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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Progressive Casualty Insurance Company v. Skin (07/10/2009) sp-6387

Progressive Casualty Insurance Company v. Skin (07/10/2009) sp-6387

     Notice:   This opinion is subject to 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, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.
                                        

            THE SUPREME COURT OF THE STATE OF ALASKA

PROGRESSIVE CASUALTY )
INSURANCE COMPANY, ) Supreme Court No. S- 12586
)
Appellant, ) Superior Court No. 2BA-05-00001 CI
)
v. ) O P I N I O N
)
SARAH SKIN, JOE SKIN, EVA ) No. 6387 July 10, 2009
NAGEAK, BENJAMIN NAGEAK, )
and BONNIE NAGEAK, )
)
Appellees. )
)

          Appeal  from the Superior Court of the  State
          of  Alaska, Second Judicial District, Barrow,
          Richard E. Erlich, Judge.

          Appearances:  Aisha  Tinker  Bray  and   Gary
          Zipkin,  Guess  & Rudd, P.C., Fairbanks,  for
          Appellant.  Michele L. Power, Power &  Brown,
          L.L.C., Bethel, for Appellees Sarah Skin  and
          Joe  Skin.  Dennis M. Mestas, Law Offices  of
          Dennis  Mestas, Anchorage, for Appellees  Eva
          Nageak,  Benjamin Nageak, and Bonnie  Nageak.
          Rebecca   J.   Hozubin,  Wilkerson   Hozubin,
          Anchorage,   for   Amicus   Curiae   Property
          Casualty Insurers Association of America.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Carpeneti, and Winfree, Justices.

          FABE, Chief Justice.
          WINFREE,   Justice,   with   whom   MATTHEWS,
          Justice, joins, dissenting in part.
I.   INTRODUCTION
          Progressive  Casualty  Insurance  Company  appeals  the
superior  courts  ruling  that it issued an  ambiguous  insurance
policy  and  acted  improperly in handling  its  insureds  claim.
Specifically,   Progressive  challenges   the   superior   courts
conclusions  that (1) the Progressive policy failed to  meet  the
requirements for a personal motor vehicle liability policy  under
AS  28.22.101(c);  (2)  the  Progressive  policys  definition  of
vehicle  must be reformed to include liability coverage  for  the
operation  of  non-owned  all-terrain vehicles  (ATVs);  (3)  the
Progressive policys definition of insured person for the  purpose
of  medical  payments coverage, which relied on the common  usage
definition of motor vehicle, was ambiguous and thus construed  in
favor  of the insured; (4) Progressive waived its right to assert
a  defense based on the named driver exclusion in the policy; (5)
Progressive  is estopped from asserting a defense  based  on  the
named  driver  exclusion  in  the  policy;  and  (6)  Progressive
breached  its  fiduciary duty to Sarah Skin,  its  insured,  thus
warranting  coverage by estoppel for all of  the  parties  claims
arising out of an accident involving Skins minor son.
          Because Progressives policy meets the requirements  for
an  owners  motor  vehicle liability insurance  policy  under  AS
28.22.101(a),  and because the policy does not provide  liability
coverage  for accidents arising out of the insureds operation  of
an  ATV,  we reverse the superior courts rulings to the contrary.
We   affirm,  however,  the  superior  courts  decision  to  hold
Progressive  liable  for medical payments coverage  because  that
section of the Progressive policy employs the term vehicle in  an
ambiguous manner, requiring us to construe coverage in  favor  of
the insured.
II.  FACTS AND PROCEEDINGS
          On  May  17, 2002, Sarah Skin purchased a motor vehicle
insurance  policy  from Progressive to cover  a  Chevrolet  Prizm
automobile, which she intended to drive in Barrow.1   A  resident
of  Barrow,  Skin  bought  the policy  over  the  phone  from  an
InsuranceMart agent in Anchorage.  The agent faxed her  insurance
application  forms  with  instructions to  sign  or  initial  her
consent  to  various clauses, including a Named Driver  Exclusion
that  listed  her  two sons, including then fifteen-year-old  son
Joseph  Skin.  Skin signed and initialed as instructed  and  sent
the forms back.2
          Less than a month later, on June 13, 2002, Joseph ran a
stop sign at an intersection in Barrow while driving a four-wheel
Honda  ATV  owned  by  Bonnie and Benjamin Nageak.   The  Nageaks
daughter, Eva Nageak, was riding as Josephs passenger on the ATV.
A pickup truck collided with them, seriously injuring both Joseph
and  Eva.3   The  Barrow  police investigated  the  accident  and
assigned fault to Joseph.
          Neither  the Skins nor the Nageaks notified Progressive
of the accident.  The owner of the pickup truck, however, held  a
Progressive  insurance  policy, and he contacted  Progressive  on
June  24,  2002, to report the accident.  Based on  that  report,
Progressive   cross-referenced  Skins  policy.    A   Progressive
adjuster, Kelly Ford, telephoned Skin later that day to interview
her and to acquire a recorded confirmation that Skin had excluded
Joseph from her policy coverage.
          On  June  29, 2002, Progressive sent a letter  to  Skin
notifying her of the companys determination that Joseph  did  not
meet the requirements for medical coverage under her policy.  The
Medical   Payments  Coverage  section  of  Skins   policy   binds
Progressive  to  provide  coverage  for  bodily  injury:[4]    1.
sustained  by  an insured person; 2. caused by accident;  and  3.
arising  out  of  the ownership, maintenance or use  of  a  motor
vehicle.  The section goes on to define insured person as:
          a.   you  while  occupying  any  vehicle   or
               rental  vehicle, other  than  a  vehicle
               owned  by  you  which is not  a  covered
               vehicle;
               
          b.   a  relative  while occupying  a  covered
               vehicle or non-owned vehicle;
               
          c.   you  or  any relative when struck  by  a
               motor  vehicle  or  trailer  while   not
               occupying a motor vehicle; and
               
          d.   any  other  person  while  occupying   a
               covered vehicle.
               
