Colorado Cas. Ins. Co. v. Sammons

• Decision Date: 10 May 2007
• Docket Number: No. 06-239.,06-239.
• Citation: 2007 WY 75,157 P.3d 460
• Parties: COLORADO CASUALTY INSURANCE COMPANY, a Colorado corporation, Appellant (Defendant), v. Donald L. SAMMONS, Individually and as trustee of the Sammons Family Living Trust, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

157 P.3d 460

2007 WY 75

COLORADO CASUALTY INSURANCE COMPANY, a Colorado corporation, Appellant (Defendant), v. Donald L. SAMMONS, Individually and as trustee of the Sammons Family Living Trust, Appellee (Plaintiff).

No. 06-239.

Supreme Court of Wyoming.

May 10, 2007.

Representing Appellant: John A. Coppede of Hickey & Evans, LLP, Cheyenne, Wyoming; and Brian J. Spano and Stephen E. Csajaghy of Rothgerber Johnson & Lyons LLP, Denver, Colorado. Argument by Mr. Spano.

Representing Appellee: James W. Britt, Chris A. Mattison, Cathleen H. Heintz, and Alan Epstein of Hall & Evans, L.L.C., Denver, Colorado. Argument by Ms. Heintz.

Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

VOIGT, Chief Justice.

[¶ 1] The district court granted summary judgment to an insured on its contract claim against its insurer after a fire loss, granted summary judgment to the insurer on the insured's emotional distress claim, and denied summary judgment to both parties on the remaining claims. We will reverse the summary judgment based upon the contract claim because genuine issues of material fact exist. The summary judgment based upon the emotional distress claim was not appealed, and is not, therefore, before us for review. The summary judgment denials were not final appealable orders and we do not, therefore, have jurisdiction to review them.¹

FACTS

[¶ 2] The Buford Trading Post is a small gas station/convenience store located on Interstate 80 between Cheyenne and Laramie, Wyoming. It is owned by the Sammons Family Living Trust (Sammons). The Trading Post has existed at the same site, in one form or another, for nearly 150 years. At the time of the fire, it consisted of a log building constructed in the 1940s, manual gas pumps, and underground steel storage tanks.

[¶ 3] On August 17, 2003, a fire completely destroyed the Trading Post building and damaged the fuel dispensing system. Sammons filed a property damage claim with its insurer, Colorado Casualty Insurance Company (Colorado Casualty), under a replacement cost policy.² The policy provision that is central to the present controversy is Subsection 6 of Section E, which reads in pertinent part as follows:

E. Property Loss Conditions

6. Loss Payment

In the event of loss or damage covered by this policy:

a. At our option, we will either:

(1) Pay the value of lost or damaged property;

(2) Pay the cost of repairing or replacing the lost or damaged property;

(3) Take all or any part of the property at an agreed or appraised value; or

(4) Repair, rebuild or replace the property with other property of like kind and quality, subject to d.(1)(e) below.

. . . .

d. Except as provided in (2) through (8) below, we will determine the value of the Covered Property as follows:

(1) At replacement cost after application of the deductible without deduction for depreciation, but not more than the least of the following amounts:

(a) The full cost of replacement of such property at the same site with new material of like kind and quality; or

(b) The cost of repairing your property within reasonable time; or

(c) The Limit of Liability that applies to the property shown in the Declarations; or

(d) The amount actually and necessarily expended in repairing or replacing said property or any part thereof.

We shall not be liable for payment of loss on a replacement cost basis unless and until actual repair is completed.

You may elect not to repair or replace the damaged property. In this event, loss settlement shall be made on an actual cash value basis instead of a replacement cost basis. Should you elect this option, you may still make a claim on a replacement cost basis if you notify us of your intent to do so within 180 days after the loss or damage.

[¶ 4] Colorado Casualty determined certain damage valuations after the fire: (1) an actual cash value (ACV) of $215,489.71 for the building; (2) a replacement cost value (RCV) of $307,400.18 for the building; and (3) an RCV of $38,189.00 for the damaged portions of the fuel dispensing system. Consistent with the terms of the policy, Colorado Casualty paid Sammons $215,489.71 for the building's ACV, retaining a "depreciation holdback" of $91,910.47 ($307,400.18 less $215,489.71) pending rebuilding.³ In addition, because Sammons had already contracted to have extensive work done to the fuel dispensing system, Colorado Casualty used the bid documents received by Sammons to pay beyond its estimated RCV for the fuel dispensing system, eventually sending Sammons two checks, one for $71,008.49, and another for $12,274.51, for a total of $83,283.00. Colorado Casualty conceded at oral argument that this $83,283.00 figure represents the RCV for the fuel dispensing system.

