Wm. C. Hetherington, Jr., Vice-Chief Judge:
¶1 In this action for breach of contract, negligence and quantum meruit
Alfalfa Electric Cooperative, Inc. (AEC) filed against Superior Pipeline
Company L.L.C. (Superior), Triple J Production Company, Inc. (Triple J), and
Appellant Mid-Continent Casualty Company (Insurer) for damages to AEC's
transformer and trailer, Insurer appeals a summary adjudication order in favor
of AEC finding the commercial auto policy Insurer issued to Triple J provided
coverage for the alleged damages sought by AEC. We affirm.
STANDARD OF REVIEW
¶2 This appeal is governed by and follows the procedure set forth in Oklahoma
Supreme Court Rule 1.36, 12 O.S. 2011, ch. 15, app. 1, without appellate
briefing. The appellate standard of review for a trial court's grant of summary
judgment is de novo. Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. When one party
is entitled to judgment as a matter of law, i.e., there are no material
disputed facts, summary judgment will be affirmed. Id.
HISTORY OF CASE
¶3 AEC's second amended petition generally alleged that in February 2010 AEC
agreed to rent Superior a 5,000 KVA trailer mounted transformer on a temporary
basis and Superior agreed to pay a rental fee and assume any and all liability
for the transformer "from the time it was delivered and until it was picked up
by [AEC]." AEC further alleged, as facts common to all "counts': 1) Superior did
not pay any monies owed under the rental agreement, 2) when Superior had
finished working with the transformer, it hired Triple J to return it to AEC, 3)
while Triple J was in route to AEC, a mishap occurred with the trailer hitch on
Triple J's trailer, resulting in damage to the transformer, the transformer
trailer, and a spill of the transformer's fluids "onto the ground," 4) the
incident occurred in Enid, Oklahoma, 5) an undetermined amount of oil leaked
onto the pavement, and a fire was started, and at all times pertinent, 6) Triple
J was a licensed intrastate "private" motor carrier, and Insurer held the
"liability insurance policy covering injuries and property damage as required by
Oklahoma law."
¶4 AEC's second amended petition included the originally-pled two "counts" or
theories of liability against Superior, i.e., breach of contract and
quantum meruit, and three against Triple J, i.e., breach of
bailment contract, negligence, "presumption of negligence/res ipsa loquitor."
AEC added Insurer as a defendant and a new theory of liability against Triple J
and Insurer, alleging they were jointly liable for the damages caused by Triple
J based on the insurance policy issued "by [Insurer] pursuant to the applicable
motor carrier regulations."
¶5 Insurer moved for summary judgment, arguing there was no coverage for the
alleged damages due to certain exclusions in Triple J's three separate policies,
i.e., commercial auto liability, commercial general liability policy, and
inland marine. To support its arguments, Insurer attached AEC's second amended
petition, relevant pages of the three policies, and an affidavit from Insured's
employee, Gary Renneckar, attesting Insurer had three policies with Triple J and
that there was no coverage under the policies. AEC filed a combined response and
cross-motion for summary judgment, attaching Triple J's answers to AEC's first
request for admissions and its first interrogatories,1 excerpts from Mr. Renneckar's
deposition testimony, and a "certified" copy of Triple J's multi-page commercial
auto liability policy.
¶6 Insurer filed a response opposing AEC's cross-motion and a separate reply
to AEC's response to Insurer's summary adjudication motion. AEC then replied to
Insurer's response to AEC's cross-motion. Three weeks later, the trial court
filed a letter addressed to the parties' counsel which summarized its rulings on
their motions, identified the remaining issues, and directed AEC's counsel to
prepare the order.
¶7 Following the filing of both parties' motion to settle journal entry, the
court filed a "Journal Entry of Judgment" October 3, 2012. The judgment states
the parties' motions were taken under advisement pending receipt of "a certified
copy of the Commercial Auto Liability Policy issued to [Triple J] by [Insurer]
which [it] subsequently provided."2 It also states the court "considered that Policy in
rendering its decision" and "adopts and includes the Policy as part of the
summary judgment evidence of record." After stating the parties were notified of
its ruling by letter dated Aug 22, 2013,3 the court denied Insurer's motion for summary
adjudication and granted, in part, AEC's cross-motion, without explanation for
rulings. Six days later, Insurer moved for immediate appeal, which AEC opposed,
and after a hearing, the trial court denied Insurer's certification request by
order filed Jan. 30, 2013.
