Durrant v. Unigard Insurance Company

Filing 24

MEMORANDUM DECISION AND ORDER denying 11 Defendant's Motion for Summary Judgment; granting 16 Plaintiff's Cross Motion for Partial Summary Judgment. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

NEIL T. DURRANT,
Case No. 1:12-cv-00115-BLW
Plaintiff,

MEMORANDUM DECISION AND
ORDER

v.
UNIGARD INSURANCE COMPANY,
Defendant.

INTRODUCTION
Before the Court are the parties’ cross-motions for summary judgment (Dkts. 11
& 15). The Court heard oral argument on October 9, 2012, and took the matter under
advisement. For the reasons set forth below the Court will deny Defendant Unigard
Insurance Company’s Motion for Summary Judgment (Dkt. 11), and grant Plaintiff Neil
T. Durrant’s Cross-Motion for Partial Summary Judgment (Dkt. 16).
BACKGROUND
Plaintiff Neil T. Durrant seeks underinsured motorist (UIM) coverage based on an
insurance policy with the defendant, Unigard Insurance Company. Durrant, while
driving a tractor owned by Big D Ranch, was struck by a drunk driver. Durrant filed suit
against the negligent driver, and he recovered the $100,000 limit on the driver’s
automobile insurance policy. Because this amount did not cover the full measure of

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Durrant’s damages, Durrant filed an underinsured motorist claim with Unigard, his
insurer, for the remaining, unpaid compensatory damages. Unigard denied the claim. It
contends that Durrant’s UIM coverage does not apply to the accident.
Durrant contends that Unigard wrongfully denied him UIM coverage, and he
therefore filed this lawsuit. Now both parties seek summary judgment.
LEGAL STANDARD
Summary judgment is appropriate where a party can show that, as to any claim or
defense, “there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). One of the principal purposes of
summary judgment “is to isolate and dispose of factually unsupported claims ....” Celotex
Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). It is “not a disfavored procedural
shortcut,” but is instead the “principal tool[ ] by which factually insufficient claims or
defenses [can] be isolated and prevented from going to trial with the attendant
unwarranted consumption of public and private resources.” Id. at 327. “[T]he mere
existence of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247–48 (1986). There must be a genuine dispute as to any material fact-a fact
“that may affect the outcome of the case.” Id. at 248.
The evidence must be viewed in the light most favorable to the non-moving party,
and the Court must not make credibility findings. Id. at 255. Direct testimony of the nonmovant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d 1152,

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1159 (9th Cir.1999). On the other hand, the Court is not required to adopt unreasonable
inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th
Cir.1988).
When cross-motions for summary judgment are filed, the Court must
independently search the record for factual disputes. Fair Housing Council of Riverside
County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). The filing of crossmotions for summary judgment – where both parties essentially assert that there are no
material factual disputes-does not vitiate the court's responsibility to determine whether
disputes as to material fact are present. Id.
The moving party bears the initial burden of demonstrating the absence of a
genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir.
2001) (en banc). To carry this burden, the moving party need not introduce any
affirmative evidence (such as affidavits or deposition excerpts) but may simply point out
the absence of evidence to support the nonmoving party's case. Fairbank v. Wunderman
Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000).
This shifts the burden to the non-moving party to produce evidence sufficient to
support a jury verdict in her favor. Id. at 256–57. The non-moving party must go beyond
the pleadings and show “by her affidavits, or by the depositions, answers to
interrogatories, or admissions on file” that a genuine dispute of material fact exists.
Celotex, 477 U.S. at 324.

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ANALYSIS
The Idaho Supreme Court has made clear that the question of whether an
insurance policy is ambiguous is a question of law for the court to determine. Farm
Bureau Mutual Insurance Co. Of Idaho v. Schrock, 252 P.3d 98, 102 (Idaho 2011) (citing
Cherry v. Coregis Insurance Co., 204 P.3d 522, 524 (Idaho 2009)). A court must ask
whether a policy is reasonably subject to conflicting interpretations in order to determine
whether it is ambiguous. Id. If the language of the policy is clear and unambiguous, then
it will be given its ordinary and plain meaning. Id.
Insurance contracts, however, are “subject to certain special canons of
construction.” Clark v. Prudential Property And Casualty Ins. Co., P.3d 242, 244 (Idaho
2003). Those special canons of construction include the admonition that “ambiguities
must be construed most strongly against the insurer,” and “[t]he burden is on the insurer
to use clear and precise language if it wishes to restrict the scope of coverage, and
exclusions not stated with specificity will not be presumed or inferred.” Id. at 245. The
Idaho Supreme Court therefore instructs that any apparent ambiguities in the policy terms
should be resolved in favor of coverage. Cherry, 204 P.3d at 524.
The Unigard policy in dispute was issued to Big D Ranch as part of a
comprehensive “Multi-Farm Commercial Package Policy.” Unigard Policy at 2, Dkt. 121. Durrant is an employee of Big D Ranch and was listed as a “Named Insured” under
the policy. The policy package includes a Business Auto coverage portion. The Business

