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IN THE COURT OF APPEALS OF IOWA No. 2-229 / 11-1027 Filed July 25, 2012

PAUL CRAIG JEFFRIES and GERALD JEFFRIES as Administrators/Executors of the Estate of Fanchon B. Jeffries, Plaintiffs-Appellants, vs. JACK AHROLD AGENCY, INC., JACK AHROLD AGENCY, INC. d/b/a AHROLD-FAY & CO., JOHN W. AHROLD, JOHN W. AHROLD d/b/a AHROLD-FAY & CO., JOHN R. FAY; JOHN R. FAY d/b/a AHROLD-FAY & CO., Defendants-Appellants, and HERITAGE MUTUAL INSURANCE COMPANY n/k/a ACUITY MUTUAL INSURANCE COMPANY; ACUITY MUTUAL INSURANCE COMPANY; HERITAGE INSURANCE and HERITAGE INSURANCE COMPANIES, Defendants-Appellees. ________________________________________________________________ Appeal from the Iowa District Court for Jasper County, Darrell Goodhue, Judge.

The plaintiffs and defendant Ahrold-Fay appeal the district court's grant of summary judgment in favor of defendant Heritage Mutual Insurance Company. AFFIRMED.

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David J. Dutton and Erin Patrick Lyons of Dutton, Braun, Staack & Hellman, P.L.C., Waterloo, and Jerry Wieslander and Frank G. Wieslander, Altoona, for Jeffries appellants. Randall H. Stefani and Jason M. Craig of Ahlers & Cooney, P.C., Des Moines, for Jack Ahrold Agency appellants. Kimberly S. Bartosh of Whitfield & Eddy, P.L.C., Des Moines, for appellee.

Heard by Potterfield, P.J., and Mullins and Bower, JJ.

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BOWER, J. The district court granted summary judgment in favor of defendant Heritage Mutual Insurance Company after finding the commercial insurance policy Heritage issued to Reed Construction did not provide coverage for a fatal accident caused by Orval Kopp, an employee of Larry Reinier, where Reed Construction hired Reinier to deliver a truckload of asphalt. The question before us is whether coverage exists under the Heritage policy where the policy requires that Kopp was using, with Reed Construction's "permission," a vehicle Reed Construction "owned, hired, or borrowed." Upon our review, we find the vehicle at issue in this case was not owned, hired, or borrowed by Reed Construction; rather, Reed Construction hired Reinier to provide the service of delivering asphalt and Reinier retained the right to control the vehicle. In addition, Reed Construction did not give Kopp, Reinier's employee, permission to use Reinier's vehicle. We further find no error in the district court's denial of the motion to compel the parties' settlement agreement. Accordingly, we affirm. I. Background Facts and Proceedings. In August 1998, Reed Construction was a subcontractor on a roadconstruction project being performed in Centerville by Jasper Construction Services. Reed Construction was hired to perform the asphalt work. On August 25, 1998, Reed Construction needed to haul more asphalt than it had trucks and drivers for. Owner Robert Reed contacted Larry Reinier, who operated a

business delivering product from Norris Asphalt, and asked if his dump truck

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could deliver the asphalt. Reinier agreed and sent his employee, Orval Kopp, to deliver the asphalt. Kopp delivered the asphalt and was returning to Norris Asphalt when the truck collided with a vehicle being operated by Boyd Wright. Wright was killed. His passenger, Fanchon Jeffries, suffered severe injuries from the accident and later died as a result of those injuries. Before her death, Ms. Jeffries' conservator initiated a lawsuit against Kopp, Reinier, and others. On December 1, 2005, Kopp and Reinier confessed judgment in the amount of $2,450,000, plus 6.2% interest and costs, and agreed to assign any right they had to recover against the contractors, their insurers, and their insurance agents. In exchange, the

conservatorship agreed it would not execute judgment upon Kopp and Reinier, but would only seek to satisfy the judgment by taking action against the contractors, insurers, and insurance agents. On October 18, 2007, the plaintiffs filed this action against Heritage Mutual Insurance Company (which issued Reed Construction's insurance policy) and the agency issuing the policy, among others. The plaintiffs alleged Heritage's

business-auto policy provided coverage for Kopp. Heritage filed a motion for summary judgment alleging Kopp was excluded from coverage under the policy. In its December 30, 2008 ruling, the district court held Kopp was an insured under Heritage's policy, but that a question of fact remained regarding the contractual liability exclusion in the policy. In an amended ruling, the court held the contractual liability exclusion did not bar coverage as a matter of law and Kopp was covered under the commercial insurance policy. The court reaffirmed

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its ruling following a motion to reconsider. The court subsequently severed the claims against Heritage from the plaintiffs' claims against other defendants. An April 2010 trial was scheduled to determine the sole issue of the reasonableness of the settlement of the original lawsuit. Prior to the start of trial, the parties informed the district court they had resolved the issues to be tried through stipulation. When the stipulation was not filed for the court's approval by January 19, 2011, as agreed, the court ordered the parties to file the stipulation by February 25, 2011. The court stated that if the parties failed to do so, it would reconsider Heritage's motion for summary judgment. The plaintiffs filed a stipulated judgment in the amount of $1.5 million with 6.2% interest from the date the 1998 petition was filed. Heritage filed a motion to strike the judgment entry, arguing multiple issues needed to be resolved before the stipulation could be entered. Heritage also filed a motion to reconsider the issue of whether Kopp was covered under its commercial policy. The court

denied the motion to compel the stipulated judgment and granted the motion to reconsider. The court reversed its prior ruling and entered summary judgment in favor of Heritage, concluding Reinier's truck was not a borrowed or hired auto and, therefore, was not covered under the Heritage policy. The court

subsequently denied motions to reconsider, enlarge, and a motion to compel the settlement agreement. The plaintiffs and defendant Ahrold-Fay sought and were granted interlocutory appeal.