¶8 The trial court subsequently filed a "Journal Entry of Judgment" on
February 14, 2013, explaining Triple J had confessed liability for the accident
that is the subject of the lawsuit and damages to AEC's property and equipment.
The court also explains his prior decisions to overrule Insurer's motion to
dismiss based on his determination it was a proper party in the case and to
grant summary adjudication in favor of AEC and against Insurer. In the same
judgment, the court finds 1) AEC was entitled to judgment against Triple J and
Insurer, jointly and severally, 2) there was no dispute as to amount of damages,
which totaled $54,712.06, 3) the parties agreed to AEC's entitlement to attorney
fees as the prevailing party in its negligent injury to property action pursuant
to 12 O.S. 2011 § 940, and to the
amount of reasonable fees and costs AEC incurred in prosecuting the action, in
the sum of $27,012.09. That same day, AEC filed a dismissal of any and all of
its claims against the remaining party, Superior, without prejudice to refiling.
Insurer's appeal followed.
ANALYSIS
¶9 Insurer's Petition in Error raises four errors with the trial court's
granting of AEC's cross-motion for summary judgment. Based, in part, on AEC's
dismissal of its claims against Superior, we need not address Insurer's
allegation of error concerning inclusion of damages for rent in the award.4 Concerning the
remaining three issues, Insurer basically argues the evidentiary materials and
the unambiguous language in Triple J's commercial auto liability (CAL) policy
reveal disputed material facts relating to three separate policy exclusions
applicable to AEC's damages which Insurer argues preclude summary adjudication
in AEC's favor.
¶10 As previously noted, the summary adjudication order on appeal does not
specify any reason(s) for denying Insurer's motion or granting, in part, AEC's
cross motion for summary judgment. In light of the parties' arguments, the order
on appeal implies the trial court's agreement that the Policy's exclusions are
unambiguous, the material facts necessary to apply each of the three policy
exclusions are undisputed, and as a matter of law, neither exclusion applies in
this case to exclude coverage.
¶11 Insurer does not, however, raise any error on appeal with the court's
implied rejection of Insurer's "standing" arguments made in response to AEC's
cross-motion for summary judgment: 1) AEC lacks "standing" to bring a direct
action against Insurer because AEC's alleged damages are to "cargo," for which
47 O.S. 2001 § 230.30(B) requires
the filing of a "cargo" insurance policy or bond and Insurer issued Triple J
only a policy covering public liability and property damage required by 47 O.S. 2001 § 230.30(A), and 2)
motor carrier liability insurers are not proper parties in tort actions
filed against their insureds and can be sued directly only after judgment has
been entered against the motor carrier, citing Fierro v. Lincoln General
Insurance Company, 2009 OK CIV
APP 62, 217 P.3d 158.
¶12 In AEC's reply, it argues Insurer had made the "same argument" in its
motion to dismiss and that the trial court correctly denied "based on
long-standing Oklahoma judicial authority." Neither Insurer's motion to dismiss
or the order resolving it is included in the accelerated record. However, the
trial court's denial has record support in the October 3, 2013 Journal Entry of
Judgment, explaining he overruled the dismissal motion, finding Insurer "is a
proper party in this case."
¶13 "Standing refers to a person's legal right to seek relief in a judicial
forum." Fent v. Contingency Review Bd., 2007 OK 27, ¶ 7,163 P.3d 512, 519. "Standing may be
raised at any stage of the proceeding, and when raised, the party invoking the
court's jurisdiction has the burden of establishing his or her standing."
Wells Fargo Bank N.A. v. Heath, 2012 OK 54, ¶ 12, 280 P.3d 328, 334.
¶14 To the extent Insurer's second argument re-urges AEC may not bring a
direct action against Insurer as Triple J's motor carrier liability insurance
carrier and its first argument brings a new challenge to AEC's standing
based on Insurer's alleged non-liability for AEC's alleged damages to "cargo,"
we must address these predicate issues before proceeding with interpretation of
the policy. We begin with Insurer's second argument.
¶15 As relevant here, Insurer issued a Form F to Triple J pursuant to §
230.30(A), part of Oklahoma's Motor Carrier Act of 1995 (the MCA), 47 O.S. § 230.21 et seq.
According to § 230.22(C), the MCA applies "to the transportation of passengers
or property by motor carriers and private carriers, except motor carriers
of household goods and used emigrant movables, over public highways of this
state." (Emphasis added.) Section 230.30(A) mandates "no license shall be issued
by the [Corporation] Commission to any carrier until after the carrier shall
have filed with the Commission a liability insurance policy or bond covering
public liability and property damage ..."
