Nationwide Mutual Insurance Company v. Sherry Garner and Shelter Mutual Insurance Company

Annotate this Case
ca03-919

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION IV

CA03-0919

JUNE 2, 2004

NATIONWIDE MUTUAL AN APPEAL FROM THE WASHINGTON

INSURANCE COMPANY COUNTY CIRCUIT COURT

APPELLANT [CV-02-1181-6]

v.

SHERRY GARNER HONORABLE JOHN MARK LINDSAY,

SHELTER MUTUAL JUDGE

INSURANCE COMPANY

APPELLEES AFFIRMED

Olly Neal, Judge

Appellant Nationwide Mutual Insurance Company (Nationwide) appeals the trial court's grant of appellee Shelter Mutual Insurance Company's (Shelter) motion for summary judgment. On appeal, Nationwide alleges that the trial court erred when it found that appellee Sherry Garner was entitled to underinsured motorist benefits from Nationwide and not entitled to such benefits from Shelter. We affirm.

This case arises out of an automobile accident involving Sherry Garner. On October 21, 2000, Garner was a passenger in a vehicle being driven by Brent Holman. While traveling north on Highway 71 in Fayetteville, Arkansas, Holman's vehicle was struck by a vehicle being driven by Seth Primm when Primm failed to obey a traffic signal. At the time of the accident, Holman had an automobile liability insurance policy with Nationwide. His policy provided underinsured motorist coverage with a single limit of $25,000. Likewise, Garner was the named insured on an automobile liability policy with Shelter. Garner's policy also provided underinsured motorist coverage with a single limit of $25,000. After receiving the liability limits of Primm's insurance policy, Garner brought a declaratory judgment action against Nationwide and Shelter claiming that she was entitled to receive underinsured motorist benefits from both insurers.

Nationwide filed a motion for summary judgment, alleging that Garner was not an insured under its policy and therefore not entitled to receive underinsured motorist benefits from Nationwide. Shelter also filed a motion for summary judgment. Shelter conceded that Garner was an insured under its policy but asked the court to find that the "other insurance" clause in the Shelter policy made Nationwide the primary insurer. Shelter further argued that, because the "other insurance" clause was an "excess escape provision," Shelter was not liable for coverage because the amount of Shelter's underinsured motorist limits did not exceed the amount of Nationwide's underinsured motorist limits.

After hearing arguments on the two motions, the trial court granted Shelter's motion for summary judgment and denied Nationwide's motion for summary judgment. The trial court found that under these facts, the Nationwide policy provided coverage for Garner and that the Shelter policy did not provide any coverage. From that decision comes this appeal.

The law is well settled that summary judgment is to be granted by a trial court only when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. Jackson v. Blytheville Civil Serv. Comm'n, 345 Ark. 56, 43 S.W.3d 748 (2001). The evidence is viewed most favorably for the person resisting the motion, and any doubts or inferences are resolved against the moving party. Id. Here, the parties agree that there are no genuine issues of material fact. In cases where there is agreement by the parties that there is no genuine issue of any material fact, we simply determine whether the appellees were entitled to judgment as a matter of law. City of Little Rock v. Pfeifer, 318 Ark. 679, 887 S.W.2d 296 (1994).

Nationwide asserts that the trial court erred as a matter of law in finding that Garner was entitled to underinsured motorist coverage under its policy. In support of its argument, Nationwide contends that because Garner was the named insured on the Shelter policy she could not recover underinsured motorist coverage under the Nationwide policy.

