Jesus RODRIGUEZ, by and through his next Friend and Natural Mother, Graciela RODRIGUEZ, Appellant,
UNIFIED SCHOOL DISTRICT 500, et al., Defendants, and Mutual of Omaha Insurance Company, Appellee.
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Syllabus by the Court
1. An insurance agreement is a contract. The interpretation of an insurance contract is a question of law over which this court has unlimited review.
2. In general, exceptions, limitations, and exclusions to insurance policies are to be narrowly construed. The insurer assumes the duty to define limitations to coverage in clear and explicit terms. To restrict or limit coverage, the insurer must use clear and unambiguous language; otherwise, the insurance policy must be construed in favor of the insured.
3. If the language in an insurance policy is clear and unambiguous, it must be construed in its plain and ordinary sense and according to the sense and meaning of the terms used.
Henri J. Watson and Kathleen M. Hagen, of Watson & Dameron, LLP, of Kansas City, Missouri, for appellant.
Robert J. Hoffman and Lauren Horsman, of Bryan Cave LLP, of Kansas City, Missouri, for appellees.
Before HILL, P.J., PIERRON and SCHROEDER, JJ.
This is an appeal from a district court's denial of insurance coverage. Under the terms of an excess coverage policy issued to the Kansas State High School Athletic Association, Jesus Rodriquez could receive compensation for his catastrophic injuries if his travel was authorized by the school and the travel was subject to reimbursement by the school. Rodriguez' school authorized his travel to his soccer game in a pickup truck driven by a teammate when it permitted him to ride to the game instead of riding on the school bus provided for that purpose. But his travel was not subject to reimbursement by the school. Accordingly, we affirm the district court's denial of insurance coverage.
The facts are undisputed.
In 2006, Rodriguez was a 10th grade student at Sumner Academy, one of the public
high schools in Unified School District No. 500. Rodriguez, a member of the school soccer team, traveled to a school soccer game in a pickup truck driven by a teammate, Michael Hitze. Hitze owned the truck. On the way to the game, the pickup truck was involved in an accident and Rodriguez was severely injured. He made a claim for benefits under an excess catastrophic injury insurance policy issued by Mutual of Omaha Insurance Company to the Kansas State High School Athletic Association.
The excess catastrophic insurance policy provided coverage for students participating in activities under the jurisdiction of the Kansas State High School Athletic Association, including " pre and post game-related activities." Such activities included " covered travel as defined under the policy." The policy defined " Covered travel" as:
" [T]eam or individual travel, for purposes of representing the Participating School, that is to or from the location of a Covered Event and is authorized by the Insured Person's Participating School, provided the travel is paid for or subject to reimbursement by the Participating School. " (Emphasis added.)
The insurance company denied Rodriguez' claim for benefits under the policy, reasoning the accident did not occur during " Covered Travel." The company first noted that Rodriguez was not traveling in a vehicle provided by the school but was instead traveling in a vehicle owned by a private individual. The company found no authority for Sumner Academy to reimburse a student for travel expenses incurred while transporting another student to an athletic event in a private vehicle. And, in its view, there was no evidence Hitze had requested reimbursement of his travel expenses or that the school had actually reimbursed him. Therefore, the company concluded Rodriguez' means of travel was not " paid for or subject to reimbursement" as contemplated by the policy.
Rodriguez took his claim to court seeking declaratory judgment. The parties agreed that Rodriquez was a student at Sumner Academy, a participating school under the policy, and the soccer game was a covered event according to the policy. These stipulations focused the dispute on travel. The district court ruled there were two questions to answer: (1) whether the travel at issue was " authorized" and (2) if authorized, whether the travel was " subject to reimbursement." The court answered both questions in the negative.
In answering these questions, the district court cited Hobart v. U.S.D. No. 309, 230 Kan. 375, 634 P.2d 1088 (1981), where the Supreme Court held that a school district can only take actions that are authorized by the legislature. In other words, school districts must obey the law. The district court recognized that a written policy of the school in this case authorized travel by bus or private vehicle, but also held that according to K.S.A. 72-8305, a school district may only provide transportation by bus or private vehicle if there is adult accompaniment. Putting the two together, the court said that in this case, then, the school would have violated state law had it authorized transportation without an adult riding along. The court also found the Kansas State High School Athletic Association and Mutual of Omaha entered into the insurance contract with an understanding that the school districts had to obey Kansas law. The district court concluded Rodriguez' travel was not authorized under Kansas law, so there was " clearly" " no right of reimbursement" for the travel. The district court ruled in favor of the insurance company.
Fundamental insurance law offers guidance.
An insurance agreement is a contract. The interpretation of an insurance contract is a question of law over which this court has unlimited review. Marshall v. Kansas Med. Mut. Ins. Co., 276 Kan. 97, 111, 73 P.3d 120 (2003). We are not bound by the district court's interpretation of a contract. In general, exceptions, limitations, and exclusions to insurance policies are to be narrowly construed. The insurer assumes the duty to define limitations to coverage in clear and explicit terms. To restrict or limit coverage, the insurer must use clear and unambiguous language; otherwise, the insurance policy must be construed in favor of the insured. 276 Kan. at 112, 73 P.3d 120. If the language in an insurance policy is clear and
unambiguous, it must be construed in its plain and ordinary sense and according to the sense and meaning of the terms used. 276 Kan. at 111, 73 P.3d 120.
An insurance policy is ambiguous if it contains language of doubtful or conflicting meaning based on a reasonable construction of the policy's language. 276 Kan. at 112, 73 P.3d 120. Contract language is not ambiguous simply because the parties disagree on the interpretation of the language. To determine whether the language of a contract is ambiguous, the court must not consider what the insurer intends the language to mean, but must view the language in terms of what a reasonably prudent insured would understand the language to mean. 276 Kan. at 111, 73 P.3d 120. If contract language is ambiguous, the contract must be construed against the drafter. Whether a contract is ambiguous is a matter of law subject to de novo review. Liggatt v. Employers Mut. Casualty Co., 273 Kan. 915, 921, 46 P.3d 1120 (2002).
Of course, while considering statutory interpretations, this court exercises unlimited review of such questions. Bryant v. Midwest Staff Solutions, Inc., 292 Kan. 585, 587, 257 P.3d 255 (2011).
We hold the school district authorized this travel.
We begin our analysis by stating that we see no ambiguity in this insurance contract. The two terms used in the insurance contract that are at the heart of this dispute are " authorized" and " subject to reimbursement." In our view, a reasonably prudent insured would understand the two controlling terms of the policy. The terms in question are not ambiguous just because the parties here disagree about their meaning. Therefore, following the ruling in Marshall, we shall attribute ordinary everyday meanings to the ordinary words used in this clause dealing with covered travel because the context indicates there is no technical sense attributed to the words that would alter their ordinary meaning. We look first at " authorized."
Black's Law Dictionary 153 (9th ed.2009) defines " authorize" as: " 1. To give legal authority; to empower.... 2. To formally approve; to sanction." Using that definition, we can see that the school authorized Rodriguez' travel with another student.
The record contains a copy of a " Transportation Release Form" signed by one of Rodriguez' parents. It clearly informs the parents that the school was going to permit Rodriguez to either drive or ride ...