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II. Scope and Standard of Review. We review a district court's ruling on summary judgment for correction of errors at law. Iowa R. App. P. 6.907. We may uphold the ruling on any ground raised before the district court, even if that ground was not a basis for the court's decision. Sievers v. Iowa Mut. Ins. Co., 581 N.W.2d 633, 636 (Iowa 1998).

Upon a motion for summary judgment, the court must: "(1) view the facts in the light most favorable to the nonmoving party, and (2) consider on behalf of the nonmoving party every legitimate inference reasonably deduced from the record." McCormick v. Nikkel & Assocs., Inc., ___ N.W.2d ___, ___, 2012 WL 190013, at *3 (Iowa 2012). Summary judgment is appropriate if "there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Koeppel v. Speirs, 808 N.W.2d 177, 179 (Iowa 2011). III. Insurance Coverage. Summary judgment is appropriate in this case. The underlying facts are undisputed, as are the terms of the written insurance contract. The only dispute is over the legal significance of those terms; namely, whether Kopp was covered under the Heritage insurance policy issued to Reed. The Heritage policy includes the following pertinent language: 1. Who is an insured The following are insureds: a. You for any covered auto; b. Anyone else while using with your permission a covered auto you own, hire or borrow except: 1. The owner or anyone else from whom you hire or borrow a covered auto.

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The policy allows coverage for any vehicle Reed owned, hired, or borrowed. It is clear the truck involved in the accident was not owned by Reed. We next turn to whether the truck was borrowed by Reed. A. Borrowed Auto. The term "borrow" is not defined in the Heritage

policy. Our supreme court has followed the ordinary meaning for "borrow" when the term was not defined by the insurance policy, and observed: "[A] vehicle is borrowed when someone other than the owner temporarily gains its use." Andresen v. Emp'rs Mut. Cas. Co., 461 N.W.2d 181, 185 (Iowa 1990). In Andresen, our supreme court analyzed a similar commercial insurance policy to the policy at issue here.1 The plaintiff, Andresen, was an employee of First Bank of Davenport. Id. at 182. First Bank normally furnished a vehicle for Andresen to drive for his employment duties. Id. On February 10, 1988,

however, First Bank did not have any vehicles available, so it directed Andresen to use his own vehicle. Id. While performing bank duties with his own vehicle, Andresen was seriously injured in a collision with another vehicle. Id. at 183. Andresen subsequently sought to recover from Employers Mutual Casualty Company under the underinsured motorist coverage of the commercial auto policy issued to First Bank. Id. The issue for the Andresen court rested on control. As the court

acknowledged, "Employers focuses on the fact that the auto never left Andresen's possession. Andresen counters by pointing out that he was acting in his capacity as a bank employee when the accident occurred."
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Id. at 184.

The Heritage policy, however, sets forth an additional term ("permission") the Andresen policy did not include which we will address later in this ruling.

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Ultimately, the court determined Andresen drove the vehicle as a bank employee pursuant to his employment duties for First Bank; therefore, First Bank had control of the vehicle. See id. at 183. As the court explained, "First Bank

temporarily gained the use of Andresen's vehicle as a substitute for its own vehicles, regardless of the fact that Andresen himself--as a bank employee-- drove the car on the bank's business." Id. Accordingly, the court concluded Andresen's vehicle was borrowed by First Bank and was a covered auto under the Employers policy. Id. at 185. We find Andresen offers guidance on the question of the circumstances that give rise to "borrowed" auto status under a policy similar to that at issue in this case. The facts here, however, are distinguishable from the facts of

Andresen. Most importantly, unlike First Bank, Reed did not retain any control over Reinier's truck, nor did Reed have a right to control Reinier's truck. Instead, Reed hired Reinier to perform a specific task; Reinier performed the task with his own truck and his own employee under his control. The district court concluded: "[T]he facts of this case don't fit the `borrowed' definition relied upon by the Court [in Andresen]. Reed did not gain the temporary use of Reinier's truck. He

contracted with Reinier to provide a delivery by whatever method [Reinier] chose." We agree with the district court that the truck was not borrowed by Reed. Finding no error on that issue, we next turn to whether the truck was hired by Reed.

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B.

Hired Auto.

The term "hire" is not defined in the Heritage policy.

"Hired auto" provisions appear in many commercial insurance policies. Some policies define the term "hired auto" expressly, usually as vehicle "used under contract in behalf of" the named insurer. Holmes v. Brethren Mut. Ins. Co., 868 A.2d 155, 157 (D.C. 2005); see State Farm Mut. Auto. Ins. Co. v. Budget Rent-ACar Sys., Inc., 359 N.W.2d 673, 677 (Minn. Ct. App. 1984) ("A hired automobile is defined under Western's policy as "an automobile not owned by the named insured which is under contract on behalf of or, loaned to the named insured."); see generally David B. Harrison, Annotation, When is Automobile "Used Under Contract in Behalf of, or Loaned to," Insured, Within Meaning of "Hired Automobile" Provision of Automobile Insurance Policy, 5 A.L.R.4th 636

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