Missouri’s High Court Favors Insured in Question of Policy Ambiguity

Is a person hired to perform seasonal, part-time tasks for a company owner, based on a referral from an employee of the company, an employee or a temporary worker? It depends, according to Missouri’s high court justices, and if there’s any ambiguity as to whether or not that worker is covered under the company owner’s insurance policy the resolution favors the insured, the justices say.

In Mendenhall v. Property and Casualty Insurance Company of Hartford, the Missouri Supreme Court considered a case that involved a man killed while operating a truck owned by a company when he was working on personal business for the owner of that company.

Len Mendenhall was hired by Jay Walker to work on Walker’s cattle farm on an as-needed basis. Walker hired Mendenhall on the recommendation of an interviewer at a company owned by Walker, the Family Center of Farmington Inc. (Family Center).

Although Family Center did not hire Mendenhall after he interviewed for a job with the company, the interviewer told Walker that Mendenhall would be a good person to hire. Based on that recommendation, Walker hired Mendenhall to work for him personally at a farm Walker co-owned with his wife.

Mendenhall was paid by the farm but Walker sometimes asked Mendenhall to perform tasks for the Family Center, allowing Mendenhall to use company-owned truck and trailer.

“This truck and trailer was covered under a business automobile liability policy (the Hartford policy) provided by Hartford and issued to the Family Center,” Chief Justice Richard B. Teitelman wrote in the Court’s opinion.

While using the Family Center’s truck and trailer on March 8, 2007, Mendenhall was killed when the truck overturned as he was unloading rocks from the truck at the farm.

In a wrongful death suit, Mendenhall’s surviving spouse, Ruth Mendenhall, “obtained an $840,000 judgment against Mr. Walker and a $50,000 judgment against the Family Center. Prior to the judgment, Mr. Walker and Mrs. Mendenhall entered an agreement … which provided that any judgment against Mr. Walker would be collected from the proceeds of the Hartford policy,” Teitelman wrote.

The Hartford claimed that its commercial auto liability policy excluded employees of the insured from coverage.

However, the Hartford policy’s “definition of ’employee’ specifically includes a ‘leased worker’ but does not include a ‘temporary worker,'” Teitelman explained. Therefore, the Court recognized, the “dispositive issue is whether Les Mendenhall was an ’employee’ or a ‘temporary worker.'”

The trial court concluded that he was an employee at the time of his death and excluded from coverage. “The trial court found that Mr. Mendenhall was not a covered ‘temporary worker’ because he was not ‘furnished to’ Mr. Walker by an employment service or similar organization,” Teitelman explained.

The parties agreed that Mendenhall worked for Walker on a short-term, seasonal basis, and that The Hartford’s policy covered temporary workers. What they didn’t agree on was whether Mendenhall was an employee or a temporary worker.

“Hartford asserts that the Family Center could not have furnished Mr. Mendenhall because the Family Center was not an employment agency and did not employ Mr. Mendenhall. Mrs. Mendenhall asserts that an agency or employment relationship is unnecessary and that Mr. Mendenhall was ‘furnished to’ Mr. Walker by Family Center’s referral,” Teitelman wrote.

The Court found that whether or not an agency relationship existed between Family Center and Mendenhall was not particularly relevant. What was relevant, “is the undisputed fact that Mr. Walker did not interview Mr. Mendenhall and relied solely on the Family Center’s referral in making his decision to hire Mr. Mendenhall. The Family Center’s referral supplied and provided Mr. Walker with the information he used to hire Mr. Mendenhall on an as-needed basis.”

Without that referral, Walker would not have hired Mendenhall. “It was through the Family Center’s referral that Mr. Mendenhall was ‘furnished to’ Walker as a temporary worker,” Teitelman wrote.

The Court found that “under the facts of this case, the phrase ‘furnished to’ is susceptible to plausible, alternative interpretations, and this ambiguity is resolved in favor of the insured.”