Naylor Concrete Constr., Co., Inc. v. Mid-Continent Cas. Co
Annotate this Case
Download PDF
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA13-83 NORTH CAROLINA COURT OF APPEALS Filed: 21 January 2014 NAYLOR CONCRETE CONSTRUCTION CO., INC., Plaintiff Mecklenburg County No. 10 CVS 7027 v. MID-CONTINENT CASUALTY COMPANY, Defendant Appeal by plaintiff from order entered 2 April 2012 by Judge W. Erwin Spainhour in Mecklenburg County Superior Court. Heard in the Court of Appeals 13 August 2013. Grimes Teich Anderson, LLP, by Scott M. Anderson and Jessica E. Leaven; Farah & Farah, P.A., by Kevin M. Elwell, for Plaintiff. Yates, McLamb & Weyher, L.L.P., by Rodney E. Pettey and Jennifer D. Maldanado, for Defendant. ERVIN, Judge. Plaintiff Naylor appeals from an Defendant Plaintiff s order entering Mid-Continent claim Concrete that Construction Company, Inc., summary judgment in favor of Casualty Defendant Company had with unlawfully respect to refused to provide coverage for Plaintiff in a tort action brought by an individual employed by CDI Contractors, LLC, one of Plaintiff s -2subcontractors, contends that against the Plaintiff. trial court On appeal, erroneously Plaintiff granted summary judgment in Defendant s favor on the grounds that an exclusion obviating the necessity for Defendant to provide coverage for an employee of encompass an the insured employee should of a not be construed subcontractor so because as (1) to the relevant exclusion, which had been drafted by Defendant, was ambiguous and should, for that reason, be construed in such a manner as to afford coverage under the reasonable expectations doctrine; (2) an endorsement modifying the exclusion at issue in this case was couched in unduly obscure and technical language and had been unfairly hidden within the policy; and (3), even if the relevant exclusion was not itself ambiguous, that language, when read provision, in conjunction precluded Defendant s favor. the with the policy s entry of summary severability judgment in After careful consideration of Plaintiff s challenges to the trial court s order in light of the record and the applicable law, we conclude that the trial court s order should be affirmed. I. Factual Background A. Substantive Facts On 15 August 2004, CDI entered into an agreement with Dillard s, Inc., for the construction of a retail facility at -3Northlake Mall in Charlotte. into a subcontract with On 15 September 2004, CDI entered Plaintiff relating performed on the Dillard s project. to work to be According to the agreement between CDI and Plaintiff, Plaintiff was required to indemnify CDI for any liability arising from work performed in connection with the Dillard s project and to obtain various types of insurance coverage, including workers compensation and general liability insurance, under which both Plaintiff and CDI would be covered. In compliance obligations, general with Plaintiff liability this had insurance and obtained from a similar policy Defendant contractual of commercial applicable to the year beginning 1 April 2004, which policy designated Plaintiff as the named insured and, under a blanket endorsement, treated CDI as an additional insured. Plaintiff procured from According to the policy that Defendant, Defendant would provide coverage for bodily injury occurring during the policy period and defend the named insureds in the event that a claim arising from a covered injury was asserted against one or more of them. The policy that Plaintiff procured from Defendant also included a number of exclusions, including an Employer s Liability exclusion which provided that no coverage would be afforded for bodily injury claims arising out of employment by any insured. -4On 30 December 2004, Jennifer Marshall, a CDI employee, was working at the construction site when a backhoe operated by one of Plaintiff s employees struck her and pinned her between the wheel of the backhoe and a nearby column. As a proximate result of this accident, Ms. Marshall sustained a number of serious injuries, including four cracked ribs, four pelvic fractures, and a punctured colon. A workers compensation claim brought by Ms. CDI Marshall against arising from this accident was eventually settled. On 30 October 2007, CDI instituted an action against Plaintiff pursuant to N.C. Gen. Stat. § 97-10.2 for the purpose of obtaining an award of damages from Plaintiff stemming from the injuries that Ms. Marshall had sustained and the resulting necessity for CDI to provide workers compensation benefits to Ms. Marshall. On 17 December 2007, Defendant sent a letter to Plaintiff for the purpose of informing Plaintiff that Defendant would not provide Plaintiff with a defense in that action on the grounds that it was investigating the extent, if any, to which CDI s claim was covered under the relevant policy. On 28 December 2007, Ms. Marshall filed a complaint alleging that she was entitled to recover damages from Plaintiff as the result of the injuries that she had sustained because of the negligence of Plaintiff s employee. On 11 February 2008, Defendant sent a -5letter to Plaintiff declining to provide Plaintiff with a defense or coverage in either case. On 6 August 2008, a motion filed by Ms. Marshall seeking leave to intervene in the action brought against Plaintiff by CDI was allowed. On 11 August 2008, Ms. Marshall voluntarily dismissed the action that she had brought against Plaintiff. In an order filed on 3 November 2008, the trial court determined that Ms. Marshall was the real party in interest in the action that had originally been filed against Plaintiff by CDI and that the caption of [the] action should reflect that