Colonial Ins. Co. of California v. Jermann

Tyack, Judge. On May 10,1993, Jason Jermann was involved in a two-car collision during the course of his employment with Johncol, Inc., d.b.a. Papa John’s Pizza (“Papa John’s”). At the time of the accident, Jermann was returning to Papa John’s after delivering a pizza. Aso involved in the accident were Patricia A Conant, the driver of the other vehicle, and her son Ryan, both of whom were injured. On the date of the accident, Jason Jermann was a named insured on a personal automobile insurance policy issued by Colonial Insurance Company of California (“Colonial”) to his mother, Sharon Jermann. The pick-up truck owned and operated by Jason Jermann at the time of the accident was also described and covered by the policy. A commercial liability insurance policy issued to Papa John’s by Central Mutual Insurance Company (“Central Mutual”) was also in effect at the time. When Conant and her son ultimately made claims against Colonial, this lawsuit ensued. On July 14, 1993, Colonial filed a declaratory judgment action in the *386 Franklin County Court of Common Pleas generally seeking a determination that its policy coverage did not apply under the circumstances. Colonial sought to deny coverage based upon an exclusion set forth in the policy. Exclusion (7) reads, in pertinent part: “This coverage does not apply to: « * * “Bodily injury and property damage arising out of the ownership, maintenance or use of a car when used to carry persons or property for a charge.” (Emphasis added.) Following discovery proceedings, the parties filed cross-motions for summary judgment based upon undisputed facts. On July 22, 1994, the trial court journalized an entry denying Colonial’s summary judgment motion and granting the cross-motion filed on behalf of Central Mutual, Papa John’s, and Jermann. In holding that the above exclusion did not apply, the court concluded that Jermann’s use of his vehicle to deliver pizzas did not constitute carrying property “for a charge.” Colonial has pursued a timely appeal, assigning a single error for our consideration: “The decision of the trial court denying the summary judgment motion of appellant, Colonial Insurance Company of California, and granting the cross-motion for summary judgment of appellees, Central Mutual Insurance Company, Johncol, Inc. and Jason Jermann, was contrary to law.” Colonial argues that Jermann’s use of his personal vehicle for pizza delivery activities constituted “carrying property for a charge” so as to trigger the exclusion. In construing “for a charge,” Colonial emphasizes the details of the financial arrangement between Jermann and Papa John’s. Specifically, Jermann was compensated with a fixed hourly rate; plus, a “commission” of 6.5 percent of the sale price of each order he delivered; and, finally, tips from customers. Colonial construes these factors as being indicative of the plain, ordinary meaning of the phrase “for a charge.” The trial court noted that the factual situation here presents an issue of first impression. Central Mutual argued, and the trial court ultimately concluded, that Jason Jermann was not carrying pizzas “for a charge” within the meaning of the exclusion. The trial court examined the above facts, and noted the additional significant fact that Jermann was paid an hourly wage not solely for delivering pizzas, but also for helping in the kitchen when needed. Thus, the court found that the hourly wage was not dependent upon delivering pizzas and that it would have been paid in any event. The court further noted that the 6.5 percent “commission” Jermann earned on each pizza delivered was intended as remunera *387 tion for gasoline and for the mileage on his vehicle. Finally, the court rejected as unpersuasive Colonial’s argument pertaining to tips because of the highly discretionary and uncertain nature of tipping. Papa John’s did not charge its customers an additional amount for delivery. In construing the exclusion at issue, we are guided by the well-settled principle that an insurance contract prepared and drafted by the insurer is to be construed liberally in favor of the insured and strictly against the insurer where the contract contains uncertain or ambiguous language. Munchick v. Fid. & Cas. Co. (1965), 2 Ohio St.2d 303, 31 O.O.2d 569, 209 N.E.2d 167, paragraph one of the syllabus; Moorman v. Prudential Ins. Co. (1983), 4 Ohio St.3d 20, 22, 4 OBR 17, 19, 445 N.E.2d 1122, 1124. The rationale underlying this rule of law is that the insurer, having prepared the policy, must also be prepared to accept any reasonable interpretation in favor of the insured. Nationwide Ins. Co. v. Johnson (1992), 84 Ohio App.3d 106, 109, 616 N.E.2d 525, 527, citing Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 167, 24 O.O.3d 274, 275, 436 N.E.2d 1347, 1348. Thus, a preliminary question we must answer is whether the disputed language is indeed ambiguous. Not surprisingly, Colonial takes the position that the meaning of “for a charge” is unequivocally clear. Colonial cites dicta in Stanton v. Nationwide Mut. Ins. Co. (1993), 68 Ohio St.3d 111, 623 N.E.2d 1197, as being demonstrative of the Ohio Supreme Court’s “current belief’ that such “for fee” or “for charge” exclusions are unambiguous. Stanton involved an over-the-road interstate trucking organization which was exclusively in the business of hauling goods for a fee. In Stanton, the court held at the syllabus: “An exclusion in the uninsured motorist coverage of an automobile liability policy which states that uninsured motorist coverage does not apply to the use of any motor vehicle by an insured to carry persons or property for a fee is unenforceable.” Thus, the issue addressed in Stanton was the enforceability of the exclusion in the context of uninsured motorist coverage. Colonial reasons that no ambiguity exists in such exclusions by pointing to the court’s observation that the exclusion “plainly eliminates coverage to at least those persons, like [the insured truck driver], who are injured while driving vehicles that are being used for commercial purposes.” (Emphasis added.) Id. at 114, 623 N.E.2d at 1199. While Colonial emphasizes and construes broadly the “plainly eliminates coverage” language, we interpret the statement in its entirety as being narrowly restricted to the facts of that case. One would be hard-pressed to argue that a trucker expressly engaged solely to haul goods is not carrying property for a charge or fee. Such an obvious lack of ambiguity is not present under the circumstances of this case. *388 We find that the language of the exclusion clause is ambiguous and susceptible to varying interpretations in this case. In Johnson, supra, the Butler County Court of Appeals similarly found a nearly identical exclusion to be ambiguous in the context of underinsured coverage of an over-the-road trucker. In that case, the trucker was paid an hourly wage plus an additional amount for each mile he drove. The court concluded that the exclusion was prone to at least two different interpretations: “ * * * On one hand, the clause can be read in such a way that underinsured coverage is excluded anytime a vehicle used by the insured carries property and any fee or payment to the insured is involved. Nationwide Ins. Co. v. Thorley (Jan. 16, 1991), Summit App. No. 14658, unreported, at 3, 1991 WL 6137 * * *. Applying this reading of the clause to the case at bar, appellant would be excluded from coverage since, at the time of the accident, he was carrying property and being paid by his employer for driving. “On the other hand, the clause can also be reasonably read to exclude coverage only if the insured was using the vehicle for the specific purpose of obtaining a fee for carrying goods. Id. In the instant action, it is not disputed that appellant received an hourly wage from Roadway and additional compensation for each mile he drove. There is nothing which suggests, however, that he specifically charged customers a fee for carrying their freight. * * * ” (Emphasis added.) Id., 84 Ohio App.3d at 109, 616 N.E.2d at 527. While the Johnson case addressed underinsured coverage in a clearly commercial setting, as did Stanton, supra, we find its rationale persuasive. Because the exclusion clause here is susceptible to more than one interpretation as applied to the facts of this case, we find it to be ambiguous and, therefore, unenforceable. The insurer carries the burden of establishing that an exclusion applies and Colonial has failed to satisfy that burden. See Archer v. Nationwide Ins. Co. (Aug. 19, 1993), Franklin App. No. 93AP-620, unreported, 1993 WL 318823. Accordingly, the assignment of error is overruled. Numerous courts from other jurisdictions have addressed the precise issue presented here in the same factual context of pizza delivery and are in accord with our holding. See Progressive Cas. Ins. Co. v. Metcalf (Minn.App.1993), 501 N.W.2d 690; RPM Pizza, Inc. v. Automotive Cas. Ins. Co. (La.1992), 601 So.2d 1366; Pizza Hut of America, Inc. v. West Gen. Ins. Co. (Ark.App.1991), 36 Ark.App. 16, 816 S.W.2d 638; United Serv. Auto. Assn. v. Couch (Tenn.App.1982), 643 S.W.2d 668. Having overruled the assignment of error, we affirm the judgment of the trial court. Judgment affirmed. *389 Lazarus, J., concurs. Deshler, J., dissents.