Made available by Touch N' Go Systems, Inc.
e-mail: firstname.lastname@example.org, and
Law Offices of James B. Gottstein
406 G Street, Suite 210, Anchorage, AK 99501
(907) 274-7686 fax 274-9493
recent opinions, or the
Columbia Mutual Insurance Co. v. State Farm Insurance Co. (11/9/95), 905 P 2d 474
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501; (907) 264-0607.
THE SUPREME COURT OF THE STATE OF ALASKA
COLUMBIA MUTUAL INSURANCE )
COMPANY, ) Supreme Court No. S-6058
Appellant, ) Superior Court No.
) 1JU-92-1590 CI
) O P I N I O N
STATE FARM MUTUAL AUTOMOBILE )
INSURANCE COMPANY, ) [No. 4279 - November 9, 1995]
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Larry R. Weeks, Judge.
Appearances: Robert C. Erwin, Anchorage, for
Appellant. Sheldon E. Winters, Lessmeier &
Winters, Juneau, for Appellee.
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton, and Eastaugh, Justices.
The principal issue in this appeal is whether the
parties' insurance policies conflict. Also raised is the issue
of whether contribution calculations should be based on the face
value of the alleged conflicting policies or upon the actual
amount available for a given accident. Finally, we must
determine whether an exclusion in Columbia's policies is
I. FACTS AND PROCEEDINGS
This appeal arises out of an auto accident that
occurred near Ketchikan on August 25, 1990. Jim Burks Sr.,
driving an automobile owned by Jackie Lee, collided with a
motorcycle carrying two persons. As a result, State Farm Mutual
Automobile Insurance Company (State Farm) paid $100,000, its
policy limit, to each injured cyclist in full settlement of all
State Farm insured Lee's automobile and permissive
users thereof, and Columbia Mutual Insurance Company (Columbia)
insured Burks. More precisely, Columbia insured two of Burks'
automobiles in his home state of Missouri. In addition to
providing coverage for Burks' two listed automobiles, the
Columbia policies contained standard clauses which insured Burks
when he drove other automobiles under certain circumstances.
After settling the underlying claims, State Farm sought
contribution from Columbia as a joint insurer. Columbia denied
any liability, claiming that its policies provided only excess
coverage. Specifically, both Columbia policies stated:
If there is other applicable liability
insurance we will pay only our share of the
loss. Our share is the proportion that our
limit of liability bears to the total of all
applicable limits. However, any insurance we
provide for a vehicle you do not own shall be
excess over any other collectible insurance.
Given that Burks was driving Lee's car -- a "non-owned"
automobile under the terms of Columbia policies -- Columbia
argued that its coverage was excess, and that since the claims
were settled within State Farm's policy limits, no excess exists
and contribution was thus inappropriate.
State Farm moved for summary judgment, claiming that
its policy conflicted with Columbia's and therefore, pursuant to
our holding in Werley v. United Services Automobile Ass'n, 498
P.2d 112 (Alaska 1972), the loss should have been prorated
between the two insurers.1 In relevant part, State Farm's policy
[I]f other vehicle liability coverage
applies, we are liable only for our share of
the damages. Our share is the per cent that
the limit of liability of this policy bears
to the total of all vehicle liability
coverage applicable to the accident.
. . . .
If a temporary substitute car [or] a non-
owned car . . . has other vehicle liability
coverage on it, then this coverage is excess.
The superior court concluded that the policies did in
fact conflict, and granted State Farm's motion for summary
judgment. The superior court also concluded that the policy
coverage limits available in this particular case, rather than
the overall policy limits, formed the basis of the contribution
calculation. Furthermore, the superior court ruled that "the
evidence does not show a genuine issue that the car was available
for all purposes." It thus denied Columbia's claim that a policy
exclusion was applicable. Columbia now appeals the superior
court's grant of summary judgment.
