Chord v. Reynolds, 20525

• Decision Date: 03 December 1998
• Docket Number: No. 20525,20525
• Citation: 587 N.W.2d 729,1999 SD 1
• Parties: Robert CHORD, Plaintiff and Appellant, v. Chance REYNOLDS, and Chance Reynolds d/b/a Beaver Creek Ranch, Defendant, and Continental Insurance Company, Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 729

587 N.W.2d 729

1999 SD 1

Robert CHORD, Plaintiff and Appellant, v. Chance REYNOLDS, and Chance Reynolds d/b/a Beaver Creek Ranch, Defendant and Continental Insurance Company, Defendant and Appellee.

No. 20525.

Supreme Court of South Dakota.

Considered on Briefs Dec. 3, 1998.

Decided Jan. 6, 1999.

Larry M. Von Wald of Truhe, Beardsley, Jensen, Helmers and Von Wald Rapid City, for plaintiff and appellant.

Mark W. Haigh and Melissa C. Hinton of Davenport, Evans, Hurwitz & Smith Sioux Falls, for defendant and appellee.

GILBERTSON, Justice.

¶1 Robert Chord (Chord) filed this negligence action against Chance Reynolds (Reynolds), Chance Reynolds d/b/a Beaver Creek Ranch (Beaver Creek Ranch) and their insurer Continental Insurance Company (Continental) for injuries he received while working at Beaver Creek Ranch. The circuit court, Seventh Judicial Circuit, Pennington County, granted Continental's motion for summary judgment. Chord appeals. We affirm.

FACTS AND PROCEDURE

¶2 Reynolds owned and operated a ranch called Beaver Creek Ranch in Western South Dakota. The ranch covers over 80,000 acres and is located in several South Dakota counties. Reynolds' home was located on the ranch. In 1995, the United States brought federal charges against Reynolds for False Statements to a Financial Institution and Illegal Monetary Transactions. ¹ When federal charges were brought against him his agricultural empire collapsed. By January 1998, he was in the Pennington County Jail awaiting sentencing.

¶3 Chord grew up on a ranch near White Owl, South Dakota. While growing up, he helped his father with the ranch and worked part-time as a ranch hand. Chord has spent his adult years employed in either ranching or construction. Around July 1995, Chord's brother Clayton, who was the foreman for the Beaver Creek Ranch, approached him about working for Reynolds. Clayton claimed that the ranch needed some "good help." Chord considered it since he was looking for a place to work that would provide benefits and be closer to school for his two young daughters.

¶4 In October 1995, Chord was hired as "day help" for the Beaver Creek Ranch. Chord began working under his brother, Clayton. Chord earned $80.00 a day with no benefits. His hours of employment were typically 5:00 or 5:30 a.m. until the work was done. His duties consisted of caring for cattle, fencing and monitoring and maintaining the ranch.

¶5 On December 15, 1995, Reynolds placed Chord in a permanent position. He changed his pay to $2,080.00 a month, told him he would have medical insurance, ² a house to live in, beef and the use of the ranch to graze his cattle. His job title was "sub-foreman." Reynolds described Chord's duties as varying depending on the work that needed to be done at the ranch.

¶6 On December 30, 1995, Chord was involved in an accident and severely injured. The events that led to the injury are unknown. All that Chord can recall is riding his horse into the southwest part of the ranch containing numerous prairie dog holes looking "for a cow to doctor." The next thing he remembered was waking up in a hospital in Casper, Wyoming. He had been in a coma for many days. Chord believes that he was thrown when his horse stepped into a prairie dog hole. Chord sustained serious head injuries that resulted in temporary paralysis of the right side, amnesia, seizures, numbness and tingling in his right side, personality changes, short-term memory problems, an inability to concentrate, constant pain and loss of counting, spelling and walking skills.

¶7 Months after the accident Chord attempted to return to work at Beaver Creek. His attempt to regain the skills required of the job was unsuccessful due to his injuries. He lost his job at Beaver Creek after Reynolds was charged by the federal government.

