Dahms v. Nodak Mut. Ins. Co.

• Decision Date: 06 December 2018
• Docket Number: No. 20180202,20180202
• Citation: 920 N.W.2d 293
• Parties: Scott A. DAHMS & Shannon K. Dahms, Plaintiffs and Appellants v. NODAK MUTUAL INSURANCE COMPANY and Mike Bruckbauer, Defendants and Appellees
• Court: North Dakota Supreme Court

920 N.W.2d 293

Scott A. DAHMS & Shannon K. Dahms, Plaintiffs and Appellants

v.NODAK MUTUAL INSURANCE COMPANY and Mike Bruckbauer, Defendants and Appellees

No. 20180202

Supreme Court of North Dakota.

Filed December 6, 2018

Rehearing Denied January 15, 2019

Jonathan T. Garaas, Fargo, ND, for plaintiffs and appellants.

Kraig A. Wilson, Grand Forks, ND, for defendant and appellee Nodak Mutual Insurance Company.

Lisa M. L. Bachman (argued), and Jason T. Mohr (on brief), Minneapolis, MN, for defendant and appellee Mike Bruckbauer.

VandeWalle, Chief Justice.

[¶1] Scott and Shannon Dahms appealed from a summary judgment dismissing their action against Nodak Mutual Insurance Company to obtain additional insurance payments, and against their insurance agent, Mike Bruckbauer, for damages resulting from his alleged violation of professional duties owed to them. Because the district court correctly interpreted the insurance policy as applied to the undisputed facts, and because the Dahms failed to raise a genuine issue of fact to support their professional negligence claim, we affirm.

I

[¶2] In 2008 the Dahms purchased a Nodak homeowners insurance policy through Bruckbauer, an independent insurance agent, and the policy was renewed annually. At the time, the Dahms' Fargo property consisted of a two-story residence and a detached two-story carriage house which was used as a garage. After purchasing the insurance policy, the Dahms constructed a deck between their dwelling house and the garage. The "fairly elaborate deck" was attached to the garage and lag-bolted to the house. The Dahms did not inform Bruckbauer about the addition of the deck. In April 2013, the garage was destroyed by fire and the estimated damage exceeded $87,003.40.

[¶3] The property coverage provision of the insurance policy provided:

A. Coverage A – Dwelling

1. We cover:

a. The dwelling on the "residence premises" shown in the Declarations, including structures attached to the dwelling; and

b. Materials and supplies located on or next to the "residence premises" used to construct, alter or repair the dwelling or other structures on the "residence premises".

2. We do not cover land, including land on which the dwelling is located.

B. Coverage B – Other Structures

1. We cover other structures on the "residence premises" set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection.

The limit of insurance for Coverage A was $348,907, and the limit of insurance for Coverage B was $34,891.

[¶4] After Nodak determined Coverage B applied and paid the Dahms $34,891, the Dahms brought this lawsuit against Nodak claiming Coverage A applied because the garage was attached to their dwelling by the deck. They also sued Bruckbauer for professional negligence, claiming he violated his duties to protect them from any gaps in coverage and to advise them about their proper insurance needs. The district court granted summary judgment dismissing the action. The court concluded as a matter of law Coverage B applied:

The Court finds that the garage was not an attached structure as stated in the policy. Coverage A provides a higher insurance total for the dwelling and "structures attached to the dwelling." Coverage B provides a lower insurance limit for "other structures on the ‘residence premises’ set apart by clear space." This "includes structures connected to the dwelling only by a fence, utility line, or similar connection ." The Court finds that this language is clear on its face. Coverage A provides insurance for the dwelling and structures immediately attached to the dwelling; while Coverage B provides insurance for other structures on the premises, including those connected to the dwelling by another structure. Here, while bolts connected the dwelling to the deck, and the deck to the garage, the garage was not otherwise attached to the dwelling. The garage and the dwelling share no walls, roofs, foundations, or entryways. The clear space between the dwelling and the garage is the deck. To find that the construction of a deck could render the garage attached to the home under Coverage A would be to effectively render Coverage B irrelevant, as any structure on the entire premises could be connected to the home by way of a deck and, therefore, be insured under Coverage A. The Court must construe the agreement as a whole, and, therefore, must find that the deck in this situation is similar to a fence or utility line which connects the garage to the dwelling, but does not "attach" it.