fact in the future. After a bench trial in that case, the trial court entered a judgment on 18 May 2009 awarding Ms. Marshall more than $1,000,000 in damages. B. Procedural Facts On 29 March 2010, Plaintiff filed a complaint seeking a declaration that Defendant should have provided it with coverage and a defense in the action which led to the entry of the 18 May 2009 judgment deceptive and trade the recovery practices, a of bad damages faith for refusal coverage and a defense, and breach of contract.1 unfair to and provide On 12 October 2011, Defendant filed a motion seeking the entry of summary judgment in its favor on the grounds that, among other things, 1 In its brief, Plaintiff expressly abandoned its bad faith and unfair and deceptive trade practices claims. -6Ms. Marshall was an employee of an additional insured under the Policy and the Employer s Liability Exclusion Endorsement precludes coverage to an employee of any insured. On the same date, Plaintiff filed a motion seeking the judgment in its favor. an order granting entry of summary On 2 April 2012, the trial court entered Defendant s motion for summary judgment, denying Plaintiff s motion for summary judgment, and dismissing Plaintiff s complaint with prejudice. Plaintiff noted an appeal to this Court from the trial court s order. II. Legal Analysis A. Choice of Law As governs an the initial matter, resolution of we must this identify case. In the law which its complaint, Plaintiff contended that, although the policy had been issued and delivered in Oklahoma, North Carolina law should be applied for the purpose of resolving the present case on the grounds that the policy in question should be deemed to be a North Carolina contract pursuant to N.C. Gen. Stat. § 58-3-1. On the other hand, Defendant contended in the trial court that this case should be resolved in accordance with Oklahoma law. Although Plaintiff appears to have conceded the correctness of Defendant s position for purposes of the proceedings on appeal, an evaluation of the parties apparent agreement that Oklahoma -7law must be utilized to resolve the present dispute remains appropriate. Traditionally, lex loci or the law of the place where a contract is made determines matters bearing on the execution, interpretation, and validity of the contract. Home Indem. Co. v. Hoechst Celanese Corp., 128 N.C. App. 113, 119, 493 S.E.2d 806, 810 (1997). According to N.C. Gen. Stat. § 58-3-1: All contracts of insurance on property, lives, or interests in this State shall be deemed to be made therein, and all contracts of insurance the applications for which are taken within the State shall be deemed to have been made within this State and are subject to the laws thereof. Although the provisions of N.C. Gen. Stat. § 58-3-1 apply in the event that a close connection exists between this State and the interests insured by an insurance policy, the mere presence of the insured interests in this State at the time of an accident does not constitute a sufficient application of North Carolina law. connection to warrant Fortune Ins. Co. v. Owens, 351 N.C. 424, 428, 526 S.E.2d 463, 466 (2000). The undisputed information contained in the present record establishes that Defendant is an Oklahoma corporation which is not registered to do business in North Carolina and that the policy in question in delivered in Oklahoma. this proceeding was both issued and For that reason, the only connection -8between the policy at issue and this State is the fact that the Dillard s store at which Ms. Marshall was injured is located in North Carolina. not suffice to According to Fortune, such a connection does establish that North Carolina law should be applied for the purpose of resolving the dispute between the parties. As a result, given that the traditional lex loci rule remains applicable in this jurisdiction and that the policy in question in this case was made in Oklahoma, we agree with the parties that we are required to apply Oklahoma law in determining whether the trial court erred by granting summary judgment in favor of Defendant. B. Standard of Review Although, as we have already noted, we must apply the substantive law of Oklahoma, we are required to follow our own procedural rules in resolving the dispute between the parties. See Harco Nat l Ins. Co. v. Grant Thornton, LLP, 206 N.C. App. 687, 690, 698 S.E.2d 719, 722 (2010) (quoting Boudreau v. Baughman, 322 N.C. 331, 335, 368 S.E.2d 849, 853-54 (1988)) (stating that [o]ur traditional conflict of laws rule is that matters affecting the substantial rights of the parties are determined by lex loci, the law of the situs of the claim, and remedial or procedural rights are determined by lex fori, the law of the forum ), disc. review denied, 365 N.C. 77, 706 S.E.2d -9235 (2011). As a result, the applicable standard of review in this case is the one dictated by North Carolina, rather than Oklahoma, law. Orders of summary judgment are reviewed de novo by this Court and the evidence is reviewed in the light most favorable to the non-moving party. Integon Nat l Ins. Co. v. VillaFranco, __ N.C. App. __, __, 745 S.E.2d 922, 925 (2013). As a result, an order granting summary judgment in favor of a particular party will be upheld when, viewed in the light most favorable to the non-movant, the pleadings, deposition, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the prevailing party is entitled to a judgment as a matter of law. Lunsford v. Renn, 207 N.C. App. 298, 303-04, 700 S.E.2d 94, 97 (2010) (quoting N.C. Gen. Stat. § 1A-1, Rule 56(c)), disc. review denied, 365 N.C. 193, 707 S.E.2d 244 (2011). We will now utilize this standard of review in