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United Fire & Casualty Co. v. Hall

Court of Appeals of Missouri, Southern District, First Division

June 21, 2017

UNITED FIRE & CASUALTY COMPANY, Plaintiff-Appellant,
v.
ZACHARY HALL, RODNEY HALL, CAROLYN HALL, and CHASE HALL, Defendants-Respondents.

         APPEAL FROM THE CIRCUIT COURT OF JASPER COUNTY Honorable Gayle L. Crane

         AFFIRMED

          MARY W. SHEFFIELD, C.J.

         United Fire & Casualty Company ("United Fire") appeals from the trial court's summary judgment for Zachary Hall ("Zachary"), Rodney Hall ("Rodney"), Chase Hall ("Chase"), and Carolyn Hall ("Carolyn") (collectively, "the Halls").[1] The summary judgment disposed of a declaratory judgment action in which United Fire sought a declaration that two homeowner's policies United Fire issued to Jeffrey Cox ("Jeffrey") did not provide coverage for injuries Zachary sustained in a boating accident. United Fire claims the trial court erred in (1) granting summary judgment to the Halls because the owned-watercraft exclusion in the homeowner's liability insurance policy issued to United Fire's insured was ambiguous and (2) denying United Fire's own motion for summary judgment because the injuries arose from the use of an owned watercraft. The first claim is without merit, and the second claim is moot. The trial court's judgment is affirmed.

         Factual and Procedural Background

         A boating accident occurred on July 4, 2014, involving Zachary, his brother Chase, and Jeffrey's sons, Lucas Cox ("Lucas") and Jared Cox ("Jared").[2]At some point, Lucas started the boat's engine, and the propeller struck Zachary who was swimming nearby, severing Zachary's right foot. The Halls filed a petition against Jeffrey, Lucas, and Jared, alleging numerous causes of action.

         At all times relevant to the resolution of the issues here, Jeffrey was the named insured on two homeowner's insurance policies, one umbrella policy, and one boat and motor insurance policy, all issued by United Fire. The two homeowner's insurance policies contained identical language, including, as relevant to the issues raised on appeal, an exclusion providing that there was no coverage for bodily injury or property damage arising out of the ownership, maintenance, or use of a watercraft "owned by or rented to an 'insured'."[3](emphasis added). The Halls and the Coxes settled for the policy limits of the umbrella insurance policy and the policy limits of the boat and motor insurance policy. In consideration of payments received in that settlement, the Halls released Jeffrey, Lucas, and Jared from the claims alleged in the petition. The Halls agreed to seek recovery from United Fire alone under the two homeowner's insurance policies.

         United Fire thereafter filed a petition for declaratory judgment, requesting the trial court to enter an order stating there was no coverage under the two homeowner's policies for the injuries alleged in the Halls' petition because those injuries were covered by the owned-watercraft exclusion. United Fire and the Halls filed cross-motions for summary judgment in the declaratory judgment action. In addition to the facts previously stated, United Fire's statement of uncontroverted material facts included these facts: The boat involved in the accident was a 26-foot motor craft titled in the name of the Jeffrey L. Cox Living Trust ("the trust").[4] Jeffrey was a grantor, the sole trustee, and a beneficiary of the trust. Lucas and Jared would become beneficiaries of the trust upon Jeffrey's death.

         The trial court found the owned-watercraft exclusion cited by United Fire was ambiguous, construed the exclusion in the manner most favorable to the insureds, granted the Halls' motion for summary judgment, and then denied United Fire's motion for summary judgment. United Fire appeals.

         Standard of Review

         "Whether summary judgment is proper is an issue of law that this Court reviews de novo." Manner v. Schiermeier, 393 S.W.3d 58, 61-62 (Mo. banc 2013). "The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially." Farmers Ins. Co., Inc. v. Wilson, 424 S.W.3d 487, 491 (Mo. App. S.D. 2014). "Summary judgment is appropriate where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." Maxam v. American Family Mut. Ins. Co., 504 S.W.3d 124, 126 (Mo. App. W.D. 2016). "As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment." Farmers, 424 S.W.3d at 491. "The Court reviews the record in the light most favorable to the party against whom judgment was entered without deference to the trial court's findings, and accords the non-movant 'the benefit of all reasonable inferences from the record.'" Manner, 393 S.W.3d at 62 (quoting ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)).

         Point One: Owned-Watercraft Exclusion

         In its first point, United Fire claims the trial court erred in granting summary judgment to the Halls because "the uncontroverted facts established that an insured owned the watercraft that was involved in the accident[.]" This argument fails because the term "owned by" as used in the exclusion was ambiguous.

         The most recent Missouri Supreme Court case considering the interpretation of an owned-vehicle exclusion in an insurance contract is Manner. In that case, the Court began with the general rule that "[t]he burden of showing that an exclusion to coverage applies is on the insurer" and also noted that Missouri "strictly construes exclusionary clauses against the drafter[.]" Manner, 393 S.W.3d at 62 (quoting Burns v. Smith, 303 S.W.3d 505, 510 (Mo. banc 2010)). The Court also applied the well-known rule that where a term is not defined in a policy, the term "will be viewed in the meaning that would ordinarily be understood by the layman who bought and paid for the policy." Id. (quoting Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d 208, 210 (Mo. banc 1992)). The Court then reasoned that because there are many dictionary definitions of the terms "owner" and "owned" the terms were ambiguous. Id. at 62-63. As a result, the Court noted the policy did not define the term "owned, " interpreted the term in favor ...


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