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Auto coverage contains fifteen separate forms and endorsements, including “ID
Underinsured Motorist Coverage.” Id. at 4.
The Underinsured Motorist endorsement provides:
We will pay the sums the 'insured' is legally entitled to recover as
compensatory damages from the owner or driver of an 'underinsured motor
vehicle.' The damages must result from 'bodily injury' sustained by the
'insured' caused by an 'accident.' The owner's or driver's liability for these
damages must result from the ownership, maintenance or use of the
'underinsured motor vehicle.'
Unigard Policy at 38.
The UIM endorsement defines “insured” individuals as: (1) “The Named Insured
and any ‘family members’”; (2) “Anyone else ‘occupying’ a covered ‘auto’ or a
temporary substitute for a covered ‘auto’”; or (3) “Anyone for damages he or she is
entitled to recover because of ‘bodily injury’ sustained by another ‘insured.’” Id. at 39.
It is undisputed that Durrant meets each of these UIM coverage requirements.
First, he is a “Named Insured” under the policy. Second, he is legally entitled to recover
compensatory damages from a negligent driver of an “underinsured motor vehicle.”
Third, Durrant’s damage resulted from “bodily injuries” caused by an “accident.”
Fourth, the negligent driver’s liability resulted from the “ownership, maintenance or use”
of an “underinsured motor vehicle.” And, finally, the UIM coverage was triggered
because the negligent driver’s liability limits were exhausted. Thus, it is undisputed that
Durrant satisfies each of the express condition for coverage under the UIM Endorsement.
Unigard responds that language contained in the “Schedule of Coverages and
Covered Autos,” as well as the introductory paragraph to the UIM endorsement, restricts

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coverage to “covered autos” only. And this language, according to UIM, provides the
“lens” through which the language of the Underinsured Motorist Endorsement must be
viewed.
The “Schedule of Coverages and Covered Autos” consists of a four column table
listing the coverages available, the covered autos, the policy limit for each coverage type,
and the premium amount for each coverage type. At the top of this table there is
language suggesting that coverage only applies to “covered” autos:
This policy provides only those coverages where a charge is shown in the
premium column below. Each of these coverages will apply only to those
‘autos’ shown as covered “autos.”
Unigard Policy at 7, Dkt. 12-1. A “charge” is shown in the premium column for the
following coverages: Liability, Medical Payments, Uninsured Motorists, UIM, Physical
Damage Comprehensive Coverage, and Physical Damage Collision Coverage. So,
presumably, these coverages would only apply to “covered autos.”
Similarly, the introductory language to the UIM endorsement states “For a covered
‘auto’ licensed or principally garaged…in Idaho, this endorsement modifies insurance
provided under the following: Business Auto Coverage Form….”
These provisions, standing alone, appear to restrict UIM coverage to “covered”
autos. But when read in the context of the entire contract, the language in the Schedule
and introductory paragraph to the UIM endorsement creates an ambiguity. As noted
above, the Business Auto Coverage in this policy includes five different coverage types:
Liability, Physical Damage, Uninsured Motorist, UIM, and Medical Payments. Liability

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and Physical damage are part of the main policy, and Uninsured, UIM, and Medical
Payments Coverage are added to the policy through endorsements. Each of these
coverages defines who is “Insured” and under what circumstances.
Liability Coverage, for example, specifically limits coverage to “covered” autos.
It provides that Unigard will pay “all sums an ‘insured’ legally must pay as damages
because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused
by an ‘accident’ and resulting from the ownership, maintenance or use of a covered
‘auto.’” Unigard Policy at 19. In addition, “insured” is separately defined as “[y]ou for
any covered ‘auto.’” Id. at 20. The Physical Damage coverage provision also limits
coverage to a “covered” auto: “We will pay for ‘loss’ to a covered ‘auto’ or its
equipment….” Id. at 23.
By contrast, the Auto Medical Payments Coverage provision does not restrict
coverage to accidents involving “covered autos” only. It states that Unigard “will pay
reasonable expenses incurred for necessary medical and funeral services to or for an
‘insured’ who sustains ‘bodily injury’ caused by ‘accident.’” It defines “insured” as an
individual Named Insured “while ‘occupying’ or, while a pedestrian, when struck by an
‘auto.’” Id. at 42. Alternatively, this provision defines “insured” as “Anyone else
‘occupying’ a covered ‘auto’ or a temporary substitute for a covered ‘auto.’” Id. Thus, a
Named Insured receives Medical Payments coverage under the policy if he is sustains
bodily injuries while walking, but anyone else only receives such coverage while
occupying a “covered auto.” As these two definitions of “insured” demonstrate, when

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Unigard intends to limit coverage to persons occupying “covered autos,” it states so
explicitly.
The broad language contained in the in the UIM provision more closely parallels
the Medical Payments language than the narrower Liability or Physical Damages
language. As already discussed, UIM provision extends to an “insured” who sustains
“bodily injury” caused by an “accident.” Unlike the Liability or Physical Damages
provisions, nothing in the UIM provision restricts coverage to a “covered auto.”
It would have been simple for Unigard to make it clear that UIM coverage only
applied to “covered autos.” All Unigard had to say in the policy was that UIM coverage
applies to a Named Insured only while “occupying” a “covered” auto, or something to
that effect. But it did not. Indeed, Unigard included a specific exclusion that restricts
coverage for “Bodily injury” sustained by an Individual Named Insured or “family
member” while occupying any vehicle owned by that Named Insured or “family
member” that is not a “covered auto.” Id. at 42 (emphasis added). If Unigard intended
to restrict UIM coverage in every instance to accidents involving “covered autos,” why
would it include this exclusion? It would be superfluous.
At worst, Unigard’s failure to make clear UIM coverage was restricted to “covered
autos” and its insertion of this specific exclusion suggest it never intended to restrict UIM
coverage to “covered autos.” At best, it creates an ambiguity. Given that Idaho law
requires that all ambiguities be construed in favor of coverage, the Court finds that the
Unigard policy provides UIM coverage for Durrant in the circumstances of this case.

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ORDER
IT IS ORDERED that:
1. Defendant’s Motion for Summary Judgment (Dkt. 11) is DENIED.
2. Plaintiff’s Cross- Motion for Partial Summary Judgment (Dkt. 16) is
GRANTED.

DATED: October 15, 2012

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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