order to determine whether the trial court correctly granted summary judgment in Defendant s favor. C. Employer s Liability Provision In its Plaintiff reasonable initial contends challenge that, expectations in to the trial accordance doctrine, the court s with employer s order, Oklahoma s liability -10exclusion must be construed in such a manner as to give effect to the parties expectations, which were, according to Plaintiff, that the exclusion in question would only apply to claims for which the named coverage was available. Marshall was injuries compensation by not workers compensation In Plaintiff s view, given that Ms. employed would insured s CDI be insurance, and given covered the by exclusion that Ms. Marshall s Plaintiff s upon which workers Defendant relies did not operate to bar Plaintiff s request for coverage. We do not find Plaintiff s contention persuasive. The reasonable Oklahoma in Fidelity and Under the reasonable Max expectations True Guaranty reasonable expectations Plastering Company, Company 912 expectations of doctrine P.2d was in v. United States 861 (Okla. 1996). doctrine, applicants, adopted the insureds objectively and intended beneficiaries concerning the terms of insurance contracts are honored even though painstaking study of the policy provisions might have negated those expectations. Co., 912 P.2d at 862-63. Max True Plastering As a result, under the reasonable expectations doctrine, if the insurer or its agent creates a reasonable expectation of coverage in the insured which is not supported by policy language, the expectation will prevail over the language of the policy. Id. at 864. On the other hand, -11the doctrine upon which Plaintiff relies is subject to reasonable limits given that, [i]f the doctrine is not put in the proper perspective, insureds could develop a reasonable expectation that every loss will be covered by their policy and courts would find themselves engaging in wholesale rewriting of insurance policies. reasonable which expectations policy although Id. language clear, the is at 868. doctrine ambiguous policy For only and contains that applies to reason, to cases situations exclusions in where, masked technical or obscure language or hidden exclusions. the by Id. at 870. 1. Clarity of Policy Language The first issue which we must address in order to determine the applicability of the reasonable expectations doctrine is whether the relevant policy provision is ambiguous. It is settled under Oklahoma s extant jurisprudence that ascertaining whether the terms of an insurance policy are ambiguous is for the Court to determine as a matter of law. Bituminous Cas. Corp. v. Cowen Constr. Inc., 55 P.3d 1030, 1033 (Okla. 2002). A careful examination of the relevant provisions of the policy which Plaintiff procured from Defendant establishes exclusion upon which Defendant relies is not ambiguous. The exclusion at issue in this case provides that: that the -12This insurance does not apply to: . . . . Bodily Injury to: (1) An employee of any Insured arising out of and in the course of: (a) Employment by any insured; or (b) Performing duties related to the conduct of the insured s business; or . . . . This exclusion applies: (1) Whether the insured may be liable as an employer or in any other capacity; . . . . (3) According To liability assumed by any under an Insured contract to the definitional provisions insured contained in the policy, the term insured includes any person or organization qualifying as such under the provision entitled Who is An Insured. policy, As the a result, class of according insureds to an endorsement included [a]ny in person the or organization for whom the named Insured has agreed by written insured contract to designate as an additional insured subject to all provisions and limitations of this policy. the fact pertinent that the part, in term the insured policy as contract [t]hat is part In view of defined, of any in other -13contract or agreement pertaining to your business . . . under which you assume the tort liability of another party to pay for bodily injury organization or and property the damage fact that to a third person or had agreed to Plaintiff indemnify CDI from any loss which CDI sustained as a result of Plaintiff s conduct, CDI was an additional insured for purposes of the insurance Defendant. policy that Plaintiff had purchased from As a result, according to Defendant, the relevant exclusion unambiguously precludes a finding of coverage in this instance because Ms. employed by injured and Marshall, in as the an employee course and of scope CDI, was of her employment with any insured. According to Plaintiff, on the other hand, the language in which the relevant exclusion is couched is ambiguous because the result reached by analyzing the policy language in a literal manner is contrary to the established purposes of and intentions underlying similar exclusions on the grounds that such a literal reading of Plaintiff exists in the devoid the exclusion of in coverage construction question in a would situation industry. unfairly which Although leave commonly Plaintiff s arguments have equitable appeal, we are unable to square them with the fact that the reference to any insured, which is the -14operative policy language for purposes of our present inquiry, is clear and unambiguous. As all of the parties to insurance policy is a contract. this case acknowledge, an According to well-established Oklahoma law, [t]he language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity. 15 Okla. Stat. § 154. Moreover, [w]hen a contract is reduced to writing, the intention of the parties possible, article. is to be subject, ascertained however, to 15 Okla. Stat. § 155. from the the other writing alone, provisions of if this Finally, [a] contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates. 163. 