Supreme Court of Ohio.

SAUER et al.

v.

CREWS et al., Appellees; Century Surety Company, Appellant.

 

No. 2013–0283.

Submitted Feb. 26, 2014.

Decided Sept. 2, 2014.

SAUER ET AL. v. CREWS ET AL., APPELLEES; CENTURY SURETY COMPANY, APPELLANT.

 

APPEAL from the Court of Appeals for Franklin County, No. 12AP–320, 2012-Ohio-6257.

SYLLABUS OF THE COURT

*1 In determining whether an insurance policy provision is ambiguous, a court must consider the context in which the provision is used.

Plymale & Dingus, L.L.C., and M. Shawn Dingus, Columbus, for appellees.

 

Davis & Young and Richard M. Garner, Westerville, for appellant.

 

Koehler Neal, L.L.C., and Timothy J. Fitzgerald, Cleveland, urging reversal for amicus curiae Ohio Association of Civil Trial Attorneys.

 

LANZINGER, J.

LANZINGER, J.

 

{¶ 1} In this case, we are again asked to consider the language of an insurance policy. Specifically, the question is, Should ambiguity be determined only after the language at issue is examined in light of the overall context of the policy? We answer in the affirmative, i.e., that in determining whether a policy provision is ambiguous, courts must consider the context in which the specific language of the provision is used. Based on this rule, we conclude that the policy provision in this case is not ambiguous and does not provide coverage.

 

I. Case Background

{¶ 2} On November 24, 2006, Julia S. Augenstein’s vehicle collided with a flatbed trailer owned by appellees, Stinson J. Crews and Stinson Crews Trucking (collectively, “Crews”). During paving work on Columbus Street in Grove City, Ohio, Crews had parked without a permit in a no-parking zone and blocked most of Augenstine’s lane of travel. Augenstine, who was 86 years old, died as a result of the injuries she sustained in the accident.

 

{¶ 3} The executors of Augenstine’s estate, Sharon A. Sauer and Karen S. Streets, filed a survivorship action and an action alleging wrongful death against Crews; Raymond L. Jackson, the driver of a dump truck involved in the paving work; and Mariann Jackson, the owner of the dump truck driven by Raymond.FN1 Crews then filed a third-party complaint against appellant, Century Surety Company (“Century”), seeking a declaration that Crews is entitled to coverage in the wrongful-death action as an insured under a commercial general-liability (“CGL”) policy issued by Century. Century counterclaimed, seeking its own declaration that the CGL policy excludes coverage in the wrongful-death action. Before trial, the liability and coverage portions of the case were bifurcated. The court held a bench trial on the issue of liability.

 

{¶ 4} The trial court found that Crews’s negligence was the sole proximate cause of the accident and entered a judgment of $251,552.04 in compensatory damages against Crews. The judgment entry stated that there was no just cause for delay, thus permitting an immediate appeal even though the third-party complaint and counterclaim had not been resolved.

 

{¶ 5} On appeal, Crews argued that it was not solely liable for the accident. Crews asserted that Augenstein was herself partly liable due to her own negligence. Crews contended that Augenstein failed to maintain an assured clear distance ahead in violation of R.C. 4511.21(A), she operated her motor vehicle while under the influence of alcohol in violation of R.C. 4511.19(A)(1)(a), and she was driving with significantly reduced vision due to macular degeneration. The Tenth District Court of Appeals rejected these arguments and affirmed the judgment of the trial court assigning Crews sole liability for the accident. Sauer v. Crews, 10th Dist. Franklin No. 10AP–834, 2011-Ohio-3310, 2011 WL 2586712.

 

*2 {¶ 6} On remand, both Crews and Century agreed to submit Crews’s declaratory-judgment action to the trial court for a decision on the briefs. After examining the CGL policy that Century issued to Crews, the trial court’s analysis focused upon a provision in the policy providing that “mobile equipment” is not included within the definition of “auto” and is therefore not excluded from coverage. The trial court wrote that to determine whether the trailer qualified as “mobile equipment,” it had to decide whether the paving machinery that Crews transported on the trailer was “cargo” as used in the policy. The trial court found the term “cargo,” which is not defined in the policy, to be ambiguous and accordingly construed this language against Century, the insurer. The court concluded that the CGL policy provides coverage in this underlying wrongful-death action.