          Progressives letter to Skin explains that  because  the
ATV is not a private passenger, pickup or sedan, it would not  be
considered a vehicle.5  As a result, Joseph did not qualify as an
insured  person, defined by sub-definition b of the policy  as  a
relative  while occupying a covered vehicle or non-owned vehicle.
At the same time, Joseph failed to qualify under sub-definition c
as a relative when struck by a motor vehicle or trailer while not
occupying a motor vehicle.  According to the letter, [w]hile  the
policy  does not define a motor vehicle, Alaska Statute 28.40.100
defines a motor vehicle as self propelled except a vehicle  moved
by  human or animal power.  Therefore, the letter concludes, even
though  Joseph  was  not occupying a vehicle as  defined  in  the
policy,  Joseph Skin was occupying a motor vehicle, and therefore
he  would  not  have  been deemed an insured  person  under  sub-
definition  c   of the Medical Payments Coverage section  of  the
policy.
          Four  days  later,  on July 3, 2002,  Progressive  sent
another  letter  denying third-party liability coverage  for  the
accident.  Part I of Skins policy, entitled Liability to  Others,
explains  that Progressive will pay damages, other than  punitive
or  exemplary  damages, for bodily injury for  which  an  insured
person becomes legally responsible because of an accident arising
out  of  ownership, maintenance, or use of a vehicle or a  rental
vehicle.    Within  the  Additional  Definitions   of   Part   I,
Progressive  defines non-owned vehicle, as any vehicle,  and  any
rental  vehicle,  that is not owned by you, a  relative,  or  the
named  insureds  non-resident spouse.  Progressives  July  letter
notified  Skin  that there is no coverage for  Bodily  Injury  or
Property  Damage for the use of the ATV being operated by  Joseph
Skin.  The company once again explained that the ATV did not meet
the definition of vehicle under the policy.
          On  August  9,  2002,  the Nageaks  attorney  contacted
          Progressive, and the company sent the attorney a copy of the
letter  shortly  thereafter.   No further  communication  between
Progressive  and  the  parties took place until  this  litigation
began.
          On  October 21, 2003, Bonnie, Benjamin, and Eva  Nageak
brought  suit  against  Joseph for damages  arising  out  of  the
accident.   They did not notify Progressive of the suit.   Acting
on  behalf of her minor son, Skin entered into a settlement  with
the Nageaks, assigning to them the proceeds of her claims against
Progressive and agreeing to jointly prosecute those  claims.   On
October  8,  2004, at the parties request, Superior  Court  Judge
Michael  I. Jeffery entered a consent judgment against Joseph  in
favor of the Nageaks for a total amount of $1,582,632.
          On  January  3,  2005,  Skin  and  her  assignees,  the
Nageaks,  jointly  filed an action against  Progressive  and  the
individual  adjusters  assigned to  the  claim.  Their  complaint
alleged  that the Progressive agents conspired and engaged  in  a
wrongful  and  bad faith scheme that culminated in  the  wrongful
denial  of the Progressive policys liability coverage, denial  of
defense,  and  denial of medical payments coverage to  Joe  Skin.
Progressive filed its answer to the complaint on April 26,  2005.
At  about the same time, on April 29, 2005, Progressive sent Skin
a  followup  to  its  earlier Medical Payments  Coverage  denial,
explaining  that  [i]f  the  ATV involved  in  this  accident  is
determined to be a vehicle, then that determination would trigger
the  Named  Driver Exclusion Election pertaining to Joseph  Skin,
which was in effect at the time of the loss.6  Progressive sent a
similarly  worded letter on May 3, 2005 to explain  the  companys
alternative basis for denial of Bodily Injury and Property Damage
coverage.
          On  September 26, 2005, Progressive filed  two  motions
for partial summary judgment on the Nageaks third-party liability
coverage  claims  and  Skins  medical  payments  coverage  claim,
respectively.  The Nageaks and Skin filed oppositions and  cross-
motions  for summary judgment.  Superior Court Judge  Richard  H.
Erlich consolidated the motions for decision.
          On  November  28, 2006, the superior court  issued  its
decision, ruling against Progressive on all of the issues  before
it.   The  court  determined that Skin had purchased  a  personal
motor  vehicle  policy, as defined by AS 28.22.101(c),  and  that
such   a   policy  required  non-owned  vehicle  coverage.    The
Progressive definition of non-owned vehicle in Skins  policy  did
not  meet the minimum coverage mandated by the statute, according
to   the   superior  court,  because  only  the  broad  statutory
definition of motor vehicles will meet the legislative intent  to
close  gaps  in motor vehicle liability coverage.   The  superior
court  reasoned  that [a]n insured who does not desire  liability
coverage for non-owned vehicles [including ATVs] may purchase  an
owners  policy  to  provide  liability  coverage  for  designated
vehicles.  The  purchaser of a personal motor  vehicle  liability
policy,   by   contrast,  bargains  for  the  greater   coverage.
Consistent  with  this  theory, the superior  court  undertook  a
reformation  of  Progressives definition  of  non-owned  vehicle,
substituting  the term motor vehicle as defined by  the  statute,
          and thus qualifying Joseph as an insured person.
          The superior court went on to find that the Nageaks had
properly  asserted their claims for breach of contract  based  on
Progressives   denial   of   third-party   liability    coverage.
Similarly,  the  court  held that Joseph  qualified  for  medical
payments  coverage under the policy, subject to applicability  of
the named driver exclusion defense.  The superior court proceeded
to  determine  that  Progressive  had  waived  the  named  driver
exclusion  defense  because it initially relied  on  the  policys
definition  of vehicle alone as the grounds for denying  coverage
for the accident.  In addition to waiver, the superior court held
that  because  the plaintiffs reasonably relied  on  Progressives
sole defense to coverage and were prejudiced as a result . . .  .
Progressive   is  estopped  from  asserting  the  [named   driver
exclusion] defense.
          Finally,  relying  on  Lloyds  &  Institute  of  London
Underwriting Cos. v. Fulton,7 the superior court imposed coverage
by  estoppel based on Progressives breach of its fiduciary duties
to  Skin.  Noting that a Progressive agent initially called  Skin
to  ask  her  to confirm that she had requested the named  driver
exclusion  for  Joseph, the court cited the  transcript  of  that
conversation  as  evidence of  misconduct  by  Progressive.   The
court  also held that Progressives failure to give timely  notice
of  its  intent to reserve its right to assert the [named  driver
exclusion] defense also violated the companys fiduciary  duty  to
Skin.
          Progressive  filed  a  motion  for  reconsideration  on
December  8,  2006.  Among other arguments, the company  advanced
the  contention that the superior court failed to give  deference
to  the  Division of Insurances approval of its policy.   In  its
order denying Progressives motion, the superior court noted  that
Progressive declined to heed the Divisions express recommendation
that  it revise confusing and potentially misleading language  in
its policy.  On January 8, 2007, the superior court entered final
judgment  pursuant  to  Alaska  Civil  Rule  54(b).   Progressive
appeals.
III.      STANDARD OF REVIEW
          We  review a grant of summary judgment de novo and will
uphold  the lower courts ruling if the record presents no genuine
issues of material fact and the movant is entitled to judgment as
a  matter  of  law.8  We draw all reasonable inferences  of  fact
against the moving party.9
IV.  DISCUSSION
     A.   The   Progressive   Policy  Meets   Minimum   Statutory
          Requirements.
          
          Alaska  Statute  28.22.311  defines  a   motor  vehicle
liability policy as an owners policy, an operators policy,  or  a
personal  policy  that  .  .  .  meets  the  requirements  of  AS
28.22.101.   According to AS 28.22.101(a), an owners policy  must
designate . . . the motor vehicles that it covers and insure  the
person   named  against  loss  arising  out  of  the   ownership,
maintenance,   or  use  of  a  designated  motor   vehicle.    By
comparison,  a  personal  motor vehicle liability  policy  offers
          broader coverage, insuring the person named as insured against
loss  arising out of the ownership, maintenance, or  use  by  the
named person of a motor vehicle whether owned or not owned by the
person.10   The  superior court found that Progressive  issued  a
personal motor vehicle liability policy.  Progressive argues that
it  issued  an owners policy and that offering limited additional
coverage should not bind it to the statutory requirements  for  a
personal  policy.   We agree with Progressives interpretation  of
the statute.
          It was error to conclude that Progressive had to insert
explicit  language  in the policy identifying  it  as  an  owners
policy.  The superior courts holding relied on findings that  the
Progressive policy expressly provides non-owned vehicle  coverage
and  that the title of the Personal Auto Policy Declarations Page
signed  by Skin does not identify the policy as an owners  policy
or  an  operators  policy.    As  a result,  the  superior  court
concluded, the policy had to meet the requirements of  a personal
motor  vehicle  policy  as  described in  AS  28.22.101(c).   But
nothing  in  the statutes or our case law requires an insurer  to
explicitly  label a motor vehicle liability policy as  either  an
owners policy or a personal policy.
          Moreover, the policy declarations page signed  by  Skin
hardly implicates the broad coverage that the superior court read
a  personal  policy  to  require.  First, the  declarations  page
specifies the make, model, and VIN number of the Chevrolet  Prizm
that Skin planned to purchase.  In other words, it designate[s] .
. . the motor vehicle[] that it covers,11 as an owners policy must
do.   Moreover,  the  declarations page contains  a  box  labeled
Personal  Auto  Liability, which lists categories  of  automobile
liability  coverage, including coverage for any  auto,  scheduled
autos,  and  non-owned  autos.  Skins  policy  declarations  page
indicates  that she purchased coverage only for scheduled  autos.
A  purchaser  of  a  personal policy, however,  would  presumably
expect to see a checkmark by the any auto or non-owned autos  box
as  well,  since  under AS 28.22.101(c) personal policy  coverage
extends  to  a  motor vehicle whether owned or not owned  by  the
person.
          The  Nageaks  argue  that  by offering  some  non-owned
vehicle  coverage,  Progressive  committed  itself  to  meet  the
statutory  requirements  of a personal  motor  vehicle  liability
policy.   But  they marshal little support for this  proposition.
In  contrast,  Progressive points out that we have characterized,
in  dicta, an identical Progressive policy as an owners policy.12
And Progressive cites persuasive precedent from the Idaho Supreme
Court, upholding the validity of the Progressive insurance policy
and rejecting an argument similar to the Nageaks.13
          The  Nageaks argue that a legislative intent  to  close
gaps  in insurance coverage supports their claim.  They leave  us
unconvinced,  however,  that the legislature  intended  to  cabin
insurance   policy  coverage  into  narrow  statutorily   defined
categories  unless  explicitly  labeled  otherwise.   The   plain
language of AS 28.22.311 makes clear that the Progressive  policy
need  only  meet  the  requirements of  an  owners  policy  under
AS  28.22.101(a).  We therefore turn to the question  of  whether
          the policy, by its own terms, provides coverage for Josephs
accident.
          B.      The    Progressive   Policy   Reasonably    and
          Unambiguously Excludes Liability Coverage for Accidents
          Arising Out of the Operation of ATVs.
          
