Exotic Motors v. Zurich Am. Ins. Co.

• Citation: 597 S.W.3d 767
• Decision Date: 10 March 2020
• Docket Number: No. ED 108090,ED 108090
• Parties: EXOTIC MOTORS, Appellant, v. ZURICH AMERICAN INSURANCE CO., Respondent.
• Court: Missouri Court of Appeals

597 S.W.3d 767

EXOTIC MOTORS, Appellant,

v.ZURICH AMERICAN INSURANCE CO., Respondent.

No. ED 108090

Missouri Court of Appeals, Eastern District, DIVISION TWO.

FILED: March 10, 2020

Introduction

Exotic Motors appeals from the motion court's grant of summary judgment to Zurich American Insurance Company ("Zurich") on Exotic Motors's claim under the False Pretense Coverage clause of its insurance policy (the "Policy"). The False Pretense Coverage clause provides an insured with coverage for "acquired" autos when the insured suffers a loss when "acquiring" an auto from a seller who lacked legal title or authority to transfer ownership.

Exotic Motors was a victim of a fraud. After paying a substantial sum to a third party to purchase an automobile, Exotic Motors never received possession of the purchased auto. Zurich denied Exotic Motors's claim under the Policy on the grounds that Exotic Motors never obtained possession of the car, and therefore the car was not an "acquired" vehicle under the Policy. The motion court agreed and granted summary judgment in favor of Zurich. In its sole point on appeal, Exotic Motors maintains that the meaning of the term "acquire" under the Policy includes a purchase of a vehicle, even though the purchaser never receives physical possession or legal title. The motion court correctly found that Exotic Motors's claim was not covered under the Policy because the plain and ordinary meaning of the term "acquire" requires the exercise of possession and control over the subject property. Because Exotic Motors never obtained possession or control over the car it attempted to purchase, the motion court properly granted summary judgment in favor of Zurich. Accordingly, we affirm the motion court's judgment.

Factual and Procedural History

In July 2017, Exotic Motors attempted to purchase a 2015 Mercedes-Benz SL63 AMG (the "Vehicle") from an individual calling himself Robert Weir ("Weir"). Exotic Motors and Weir negotiated the sale through emails and text messages. In these communications, Weir provided Exotic Motors with what he claimed was the Vehicle's license plate information and certificate of title. Exotic Motors agreed to purchase the Vehicle for $90,100 and entered into a purchase agreement and bill of sale.¹ Exotic Motors then wired the $90,100 to Weir's bank account and attempted to make arrangements to pick up the Vehicle. However, when Exotic Motors tried to contact Weir to finalize the details, Weir could not be reached. A criminal investigation revealed that Weir had been using an alias, never had legal title to the Vehicle, and that the Vehicle's vehicle identification number ("VIN") and license plate information belonged to third parties with no knowledge of Weir's actions.

Exotic Motors made a claim for loss under its auto-dealers Policy issued by Zurich, effective from February 1, 2017 through February 1, 2018. The Policy's False Pretense Coverage includes the following provision under Section 1, Covered Autos Coverages, Paragraph F. Physical Damage Coverage:

1. The following is added:

a. Any "auto" you have acquired is a covered "auto" under False Pretense Coverage.

b. We will pay for "loss" to a covered "auto" under False Pretense Coverage caused by:

(1) Your voluntary parting with evidence of title to or possession of the covered "auto" ...[.]

(2) Your acquiring an "auto" from a seller who did not have legal title or authority to transfer ownership of that property.

(3) The unauthorized retention (without intent to return) of a covered "auto" by:

(a) Your customer ...[.]

(b) Any person to whom you furnish a covered "auto" for their regular use.

(emphases added). Zurich denied coverage, stating that the loss was not covered because Exotic Motors never "acquired" the Vehicle. Exotic Motors subsequently brought suit against Zurich for breach of contract and vexatious refusal to pay.

Exotic Motors moved for summary judgment, and Zurich cross-moved for summary judgment. Zurich provided the following two statements of uncontroverted facts in support of its motion for summary judgment that coverage should be denied: (1) Exotic Motors never took or had physical possession over the subject auto, and (2) Exotic Motors never took or had legal title to the subject auto, as the prospective seller never had good title to give.

