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American Indemnity Co. v. Foy Trailer Rentals11/28/2000
court to determine whether it had an obligation to defend and indemnify Foy, Mr. Rivalto, and Ms. Hinman for the claims made in Ms. Johnson's federal suit and whether the CGL policy provided coverage for the allegations made against Foy, Mr. Rivalto, and Ms. Hinman in the federal suit. American Indemnity Company filed a motion for summary judgment. The trial court granted summary judgment in favor of American Indemnity Company, finding that under the CGL policy, American Indemnity Company did not have a duty to defend the federal court action on behalf of Foy, Mr. Rivalto, and Ms. Hinman, and that the policy in question did not provide coverage for the allegations against Foy, Mr. Rivalto, and Ms. Hinman in the federal action. Foy, Mr. Rivalto, and Ms. Hinman appealed, raising the issue of whether the trial court erred in granting American Indemnity Company's motion for summary judgment.
This appeal involves questions regarding an insurance policy's coverage and an insurer's duty to defend which requires this court to interpret the insurance policy in light of the claims asserted against the insured. If any one of the allegations made against the insured is covered by the policy, the insurer has a duty to defend the lawsuit regardless of the number of allegations falling outside of coverage. Drexel Chem. Co. v. Bituminous Ins. Co., 933 S.W.2d 471, 480 (Tenn. Ct. App. 1996) (citations omitted). Issues relating to the scope of coverage and an insurer's duty to defend are questions of law. See Standard Fire Inc. Co. v. Chester-O'Donley & Assoc., Inc., 972 S.W.2d 1, 5 (Tenn. Ct. App. 1998). Summary judgment is appropriately used in resolving legal questions only when the relevant facts are undisputed. See St. Paul Fire and Marine Ins. Co. v. Torpoco, 879 S.W.2d 831, 834 (Tenn. 1994).
The trial court's grant of summary judgment is not entitled to a presumption of correctness on appeal. See McClung v. Delta Square Ltd. Partnership, 937 S.W.2d 891, 894 (Tenn. 1996). Rather we must review de novo whether the requirements of Tennessee Rule of Civil Procedure 56 have been met. See Mason v. Seaton, 942 S.W.2d 470,472 (Tenn. 1997). A summary judgment is warranted only when there are no genuine, material factual disputes with regard to the claim or defense asserted in the motion and when the moving party is entitled to a judgment as a matter of law. See Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997).
The insurance policy issued by American Indemnity Company to Foy Trailer Rentals is in the record. There are no factual disputes concerning the contents of this policy; thus, its interpretation presents only a question of law. The summary judgment granted to American Indemnity Company can stand only if it is established, as a matter of law, that the CGL policy does not cover the asserted claims against the Appellants.
Insurance contracts are subject to the same rules of construction and enforcement as general contracts. See McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn. 1990). Absent fraud or mistake, the insurance contract should be interpreted as written, giving natural and ordinary meaning to its terms. See Allstate Ins. Co. v. Wilson, 856 S.W.2d 706, 708 (Tenn. Ct. App. 1992); Drexel Chem. Co., 933 S.W.2d at 477. However, ambiguous terms in the insurance contract will be construed against the insurer and in favor of the insured. See Harrell v. Minnesota Mut. Life Ins. Co., 937 S.W.2d 809, 814 (Tenn. 1996). Insurance polices should be construed as a whole and in a reasonable and logical manner. See English v. Virginia Sur. Co., 268 S.W.2d 338, 340 (Tenn. 1954).
Commercial general liability policies are designed to protect the insured from losses arising out of business
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