          The   Nageaks   argue  that  regardless   of   how   we
characterize  it, the Progressive policy covers the operation  of
an  ATV  by an insured.  They reason that the Progressive policys
coverage  for  non-owned vehicles extends  to  ATVs  because  the
policys  liability coverage section defines non-owned vehicle  as
any vehicle . . . that is not owned by you.  They further contend
that  vehicle must include ATVs because AS 28.90.990(15)  defines
motor  vehicle  as  a  vehicle which is self-propelled  except  a
vehicle  moved  by  human or animal power, and  AS  28.90.990(28)
defines  vehicle even more broadly as a device in,  upon,  or  by
which  a  person or property may be transported.  For  its  part,
Progressive  maintains  that the definition  of  vehicle  at  the
outset  of  the  Progressive policy,  contained  in  the  General
Definitions section, excludes coverage for ATVs.
          The  doctrine  of  reasonable expectations  guides  our
review  of the terms of an insurance policy.14  In applying  that
doctrine,  we held in Hillman v. Nationwide Mutual Fire Insurance
Co.  that  an insurance policys definitional section is  distinct
from  the  coverage provisions, and cannot logically be  read  as
providing  any  substantive additions to the coverage  section.15
Progressives   definition  of  vehicle  in  its  policys  General
Definitions section effectively provides a substantive limitation
to its policys liability coverage section.  The Nageaks therefore
argue   that   just  as  the  definitional  section  cannot   add
substantive protections, it cannot delete them.16
          The  substantive  provision for  third-party  liability
coverage in the Progressive policy appears as follows:
          Part I  Liability to Others
          Insuring Agreement  Bodily Injury

          Subject  to the Limits of Liability,  if  you
          pay  a  premium  for bodily injury  liability
          coverage,  we  will pay damages,  other  than
          punitive  or  exemplary damages,  for  bodily
          injury  for  which an insured person  becomes
          legally  responsible because of  an  accident
          arising out of the ownership, maintenance, or
          use of a vehicle or a rental vehicle.
          
The Additional Definitions subsection in Part I goes on to define
insured person as, among other things, a relative with respect to
an  accident arising out of the maintenance or use of a non-owned
vehicle  with the express or implied permission of the  owner  of
the   non-owned   vehicle.   Also  within  the  same   Additional
Definitions  subsection,  the policy  clarifies  that   non-owned
vehicle  means any vehicle and any rental vehicle,  that  is  not
owned  by  you,  a  relative, or the named insureds  non-resident
spouse.
          Finally, the General Definitions section of the policy,
          number 12, explains:
          Vehicle means a land motor vehicle:

          a.   of  the private passenger, pickup  body,
               or sedan delivery type;
               
          b.   designed for operation principally  upon
               public roads;
               
          c.   with at least four (4) wheels; and

          d.   with  a  gross vehicle weight of  10,000
               pounds or less;
               
          which is not a rental vehicle.

As Progressive explained in its initial correspondence with Skin,
the  ATV involved in Josephs accident did not meet the first  two
criteria  of the vehicle definition: it was neither a land  motor
vehicle  .  . . of the private passenger, pickup body,  or  sedan
delivery  type,  nor  a land motor vehicle .  .  .  designed  for
operation principally upon public roads.  Consequently,  the  ATV
did  not  qualify  as  a non-owned vehicle, and  Joseph  did  not
qualify as an insured person because he was not operating a  non-
owned vehicle.  Progressive therefore denied coverage.
          The  Nageaks argue that Progressive cannot rely on  its
policys  distinct  and  separate General Definitions  section  to
limit  the  scope  of  coverage.  They argue that  the  statutory
definition of vehicle should apply within the Progressive policys
liability  coverage section.  According to the  Nageaks,  Hillman
relieves  the  insured of any obligation to  cross-reference  the
General  Definitions section when reading the  non-owned  vehicle
definition.
          In Hillman, however, we rejected an appeal for coverage
based  on a definition that we determined could not logically  be
read  as  providing  any substantive additions  to  the  coverage
section of the policy.17  Here, Progressive relies on the general
definition  of  vehicle set out at the beginning of  its  policy.
That  section explains that [e]xcept as otherwise defined in this
policy,  terms  appearing  in boldface will  have  the  following
meaning.   And  the term vehicle appears in boldface  within  the
liability coverage sections non-owned vehicle definition.
          That   boldfaced   vehicle   definition   unambiguously
excludes  ATVs.  The Nageaks do not argue that ATVs  are  of  the
private passenger, pickup body, or sedan delivery type.   Nor  do
they  claim  that the ATV was designed for operation  principally
upon public roads.18  The superior court took judicial notice that
lay  persons in Barrow regularly see snowmobiles and ATVs  driven
upon  the public roads.  And the Nageaks defend the trial  courts
reasoning  by  pointing to Alaska Administrative Code  provisions
and  Barrow  Municipal  Ordinances that  apparently  permit  non-
licensed drivers to operate ATVs in the streets of Barrow.19  But
an   insurance  coverage  rule  that  turns  so  readily  on  the
conditions  and  ordinances particular to the insureds  place  of
residence  would  inject  uncertainty into  a  policys  scope  of
coverage.    Progressives  definition  of   vehicle   meets   the
          objectively reasonable expectations of consumers across Alaska.
The  local ordinances and regulations cited by the Nageaks do not
entitle  consumers  in  some parts of Alaska  to  more  insurance
coverage.
          The  Nageaks further argue that the Progressive  policy
is confusing and ambiguous because a definition of vehicle cannot
be  found  in the policys liability coverage section.  Therefore,
they  maintain,  an  insured  has  a  reasonable  expectation  of
coverage  for  all  non-owned vehicles that  meet  the  statutory
definition  of  motor vehicle.  But adopting this argument  would
lead   us   to   recognize  a  Progressive  insureds   reasonable
expectation of coverage for liability incurred while driving non-
owned  scooters,  golf carts, fork-lifts,  tugs,  and  any  other
vehicle  which is self-propelled except a vehicle moved by  human
or  animal power.20  The Progressive policy does not support such
an  expectation  of coverage.  At its outset, the policy  defines
the term vehicle, and an insured may fairly apply that definition
throughout the policy, including the liability coverage section.
          We  therefore  conclude that because  the  Nageaks  ATV
fails  to  qualify  as  a covered vehicle, third-party  liability
coverage  was not available to Skin.21  In light of this holding,
we  need not determine whether Joseph was legally excluded  as  a
covered driver under the policy.
     C.   The  Superior  Court  Correctly Construed  the  Medical
          Payments Coverage Section of the Progressive Policy  To
          Provide Coverage for Josephs Accident.
          