¶16 That section's predecessor, 47
O.S. 2001 § 169, has long been interpreted by the Supreme Court 1) to make a
motor carrier and its insurer "jointly liable" and 2) to allow an injured third
party to bring a direct action against a tortfeasor motor carrier and its
insurer when the liability policy or bond required by § 169 has been filed with
the Oklahoma Corporation Commission (OCC). Diagle v. Hamilton, 1989 OK 137, ¶ 8, 782 P.2d 1379, 1381 (citing
Enders v. Longmire, 1937 OK
154, 67 P.2d 12). Important
to this issue, the Legislature enacted § 230.30(A) as part of the MCA without
deleting any § 169 language the Supreme Court had previously interpreted to
allow a direct action against a motor carrier and its insurer, i.e., "the
liability and property damage insurance policy or bond shall bind the obligor
thereunder to make compensation for . . . loss or damage to property,
resulting from the operation of any carrier for which the carrier is
legally liable."
¶17 In Fierro, another panel of this division of the Court of Civil
Appeals addressed § 230.30(A) of the MCA and found the statute denied a third
party's direct action against the insurer of an interstate motor carrier
whose compulsory public liability policy had been filed in its home state and
not in Oklahoma as required to invoke the MCA. Thus Fierro is factually
distinguishable from the instant case which involves an intrastate motor
carrier, Triple J, about which there is no dispute its § 230.30(A) liability
policy was properly filed with the OCC.
¶18 Insurer also argues § 230.30(A)'s language, i.e., "after judgment
against the carrier for any damage, the injured party may maintain an action
upon the policy or bond to recover the same, and shall be a proper party to
maintain such action," precludes a direct action against a motor carrier insurer
until entry of judgment against the motor carrier. However, the same
argument regarding this exact language in § 169 was made in Enders v.
Longmire and expressly rejected by the Supreme Court, 1937 OK 154, ¶14-15, 67 P.2d at 15.
More importantly, in 1995, the Legislature adopted the same § 169 language when
it enacted § 230.30(A) of the MCA. "Unless a contrary intent appears, if a
statute previously construed by a court of last resort is reenacted in the same
or substantially the same terms, the Legislature is presumed to have been
familiar with the previous construction and to have adopted such construction as
an integral part of the statute." Boswell v. Schultz, 2007 OK 94, ¶ 13, 175 P.3d 390, 394. Finding no
contrary intent in § 230.30(A), we affirm the trial court's implied rejection of
Insurer's general standing argument.
¶19 We also reject Insurer's lack of standing argument based on its position
that AEC's alleged damages to its transformer are to "cargo," for which §
230.30(B) mandates "cargo" insurance. The Legislature enacted the MCA to
"regulate transportation by motor carriers and private carriers" for the "public
interest," recognizing the need to require "all motor carriers and private
carriers" 1) to have adequate insurance, 2) to provide service in a safe and
efficient manner, and 3) to prevent "a detrimental impact on the environment" by
the operations of "motor carriers and private carriers." See § 230.22(A)
of the MCA.
¶20 As relevant here, the Legislature vested the OCC with powers "to protect
the shipping and general public by supervising and requiring
insurance of all motor carriers and private carriers" and "to establish there
will be no detrimental environmental impact." § 230.24(A)(2) and § 230.24(A)(4)
of the MCA. The OCC also has the duty "to supervise and regulate motor carriers
in all other matters affecting the relationship between such carriers and the
traveling and shipping public." § 230.24(A)(5) of the MCA. As part of the
general and shipping public, AEC qualifies as an intended beneficiary of the
MCA's protections. See also Casualty Reciprocal Exchange v. Waggoner Drilling
Company, 1959 OK 43, 340 P.2d 490 (based on § 169 and
motor carrier's liability policy, the court held the insurer liable to a
non-traveling owner for property damages to a drilling rig during
re-assembly).
¶21 The terms "motor carrier" and "private carrier" are defined by the MCA
with very distinct meanings. As relevant here, a "motor carrier" means "any
person. . . operating upon any public highway for the transportation of
passengers or property for compensation or for hire or for commercial purposes,
and not operating exclusively within the limits of an incorporated city or two
with this state." § 230.23(6) of the MCA. In contrast, "private carrier" means
"any person engaged in transportation upon public highways, of persons or
property or both, but not as a motor carrier." (Italics added.) §
230.23(9) of the MCA. "Private carrier" also "includes any persons who
transports property by motor vehicle where such transportation is incidental to
or in furtherance of any commercial enterprise of such person, other than
transportation." Id.
