The opinion
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
October 21, 2014 Session
GUNNAR C. SKARBREVIK, ET AL. V. PERSONAL REPRESENTATIVE
OF ESTATE OF CAROLYN E. BROWN
Appeal from the Circuit Court for Shelby County
No. CT00543610 Donna M. Fields, Judge
No. W2014-00809-COA-R3-CV – Filed November 16, 2015
An employee, who was injured in an accident with an uninsured motorist while on
company business and while driving an automobile owned by his wife, sought to recover
for his injuries through the uninsured motorist provision of his employer‟s business
automobile policy. The insurer denied coverage, asserting that the policy only provided
coverage for automobiles owned by the company. The trial court granted the employee‟s
motion for partial summary judgment, holding that an endorsement to the policy which
added employees using non-company vehicles on company business to the liability
coverage operated to make those employees “insured” for purposes of the uninsured
motorist coverage. Insurer appeals; finding no error in the trial court‟s interpretation of
the policy, we affirm the judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
RICHARD H. DINKINS, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and ARNOLD B. GOLDIN, J., joined.
Alan Mark Sowell and William H. Tate, Nashville, Tennessee, for the appellant, Zurich
North American Insurance Company.
J. Houston Gordon and Amber Nicole Griffin Shaw, Covington, Tennessee, for the
appellees, Gunnar C. Skarbrevik and Linda Skarbrevik.
OPINION
On November 8, 2009, Gunnar Skarbrevik, a resident of Texas, was involved in an
accident with Carolyn Brown on Interstate Highway 240 in Shelby County, Tennessee;
Ms. Brown was driving her vehicle at a high rate of speed in the wrong direction on the
highway, thereby causing the collision. Ms. Brown, who was inebriated and driving
under the influence of drugs, was killed in the accident; Mr. Skarbrevik suffered injuries
which required extensive surgeries and rehabilitation and which are permanent. At the
time of the accident, Mr. Skarbrevik was driving an automobile owned by and titled to
his wife, Linda, and was on the business of his employer, LifeTouch, Inc.
On November 4, 2010, the Skarbreviks filed suit in Shelby County Circuit Court
against Ms. Brown‟s estate to recover for their injuries and damages; because Ms. Brown
was uninsured at the time of the accident, summons was served upon Zurich American
Insurance Company, which had issued a business automobile policy to LifeTouch which
included uninsured motorist coverage.1 In due course Zurich answered the complaint; the
answer pled the affirmative defense that the policy only provided uninsured motorist
coverage for automobiles owned by LifeTouch. Shortly thereafter, Zurich filed a motion
for summary judgment asserting that, since Mr. Skarbrevik was not driving an
automobile owned by LifeTouch at the time of the accident, he was not entitled to
uninsured motorist coverage. Plaintiffs responded to the motion and, after argument, the
court denied Zurich‟s motion.
Plaintiffs then moved for partial summary judgment, contending that an
“Employees as Insureds” endorsement to the business automobile policy (herein “the EAI
endorsement”) had the effect of providing additional, non-owned automobile liability
coverage, thereby triggering a Texas statute, Texas Ins. Code Ann. ' 1952.101, which
imposed uninsured coverage by operation of law. Zurich responded to the motion and,
after argument, the court granted the motion, directing entry of a final judgment as to
plaintiffs‟ claim for coverage. Zurich appeals; the sole issue presented is whether, under
the facts presented, Mr. Skarbrevik is entitled to the benefit of the uninsured motorist
coverage under the policy issued to LifeTouch.
STANDARD OF REVIEW
This case was resolved on a motion for summary judgment, which is an
appropriate vehicle for resolving a case where a party can “show that there is no genuine
issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Tenn. R. Civ. P. 56.04. The parties do not contend that there is a genuine issue
of material fact which would preclude the grant of summary judgment; consequently, the
issue before this court is a question of law which we review de novo, affording no
presumption of correctness to the trial court‟s conclusions. Draper v. Westerfield, 181
S.W.3d 283, 288 (Tenn. 2005).
1
The Skarbreviks received $25,000 from the uninsured motorist coverage of their personal
automobile liability policy. No issue is raised in this appeal regarding the payment from their personal
policy.
