Court of Appeals of Nebraska.

GREAT WEST CASUALTY COMPANY, A Nebraska Corporation, Appellee,

v.

MICHIGAN MILLERS MUTUAL INSURANCE COMPANY, Appellant.

No. A-10-136.

 

Sept. 28, 2010.

 

Appeal from the District Court for Buffalo County: John P. Icenogle, Judge. Reversed and remanded with directions.

Tanya J. Janulewicz, of Leininger, Smith, Johnson, Baack, Placzek & Allen, for appellant.

 

James W. Ellison and Leland K. Kovarik, of Kovarik, Ellison & Mathis, P.C., for appellee.

 

IRWIN, SIEVERS, and CARLSON, Judges.

 

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

 

SIEVERS, Judge.

 

This liability coverage dispute arises out of an accident in Buffalo County, Nebraska, that occurred on November 4, 2006, when a northbound semi-trailer truck pulled out from a stop sign onto U.S. Highway 30 into the path of an eastbound car that clearly had the right of way. Two occupants in the vehicle were injured, and a third was killed. The semi was owned by Richard Sullwold and insured by Great West Casualty Company (Great West). The semi was being used by Agri Co-op of Holdrege by agreement with Sullwold and was being driven by Agri Co-op’s employee, Donald Stone, who was in the course of his employment at the time of the accident. Agri Co-op is insured by Michigan Millers Mutual Insurance Company (Michigan Mutual). The issue is which of the two insurers, Michigan Mutual or Great West, has the primary liability coverage for the accident. Great West paid approximately $225,000 to settle the claims from the car’s passengers. As a result, Great West filed an action in the district court seeking a declaration that its coverage was only excess and that it was entitled to judgment against Michigan Mutual for the amounts it paid to adjust and settle the personal injury claims from the accident of November 4. The district court entered judgment in favor of Great West, and Michigan Mutual now appeals to this court. Because we find that both insurers’ coverage was excess, we apply the doctrine of mutual repugnancy, which means that the insurer for the semi, Great West, has the primary coverage. Thus, we reverse the decision of the district court and remand the cause with directions.

 

FACTUAL AND PROCEDURAL BACKGROUND

 

Sullwold was the owner of a semi-tractor and a grain trailer that he began using to haul grain for Agri Co-op around November 1, 2006. When Sullwold was going to be unavailable for several days, LeLand Stone of Agri Co-op asked if Agri Co-op could use his equipment while he was gone, with the understanding that Donald Stone would drive it and that Sullwold would be compensated for the use of his equipment. In this conversation, there was no discussion whatsoever about liability insurance or assumption of liability by either party in the event of accident and/or injury. The arrangement was never reduced to writing, but its terms as outlined above are not disputed. The accident happened within days of the making of this arrangement.

 

After the accident, Great West promptly employed an adjuster, Jeffry White, who gathered information about the accident, took a number of statements, and reported periodically to Great West. Ultimately, White was able to settle the claims of the two injured occupants of the vehicle, and in early July 2007, Great West concluded all of the occupants’ claims by the settlement of the claim of the occupant of the vehicle who died as a result of the accident, in the amount of $175,000.

 

Michigan Mutual was put on notice of those settlements by a December 14, 2006, letter from John Fitzsimmons of Great West to Nancy Walder of Michigan Mutual, in which Fitzsimmons asserted that Michigan Mutual’s coverage was primary and Great West’s coverage was only excess. Fitzsimmons’ letter also renewed a request, apparently made earlier by telephone to Walder, that he be provided with a copy of the Michigan Mutual policy covering Agri Co-op, plus, in the letter he “tendered” the defense and handling of the claims to Michigan Mutual. Walder was also advised that if Michigan Mutual did not assume the “further handling of this matter; [Great West], keeping the third party claimants best interests in mind, will continue with the investigation, evaluation and good faith settlement of all claims” and would then look to Michigan Mutual for indemnification of all losses and expenses. As outlined above, Great West had settled all three claims by June 5, 2007, and this action was filed September 25. Additional facts will be set forth as required in our analysis.

