National Casualty Co. v. Barksdale

          ORDER

          H. Russel Holland United States District Judge

         Cross-motions for Summary Judgment

         Plaintiff moves for summary judgment.^[1] This motion is unopposed by defendant Alaska Sales & Service.^[2] The motion is opposed by defendant Charlene Marie Seamon, ^[3] and she cross-moves for summary judgment.^[4] The cross-motion is opposed.^[5] Oral argument was not requested and is not deemed necessary.

         Facts

         Plaintiff is National Casualty Company. Defendants are Jessie L. Barksdale;^[6] Alaska Sales & Service, Inc., d/b/a National Car Rental/Alamo;^[7] and Charlene Marie Seamon.

         Barksdale, who is retired, lives in Virginia. In the summer of 2016, Barksdale, his wife, and other relatives traveled to Alaska for a vacation. Barksdale rented a minivan from Alamo Car Rental in Anchorage on July 21, 2016. The rental was part of a package deal that Barksdale's travel agent, Linda Sizemore, arranged through Alaska Airlines for Barksdale and his wife. Barksdale declined additional insurance at the time of the rental^[8] because he had $300, 000 in liability insurance through his own liability carrier, USAA, that he understood applied to rental vehicles.^[9] The rental agreement number was 534326725.^[10] The rental agreement had a line that read: ACCOUNT Alaska Airlines” and a line that read: “EXT REF # ALG2D240[.]”^[11] The rental agreement listed two forms of payment: 1) an external tour voucher ALG2D240 and 2) a Visa.^[12]

         The rental agreement stated that the agreement included all provisions “contained within Alamo's rental agreement jacket. . . .”^[13] The rental agreement jacket contained the following provision:

Owner complies with applicable motor vehicle financial responsibility laws as a state-certified self-insurer, bondholder, or cash depositor. Except to the extent required by the motor financial responsibility laws of the applicable state or otherwise by law, Owner does not extend any of its motor vehicle financial responsibility or provide insurance coverage to Renter, [additional drivers], passengers or third parties through this Agreement. If valid automobile liability insurance or self insurance is available on any basis to Renter, [additional drivers] or any other driver and such insurance or self insurance satisfies the applicable state motor vehicle financial responsibility law, then Owner extends none of its motor vehicle financial responsibility. However, if Renter and [additional drivers] are in compliance with the terms and conditions of this Agreement and if Owner is obligated to extend its motor vehicle financial responsibility to renter, [additional drivers] or third parties, then Owner's obligation is limited to the applicable state minimum financial responsibility amounts.^[14]

         On July 27, 2016, Barksdale, while driving the rented minivan in Fairbanks, Alaska, was involved in an automobile accident. Seamon was seriously injured in the accident.

         Plaintiff had issued an insurance policy to Alaska Sales & Service, d/b/a Alamo, Policy Number CA07766664, which contained a Daily Auto Rental Endorsement.^[15] The Endorsement provides that an “insured” includes a “‘rentee[, ]'” who is defined as “a holder of a ‘rental agreement' with you which provides for the holder's use of an ‘auto' for a period of less than one year.”^[16] A “rental agreement” is defined as “the ‘auto' rental contract between you and the ‘rentee.' This agreement states the limit of liability you are providing the ‘rentee.'”^[17]

         Paragraph C in Section II of the Endorsement provides that the “Limit of Insurance” for a “rentee” “is the limit shown in the SCHEDULE of this endorsement or the limits specified by a compulsory or financial responsibility law of the jurisdiction in which the accident occurred.”^[18] The Schedule shows that the limit for “bodily injury” liability is $50, 000 for each person and $100, 000 for each accident and that the limit for “property damage” liability is $25, 000 for each accident.^[19] This complies with the mandatory minimum for bodily injury liability under Alaska law. AS 28.22.101(d).

         The Endorsement further provides:

With respect to specific commercial accounts, if the Corporate Schedule below is filled in, the Limit Of Insurance for Liability Coverage for the “rentee” as stated in Item C. Limit Of Insurance of this endorsement is replaced by the following:

C. Limit Of Insurance

The “rentee” limit of liability contained in a written “insured contract” between the “Insured” and specific commercial accounts designated by the “Insured” shall be considered to be the Limit of Liability contained in the “rental agreement”; however, our Limit of Liability for any “rentee” shall not exceed the limit stated in the Corporate Schedule of this endorsement.^[20]

         The Corporate Schedule is filled in on the Endorsement and provides for a Limit of Liability for bodily injury and property damage combined of $2, 000, 000 for each accident.^[21]

         Finally, the Endorsement provides:

