This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Metropolitan Property & Casualty Insurance Company,
as successor-in-interest to Economy Premiere Assurance Company,
Kenneth Koehnen, et al,
William Roger Wetterstrom, et al.,
Filed December 19, 2006
Washington County District Court
File No. C7-05-4971
William L. Davidson, Timothy J. O’Connor, Paulette Steffes Sarp, Lind, Jensen, Sullivan & Peterson, P.A., 150 South Fifth Street, Suite 1700, Minneapolis, MN 55402 (for respondent)
Bernie M. Dusich, Joshua A. Tuchscherer, Sieben, Polk, LaVerdiere & Dusich, P.A., 999 Westview Drive, Hastings, MN 55033 (for appellants)
Considered and decided by Kalitowski, Presiding Judge; Lansing, Judge; and Dietzen, Judge.
Appellants challenge the district court judgment in which it granted respondent’s cross motion for summary judgment, arguing that the district court erred in concluding that respondent had no duty to defend or indemnify its insured, who was involved in a car accident with appellant, for no-fault benefits on the grounds that the “regular-use” and the “business-use” exclusions did not apply. Because the district court properly applied the law and properly interpreted the insurance policy in question, we affirm.
In October 2003, appellant Kenneth
Koehnen was driving his motorcycle in the left lane of eastbound Highway 36
At the time of the accident, Wetterstrom
was the manager and sole employee of Wescott Auto Sales, which was owned by his
daughter Lisa Jerentosky and her husband Scott Jerentosky. Wetterstrom was responsible for the general
management of the business, which included the purchase and sale of vehicles
for the business. As part of the
business, Wetterstrom purchased vehicles at auctions for resale by Wescott Auto
Sales. After a vehicle was purchased,
Wetterstrom would clean it up and get it ready for sale. When it was ready for sale, Wetterstrom would
display it at the Wescott Auto Sales lot in
The 2003 Buick that was involved in the accident had been recently purchased at an auction. On the afternoon of the accident, Wetterstrom picked up the vehicle from the repair shop in Lake Elmo, drove it to his home to pick up his checkbook, and was in the process of driving the vehicle to a location in North St. Paul where he intended to prepare the vehicle for sale by washing it, checking the oil, and filling it with gas. The accident occurred on his way to that location.
Auto-Owners Insurance Company undertook the defense of Wetterstrom and Wescott Auto Sales under Wescott’s comprehensive general liability (CGL) insurance policy. Wetterstrom also tendered the complaint to his home and auto owners’ insurer, Economy Premiere Assurance Company, seeking further indemnification for the accident. Subsequently, respondent Metropolitan Property and Casualty Insurance Company, a successor-in-interest to Economy Premiere, brought a declaratory judgment action asserting that it had no duty to indemnify Wetterstrom for the claims arising out of the accident on the grounds that (1) the 2003 Buick owned by Wescott Auto Sales was not a covered vehicle under Metropolitan’s insurance policy, and (2) the “regular-use” and “business-use” exclusions precluded coverage for the claims. Subsequently, Koehnen and his wife Kim Koehnen (appellants) settled with Auto-Owners, the CGL insurer, but reserved their rights against respondent.
Both parties filed motions for summary judgment. Following a hearing, the district court granted respondent’s motion for summary judgment concluding that the “regular-use” and ‘business-use” exclusions precluded coverage under the insurance policy. This appeal follows.
D E C I S I O N
Appellants argue that the
district court erred in concluding that the “regular-use” exclusion of the
insurance policy precluded coverage. “Regular
use” is an unambiguous term, to be given its “common and ordinary
meaning.” Grinnell Mut. Reinsurance Co. v. Anderson, 427 N.W.2d 274, 275-76
(Minn. App. 1988) (citing Boedigheimer v.
At the time of the accident, Wetterstrom was covered by respondent’s home and auto owner’s insurance policy, which states:
Motor Vehicle Liability Protection
PAK II covers you and your family for any liability caused through the use of any motor vehicle you or they own or lease that is listed on the Coverage Summary. . . . In addition we will cover:
1. Vehicles, or trailers designed for use with any motor vehicle covered by PAK II, you or your family do not own as long as they are not made available for you or your family’s regular use . . . .
To determine whether
a vehicle was available for regular use, we consider (1) any agreement between
the insured and the owner of the involved vehicle, (2) the actual use of the
vehicle by the insured, and (3) the purpose for including nonowned automobile
provisions in insurance policies. Grinnell Mut., 427 N.W.2d at 276. Use of a non-owned vehicle for business purposes may
constitute the regular use of that vehicle.
First, we consider
any agreement between the insured and the owner of the vehicle.
Second, we consider the actual usage of the involved vehicle by the insured. Grinnell Mut., 427 N.W.2d at 276. The district court found that Wetterstrom drove Wescott’s cars back from auctions or dealers after purchase, and drove cars to and from repair shops, gas stations, car washes, and shops for interior cleaning to prepare the cars for resale. Additionally, “[h]e was allowed to drive the cars home at night or over the weekend and he was allowed to make other stops with the cars (as he stopped home on the day of the accident on the way to the cleaning).” As the dealership’s manager and sole employee, Wetterstrom had regular access to all of the cars to prepare them for sale.
attempt to distinguish LeDoux on the
basis that LeDoux used the vehicle for three hours, five days a week. See id.