 

DISTRICT COURT DECISION

 

In an order of March 18, 2009, deciding the parties’ competing motions for summary judgment, the district court for Buffalo County first found that the arrangement for the usage of Sullwold’s equipment by Agri Co-op was a “bailment contract.” The court then found that Michigan Mutual’s coverage was primary, because the bailee assumed the tort liability of the bailor, citing as its authority an unreported opinion of the Ohio Court of Appeals, Auto Owners Ins. Co. v. Motorists Mut. Ins. Co., No. CA91-07-121, 1992 WL 236861 (Ohio App. Sept. 21, 1992) (unpublished opinion). The court then discussed Great West’s coverage on the semi, which was outlined in the policy issued to its owner, Sullwold. The court noted the provision that Great West policy’s coverage was excess ‘ “over any other collectible insurance or self insurance …’ when the covered auto, which Sullwold’s semi would be, is used by a trucker.” However, the trial court found that there was an issue of fact to be resolved as to whether Agri Co-op was a “trucker.” The court further found that Michigan Mutual’s claim that Great West could not recover its payments because such were “voluntary” could not be resolved via summary judgment.

 

These remaining issues were tried to the district court in November 2009, and a decision was issued on January 6, 2010. The district court found that Agri Co-op was in fact engaged in the business of transporting property for hire and thus was a “trucker,” making Great West’s coverage excess, and, as stated, the court had previously determined that Michigan Mutual’s coverage was primary.

 

The court rejected Michigan Mutual’s argument that Great West made “voluntary” payments which allegedly prevented Great West from being reimbursed for such. Therefore, judgment was rendered against Michigan Mutual and in favor of Great West for the sum of $25,409.60 for its payments on the claim of one of the surviving occupants, $13,091 on the claim of the other surviving occupant, and $175,000 on the claim of the occupant who died. Also included in the judgment were Great West’s out-of-pocket expenses in resolving the claims in the amount of $12,354, for a total judgment of $225,854.60.

 

ASSIGNMENTS OF ERROR

 

Michigan Mutual assigns error to the grant of partial summary judgment finding that Michigan Mutual’s coverage was primary and to the district court’s finding, after trial, that Great West’s coverage was only excess coverage. Michigan Mutual also assigns as error the district court’s finding that Great West did not make voluntary payments as well as the district court’s refusal to grant its motion for a new trial.

 

STANDARD OF REVIEW

 

The meaning of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the lower court. Auto-Owners Ins. Co. v. Home Pride Cos., 268 Neb. 528, 684 N.W.2d 571 (2004). In construing insurance policy provisions, a court must determine from the clear language of the policy whether the insurer in fact insured against the risk involved. Id. When an appellate court reviews an insurance policy, the court construes the policy as it would any other contract to give effect to the parties’ intentions when the contract was made, and when the terms of a contract are clear, they are to be given their plain and ordinary meaning. Id.

 

ANALYSIS

 

Because the Michigan Mutual policy is 283 pages and the Great West policy is 67 pages, we concentrate on the determinative coverage provisions of the policies. Neither party disputes that its policy provides liability coverage to Agri Co-op and the driver of the semi, Donald Stone, for the accident of November 4, 2006. Rather, the coverage issue as between the two insurance carriers is which carrier has the primary coverage and which has the excess coverage. We note that the liability limits of both are $1 million. Thus, there will be no excess to pay because one policy or the other will cover all damages in issue.

 

Is Michigan Mutual Coverage Primary?

 

We begin our analysis of this question by setting forth the key portions of the Michigan Mutual policy. It is conceded that this policy provides liability coverage for “hired autos,” brief for appellant at 13, which the policy defines as “those ‘autos’ you lease, hire, rent, or borrow.” There is no dispute that Sullwold’s semi was borrowed, albeit for unspecified compensation by Agri Co-op, and thus it was a “hired auto” for which there was coverage under the Michigan Mutual policy. To determine the extent of such coverage, we look to the “General Conditions” of the policy under “5. Other Insurance,” which states: “For any covered ‘auto’ you own, this Coverage Form provides primary insurance. For any covered ‘auto’ you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance.” Great West concedes that it provides “other collectible insurance” on the semi. Because Sullwold’s semi was not owned by Agri Co-op, but was borrowed and rented from Sullwold, the semi was a “hired auto.” Therefore, the Michigan Mutual policy language quoted above clearly makes the Michigan Mutual coverage for the semi excess coverage.

