Design Data Corp. v. Maryland Cas. Co.

• Decision Date: 06 August 1993
• Docket Number: No. S-91-579,S-91-579
• Citation: 243 Neb. 945,503 N.W.2d 552
• Parties: , 21 UCC Rep.Serv.2d 230 DESIGN DATA CORPORATION, Appellee, v. MARYLAND CASUALTY COMPANY, an Insurance Company, Defendant and Third-Party Plaintiff, Appellant, Consolidated Freightways, Inc., Third-Party Defendant, Appellee.
• Court: Nebraska Supreme Court

Page 552

503 N.W.2d 552

243 Neb. 945, 21 UCC Rep.Serv.2d 230

DESIGN DATA CORPORATION, Appellee, v. MARYLAND CASUALTY COMPANY, an Insurance Company, Defendant and Third-Party Plaintiff, Appellant Consolidated Freightways, Inc., Third-Party Defendant, Appellee.

No. S-91-579.

Supreme Court of Nebraska.

Aug. 6, 1993.

Syllabus by the Court

1. Summary Judgment. A summary judgment is proper when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences to be drawn therefrom and that the moving party is entitled to judgment as a matter of law.

2. Summary Judgment: Appeal and Error. In reviewing an order sustaining a motion for summary judgment, an appellate court views the evidence in a light most favorable to the party opposing the motion and gives that party the benefit of all reasonable inferences that may be deduced from the evidence.

3. Uniform Commercial Code: Contracts: Sales. The Uniform Commercial Code applies where the principal purpose of the contract is the sale of goods, even though in order for the goods to be utilized, some installation is required. On the other hand, if the contract is principally for services and the goods are merely incidental to the contract, the provisions of the Uniform Commercial Code do not apply. The test for inclusion in or exclusion from the sales provisions is not whether the contracts are mixed but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved, or whether they are transactions of sale, with labor incidentally involved.

4. Insurance: Contracts: Intent. An insurance policy is to be construed as any other contract to give effect to the parties' intentions at the time the contract was made. When the terms of the contract are clear, they are to be accorded their plain and ordinary meaning.

5. Insurance: Contracts. While an ambiguous policy will be construed in favor of the insured, an ambiguity will not be read into policy language which is plain and unambiguous in order to construe it against the preparer of the contract.

6. Insurance: Contracts. The parties to an insurance contract may contract for any lawful coverage, and the insurer may limit its liability and impose restrictions and conditions upon its obligation under the contract not inconsistent with public policy or statute.

7. Insurance: Contracts: Estoppel. Estoppel cannot be invoked to expand the scope of coverage of an insurance contract absent a showing of detrimental good faith reliance upon statements or conduct of the party against whom estoppel is invoked which reasonably led an insured to believe coverage was present.

8. Insurance: Contracts: Estoppel: Case Disapproved. To the extent that it may suggest that coverage on an insurance policy may be extended by estoppel without a showing of detrimental reliance, Mutual Benefit Life Ins. Co. v. Chisholm, 213 Neb. 301, 329 N.W.2d 103 (1983), is disapproved.

9. Insurance: Breach of Contract: Claims: Proof. When a breach of an insurance contract is alleged, the plaintiff has the burden of bringing his or her claim within the limitations of the policy.

10. Appeal and Error. Although an appellate court does not consider assignments of error not listed and discussed in the briefs, it always reserves the right to note plain error which was not complained of at trial or on appeal but is plainly evident from the record, and which is of such a nature that to leave it uncorrected would result in damage to the integrity, reputation, or fairness of the judicial process.

Stephen L. Ahl and Michael A. England of Wolfe, Anderson, Hurd, Luers & Ahl, Lincoln, for appellant.

Lavern R. Holdeman of Nelson Morris Holdeman & Titus, Lincoln, for appellee Design Data Corp.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

HASTINGS, Chief Justice.

This action was brought by the insured, Design Data Corporation, upon the denial of a claim made on a commercial insurance policy issued by defendant and third-party plaintiff Maryland Casualty Company. Design Data sought the recovery of damages to a computer plotter shipped by third-party defendant Consolidated Freightways, Inc., from the insured to a customer, HHB Drafting, Inc.

Summary judgment was entered in favor of Design Data and against Maryland Casualty, as later will be set out. There is no issue remaining to be decided between Maryland Casualty as third-party plaintiff and Consolidated as third-party defendant.