15 Okla. Stat. § As a result, during the contract construction process: [a] contract must be considered as a whole so as to give effect to all its provisions without narrowly concentrating upon some clause or language taken out of context. The language in a contract is given its plain and ordinary meaning unless some technical term is used in a manner meant to convey a specific technical concept. The court must interpret a contract so as to give effect to the intent of the parties at the time the contract was formed. Mercury Inv. Co. v. F. W. Woolworth Co., 706 P.2d 523, 529 (Okla. 1985) (footnotes omitted) (citing 15 Okla. Stat. §§ 152, 157 and 160 (1985)). However, [w]hen [the] terms [in which a -15contract is couched] are unambiguous and clear, the employed language is accorded its ordinary, plain meaning and enforced so as to carry out the parties Corp., 55 P.3d at 1033. intentions. Bituminous Cas. In view of the fact that the parties do not dispute that CDI was an insured as that term is used in the relevant policy provision and that any is neither a defined nor a technical term . . . used in a manner meant to convey a specific technical concept, the term any must be given its plain and ordinary meaning, during the process which we utilize in determining whether the expression in question is ambiguous. Mercury Inv. Co., 706 P.2d at 529. Although [a] contract term is ambiguous if it can be interpreted as having two different meanings, Equity Ins. Co. v. City of Jenks, alternative meanings necessarily rest 184 P.3d upon which must arise 541, a from 544 (Okla. finding the of 2008), the ambiguity must relevant language rather than from some other source. contractual For that reason, the practical construction of an agreement, as evidenced by the acts and conduct of the parties, is available only in the event of an ambiguity. But where a contract is complete in itself and, as viewed in its entirety, is unambiguous, its language is the only legitimate evidence of what the parties intended. The intention of the parties cannot be determined from the surrounding circumstances, but must be gathered from a four-corners examination of the contractual instrument in question. -16Mercury Inv. Co., 706 P.2d at 529 (emphasis omitted). fundamental principle is illustrated in Bituminous This Casualty Corporation, in which patients at a hospital contracted lead poisoning from what appeared to be the negligent construction of a dialysis center. The insurance policy at issue in that case excluded claims for [b]odily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants, with pollutants being defined as any solid, contaminant, liquid, including gaseous smoke, alkalis, chemicals and waste. at 1031 provision n.1. was Although the intended to or vapor, thermal soot, irritant fumes, or acids, Bituminous Cas. Corp., 55 P.3d insured exclude argued that purely the policy environmental pollutants, a category which did not include lead, the Oklahoma Supreme Court rejected this assertion, holding that: Nowhere in the policy s lexicon is there language employed which would sustain finding-as suggested by the insured-the pollution exclusion clause only excluded from coverage that bodily injury and/or property damage which occurred when the general environment was damaged by the insured s acts. An insured cannot insist upon a strained construction of relevant policy language in order to claim a patent ambiguity exists nor can it contradict the written instrument s plain terms under the guise of a latent ambiguity. -17Id. at 1034. ambiguity As a sufficient doctrine exists result, to in invoke order the to establish reasonable that an expectations in this instance, the plain language of the relevant policy provision must be susceptible to at least two reasonable interpretations. A careful analysis of the relevant policy language shows that the expression any insured is clear and unambiguous. As an initial matter, the word any, when read in context, means every. 2006). be Webster s New World College Dictionary 64 (4th ed. In addition, given that [t]he whole of a contract is to taken together, reasonably so as practicable, to each give effect clause to helping every to part, interpret if the others, 15 Okla. Stat. § 157; see also Mercury Inv. Co., 706 P.2d at 529, we note that the policy in question has both an employer liability exclusion and a separate exclusion applicable to situations in which workers available, a fact which suggestion that the employer operate in compensation employer severely exclusion instances in which coverage had been liability exclusion, compensation the undercuts was named implicated. the policy only coverage Plaintiff s intended insured s Even is to workers within specifically the states that the exclusion applies [w]hether the insured may be liable as an employer or in any other capacity, a fact which indicates -18that the relevant policy provision should be read broadly to apply to a wide variety of situations, including instances such as those before us in this case. As a result, we believe that the clear and unambiguous language of the employer liability exclusion demonstrates that Defendant was not obligated to provide coverage in any situation, regardless of its nature, in which the injured party was employed by a named insured. The appellate courts in Oklahoma have, on at least one prior occasion, evaluated the meaning of any insured. America, Inc. v. State Company, 148 P.3d 832 Auto Property (2005), the & Casualty Oklahoma In BP Insurance Supreme Court considered a case in which the plaintiff, which had entered into a construction contract with Rowland Construction, Inc., purchased general liability and automobile liability policies under which Rowland was designated as the named insured and the plaintiff was listed as an additional insured. After an employee of Rowland was involved in a motor vehicle accident in which several non-employee third parties were injured or killed, the plaintiff sought to obtain a judgment ordering the defendant to provide coverage under the general liability policy. 