 

However, despite the foregoing clear Michigan Mutual policy language, the district court used an analysis premised on the law of bailment garnered from an unreported decision of the Ohio Court of Appeals to conclude on the motion for summary judgment that Michigan Mutual’s coverage was primary. A bailment is defined as a delivery of personalty for some particular purpose, or on mere deposit, upon a contract, express or implied, that after the purpose has been fulfilled it shall be redelivered to the person who delivered it or otherwise dealt with according to his directions, or kept until he reclaims it, as the case may be. Mimick v. Beatrice Foods Co., 167 Neb. 470, 93 N.W.2d 627 (1958). Clearly, there was a bailment of the semi of some sort under Mimick, supra. With this background on bailment in place, we repeat the district court’s quote from the Ohio case, Auto Owners Ins. Co. v. Motorists Mut. Ins. Co., No. CA91-07-121, 1992 WL 236861 at(Ohio App. Sept. 21, 1992) (unpublished opinion), upon which it rested its conclusion that Michigan Mutual’s coverage was primary:

 

Having found a bailment had been established …, it follows, based on the … common law principles, that DASP, as the bailee, assumed the tort liability of the bailor, Mann’s. Since a liability was imposed by law on DASP that was not otherwise proscribed by the parties’ contractual agreement, it further follows from the language in the clause … that an insured contract had been created. Under the terms contained in the clause … the formation of this insured contract made Motorists’ [the insurance company for the bailee] liability coverage primary.

 

The district court then stated that it “agrees with the reasoning of the Ohio [court] and concludes that Michigan Mutual’s coverage in this matter is primary.” However, while a bailment may have been created when Sullwold and Agri Co-op agreed that the latter would have and use Sullwold’s semi for a brief period of time, we believe that the coverage issue we face is properly resolved by the language of the two policies and other Nebraska precedent, rather than through the common law concerning bailment in Ohio. In short, the district court’s reliance on the unpublished Ohio case of Auto Owners Ins. Co. v. Motorists Mut. Ins. Co. is misplaced, and it is the language of the two policies under the undisputed facts that ultimately determines the coverage issue.

 

That said, it is apparent that under the clear language of the Michigan Mutual and Great West policies, the district court erred in granting paitial summary judgment that Michigan Mutual’s coverage was primary. We reach this conclusion because the determination of the extent of Michigan Mutual’s coverage rests on the resolution of a disputed factual issue: Was Agri Co-op a “trucker” under the Great West policy? The district court did conclude that such was a factual issue for trial, and it was tried to the court after the grant of partial summary judgment that Michigan Mutual’s coverage was primary. Shortly, we shall explain how the question of whether Agri Co-op was a trucker is determinative. But, it is clear that we must reverse the district court’s grant of partial summary judgment in its order of March 18, 2009, finding that Michigan Mutual’s coverage was primary. To properly frame the determinative question, we turn to the Great West policy’s terms.

 

Terms of Sullwold’s Great West Policy on Semi.

 

We begin with “SECTION II-LIABILTY COVERAGE” under “A. COVERAGE” of the Great West policy, which provides:

 

We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the … use of a covered “auto”.

 

….

 

1. WHO IS AN INSURED

 

The following are “insureds”:

 

a. You for any covered “auto”.

 

b. Anyone else while using with your permission a covered “auto” you own, hire, or borrow….

