From the desk of Kyle Riley: What happens when an owner of multiple businesses obtains a motor vehicle liability insurance policy listing only one of his business entities as the named insured but provides information regarding the location and number of drivers based on all of his business entities? Incomplete information from the insured is a relatively common event. Read on to find out how the insurer escaped liability in this case.
Claims Pointer: When only one entity is listed as the named insured on a liability policy, the insurance carrier is obligated to provide coverage for only that entity even if the insurance application and/or schedules contain information regarding other unnamed entities.
West Coast Pizza Co., Inc. v. United Nat’l Ins. Co., in the Court of Appeals of the State of Washington (Case No: 65946-4-I, December 12, 2011).
Bryan and Kevin Dobbs were part owners of four entities which operated Domino’s Pizza franchises in Washington. One of these entities was named West Coast Pizza. Bryan Dobbs was also the sole owner of an additional Dominos’ franchise entity named Mad Pizza. Collectively, these five entities operated 21 Domino’s franchises and employed approximately 100 delivery drivers.
The Dobbs brothers filed an application to obtain liability insurance coverage related to pizza delivery. The application listed West Coast Pizza, dba Domino’s Pizza as the sole applicant. However, the application indicated that there were 100 delivery drivers. Based on the application, National Continental issued an insurance policy listing West Coast Pizza dba Domino’s Pizza as the sole insured. A schedule of franchise locations was then sent to National Continental listing 21 franchise locations.
During the effective period of this policy, a Mad Pizza delivery driver was involved in an accident which resulted in injuries to the other driver. The other driver filed a personal injury suit against Mad Pizza and the delivery driver. National Continental refused to provide the delivery driver or Mad Pizza with a defense in this lawsuit. West Coast Pizza then filed a declaratory action seeking a declaration that the policy provided coverage for the underlying suit. National Continental filed a Motion for Summary Judgment in this action arguing that neither Mad Pizza nor the delivery driver was insured by the policy. The trial court granted the Motion. West Coast Pizza appealed.
The Court of Appeals noted that insurance policies are to be interpreted by ascertaining the intent of the parties. The intent of the parties is generally shown by examining the terms of the policy. According to its terms, the policy provided coverage to the named insured—West Coast Pizza—for accidents involving vehicles used by the named insured or owned by its employees. Mad Pizza was not mentioned anywhere within the policy. West Coast Pizza argued that the application listing 100 drivers and the schedule of locations listing 21 addresses demonstrated that the parties intended the policy to provide coverage for Mad Pizza and its drivers. However, the Court of Appeals found that this evidence only indicated that National Continental intended to cover West Coast Pizza and its supposed 100 drivers and 21 locations, not Mad Pizza and its delivery drivers. Accordingly, the Court held that National Continental did not have a duty to defend or indemnify Mad Pizza in the underlying action.
West Coast Pizza further argued that the policy should be reformed based on mutual mistake. The Court rejected this argument finding that there was no evidence showing that National Continental ever intended to insure Mad Pizza and its drivers. Instead, the evidence only showed a unilateral mistake on the part of the Dobbs for failing to obtain insurance coverage for their other entities. Because unilateral mistake cannot be the basis for reformation, the Court held that the policy is to be enforced as written.
NOTE: This opinion has not been published. It is provided to demonstrate how the court approaches the issues involved in the case. It cannot be cited as authority to a court of law.
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