148 P.3d the at 833-35. In response to the plaintiff s claim, defendant argued that it was not obligated to provide coverage on the grounds that the relevant language in the general -19liability policy excluded coverage in the event that the injury for which recovery was sought stemmed from the operation of a motor vehicle by any insured. Oklahoma Supreme Court Id. at 836. considered whether On appeal, the the term any insured in an Auto Exclusion clause of a commercial general liability policy exclude[d] from coverage all automobile occurrences attributable to any of the insureds, id. at 833; determined that the term any insured was unambiguous and that to rule otherwise would require [the court] to ignore the clear language of an exclusion and expand the policy terms well beyond the parties reasonable expectations, id. at 838-39; and held that adopting require that liability the [the position court] policy-without outcome of Defendant that case, motor expansive view Plaintiff suggests, present case in of a vehicle that are not the decision BP America number of the insured convert a coverage into would general a [sic] Id. at 839. argues we by unilaterally automotive liability policy. Although advanced BP America prepared in is to question. controls take such an Instead, as distinguishable respects. First, the the from the question certified to the Oklahoma Supreme Court in BP America revolved around the proper interpretation of an automobile exclusion contained in a general liability policy rather than an employer -20liability exclusion contained in a commercial liability policy. Secondly, the injured party in BP America, unlike the injured party in this case, had no relationship to either of the named insureds. Finally, the plaintiff in BP America argued that the term any should be interpreted to mean the instead of all, id. at 836, while Plaintiff, in addition to acknowledging that any means qualifying any, simply language, argues any is that, open given the to absence two of reasonable interpretations in light of the purpose underlying the relevant exclusion and should, for that reason, be deemed ambiguous. As a result, given that the exact issue before us in this case was not before the Oklahoma Supreme Court in BP America, we are unable to conclude that outcome in this case. BP America absolutely controls the On the other hand, the approach taken by the Oklahoma Supreme Court in BP America is consistent with the approach that we have deemed appropriate in provides an obvious indication that the result this case and that we have reached in this case is consistent with the manner in which the Oklahoma courts would resolve the present issue in the event that it was presented to them for determination. See also All American Ins. Co. v. Burns, 971 F.2d 438, 445 (10th Cir. 1992) (first omission in original) (holding that, under Oklahoma law, a provision contained in a comprehensive liability policy issued -21to a religious organization excluding coverage for personal injury [claims] arising out of the willful violation of a penal statute . . . committed by or with the knowledge . . . of any insured was clear and unambiguous ), and Farmers Ins. Co. v McClain, 603 F.2d 821, 823 (10th Cir. 1979) (holding that, under Oklahoma law, a household exclusion contained in an automobile liability policy providing that coverage was not available for the liability of any insured for bodily injury to (a) any member of the same household of such insured except servants, or (b) the Named insured, was clear and unambiguous and was clearly intended to be applicable to permissive users as well as the named insured ).2 In seeking to persuade us that the relevant policy provision is ambiguous, Plaintiff also directs our attention to a number of decisions from other jurisdictions. Although Plaintiff acknowledges, as Defendant demonstrates in its brief, that there are other decisions from across the country which find similar policy language to be clear and unambiguous, Plaintiff asserts that we should find the decisions upon which 2 At one point in its brief, Plaintiff also appears to suggest that we should disregard BP America on the grounds that it was wrongly decided. However, given that our role in this case is limited to attempting to determine how the Oklahoma courts would decide the issue which is before us in this case, it would be inappropriate for us to evaluate the extent, if any, to which we believe that the BP America court should have reached a different result. -22it relies to be persuasive for purposes of resolving the issue which has been presented for our decision in this case. careful examination Plaintiff relies distinguishable of each of establishes from this case the decisions that in all ways of that we upon which them find A are to be material. Although the United States District Court for the District of Utah held in Cyprus Plateau Mining Corporation v. Commonwealth Insurance Company, 972 F. Supp. 1379, 1382 (D. Utah 1997), that an exclusion providing that the Policy [did] not cover Personal Injury including Bodily Injury to any employee of any Insured under [the] policy for which the Insured or his indemnitee may be held liable, would, when read literally, exclude coverage in a situation similar to this one, the Court still found the relevant policy language to be ambiguous, stating that: given the purposes of the Commonwealth policies to protect the insured from claims brought by persons other than their own employees and to avoid coverage that duplicated the worker s compensation coverage already available and the circumstances in which Cyprus was named as an additional insured to increase rather than decrease its coverage it cannot be said that the language of the exclusion can be interpreted only to mean that any claim of any employee of any insured against any insured is excluded from coverage. -23972 F. Supp. at 1385. issue in included Cyprus a In light of the fact that the policy at Plateau, reference to unlike the the policy Insured in at issue addition here, to the reference to any insured and the fact that the Cypress Plateau Court appears to have based its decision on the perceived intent of the parties rather than the language in which the policy in question is couched, we do not believe that the logic employed and result reached in Cyprus Plateau is consistent with the result which would be reached in this case by an Oklahoma court. Similarly, in Transport Indemnity Company v. Wyatt, 417 So. 2d 568, 570 (Ala. 1982), the Alabama Supreme Court held that an exclusion contained in a corporate liability policy excluding any OCCURRENCE which caused BODILY INJURY to any employee of any INSURED arising out of or in the course of his employment by any INSURED was ambiguous on the grounds that [t]he wording could be interpreted to mean either only singularly any one of the insureds or could apply collectively to the whole group of insureds. However, the Court failed to explain, based on an analysis of the relevant policy language, why this ambiguity existed. Although the claims that were asserted against the insureds involved in Wyatt might have been covered by workers compensation, the policy in question does not appear to have contained any language like that found in the policy at issue -24here specifically providing that the exclusion applied regardless of the capacity in which the insured was held liable. As a result, we do not believe that Wyatt reflects the result that would be reached by the Oklahoma courts in the event that they were called upon to construe the policy language at issue here. Finally, in Pacific Indemnity Company v. Transport Indemnity Company, the California Court of Appeals examined an automobile liability liability for bodily policy injury, [that . . did] . of not any apply to any employee of any Insured arising out of and in the course of his employment by any Insured and held, in reliance upon its decision in Pleasant Valley Lima Bean Growers Ass n v. Cal-Farm Ins. Co., 142 Cal App. 2d 126, 133-34, 298 P.2d 109, 113-14 (1956), that the reference to any insured was ambiguous on the grounds that: [t]he phrase any employee of any insured is susceptible to two interpretations: it could mean any employee of any insured who is seeking protection under the policy or it could mean any employee of any insured under the contract, whether or not that insured is seeking protection under the policy. It is unnecessary to show which interpretation is more logical. 81 Cal. App. 3d 649, 653, 656, 146 Cal. Rptr. 648, 649, 651 (1978) (omissions in the original). Aside from the fact that -25the Pacific Indemnity Court simply asserted, rather than demonstrated, that the relevant policy language was susceptible to both of the interpretations set out in its opinion, nothing in Pacific Indemnity suggests that the additional factors upon which we have relied in determining that the policy language at issue here was not ambiguous, such as the separate exclusion for situations involving workers compensation coverage and the language providing that the exclusion applied regardless of the capacity in which the insured was held liable, were present in that case. As a result, we do not believe that the result reached in Pacific Indemnity reflects the approach that would be adopted by the Oklahoma courts in the event that they were called upon to decide the present case.3 A careful examination of the arguments advanced in opposition to the result reached in the trial court s order indicates that Plaintiff would have this Court focus on the perceived general purposes underlying the inclusion of employer exclusions in insurance policies, the inequities that would allegedly result from the adoption of the position reflected in 3 The same factors persuade us that the logic adopted by the California Court of Appeals in United States Steel Corporation v. Transport Indemnity Company, 241 Cal. App. 2d 461, 474, 50 Cal. Rptr. 576, 384-85 (1966), is not reflective of the approach which would be adopted in this case in the event that the Oklahoma courts were to address the issues before us in this case in light of the law applicable in that jurisdiction. -26the trial court s order, and other general policy considerations in order to ascertain whether the relevant policy provision is ambiguous rather than upon an examination of the actual policy language. most Put another way, Plaintiff s argument rests, for the part, upon a number of equitable or policy-based justifications for interpreting the reference to any insured in the relevant application than of advancing employer policy the in such reasonable an analysis exclusion that of a manner as to expectations