2
ANALYSIS
In the order granting plaintiffs‟ motion for partial summary judgment, the court
made the following findings of fact pertinent to the issues involved in this appeal:2
1. Plaintiff, Gunnar C. Skarbrevik, on November 8, 2009, while
traveling interstate 240 in Memphis, Shelby County, Tennessee, was
involved in an automobile wreck with an uninsured motorist,
Carolyn Brown, resulting in severe bodily injury, further resulting in
medical bills, lost income and other economic damages exceeding
$25,000, irrespective of non-economic damages.
***
3. Gunnar C. Skarbrevik, on November 8, 2009, was an employee of
LifeTouch, Inc., and was on or about the business of his employer.
4. On November 8, 2009, while on or about the business of his
employer, LifeTouch, Inc., Plaintiff, Gunnar C. Skarbrevik, was
driving a 2008 Mercury Mountaineer owned by his wife, Linda
Skarbrevik, on Interstate 240 in Memphis, Shelby County,
Tennessee.
5. The 2008 Mercury Mountaineer driven by Plaintiff Skarbrevik was
registered and garaged in Texas.
***
8. Defendant, Carolyn E. Brown, was an uninsured motorist.
***
10. LifeTouch, Inc., Gunnar C. Skarbrevik‟s employer, purchased a
Business Automobile Policy providing nationwide coverage from
Zurich American Insurance Company, policy No. BAP5346525 - 04,
which was in effect on November 8, 2009.
2
The undisputed facts set forth in the order were taken from Plaintiffs‟ Statement of Undisputed
Facts; unless otherwise noted herein, the statements were either admitted or not disputed by Zurich in its
response. The trial court did not consider that those statements which were not specifically admitted or
which were disputed precluded summary judgment; Zurich does not contend on appeal that there are
questions of material fact.
3
11. LifeTouch, Inc., the named insured under the policy issued by
Zurich American, obtained a national policy, including all
endorsements and selection/rejection forms for uninsured motorist
coverage in each state, which were made part of the policy.
12. Zurich policy number BAP5346525 - 04 provided liability and, by
endorsement, provided uninsured/underinsured motorist coverage in
all 50 states.
13. As shown in these endorsements and forms, no “Named Insured”
under the policy rejected, in writing, uninsured motorist coverage for
the state of Texas.[3]
14. As to automobiles garaged in Texas, there is no rejection of
uninsured motorist coverage signed in writing by any named
insured. See, Tex. Ins. Code Ann. ' 1952.101.[4]
15. Carolyn E. Brown, the driver of the vehicle that collided with
Gunnar C. Skarbrevik, was negligent and her negligence was the
proximate cause of Gunnar C. Skarbrevik‟s injuries and damages.
16. The business auto coverage under the policy was specifically
modified by the “Employees As Insureds” endorsement, attached as
Exhibit G, Section II C Liability Coverage, paragraph A.1, Who is
an Insured, through the following language: “any „employee‟ of
yours is an „insured‟ while using a covered „auto‟ you don‟t own,
hire or borrow in your business or your personal affairs.”[5]
17. Gunnar C. Skarbrevik, as an employee of LifeTouch, Inc., while
operating a vehicle not owned by Lifetouch, Inc., but while on or
about the business of his employer, was an insured.[6]
3
Zurich‟s response was: “Zurich admits there was no rejection, in writing, of uninsured motorist
coverage for the State of Texas, but asserts it may validly restrict UM coverage to designated persons.”
4
Zurich‟s response was: “Zurich admits there was no rejection of uninsured motorist coverage
signed in writing. Zurich denies this is required for non-owned autos by Texas Insurance Code Annotated
Section 1952.101.”
5
Zurich‟s response was: “Zurich admits that the liability coverage was modified by the
„Employees As Insured‟ endorsement. Zurich disputes that this endorsement has any relevance on
uninsured motorist coverage for the plaintiff.”
6
Zurich‟s response was: “Disputed. Zurich does not dispute that the plaintiff was an insured for
liability coverage, but Zurich denies that the plaintiff was an insured for uninsured motorist coverage.”
