Summary: Plaintiff Steven Broom was a temporary employee working for Labor Ready employment service and assigned to work for the day with Wilson Paving & Excavating laying pipe inside a trench. The trench Broom was working in collapsed, resulting in severe injuries on Broom including rib fractures, collapsed lungs, pulmonary contusions, blood within the chest, fluid around the spleen and kidney, and a left kidney laceration. Broom applied for and received worker's compensation benefits from Labor Ready as his employer. Broom also sued Wilson Paving for its negligent violation of OSHA rules that would have prevented the collapse. Broom received a judgment for $1,150,000 against Wilson Paving. In a post-judgment action, Broom sought payment via garnishment against an insurance policy held by Wilson Paving from Mid-Continent Casualty Company. Mid-Continent objected to payment, alleging that its policy excluded expected or intentional injuries and that its policy excluded injuries resulting from earth movement. The trial court held in favor of Mid-Continent finding that the injuries were excluded under the earth-movement exclusion. Broom appealed and the case was assigned to the Oklahoma Court of Civil Appeals. The OCCA ruled that coverage was properly excluded under the expected or intentional injuries exception, but not under the earth-movement exception. Broom applied for and received certorari to the Oklahoma Supreme Court. The Oklahoma Supreme Court held that neither exception applied and remanded the case to the trial court for further action consistent with its holding.
Legal Issue: The Mid-Continent policy covered potential injuries to non-employees accrued as a result of Mid-Continent's business activities. This policy specifically did not cover injuries that were expected or intended by the insured. It also specifically excluded damages resulting from earth movement such as by earthquake, landslide, mud flow, subsidence, settling, slipping, falling away, shrinking, expansion, caving in, shifting, eroding, rising, tilting or any other movement of land, earth or mud.
The Court noted that in Oklahoma to limit liability in an insurance policy an insurer must employ language that clearly and distinctly reveals its stated purpose. Any ambiguity in the contract is to be interpreted against the insurer, as the policy is drafted by the insurer.
Using this standard the Court first set aside the exception for injuries that were expected or intended by the insured, noting that Broom sued for and won under a negligence theory. The Court noted that negligence has in it no element of willfulness; but involves a state of mind which is negative; a state of mind in which the person fails to give attention to the character of his acts or omissions or to weigh their probable or possible consequences. Thus, injuries flowing from negligence are neither expected nor intended.
Next the Court looked to the earth-movement exception. Mid-Continent argued that by its very nature a collapse is a movement of earth and therefore not covered. Wilson Paving argued that this interpretation would have excluded almost every possible loss it could encounter as its business related to the movement of earth. The Court found this question to be one of first impression in the state of Oklahoma, and looked to other jurisdictions for guidance. There it found that earth movement exceptions have been traditionally applied to natural events such as earthquakes and landslides that are not man-made events. The Court ruled that because Mid-Continent did not clearly delineate that the exception was to include all movements of earth regardless of cause, and that the historic use of such exclusions has been related to natural phenomena, that an ambiguity existed in the language of the policy and interpreted the same against the insurance company.
Because neither exception is applicable, the Court remanded the matter to the trial court for further action in accordance with the terms of this opinion. Likely, this will result in payment of the injury from the insurance policy.
Discussion: Mid-Continent attempted to use parallel litigation by the American Interstate Insurance Company (AIIC) regarding this same event. AIIC sought and obtained a declaratory judgment that its policy covering Mid-Continent at the time of the injury did not cover the injury. The AIIC policy was limited to employees of Wilson Paving. At all times in the litigation Broom alleged he was an employee of Labor Ready on loan to Wilson Paving, and as such was not an 'employee' of Wilson Paving under the AIIC insurance policy. The Court noted that Mid-Continent was not a party to that litigation and that the terms of the contracts, while similar, were not identical. Further, the express purpose of the AIIC contract was to insure against losses to employees and the purpose of the Mid-Continent contract was to insure against losses of all other persons.
Dissent: Justice Taylor wrote a spirited dissent to this opinion, accusing the Court of placing a constrained reading of the language of the earth-movement exception and of using out-of-jurisdiction cases that were regarding home-owners insurance and not commercial insurance as was present in this case. Justice Taylor makes it clear that he feels that the Court has 're-written' the insurance policy and dissents therefrom.
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