Gilbert/Robinson, Inc. v. Sequoia Ins. Co., WD

• Decision Date: 24 May 1983
• Docket Number: No. WD,WD
• Citation: 655 S.W.2d 581
• Parties: GILBERT/ROBINSON, INCORPORATED, et al., Plaintiffs-Appellants, v. SEQUOIA INSURANCE COMPANY, Defendant-Respondent. 33719.
• Court: Missouri Court of Appeals

Page 581

655 S.W.2d 581

GILBERT/ROBINSON, INCORPORATED, et al., Plaintiffs-Appellants, v. SEQUOIA INSURANCE COMPANY, Defendant-Respondent.

No. WD 33719.

Missouri Court of Appeals,

Western District.

May 24, 1983.

Motion for Rehearing and/or Transfer to

Supreme Court Overruled and Denied

Aug. 2, 1983.

H. Fred Northcraft and James E. Kelley, Jr. of Smith, Gill, Fisher & Butts, Inc., Kansas City, for plaintiffs-appellants.

Darrell L. Havener and William T. Smith III of Watson, Ess, Marshall & Enggas, Kansas City, for defendant-respondent.

Before PRITCHARD, P.J., and MANFORD and NUGENT, JJ.

MANFORD, Judge.

This is an action to recover for business interruption losses under an insurance policy. The trial court sustained the insurer's motion for summary judgment. The judgment is affirmed.

Both parties sought summary judgment. From the affidavits, pleadings and documentary evidence upon the record, the following factual summary is developed. Any additional pertinent facts are disclosed and included within the remaining portions of this opinion where applicable.

Appellants, plaintiffs below, are the corporate owners and operators of four restaurants in the Plaza area of Kansas City, Missouri. Respondent, defendant below, was the insurance carrier for plaintiffs at the time of the alleged loss. On September 12, 1977, a flood struck the Plaza area. All four restaurants owned and operated by plaintiffs were damaged by the flood. The policy under question in this proceeding was issued on January 16, 1976, and was in full force and effect on September 12, 1977.

All four restaurants were closed for varied periods of time. The defendant paid, and plaintiffs accepted the payment of, $100,000 under the policy subject to a reservation of rights by both parties under the terms of the policy. Plaintiffs then filed amended proofs of loss, claiming a sum of $282,528 as losses for all four restaurants for business interruption. Defendant refused further payment, claiming that the maximum amount of its liability under the policy was $100,000, which had been paid.

This action was filed and plaintiffs alleged in their petition that the policy insured plaintiffs' property, including business interruption losses; that said losses were sustained, that calculations per restaurant were made for such losses according to the formula within the policy, including damages for vexatious delay. This latter claim has been abandoned on this appeal.

By affidavit in support of their motion for summary judgment (with the policy attached), in addition to other general and applicable allegations, plaintiffs set forth with particularity the dates of closing for each restaurant and the calculated losses claimed due plaintiffs for and as a result of business interruption. Plaintiffs claimed a right of recovery directly from the terms of the policy, or in the alternative, that the terms of the policy were ambiguous concerning business interruption; and as a result of such ambiguity, the policy should be construed in plaintiffs' favor and against defendant.

Defendant has maintained the position that the policy is unambiguous; that payment of the $100,000 was pursuant to a flood endorsement to the policy; that the payment exhausted coverage for the flood and that as insurer, it had paid the total amount due under the policy.

The trial court entered summary judgment for the defendant insurer and this appeal followed.

The dispute herein centers upon five parts or sections of the policy identified as MLB-140, MLB-115, MLB-101, FP-1 and FP-10. It is beyond the scope and purpose of this opinion to recite verbatim all of these lengthy policy provisions, so where that is not done, reference is simply made thereto. MLB-140, MLB-115, and MLB-101 are basic policy coverage sections of the policy. FP-1 and FP-10 are endorsements to the policy.

MLB-140 is captioned "Gross Earnings Endorsement". MLB-140 contains a reference, "Per endorsement FP-1 attached to this contract." Under paragraph 1 of MLB-140, the following is found:

"1. Subject to all the provisions and stipulations otherwise applicable to Section I of this policy, except the Coinsurance Clause and the Loss Deductible Clauses, this policy is extended to insure against loss resulting directly from necessary interruption of business caused by the perils insured against damaging or destroying during the policy period, real or personal property (except finished stock) at the premises described in this endorsement, subject to the limit of liability specified above for the premises at which the damage or destruction occurs. For the purposes of this insurance, 'perils insured against' shall mean the perils, as defined and limited in the forms and endorsements listed above, for each premises specified and also subject to the provisions of this endorsement."

