Buckner v. Motor Vehicle Acc. Indemnification Corp., 66 N.Y.2d 211 (1985)

A business automobile insurance policy issued to a corporation does not extend uninsured motorist coverage to the son of the corporation’s officers and sole shareholders when the son is injured while not acting on behalf of the corporation.

Summary

Robert Buckner, son of the officers and sole shareholders of Buckner Associates, Inc., was injured by a hit-and-run driver while riding his bicycle. Buckner Associates had a business automobile policy with Liberty Mutual. Robert’s claim for first-party benefits was denied. He then sought benefits from the Motor Vehicle Accident Indemnification Corporation (MVAIC). After arbitration, a declaratory judgment action ensued against Liberty Mutual and MVAIC. The lower court ruled in favor of MVAIC, but the Appellate Division reversed, finding Robert covered under the Liberty Mutual policy due to ambiguities in the policy’s language regarding “family member” coverage. The New York Court of Appeals reversed the Appellate Division, holding that the policy, when read as a whole, did not provide coverage to the son in this situation.

Facts

Robert Buckner, a college student, resided with his parents. His parents were the officers and sole shareholders of Buckner Associates, Inc., a family-owned real estate business. Robert performed some part-time work for the corporation. He was injured by a hit-and-run driver while riding his bicycle and was not engaged in any business of the corporation at the time of the accident.

Procedural History

Robert Buckner’s application for insurance benefits under Buckner Associates, Inc.’s Liberty Mutual policy was denied. He then applied to MVAIC. After arbitration, Robert initiated a declaratory judgment action against both Liberty Mutual and MVAIC. Special Term granted summary judgment against MVAIC, denying it against Liberty Mutual, and declared Robert a qualified person entitled to benefits from MVAIC. The Appellate Division reversed, declaring Robert an insured person under the Liberty Mutual policy. Liberty Mutual appealed to the New York Court of Appeals.

Issue(s)

Whether a business automobile insurance policy issued to a corporation provides uninsured motorist coverage for the son of the corporation’s officers and sole shareholders, who resides with them, when he is injured by a hit-and-run driver while not acting on behalf of the corporation.

Holding

No, because reading the policy as a whole, the average person would not understand the phrase “You or any family member” in the uninsured motorist endorsement to extend coverage to the son of the corporation’s officers and shareholders in this situation.

Court’s Reasoning

The court reasoned that the determination of coverage hinges on a comprehensive reading of the entire insurance policy, not merely isolated sections of the uninsured motorist endorsement. The court stated that the key question is whether an average person, applying common speech, would understand the words “Who is insured 1. You or any family member” to encompass the son of the corporation’s officers. The court emphasized that the insured was a corporation, which cannot suffer personal injuries or have a family in the conventional sense. The court cited several cases from other jurisdictions supporting this view, noting that “it is obvious, even to a casual reader, that the insured was to be a corporation which could not possibly have personal injuries or family” (Dixon v Gunter, 636 SW2d 437, 441 [Tenn]).

The court highlighted that the policy’s declarations explicitly state that the “Named insured is corporation.” Part 1 (A) defines “You” as “the person or organization shown as the named insured in item one of the declarations.” Part 1 (F) states that ” ‘Insured’ means any person or organization qualifying as an insured in the who is insured section of the applicable insurance.” This language leads to the conclusion that the insured is Buckner Associates, Inc., and therefore the “family member” definition in the endorsement does not apply. The court also noted that the uninsured motorist coverage is not rendered meaningless by this interpretation, as it would still cover individuals occupying a company-owned vehicle or operating a vehicle on behalf of the corporation. Furthermore, the court found that the no-fault endorsement did not alter the conclusion because it defined “named insured” as “the person or organization named in the declarations” and “relative” in a way that would not be construed to apply to a corporation.