 

Agri Co-op as well as its driver of the Sullwold semi, Donald Stone, would clearly be an “[a]nyone else” under the above section because they were using, with Sullwold’s permission, the semi that was named as the specifically covered vehicle in the Great West policy. Thus, Agri Co-op and its driver, Donald Stone, were “insureds” under the policy. But, the coverage afforded them is limited by the provision in the Great West policy found at section V(B)(5)(a):

 

This coverage Form’s Liability Coverage is primary for any covered “auto” while hired or borrowed by you and used exclusively in your business as a “trucker” and pursuant to operating rights granted to you by a public authority. This Coverage Form’s Liability Coverage is excess over any other collectible insurance or self insurance for any covered “auto ” while hired or borrowed from you by another “trucker ”.

 

(Emphasis supplied.)

 

In section VI, the Great West policy defines “trucker” as “any person or organization engaged in the business of transporting property by ‘auto’ for hire.” This is the extent of the policy’s definition of “trucker.”

 

Therefore, the Great West policy covers Sullwold’s semi for this accident because it was a “covered auto,” as it was undisputedly being used by someone else-Agri Co-op and Donald Stone-with Sullwold’s permission. However, if the “someone else” was a “trucker,” then Great West’s coverage is limited to excess coverage according to the language of the Great West policy.

 

The district court correctly recognized that, Was Agri Co-op a trucker?, was the key question to be answered, and the court found the Great West coverage to be excess. We quote its findings and rationale for such determination:

 

The evidence before the court establishes that between February of 2006 and January of 2007 Agri-Co-op entered into a series of agreements with Hannebaum Grain in Salina, Kansas to transport property owned by Hannebaum Grain to various locations. Exhibit # 10 indicates that over the entirety of the arrangement Agri-Co-op received in excess of $42,500 in compensation for the transportation provided. Without reference to the other activities of Agri-Co-op in transporting its own products or the products of its Co-op members, the court finds that evidence sufficient to establish the [sic] Agri-Co-op was in fact engaged in the business of transporting property for hire and therefore the coverage of Great West is considered excess coverage to that of the defendant.

 

Michigan Mutual argues that Great West’s coverage is primary because Agri Co-op was not a “trucker.” Although the trial court cited evidence, as quoted above, that supports its conclusion that Agri Co-op was a trucker, there is additional evidence to support its conclusion, which we shall shortly discuss. However, we first note the absence of any requirement in the policy’s definition of “trucker” about the extent to which the person or organization must be engaged in the business of “transporting property for hire.” For example, that trucking must be its “full-time” or “main” or “primary” business, as measured by time devoted to it or revenue generated by such.

 

Michigan Mutual’s attack on the district court’s finding that Agri Co-op was a trucker is that Agri Co-op is an agricultural cooperative, handling grain for its farmer/producer members, rather than a trucker. In support of this argument, Michigan Mutual cites the testimony of Agri Co-op’s general manager that Agri Co-op buys corn from the farmer, or stores it for the producer, and that there is no charge for moving a customer’s corn between Agri Co-op’s facilities. Second, Michigan Mutual argues that “a single business arrangement does not make Agri Co-op in the business of transporting for hire.” This latter claim seeks to blunt the fact that in 2006, Agri Co-op had undisputedly been engaged in “backhauling” loads of rock from Kansas for Hannebaum Grain, as referenced in the district court’s findings. Agri Co-op’s general manager explained:

 

[T]he reason we were backhauling rock is that destination market where we took that corn was southwest Kansas … you could not make any money going down there … so we loaded up the trucks, brought rock back for another party and charged them a fee which helped lower our one way cost to deliver the corn.

 

In support of this argument, City of Bayard v. North Central Gas Co., 164 Neb. 819, 83 N.W.2d 861 (1957), is cited. In that case, the court said that a single contract for delivery of natural gas did not make the gas company a common carrier. But, the issue here is not whether Agri Co-op was a common carrier, as the policy definition of “trucker” does not require such, and, moreover, the backhauling arrangement was far more than a one-time occurrence.