MLB-101 is captioned, "SMP Special Building Form--Section 1--Property Coverage." MLB-101 carries an exclusion for interior building flood damage (III, subsection G).

MLB-115 is captioned, "Special Property Form-Section 1 Property Coverage." MLB 115 carries an exclusion for flood damage. (VII C.2.) It references endorsement FP-1 under the schedule of limits of liability.

FP-1 is an endorsement to the policy, consisting of two legal-sized sheets listing "Locations, Limits, and Coverages" as to plaintiffs' properties. It also contains a co-insurance statement, plus applicable deductible and business interruption co-insurance provisions as per each of plaintiffs' properties. As regards the four properties in this proceeding, FP-1 contains limits for business interruption as follows: (1) $100,000 (50% co-insurance); (2) $250,000 (50% co-insurance); (3) $375,000 (50% co-insurance) and (4) $300,000 (50% co-insurance). FP-1 also outlines the limits of coverage for comprehensive general liability, liquor liability, neon signs, fine arts, cargo truck, medical payments, and crime coverage.

FP-10 is an endorsement to the policy captioned, "Flood and Earthquake Endorsement". The remainder of FP-10 reads as follows:

"This Company shall not be liable for more than the limits stated in the schedule attached to this policy, these limits being maximum any one loss except for flood and earthquake which covered subject to a limit of $25,000 at any one location.

The term FLOOD shall mean waves, tides, or tidal water, the rising (including the overflowing or breaking of boundaries) of lakes, ponds, reservoirs, rivers, harbors, streams or similar bodies of water whether driven by wind or not."

As noted above, flood damage was excluded from the basic policy as per MLB-101 and MLB-115. FP-10 was an endorsement attached to the policy which, by its terms, removes the flood damage exclusion.

On this appeal, plaintiffs set forth three points, which in summary charge the trial court erred in entering summary judgment for the defendant because: (1) when MLB-140 is read together with FP-1 and other relevant portions of the policy, the policy affords business interruption coverage arising from flood damage up to the dollar amounts set forth in FP-1 "and at least and in the alternative the policy does not state otherwise without ambiguity"; (2) FP-10 itself is internally ambiguous as to whether there is per premises flood coverage up to $25,000 for building contents and additionally, up to $25,000 for business interruption, or whether contents and business interruption are covered only up to $25,000 in the aggregate for each of the premises, and as a result, defendant is liable for up to an additional $25,000 per each of the premises for business interruption losses; and (3) the trial court erred in giving weight to the deposition testimony of one Pat Mullen in its order and judgment because such testimony was not material or relevant to the issues presented by the cross-motions for summary judgment.

In support of its first point, plaintiffs have fragmented their argument into eight subportions.

Under their first subpoint, plaintiffs submit nothing more than an exhaustive and thorough recapitulation of cited authority in support of the general rule that if an insurance contract by its terms is ambiguous, it must be construed against the insurer. Continuing, plaintiffs point out that the "face sheet" of the policy provides six separate property coverages designated Section I "property coverage". Under Division 1, there is coverage for buildings, personal property (or contents of buildings), and for business interruption. The three remaining coverages are under Division 2 and include neon signs, fine arts, and motor truck cargo. Plaintiffs suggest that with respect to these coverages, five are categories of properties covered and constitute, in the aggregate, the real and personal property within the property coverages of the policy. Plaintiff then contends that the remaining or sixth coverage, business interruption, is not for loss due to property damage as such but for loss resulting from interference with business operations.

Plaintiffs then direct attention to paragraph 1 of MLB-140 and emphasize portions thereof. At this juncture, it is perhaps wise to again recite paragraph 1 of MLB-140 with the portions emphasized by plaintiffs:

"Subject to all the provisions and stipulations otherwise applicable to Section I of this policy, except the Coinsurance Clause and the Loss Deductible Clauses, this policy is extended to insure against loss resulting directly from necessary interruption of business caused by the perils insured against damaging ... real or personal property ... at the premises described in this endorsement, subject to the limit of liability specified above for the premises at which the damage ... occurs. For the purposes of this insurance 'perils insured against' shall mean the perils, as defined and limited in the forms and endorsements listed above for each premises specified ..." (Emphasis added)

Plaintiffs further direct attention to the fact that...