Dundee Mut. Ins. Co. v. Marifjeren

• Citation: 587 N.W.2d 191
• Decision Date: 22 December 1998
• Docket Number: No. 980143,980143
• Parties: DUNDEE MUTUAL INSURANCE COMPANY, Plaintiff and Appellant, v. Earl MARIFJEREN and Richard Lien, d/b/a Marifjeren Farms and Marifjeren Farms, Defendants and Appellees. Civil
• Court: United States State Supreme Court of North Dakota

Page 191

587 N.W.2d 191

1998 ND 222

DUNDEE MUTUAL INSURANCE COMPANY, Plaintiff and Appellant, v. Earl MARIFJEREN and Richard Lien, d/b/a Marifjeren Farms and Marifjeren Farms, Defendants and Appellees.

Civil No. 980143

Supreme Court of North Dakota.

Dec. 22, 1998.

Jon J. Jensen (argued) and Richard A. Clapp, of Pearson, Christensen, Larivee, Clapp, Fiedler, Fischer & Jensen, Grand Forks, ND, for plaintiff and appellant.

Nicholas B. Hall, of Hodny Currie Lawyers, Grafton, ND, for defendants and appellees.

MARING, Justice.

¶1 Dundee Mutual Insurance Company (Dundee) appeals from a district court judgment granting summary judgment in favor of defendants Earl Marifjeren, Richard Lien, and Marifjeren Farms (Marifjeren), in a declaratory action. The district court declared a farm insurance policy issued by Dundee was unambiguous and construed the policy to provide coverage. We affirm.

I

¶2 Earl Marifjeren and Richard Lien operate Marifjeren Farms, a farming partnership in Walsh County, North Dakota. For several years, Marifjeren insured its potato crop with Dundee, a county mutual insurance company headquartered in Park River, North Dakota. During the 1996-97 growing season, Marifjeren raised approximately 500 acres of potatoes. After harvest, the potatoes were stored in a potato storage facility at the Marifjeren farmstead in Dundee Township for future delivery. For the 1996-97 growing season, Dundee issued Marifjeren a farm fire and extended coverage insurance policy, policy FF-18639, and an attached endorsement, which were both in effect for the relevant events.

¶3 On April 6, 1997, Blizzard Hannah paralyzed the Red River Valley with snow, sleet, and strong winds, resulting in downed power lines and an interruption of power service to a majority of the region. The power lines serving the rural farms and homes of Dundee Township were also downed during the storm, and a period of three days passed before service was restored. It is undisputed the storm's strong north winds were a major factor in the damage to the power lines serving Dundee Township, and those serving Marifjeren's potato storage facility. It is also undisputed the storm did not cause any physical damage to the storage facility. The power outage, however, caused all of Marifjeren's stored potatoes to freeze because the storage facility was heated by electric heaters and fans.

¶4 Shortly after the storm, Marifjeren filed a claim for its potato loss. On May 13, 1997, an adjuster from Dundee determined Policy FF-18639 did not provide coverage because the policy's endorsement required "physical damage to the structure or at least physical damage to the transmission line somewhere on the insured's premises."

¶5 Policy FF-18639 included the following provisions. The declaration sheet declared the policy covered "potatoes-year round: in storage" for a maximum sum of $300,000. The policy's perils section provided in part:

I. FIRE AND EXTENDED COVERAGE

This policy insures against direct physical loss to covered property caused by the following perils:

. . . . .

2. Windstorm or Hail. This peril does not include loss to the interior of a building or the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

An endorsement to the policy provided in part:

POTATOES IN STORAGE

This policy on potatoes in storage does hereby include coverage for damage caused by freezing as a direct or indirect result of fire damage, wind damage, roof collapse from weight of snow or ice and vandalism to the potato storage facility wherein said potatoes are stored. (Emphasis added.)

¶6 On June 30, 1997, Dundee sought declaratory relief, asserting the policy and endorsement precluded coverage in the absence of physical damage to the storage facility. On cross motions for summary judgment, the district court concluded neither the policy nor the endorsement was ambiguous and construed it to provide coverage.

II

¶7 On appeal, Dundee argues the insurance policy and its endorsement unambiguously exclude coverage for natural disasters that do not cause physical damage to the potato storage facility itself. Because the region-wide power outage did not cause physical damage to the storage facility, Dundee argues the district court erred in granting Marifjeren's motion for summary judgment.

¶8 Summary judgment under N.D.R.Civ.P. 56 is appropriate if the only issues to be resolved are questions of law. Security Nat. Bank, Edgeley v. Wald, 536 N.W.2d 924, 926 (N.D.1995). "The interpretation of an insurance policy, including whether it is ambiguous, is a question of law, which is fully reviewable on appeal." Fisher v. American Family Mut. Ins., 1998 ND 109, p 5, 579 N.W.2d 599. Since this case turns on the interpretation of the farm insurance policy issued to Marifjeren by Dundee, we will "independently examine and construe the insurance policy to determine if the trial court erred in its construction." Id.; Sellie v. North Dakota Ins. Guar. Ass'n, 494 N.W.2d 151, 156 (N.D.1992).

¶9 Generally, we attempt to ascertain the parties' intent through the language of the insurance contract itself. Northwest G.F. Mut. Ins. v. Norgard, 518 N.W.2d 179, 181 (N.D.1994). We look first to the language of the insurance policy, and if the policy is clear on its face, our inquiry is at an end. Martin v. Allianz Life Ins. Co., 1998 ND 8, p 9, 573 N.W.2d 823. If coverage turns on an undefined term, however, we apply the plain, ordinary meaning of the term in interpreting the policy. Id. (citing Aid Ins. Servs., Inc. v. Geiger, 294 N.W.2d 411, 414-15 (N.D.1980)).

¶10 An ambiguity in an insurance policy exists when good arguments can be made for two contrary positions about the meaning of a policy term. Fisher, 1998 ND 109, p 5, 579 N.W.2d 599. Any ambiguity or reasonable doubt as to the meaning of a policy term is strictly construed in favor of the insured, id. at p 6, 579 N.W.2d 599, and we construe an ambiguous policy term " 'to mean what a reasonable person in the position of the insured would think it meant.' " Id. (quoting Sellie, 494 N.W.2d at 157). Thus, if an insurance policy term supports an interpretation imposing liability on the insurer and one that does not, we will adopt the interpretation imposing liability. Id.

¶11 Dundee initially argues the policy's perils section precludes coverage because the blizzard did not cause "direct physical loss" to the storage facility. We need not address the perils section, however, because we find coverage under the endorsement. We have always regarded an endorsement to be part of the insurance contract itself, Johnson v. Center Mut. Ins. Co., 529 N.W.2d 568, 571 (N.D.1995); Thiel Indus., Inc. v. Western Fire Ins. Co., 289 N.W.2d 786, 788 (N.D.1980), and when there is a conflict between an endorsement and other policy provisions, we have consistently held the endorsement...