Opinion handed down July 31, 2012
Len Mendenhall worked for Jay Walker on his cattle farm.[2] While at work one day, Mr. Mendenhall was killed in an accident when the truck he was unloading overturned.[3] The truck was owned by the Family Center[4] and covered by business liability insurance.[5] Ruth Mendenhall, his wife, filed a wrongful death suit against the Walkers and the Family Center, seeking indemnification of her judgment against Jay Walker from the liability insurance.[6] The insurance company contended that Mr. Mendenhall was excluded by the insurance coverage because he was considered an “employee” under the insurance policy.[7] The Supreme Court of Missouri held that because of an ambiguity in the exclusionary language and various definitions for an “employee,” the policy must be interpreted in favor of Mrs. Mendenhall.[8]
I. Facts and Holding
In May 2006, Mr. Mendenhall interviewed for a job with the Family Center of Farmington.[9] He was not hired, but was referred to Jay Walker, the owner of the Family Center, as a good candidate for employment.[10] Upon the Family Center’s recommendation, Mr. Walker personally hired Mr. Mendenhall to do work on his cattle farm on an as-needed basis.[11]
Mr. Mendenhall performed work on the farm as well as occasionally performing tasks for the Family Center.[12] Mr. Mendenhall was also permitted to use a truck and trailer owned by the Family Center, covered by a business automobile liability insurance policy.[13] Despite Mr. Mendenhall’s work for the Family Center, he was always paid by the farm.[14]
On March 8, 2007, Mr. Mendenhall was using the Family Center’s truck and trailer to haul and unload rock on Mr. Walker’s farm, when the truck overturned, killing him.[15] Mrs. Mendenhall filed a wrongful death suit against the Family Center and the Walkers.[16] Mrs. Mendenhall dismissed her action against Mrs. Walker and entered into an agreement with Mr. Walker pursuant to section 537.065[17], in which a judgment against him would be taken from the proceeds of the Hartford insurance policy.[18]
Mrs. Mendenhall obtained a judgment against Mr. Walker in the amount of $840,000 and against the Family Center for $50,000.[19] She then proceeded in an equitable garnishment suit to satisfy the $840,000 judgment under the Family Center’s insurance policy.[20] Hartford denied any obligation to indemnify Mr. Walker for the judgment Mrs. Mendenhall secured against him because of the exclusionary language of the policy.[21]
Under the Hartford insurance policy, a specific exclusion denied coverage for employees of the insured, including a “leased worker” but not a “temporary worker.”[22] In the policy, a “leased worker” was defined as a “person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm...”[23] The policy separately defined “temporary worker” as “a person who is furnished to you to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions.”[24]
The trial court entered summary judgment in favor of Hartford, concluding that Mr. Mendenhall was excluded from coverage because he was an “employee” rather than a “temporary worker” because he was not “furnished” to Mr. Walker by an employment agency or service.[25]
The Supreme Court of Missouri reversed, focusing their analysis on whether Mr. Mendenhall was a “temporary employee” under the definition set forth by the insurance policy.[26] Hartford argued that Mr. Mendenhall was not “furnished” to Mr. Walker as an employee because the Family Center was not an employment agency capable of “furnish[ing]” employees.[27] The Court first looked to the policy for a definition of the word “furnished.”[28] When it found none, the Court gave “furnished” it’s ordinary meaning and rejected Hartford’s argument that the word “furnished” within the policy required an agency relationship.[29]
The Court found that the existence of an agency relationship between the Family Center and Mr. Mendenhall was neither necessary nor was it a useful point for determining whether Mr. Mendenhall was “furnished” to Mr. Walker by the Family Center.[30] Furthermore, the Court decided that the phrase “furnished” could plausibly include situations where an employment decision is based merely on a third party referral, which was the case between the Family Center and Mr. Walker.[31]
Additionally, the Court noted a stark ambiguity in Hartford’s policy, in that it specifically stated in its “leased worker” definition that the existence of a third party labor leasing firm was necessary.[32] In contrast, no such requirement could be found in the policy’s definition of “temporary worker.”[33] The Court referenced the split in case law holding for and against defining “furnished to” as requiring a third party employment agency, and ultimately found that such a split makes the phrase susceptible to multiple interpretations and is therefore ambiguous.[34] Because of the ambiguity as to the meaning of “furnished” within Hartford’s definition of “temporary worker,” the Court construed the ambiguity against the insurer and in favor of Mrs. Mendenhall.[35]
The dissent, written by Judge Stith, agreed with the majority opinion’s definition of “furnish,” but disagreed with its application of the definition.[36] The dissent argued that simply referring or recommending an employee does not rise to the level of “furnishing” the employee.[37] Rather, in order to “furnish” an employee, one must have the employee to “furnish” in the first place and must be able to direct the actions of that employee to which it is furnishing.[38]