A summary judgment is proper when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences to be drawn therefrom and that the moving party is entitled to judgment as a matter of law. In re Estate of Wells, 243 Neb. 152, 497 N.W.2d 683 (1993); Viking Broadcasting Corp. v. Snell Publishing Co., 243 Neb. 92, 497 N.W.2d 383 (1993).

In reviewing an order sustaining a motion for summary judgment, an appellate court views the evidence in a light most favorable to the party opposing the motion and gives that party the benefit of all reasonable inferences that may be deduced from the evidence. Professional Firefighters of Omaha v. City of Omaha, 243 Neb. 166, 498 N.W.2d 325 (1993); Economy Preferred Ins. Co. v. Mass, 242 Neb. 842, 497 N.W.2d 6 (1993).

Design Data operates a computer services company in Lincoln, Nebraska. Design Data purchased from Maryland Casualty a policy of commercial insurance for its operations which was in effect at the time of the loss at issue here. In relevant part, the policy provides:

Property Insured

....

We'll cover equipment you own, rent, or for which you are legally responsible. We'll consider all of these to be yours in this agreement.

....

Where Insurance Applies

We'll cover losses that occur at the locations shown in the Declarations, or while in transit in the United States of America excluding Hawaii and Alaska.

Causes of Loss Insured

....

We'll cover losses that occur at the locations shown in the Declarations, up to the limit of coverage that applies. Losses that occur while property is in transit are covered up to the transit limit. If no transit limit is shown, these losses won't be covered.

The schedule of covered premises in the "Declarations" shows the address of the location as 1033 O Street, Lincoln, NE 68508. The limits of insurance in the "Declarations" disclose: "G. Property in Transit $________."

In November 1988, Design Data sold a "Hewlett Packard 7586B Roll-Feed 8-Pen Drafting Plotter," as part of a structural steel design computer system, to HHB. Design Data arranged for shipment to the purchaser in Pevely, Missouri, via Consolidated. In a deposition, Design Data's vice president of sales, Ed Bruening, stated that the plotter was in good condition when tendered to Consolidated and that the carton it was packaged in showed no evidence of damage or perforation. However, HHB employee Harold Glamann, who received the shipment, testified by deposition that when the plotter arrived, he noticed that there had been some damage to the cardboard container. Glamann stated: "The wheels of the plotter were actually protruding through a hole in the container. When the driver drug [sic] it off or dropped it to the ground, that may or may not have created more damage. It dropped rougher than I would like to see computer equipment handled." When Glamann was asked if there was any other noticeable damage to the carton, he replied that it appeared that "something had either fallen on it or something heavy put on it that it was caved in." Upon opening the carton and examining the plotter, Glamann noticed that it had been "cracked and chipped in a couple of different places" and that the paper tray was bent or not positioned properly.

Howard Becker, president of HHB, stated in a deposition that at the time he learned of the damage to the plotter upon his return to his plant, a Design Data representative was present. Becker testified that the individual from Design Data hooked up the plotter and "tried to get it to work," but that it just made a loud noise and was not operable. The plotter had been tendered to Consolidated pursuant to a tariff provision which set the "released value" for the computer equipment at $5 per pound. As a result of the damage, Design Data filed a claim with Consolidated, which issued a draft to Design Data on March 29, 1989, for $1,700, the tariff limit as specified. The reverse side of the draft, which was accepted and endorsed by Design Data, contained the following language:

Endorsement and negotiation of this draft constitutes a release of all claims, known or unknown, including judgments thereon, the undersigned has or may have against the payor, and any other person on account of any injury, loss or damage, arising out of, or in connection with, the occurrence referred to on the explanatory voucher slip attached hereto.

(Emphasis supplied.)

In a letter to Design Data dated February 21, 1989, Maryland Casualty acknowledged the receipt of a loss notice regarding the damaged plotter and stated:

It is our position that Design Data Inc. no longer owned the equipment purchased and accepted by HHB Drafting Inc. Therefore, your Electronic Data Processing form would not cover any equipment since you did not own[,] rent or have legal responsibility for same. We must respectfully deny coverage on this claim.

In its amended answer, Maryland Casualty alleged that Design Data had delivered the computer to the purchaser, which had accepted the goods; that the property was damaged while in transit; and that the property was covered by a transit limit calculated at the released value rate of $5 per pound. It was additionally alleged...