II. STANDARD OF REVIEW
A motion for summary judgment is granted only when the
record indicates 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. Alaska R. Civ. P. 56(c). In determining
whether State Farm is entitled to judgment as a matter of law, we
must construe the relevant provisions of the State Farm and
Columbia policies. "The construction of an insurance contract is
a matter for the court, unless its interpretation is dependent
upon the resolution of controverted facts." O'Neill
Investigations v. Illinois Employers Ins. of Wausau, 636 P.2d
1170, 1173 (Alaska 1981).
A. The Policies Conflict.
In Horace Mann Insurance Co. v. Colonial Penn Insurance
Co., 777 P.2d 1162 (Alaska 1989), we considered a fact pattern
almost identical to that now posed. In that case, Horace Mann
made the same type of argument that Columbia makes here:
Horace Mann argues that there is no conflict
between its "other insurance" clause and
Colonial Penn's. It reasons that its policy
provides excess coverage as to non-owned
automobiles when other available insurance
exists. According to Horace Mann, until
Colonial Penn exhausts its limits, its
coverage is not other available insurance
within the meaning of Colonial Penn's "other
insurance" clause. Thus, it concludes no
conflict between the "other insurance"
Id. at 1164.
Rejecting this line of reasoning, we stated:
The fallacy of this argument is that Colonial
Penn's policy does not prorate with other
available insurance. Instead, it prorates
with other "valid and collectible insurance."
This term is clearly intended to include all
insurance that would cover the loss in the
absence of "other insurance." Thus, in this
case a conflict arises. Colonial Penn's
policy requires proration; on the other hand,
Horace Mann's policy requires that it be
treated as excess insurance.
Id. Finding a conflict, we concluded that "the insurers must
prorate the loss." Id.
Of significance is the fact that the provisions in
State Farm's and Columbia's insurance policies are essentially
identical to those which were held to be conflicting in Horace
Mann.2 The only differences between the policies reviewed in
Horace Mann and those now before us are the adjectives employed,
a distinction of no substantive significance.3 Accordingly,
application of Horace Mann leads to the conclusion that State
Farm's and Columbia's "other insurance" clauses conflict.
We additionally note that Columbia does not assert that
Horace Mann is inapplicable nor does it ask us to overrule it.
Instead, Columbia contends that this case is distinguishable and,
as Horace Mann argued, more readily likened to Providence
Washington Insurance Co. of Alaska v. Alaska Pacific Assurance
Co., 603 P.2d 899, 902-03 (Alaska 1979). However, our reason for
rejecting the application of Providence Washington in Horace Mann
is also appropriate here:
In Providence Washington, both policies'
"other insurance" clauses stated that the
policy was "primary insurance except when
stated to apply in excess of or contingent
upon the absence of other insurance." Id. at
902-03. Both policies also stated that they
were excess as to hired automobiles. Id. at
903. The vehicle involved in the accident
was a hired automobile as to Alaska Pacific;
under Providence Washington's policy, the
vehicle was owned. Thus, we concluded that
there was no conflict in the "other
insurance" clauses. Id. at 903. In this
case neither policy's language asserts that
it is primary.
Thus, we conclude that the trial court
correctly found that the "other insurance"
clauses were in conflict and prorated the
loss between Colonial Penn and Horace Mann.
Horace Mann, 777 P.2d at 1164-65. Similarly, neither Columbia's
nor State Farm's policies state that they are "primary."
Consequently, Columbia's assertion that Providence Washington
controls is unpersuasive.
B. The Superior Court Did Not Err in Calculating
Columbia next contends that even if contribution is
appropriate, the superior court overstated its contribution
share. Specifically, Columbia argues that contribution shares
should be calculated based on overall policy limits, not per
accident limits. The issue presented is whether the superior
court applied the correct formula for calculating Columbia's pro
rata share of contribution.
In this instance, State Farm's policy has limits of one
hundred thousand dollars ($100,000) per person and three hundred
thousand dollars ($300,000) per accident (100/300). Columbia has
two policies: one has a single limit of sixty thousand dollars
($60,000), and the other has a limit of twenty-five thousand
dollars ($25,000) per person and fifty thousand dollars ($50,000)
per accident (25/50).