The dissent also noted the potential windfall of the majority’s construction of the word “furnish.”[39] Judge Stith worried the use of the majority’s definition could have consequences for seasonal or part-time worker’s seeking worker’s compensation, who would be transformed from an “employee” covered by the worker’s compensation act, to a “temporary employee” if they were recommended or referred to the employer.[40] This could in turn limit the remedy available to thousands of part-time and seasonal workers who have been injured on the job.[41]
The dissent ultimately argued that the word “furnish” should have been interpreted in light of its use within the Workmen’s Compensation Act, since definitions under commercial liability and workers’ compensation are written in a parallel fashion, to provide coverage for the public, without duplicating coverage given to employees.[42]
II. Legal Background
In Missouri, when a phrase is “reasonably open to different constructions,” it is considered ambiguous.[43] When a court is resolving ambiguities in insurance coverage, they must do so by applying the meaning understood by an ordinary person of average intelligence who is similarly purchasing the insurance.[44] Ambiguities within an insurance policy are resolved in favor of the insured, and exclusionary clauses are construed against the drafter of the policy.[45]
In the realm of “furnishing” an employee, different courts have split on whether doing so requires the worker to be furnished by an employment agency or not. On one hand, courts in Kentucky and Connecticut have both held that the phrase “furnished to” unambiguously requires that the worker be furnished by an employment agency or some type of similar service.[46] Specifically, in Burlington Insurance Company v. DeVesta, the district court made clear that “[i]n order to have been furnished [sic] the worker must have been hired through an employment agency, manpower service provider or any similar service.”[47] On the other hand, courts in New York and Florida have held that an employee may be “furnished” by seemingly any third party, including referrals by friends or other employees.[48]
III. Comment
The majority and dissenting’s opinions differ on how the insurance contract should be interpreted. The majority took a traditional approach, looking to the plain and ordinary meaning of “furnished” in the dictionary, and applied it accordingly.
On the other hand, the dissent implemented one more method of interpretation. The dissent looked to other types of policies in which the term “furnished” has been used, specifically that of worker’s compensation, justifying its view as a better public policy.
The law is not steadfast on what “furnished” should or should not mean. However, the legal background does provide a consistent means of how to interpret an ambiguous term within a policy. In this case, the majority lines up with basic insurance policy provision interpretation, while the dissent stretches the limits of interpretation beyond what has been legally provided for. In this sense, it appears the majority was on point in its interpretation and finding the term “furnished” ambiguous and construing it against the insurance company.
- Chantal Fink
[1] No. SC 92202 (Mo. July 31, 2012) (en banc), available at http://www.courts.mo.gov/file.jsp?id=55763. The West reporter citation is Mendenhall v. Prop. & Casualty Ins. Co. of Hartford, 375 S.W.3d 90 (Mo. 2012)(en banc).
[2] Id. at 2.
[3] Id.
[4] The Family Center of Farmington was a company unassociated with Jay Walker’s cattle farm.
[5] No. SC 92202 at 2.
[6] Id. at 3.
[7] Id. at 3-4.
[8] Id. at 8.
[9] Id. at 2.
[10] Id.
[11] Id.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id. at 3.
[17] “Any person having an unliquidated claim for damages against a tort-feasor, on account of bodily injuries or death, may enter into a contract with such tort-feasor or any insurer in his behalf or both, whereby, in consideration of the payment of a specified amount, the person asserting the claim agrees that in the event of a judgment against the tort-feasor, neither he nor any person, firm or corporation claiming by or through him will levy execution, by garnishment or as otherwise provided by law, except against the specific assets listed in the contract and except against any insurer which insures the legal liability of the tort-feasor for such damage and which insurer is not excepted from execution, garnishment or other legal procedure by such contract.” Mo. Rev. Stat. § 537.065 (2000).
[18] 2012 WL 3106613 at 3.
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[23] Id.
[24] Id.
[25] Id. at 4.
[26] Id at 5.
[27] Id
[28] Id.
[29] Id. at 5-6.
[30] Id. at 6.
[31] Id. at 7.
[32] Id.
[33] Id.
[34] Id. 7-8.
[35] Id. at 8.
[36] Id. at 11 (J. Stith dissenting).
[37] Id.
[38] Id. at 11-12.
[39] Id. at 12.
[40] Id. at 13-16.
[41] Id.
[42] Id. at 17.
[43] Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010).
[44] Jones v. Mid-Century Insurance Co., 287 S.W.3d 687, 690 (Mo. banc 2009).
[45] Burns, 303 S.W.3d at 509.
[46] See Burlington Ins. Co. v. DeVesta, 511 F.Supp.2d 231, 233 (D. Conn. 2007); Brown v. Ind. Ins. Co., 184 S.W.3d 528, 538 (Ky. 2005).
[47] Burlington Ins. Co. v. DeVesta, 511 F.Supp.2d 231, 233 (D. Conn. 2007) (quoting Nationwide Mut. Ins. Co. v. Allen, 850 A.2d 1047, 1057 (2004)) (internal quotation omitted).
[48] See Nat’l Indent. Co. of S. v. Landscape Mgmt. Co., Inc., 936 So.2d 361, 363 (Fla. Dist. Ct. App. 2007); Nick’s Brick Oven Pizza, 853 N.Y.S.2d 870, 872-73 (N.Y. Sup. Ct. 2008).