          The   Medical   Payments  Coverage   section   of   the
Progressive  policy covers expenses associated  with  the  bodily
injury  of  an  insured person.  This part of the policy  defines
insured  person as including a relative while occupying a covered
vehicle or non-owned vehicle, as well as you or any relative when
struck by a motor vehicle or trailer while not occupying a  motor
vehicle.  (Boldface type in original; underlined emphasis added.)
Thus,  as a relative, Josephs claim for medical payments coverage
proceeds under two discrete theories.  Under the first theory, he
claims that he is covered as a relative while occupying a .  .  .
non-owned vehicle.  But our previous holding makes clear that the
Nageaks ATV does not qualify as a vehicle under the policy.22  The
second  theory applies if the Nageaks ATV does not qualify  as  a
vehicle.   Under this theory, the policy would cover Joseph as  a
relative  when  struck by a motor vehicle or  trailer  while  not
occupying a motor vehicle.
          Progressive denied medical payments coverage for Joseph
under this theory on the basis of a distinction between the  term
vehicle, which is set out in boldface type in the policy, and the
term  motor  vehicle.  We agree with Progressive that Joseph  was
not  occupying  a  vehicle  at the time  of  the  accident.   But
Progressive  also takes the position that Joseph  cannot  recover
under  the second theory that the accident occurred while  Joseph
was  not  occupying  a motor vehicle. According  to  Progressive,
although the Nageaks ATV does not qualify as a vehicle,  it  does
qualify as a motor vehicle.  Therefore, according to Progressive,
Joseph  was  occupying a motor vehicle, even though  he  was  not
          occupying a vehicle.
          Progressive  argues that because the  policy  does  not
define  the  term motor vehicle for purposes of medical  payments
coverage, an insured must rely on the common usage meaning of the
term.   The  company contends that an objectively reasonable  lay
person should understand that an ATV qualifies as a motor vehicle
but not as a vehicle.  We cannot agree with Progressives tortured
reading of its policy.
          The  General  Definitions section  of  the  Progressive
policy  explains  that   [e]xcept as otherwise  defined  in  this
policy,  terms  appearing  in boldface will  have  the  following
meaning[.]  The policy fails to mention that the same terms, when
not  appearing in boldface, will depart from those meanings.   In
the  superior  courts words, vehicle must be read as  vehicle  in
boldface  to  convey the policy meaning rather than the  ordinary
meaning as understood by lay persons.  The court noted that there
are  at  least  56  instances of vehicle or motor  vehicle   non-
boldface  throughout  Mrs. Skins policy  and  concluded  that   a
reasonable  insured  may  question  whether  the  appearance   of
vehicle, non-boldface, is intentional or a typographical error.
          We  agree  with the superior court that the distinction
between  the  terms motor vehicle and vehicle would be  difficult
for  a policyholder to understand.  A reasonable lay person could
not  be  expected  to understand that he could simultaneously  be
denied  coverage under one policy provision because  he  was  not
occupying  a  vehicle  while  also being  denied  coverage  under
another   provision   because  he  was   occupying   a   vehicle.
Accordingly, we hold that this ambiguous policy language entitles
Skin  to  attach the policy definition of vehicle  to  that  term
wherever it appears in the policy, regardless of its typeface  or
whether  the  word  motor precedes it.  Because  that  definition
excludes  ATVs,  we  hold that Progressive  must  extend  medical
payments coverage under the policy to Joseph.
          We  are  not  alone in arriving at the conclusion  that
Progressives practice of attaching two definitions  to  the  same
policy  term  is  obscure  at best.   The  Court  of  Appeals  of
Washington  has similarly determined that Progressive clouds  its
policy  with ambiguity by employing multiple definitions for  the
term vehicle.23  In Getz v. Progressive Specialty Insurance Co., a
longshoreman   sued  Progressive  for  UIM  coverage   after   an
underinsured, unauthorized driver on the dock collided  with  him
as  he  operated  a  piece of equipment  known  as  a  hustler.24
Progressive  declared that the hustler fell within the  statutory
definition  of  motor vehicle and therefore  denied  Getzs  claim
under  the  terms of its UIM coverage.25  But Getzs policy,  like
Skins, defined vehicle narrowly, although it used capital letters
rather  than  boldface  type  to  denote  that  meaning.26    The
Washington Court of Appeals held in favor of Getz, reasoning that
Progressives  effort  to  avoid  the  consequences  of  its   own
definition fails.27
          A  New  York court has similarly held that Progressives
definition of vehicle should carry over through the rest  of  its
policy,  but its holding operated to exclude coverage.28   In  re
Progressive   Insurance  Cos.  (Nemitz)  involved  a  Progressive
          customer who sought UIM payments for injuries that she suffered
while riding as a passenger on an uninsured ATV.29  The policy in
Nemitz employed a definition of vehicle nearly identical to  that
of  Skins.30   And like Skins policy, it defined uninsured  motor
vehicle   as   a  motor  vehicle  that,  through  its  ownership,
maintenance  or  use, results in bodily injury to the  insured.31
The brief opinion of the New York Supreme Court omits any mention
of boldface type.  The court nonetheless held that the definition
of  an uninsured motor vehicle in the [UIM] section of the policy
[]  references the phrase motor vehicle, which, as we  previously
noted, is already unambiguously defined in the policy in a manner
that excludes ATVs.32  The New York court apparently saw no reason
to distinguish between the specific wording of the UIM provisions
reference  to motor vehicle and the general definitions  sections
reference to vehicle.33
          These  cases  further  persuade  us  that  Progressives
position  relies  on an ambiguous and confusing  convention  that
varies  material  terms of Progressives policy depending  on  the
typeface.  Progressive maintains that it intentionally makes  use
of this convention to deliberately provide additional coverage to
the policy holder.34  But the typeface convention in Skins policy
has  operated  only  to  deny  her coverage.   And  despite  what
Progressive  may  have  intended,  its  policy  lends  itself  to
competing interpretations.  We conclude that a reasonable insured
is   entitled  to  rely  on  Progressives  policy-defined  terms,
including the term vehicle, to carry a uniform meaning throughout
the  policy, regardless of typeface.35  We therefore  affirm  the
superior court on the issue of medical payments coverage.




     D.   Coverage by Estoppel Does Not Apply.
          The superior court, citing Lloyds & Institute of London
Underwriting Cos. v. Fulton,36 found that Progressive had breached
its  fiduciary  duty  to Skin and that this misconduct  warranted
coverage  by  estoppel.   Specifically,  the  court  found   that
Progressive  acted  improperly when its  agent  called  Skin  and
sought to confirm that she had named Joseph as an excluded driver
from  her  policy.  The court identified other acts of misconduct
as  well, all of which concerned Progressives alternative defense
based on the named driver exclusion election in Skins policy.
          Given its alleged misconduct in attempting to establish
the  named  driver exclusion defense, Progressive may  indeed  be
estopped from denying coverage based on that defense or any other
defense related to the misconduct.  But in this case coverage was
denied  not  because of the named driver exclusion that  was  the
subject  of Progressives alleged misconduct, but instead  because
of  the  unrelated policy definition of vehicle.  The Progressive
policy  does not provide liability coverage for Josephs  accident
because  an  ATV does not qualify as a vehicle under the  policy.
This  coverage limitation has nothing to do with the named driver
exclusion  or  Progressives alleged impropriety in attempting  to
confirm  that  exclusion.37  We therefore  reverse  the  superior
          courts decision to impose coverage by estoppel.38
V.   CONCLUSION
          For the reasons detailed above, we REVERSE the judgment
of  the  superior court that Progressives insurance policy failed
to   meet   minimum  statutory  requirements,  that  the  policys
liability  coverage  extends to all-terrain  vehicles,  and  that
Progressives misconduct warranted coverage by estoppel.   Because
we  reverse on these issues, we conclude that the superior courts
decision  to  impose coverage by estoppel must also be  REVERSED.
We AFFIRM the superior courts decision that Joseph is entitled to
medical payments coverage.
WINFREE,  Justice, with whom MATTHEWS, Justice, joins, dissenting
in part.
          I respectfully disagree with the courts conclusion that
Joseph  Skin  is entitled to medical-payments (med-pay)  coverage
under  his  mothers  policy.   In  my  view  this  conclusion  is
inconsistent and incompatible with our decision that Joseph  Skin
is not entitled to liability coverage under the policy.
          Fundamental  to our decision that Joseph  Skin  had  no
liability coverage while operating the Nageaks ATV is the special
definition of vehicle in the policys General Definitions section:
          Vehicle means a land motor vehicle:
          a.   of  the private passenger, pickup  body,
               or sedan delivery type;
          b.    designed for operation principally upon
          public roads;
          c.   with at least four (4) wheels; and
          d.   with  a  gross vehicle weight of  10,000
               pounds or less;
          which is not a rental vehicle.[1]
          