4
18. Pursuant to the “Employees As Insureds” endorsement which added
language to the Business Auto coverage under the policy, Section II,
Liability Coverage, paragraph A.(l) “Who Is An Insured” provision,
Gunnar C. Skarbrevik, as an employee, while on or about the
business of his employer, LifeTouch, Inc., and using a vehicle that
was not owned by LifeTouch, Inc., was an “insured.” Therefore,
Gunnar C. Skarbrevik, as an employee of LifeTouch, Inc., was an
insured under the policy purchased by his employer.[7]
19. The named insured shown in the declarations of policy No. BAP534-
6525 - 04 is LifeTouch, Inc.
20. Tex. Ins. Code Ann. ' 1952.101 applies to this Policy, since motorist
coverage is issued for Texas, and the automobile used by Plaintiff,
Gunnar C. Skarbrevik, was garaged and registered in Texas.
Construing the EAI8 endorsement together with the Business Auto Coverage
Form, the court concluded:
The Court finds that the “Employees As Insureds” endorsement modified
the business auto coverage under the policy. As a result, “any” employee
of LifeTouch, Inc. became an “insured” while using a covered “auto” when
7
Zurich‟s response was: “Disputed as phrased. Zurich admits that pursuant to the “Employees
As Insured” endorsement Gunnar C. Skerbrevik, as an employee, while on or about the business of his
employer, LifeTouch, Inc., and using the vehicle that was not owned by LifeTouch, Inc., was an insured
for liability coverage only under the policy.”
8
The EAI endorsement states:
EMPLOYEES AS INSUREDS
This endorsement modifies insurance provided under the following:
BUSINESS AUTO COVERAGE FORM
MOTOR CARRIER COVERAGE FORM
TRUCKERS COVERAGE FORM
With respect to coverage provided by this endorsement, the provisions of the Coverage
Form apply unless modified by the endorsement.
The following is added to the Section II - Liability Coverage, Paragraph A.1. Who Is An
Insured Provision:
Any “employee” of yours is an “insured” while using a covered “auto” you don‟t own,
hire or borrow in your business or your personal affairs.
5
LifeTouch, Inc. did not own, hire or borrow the vehicle in its “business” or
its “personal affairs.”
The court then applied Texas Ins. Code Ann. ' 1952.101, entitled “Uninsured or
Underinsured Motorist Coverage Required” and held that Mr. Skarbrevik was entitled to
the uninsured motorist protection provided in the policy.
Zurich appeals, contending that the uninsured motorist coverage is not available
since Mr. Skarbrevik was not driving a “covered auto”, i.e., one owned by LifeTouch;
Zurich also contends that the EAI endorsement only applies to liability coverage. Mr.
Skarbrevik shifts the focus of the inquiry from “covered auto” to “insured” and argues
that the addition of the phrase “while using a covered auto [LifeTouch] doesn‟t own, hire
or borrow in [its] business or personal affairs” to the definition of “insured” to the
business auto coverage had the effect of expanding the uninsured motorist coverage to
the circumstances presented.
The resolution of these contentions calls for us to construe the policy and various
endorsements. As noted in Fletcher v. White:
Generally, the rules of contract construction apply to insurance contracts.
Insurance contracts should be construed so as to give effect to the intention
and express language of the parties. In construing contracts, the words
expressing the parties‟ intentions should be given their usual, natural, and
ordinary meaning.
No. E2009-01199-COA-R3-CV, 2010 WL 3715624, at *3 (Tenn. Ct. App. Sept. 22,
2010) (internal citations omitted). In addition, “[a]ll provisions in the contract should be
construed in harmony with each other, if possible, to promote consistency and to avoid
repugnancy between the various provisions of a single contract.” Guiliano v. Cleo, Inc.,
995 S.W.2d 88, 95 (Tenn. 1999) (citing Rainey v. Stansell, 836 S.W.2d 117, 118-19
(Tenn. Ct. App. 1992). We are also mindful of the following instruction:
Insurance contracts are subject to the same rules of construction and
enforcement as contracts generally. In the absence of fraud or mistake,
they should be interpreted as written, and their terms should be given their
natural and ordinary meaning. Because insurers are strictly accountable for
the language in their contracts, ambiguous language will be construed
against the insurer and in favor of the insured. Insurance policies should be
construed as a whole in a reasonable and logical manner.