In calculating contribution shares, the superior court
used per accident shares. More precisely, since two individuals
were injured in the accident, State Farm was potentially liable
for $200,000, its per person policy limits, while Columbia was
potentially liable for $110,000, its per person policy limits of
$50,000 and single limit policy of $60,000. Together, State Farm
and Columbia's per person exposure totaled $310,000 (200,000 +
110,000) for this accident. Consequently, the superior court
held that Columbia should contribute 11/31, or $70,967.74 (11/31
x 200,000). Columbia argues that its contribution share should
be 11/41, thus reflecting State Farm's overall policy limits of
In relying upon Continental Insurance Co. v. United
States Fidelity and Guaranty Co., 528 P.2d 430, 436 (Alaska
1974), the superior court correctly concluded that contribution
"should be based upon the theories available within the coverage
of the relevant policy."4 In Continental, the court faced facts
analogous to those now presented:
The general liability policy issued by
Continental to Northern had an aggregate
limit of $500,000, without smaller limits per
person or occurrence. The U.S.F. & G. policy
issued to Cooper contained limits of $100,000
per person and $300,000 per occurrence for
bodily injury liability. The amount of
coverage U.S.F. & G would have provided had
it been ultimately found liable was $200,000.
U.S.F. & G. should therefore bear two-
sevenths of Continental's costs . . . . We
remand for the calculation of that sum.
Id. at 435-36 (footnote omitted).
As in Continental, in this case two people were injured
in the underlying accident. Thus, State Farm's exposure was, at
most, $200,000 under its policy. Consequently, following
Continental the contribution formula should only reflect State
Farm's actual exposure -- $200,000 -- not its overall policy
limit of $300,000.5
C. Columbia's Exclusion is Inapplicable: No Genuine
Issue of Material Fact Exists.
Columbia alternatively argues that the above analysis
is entirely unnecessary since a policy exclusion precludes
coverage. Columbia's policies state:
We do not provide Liability Coverage for the
ownership, maintenance or use of:
. . . .
2. Any vehicle, other than "your covered
auto," which is:
. . . .
b. furnished or available for
your regular use.
Columbia contends that there is a direct conflict in the
testimony as to whether the vehicle was available for regular use
by Burks, thus precluding summary judgment.
The superior court first defined "regular use" to mean
"steady or uninterrupted use for all purposes and without
limitation." The superior court next discussed its summary
Columbia need not prove an exclusion in
opposition to the motion for summary
judgment. Columbia needs only to show
evidence of genuine issues of material fact.
Further, the court believes that the court
must draw all reasonable inferences from the
facts presented and decide if, with those
inferences, there is a genuine issue of
The superior court then concluded:
[T]he evidence does not show a genuine issue
that the car was available for all purposes.
To borrow a friend's car when you need it is
not to borrow it whenever it might occur to
you to use it. It is not an unlimited
permission for all purposes. It is not
"furnished or available for regular use" as
that has been accepted in the cases.
In addressing this issue, we must first determine
whether the superior court's definition of "regular use" --
"steady or uninterrupted use for all purposes and without
limitation" -- is appropriate and then determine whether any
genuine issues of fact preclude summary judgment.
The issue of what constitutes "furnished or available
for regular use" is one of first impression. Although the
superior court's interpretation of the "regular use" exclusion
may seem narrow, it is appropriate in light of two factors.
First, "insurance coverage provisions should be broadly construed
while exclusions are to be interpreted narrowly." Whispering
Creek Condominium Owner Ass'n v. Alaska Nat'l Ins. Co., 774 P.2d
176, 178 (Alaska 1989). Second, Columbia does not contest the
superior court's definition of "regular use" but rather argues
that Burks' and Lee's contradictory testimony precludes summary
judgment. Thus, on this record the superior court's definition
of "regular use" is appropriate.
Columbia contends that genuine issues of material fact
concerning Burks' use of the vehicle preclude summary judgment.