          Its very obviousness makes it easy to overlook, but  to
understand  the specially defined term vehicle  in boldface   one
must understand the undefined but easily understood general terms
vehicle  and motor vehicle.  Otherwise it would be impossible  to
appreciate  the  difference between a vehicle  and  just  another
motor  vehicle or, for specific example, to appreciate that gross
vehicle weight can be the distinguishing factor between a vehicle
and just another motor vehicle.
          To  determine whether a vehicle is a vehicle under  the
policy,  one  must start with the larger set of  vehicles  called
land  motor  vehicle[s] and then use the four limiting provisions
of  (a)  -  (d)  to  arrive at the specific  subset  of  vehicles
contemplated by the policy.  The term land motor vehicle  is  not
defined  in  the  policy  and  therefore  must  be  construed  in
accordance with ordinary and customary usage.2  The land  portion
of  the  term  is self-evident.  The common definition  of  motor
vehicle  is  broad  enough to cover any  automotive  vehicle  not
operated  on rails.3  This is consistent with relevant  statutory
definitions in Title 28 of the Alaska Statutes (Motor  Vehicles):
AS  28.90.990(a)(29) defines vehicle as a device for transporting
people or property, and AS 28.90.990(a)(16) defines motor vehicle
as a vehicle which is self-propelled.
          We   had   no   difficulty  understanding  the   policy
definition  of vehicle or differentiating between a  vehicle  and
other examples of motor vehicle when concluding that Joseph  Skin
had  no  liability coverage while operating the Nageaks ATV.   We
stated  that:   (1)  the  boldfaced vehicle  definition  [in  the
General Definitions section] unambiguously excludes ATVs; (2) the
policy  definition  of  vehicle meets the objectively  reasonable
expectations of consumers; (3) to conclude otherwise would create
coverage for liability incurred while driving non-owned scooters,
golf carts, fork-lifts, tugs, and any other [motor vehicle];  and
(4)  an insured may fairly apply the policy definition of vehicle
throughout  the policy.  In short, we concluded that the  Nageaks
          ATV is a (land) motor vehicle but not a vehicle or, more
specifically, not a non-owned vehicle as defined by  the  policy,
and  that  this  conclusion  is  within  a  consumers  reasonable
expectations.4
          But when the court considers med-pay coverage under the
policy,  it  makes  an  about-face and concludes  that  the  term
vehicle  [is used] in an ambiguous manner in the med-pay coverage
section  and the distinction between the terms motor vehicle  and
vehicle would be difficult for a policyholder to understand.  The
court   describes  as  tortured  Progressives  argument  that   a
reasonable layperson should understand that an ATV qualifies as a
motor  vehicle  but not as a vehicle, although we concluded  that
very thing with respect to liability coverage.
          Relevant  policy  provisions from  Mrs.  Skins  med-pay
coverage are as follows:
          PART II - MEDICAL PAYMENTS COVERAGE
          INSURING AGREEMENT
          [We will pay medical expenses for injuries]:
          1.   sustained by an insured person;
          2.   caused by accident; and
          3.   arising    out    of   the    ownership,
               maintenance or use of a motor vehicle.
               
          . . . .

          ADDITIONAL DEFINITIONS

          When used in this Part II:
          1.   Insured person and insured persons mean:
               a.   you while occupying any vehicle  or
                    rental   vehicle,  other   than   a
                    vehicle owned by you which is not a
                    covered vehicle;
               b.   a   relative   while  occupying   a
                    covered   vehicle   or    non-owned
                    vehicle;
               c.   you or any relative when struck  by
                    a  motor  vehicle or trailer  while
                    not occupying a motor vehicle; and
               d.   any other person while occupying  a
                    covered vehicle.
                    
The  court  ignores  the general grant of  coverage  for  medical
expenses  arising  out of the . . . use of a  motor  vehicle  and
focuses only on whether Joseph Skin is an insured person for  the
coverage.
          Provision  (c) of the insured person definition  is  at
issue here, but it is important to consider all of the provisions
as  a whole and place provision (c) in proper context.  First and
foremost, provisions (a), (b), and (d) combine to provide med-pay
coverage to anyone who occupies Mrs. Skins car, i.e., the covered
vehicle.    Provision  (b)  also  extends  med-pay  coverage   to
Mrs.  Skin and her family members while they occupy any non-owned
vehicle.  It is thus clear that Joseph was an insured for med-pay
coverage  under  Mrs. Skins policy anytime he was  occupying  any
          vehicle  there is no vehicle for which Joseph would not be a med-
pay insured.5
          This   leads  to  provision  (c),  which  adds  a  very
different  dimension  of med-pay coverage to  Mrs.  Skins  family
members.   Provision (c) extends med-pay coverage to  Mrs.  Skins
family members only when they (1) are struck by any kind of motor
vehicle  and  (2)  are not occupying any kind of  motor  vehicle.
This  is  pedestrian coverage, and although the common  situation
invoking  this coverage would be a pedestrian struck  by  a  car,
under the policy it also would apply for pedestrians struck,  for
example, by ATVs and scooters, golf carts, fork-lifts, tugs,  and
any  other  [motor vehicle].  But it would not apply for  persons
injured while occupying ATVs or scooters, golf carts, fork-lifts,
tugs, and any other [motor vehicle], i.e., for non-pedestrians.6
          Other  courts have applied similar pedestrian  coverage
provisions.   In  State Farm Mutual Automobile Insurance  Co.  v.
Green,7 for example, Green was injured in a collision between his
motorcycle and another vehicle and sought med-pay coverage  under
policies  insuring  his  truck  and  automobile.8   The  policies
provided med-pay coverage to Green if he were struck by a highway
vehicle while not occupying a land motor vehicle.9  Green  argued
that although he was occupying his motorcycle at the time of  the
accident, his motorcycle was not a land motor vehicle within  the
meaning  of the policy language.10  The Indiana Court of  Appeals
made  short  work  of  this argument:  [W]e do  not  believe  any
reasonable  person could honestly conclude that a  motorcycle  is
not  a  land motor vehicle within the plain, ordinary meaning  of
that  term . . . . [The] phrase is not a term of art; nor  is  it
automatically  ambiguous simply because it is not defined  within
the policy.11
          In  Colwell  v. State Farm Mutual Automobile  Insurance
Co.,12  Colwell was driving a minibike when he collided  with  an
automobile  and sought med-pay coverage under his fathers  family
automobile  policy.13  The policy provided med-pay  coverage  for
Colwell  if  he  were  struck  by a  Highway  vehicle  while  not
Occupying  a land motor vehicle.14  The Arizona Court of  Appeals
noted  that although the term land motor vehicle was not  defined
in  the policy, it was not vague or ambiguous (although it  could
be  more  artfully  drawn),15 and concluded that  it  had  little
difficulty  in  holding that the common sense definition  of  the
term  land  motor  vehicle would include such a  gasoline-powered
motorized two-wheeled vehicle.16
          Jirousek  v.  Prudential  Insurance  Co.  of  America17
yielded  a  similar  result  in a different  insurance  scenario.
There, a beneficiary under a life insurance policy sought payment
of  supplemental  benefits after her son  died  in  a  motorcycle
accident.18   Supplemental benefits were payable if the  decedent
had  been struck by a motor vehicle while not himself or  herself
driving  or riding in a motor vehicle.19  The beneficiary claimed
ambiguity  in the wording, arguing that a motorcycle  was  not  a
motor  vehicle  under this provision, but the Ohio Supreme  Court
found  no ambiguity:  Each word has its own meaning in every  day
usage, and the purchaser of insurance . . . would understand  the
limited  aspects of . . . motorcycle, and the broader meaning  of
          motor vehicle. 20  It went on to conclude that the term motor
vehicle  has  a  normal  meaning in common usage  which  includes
motorcycle.21
          Following this line of cases and using the ordinary and
customary   meaning  of  motor  vehicle,  the   only   reasonable
conclusion here is that Joseph Skin was not an insured person for
med-pay coverage under Mrs. Skins policy because he was occupying
a  motor  vehicle  the Nageaks ATV  at the time of his  accident.
The  court  avoids this logical interpretation and implementation
of  the pedestrian coverage under provision (c) by examining that
provision  without considering:  (1) the context of the  original
definition of vehicle; (2) the opening grant of med-pay  coverage
for  an  insured in an accident arising from the use of  a  motor
vehicle;  or (3) the other three provisions defining  an  insured
for  med-pay coverage.22  The court then finds ambiguity  because
the  term motor vehicle contains the word vehicle in plain rather
than  bold typeface, concluding that the distinction between  the
terms  motor  vehicle  and  vehicle  would  be  difficult  for  a
policyholder to understand.23
          The  court  notes but does not distinguish  Progressive
Express  Insurance Co. v. Boyce,24 a case involving a Progressive
policy  and   refuting  the  courts analysis.   Like  Mrs.  Skins
policy,   the  Boyces  automobile  policy  contained  a   general
definitions  section  using boldface type for  specially  defined
words, including vehicle.25  The Boyces sought uninsured motorist
coverage benefits under their policy after they collided with  an
uninsured  vehicle while riding their motorcycle.26   The  Boyces
uninsured  motorist coverage contained an exclusion for  injuries
incurred while using an owned motor vehicle other than a  covered
vehicle, and there was no dispute that the motorcycle was  not  a
covered vehicle under the policy.27  Just as the court does  with
respect  to  Mrs. Skins policy, the Boyce trial court found  that
vehicle  as used in the policy was ambiguous because it was  used
in  boldface form in some places and in non-boldface form in  the
term  motor  vehicle.   Construing the policy  in  favor  of  the
Boyces,  the trial court found that a motorcycle was not a  motor
vehicle  for  purposes  of the exclusion for  uninsured  motorist
coverage.28   But  the  appellate  court  reversed,  finding   no
ambiguity  in  the  policys  use of the  specially  defined  term
vehicle  and holding that, because motor vehicle was not  defined
in  the policy and the statutory definition therefore applied,  a
motorcycle  was  a  motor vehicle for purposes  of  the  coverage
exclusion.29   The  appellate court  in  Boyce  had  the  correct
analysis  and  directly contradicts the courts decision  in  this
case.
          Towne v. Progressive Insurance Co., an unpublished Ohio
appellate  decision  concerning another  Progressive  policy,  is
equally  instructive.30  There, holders of an  automobile  policy
sought  underinsured motorist coverage under their  policy  after
being  involved  in  an accident while on  a  motorcycle.31   The
policy contained the same boldface definition of vehicle as  Mrs.
Skins policy,32 and no one disputed that the motorcycle was not a
vehicle under the policy.33  The policy contained an exclusion in
the  underinsured  motorist coverage for damages  incurred  while
          operating or occupying a motor vehicle other than an expressly
covered  vehicle.34  Just as the court does with respect to  Mrs.
Skins  policy  and as the Boyce trial court did with  the  Boyces
policy,  the Towne trial court agreed with the insureds arguments
that (1) because vehicle in its non-boldface form was not defined
in  the policy, the term motor vehicle was ambiguous, and (2) the
exclusion  for  uninsured  motorist coverage  therefore  must  be
construed  to  mean  vehicle and did not encompass  operating  or
occupying  the motorcycle.35  The Ohio Court of Appeals reversed,
stating:
          The General Definitions section of the policy
          unambiguously states that terms appearing  in
          boldface   type   will  have   the   supplied
          meanings.  Because the term vehicle does  not
          appear in boldface type in the exclusion, the
          policys  definition does not apply.  Instead,
          the ordinary meaning of the word applies.[36]
          