 

{¶ 7} On appeal, Century argued that the trial court had misinterpreted the language of the CGL policy. Century asserted that the trial court had incorrectly determined that the trailer is “mobile equipment” as defined by the policy and that even if the trailer were mobile equipment, the claim involving the trailer was not covered because of a provision in the CGL policy excluding coverage for claims arising out of the transport of mobile equipment. The Tenth District disagreed and affirmed the trial court’s judgment that the CGL provides coverage.

 

{¶ 8} Century appealed to this court, and we accepted Century’s two propositions of law:

 

1. A registered commercial flatbed trailer, used to haul construction equipment to and from job sites, is not a vehicle maintained for purposes other than transportation of cargo within the meaning of a commercial general liability policy, and, therefore, claims arising out of the ownership or use of such a trailer are excluded from coverage under the terms of such policies.

 

2. When considering whether an insurance policy provision is ambiguous, a reviewing court must consider the context in which the policy provision is used—particularly where that context pertains to a highly regulated commercial activity such as the use of commercial vehicles upon public roadways.

 

*3 135 Ohio St.3d 1458, 2013-Ohio-2285, 988 N.E.2d 578.

 

II. Legal Analysis

{¶ 9} The outcome of this cases hinges upon whether the CGL policy insured the trailer used by Crews. Century argues in its second proposition of law that the lower courts improperly determined that the relevant policy provisions were ambiguous. We accordingly address this second proposition of law, which deals with the proper method of interpreting the language of insurance policies, before addressing the first proposition of law, which asks us to apply that method to the particular language in the CGL policy before us.

 

A. The Context in Which a Provision Is Used Must Be Considered in Determining Whether Ambiguity Exists

[1][2][3] {¶ 10} “An insurance policy is a contract whose interpretation is a matter of law.” Sharonville v. Am. Emp. Ins. Co., 109 Ohio St.3d 186, 2006-Ohio-2180, 846 N.E.2d 833, ¶ 6. “[W]ords and phrases used in an insurance policy must be given their natural and commonly accepted meaning, where they in fact possess such meaning, to the end that a reasonable interpretation of the insurance contract consistent with the apparent object and plain intent of the parties may be determined.” Gomolka v. State Auto. Mut. Ins. Co., 70 Ohio St.2d 166, 167–168, 436 N.E.2d 1347 (1982), citing Dealers Dairy Prods. Co. v. Royal Ins. Co., 170 Ohio St. 336, 164 N.E.2d 745 (1960), paragraph one of the syllabus.

 

[4] {¶ 11} We have stated that “an exclusion in an insurance policy will be interpreted as applying only to that which is clearly intended to be excluded.” (Emphasis sic.) Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657, 665, 597 N.E.2d 1096 (1992). Furthermore, “[i]f provisions are susceptible of more than one interpretation, they ‘will be construed strictly against the insurer and liberally in favor of the insured.’ ” Sharonville at ¶ 6, quoting King v. Nationwide Ins. Co., 35 Ohio St.3d 208, 519 N.E.2d 1380 (1988), syllabus.

 

{¶ 12} We have previously discussed the effect of ambiguity in an insurance contract:

 

Although ambiguous provisions in an insurance policy must be construed strictly against the insurer and liberally in favor of the insured, see, e.g., King v. Nationwide Ins. Co., 35 Ohio St.3d 208, 519 N.E.2d 1380, syllabus, it is equally well settled that a court cannot create ambiguity in a contract where there is none. See, e.g., Hacker v. Dickman (1996), 75 Ohio St.3d 118, 119, 661 N.E.2d 1005. Ambiguity exists only when a provision at issue is susceptible of more than one reasonable interpretation. Id. at 119–120, 661 N.E.2d 1005.

 

Lager v. Miller–Gonzalez, 120 Ohio St.3d 47, 2008-Ohio-4838, 896 N.E.2d 666, ¶ 16.