(vehicle was used daily for newspaper delivery). Here, the accident occurred the first time
Wetterstrom drove the 2003 Buick. But,
as the district court pointed out, even though this was the first time he drove
this particular car, Wetterstrom regularly had access to all vehicles owned by
the dealership. It found that there is
“no difference between a single furnished car for regular use or any car from a
group of automobiles from which an automobile is regularly furnished for
driving.” Cf. Grinnell Mut., 427 N.W.2d at 275 (car involved was one of five
cars owned by the business). See also Kenney v. Employers’ Liability
Third, we consider the
purpose of including non-owned vehicle provisions in insurance policies, when
determining whether the vehicle was available for the insured’s regular
Mut., 427 N.W.2d at 276. “Nonowned
automobile provisions in automobile liability insurance contracts were not
intended to permit insureds to drive any number of additional vehicles and
claim coverage for all of them.”
Thus, the agreement between Wescott Auto Sales and Wetterstrom, Wetterstrom’s actual use, and the provision’s purpose support a finding of regular use. Grinnell Mut., 427 N.W.2d at 276 (identifying regular use factors). As such, the court properly applied the law in finding that Wetterstrom had regular use of the 2003 Buick involved in the accident, and the policy exclusion precludes coverage.
Appellants argue that the
district court erred in concluding that the business-use exclusion in
Wetterstrom’s insurance policy precluded coverage. Specifically, appellants argue that the
business-use exclusion is ambiguous and should be resolved against the insurer. Alternatively, appellants argue that the
business-use exclusion contravenes
A. Is the Business-Use Exclusion Ambiguous?
that the language of the business-use exclusion is ambiguous. Whether a contract is ambiguous is a question of law that we
review de novo. Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640,
643 (Minn. App. 1985), review denied
(Minn. Jun. 24, 1985). “A contract is
ambiguous if it is reasonably susceptible to more than one
construction.” City of
Undefined terms of an
insurance policy must be given “their plain, ordinary, or popular meaning.” Smith
v. St. Paul Fire & Marine Ins. Co., 353 N.W.2d 130, 132 (
Wetterstrom’s insurance policy states, “we do not cover any liability or claims connected with any business, profession, or occupation. But we do cover business use of the private passenger automobiles listed on the Coverage Summary.” The district court found that the language was “plain and unambiguous,” that the vehicle was not listed on the coverage summary, and that Wetterstrom was using the vehicle for a business purpose. Appellants argue that the language of the policy is limited to claims like malpractice, fraud, or employment issues that may arise during the operation of a business.
We conclude that the policy language is not ambiguous. The policy language specifically excludes, except in the case of an automobile listed on the coverage summary, “any liability or claims connected with any business, profession or occupation” unless subject to the exception for covered automobiles. (Emphasis added). There is no dispute that the vehicle in question, the 2003 Buick, was not listed on the coverage summary and was being driven for business at the time of the accident.
Appellants next argue that the business-use exclusion conflicts with another policy provision. That provision states:
We also cover you and your family if you or they give someone else permission to drive a vehicle covered by PAK II. The driver is also covered as long as he or she uses the vehicle for the purpose intended when permission was given. But we won’t cover anyone other than you or your family for the use of a vehicle covered by PAK II during the operation of an automobile business. An “automobile business” is selling, repairing, servicing, leasing, towing, transporting, fueling, storing or parking motor vehicles.
This policy provision functions to limit liability when a covered vehicle is driven by someone other that the vehicle owner or family member. The first two sentences extend coverage to the insured vehicle owner or family member and the permissive user, so long as the vehicle is used for the intended purpose. The third sentence restricts coverage to the insured vehicle owner and his family when the permissive driver uses the vehicle in an automobile business.
Appellants argue that the third sentence creates a right to coverage any time the insured or family member engages in an automobile business. They assert that because Wetterstrom used the 2003 vehicle in an automobile business, i.e., the sale of cars, that the policy language expressly requires Metropolitan to provide coverage. Appellants acknowledge that such an interpretation conflicts with the business-use exclusion, but argue that the conflict creates an ambiguity that must be resolved against the insurer.
But, this provision is inapplicable to Wetterstrom’s situation for several reasons. First, the provision in question is limited to the circumstance where the insured or a family member gives permission to a third party to drive an insured vehicle. Here, the vehicle in question was not loaned by the insured to a third party. Rather the opposite is true; Wetterstrom, the insured, was the user of a car owned by Wescott Auto Sales. Second, contrary to appellants’ interpretation, the provision creates no independent right to coverage of an accident that occurs during the operation of an automobile business. Instead, the policy limits coverage of vehicles used in an automobile business to the insured and the insured’s family, and therefore does not contradict the policy’s limitation of the business-use exclusion to vehicles listed on the coverage summary. As such, there is no conflict between the business-use exclusion and the provision cited by appellants, and no ambiguity is created.
B. Does the Business-Use Exclusion Contravene
that the business-use exclusion in Wetterstrom’s policy contravenes
Minnesota No-Fault Automobile Insurance Act, every automobile owner must
maintain a plan of reparation security that includes, inter alia, residual
liability insurance. Minn. Stat.
§ 65B.48, subd. 1 (2004). The “residual
liability insurance policy shall be excess of a nonowned vehicle policy whether
the nonowned vehicle is borrowed or rented, or used for business or pleasure. A
nonowned vehicle is one not used or provided on a regular basis.”
subdivision’s purpose is to identify the order of priority for insurance
coverage. See State Farm Mut. Auto. Ins. Co. v. Universal Underwriters Ins. Co.,625 N.W.2d 160, 164 (