¶22 Unlike the majority of the MCA sections which address "motor carriers and
private carriers,"5 Insurer's argument fails to consider § 230.30(A)'s
mandate for filing a liability policy with the OCC, is directed to "any
carrier," which reference clearly and unambiguously includes both motor carriers
and private carriers. In contrast, § 230.30(B) of the MCA mandates "every
motor carrier" to file a cargo insurance policy covering any goods or
property being transported. Similarly, the MCA also mandates "every motor
carrier, subject to the [MCA], receiving property for transportation in
intrastate commerce" to issue a receipt or bill of lading." § 230.25 of the MCA.
The MCA includes no similar or identical statutory mandates for "private
carriers." Based on our interpretation of § 230.30, in its entirety and with the
MCA as a whole, and in light of its stated intent and purposes, we conclude the
Legislature clearly intended both motor carriers and private carriers to file §
230.30(A) liability insurance policies, whereas the § 230.30(B)'s mandate for
cargo insurance only applies to motor carriers.
¶23 In this case, except for the sole reference in the title of the Form F
attached to the Policy, "Uniform Motor Carrier Bodily Injury and Property Damage
Liability Insurance Endorsement," Insurer has not demonstrated Triple J is a
"motor carrier," as defined by the MCA, to which § 230.30(B)'s requirement for a
cargo insurance applies. Because the evidentiary materials presented to the
trial court support only Triple J's status as a intrastate private carrier, we
affirm the trial court's implied rejection of Insurer's remaining standing
argument.
Rules Applicable to Insurance Policies
¶24 "Interpretation of a policy with its exclusions is a law question,"
unless the facts necessary to apply the decided law question are in
dispute. Wiley v. Travelers Insurance Company, 1974 OK 147, ¶15, 534 P.2d 1293, 1296. "A policy of
insurance is a contract and should be construed like any other contract . . .
where not ambiguous, according to its terms." Id., ¶16. "Parties to
insurance contracts are at liberty to contract for insurance to cover the risks
as they see fit and are bound by terms of the contract." Id. As a result,
"courts will not undertake to rewrite terms [of the insurance contract]."
Id.
¶25 In a dispute over the language of an insurance policy, our first step is
to determine as a matter of law whether the policy language at issue is
ambiguous. See Wynn v. Avemco Ins. Co., 1998 OK 75, ¶17, 963 P.2d 572, 575. If it is not
ambiguous, we accept the language in its plain, ordinary and popular sense.
McDonald v. Schreiner, 2001
OK 58, ¶ 7, 28 P.3d 574,
577. "We construe the policy to give a reasonable effect to all of its
provisions." Cranfill v. Aetna Life Ins. Co., 2002 OK 26, ¶ 5, 49 P.3d 703, 706.
¶26 We are also mindful that the "general declaration of insurance . . .
normally determines the insurance carrier's liability, and the insured's
respective rights under the contract by identifying what risks are covered and
excluded by the policy." Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 13, 812 P.2d 372, 377 (footnote
omitted). "[A]n exclusion . . . eliminates coverage where, were it not for the
exclusion, coverage would have existed" under the insurance policy. Id.,
at n. 11. "Policy exclusions are read seriatim; each exclusion eliminates
coverage and operates independently against the general declaration of insurance
coverage and all prior exclusions by specifying other occurrences not covered by
the policy." Id., ¶ 13, 812 P.2d at 377 (footnote omitted). "In case of
doubt, exclusions exempting certain specified risks are construed strictly
against the insurer." Id. (footnote omitted). With these rules in mind,
we review the Policy.
The Policy
¶27 As relevant here, Triple J is the named insured listed on the Policy's
Declaration Page, which describes Triple J as a "corporation" that "installs
& repairs oilfield production equipment." The Policy and its endorsements
provides coverage for, inter alia, liability, uninsured motorists, and
motor carrier bodily injury and property damage liability.
¶28 Pursuant to "Section II - Liability Coverage" and subsection A of the
"Business Auto Coverage," Insurer agreed to pay: 1) "all sums an 'insured'
legally must pay as damages because of . . . property damage" and 2) "all sums
an "insured" legally must pay as a "covered pollution cost or expense," that
"are caused by an accident and resulting from the ownership, maintenance or use"
of covered autos.
¶29 "Property damage" is defined by the Policy as "damage to or loss of use
of tangible property," about which there is no dispute the damages to AEC's
transformer and trailer qualify as such damages were caused by an "accident" and
resulted from the use of one of Triple J's covered autos. The Policy also
defines "covered pollution cost or expense" as: 1) "any request, demand . .