 

[5] {¶ 13} Century argues that the language of the provisions in its policy must be examined in the context of the overall policy and with respect to the policy’s purpose. We agree. We have previously stated that insurance policies cannot be read in an overly circumscribed fashion. Gomolka, 70 Ohio St.2d at 172, 436 N.E.2d 1347. “One may not regard only the right hand which giveth, if the left hand also taketh away. The intention of the parties must be derived instead from the instrument as a whole, and not from detached or isolated parts thereof.” Id., citing Stickel v. Excess Ins. Co. of Am., 136 Ohio St. 49, 53, 23 N.E.2d 839 (1939), and Germania Fire Ins. Co. v. Schild, 69 Ohio St. 136, 68 N.E. 706 (1903).

 

*4 {¶ 14} Since courts must examine the insurance policy as a whole to determine the parties’ intentions, it follows that courts must also examine the policy as a whole when determining whether a word or phrase of the policy is ambiguous. We accordingly hold that in determining whether an insurance policy provision is ambiguous, a court must consider the context in which the provision is used.

 

{¶ 15} In this case, the trial court and the Tenth District found the word “cargo” to be ambiguous. The analysis of those courts, however, isolated the word “cargo,” rather than examining the intended scope of the policy as a whole. A consideration of the overall context of the policy would show that the policy is unambiguous in excluding the trailer from coverage.

 

B. The Language of the CGL Policy

[6] {¶ 16} The insuring portion of the CGL policy provides that Century “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Then the policy sets forth the exclusions that state what the insurance does not cover.

 

SECTION I—COVERAGES

 

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

 

* * *

 

2. Exclusions

 

This insurance does not apply to:

 

* * *

 

g. Aircraft, Auto Or Watercraft

 

“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and “loading or unloading.”

 

(Capitalization and boldface sic.)

 

{¶ 17} The CGL policy defines “auto” as:

 

SECTION V—DEFINITIONS

 

* * *

 

2. “AUTO” MEANS:

 

a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or

 

b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged.

 

However, “auto” does not include “mobile equipment.”

 

*5 (Boldface sic; italics added for emphasis.)

 

{¶ 18} “Mobile equipment” is also defined in Section V of the policy:

 

12. “Mobile equipment” means any of the following types of land vehicles, including any attached machinery or equipment:

 

a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;

 

b. Vehicles maintained for use solely on or next to premises you own or rent;

 

c. Vehicles that travel on crawler treads;

 

d. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

 

(1) Power cranes, shovels, loaders, diggers or drills; or

 

(2) Road construction or resurfacing equipment such as graders, scrapers or rollers;

 

e. Vehicles not described in a., b., c. or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

 

(1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or

 

(2) Cherry pickers and similar devices used to raise or lower workers;

 

f. Vehicles not described in a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo.

 

(Boldface sic; italics added for emphasis.)

 

{¶ 19} Century argues that the policy is unambiguous, asserting that in this case the trailer qualifies as an “auto” and is not “mobile equipment” under the policy definitions. Crews counters, and the appellate court held, that the policy is ambiguous because its failure to define the term “cargo” makes it unclear whether the policy is intended to exclude the trailer from coverage. Crews asserts that the policy’s ambiguity should be construed strictly against Century and that we should accordingly hold that the trailer meets the definition of “mobile equipment” under Section V(12)(f) of the policy and thus the policy provides coverage for the trailer. We agree with Century that the policy is unambiguous and does not provide coverage for the trailer.

 

C. The CGL Policy Does Not Provide Coverage

{¶ 20} When viewing the CGL policy as a whole we conclude that the policy clearly excludes the trailer from coverage in this case. The fault in Crews’s analysis is that it fixates upon a single word, “cargo,” and fails to consider the intent of the policy as a whole.

 

{¶ 21} The policy excludes coverage for any bodily injury or property damage arising from the use of an “auto” by the insured. Section V(2)(a) of the policy explicitly states that a “trailer” designed for travel on public roads is an “auto” for purposes of the policy.FN2 This provision establishes a fundamental premise of the policy: trailers are excluded from coverage.