¶8 Continental provided Reynolds and Beaver Creek Ranch with an "RFD Catastrophe Liability Coverage" insurance policy. The policy provided coverage for certain injuries and property damage. The policy excluded coverage of bodily injury sustained by any employee other than a "residence employee." Therefore, Chord would only be covered under the policy if he were a "residence employee."

¶9 Chord brought suit against Reynolds, Beaver Creek Ranch and Continental. The claim against Continental is based on SDCL 58-20-12. ³ There was no dispute that Chord was an employee of Reynolds at the time of his injury. The only dispute is whether Chord is the type of employee covered by the insurance policy. Continental filed a motion for summary judgment. The trial court granted the motion. Chord appeals raising the following issue:

Whether the trial court erred in its grant of Continental's motion for summary judgment.

STANDARD OF REVIEW

¶10 Our standard of review of a trial court's grant of a motion for summary judgment is well settled. As we recently stated in Estate of Shuck v. Perkins County:

Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. Morgan v. Baldwin, 450 N.W.2d 783, 785 (S.D.1990). The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

1998 SD 32, p 6, 577 N.W.2d 584, 588 (citations omitted).

¶11 The construction of a contract is a question of law that we review de novo. Ward v. Midcom, Inc., 1998 SD 10, p 9, 575 N.W.2d 233, 236 (citing Schleuter Co., Inc. v. Sevigny, 1997 SD 68, p 15, 564 N.W.2d 309 313 (citing Alverson v. Northwestern Nat'l Cas. Co., 1997 SD 9, p 5, 559 N.W.2d 234, 235)).

ANALYSIS AND DECISION

¶12 Whether the trial court erred in its grant of Continental's motion for summary judgment.

¶13 This case rests on the application of certain terms in an insurance contact to the undisputed facts. As construction of a written contract is a question of law we are free to read the contract de novo. Olson v. United States Fidelity and Guar. Co., 1996 SD 66, p 6, 549 N.W.2d 199, 200. As we do not have the benefit of the trial court's reasoning for the grant of summary judgment, we will assume, from the information provided by the parties on brief, that summary judgment was granted because the trial court determined Chord was not a "residence employee" and therefore was excluded from the policy's coverage. ⁴

¶14 We have developed special rules of construction that apply when interpreting an insurance policy. Id.

Where the provisions of an insurance policy are fairly susceptible of different interpretations, the interpretation most favorable to the insured should be adopted. This rule of liberal construction in favor of the insured and strictly against the insurer applies only where the language of the insurance contract is ambiguous and susceptible of more than one interpretation....This rule does not mean, however, that the court may seek out a strained or unusual meaning for the benefit of the insured.

Id.

¶15 In order for the rule of liberal construction to apply to the insurance contract the language in the contract must be ambiguous and susceptible to one or more interpretations. Id. Ambiguity in an insurance policy is determined by reviewing "the policy as a whole and plain meaning and effect of its words." American Family Mut. Ins. Co. v. Elliot, 523 N.W.2d 100, 102 (S.D.1994). Chord claims the insurance contract is ambiguous and should be construed strictly against the insurer.

¶16 We find, after reading the policy as a whole, the language is not ambiguous. We would be hesitant to apply the rule of liberal construction when the party urging a particular construction is not a party to the contract. See St. Paul Fire and Marine Ins. Co. v. Schilling, 520 N.W.2d 884, 889 (S.D.1994). The only issue remaining is whether Chord falls under the definition of a "residence employee" or a "farm employee."

¶17 The policy that Continental provided Reynolds' clearly excludes coverage for:

"Bodily injury" sustained by

(1) Any employee (other than a "residence employee") as a result of his or her employment by the "insured."

In an attempt to avoid the policy exclusion, Chord asserts he meets the definition of "residence employee." The definition under the policy provides:

"Residence employee" means an "insured's employee who performs duties in connection with the maintenance or use of the 'residence premises,' including household or domestic service, or who performs duties elsewhere of a similar nature not in connection with the 'business' of any 'insured.' "

Chord asserts that he is a residence employee because he performed duties in connection with the maintenance or use of Reynolds' residence premises. Chord further asserts that...