.that any 'insured' or others . . . clean up, remove, contain. . .or neutralize.
. .the effects of pollutants,"; or 2) "[a]ny claim or suit by or on behalf of a
governmental entity for damages because of . . . .cleaning up, removing . . .or
neutralizing. . . the effects of pollutants." There is no dispute in this case
that: 1) there were billed costs or expenses associated with the cleanup for the
"spill of fluids from the transformer onto the ground" and/or "the oil that
leaked onto the pavement" or 2) the "fluids" and/or "oil" are "pollutants," as
that term is defined by the Policy.
¶30 The controversy between AEC and Insurer involves the applicability of the
following three exclusions of the Policy's "Business Auto Coverage" section:
B. Exclusions
This insurance does not apply to any of the
following:
****
2. Contractual
Liability imposed under any contract or agreement.
But this exclusion does not apply to liability for damages:
a. Assumed in a contract or agreement that is an "insured
contract" provided the "bodily injury" or "property damage" occurs
subsequent to the execution of the contract or agreement; or
b. That the "insured" would have in the absence of the contract or
agreement.
6. Care, custody or Control
"Property damage" or "covered pollution cost or expense"
involving property owned or transported by the "insured" or in the
"insured's" care, custody or control. But this exclusion does not apply
to liability assumed under a sidetrack agreement.
11. Pollution
"Bodily injury" or "property damage" arising out of the actual,
alleged or threatened discharge, dispersal, seepage, migration, release
or escape of "pollutants":
a. That are, or that are contained in any property that is:6
(1) Being transported or towed by . . . the covered auto.
(2) Otherwise in the course of transit by or on behalf of the
"insured"; or . . .7 (Italics added.)
Exclusions B.6. and B.11
¶31 To support the Policy provides no liability coverage for AEC's damages,
Insurer essentially argues there is one undisputed material fact in common to
Exclusions B.6. and B.11. that precludes summary judgment in favor of AEC and
requires summary judgment in its favor - Triple J was transporting and towing
AEC's trailer mounted transformer when it became unattached from Triple J's
hitch.
¶32 AEC admits it originally alleged Triple J was "transporting" the trailer
mounted transformer when it was damaged, but responds to Insurer's motion,
arguing subsequent discovery revealed different circumstances leading to the
incident about which "there is a question of fact . . . precluding summary
judgment." In its cross-motion, AEC argues the inapplicability of the pollution
exclusion B.11. in great detail but does not make any similar argument about
Exclusion B.6.
¶33 We agree there is a common thread in the Policy's Exclusions B.6. and
B.11. by which Insurer attempts to exclude payment for both "property damage
involving property . . . transported by "insured" and "property damages .
. .arising from the actual . . . release or escape of 'pollutants'. . .that are
contained in any property that is being towed or transported by a covered
auto." Relying solely on Gary Renneckar's deposition testimony, AEC argues the
transformer and trailer were no longer being towed or transported when the
hitch malfunctioned. Assuming without deciding that AEC's argument is
correct, AEC has failed to consider an undisputed material fact revealed by the
evidentiary materials, i.e., Triple J was in physical possession or in
custody of the transformer and trailer when the accident occurred. Application
of that fact alone to the remaining part of Exclusion B.6., "property damage
involving property. . .in the insured's care, custody or control", results in
potential application of that specific exclusion.
¶34 Similarly, it is also undisputed Triple J was between its point of
departure and the final destination 1) when the hitch on its covered vehicle
malfunctioned and ultimately causing the transformer and trailer to overturn and
2) when the pollutants contained in the transformer were released on the ground
and/or pavement. As a result, application of these undisputed facts to the
remaining part of Exclusion B.11.a.2., i.e., "'property damage' arising
out of the actual. . . release or escape of 'pollutants' . . . that are
contained in any property that is . . .[o]therwise in the course of transit by
or on behalf of the 'insured,'" also implicates this exclusion.
¶35 In light of these undisputed facts, the clear and unambiguous language of
the Policy's Exclusion B.6. and B.11 would appear to support Insurer's position
of no coverage under either exclusion and summary judgment in its favor.
However, because the Policy, as AEC further argues,8 includes a specific endorsement for
motor carrier public liability insurance (Form F) required by § 230.30, we must
address its effect on the Policy's coverages and exclusions.
