurich-American Ins. Co. v. Amerisure, supra, provides that in situations such as the present one coverage exists under both policies, I would also find coverage to exist under both policies.

I would affirm the order granting summary disposition in favor of plaintiff with respect to the policy issued by Zurich-American and would reverse the order granting summary disposition in favor of Liberty Mutual with respect to the policy issued by Liberty Mutual.

NOTES

[1] Zurich's sole issue on appeal according to its statement of questions presented is:

WHETHER THE TRIAL COURT PROPERLY GRANTED SUMMARY DISPOSITION ON THE ISSUE OF WHETHER PLAINTIFF WAS "IN THE BUSINESS" OF ITS LESSEE AT THE TIME OF THE ACCIDENT, AND THEREFORE WITHIN THE EXCLUSION OF THE NONTRUCKING POLICY?

[2] We note that in Zurich Ins. Co. v. Rombough, 384 Mich. 228, 180 N.W.2d 775 (1970), the Court held that a policy containing a similar clause, "in any business," was ambiguous. However, the Court stated that it was the relationship between the exclusion and the clause relating to the insurer's duty to defend that created the ambiguity. Id. at 232, 180 N.W.2d at 776. The Court did not indicate whether the exclusionary clause by itself was ambiguous. In Zurich-American Ins. Co. v. Amerisure Ins. Co., 215 Mich.App. 526, 547 N.W.2d 52 (1996), this Court determined that the exclusion did not apply when the accident occurred when the truck was being driven to a facility for repair. The opinion does not provide guidance in this case in which the accident occurred following completion of assigned deliveries.

[1] While it is true that plaintiff, in his cross appeal, names Liberty Mutual as a cross appellant but does not name Zurich-American as a cross appellant, plaintiff's cross appeal is distinct from Zurich-American's appeal.