 

The undisputed evidence shows that on February 9, 2006, Agri Co-op’s “Transportation Coordinator” submitted an application to the Federal Motor Carrier Safety Administration seeking authority as a “motor common carrier of property (except household goods),” along with the required $300 fee to get such authority. The application indicates that Agri Co-op would operate vehicles having gross vehicle weight of 10,000 pounds or more “to transport non-hazardous commodities.” The “Motor Carrier Identification Report” in evidence for Agri Co-op under “Operation Classification” states “Authorized for hire-Private property.” This same document requires disclosure of the “Carrier Miles” and Agri Co-op listed 350,000 carrier miles in 2006. In addition, exhibit 10 contains copies of 42 invoices, each on different dates, for trucking services for backhauls of rock earlier mentioned, which were issued by Agri Co-op to Hannebaum Grain, totaling $34,383.92 (the district court cited a larger sum for such but we have limited our consideration to the invoices occurring before Agri Co-op borrowed Sullwold’s semi). And, if a producer wanted Agri Co-op to pick up and transport grain that Agri Co-op was purchasing, a transportation charge was assessed via reducing the price paid to the producer by 6 cents a bushel less than if the producer had delivered the grain himself or herself. Also, exhibit 7 shows that Agri Co-op had eight semi-tractors and approximately 60 other trucks, aside from Sullwold’s borrowed semi.

 

This additional evidence in the record provides further support for the trial court’s conclusion that Agri Co-op was a “trucker” for hire in November 2006 when it borrowed Sullwold’s semi. The applicable standard of review of such extrinsic evidence to determine the meaning of the contracts, such as insurance policies, is that we cannot overturn the trial court’s factual findings unless they are clearly wrong. See Don J, Murray Co. v. Wiesman, 199 Neb. 494, 260 N.W.2d 196 (1977) (if interpretation of agreement properly depends upon consideration of extrinsic evidence, appellate court is bound by trial judge’s determination unless it was clearly wrong). Given the evidence cited by the trial court to support its conclusion that Agri Co-op was a “trucker,” plus the additional evidence we have detailed about its trucking operations, the trial court was not clearly wrong in concluding that Agri Co-op was a “trucker” for hire. The fact that Agri Co-op’s primary business may be the buying, selling, and storage of its members’ grain does not prevent Agri Co-op from also being a “trucker,” given the expansive usage of that term in the policy. Thus, because the organization that borrowed or hired Sullwold’s semi, Agri Co-op, was a “trucker,” Great West’s liability coverage for the accident of November 6, 2006, was excess under the terms of its policy.

 

Therefore, we find that under the terms of the two insurance policies at issue, together with the finding that Agri Co-op was a trucker, the result is that both Great West’s and Michigan Mutual’s coverage was excess coverage for the accident of November 4, 2006.

 

If Both Insurance Carriers Having Coverage for Accident Are Excess Carriers Under Their Policies’ Terms, Who Pays?

 

This situation-that both carriers have excess coverage for the accident and neither had primary coverage-has acquired the somewhat colorful descriptor of “mutual repugnancy,” first adopted by the Nebraska Supreme Court in Bituminous Cos. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969). This court has just recently fully dissected the historical development in Nebraska jurisprudence of the mutual repugnancy doctrine in Beckman v. Federated Mut. Ins. Co., 18 Neb.App. 513, — N.W.2d —- (2010), an arduous task that we will not try to repeat or even summarize here. It is sufficient to set forth the doctrine and apply it.

 

In Allied Mutual Ins. Co. v. Universal Underwriters Ins. Co., 265 Neb 549, 553, 657 N.W.2d 905, 908 (2003), the court defined the doctrine of mutually repugnant as follows:

 

“[W]hen controversies arise regarding insurance coverage because the applicable documents contain ‘mutually repugnant language intended to restrict or escape liability for a particular risk in the event there exists other insurance … the owner’s policy … provide[s] primary coverage and the driver’s policy … provide[s] excess coverage.’ “ State Farm Mut. Auto. Ins. Co. v. Cheeper’s Rent-A-Car, 259 Neb. 1003, 1011, 614 N.W.2d 302, 309 (2000).

 

The Supreme Court in Allied Mutual Ins. Co., supra, explained in considerable detail the decision in State Farm Mut. Auto Ins. Co. v. Cheeper’s Rent-A-Car, 259 Neb. 1003, 614 N.W.2d 302 (2000). We quote that explanation at length because it makes it apparent that the question we posed at the beginning of this section of our analysis is answered by the doctrine of mutual repugnancy-and that it is Great West that has the primary coverage.

