Frey v. Nationwide Mutual Insurance Company

Facts

On the evening of June 4, 2017, Michael C. Jesperson was driving his pickup truck on a state highway while allegedly under the influence of alcohol. Jesperson tried to make a left turn into the path of a funeral procession and collided with a motorcycle operated by William Irish, who tragically sustained fatal injuries. 

The Plaintiff identified four potential sources of insurance — two uninsured/ underinsured motorist (“UM”) policies owned by the deceased,  an automobile liability policy owned by Jesperson, and at issue, a commercial general liability policy (“CGL”) through Nationwide that Jesperson maintained in connection with his ownership of a custom glass business.  

Plaintiff Frey, Willaim’s widow, subsequently settled with Jesperson’s liability carrier and the deceased’s UM carriers, releasing each through a limited liability release. However, Jesperson’s CGL carrier declined coverage for the subject incident. 

The Plaintiff filed a wrongful death action and obtained a $1,655,647 verdict. However, the judgment was specifically “only enforceable against any remaining liability insurance and/or underinsured motorist insurance coverage which provide[d] coverage for the claims contained within [the] case.” 

Jesperson assigned any rights he had under the Nationwide CGL policy to the Plaintiff, and the Plaintiff filed a declaratory action seeking a judgment that the CGL policy covered the subject collision and to have Nationwide pay the remaining balance of the wrongful death verdict.

Nationwide moved for judgment on the pleadings arguing that the automobile exclusion policy contained in the CGL unambiguously excluded the subject collision. In pertinent part, the exclusion stated that “This insurance does not apply to: … ‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any aircraft,  ‘auto’ or watercraft owned or operated by or rented or loaned to any insured. Use includes operation[.]” (emphasis added). 

The trial court granted Nationwide’s motion, and the Plaintiff appealed contending that the court misconstrued the exclusion. 

Issue & Holding

The only issue on appeal was whether the omission of a serial comma after the word “use” in the automobile exclusion provision created an ambiguity that could reasonably be construed against Nationwide. As the Plaintiff contended, that is, whether its omission could reasonably be construed as excluding coverage only when the insured’s automobile is used or entrusted by someone other than the insured.

The Court of Appeals held in Nationwide’s favor, reasoning that the provision was subject to only one reasonable construction that excluded the subject collision. 

Reasoning

The court began its analysis with two interpretative frameworks that guided its reasoning. First, when the words of a  contract are plain and obvious, “they must be given their plain and literal meaning and no new terms can be inserted.” Second, “Where the contractual language is explicit and unambiguous, the court’s job is simply to apply the terms of the contract as written[.]” With these in mind, it concluded that the Automobile Exclusion excluded bodily injury “arising out of the … use … of any … auto … owned … by … any insured[,]” because the exclusion did not have any limiting language qualifying who must be driving in order for the exclusion to apply.

Further, the court expressly rejected the Plaintiff’s contention that the omission of the serial comma created an ambiguity. Relying on similar precedent, the court reasoned that the absence of a serial comma carries little weight where the interpretation that is advanced conflicts with the rules of grammar. In this case, the Plaintiff sought to advance a meaning that would violate the last antecedent rule. 

Generally, the last antecedent rule is a principle of grammar and legal interpretation that states qualifying words or phrases typically apply only to the last noun or clause immediately preceding them, unless there is clear evidence suggesting a broader application. Here, the court found the limiting phrase “to others” immediately follows the word “entrustment,” and under the last antecedent rule, the limiting phrase is reasonably understood to refer to that word and no others. However, the court was careful to state that while the last antecedent rule is applicable in this case, it is not absolute, and may still “be overcome by other indicia of meaning.”

Finally, the Plaintiff’s contention that the policy’s excess insurance provision implied some automobile-related claims are covered was rejected. 

The Plaintiff argued that the inclusion of an Excess Insurance provision in the CGL policy implied that some automobile-related claims were not subject to the Automobile Exclusion, thus supporting her alternative interpretation of the subject exclusion. However, the court rejected this argument, explaining that the Excess Insurance provision is most reasonably interpreted as applying to specific exceptions already outlined in the Automobile Exclusion. Thus, the court reasoned that the provision did not support the Plaintiff’s claim that the exclusion only applied when the insured’s vehicle was used by others.

After reviewing the reasoning above, the court ultimately concluded that the Automobile Exclusion excluded coverage under the Nationwide CGL policy. 

Conclusion

Frey suggests that courts may be unwilling to go out of their way to use technical rules of grammar to contradict an otherwise unambiguous term or exclusion found in an insurance policy. This should come as no surprise as Georgia courts are largely employing a textualist approach in other interpretive areas of the law such as statutory and constitutional interpretation. See e.g. Nels S.D. Peterson, Principles of Georgia Constitutional Interpretation, 75 Mercer L. Rev. 1 (2023). 

More importantly, Frey illustrates an important responsibility that the competent and diligent personal injury attorney bears—identifying, pursuing, and exhausting all potential sources of available insurance. While Plaintiff’s counsel did not win the day in Frey, it serves as a reminder of the importance of careful reading of the underlying policy when coverage is in dispute. After all, this dispute arose over the omission of a single comma. 

Citation: Frey v. Nationwide, 371 Ga. App. 590, 901 S.E.2d 730, A24A0284 (Ga. Ct. App. May 15 2024)