Like  the  Boyce  appellate  court,  the  Towne  appellate  court
correctly  analyzed the policy.  That analysis precludes  med-pay
coverage for Joseph Skin under his mothers policy because he  was
operating a motor vehicle at the time of the accident.
          The  court  instead relies on the Washington  appellate
court decision Getz v. Progressive Specialty Insurance Co.,37 but
the  court  misreads that decision.  Getz raised  the  very  same
question  as  the  Towne  case, but came to  a  different  result
because  of  differences in the language of the  two  Progressive
policies.
          In  Getz  a  longshoreman was operating a  tractor-like
piece of dock equipment known as a hustler when he was struck  by
another  vehicle.38  Getz sought underinsured  motorist  coverage
under his own automobile insurance policy, but his policy had the
same exclusion from coverage as in the Towne case:  coverage  was
excluded for damages incurred while operating a motor vehicle not
expressly  covered  by the policy.39  But unlike  the  policy  in
Towne, Getzs policy had a special definition of motor vehicle  in
its  underinsured  motorist coverage section, a  definition  that
specifically excluded equipment designed or modified for use, and
actually  used, off-road.40  It was undisputed that  the  hustler
was  not  a  motor  vehicle under this definition  and  that  the
coverage  exclusion  was  facially  inapplicable.41   Progressive
nonetheless sought to avoid that result:
          Progressives sole argument rests on its claim
          that [t]hroughout the policy, capital letters
          are  used to denote defined terms.  The  term
          motor  vehicle  appears in  the  regular  use
          exception in lower case letters.  Progressive
          therefore argues that the ordinary definition
          of   the   term,  rather  than   the   policy
          definition, applies.  Progressive provides no
          authority   for   this   premise.    Instead,
          Progressive simply asserts:  This  [practice]
          makes abundant good sense.[42]
          
The  Washington  court correctly rejected Progressives  arguments
because,  unlike the policy in Towne, Getzs policy  contained  no
notice that emphasized terms had special meaning:
          [Progressives argument] might be [correct] if
          the  policyholder only knew  about  it.   But
          nothing  in  the  policy  signals  that   the
          presence  or  absence of capital letters  has
          any significance at all.
          
          . . . .

          So,  the  question  in this  case  is  easily
          answered  as  a  matter of law.   An  average
          person  purchasing insurance would reasonably
          have  believed  the  exclusion  inapplicable.
          Therefore, the exclusion does not apply.[43]
          
          Getz  does not support the courts decision here.   Mrs.
Skins policy plainly states that boldface terms have specifically
defined meanings.  The term motor vehicle is not defined  in  the
policy  and therefore does not have a specially defined  meaning.
Progressive  is not seeking to avoid a specifically defined  term
in  its policy and replace it with common meaning and usage.  Nor
is  Progressive seeking to avoid the common meaning and usage  of
the  term  motor vehicle by pointing to a boldface term  in  some
other  portion  of the policy.  Progressive seeks  to  apply  the
common  meaning  and  usage of the undefined term  motor  vehicle
consistently throughout its policy.
          The  courts reliance on the New York appellate decision
In   re   Progressive  Insurance  Cos.  (Nemitz)44   is   equally
unpersuasive.  There, a passenger on an uninsured  ATV  fell  and
was injured; she sought uninsured motorist coverage under her own
automobile  policy.45   The brief two-page  decision  includes  a
quotation of the policys general definition of vehicle, which  is
similar  to  that  of  Mrs. Skins policy but lacks  any  boldface
type.46   That definition was said to control except as otherwise
defined  in the policy,47 and there was a separate definition  of
uninsured  motor  vehicle  in  the  uninsured  motorist  coverage
section   of  the  policy,  again  without  any  boldface   type:
  uninsured motor vehicle means a motor vehicle that, through its
ownership,  maintenance or use, results in bodily injury  to  the
insured.48   Noting without further explanation  that  the  lower
court  had decided  and the insured did not dispute  that an  ATV
was  not a motor vehicle under the general definition, the  court
decided that the definition of uninsured motor vehicle had to  be
read  to  conform to the general definition.  Thus there  was  no
coverage.49
          Nemitz  provides  no real support for  Joseph  Skin  to
obtain med-pay coverage under Mrs. Skins policy.  Indeed, our own
holding  about the definition of vehicle in Mrs. Skins policy  is
exactly  opposite  of the holding in Nemitz.   While  the  Nemitz
court  concluded  that vehicle and motor vehicle were  synonymous
terms, our analysis of Mrs. Skins liability coverage acknowledged
that  vehicle  and motor vehicle had different  meanings  in  the
context of the policy.
          The  court  states  that Mrs. Skins policy  contains  a
          definition of uninsured motor vehicle just like the policy in
Nemitz.  It does not.  The policy in Nemitz defined the phrase as
a  motor vehicle that, through its ownership, maintenance or use,
results  in  bodily injury to the insured.50  Mrs.  Skins  policy
defines uninsured motor vehicle in significantly more detail:

          PART  III  - UNINSURED/UNDERINSURED  MOTORIST
          COVERAGE
          . . . .
          ADDITIONAL DEFINITIONS
          When used in this Part III:
          . . . .
          5.   Uninsured/underinsured   motor   vehicle
               means a land motor vehicle or trailer of
               any type:
               a.   [which is uninsured];
               b.   [which  is the subject of a  denial
                    of   coverage   or   an   insolvent
                    insurer];
               c.   that is a hit-and-run vehicle whose
                    operator   and  owner   cannot   be
                    identified  and  which  comes  into
                    direct physical contact with:
                    i.   you or a relative;
                    ii.  a   vehicle  that  you  or   a
                         relative are occupying; or
                    iii. a covered vehicle;
                    provided  that the insured  person,
                    or  someone  on his or her  behalf,
                    reports the accident to the  police
                    or  civil authority within  twenty-
                    four (24) hours; or
               d.   [which is underinsured].[51]
                    