 

{¶ 22} Crews is correct that the policy provides an exception to the “auto” exclusion. Anything qualifying as “mobile equipment” as defined by the policy is excepted from the definition of “auto.” Crews argues that the trailer qualifies as “mobile equipment” pursuant to Section V(12)(f) of the policy. However, when looking at this section in context, it is clear that the trailer does not qualify as “mobile equipment.”

 

{¶ 23} Section V(12) of the CGL policy lists specific types of land vehicles that qualify as “mobile equipment.” Subsections (a) through (d) group these specific types of vehicles into categories, such as vehicles maintained solely on or next to premises rented or owned by the insured and vehicles that travel on crawler treads. Subsections (e) and (f) are catchall provisions, but Crews relies only on (f), which classifies the following as “mobile equipment”: “Vehicles not described in a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo.” (Boldface sic.) When read in context with the rest of Section V(12), it is clear that the catchall provision of subsection f is meant to classify as “mobile equipment” those land vehicles not specifically named in Section V(12) that are of the same subclass of vehicles as those that are named in the section. A trailer is not of the same subclass as the land vehicles identified in Section V(12). It follows, then, that Section V(12)(f)’s catchall provision does not apply to the trailer in this case and that it is excluded from coverage pursuant to Section V(2)(a).

 

*6 {¶ 24} Because we conclude that the trailer does not belong to the subclass of land vehicles set forth in Section V(12) of the CGL policy, the precise definition of the word “cargo” as used in that section is irrelevant to our analysis. We accordingly disagree with the lower courts’ conclusion that the CGL policy’s failure to define the term “cargo” creates an ambiguity that, when construed in favor of the insured, must be read in a way that provides coverage for the trailer. Instead, we conclude that the plain language of the CGL policy clearly excludes trailers from coverage as autos pursuant to Section V(2)(a) of the policy. We finally note that because trailers do not fit into the subclass of land vehicles described in Section V(12) of the CGL policy, we need not address the portion of Century’s first proposition of law asking us to construe the phrase “maintained primarily for purposes other than the transportation of persons or cargo” as found in Section V(12)(f).

 

III. Conclusion

{¶ 25} When interpreting a provision in an insurance policy, courts must look at the provision in the overall context of the policy in determining whether the provision is ambiguous. The CGL policy issued by Century clearly provides that trailers are excluded from coverage. We accordingly reverse the judgment of the court of appeals and remand this case to the court of common pleas for proceedings consistent with this opinion.

 

Judgment reversed, and cause remanded.

 

O’CONNOR, C.J., and O’DONNELL, KENNEDY, DeWINE, and O’NEILL, JJ., concur.

PFEIFER, J., dissents and would dismiss the appeal as having been improvidently accepted.

PAT DeWINE, J., of the First Appellate District, sitting for FRENCH, J.

 

O’CONNOR, C.J., AND O’DONNELL, KENNEDY, DEWINE, AND O’NEILL, JJ., CONCUR.PFEIFER, J., DISSENTS AND WOULD DISMISS THE APPEAL AS HAVING BEEN IMPROVIDENTLY ACCEPTED.PAT DEWINE, J., OF THE FIRST APPELLATE DISTRICT, SITTING FOR FRENCH, J.Vorys, Sater, Seymour & Pease, L.L.P., Thomas E. Szykowny, and Michael Thomas, urging reversal for amicus curiae Ohio Insurance Institute.Plymale & Dingus, L.L.C., and M. Shawn Dingus, for appellees.Davis & Young and Richard M. Garner, for appellant.Koehler Neal, L.L.C., and Timothy J. Fitzgerald, urging reversal for amicus curiae Ohio Association of Civil Trial Attorneys.Vorys, Sater, Seymour & Pease, L.L.P., Thomas E. Szykowny, and Michael Thomas, urging reversal for amicus curiae Ohio Insurance Institute.

 

FN1. Raymond L. Jackson and Mariann Jackson are not parties to this appeal.

 

FN2. Crews concedes that the trailer in this case was designed for travel on public roads.

United States Court of Appeals,

Eighth Circuit.

OCCIDENTAL FIRE & CASUALTY COMPANY, Plaintiff–Appellant

v.

Adam SOCZYNSKI, as Trustee for the heirs and next of kin of Amy Soczynski, deceased, Defendant–Appellee

Thomas Hipp; Hipp’s Trucking, Inc., Defendants.