The Insurance provided by this policy for the “rentee” and any other person authorized by the “rental agreement” held by the “rentee, ” is subject to the terms, conditions, restrictions and limitations contained in the “rental agreement, ” provided however, that our Limit of Insurance for Liability Coverage will not exceed the limit shown in Section C. Limit Of Insurance of this endorsement.^[22]

         Seamon contends that plaintiff sold Alaska Sales & Service the policy that contained the Endorsement because in 2008, Alaska Sales & Service was directed by Alamo's parent company to obtain additional insurance coverage for certain commercial accounts that rented with Alamo.^[23] More specifically, Alaska Sales & Service was to have an insurance policy that contained “[a]n endorsement providing coverage over the minimum financial responsibility limits to all commercial accounts that we have, by separate contract, agreed to provide. . . .”^[24]

         After the accident involving Barksdale and Seamon, plaintiff contends that, on Barksdale's account, it offered the $50, 000 bodily injury limit of liability to Seamon. Plaintiff further contends that Seamon rejected that offer and demanded the $2 million limit of liability contained in the Corporate Schedule in the Endorsement.

         Plaintiff commenced this action for declaratory relief on October 16, 2017. Plaintiff seeks a declaration “that the applicable liability limit under the National Casualty policy issued to Alamo, for vehicle renter Jessie L. Barksdale, is $50, 000 for each person, as stated in the National Casualty policy, and not $2, 000, 000 as alluded to by defendant Seamon.”^[25]

         Plaintiff now moves for summary judgment on its claim for declaratory relief. Seamon cross-moves for summary judgment that the applicable liability limit for Barksdale is $2, 000, 000.^[26]

         Discussion

         Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

         This case involves the interpretation of an insurance contract under Alaska law. “The interpretation of contract language is a question of law. . . .” Dugan v. Atlanta Cas. Companies, 113 P.3d 652, 654 (Alaska 2005). “‘In addressing the proper interpretation of an insurance policy, ” the court “‘look[s] to (1) the language of the disputed provisions in the policy, (2) other provisions in the policy, (3) extrinsic evidence, and (4) case law interpreting similar provisions.'” Hahn v. GEICO Choice Ins. Co., 420 P.3d 1160, 1170 (Alaska 2018) (quoting State Farm Mut. Auto. Ins. Co. v. Houle, 269 P.3d 654, 657-58 (Alaska 2011)). “‘Because an insurance policy is a contract of adhesion, [the court] construe[s] grants of coverage broadly and interpret[s] exclusions narrowly.'” Id. (quoting Houle, 269 P.3d at 658). “Under Alaska law, ‘[i]nsurance contracts are interpreted in accordance with the reasonable expectations of the insured. This is true even if painstaking study of the policy provisions would have negated those expectations.'” Id. (quoting Safety Nat'l Cas. Corp. v. Pac. Emp'rs Ins. Co., 927 P.2d 748, 750 (Alaska 1996)). “Insurance contracts are also construed according to ‘ordinary and customary usage.'” Id. at 1171 (quoting Houle, 269 P.3d at 658). “Any ambiguous terms are to be construed in favor of the insured.” Id. “However, ‘ambiguities only exist when there are two or more reasonable interpretations of particular policy language.'” Id. (quoting Houle, 269 P.3d at 658).

         Although the definition section of the Endorsement does not contain a definition for “specific commercial account, ” the Endorsement is not ambiguous. The Limit of Insurance for Liability Coverage is stated in Paragraph C of Section II of the Endorsement. Paragraph C provides that the limit for liability coverage for a “‘rentee' is the limit shown in the SCHEDULE of this endorsement. . . .”[27]The SCHEDULE shows a $50, 000 limit for bodily injury liability for each person.^[28]

         The Endorsement further provides:

With respect to specific commercial accounts, if the Corporate Schedule below is filled in, the Limit Of Insurance for Liability Coverage for the “rentee” as stated in Item C. Limit Of Insurance of this endorsement is replaced by the following:

C. Limit Of Insurance

The “rentee” limit of liability contained in a written “Insured contract” between the “Insured” and specific commercial accounts designated by the “Insured” shall be considered to be the Limit of Liability contained in the “rental agreement”; however, our Limit of Liability for any “rentee” shall not exceed the limit stated in the Corporate Schedule of this endorsement.^[29]

         The Corporate Schedule in the Endorsement provides for a Limit of Liability for bodily injury and property damage combined of $2, 000, 000 for each accident.^[30] Paragraph C, as it pertains to “specific commercial accounts[, ]” unambiguously states that in order for the limit of liability in the Corporate Schedule to apply there must be a written ...