In that case, the driver of a rental car owned by Cheeper’s Rent-A-Car, Inc. (Cheeper’s), was involved in a car accident. The driver had an insurance policy with State Farm Mutual Automobile Insurance Company (State Farm) which provided liability coverage resulting from the use of a temporary substitute car or a nonowned car. An amendment to the policy provided that the coverage for a temporary substitute car was excess over self-insurance. The rental agreement signed by the driver provided that the liability policy of Cheeper’s was secondary to the renter’s liability insurance.

 

The trial court was therefore presented with two contracts: the rental agreement which incorporated liability insurance and the driver’s insurance policy with State Farm. Each of the contracts “contain[ed] language which purport[ed] to place the primary responsibility in terms of liability on the issuer of the opposing contract.” Id. This court found that the language in the driver’s insurance policy and the rental agreement was mutually repugnant and that Cheeper’s, the owner of the rental car, had primary liability for the damages to the car.

 

The holding in State Farm Mut. Auto. Ins. Co. v. Cheeper’s Rent-A-Car, supra, follows a line of cases in which this court has stated that when a conflict exists because insurance policies contain “mutually repugnant language intended to restrict or escape liability for a particular risk in the event there exists other insurance … the owner’s policy … provide[s] primary coverage and the driver’s policy … provide[s] excess coverage.” See Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 508, 406 N.W.2d 640, 644 (1987), citing Jensen v. Universal Underwriters Ins. Co., 208 Neb. 487, 304 N.W.2d 51 (1981); Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W .2d 175 (1969); Farm Bureau Ins. Co. v. Allied Mut. Ins. Co., 180 Neb. 555, 143 N.W.2d 923 (1966); Protective Fire & Cas. Co. v. Cornelius, 176 Neb. 75, 125 N.W.2d 179 (1963); and Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959).

 

Allied Mutual Ins. Co., 265 Neb. at 553-54, 657 N.W.2d at 908-09.

 

In our recent case of Beckman v. Federated Mut. Ins. Co., 18 Neb.App. 513, — N.W.2d —- (2010), the doctrine outlined above was applied when John F. Beckman’s Farmers Mutual Insurance Company of Nebraska’s policy and Federated Mutual Insurance Company’s policy were found to have mutually repugnant language. Therefore, the policy, Federated Mutual Insurance Company’s, that covered the vehicle, a loaner from a car dealer while Beckman’s stepdaughter’s vehicle was being repaired by the dealer, was held to provide the primary coverage for the accident Beckman had when he collided with a bicyclist while driving the loaner.

 

In the instant case, the Great West and the Michigan Mutual policies are mutually repugnant because they are written in such a way that in the factual circumstances present here-that Agri Co-op was a trucker-both policies provide only excess coverage and neither provides primary coverage. Thus, under the line of cases outlined by the court in Allied Mutual Ins. Co., supra, the primary coverage for the accident of November 4, 2006, is provided by the carrier that covers the owner and his semi, which is Sullwold’s policy with Great West. This conclusion makes it unnecessary for us to discuss Michigan Mutual’s assignments of error that Great West’s voluntary payments bar its recovery and that the trial court should have granted its motion for a new trial. Curry v. Lewis & Clark NRD, 267 Neb. 857, 678 N.W.2d 95 (2004) (appellate court is not obligated to engage in analysis which is not needed to adjudicate controversy before it).

 

CONCLUSION

 

For the reasons outlined above, we reverse the decision of the district court finding that Michigan Mutual’s coverage for the accident of November 4, 2006, and the resulting claims is primary. We also necessarily reverse the district court’s decision that Michigan Mutual is liable to Great West for the amounts that it expended to adjust and settle the three claims of the occupants of the car that Sullwold’s semi collided with. Therefore, we remand the cause to the district court for Buffalo County with direction to enter judgment in accordance with our opinion.

 

REVERSED AND REMANDED WITH DIRECTIONS.