Occidental Fire & Casualty Company, Plaintiff–Appellant

v.

Adam Soczynski, as Trustee for the heirs and next of kin of Amy Soczynski, deceased, Defendant–Appellee

Thomas Hipp; Hipp’s Trucking, Inc. Defendants.

 

Nos. 13–2679, 13–2949.

Submitted: May 13, 2014.

Filed: Sept. 2, 2014.

 

Appeal from United States District Court for the District of Minnesota—Minneapolis.William Lawrence Davidson, argued, Minneapolis, MN, (Brian Alan Wood, Minneapolis, MN, on the brief) for appellant.

 

Wilbur W. Fluegel, argued, Minneapolis, MN, (Thomas J. Laughlin, Oakdale, MN, on the brief) for appellee.

 

Before BYE, MELLOY, and BENTON, Circuit Judges.

 

BYE, Circuit Judge.

*1 This is an insurance coverage dispute arising out of a fatal accident. The district court FN1 determined a bobtail policy issued to Hipp’s Trucking, Inc., provided coverage for damages arising out of a collision involving trucker Thomas Hipp’s semi-tractor and trailer. The district court also determined the bobtail policy provided $1 million in coverage. We affirm.

 

I

On March 10, 2009, Thomas Hipp was driving his semi-tractor and trailer on a two-lane road near Ham Lake, Minnesota, after loading wind tower outriggers FN2 onto the trailer. On a gradual curve in the road, Hipp’s trailer crossed the center line and collided with a vehicle driven by Amy Soczynski. Amy died as a result of the collision.

 

At the time of the accident, Hipp’s semi-tractor and trailer were insured by two separate insurance policies. The first policy was issued by Great West Insurance Company (Great West) to Airline Transportation Specialists, Inc., (ATS), a federally licensed motor carrier. Hipp had been hauling cargo exclusively for ATS for several years and had a continuous lease agreement with ATS at the time of the accident. The Great West policy was intended to cover Hipp while he was hauling commercial loads on behalf of ATS.

 

A second policy was issued to Hipp’s Trucking by Occidental Fire & Casualty Company of North Carolina (Occidental). The Occidental policy was a non-trucking use policy, also referred to as a bobtail policy. A bobtail policy is intended to provide coverage for a trucker while a semi-tractor is being driven without a trailer, or while the trucker is operating outside the services of a federally licensed motor carrier.

 

Following the accident, Adam Soczynski, Amy’s widower, sued Hipp in Minnesota state court alleging the accident was caused by Hipp’s negligence. Although Hipp was not hauling an ATS load at the time of the accident—Hipp had purchased the wind tower outriggers to make his trailer more marketable to other motor carriers in the event he quit working for ATS—Adam nonetheless amended his complaint to add ATS as a defendant. Adam alleged Hipp was operating his semitractor at the time of the accident with the “permission and consent” of and “under the authority of [ATS]” pursuant to the continuous lease agreement between Hipp and ATS.

 

During the course of the state court action, Adam demanded the policy limits for both the Great West policy and the Occidental bobtail policy. Occidental refused to tender the limits of the bobtail policy. Notwithstanding the fact that Hipp was not hauling a commercial load for ATS at the time of the accident, Great West decided to tender its policy limits of $1 million. Great West stipulated that its “offer and release is made with the understanding that [ATS] would maintain its denial of liability,” but that “[d]ue to the possibility of exposure to a verdict greatly in excess of policy limits … Great West … made a business decision to tender its liability limits despite its available defenses.” As part of the settlement, Hipp assigned any potential claims he may have against Occidental to Adam.

 

*2 As an additional part of the settlement, the parties appointed an arbitrator to decide the amount of damages. The arbitrator determined the total damages from the accident were $2,750,000. The state court found the arbitrator’s damage award reasonable, offset the $1 million settlement with Great West, and entered judgment against Hipp in the amount of $1,750,000. Adam agreed not to execute the judgment against Hipp personally, but reserved the right to pursue Occidental for the limits of the bobtail policy. The parties gave Occidental notice of their intent to enter into the settlement as well as a copy of the executed agreement.