In support, Columbia relies on allegedly conflicting deposition
testimony of Burks and Lee, State Farm's insured and owner of the
car. Review of the record persuades us that Columbia has failed
to demonstrate the existence of a genuine issue of material fact.
In making this conclusion, we note that it is undisputed that
Burks used the car only three to six times over a four month
period. Additionally, each time Burks used the car, he asked for
and received permission from Lee. Thus we affirm the superior
court's holding that as a matter of law the exclusionary clauses
in Columbia's policies are inapplicable.
State Farm's motion for summary judgment was properly
granted for the following reasons. First, per Horace Mann, the
"other insurance" clauses of the State Farm and Columbia policies
conflict; thus, contribution is appropriate. Additionally, the
superior court's contribution calculation correctly reflected the
policy limits applicable to this accident rather than overall
policy limits; thus, Columbia's contribution share was not
overstated. Finally, as appropriately defined by the superior
court, the auto was not furnished or available for Mr. Burks'
"regular use"; thus, no policy exclusion is applicable.
Accordingly, the superior court's summary judgment decision is
1 In Werley, we held that when "other insurance" clauses
conflict with one another, "3they are in fact repugnant and each
should be rejected in toto.3" 498 P.2d at 118 (quoting Lamb-
Weston, Inc. v. Oregon Auto. Ins. Co., 341 P.2d 110, 119 (Or.
1959)). Under this rule, the loss is then prorated between the
insurers up to the respective policy limits. Id. at 117.
2 Much like State Farm's policy, Colonial Penn's "other
insurance" clause read:
If a loss involves a listed auto. In a loss
that involves a listed auto, an insured
person may have other insurance against the
same loss. If so, we won't be liable for
more than our share of the loss. Our share
of the loss will be the proportion this
policy's coverage is of the total amount of
all valid and collectible insurance.
If a loss involves the use of a non-owned
auto or a temporary substitute auto. . . .
For losses that involve such autos this
policy will be excess insurance.
Horace Mann, 777 P.2d at 1163 n.1.
Similarly, much like Columbia's, Horace Mann's "other
insurance" clause provided:
If the insured has other insurance against a
loss covered by bodily injury and property
damage liability coverage of this policy the
company shall not be liable under this policy
for a greater proportion of such loss then
[sic] the applicable limit of liability
states in the declarations bears to the total
applicable limit of liability of all
collectible insurance against such loss[.]
. . . .
[T]he insurance with respect to any
. . . non-owned automobile shall be excess
over other collectible insurance.
Id. at 1163 n.2.
3 Specifically, Colonial Penn's policy stated that it is
to be prorated against the "total amount of all valid and
collectible insurance", id. at 1163 n.1, while State Farm's
policy states that it is to be prorated against the "total of all
vehicle liability coverage applicable to the accident."
4 Although Continental dealt with the proration of
defense costs between the potentially liable insurers, we find
its logic equally compelling in the allocation of coverage.
5 In opposition, Columbia cites Marwell Construction,
Inc. v. Underwriters at Lloyd's, London, 465 P.2d 298 (Alaska
1970). Columbia contends that Marwell states that overall policy
limits form the proper basis for calculating contribution.
However, in addition to pre-dating Continental, Marwell merely
states a general proposition; it does not definitively hold that
overall policy limits are appropriate nor does it discuss a
specific application like the Continental court did. Instead,
We employ the principle of equitable
subrogation and rule that the defense costs
must be shared pro rata between concurrent
insurers in proportion to the amounts of
coverage they have provided.
Id. at 313.
Columbia notes that sister states, including Oregon,
upon whose law our decision in Werley was patterned, use overall
policy limits in calculating contribution. However, the fact
that we adopted a rule from another jurisdiction does not mean
that the tangential holdings of that jurisdiction's courts must
also be adopted in whole or in part. Furthermore, the per
accident approach which we adopted in Continental reflects a more
appropriate application of the contribution calculation than the
alternative of simply looking to overall policy limits.