¶36 We conclude the trial court's order in favor of AEC is supported by
Oklahoma precedent interpreting § 230.30's predecessor, § 169, as becoming part
of the Policy and controlling over similar policy exclusions. In Casualty
Reciprocal Exchange v. Waggoner Drilling Company, 1959 OK 43, 340 P.2d 490, the owner of property
sued a trucking company hired to transport an oil well drilling rig from one
lease to another, seeking damages sustained to the drilling rig's mast while the
trucking company was re-assembling the rig at the delivery point. Similar to the
facts of this case, a malfunction of the trucking company's vehicle caused the
mast to fall to the ground when attempting to raise it with a winch that was
attached to the truck.
¶37 Based on the undisputed evidence, the Court in Waggoner
determined, as relevant here, that 1) the disassembling, loading, unloading, and
reassembling of the oil rig and transportation from one lease to another
"constituted one continuous act of transportation" and 2) even though the
vehicle was off the highway at the time of the resulting damage, the
operation or use of the vehicle in reassembling the rig was "incident to
the transportation of the rig" and "had a proximate and necessary
connection with the operation and use of the vehicle upon the highway
within the meaning of 47 O.S. [1951] § 161-169."
¶38 The insurer in Waggoner, similar to Insurer in this case, argued
the trucking company's insurance policy did not cover the risk. The Court in
Waggoner pointed out that Insured had agreed in the policy filed with the
OCC and covering the trucking company as a "Class B Motor Carrier,9"
to pay on behalf of insured all sums which the insured shall become
obligated to pay by reason of the liability imposed upon him by law for
damages because of injury to or destruction of property, including the loss
of use thereof, and caused by accident arising out of the ownership,
maintenance or use of any motor vehicle in the insured's
business."
Considering the exclusion on which the insurer relied to argue the accident
and resulting property damages were not covered by that policy, i.e.,
"damage to or destruction of loss of cargo or property in the possession of
the Insured or for which the Insured is legally responsible as carrier . . .or
bailee . . . ," the Waggoner Court rejected the insurer's argument,
finding;
Under [47 O.S.1951 §] 169, policies such as the one under consideration
shall cover 'loss or damage to property.' This broad statutory provision, of
course, becomes a part of the insurance policy in controversy and
prevails over provisions of the policy to the contrary. Enders v.
Longmire, [1937 OK 54], 67
P.2d 12." (Italics added.)
¶39 Relying on the Waggoner Court's same quote from Enders, the
Court of Civil Appeals in Western Casualty & Surety Co. v. J. R. Adams,
Inc., 1970 OK CIV APP 4, ¶14,
465 P.2d 794, 796, reached the
same conclusion regarding the insurer's liability to cover property damages to
construction equipment and trailer for which its owner had hired the insured
motor carrier to transport. While "pulling" the equipment and trailer, the
insured motor carrier in Western Casualty negligently drove the owner's
equipment and trailer into a highway overpass causing severe damages to the
equipment. Like Waggoner, the insurer had issued a § 169 liability policy
to a Class B motor carrier and argued its policy's terms excluded coverage to
"injury to or destruction of ***(3)***property in the care, custody, or
control of the insured or property as to which the insured for any
purpose is exercising physical control." (Emphasis added.) The insurer also
attempted to argue, as a bar to liability, language in the policy's motor
carrier endorsement, "It is agreed and understood that the words 'Damages to
Property' as used in this endorsement shall be construed to cover any and all
property, except property of such insured, or carried in or on the motor
vehicle belonging to or controlled by the insured." (Emphasis added.) The
Court in Western Casualty affirmed the trial court's judgment in favor of
the plaintiff/property owner, finding "the policy of insurance having been filed
pursuant to the statute, 47 O.S. 1961, [§] 169, as then in force, the statute
becomes a part of the contract of coverage and the terms of the statute control
as to the character of said coverage." Although differently phrased, the policy
exclusions in Waggoner and Western Casualty each attempted to
eliminate liability coverage for property in the possession or
control and damaged during operation of a motor carrier's business, the
very circumstances for which [§] 169 mandated such coverage.
¶40 Similar to the pre-1995 and 1995 versions of § 169, § 230.30(A) of the
MCA mandates "no license shall be issued by the [Oklahoma Corporation]
Commission to any carrier until after the carrier shall have filed with the
Commission a liability insurance policy or bond covering public liability and
property damage . . ." Identical to the language in § 169 relied on by the Court
in Waggoner, § 230.30(A) mandates "the liability and property damage
insurance policy or bond shall bind the obligor thereunder to make
compensation for . . . loss or damage to property, resulting from the
operation of any carrier for which the carrier is legally liable."