 

After the state court settlement, Occidental filed a complaint in federal district court seeking a declaratory judgment that its bobtail policy did not provide coverage for the accident. Adam filed an answer and counterclaim. In the counterclaim, Adam asked the court to declare that the Occidental policy provided coverage for the accident, determine the policy limits to be $1 million, and award damages based on Occidental’s bad faith in failing to tender its policy limits in the state court action.

 

Occidental and Adam both filed motions for summary judgment. In its motion, Occidental relied upon a Non– Trucking endorsement in the bobtail policy which stated “[t]his insurance does not apply at any time that [Hipp] is operating, maintaining, or using a covered auto for or on the behalf of any other person or organization.” Occidental argued Hipp was operating his semi-tractor on behalf of ATS at the time of the accident, and thus the bobtail policy did not provide coverage. Occidental further argued Adam should be judicially estopped from arguing the bobtail policy provided coverage for the accident because he had already recovered under the Great West policy after alleging Hipp was operating his truck under ATS’s authority at the time of the accident. The parties also disputed the amount of coverage available under the bobtail policy based upon a conflict between the declarations page—which said the policy limits were $500,000—and a “Monthly Payment and Reporting Endorsement” labeled Form AA 1903—which said the policy limits were $1 million.

 

The district court granted Adam’s motion for summary judgment and denied Occidental’s motion. The district court determined Adam was not judicially estopped from pursuing coverage under the bobtail policy despite having alleged in state court that Hipp was operating his semi-tractor under the authority of ATS at the time of the accident, and despite having recovered under ATS’s policy in the settlement with Great West. The district court further determined the bobtail policy’s Non– Trucking endorsement did not preclude coverage because Hipp was on a personal errand to haul his own wind tower outriggers and thus not acting on behalf of ATS at the time of the accident. Finally, the district court determined the bobtail policy was ambiguous with respect to the policy limits and resolved the ambiguity against Occidental.

 

*3 Following the summary judgment determination, Adam asked the court to voluntarily dismiss his bad faith claim. The district court dismissed the bad faith claim and entered a final judgment. This timely appeal followed.

 

II

[1][2][3] We review the district court’s grant of summary judgment de novo. Stein v. Chase Home Fin., LLC, 662 F.3d 976, 979 (8th Cir.2011). Similarly, we review the district court’s interpretation of an insurance policy de novo. Macheca Transp. v. Phila. Indem. Ins. Co., 649 F.3d 661, 667 (8th Cir.2011). We review the district court’s refusal to apply the doctrine of judicial estoppel only for an abuse of discretion, however, because the doctrine is one of equity invoked at the district court’s discretion. See Capella Univ., Inc. v. Exec. Risk Specialty Ins. Co., 617 F.3d 1040, 1051 (8th Cir.2010).

 

A

[4] Occidental first contends the district court abused its discretion when it declined to apply the doctrine of judicial estoppel to prevent Adam from pursuing coverage under the bobtail policy.

 

[5][6][7][8] Judicial estoppel is a doctrine created by courts to prevent parties from taking contrary positions during the course of a lawsuit. In Minnesota (which has not formally recognized the doctrine), three conditions must be met before the doctrine would apply:

 

First, the party presenting the allegedly inconsistent theories must have prevailed in its original position (a litigant is not forever bound to a losing position). Second, there must be a clear inconsistency between the original and subsequent position of the party. Finally, there must not be any distinct or different issues of fact in the proceedings.

 

State v. Pendleton, 706 N.W.2d 500, 507 (Minn.2005) (internal quotation marks and citations omitted).FN3 Importantly, with respect to whether a party has “prevailed in its original position,” the Minnesota Supreme Court stated “judicial estoppel requires that the party have actually previously succeeded at trial on a factual theory inconsistent to the one in question.” Id.

 

Occidental contends the district court abused its discretion when it declined to apply judicial estoppel here because Adam presented one theory in state court, i.e., that Hipp operated his semi-tractor under the authority of ATS at the time of the accident, prevailed on such theory when Great West tendered its policy limits to settle the case, but then reversed course in federal court by contending Hipp was acting on his own behalf at the time of the accident.

