Resolving policy ambiguities can be difficult with courts utilizing different analytic approaches. Steven Plitt and Jordan R. Plitt, “Practical Tools for Handling Insurance Cases,” §1:21 (Thompson Reuters 2011, and 2014 Supplement) (discussing various analytic approaches by the courts to resolve ambiguities).
The Ohio Supreme Court recently advised that the Ohio Courts were required to consider the context in which a policy provision is used in determining whether an ambiguity existed.
In Sauer v. Crews, 140 Ohio St.3d 314, 18 N.E.3d 410 (2014), the Court explained that when interpreting an insurance policy courts were required to examine the policy as a whole to determine the parties intentions and whether particular words or phrases of the policy were ambiguous. It followed, therefore, that determining whether an insurance policy provision was ambiguous courts were required to consider the context in which the provision was used.
In Sauer, decedent’s vehicle collided with a flatbed trailer owned by Stinson J. Crews and Stinson Crews Trucking (collectively “Crews”). The flatbed trailer was parked without a permit in a “no parking zone”, blocking most of the decedent driver’s lane of travel when the accident occurred. The trial court analysis of the commercial general liability policy focused upon a provision in the policy providing that “mobile equipment” was not included within the definition of “auto,” and, therefore, was not excluded from coverage under the policy. In reaching this decision, the trial court concluded that to determine whether the trailer qualified as “mobile equipment” the court had to decide whether the paving machinery that Crews transported on the trailer was “cargo” as used in the policy. The trial court found that the term “cargo,” which was not defined in the policy, was ambiguous and, therefore, construed the policy language against the insurer.
On appeal, the insurer argued that the trial court incorrectly determined that the trailer was “mobile equipment” as defined by the policy and that even if the trailer was determined to be mobile equipment, coverage was excluded for claims arising out of the transportation of mobile equipment. The Court of Appeals disagreed and affirmed the trial court’s ruling. However, the Ohio Supreme Court reversed these rulings finding that the Court had erred by not considering the context in which the provision was used in determining whether there was ambiguity, and further finding that once the context was considered, the Court concluded that the flatbed trailer was not a vehicle maintained for purposes other than transportation of cargo within the meaning of the policy.
The Supreme Court agreed with the insurer that the language of the policy provisions were required to be examined in the context of the overall policy and consistent with the policy’s purpose. (Citing Gomolka v. State Auto Mutual Ins. Co., 70 Ohio St.2d 166, 172, 436 N.E.2d 1347 (1982) (“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.”). Turning to the policy language, the Court noted that the policy contained an auto exclusion. The policy defined “auto” as including a “trailer or semi-trailer designed for travel on public roads, including any attached machinery or equipment. . . .” The policy further stated that “auto” did not include “mobile equipment.” The policy also defined “mobile equipment” variously.
The insurer argued that the policy was unambiguous because the trailer qualified as a defined “auto” and was not defined as “mobile equipment.” The claimants countered by arguing that the policy was ambiguous because it failed to define the term “cargo” making it unclear whether the policy was intended to exclude the trailer from coverage. The argument focused on the definition of “mobile equipment,” which included vehicles not described [in other parts of the policy] maintained primarily for purposes other than transportation of persons or cargo”.
Construing the policy as a whole, the Ohio Supreme Court found that the policy clearly excluded the trailer from coverage. The claimant’s analysis was flawed because it fixated upon a single word “cargo,” but failed to consider the intent of the policy as a whole. According to the Court, the policy excluded coverage for any bodily injury or property damage arising from the use of an “auto” by the insured, and the policy explicitly stated that a “trailer” designed for travel on public roads was an “auto” for purposes of the policy. According to the Court, this provision established a fundamental premise of the policy: trailers are excluded from coverage. Although the claimants were correct in asserting that the policy provided an exception to the “auto” exclusion, and that anything qualifying as “mobile equipment” as defined by the policy was excepted from the definition of “auto.” When looking at the definition of “mobile equipment” in context it was clear that the trailer did not qualify as “mobile equipment.”
The definition of “mobile equipment” listed specific types of land vehicles that qualified as defined “mobile equipment.” The definition contained subsections which grouped specific types of vehicles into categories and also contained “catch all” provisions for other types of mobile equipment. The claimants relied solely on one classification of mobile equipment that was not described in the definition which was maintained primarily for purposes other than the transportation of persons or cargo. The Court found that when the provision relied upon by claimants was read in the context of the rest of the definition of the “mobile equipment,” it became clear that the “catch all” provision relied upon by the claimants was meant to classify as “mobile equipment,” those land vehicles not specifically named in the definition of “mobile equipment” that were in the same subclass of vehicles as those that were named in the definition. A trailer was not in the same subclass as the land vehicles identified in the definition of “mobile equipment.” Therefore, the Ohio Supreme Court found that the “catch all” provision of the definition of “mobile equipment” did not apply to the trailer and, therefore, was excluded from coverage.
The Ohio Supreme Court concluded that the trailer in question did not belong to the subclass of land vehicles set forth in the definition of “mobile equipment” and, therefore, the precise definition of the word “cargo” was irrelevant to the analysis. The Court further found that the policy’s failure to define the term “cargo” did not create an ambiguity because the policy clearly excluded trailers from coverage as autos, pursuant to the definition of the “auto.” The Ohio Supreme Court concluded that “when interpreting a provision of an insurance policy, courts must look at the provision in question in the overall context of the policy in determining whether the provision is ambiguous.”
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