the literal demonstrates the ambiguity in the relevant policy language.4 trigger doctrine language existence the rather of of the an For that reason, the approach which Plaintiff would apparently have us adopt suffers from the deficiency that it relies, contrary to controlling Oklahoma law, upon factors other than the plain meaning of the relevant policy ambiguity. provision to establish the necessary As a result, given that Plaintiff has failed to offer any textual support for a determination that the term any insured is ambiguous and given that our reading of the language 4 Plaintiff does contend that the fact that the exclusion in question is titled Employer s Liability rather than Employers Liability creates the ambiguity necessary to trigger application of the reasonable expectations doctrine. However, we are unable to see why the use of a singular heading should negate the unambiguous language which appears in the text of the relevant policy provision given that this exclusion would be applicable to each insured as well as to the insured collectively. -27of the employer liability exclusion indicates that no such ambiguity exists, we conclude that Plaintiff s initial challenge to the trial court s order lacks merit. 2. Obscurity of Endorsement As we have already noted, the reasonable expectations doctrine may apply to cases in which . . ., although clear, the policy contains exclusions masked language or hidden exclusions. P.2d at 870. the employer by technical or obscure Max True Plastering Co., 912 According to Plaintiff, the modified version of liability exclusion contained in the commercial general liability policy at issue here was adopted by means of a modification to the relevant policy buried on page 53 of the endorsements that follow the Policy that reference to the insured to any insured. 5 changed the prior In light of these facts, Plaintiff contends that, even if the language of the employer exclusion is clear and unambiguous, we should construe the relevant policy language in a manner favorable to Plaintiff given 5 that the language in question was both technical or Aside from the arguments advanced in the text, Plaintiff advances other contentions in support of its hidden endorsement assertion. In view of the fact that these additional arguments rely on the allegedly ambiguous nature of the employer exclusion and the fact that we have already determined that the relevant policy language is clear and unambiguous, we need not address this aspect of Plaintiff s hidden endorsement argument any further. -28obscure and hidden. We do not find Plaintiff s argument persuasive. According to the undisputed record evidence, the policy that Plaintiff had procured from Defendant had been renewed on multiple occasions. passed since the In view of the length of time that had date upon which the policy was initially issued, a number of endorsements had been issued for the purpose of modifying language the in couched. original which The the sixth policy employer page of the language, policy the endorsement liability including was includes a list of endorsements and a specification of the states to which each endorsement applies. included in this The endorsement at issue here, ML 1276, is list and states, at the very top of the relevant page on which it appears, THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. As a result of the fact that each endorsement was set forth on a separate page, the fact that the presence policyholder s fact that the ability of the to endorsement master identify heading list each was facilitated endorsement, set out in and the the capital letters, the manner in which the endorsement in question was implemented and couched more than sufficed to put Plaintiff on notice that the policy had been changed. Although Plaintiff argues that other approaches that Defendant might have taken -29would have been clearer, that fact, standing alone, does not suffice to establish that Defendant hid the change to the employer liability question. In exclusion addition, the worked by language the in endorsement which the in modified version of the employer exclusion is couched does not, at least to us, appear to be technical or obscure. In spite of Plaintiff s argument to the contrary, we are unable to see how the expression any insured can be deemed to fall into the category of technical or obscure expressions. Unless we were to hold that any and all endorsements triggered the operation of the reasonable expectations doctrine, a result that would clearly conflict with Oklahoma law, we cannot conclude that the endorsement at issue here was couched in obscure and technical language or hidden from Plaintiff. As a result, we conclude that the endorsement at issue here was not such as to authorize the use of the reasonable expectations doctrine to interpret the employer liability exclusion in the manner contended for by Plaintiff. D. Severability Provision Finally, Plaintiff argues that, even if the language in which the employer exclusion is couched is clear and unambiguous and even exclusion if set the out modified in the version of relevant the employer endorsement was liability neither -30 hidden nor couched in obscure and technical language, the severability clause contained in the policy that Plaintiff procured from Defendant created a sufficient ambiguity to permit us to construe the policy in a manner favorable to Plaintiff. More specifically, Plaintiff contends that, given that the employer liability exclusion excludes claims asserted by any employee arising out of the claimant s employment with any insured and given that, in light of the language in which the