Interpreting An Insurance Policy – It Can Be Tough

Dallas insurance attorneys will run across situations wherein it is hard to understand and advise how the law applies based on the facts of the case when applied to the policy language.
The United States District Court, N. D. Oklahoma, issued an opinion in July 2013 that illustrates how complicated it can sometimes be to advise a client. The style of the case is O’Farrell v. State Farm. Here is some relevant information:
O’Farrell and State Farm, both, filed motions for summary judgment. The parties dispute whether Oklahoma or Texas insurance law applies to plaintiff’s claim for underinsured motorist (UIM) benefits, and they agree that the choice of law issue is dispositive. Plaintiff Patricia O’Farrell, in her capacity as the personal representative of the Estate of Samuel Joseph Dash (the Estate), argues that Oklahoma law applies and an insured’s own vehicle qualifies as an “uninsured motor vehicle” as a matter of law. Defendant contends that Texas law applies and an exclusion in the policy providing that the insured’s vehicle is not an uninsured motor vehicle is enforceable under Texas law.
On June 24, 1994, State Farm issued an automobile insurance policy to Curtis and Elisabeth Callaway. The application was completed at the office of State Farm agent Roland Gladden in Odessa, Texas, and the Callaways resided in Odessa when the policy was issued. The Callaways moved to Midland, Texas in 2004. From the date of the issuance of the policy, all premium notice renewals and any other correspondence was sent to the Callaways at an address in Texas. The policy plainly states that “[t]he Auto(s) or Trailer(s) described in this policy is principally garaged at the address shown unless otherwise stated.” The Callaways added a 1998 Ford Expedition to the policy with an effective date of coverage of May 2, 2003. Curtis Callaway died on April 21, 2004, but Elisabeth Callaway maintained coverage of the Expedition after his death. Elisabeth Callaway died on February 27, 2012, and the policy remained in effect until April 25, 2012. The address shown on the declarations page for the policy period between February 17, 2012 until the policy terminated on April 25, 2012 was 2804 Purple Sage Trail, Midland, Texas, and this is where the Expedition was principally garaged during that time period.
In September 2010, Elisabeth Callaway loaned the Expedition to her grandson, Justin Gibson, for his use while he was home on leave from military duty. While he was overseas on military duty, Gibson stored the Expedition at the home of his other grandmother, Mary Campbell, in Stigler, Oklahoma. Gibson had been staying at Campbell’s home since 2000 and he treated it as his residence while he was on leave. Neither Elisabeth Callaway nor Gibson notified State Farm that Gibson had taken the Expedition to Oklahoma or that he would be storing the vehicle in Oklahoma. Gibson was not added as a driver on the policy and he did not obtain his own insurance for the Expedition. In February 2012, Elisabeth Callaway completed an Application for Texas Certificate of Title Seller, Donor, or Trader’s Affidavit, but there is no evidence showing that the application was filed. Gibson states that he was “short on money, and was waiting for his next paycheck to get everything switched over.” Even though the application for a Texas title was not filed, plaintiff claims that ownership of the Expedition had transferred to Gibson in February 2012.
On March 25, 2012, Gibson allowed Brian Cripps to drive the Expedition, and Samuel Dash was a passenger in the Expedition. The Expedition was involved in a single- vehicle rollover accident and Dash was killed. At the time of the accident, the Expedition was registered in Texas and it was titled in Texas to Curtis and Elisabeth Callaway. State Farm received notice of the accident and learned for the first time that Gibson had maintained possession of the Expedition in Oklahoma since September 2010. State Farm paid the maximum limit of liability coverage of $100,000 to the Estate. The Estate subsequently submitted a claim for UIM benefits under Callaway’s policy. The policy had a $100,000 limit for underinsured motorist claims. State Farm agreed to “pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage, caused by an accident.” The term “covered person” means “[y]ou or any family member [or][a]ny person occupying your covered auto.” The policy states that “uninsured motor vehicle does not include any vehicle or equipment … [o]wned by or furnished or available for the regular use of you or any family member….” The insured was also required to notify State Farm of any changes that could affect the insurance premium, including additional operators using the insured vehicle or a change in the “place of the principal garaging” of the insured vehicle. The policy states that it “contains all the agreements between you and us. Its terms may not be changed or waived except by endorsement issued by us.”
Now – let’s call time out.
As can be seen by the fact pattern, these situations can get complicated. The ruling came down in favor of State Farm in this particular case, but it might not take much change in the fact pattern to make the outcome different and goes to illustrating why an experienced Insurance Law Attorney needs to be involved in these types of cases.