American States Insurance Co. v. Flathead Janitorial & Rug Services, Inc.

American States Insurance Co. v. Flathead Janitorial & Rug Services, Inc., 2015 MT 239 (Aug. 11, 2015) (McKinnon, J.; Wheat, J. dissenting) (4-1, aff’d)

Issue: Whether the district court erred in concluding Bridgett was not covered under the commercial auto policy issued to Flathead Janitorial.

Short Answer: No.

Affirmed

Facts: Bridgett suffered severe, permanent, debilitating injures in December 2011 when the bicycle she was riding collided with a truck making a negligent turn. She now requires full-time care from her parents. At the time of the accident, Bridgett was attending college in Utah, had a Utah driver’s license, and was employed by a Utah business. It is undisputed that she was not employed by Flathead Janitorial or in a company vehicle at the time of the accident.

Flathead Janitorial is a closely held corporation in Kalispell, owned by Bridgett’s parents, the Nolands. Flathead Janitorial was the named insured under a policy issued by American States. The schedule of covered autos named 27 company-owned vehicles, and list of company drivers, which included Bridgett.

Bridgett received the liability policy limits from the truck driver’s insurance company, and underinsured motorist (UIM) and medical payment (MP) benefits under two personal automobile insurance policies for which she was the insured. The Nolands allege that these amounts are insufficient to cover Bridgett’s medical needs and accordingly seek UIM and MP coverage under the American States commercial automobile policy issued to Flathead Janitorial.

American States denied coverage and filed a complaint for declaratory judgment. Nolands counterclaimed, arguing Bridgett was an insured and additionally, that the UIM and MP benefits should be stacked. 

Procedural Posture & Holding: After discovery, the parties filed cross-motions for summary judgment. The district court granted American States’ motion, concluding that because Bridgett was not occupying a vehicle owned by Flathead Janitorial and covered by the policy when she was injured, she does not qualify for coverage as a matter of law. Having found no coverage, it did not address stacking. Nolands appeal, and the Supreme Court affirms. 

Reasoning: The Court finds the policy provisions defining who is an insured unambiguous, and further finds Bridgett does not meet any of the provisions. The policy provided UIM and MP coverage for occupants of covered autos and those conducting business for the corporation. Bridgett was doing neither of these things.

Justice Wheat’s Dissent: Justice Wheat would find the policy ambiguous and, construing the policy against the insurer, hold that Mark and Katherine are covered insureds and Bridgett is covered as a “family member” under the MP and UIM sections of the policy.