Runte v. Shelter Ins. Cos., No. 106,101.

281 P.3d 1146

Christopher RUNTE, Appellee,

v. SHELTER INSURANCE COMPANIES, Appellant,andFarm Bureau Mutual Insurance Company, Appellee.

No. 106,101.

Court of Appeals of Kansas.

Aug. 10, 2012.

Appeal from Seward District Court; Kim R. Schroeder, Judge.

Michael J. Norton and Rachel Parr, of Foulston Siefkin LLP, of Wichita, for appellant Shelter Insurance Companies.

Randall E. Fisher, of Wichita, for appellee Christopher Runte.

Bradley C. Ralph, of Williams, Malone & Ralph, P.A., of Dodge City, for appellee Farm Bureau Mutual Insurance Company.

Before GREENE, C.J., GREEN and BUSER, JJ.

MEMORANDUM OPINION

GREEN, J.

Christopher Runte, the plaintiff, was injured in a two-car accident in Liberal, Kansas. He was a front seat passenger in a car driven by Nancy Guzman. The car was insured by Shelter Mutual Insurance Companies (Shelter). The tortfeasor, who caused the collision, was insured by State Farm Mutual Automobile Insurance Company (State Farm), and he carried bodily injury liability limits of $25,000 per person. State Farm tendered to Runte the $25,000 policy limits. Runte was insured under an automobile policy with Farm Bureau Mutual Insurance Company (Farm Bureau). Runte suffered personal injury and noneconomic damages in excess of $100,000. Runte's Farm Bureau policy had underinsured motorist (UIM) limits of $100,000. Guzman's Shelter policy had UIM limits of $50,000.

When Runte made a UIM claim against Farm Bureau for payment of the $75,000 in UIM coverage available under his policy, Farm Bureau denied Runte's claim. Farm Bureau contended that it was not required to pay any UIM benefits until Runte recovered from Shelter under the policy of insurance that insured Guzman. Shelter denied that its policy furnished UIM coverage to Runte. Runte filed suit against both Shelter and Farm Bureau.

Shelter and Farm bureau both moved for summary judgment. The trial court granted summary judgment in favor of Farm Bureau based on the ambiguous language of Shelter's policy. On appeal, Shelter contends that the trial court erred in granting summary judgment to Farm Bureau. We agree. Accordingly, we reverse and remand to the trial court with directions to enter summary judgment in favor of Shelter.

On July 15, 2007, Runte was a passenger in a car driven by Guzman. Guzman's car collided with a car driven by Vernon Lewis. As a result of this accident, Runte was injured. Lewis' car was insured by State Farm. State Farm tendered the policy liability limits of $25,000 to Runte.

Guzman's car was insured by Shelter, and it carried UIM limits of $50,000 per person. Runte was insured by a policy with Farm Bureau that carried UIM limits of $100,000 per person. Runte made a claim for UIM benefits under Shelter's policy, but Shelter denied Runte benefits arguing that Runte did not qualify as an “insured” under Shelter's policy. Runte also made a claim for UIM benefits under Farm Bureau's policy, but Farm Bureau denied the benefits because Farm Bureau believed that Shelter had the primary policy of coverage and that Shelter should pay the UIM benefits first and then Farm Bureau would cover any excess amount owed. Runte filed suit against Shelter and Farm Bureau, and both Shelter and Farm Bureau moved for summary judgment.

The trial court granted summary judgment in favor of Farm Bureau finding that the definition of “use” in Shelter's policy was ambiguous and it violated public policy. The trial court further found that Runte was an insured under Shelter's policy, and as a result, the trial court determined that Shelter had the primary policy and must pay its UIM limits first.

Did the Trial Court Err in Granting Summary Judgment to Farm Bureau, Holding That Shelter's Insurance Policy Furnished UIM Benefits to Runte?

Shelter argues that the trial court erred in granting summary judgment to Farm Bureau based on its finding that Runte qualified as an insured under Shelter's policy.

This court's standard of review is well established:

“ ‘ “Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.’ “ [Citations omitted.]” Nungesser v. Bryant, 283 Kan. 550, 566, 153 P.3d 1277(2007).