Standard Fire Ins. Co. v. Chester O’Donley & Associates, Inc., 972 S.W.2d 1, 7 (Tenn.
Ct. App. 1998) (internal citations omitted).
6
The Zurich policy includes a “Schedule of Coverages and Covered Autos”9; the
policy identifies covered autos for purposes of uninsured motorist coverage as follows:
Owned “autos” only Only those “autos” you own (and for Liability
Coverage any “trailers” you don‟t own while
attached to the power units you own). This
includes those “autos” you acquire ownership
of after the policy begins.
The uninsured motorist coverage endorsement (the “uninsured endorsement”) modifies
the Business Auto Coverage Form by providing uninsured/underinsured coverage for
“covered autos,” defined in the uninsured endorsement as “[a]ny „auto‟ owned by the
Named Insured”10; an additional definition in the uninsured endorsement expands
“covered auto” to include an “„auto‟[o]wned or leased by the Named Insured.”11 The
“Coverage” portion of the uninsured motorist endorsement pertinent to our analysis
states:
We will pay damages which an “insured” is legally entitled to recover from
the owner or operator of an “uninsured motor vehicle” because of “bodily
9
The various coverages under the policy, e.g., liability, personal injury protection, physical
damage comprehensive, etc., are not available to all “covered autos.” Item Two of the Business Auto
Declarations provides that:
This policy provides that 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.” “Autos” are shown as covered “autos” for a particular coverage by the
entry of one or more symbols from the Covered Auto Section of the Business Auto
Coverage Form next to the name of the coverage.
10
The endorsement is applicable to “„covered auto[s]‟ licensed or principally garaged in, or
„garage operations‟ conducted in, Texas.‟”
11
The endorsement includes the following Section:
F. Additional Definitions
The following are added to the Definitions Section and have special meaning for
Uninsured/Underinsured Motorists Insurance:
1. “Covered auto” means an “auto”;
a. Owned or leased by the Named Insured; or
b. While temporarily used as a substitute for an owned “covered auto” that has been
withdrawn from normal use because of its breakdown, repair, servicing, “loss” or
destruction.
Liability coverage of this policy must apply to the “covered auto.”
“Covered auto” includes “autos” (described in a. or b. above) for which
Uninsured/Underinsured Motorists Insurance has not been rejected in writing.
7
injury” sustained by an “insured” or “property damage” caused by an
“accident.”
Mr. Skarbrevik contends that the following language in the EAI endorsement,
made him an “insured” for liability purposes while driving his Wife‟s automobile on
LifeTouch‟s business, and through application of Tex. Ins. Code Ann. ' 1952.101, had
the effect of extending uninsured coverage protection to him:
The following is added to the Section II - Liability Coverage, Paragraph
A.1. Who Is An Insured Provision:
Any “employee” of yours is an “insured” while using a covered “auto” you
don‟t own, hire or borrow in your business or your personal affairs.
Considering the business policy and various endorsements, and consistent with the
applicable statutes, we agree that uninsured coverage was available to Mr. Skarbrevik.
Tex. Ins. Code Ann. ' 1952.101 provides:
(a) In this section, “uninsured or underinsured motorist coverage” means
the provisions of an automobile liability insurance policy that provide for
coverage in at least the limits prescribed by Chapter 601, Transportation
Code, that protects insureds who are legally entitled to recover from owners
or operators of uninsured or underinsured motor vehicles damages for
bodily injury, sickness, disease, or death, or property damage resulting from
the ownership, maintenance, or use of any motor vehicle.
(b) An insurer may not deliver or issue for delivery in this state an
automobile liability insurance policy, including a policy provided through
the Texas Automobile Insurance Plan Association under Chapter 2151, that
covers liability arising out of the ownership, maintenance, or use of any
motor vehicle unless the insurer provides uninsured or underinsured
motorist coverage in the policy or supplemental to the policy.