If  similarity of language is significant to the courts  reliance
on Nemitz, this is additional reason to find Nemitz unpersuasive.
More  importantly, this policy provision helps reveal  unintended
havoc the courts decision may cause in light of its holding  that
an  insured  is  entitled to rely . . . on a uniform  meaning  of
vehicle throughout the policy, regardless of typeface.
          As   with  the  original  definition  of  vehicle,   an
uninsured/underinsured motor vehicle is a subset  of  the  larger
set  land  motor vehicle.  The subset is further defined  by  the
conditions of (a) - (d), including the condition involving a hit-
and-run   vehicle.   There  also  is  an  exclusion  for  damages
resulting from accidents with motorized vehicles designed for off-
road  use.  Substituting the special definition of vehicle52  for
vehicle  generates  confusing circularity  about   or  perhaps  a
narrowed  definition of  underinsured/uninsured vehicle  (a  land
motor  vehicle  or trailer of any type instead of  a  land  motor
vehicle  or  trailer of any type), further limiting  that  subset
(hit-and-run  vehicle  instead of hit-and-run  vehicle),  and  an
eviscerated coverage exclusion (accident caused by any  motorized
vehicle  instead of caused by any motorized vehicle).  In  short,
          the court significantly changes the meaning of many provisions of
Mrs.  Skins  policy,  perhaps in as many as  fifty-six  different
places,  without  giving those provisions any  real  examination.
How  those changes actually affect coverage under the policy will
be left to future litigation.
          With  that  in  mind, a final analysis of the  critical
elements of the med-pay provision is appropriate:
          INSURING AGREEMENT
          [We  will  pay medical expenses for  injuries
          sustained  by  an insured person,  caused  by
          accident]:
          3.   arising    out    of   the    ownership,
               maintenance or use of a motor vehicle.
          . . . .
          ADDITIONAL DEFINITIONS
          When used in this Part II:
          1.   Insured person and insured persons mean:
          . . . .
               c.   you or any relative when struck  by
                    a  motor  vehicle or trailer  while
                    not occupying a motor vehicle; and
                    
In  finding  coverage  for Joseph Skin, the  court  significantly
changed  what  had been pedestrian coverage under provision  (c).
Based on the courts ruling, motor vehicle in all three places  of
this provision should now be uniformly read as vehicle.  Although
this means that the class of people not occupying a motor vehicle
has  increased  from only pedestrians to anyone not  occupying  a
vehicle,  such as Joseph Skin, it also means that there has  been
a  decrease in the number of motor vehicles covered by the  other
prong  of provision (c):  when struck by a motor vehicle  is  now
when struck by a vehicle.   It is fortuitous for Joseph Skin that
while  negligently operating the Nageaks ATV he struck  a  pickup
truck that qualifies as a vehicle, instead of another ATV or some
other  motor  vehicle outside the policy definition  of  vehicle.
But  by interpreting Progressives policy language to find med-pay
coverage  for  Joseph Skin, the court significantly  changes  the
pedestrian coverage Progressive intended to provide.53
          Because  the court finds ambiguity where there is  none
and  unnecessarily  changes coverage  throughout  the  policy,  I
dissent.
          In the Supreme Court of the State of Alaska
                         
Progressive Casualty Insurance Co.,            )
                                ) Supreme Court No. S-12586
                                   Appellants, )
                   v.           )            Order
                                )   Petition for Rehearing
Sarah Skin, Joe Skin, Eva Nageak,              )
Benjamin Nageak, and Bonnie Nageak,            )
                                )
                                    Appellees.  )        Date  of
Order: 07/10/2009
                                )
Trial Court Case # 2BA-05-00001 CI

          Before:   Carpeneti, Chief Justice, Eastaugh, Fabe, and
                    Winfree,   Justices,  and  Matthews,   Senior
                    Justice.*

     On  consideration  of the Petition for  Rehearing  filed  on
3/16/09,  the Opposition filed on 3/30/09, and the Reply  to  the
Opposition filed on 4/7/09,

     It is Ordered:
                              
     1.   The Petition for Rehearing is Granted.  The text of the
          courts  opinion at page 21 and footnote  38  have  been
          modified.

     2.     Opinion  No.  6343,  issued  on  March  6,  2009,  is
Withdrawn.

     3.    Opinion No. 6387 is issued on this date in its  place,
reflecting the modifications to the opinion.
                                             
     Entered by direction of the court.

                                   Clerk of the Appellate Courts
     
                                   
                                   Marilyn May
Progressive Casualty Ins. Co. v. Skin
Supreme Court No. S-12586
Order of July 10, 2009
Page Two

cc:  Supreme Court Justices
     Judge Erlich
     Trial Court Appeals Clerk
     West Publishing
     Other Publishers

Distribution:

     Aisha T Bray
     Guess & Rudd
     100 Cushman Street Suite 500
     Fairbanks AK 99701

     Michele Power
     Power and Brown LLC
     P O Box 1809
     Bethel AK 99559

     Jason Skala
     Law Office of Jason Skala
     11517 Old Glenn Hwy  Suite 202
     Eagle River AK 99577

     Dennis M Mestas
     Law Offices of Dennis M Mestas
     745 West Fourth Avenue Suite 306
     Anchorage AK 99501

     Rebecca J Hozubin
     Wilkerson Hozubin & Burke
     310 K Street   Suite 405
     Anchorage AK 99501

_______________________________
     1      The  policy  contained  $50,000/$100,000  limits  for
liability   coverage,  $50,000/$100,000  limits   for   uninsured
motorist/underinsured motorist (UM/UIM) bodily injury coverage, a
limit  of  $25,000  for  UM/UIM  property  damage  coverage,  and
comprehensive  and  collision coverage for the  Chevrolet  Prizm,
although Skin later decided not to purchase the Prizm.

     2     In  response to the question whether she had disclosed
all the residents of your household, Skin marked both the Yes and
No  boxes.   At some point later, an InsuranceMart agent  made  a
note  on  the page indicating that Skin, whose first language  is
Inupiaq, had not understood the question.

     3     Evas  injuries include a permanently crippled, painful
and  unsightly leg.  Josephs injuries, although temporary, caused
him to incur over $17,000 in medical expenses.

     4      As   explained  further  below,  Progressive  assigns
distinct  definitions to contractual terms in bold  versus  plain
typeface.

     5    The General Definitions section of the policy explains:

          Vehicle means a land motor vehicle:

          a.   of  the private passenger, pickup  body,
               or sedan delivery type;
               
          b.    designed for operation principally upon
          public roads;
          
          c.   with at least four (4) wheels; and

          d.   with  a  gross vehicle weight of  10,000
               pounds or less;
               
          which is not a rental vehicle.

     6     The  named driver exclusion in the Progressive  policy
states:

          If  you  have asked us to exclude any  person
          from coverage under this Policy, then we will
          not  provide  coverage for any claim  arising
          from  an accident or loss involving a vehicle
          or  rental  vehicle  being  operated  by  the
          excluded person.  THIS INCLUDES DAMAGES  MADE
          AGAINST YOU, A RELATIVE, OR ANY OTHER  PERSON
          OR  ORGANIZATION  THAT IS VICARIOUSLY  LIABLE
          FOR  AN ACCIDENT ARISING OUT OF THE OPERATION
          OF A VEHICLE BY THE EXCLUDED DRIVER.
          
     7    2 P.3d 1199 (Alaska 2000).

     8    Newton v. Magill, 872 P.2d 1213, 1215 (Alaska 1994).

     9    Id.

     10    AS 28.22.101(c).

     11    AS 28.22.101(a).

     12     Nelson  v. Progressive Cas. Ins. Co., 162 P.3d  1228,
1235-36 (Alaska 2007) (upholding the named driver exclusion  term
within  a  similar  Progressive  insurance  policy  as  a   valid
exception  to  the  requirements  for  an  owners  policy   under
AS 28.22.101(a)).

     13    See Purvis v. Progressive Cas. Ins. Co., 127 P.3d 116,
120 (Idaho 2005) (That the policy does not state whether it is an
operators  policy or an owners policy, provides both  owners  and
operators   coverage,  and  states  it  has   some   non-standard
restrictions simply does not show the policy is ambiguous.).

     14    Allstate Ins. Co. v. Teel, 100 P.3d 2, 4 (Alaska 2004).

     15    758 P.2d 1248, 1250 (Alaska 1988).

     16    The Division of Insurance appears to have endorsed this
theory  as  well.  In a 1999 letter to Progressive, the  Division
cited  Hillman for the proposition that the definitional  section
cannot  add  substantive coverage and explained that  [l]ikewise,
substantive exclusions should be found in the exclusions section,
not  in definitional provisions.  The letter strongly recommended
that  all  exceptions to the definition of Uninsured/Underinsured
Motor Vehicle must be modified or deleted.

     17    758 P.2d at 1250.

     18     The  Certificate of Origin for the Nageaks ATV  warns
that  the vehicle was not manufactured for use on public streets,
roads or highways.

     19     As  the Nageaks point out, operating a golf  cart  on
public streets without a license is also legal in Barrow.

     20    AS 28.90.990(16).
          
     21    In addition to the unambiguous terms of the Progressive
policy,  we  are  further persuaded by the  Department  of  Motor
Vehicles  exclusion of ATVs and other recreational vehicles  from
Alaskas mandatory automobile insurance laws.