The motion court granted summary judgment in favor of Zurich. In its final judgment, the motion court found that the word "acquired" was not ambiguous. In reaching its decision, the motion court relied on Shaffer v. Federated Mut. Ins. Co., 903 S.W.2d 600 (Mo. App. S.D. 1995), in which false pretense coverage depending on a similarly-worded policy's use of the word "acquiring" was denied on the basis of the insured dealership never having acquired the vehicles where the dealership paid a wholesaler for vehicles that were never delivered. Shaffer interpreted the ordinary meaning of "acquire" using Webster's Third New International Dictionary, which defined the term as "to come into possession, control, or power of disposal of, often by some uncertain or unspecified means." Id. at 607. Shaffer therefore held that because the insured did not come to possess the vehicles, have control over them, or have the power to dispose of them, the insured never acquired the vehicles and was thus not afforded coverage under the policy. Id. Relying on that Missouri precedent, the motion court determined that because Exotic Motors never gained possession or control over the Vehicle, Exotic Motors never "acquired" the Vehicle under the language of the Policy and thus its loss was not covered by the Policy's False Pretense Coverage provision. Exotic Motors now appeals.

Point on Appeal

In its sole point on appeal, Exotic Motors argues the motion court erred in granting summary judgment in favor of Zurich because the terms "acquired" and "acquiring" in the Policy are ambiguous and should be construed in favor of coverage.

Standard of Review

We review a circuit court's grant of summary judgment de novo. Swadley v. Shelter Mut. Ins. Co., 513 S.W.3d 355, 357 (Mo. banc 2017) (internal citation omitted). Interpreting the terms of an insurance policy presents a question of law and is also reviewed de novo. Id.

Discussion

Because the point on appeal alleges ambiguity in the terms of an insurance policy, we must first determine whether the language of the policy is ambiguous. Allstate Ins. Co. v. Ibrahim, 243 S.W.3d 452, 456–57 (Mo. App. E.D. 2007). Absent an explicit finding of ambiguity, we then proceed in deciding whether coverage exists when the policy language is given its plain and ordinary meaning. Id.

"An ambiguity exists when the contract language is duplicitous, indistinct, or uncertain, leaving its interpretation open to different constructions." Foremost Signature Ins. Co. v. Montgomery, 266 S.W.3d 868, 872 (Mo. App. E.D. 2008) (citing Krombach v. Mayflower Ins. Co., 827 S.W.2d 208, 210 (Mo. banc 1992) ). "The fact that a term remains undefined in a policy does not necessarily render it ambiguous[.]" Am. Family Mut. Ins. Co. v. Peck, 169 S.W.3d 563, 567 (Mo. App. W.D. 2005) (internal citations omitted). Similarly, "[t]he fact that the parties disagree as to the correct interpretation of insurance policy language does not render the policy ambiguous." Foremost Signature Ins. Co., 266 S.W.3d at 873 (citing Shelter Mut. Ins. Co. v. Ballew, 203 S.W.3d 789, 794 (Mo. App. W.D. 2006) ). Further, "[a] court may not use its inventive powers to create an ambiguity where none exists[.]" Id. at 872 (internal quotation omitted). Where an insurance policy's terms are found to be ambiguous, we construe the ambiguity against the insurer. Id. at 872 (citing Krombach, 827 S.W.2d at 210 ); see also Burns v. Smith, 303 S.W.3d 505, 509–10 (Mo. banc 2010) (reviewing an exclusionary clause for ambiguity, which is strictly construed against the drafter). Where no ambiguity is found, we will enforce an insurance policy according to its terms, applying the plain and ordinary meaning as understood by lay persons buying insurance, "consistent with the reasonable expectations, objectives, and intent of the parties." Foremost Signature Ins. Co., 266 S.W.3d at 871 (internal citations omitted); see also Swadley, 513 S.W.3d at 357 (internal citation omitted).

Here, Exotic Motors asserts that the term "acquire" in the Policy is ambiguous and should be construed in favor of coverage. The Policy provides that "[a]ny ‘auto’ you have acquired is a covered ‘auto’ under False Pretense Coverage." (emphasis added). The Policy further states that the Insurer "will pay for ‘loss’ to a covered ‘auto’ under False Pretense Coverage caused by ... [y]our acquiring an ‘auto’ from a seller who did not have legal title or authority to transfer ownership of that property." (emphasis added). Exotic Motors argues that a reasonable meaning of the term "acquire" includes "purchasing" and that by wiring the purchase money to the purported seller, Exotic Motors thereby "acquired" the Vehicle under the terms of the Policy. Zurich contends, and the motion court agreed, that the plain meaning of "acquire" does not encompass purchasing the Vehicle. Relying on Webster's definition of "acquire" and judicial precedent interpreting "acquire" in an automobile insurance policy under similar facts in Shaffer, the motion court found the unambiguous plain meaning of "acquire" is to come into possession, control, or power of disposal over. The motion court further found that Exotic Motors did not "acquire" the Vehicle because Exotic Motors never took physical or legal possession of the Vehicle, and thus the Vehicle was not a covered auto under the Policy.

In our de novo review, we find the term "acquire" in the Policy to be unambiguous. First, as the motion court recognized, the alleged ambiguity of "acquire" within an automobile insurance policy's false pretense coverage has been previously addressed by the Southern District. In that case, interpreting a...