 

[9] We disagree the district court abused its discretion under the circumstances present in this case. Occidental has not shown Adam ever “prevailed” in state court, that is, persuaded the state court itself to adopt Adam’s litigation position. The claim against Great West resulted in a settlement in which the insurer specifically stated ATS was “maintain[ing] its denial of liability,” and Great West was settling as “a business decision … despite its available defenses.” In other words, Adam permissibly raised alternate theories against both insurance carriers in state court, and then persuaded one insurer to settle before the state court ever adjudicated the merits of the claim. Under Minnesota’s recitation of the doctrine of judicial estoppel, persuading an opposing party to settle prior to an adjudication on the merits is not the same as having a court adopt a litigant’s position, and thus the district court was clearly within its discretion when it declined to apply the doctrine. See Pendleton, 706 N.W.2d at 507 (indicating a party must succeed “at trial” before the doctrine will apply); cf. Sunny Fresh Foods, Inc. v. Michael Foods, Inc., 205 F.Supp.2d 1077, 1090 (D.Minn.2002) ( “Judicial estoppel does not hinge on whether the party previously argued a position, but instead hinges on whether that party was successful in having the court adopt that position.”).FN4

 

B

*4 [10][11] Occidental next contends the district court erred when it concluded the bobtail policy provided coverage to Hipp at the time of the accident. In this case, the coverage dispute turned on a phrase in an exclusion which states this “insurance does not apply at any time that [Hipp] is operating, maintaining, or using a covered auto for or on the behalf of any other person or organization.” Under Minnesota law, Occidental had the burden to establish the applicability of any exclusions in the bobtail policy.   Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn.2006). Policy exclusions are “construed narrowly and strictly against the insurer.” Id.

 

The district court concluded Hipp was not operating his semi-tractor “for or on the behalf of” ATS at the time of the accident, but instead was operating the semitractor on his own behalf by hauling the wind tower outriggers he had purchased. We agree. It was undisputed that Hipp was not hauling a commercial load for ATS at the time of the accident. In addition, ATS was not paying Hipp for the use of his truck at the time of the accident. Finally, Hipp testified he had purchased the wind tower outriggers for his own benefit in the event he stopped hauling for ATS. In fact, the record showed ATS had never utilized the outriggers in the three years following the accident. Under these facts, we conclude the district court correctly determined Occidental failed to carry its burden of showing Hipp was acting “for or on the behalf of” ATS at the time of the accident.

 

C

[12][13] Finally, Occidental contends the district court erred when it determined the bobtail policy had limits of $1 million. Significantly, Occidental concedes the bobtail policy is ambiguous with respect to the issue of the coverage limits. See Appellant’s Br. at 47 (“The Occidental policy is internally inconsistent in that it has one page that states it provides $1 million in coverage, but the declarations page … provide[s] that its limit is $500,000.”). Occidental contends, however, under Minnesota law the ambiguity is not necessarily construed against it if the result of such a construction is “beyond the reasonable expectations of the insured.” Rusthoven v. Commercial Standard Ins. Co., 387 N.W.2d 642, 645 (Minn.1986).

 

In Rusthoven, the Minnesota Supreme Court resolved a policy limits dispute over the uninsured motorist coverage available under a policy insuring sixty-seven leased vehicles. The court concluded two endorsements attached to the policy were irreconcilably inconsistent. One endorsement purported to limit uninsured motorist coverage to $25,000 for each person and $50,000 for each accident, but a reasonable interpretation of a separate endorsement indicated the uninsured motorist coverage was equal to “the sum of the limits applicable to each covered auto,” which was “67 times $25,000 for each person or $1,675,000.” 387 N.W.2d at 644. The court noted “[o]ne of the fundamentals of insurance law … is that ambiguous language in an insurance policy is to be construed in favor of the insured,” but added the proviso that “[t]he result of such a construction … must not be beyond the reasonable expectations of the insured.” Id. at 645. The court found the higher amount “not to exceed the reasonable expectations of the insured” and construed the ambiguity against the insurer. Id.