Resolution of this case turns on the interpretation of the two insurance policies. In Arkansas, insurance policies are to be interpreted like other contracts. Foster v. Farm Bureau Mut. Ins. Co., 71 Ark. App. 132, 27 S.W.3d 465 (2000). The language in an insurance policy is to be construed in its plain, ordinary, and popular sense. Id. Contracts of insurance should receive a practical, reasonable, and fair interpretation consonant with the apparent object and intent of the parties in light of their general object and purpose. Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000). If there is no ambiguity, and only one reasonable interpretation is possible, it is the duty of the courts to give effect to the plain wording of the policy. Foster v. Farm Bureau Mt. Ins., Co., supra. However, if the policy language is ambiguous, and thus susceptible to more than one reasonable interpretation, the policy will be construed liberally in favor of the insured and strictly against the insurer. Gawrieh v. Scottsdale Ins. Co., Ark. App. , 117 S.W.3d 634 (2003). Whether the language of a policy is ambiguous is a question of law to be resolved by the court. Id. Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one reasonable interpretation. Id.

Nationwide's underinsured policy provides in part:

YOU AND A RELATIVE

We will pay compensatory damages, including derivative claims, because of bodily injury suffered by you or a relative and which are due by law to you or a relative from the owner or driver of:

1. An uninsured motor vehicle; or

2. An underinsured motor vehicle if the Declarations show that the policyholder has elected Underinsured Motorist Coverage.

. . . .

OTHER PERSONS

For the elected coverages, we will also pay compensatory damages, including derivative claims, which are due by law to other persons who:

1. Are not a named insured or an insured household member for similar coverage under another policy; and

. . . .

DEFINITIONS

2. An underinsured motor vehicle is one for which bodily injury liability coverage or bonds in at least the amount required by the Arkansas financial responsibility law are in effect; however, their total amount is less than the damages an insured is legally entitled to recover.

We will not consider as an underinsured motor vehicle a vehicle that is defined as an uninsured motor vehicle.

(Emphasis added.)

The Shelter policy provides in part:

COVERAGE E-1 - UNDERINSURED MOTORIST (DAMAGES FOR BODILY INJURY)

We will pay damages for bodily injury which an insured or the insured's legal representative is legally entitled to recover from the owner or operator of an underinsured motor vehicle. The bodily injury must be caused by accident and arise out of the ownership, maintenance, or use of the underinsured motor vehicle. Our obligation shall apply only to such damages as are in excess of the total limits of all bodily injury liability insurance policies and bonds applicable to the person or person legally responsible for such damages and available to cover the insured's damages. Decision as to whether damages are to be paid to or for the insured, and the amount, will be made by agreement between the insured, or the amount, will be made by agreement between the insured, or the legal representative, and us. No judgment on a suit against a person or firm causing the bodily injury will determine whether we will have to pay, or how much, unless we have consented in writing that the suit be brought.

. . . .

ADDITIONAL DEFINITIONS

As used in this Coverage E-1

(1) Insured means:

(a) You and a relative;

(b) Any other person while occupying an insured auto;

(c) Any person, with respect to damages he or she is entitled to recover because of bodily injury to which this Coverage applies sustained by an insured as defined in (a) and (b) above.

. . . .

OTHER INSURANCE

With respect to injury to an insured while in an auto not owned by you, this insurance shall apply only as excess insurance over any other similar insurance available to the insured as primary insurance. This insurance will then apply only in the amount that its limits of liability is excess over the liability of the other insurance. Except as above, if the insured has other insurance available, the damages shall not exceed the limits of liability of this insurance or the other insurance, whichever is larger. We will not be liable for a greater proportion of any loss to which this coverage applies than the limits of liability of this insurance bear to the sum of the limits of liability of this insurance and any other similar insurance available to the insured.

(Emphasis added.)

Each policy contains an escape provision that attempts to exclude or limit coverage under its underinsured motorist provision. Based upon a reading of the language contained in each policy, it would appear that the policies cancel each other out. However, as a fundamental principle of insurance law, under a standard automobile policy, primary liability is generally placed on the insurer of the owner of the automobile involved and the policy providing the nonownership coverage is secondary. Shelter Mut. Ins. Co. v. Williams, supra. Therefore, Nationwide was the primary insurer, and as such, was liable to Garner for underinsured motorist coverage. We thereby affirm the decision of the trial court. Affirmed.

Pittman and Baker, JJ., agree.