The parties stipulated to the facts and agreed that the facts are undisputed. The disputed issue involves the trial court's conclusions of law, particularly its interpretation of the Shelter insurance contract. This court has unlimited review of questions of law. See Nungesser, 283 Kan. at 566–67.

Coverage Issue

When, as in this case, an insured files suit against its insurer seeking coverage under a policy of insurance, the insured has the burden of proving he or she falls within the coverage provisions of the policy. Brumley v. Lee, 265 Kan. 810, 816, 963 P.2d 1224 (1998). More specifically, “ ‘the insured has the burden of proof to establish the nature and extent of any loss and that the loss claimed was caused by one of the perils insured against (“covered”) by the policy.’ “ Kansas Farm Bureau Ins. Co. v. Reynolds, 16 Kan.App.2d 326, 328, 823 P.2d 216 (1991). Assuming the insured can satisfy this burden, the insurer then has the burden of proving that any exclusionary clauses within the policy apply to preclude coverage. Exploration Place, Inc. v. Midwest Drywall Co., 277 Kan. 898, 906, 89 P.3d 536 (2004).

In its first issue on appeal, Shelter contends that the trial court erred in finding that Runte qualified as an insured under Shelter's policy.

The resolution of the issue of coverage requires an interpretation of the Shelter insurance policy. The interpretation of a written insurance policy based on stipulated facts is a question of law over which an appellate court has unlimited review. Colfax v. Johnson, 270 Kan. 7, 10, 11 P.3d 1171 (2000).

It is undisputed that when the accident occurred Runte was a passenger in Guzman's car. Does Runte qualify as a “user” under Shelter's policy when he was a passenger in the car? If Runte is a user under the policy, then he qualifies as an insured and is entitled to receive UIM benefits from Shelter. To answer this question, we must consider the terms of Shelter's insurance policy and determine whether Runte fits within the policy's definition of “user.”

Shelter's policy for the underinsured motorist coverage states: “If an insured sustains bodily injury as a result of an accident involving the use of a motor vehicle, and is entitled to damages as a result of that bodily injury, we will pay the uncompensated damages, subject to the limit of our liability stated in this Coverage.”

The term “insured” is further defined as follows: “(a) You; (b) any relative; and (c) any other individual using the described auto with permission.”

Shelter's policy defines “use” as “operation and maintenance.” The policy further defines “operate” as follows: “physically controlling, having physically controlled, or attempting to physically control, the movements of a vehicle.” The policy also defines “maintenance” as follows: “[T]he performance of services which are necessary to keep a motor vehicle in working order or to restore it to working order. It does not include the installation or servicing of equipment which is not usual and incidental to the operation of an auto.”

In denying Runte's claim for UIM benefits, Shelter stated that Runte did not meet the policy's definition of the term “insured” as defined in the policy.

The trial court concluded that Runte did meet the policy requirements for coverage and granted summary judgment to Farm Bureau based on Shelter's definition of “use” being too narrow and against public policy. In concluding that Shelter was required to provide UIM coverage to Runte as a user and, therefore, as an insured, the trial court reasoned:

“28. The term ‘use’ in a coverage clause of an insurance agreement is given a broad, general and comprehensive meaning affecting broad coverage and it includes any exercise of control over the vehicle regardless of its purpose, extent, or duration. [Citation omitted.]

....

“33. To this Court the term ‘use’ is not ambiguous but how Shelter Insurance is choosing to apply it to a passenger under its policy is.

....

“35. The Shelter policy is an attempt to dilute the intent of K .S.A. 40–284 and K.S.A. 40–3107(b) to deny coverage when a passenger is riding in its insured's car and struck by an underinsured motorist.

“36. This Court agrees it cannot rewrite the policy, but in the same token the policy cannot change the intended application of the statute to provide broad coverage by our legislature and violate public policy.”

Shelter argues that its policy does not furnish UIM coverage to Runte. Shelter contends that the term “use” as defined in its policy is not ambiguous because it is clearly defined in the policy. Shelter argues that Kansas courts have consistently allowed, and even encouraged, insurance carriers to define the term “use” in their insurance policies. Shelter maintains that Runte does not fit within the policy's definition of “use” because he was not maintaining or operating the car.

We interpret the terms of an insurance policy by applying the following rules of construction:

“The language of an insurance policy, like any other contract, must, if...