The court dismissed the negligence claim against Bruckbauer, concluding as a matter of law that he breached no professional duties owed to the Dahms.

II

[¶5] The Dahms argue the district court erred in dismissing their action on summary judgment.

[¶6] Our standard of review for summary judgments is well established:

Summary judgment is a procedural device under N.D.R.Civ.P. 56(c) for promptly resolving a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. The party seeking summary judgment must demonstrate there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. In deciding whether the district court appropriately granted summary judgment, we view the evidence in the light most favorable to the opposing party, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record. A party opposing a motion for summary judgment cannot simply rely on the pleadings or on unsupported conclusory allegations. Rather, a party opposing a summary judgment motion must present competent admissible evidence by affidavit or other comparable means that raises an issue of material fact and must, if appropriate, draw the court's attention to relevant evidence in the record raising an issue of material fact. When reasonable persons can reach only one conclusion from the evidence, a question of fact may become a matter of law for the court to decide. A district court's decision on summary judgment is a question of law that we review de novo on the record.

Pettinger v. Carroll , 2018 ND 140, ¶ 7, 912 N.W.2d 305 (quoting A.R. Audit Servs., Inc. v. Tuttle , 2017 ND 68, ¶ 5, 891 N.W.2d 757 ).

A

[¶7] The Dahms argue the district court erred in ruling Coverage A policy limits did not apply because they contend the garage was "attached" to their dwelling by the deck.

[¶8] In Borsheim Builders Supply, Inc. v. Manger Ins., Inc. , 2018 ND 218, ¶ 8, 917 N.W.2d 504, we recently explained the rules for interpreting insurance policies:

"Insurance policy interpretation is a question of law, which is fully reviewable on appeal." Forsman [v. Blues, Brews & Bar-B-Ques, Inc.] 2017 ND 266, ¶ 10, 903 N.W.2d 524. This Court independently examines and construes the insurance contract on appeal to decide whether coverage exists. K & L Homes[, Inc. v. Am. Family Mut. Ins. Co.] 2013 ND 57, ¶ 8, 829 N.W.2d 724. This Court construes policy language to give effect to the parties' mutual intention at the time of contracting:

We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract. While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured. We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. The whole of a contract is to be taken together to give effect to every part, and each clause is to help interpret the others.

Forsman , at ¶ 10 (quoting K & L Homes , at ¶ 8 ).

[¶9] Whether Coverage A or Coverage B insurance policy limits apply under the circumstances present in this case is a question of first impression in North Dakota. The parties do not cite, and we have not found, any cases construing similar insurance policy provisions from other jurisdictions that are factually on point. In deciding this issue the district court found persuasive a hypothetical posed by the Texas Supreme Court in Nassar v. Liberty Mut. Fire Ins. Co. , 508 S.W.3d 254, 260 (Tex. 2017) :

To illustrate using a hypothetical, a stand-alone barn on a residence premises set apart from the dwelling by clear space would clearly be covered under subsection (2). Yet without the second sentence in subsection (2), a barn that was connected to the dwelling by only a fence would qualify as a "structure attached to the dwelling." This is because the fence, acting as a "structure attached to the dwelling" and a "connection" to the barn that would otherwise be "set apart by clear space," acts to negate the clear space requirement that places the barn neatly in the first sentence of subsection (2). An insured could simply use some fencing (or a "utility line or similar connection") and attach his or her dwelling to every barn, garage, or other building on the residence premises and secure coverage under subsection (1) instead of subsection (2). What protects the insurer from an insured determined to secure coverage for his or her other structures in such a way? The second sentence of subsection (2) provides the answer, and it does so with the distinction between "dwelling" and "other structures." In the above illustration, applying the second sentence of subsection (2) would cause the barn, connected to the dwelling by only a fence, to not be considered "attached to the dwelling" but rather as effectively "separated by clear space." The second sentence of subsection (2) operates to prevent a

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