(c) The coverage required by this subchapter does not apply if any insured
named in the insurance policy rejects the coverage in writing. Unless the
named insured requests in writing the coverage required by this subchapter,
the insurer is not required to provide that coverage in or supplemental to a
reinstated insurance policy or renewal insurance policy if the named
insured rejected the coverage in connection with that insurance policy or an
insurance policy previously issued to the insured by the same insurer or by
an affiliated insurer.
In Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212 (Tex. App. 1996), the
Texas Court of Appeals was called upon to consider the written rejection exception to
8
Texas Insurance Code Art. 5.06-1, the predecessor to Tex. Ins. Code Ann. ' 1952.101.12
The plaintiff in Howard, while driving a company vehicle and on company business, was
injured in an automobile accident with an uninsured motorist; the employee made a claim
for UM/UIM coverage under his employer‟s commercial automobile policy. Because the
insured‟s vice-president did not specifically accept or reject the UM/UIM coverage on the
original coverage selection form, the insurer treated the employer as having rejected the
coverage and denied the claim. On appeal, the trial court‟s grant of summary judgment
to the insurer was reversed. Significant to our analysis in this case is the following
language:
This Court has recognized the legislature‟s purpose of protecting
conscientious, insured motorists from financial loss caused by negligent,
financially irresponsible owners and operators of uninsured and
underinsured motor vehicles. By enacting article 5.06-1, the legislature
declared that the public policy of this State requires UM/UIM coverage be
made a part of every automobile liability insurance policy issued, subject to
only limited exception. The statute‟s limited exception provides for
rejection of UM/UIM coverage; however, the insured must reject the
coverage in writing. . . . Courts must liberally construe article 5.06-1 to give
full effect to the public policy broadly requiring UM/UIM coverage.
Because of its remedial purpose and as a corollary to the courts‟ liberal
interpretation effecting UM/UIM coverage, the written rejection exception
to article 5.06-1‟s general rule should be strictly construed to protect the
insured. Thus, absent a written rejection, every automobile liability policy
of insurance delivered in this State includes UM/UIM coverage by
operation of law.
933 S.W.2d at 218 (internal citations omitted).
The EAI endorsement included Mr. Skarbrevik within the class of persons who
were insured by the Zurich policy for liability purposes, when driving his wife‟s vehicle
on company business.13 Texas Ins. Code Ann. § 1952.101(b) mandates that an
12
As part of revisions to the Texas Insurance Code contained in Acts 2005, 79th Leg., Ch. 727, Art. 5.06-
1 of the Texas Insurance Code was repealed and became the source for Tex. Ins. Code Ann. ' 1952.101,
effective April 1, 2007. See Texas Legislative Council, A NONSUBSTANTIVE REVISION OF
STATUTES RELATING TO SOLVENCY OF INSURERS, PROPERTY AND CASUALTY
INSURANCE, OTHER TYPES OF INSURANCE COVERAGE, AND UTILIZATION REVIEW AND
INDEPENDENT REVIEW, at p. 896-99 (2005), available at
http://www.lrl.state.tx.us/scanned/statutoryRevision/RevisorsReports/Insurance/Insurance_Code_Report_
submitted_to_the_79th_Legislature.pdf
13
The “Schedule of Coverages and Covered Autos” in the Business Auto Declarations identifies symbol 1
from the Covered Auto Section of the Business Auto Coverage Form for liability coverage; that form has
the following entry for symbol 1: “Any „Auto‟”.
9
automobile liability insurance policy provide uninsured motorist coverage “that protects
insureds who are legally entitled to recover from owners or operators of uninsured motor
vehicles.” Due to his coverage as an “insured” under the policy for liability purposes,
Mr. Skarbrevik was entitled to the uninsured motorist coverage imposed by statute. To
adopt Zurich‟s insistence that the modification to the policy created by the EAI
endorsement did not expand the uninsured coverage beyond the “covered autos”
designated for uninsured coverage is contrary to the mandate of the statute and public
policy and would require us to adopt an interpretation of the policy, taken as a whole, that
would be illogical and inconsistent with the liberal construction of the statute.
Accordingly, we affirm the judgment of the trial court and remand the case for
further proceedings in accordance with this opinion.
________________________________
RICHARD H. DINKINS, JUDGE
10