[¶ 5] The present controversy arose because Sammons did not replace the building and the fuel dispensing system by spending the damage valuation amounts determined by Colorado Casualty, nor did it replace the destroyed building or damaged fuel dispensing system with similar configurations. Instead, Sammons constructed a smaller building at a cost of only $210,443.76, and then spent $139,137.09 for a fuel dispensing system with automated pumps and PVC storage tanks, $22,635.15 for a canopy over the gas pump islands, and $20,998.57 to pave the parking lot. At that point, Colorado Casualty had paid Sammons $298,772.71, and Sammons had spent $393,214.57. The policy's maximum value was $429,266.00.

[¶ 6] On June 17, 2004, Sammons' agent demanded that Colorado Casualty pay Sammons the $91,910.47 depreciation holdback. Colorado Casualty refused, on the ground that Sammons had not even spent the building's estimated ACV of $215,489.71, much less the RCV of $307,400.18 from which the depreciation holdback had been calculated, and that the amount Sammons actually expended in replacing the damaged property was less than the RCV estimates. Sammons then filed a consumer complaint against Colorado Casualty with the Wyoming Department of Insurance, seeking a determination that Colorado Casualty had wrongfully withheld the depreciation holdback. The Department ruled in favor of Colorado Casualty, concluding that neither the policy nor Wyoming law prevented Colorado Casualty from separately adjusting the building and the fuel dispensing system. In other words, Colorado Casualty only had to pay the building's ACV, because Sammons had not spent more than that amount on the building, even though he had spent more than the fuel dispensing system's RCV for changes and improvements to that system.

[¶ 7] On May 2, 2005, Sammons filed a Complaint against Colorado Casualty in district court, alleging breach of contract, violation of the implied covenant of good faith and fair dealing, and unfair claims practices under Wyo. Stat. Ann. § 26-13-124 (LexisNexis 2003), and seeking attorney's fees and penalties under Wyo. Stat. Ann. § 26-15-124 (LexisNexis 2003).⁴ Both parties filed motions for summary judgment. Colorado Casualty filed first, with its central hypothesis being that the policy only required it to pay Sammons the depreciation holdback amount if he did, indeed, replace the building at a cost in excess of the ACV. In its cross-motion, Sammons took the position that all of its expenditures were necessary to replace the building and fuel dispensing system, and that those expenditures should be combined as one amount under the "building" section of the policy, with a resultant single RCV. More specifically, Sammons contended that, once Colorado Casualty determined the replacement value of the building and fuel dispensing system, it had to pay him that total amount whether he spent it replacing the building or refurbishing the fuel dispensing system.

[¶ 8] The district court concluded that Sammons was correct as to two major points: first, that in making RCV estimates, Colorado Casualty could not separate the store claim from the fuel dispensing system claim because both were covered under the single "Buildings" portion of the policy; and second, once the RCV amount was established as the value of the loss, the manner of rebuilding was up to Sammons.

ISSUES

[¶ 9] The parties have presented numerous issues, with some duplication. The following issues are dispositive:

1. Does the policy provide an unambiguous method of calculating the amount Colorado Casualty owes Sammons?

2. Are there genuine issues of material fact concerning the amount Colorado Casualty owes Sammons?

STANDARD OF REVIEW

[¶ 10] Summary judgment motions are governed by W.R.C.P. 56, and the disposition of such motions is guided particularly by the following language found in subsection (c) thereof:

The judgment sought shall be rendered forthwith 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 a judgment as a matter of law.

[¶ 11] In reviewing the grant of a summary judgment, we apply the following well-known standard of review:

We examine the record from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record. We evaluate the propriety of a summary judgment by employing the same standards and by using the same materials as were employed and used by the lower court. We do not accord any deference to the district court's decisions on issues of law.

Trabing v. Kinko's, Inc., 2002 WY 171, ¶ 8, 57 P.3d 1248, 1252 (Wyo.2002) (internal citations omitted).

DISCUSSION

[¶ 12] We will begin this analysis by restating the principles of law we apply in reviewing insurance policy disputes:

An insurance policy constitutes a contract between the insurer and the insured. As with other types of contracts, our basic purpose in construing or interpreting an insurance contract is to determine the parties' true intent. We must determine...