Allied Mutual Insurance v. Moeder

Citations: 48 P.3d 1; 30 Kan. App. 2d 729; 2002 Kan. App. LEXIS 540Docket: 87,405

Court: Court of Appeals of Kansas; June 7, 2002; Kansas; State Appellate Court

SummaryOriginalCytator Case TreatmentAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Nathan A. Moeder appeals a trial court ruling that Shelter Mutual Insurance Company (Shelter) had no obligation to provide coverage or defend him in a lawsuit related to a vehicle accident involving Rebecca S. Regan. Moeder had acquired a 1991 Chevrolet S-10 pickup truck shortly before the accident on June 7, 1997, in which he was solely at fault. Although he notified Shelter of the vehicle within the 30-day period required by the policy, the S-10 was not listed as covered because the Moeder family had previously owned a 1995 Kenworth tractor-trailer insured with a different company, Great Western Casualty Company.

The insurance policy stipulated that coverage for a newly acquired vehicle would only apply if Shelter insured all vehicles owned by the Moeders at the time of acquisition. Since the Kenworth was not covered by Shelter, the court found that this provision disqualified Moeder from receiving coverage for the S-10. The trial court granted summary judgment in favor of Shelter, concluding the policy's language was clear and that because not all vehicles owned by the Moeders were insured by Shelter, it had no obligation to defend or indemnify Moeder in the lawsuit filed by Regan and Allied Mutual Insurance Company. The stipulated damages in the underlying lawsuit amounted to $6,500.

The standard of review for summary judgment requires that it is granted only when there are no genuine issues of material fact, allowing the moving party to claim judgment as a matter of law. The district court must resolve all facts and inferences in favor of the opposing party. An adverse party must present evidence to establish a material fact dispute to preclude summary judgment, which must be significant to the case's conclusive issues. On appeal, if reasonable minds could differ on conclusions from the evidence, summary judgment should be denied.

Moeder argued that Shelter was obligated to provide coverage for the S-10 under the policy's automatic insurance provision and had a duty to defend him against a lawsuit by Regan. Contract interpretation is a legal question, and appellate courts can construe the agreement independently of the trial court's interpretation. An insurer's duty to defend is based on a potential liability under the policy, which is assessed by examining the allegations in the complaint alongside any relevant facts. If a complaint alleges both negligent and intentional acts, the potential for liability and the duty to defend are triggered.

Moeder contended that the Shelter policy was ambiguous regarding coverage, but the court disagreed, stating that ambiguity requires conflicting meanings based on reasonable interpretations of the contract's language. Disagreement over terms alone does not indicate ambiguity. Under Kansas law, coverage clauses in automobile policies are construed liberally in favor of coverage, and any limitations must be clearly stated. It is undisputed that the Moeders owned the Kenworth when they acquired the S-10 and that the Kenworth was not insured by Shelter at that time.

The policy clearly excludes coverage for the S-10 since not all vehicles were insured by Shelter at the time of its acquisition. The automatic insurance provision is unambiguous, establishing that Shelter had no obligation to defend or provide coverage in this case. Moeder claims Shelter indicated it could not insure an 18-wheeled vehicle, the Kenworth, and argues this affects the automatic insurance clause. However, there is no legal precedent that allows the automatic insurance clause to disregard separately insured vehicles. A reasonable person would understand that coverage is contingent on all vehicles being insured by Shelter when the S-10 was acquired. The trial court correctly concluded that Moeder was not entitled to coverage for the S-10. Moeder also contends that Shelter waived its right to invoke the automatic insurance provision by accepting a premium for the S-10 while knowing about the Kenworth. However, Kansas law prohibits using waiver or estoppel to expand coverage when the policy explicitly excludes it. Consequently, Shelter did not owe Moeder a duty to defend, as there was no potential liability under the policy, and there was no evidence of a breach of good faith or fair dealing. The trial court's summary judgment in favor of Shelter is upheld.