¶41 Further, pursuant to the Form F motor carrier liability endorsement in
this case, Insurer and Triple J agreed that "the certification of the policy, as
proof of financial responsibility under the provisions of any State motor
carrier law. . . amends the policy to provide insurance for automobile
bodily injury and property damage liability in accordance with the provisions
of such law. . .to the extent of the coverage and limits of liability
required thereby." (Emphasis added.)
¶42 Like the owner of the damaged drilling rig in Waggoner and the
owner of damaged construction equipment in Western Casualty, each of whom
sued the respective tortfeasor motor carrier for only property damages, AEC was
not involved in the specific accident with Triple J during which AEC's
transformer and trailer were damaged while being transported by Triple J, who
was undisputedly operating as a motor carrier at the time. Therefore,
Waggoner clearly supports long standing Oklahoma precedent holding motor
carrier liability insurance required by § 169 was intended to protect "the
shipping and general public," not only the traveling public. 47 O.S. 2001 § 162; see also
Tri-State Insurance Company, v. J. O. Hobbs, 1959 OK 143, ¶ 0, 347 P.2d 226, 227; Utilities Ins.
Co. v. Potter, 1940 OK 127,
105 P.2d 259, cert. dismissed 61
S.Ct. 804, 312 U.S. 662.
¶43 Further, the regulations mandated for motor carriers and private carriers
by the MCA indicate the Legislature's clear intent for the same protections as
that intended by § 169. See 47
O.S. 2001 § 230.22 ("it is necessary in the 'public interest' to regulate
transportation by motor carriers and privates carriers. . .[and] to recognize
the need of [both carriers] to have adequate insurance. . .[and] to provide
service in a safe and efficient manner.) Our interpretation is also supported by
the similarities in the authority vested in the OCC to enforce these statutes.
See 47 O.S. 2001 § 162 and
47 O.S. 2001 § 230.24.
¶44 Finally, although no exclusion similar to Exclusion B.11. "Pollutants"
was at issue in either Waggoner or Western Casualty, we find
further support for applying Waggoner to that exclusion based on the
Legislature's since-added protection to the MCA, i.e., "to establish that
operations of [both carriers] will not have a detrimental impact on the
environment." This language clearly and unambiguously provides for joint
liability of motor carriers and their insurers, as in this case, for damages to
the environment arising from the transportation of pollutants or property
containing pollutants.
¶45 Because Exclusions B.6. and B.11. each similarly attempt to eliminate
coverage contrary to § 230.30(A), we conclude, based on Waggoner and the
intent and stated purposes for the MCA, that the Policy's Form F became part of
the Policy and controls over these two exclusions. Albeit for other
grounds, we affirm the court's summary adjudication in favor of AEC based on
Exclusions B.6. and B.11.
Contractual Exclusion
¶46 Insurer argues Exclusion B.2., "[l]iability imposed under any contract or
agreement," provides no coverage "for damages as a result of a contractual
obligation. By cross-motion, AEC argues the same exclusion does not apply,
claiming the bailment between Superior and Triple J is an "insured
contract"10
which is the first exception to Exclusion B.2. We agree Exclusion B.2. does not
apply.
¶47 Insurer's arguments in its summary judgment and its response to AEC's
cross motion relies on 1) Triple J's admission it had an agreement with Superior
to transport the trailer mounted transformer, and 2) AEC's alleged
failure to present any evidence of its speculation of a "master servant
agreement" or other contract between Triple J and Superior that would constitute
an "insured contract." For application of Exclusion B.2.'s insured contract
exception, AEC contends it has proven beyond dispute the status between Superior
and Triple J as bailor-bailee for which Oklahoma bailment statutes makes the
latter liable to AEC for damages to the bailed property. The trial court agreed
with AEC.
¶48 Insurer cites no supporting authority for its interpretation of Exclusion
B.2. This Court's research discovered no published state or federal court cases
interpreting the identical Exclusion B.2. language, "[l]iability imposed
under any contract or agreement" in any type liability policy. Our research did
disclose other types of contract exclusions with Exclusion B.2.'s same and/or
similar exceptions. The most similar contract exclusion to the exclusion at
issue is "[l]iability assumed under any contract or agreement," or words
to that effect, which version has most commonly been interpreted in the context
of commercial general liability insurance (CGLI) policies. In such policies, the
Texas Supreme Court found a split of authority on its interpretation in
Gilbert Texas Construction, L.P. v. Underwriters at Lloyd's London, 327
S.W.3d 118, 129-133 (2010), with several courts applying the exclusion only to
contracts in which the insured has assumed another's liability, e.g.,
indemnity or hold-harmless agreements, and other courts, including the Texas
Supreme Court, interpreting the exclusion without any such limitation,
i.e., no coverage for a contract-based claim.