severability clause is couched, Plaintiff should be viewed as the only insured for purposes of applying the language of the employer exclusion, it is, for that reason, entitled to receive coverage under the policy in question. Plaintiff s argument lacks merit. The severability provision upon which Plaintiff s argument rests provides that: Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or suit is brought. According to Plaintiff, the language of the severability clause indicates that the policy in question applies separately to each -31insured, thereby precluding an interpretation of the employer exclusion which treats multiple entities as insureds. Although this argument has surface appeal, it was specifically rejected in addressed BP the America, in which the Oklahoma Supreme Court issue of whether the existence of an auto exclusion and a separation of insureds clause identical to the one at issue here rendered the policy in question ambiguous for purposes of Oklahoma law. considering the merits of BP America, 148 P.3d at 833. an argument indistinguishable In from that advanced by Plaintiff in this case, the court concluded that the purpose of severability is not to negate plainly worded exclusions and that exclusions are read separately and operate independently from the general declaration identifying events which will not be covered. omitted). Id. at 841-42 (emphasis Although Plaintiff attempts to distinguish BP America on the grounds that it involved an automobile exclusion rather than an employer exclusion, we note that BP America and this case both identical involved issues and considerable breadth. general policy liability language, policies, and used addressed language of For that reason, even though BP America may not absolutely control the resolution of the issue that is before us, it does provide considerable light on the manner in which the Oklahoma courts have viewed issues similar to the one -32before us in this case. Moreover, the BP America Court clearly declined to follow the decisions in United States Fidelity and Guaranty Company v. Globe Indemnity Company, 60 Ill. 2d 295, 299, 327 N.E.2d 321, 323 (1975) (holding that a severability provision provided coverage to an additional insured for injuries suffered by an individual employed by a named insured despite the presence of an employer liability exclusion), and Atchison, Topeka and Santa Fe Railway Company v. St. Paul Surplus Lines Insurance Company, 328 Ill. App. 3d 711, 716, 767 N.E.2d 827, 831 (2002) (holding, in reliance upon U.S. Fid. & Guar. Co., that the separation clause contained in the St. Paul policy provide[d] separate coverage for each insured as if each was separately implicitly rejected insured the with logic of a the distinct policy ), decisions in and Cook v. Country Mutual Insurance Company, 126 Ill. App. 3d 446, 447-48, 466 N.E.2d 587, 588 (1984) (reversing, in reliance upon U.S. Fid. & Guar., liability coverage Shelby Dist. a trial exclusion given Realty Lexis the LLC 29482 court determination obviated presence v. the of National *10 a defendant an from severability Surety (S.D.N.Y. that providing clause), Corporation, 2007) employer (holding and 2007 U.S. that the Employee Exclusion, read in conjunction with the Separation of Insureds Clause, does not relieve National of its obligation to -33indemnify Shelby for the Personal Injury Action ),6 on the theory that most courts addressing the issue of whether a severability clause will provision render doubtful a clear determine exclusion must prevail. 7 and that unambiguous the clear exclusionary language 148 P.3d at 841. of the As a result, the language of the severability clause contained in the policy that Plaintiff purchased from Defendant does not suffice to support a determination that the employer exclusion is ambiguous and subject to interpretation in Plaintiff s favor on the basis of the reasonable expectations doctrine. III. Conclusion For the reasons set forth above, we conclude that none of Plaintiff s challenges to the trial court s order have merit and that the trial court did not err by granting summary judgment in Defendant s favor. Although a number of policy-oriented 6 A number of courts have criticized Shelby Realty, stating that it does not accurately reflect[] the current state of the case law in New York, Richner Development, LLC v. Burlington Insurance Company, 2009 N.Y. Misc. Lexis 5221 *8 (N.Y. Sup. Ct. 2009), aff d 81 App. Div. 3d 705, 916 N.Y.S. 2d 211 (2011), and that it represents a minority position. Nautilus Ins. Co. v. K. Smith Builders, Ltd., 725 F. Supp. 2d 1219, 1229 (D. Haw. 2010). 7 We also note that the employer liability exclusion at issue in two of the three cases upon which Plaintiff relies references a protected person, Atchison, Topeka and Santa Fe Railway Company, 328 Ill. App. 3d at 713, 767 N.E.2d at 828, or an insured, Cook, 126 Ill. App. 3d at 446, 466 N.E.2d at 587, rather than any insured, a fact that renders these decisions distinguishable on policy language grounds as well as inconsistent with BP America. -34objections can be advanced in opposition to the result that we believe to be required under Oklahoma law, we are compelled by the applicable Oklahoma decisions to focus upon the language of the policy rather than upon the which Plaintiff urges us to rely. broader considerations upon As a result, given that the language of the employer exclusion is clear and unambiguous when applied to the present set of facts, the trial court s order should be, and hereby is, affirmed. AFFIRMED. Judges McGEE and STEELMAN concur. Report per Rule 30(e).
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