 

*5 Here, the district court relied upon Rusthoven to conclude the higher policy limits of $1 million did not exceed the reasonable expectations of the insured, and construed the bobtail policy’s ambiguity against Occidental. Occidental argues the district court’s reliance on Rusthoven was misplaced. Occidental contends the district court should have followed a subsequent decision issued by the Minnesota Court of Appeals in Curtis v. Home Insurance Co., 392 N.W.2d 44, 45 (Minn.Ct.App.1986). In Curtis, the court of appeals applied Rusthoven but concluded an ambiguous policy should not be construed against the insurer. The court of appeals held the policy provided the lesser of two policy limits because there were “affidavits stating that the [insured] intended the maximum amount of underinsured motorist coverage available for any one accident would be $50,000 [the lesser limit].” 392 N.W.2d at 46. Consequently, the court concluded the insured had “no expectation that the limit of liability would be greater than $50,000.” Id.

 

Occidental contends—similar to the situation involved in Curtis—there is record evidence in this case indicating exactly what the insured’s reasonable expectations were with respect to the bobtail policy’s coverage limits. Occidental relies solely upon a settlement letter prepared by Adam’s attorney in January 2011. Adam’s attorney represented that the information provided to him indicated the coverage limits for the bobtail policy were $500,000. Occidental contends Adam’s attorney’s settlement letter demonstrates exactly what Thomas Hipp’s reasonable expectations were with respect to the policy limits. We disagree.

 

Unlike the situation involved in Curtis, there is no affidavit directly from Thomas Hipp stating that he intended his bobtail policy limits to be $500,000. Nor is Hipp even directly identified as the personal source of the hearsay referenced by the plaintiff’s attorney in the settlement letter with respect to the policy limits. Thus, contrary to Occidental’s contention, there is no record evidence in this case indicating what Thomas Hipp’s reasonable expectations were. The district court therefore did not err when it construed the admittedly ambiguous policy against Occidental to conclude it provided $1 million in coverage.

 

III

We affirm the judgment of the district court.

 

FN1. The Honorable John R. Tunheim, United States District Judge for the District of Minnesota.

 

FN2. Outriggers are removable steel structures that can be attached to a trailer to make more floor space available or to distribute the weight of a load differently, allowing truck drivers to haul various types of cargo.

 

FN3. Courts in our circuit are bound to apply state law elements of judicial estoppel in a diversity case. See Monterey Dev. Corp. v. Lawyer’s Title Ins. Corp., 4 F.3d 605, 608–09 (8th Cir.1993); see also Spencer v. Annett Holdings, Inc., 757 F.3d 790, ––––, 2014 WL 3056811, at *6 (8th Cir. July 8, 2014) (reaffirming our decision in Monterey ).

 

FN4. We note the circuit split regarding whether settling a claim is the same as persuading a court to adopt a party’s position. Compare Konstantinidis v. Chen, 626 F.2d 933, 939 (D.C.Cir.1980) (“A settlement neither requires nor implies any judicial endorsement of either party’s claims or theories, and thus a settlement does not provide the prior success necessary for judicial estoppel.”); Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir.1982) (“If the initial proceeding results in settlement, the position cannot be viewed as having been successfully asserted.”); Bates v. Long Island R.R. Co., 997 F.2d 1028, 1038 (2d Cir.1993) (same) with Rissetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 604–05 (9th Cir.1996) (concluding a favorable settlement is the “equivalent to winning a judgment for purposes of applying judicial estoppel”); Commonwealth Ins. Co. v. Titan Tire Corp., 398 F.3d 879, 887 (7th Cir.2004) (concluding a “favorable settlement … may be sufficient to show that the party to be estopped prevailed in the prior case regardless of whether a judicial decision was obtained”).

 

Because Minnesota law requires a party to succeed “at trial” before the doctrine would apply, we need not choose a side in the circuit split. We have, however, said the “chief purpose” of the doctrine “is to protect the integrity of the judicial process.” E.E.O.C. v. CRST Van Expedited, Inc., 679 F.3d 657, 681 (8th Cir.2012). Under circumstances where a party pursues alternate theories against two parties, settles the weaker claim against one party without a court adjudication, and then pursues the stronger theory against the other party in court, we see little, if any, threat to the integrity of the judicial process.