     22     Had we determined that the ATV qualified as a vehicle
under  the  policy, the named driver exclusion in the Progressive
policy  might have barred Josephs ability to recover medical  pay
benefits  under this theory of coverage.  But the exclusion  only
applies to accident or loss involving a vehicle or rental vehicle
being  operated  by  the excluded person.  Because  the  ATV  was
neither  a vehicle nor a rental vehicle for the purposes  of  the
policy,  Joseph does not qualify as a driver for the purposes  of
the exclusion.  The policy thus affords him the same coverage for
medical payments arising out of this accident as it would  if  he
had been struck while walking across the street.

     23     Getz v. Progressive Specialty Ins. Co., 22 P.3d  835,
837-39 (Wash. App. 2001).

     24    Id. at 836.

     25    Id. at 837.

     26    Id. at 837-38.

     27    Id. at 839.  In support of its holding, the Getz court
noted  that  nothing in the policy signals that the  presence  or
absence of capital letters has any significance at all.   Id.  at
838.

     28    In re Progressive Ins. Cos. (Nemitz), 834 N.Y.S.2d 394,
396 (N.Y. App. Div. 2007).

     29    Id. at 395.

     30    Compare id. at 396, with supra note 5.

     31    Id. at 396.

     32    Id.

     33    See id.

     34     Progressive has convinced at least one court of  this
argument.  See Progressive Express Ins. Co. v. Boyce, 821 So.  2d
445, 446 (Fla. Dist. App. 2002) (holding that insureds motorcycle
qualified  as a motor vehicle because [t]he word vehicle  in  the
owned  but  uninsured exclusion is not boldfaced, and thus,  [the
earlier policy] definition would not apply).

     35     The  dissent suggests that this courts holding  could
operate  to  shrink  the scope of coverage  in  some  situations.
Dissent  at 37-39.  But our holding is based on the ambiguity  of
the  policys  language,  and  such  ambiguities  must  always  be
construed  in  favor of the insured, not the  insurer.   West  v.
Umialik  Ins.  Co.,  8 P.3d 1135, 1138 (Alaska  2000)  (It  is  a
settled  principle  that ambiguities in an insurance  policy  are
construed in favor of the insured.).

     36    2 P.3d 1199 (Alaska 2000).

     37     As  we observed in our discussion of medical payments
coverage, the named driver exclusion only applies to accident  or
loss involving a vehicle or rental vehicle being operated by  the
excluded person.

     38     In  Fulton  we  expressed our  desire  to  discourage
overreaching  by  insurers.  While this is  indeed  an  important
consideration, we also recognize that coverage by estoppel is  an
extreme  remedy.  We thus limit our Fulton holding by  concluding
that  coverage by estoppel, the usual remedy for breaches of  the
insurers  duty  to defend, does not apply where  an  insurer  has
violated  only its duty of disclosure with regard to  a  coverage
defense that is unrelated to the coverage defense that forms  the
basis for the insurers ultimate denial of coverage.

1     Progressive  assigns  distinct definitions  to  contractual
terms  in bold versus plain typeface.  In the General Definitions
section,  where the definition of vehicle is located, the  policy
states:   Except  as  otherwise defined  in  this  policy,  terms
appearing in boldface will have the following meaning:  . . . .

     2     Allstate  Ins.  Co. v. Falgoust,  160  P.3d  134,  139
(Alaska 2007).

     3      Websters  Third  New  International  Dictionary  1476
(2002).

4       The   Nageaks   and   Skins   clearly   understand    the
distinction  between  a  vehicle  and  a  motor  vehicle.   Their
argument  for  liability coverage for Joseph Skin  was  that  the
common meaning and usage of motor vehicle should replace the term
vehicle in the policy definition of non-owned vehicle so that the
Nageaks  ATV would be included in liability coverage  as  a  non-
owned vehicle.  We rejected that argument.

5     The  superior  court  found  med-pay  coverage  for  Joseph
under  provision  (b),  but  the court correctly  concludes  that
Joseph could not be an insured for coverage under (b) because the
ATV  is not a vehicle as defined by the policy.  The court  could
not  reach  this conclusion without expressly acknowledging  that
the ATV is a motor vehicle but not a vehicle.

     6     Med-pay  coverage is not required by Alaskas mandatory
insurance  laws.  See AS 28.22.101.   Progressive is entitled  to
provide,  and to limit, med-pay coverage as it chooses.   See  AS
28.22.121.

     7    474 N.E.2d 1037 (Ind. App. 1985).

     8    Id. at 1037-38.

     9    Id. at 1038.

     10   Id.

     11   Id.

     12   600 P.2d 751 (Ariz. App. 1979).

     13   Id. at 751.

     14   Id. at 752.

     15   Id.

     16   Id.

     17   271 N.E.2d 866 (Ohio 1971).

     18   Id. at 867.

     19   Id.

20   Id. at 868.

     21    Id.   An Ohio appellate court later relied on Jirousek
to deny med-pay coverage for an injured motorcycle rider under an
automobile  policy  providing med-pay  coverage  for  any  family
member  struck  by a highway vehicle while not occupying  a  land
motor  vehicle,  because  the motorcycle  was  a  motor  vehicle.
Katanik v. State Farm Mut. Auto. Ins. Co., 455 N.E.2d 1340, 1342-
43 (Ohio App. 1982) (emphasis in original).

     22    This is inconsistent with the rule that ambiguity  can
exist  only  when  the  policy, taken as a whole,  is  reasonably
subject  to  differing interpretations.  Dugan  v.  Atlanta  Cas.
Cos., 113 P.3d 652, 655 (Alaska 2005).

     23    The court notes that the superior court found at least
fifty-six  instances  in the policy where the  terms  vehicle  or
motor  vehicle are not boldfaced and create confusion.  We  noted
no confusion or ambiguity in the non-boldface terms motor vehicle
and gross vehicle weight when examining the policy definition  of
vehicle  and concluding that an ATV is not a vehicle.  The  court
similarly  noted  no confusion or ambiguity in  the  non-boldface
term motor vehicle in the grant of med-pay coverage.

     24   821 So. 2d 445 (Fla. App. 2002).

     25   Id. at 445-46.

     26   Id.

     27   Id. at 445.

     28   Id. at 446.

     29   Id.

     30    2005  WL 3588425, 2005-Ohio-7030  (Ohio App.).   Under
Ohios  rules, unpublished court of appeals opinions may be  cited
as  legal authority and weighted as deemed appropriate by courts.
Ohio R. Reporting Op. 4.

     31   Towne, 2005 WL 3588425 at *1.

     32   Id. at *2.

     33   Id. at *2 n.2.

34   Id. at *2.

     35   Id. at *1.

     36   Id. at *3.

     37   22 P.3d 835 (Wash. App. 2001).

     38   Id. at 836.

     39   Id. at 837.

     40   Id.  The definition is as follows:

          MOTOR VEHICLE means a land motor vehicle or a
          utility trailer but does not mean a vehicle:
          a.   or  any  equipment designed or  modified
               for  USE  primarily  off  public  roads,
               while not on public roads. . . .
               
     41   Id.

     42   Id. at 838.

43   Id.

     44   834 N.Y.S.2d 394 (N.Y. App. Div. 2007).

     45   Id. at 395.

     46   Id. at 396 n.1.

     47   Id. at 396.

     48   Id.

     49   Id.

50   Id.

     51   Mrs. Skins uninsured motorist coverage also contains an
exclusion for accidents caused by any motorized vehicle  designed
mainly for off-road use, along with a number of other exclusions:

          EXCLUSIONS  -  READ THE FOLLOWING  EXCLUSIONS
          CAREFULLY.  IF AN EXCLUSION APPLIES, COVERAGE
          WILL NOT BE AFFORDED UNDER THIS PART III.
          
          Coverage  under this Part III is not provided
          for bodily injury sustained by any person:
          
          . . . .

          9.   In  an  accident caused by any motorized
               vehicle or equipment designed mainly for
               use  off  public  roads,  while  not  on
               public roads.
               
     52     The  general  definition  of  vehicle  apparently  is
modified  by  the courts holding to state that  a  vehicle  is  a
subset  of  the  category land motor vehicle but  is  within  the
subset only if it has a gross vehicle weight of 10,000 pounds  or
less.  What this now means is unclear.

     53    The  court  suggests that the ambiguity it  relies  on
could  not  be applied to reduce coverage but only to expand  it.
It is a dubious proposition that an insured could apply different
meanings to the term motor vehicle when it is used two times  for
the same purpose in a single sentence  as in provision (c) of the
med-pay coverage.

     *    Sitting pro tem by special order of the Chief Justice.

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