¶49 In 1991, the Oklahoma Supreme Court in Dodson v. St. Paul Ins.
Co., 1991 OK 24, ¶ 5, 812 P.2d 372, 374, interpreted an
exclusion in a CGLI policy almost identical to the version addressed by the
Texas Supreme Court, i.e., "liability assumed by the Insured under
contract or agreement except an incidental contract." and essentially reached
the same conclusion.11 The Dodson Court found "no ambiguity" with
the exclusion, either when read alone or with two other exclusions not at issue
in this case, and that it "removes from coverage any cause of action grounded
upon a liability arising 'under contract or agreement except an incidental
contract'." (Emphasis added.)
¶50 The Policy does not define the term "imposed" as used in Exclusion B.2.
As a verb, its common definition is "to cause or to be burdened . . .to force
one to submit. . .[or] to establish or create (something unwanted) in a forceful
way." Webster's Third International Dictionary, p. 1136. Based on Dodson
and the plain and unambiguous terms of Exclusion B.2. in this case, we conclude
it "removes from coverage any cause of action grounded on a liability arising
under contract or agreement," i.e., contract-based claims. We further
find that Exclusion B.2. applies here unless one of its two exceptions
"reserves coverage," see Dodson, 1991 OK 24, ¶ 14, or "brings a claim
back into coverage," see Gilbert Texas Construction, 327 S.W.3d at
133.
¶51 In this case, the contract upon which Insurer solely relies to invoke
Exclusion B.2. to deny coverage to Triple J is the "bailment agreement" with
Superior to return the transformer and trailer back to AEC. It is undisputed
there was no written bailment agreement between those two parties whose terms
would control over one implied by law. Chambers v. Morgan, 1983 OK CIV APP 59, ¶ 6, 671 P.2d 89 (citing Oklahoma
Petroleum & Gasoline Co. v. Winship, 1921 OK 293, 200 P. 844).
¶52 AEC relies on the same bailment agreement to invoke the first exception
of Exclusion B.2., which exclusion the Policy expressly states "does not apply
to liability for damages . . . a. [a]ssumed in a contract or agreement that is
an 'insured contract' . . ." We can not agree with AEC's interpretation
considering the Policy's definition of "insured contract" begins with "[t]hat
part of any other contract or agreement pertaining to your business. . .under
which you assume the tort liability of another party to pay for . . .'property
damage.'" As we interpret Exception a., in its entirety and with Exclusion B.2.
as a whole, in order to qualify as an "insured contract," Triple J would have
had to 1) expressly assume the tort liability of Superior to pay property
damages to AEC under their rental contract when Triple J and Superior
agreed to the bailment for the transformer and to 2) execute its agreement to
assume Superior's tort liability prior to the property damage
occurrence.
¶53 In this case, Insurer denied AEC's allegation in its second amended
petition that Superior "agreed to . . . assume any and all liability for the
transformer" in its rental contract with AEC, and neither the rental contract
nor other evidentiary support for Superior's alleged assumption is included in
the accelerated record. Further, AEC has not produced any evidentiary support
for the existence of a master service agreement or other contract between Triple
J and Superior which AEC contends might also qualify as an "insured contract."
As cross-movant for summary adjudication on the issue of Insurer's liability
under the Policy, AEC has failed to establish application of exception a. to
Exclusion B.2.
¶54 However, the same may not be said about Exception b. to Exclusion B.2. As
previously noted, Exclusion B.2. does not apply to "liability for damages . . .
b. That the 'insured' would have in the absence of the contract or
agreement." Aside from the implied bailment agreement, Triple J would be
liable for the property damages to AEC's transformer by general common law
negligence and under Oklahoma's Motor Carrier regulations by virtue of the Form
F attached to the Policy. Therefore, Exclusion B.2. is inapplicable due to
reservation of coverage by Exception b. Having previously concluded the motor
carrier liability endorsement issued to Triple J as required by § 230.30
controls over and replaces Exclusions B.6. and B.11., we find Insurer liable
under the Policy.
CONCLUSION
¶55 The trial court's summary adjudication in favor of AEC is
AFFIRMED.
JOPLIN, P.J., and BUETTNER, J., concur.