Grinnell Mut. Reinsurance Co. v. Thies

Decision Date04 September 2008
Docket NumberNo. 20080017.,20080017.
Citation2008 ND 164,755 N.W.2d 852
PartiesGRINNELL MUTUAL REINSURANCE COMPANY, Plaintiff and Appellee, v. Lisa R. THIES, Defendant, J. Jeffrey Geiger and Vicki Jo Geiger, Defendants and Appellants.
CourtNorth Dakota Supreme Court

Lyle W. Kirmis, Zuger Kirmis & Smith, Bismarck, N.D., for plaintiff and appellee.

Benjamin E. Thomas, Wold Johnson, Fargo, N.D., for defendants and appellants.

VANDE WALLE, Chief Justice.

[¶ 1] J. Jeffrey and Vicky Jo Geiger appealed from a summary judgment declaring Grinnell Mutual Reinsurance Company was not obligated to provide the Geigers with coverage for a third-party claim under a homeowner's insurance policy issued to the Geigers. We hold Grinnell Mutual's insurance policy with the Geigers did not provide coverage for a third-party claim against them because the third-party claim did not result in bodily injury or property damage caused by an occurrence during the policy period. We affirm.

I

[¶ 2] From August 2001 through July 20, 2006, the Geigers owned a house in West Fargo. The Geigers insured the house under a "Home-Guard 2" insurance policy issued by Hartland Mutual Insurance Company on behalf of itself and Grinnell Mutual, which was effective from September 5, 2005, through July 20, 2006, when the Geigers sold the house to Lisa Thies and cancelled the policy. The policy provided coverage by Hartland Mutual under Section I for "Property Coverages" and by Grinnell Mutual under Section II for "Personal Liability Coverages."

[¶ 3] Thies claimed that within one week after moving into the house, she began feeling sick and discovered mold. Legend Technical Services conducted a microbial investigation of the house in September and October 2006, and found wetness and mold within the walls of the house. Legend Technical Services issued a report concluding the "amount of decay and dry rot of the wood framing inside the walls indicates the windows and/or wall system have been leaking for years." Thies sued the Geigers to rescind the sale, or alternatively, for damages associated with repairing and restoring the house. Thies alleged that, soon after occupying the house, she began suffering headaches, nausea, dizziness, and breathing problems caused by mold in the wood framing of the house. She claimed "decay and dry rot within the walls of the Property as well as the mold found within and outside the Property are a result of chronic, long term exposure to water," and the Geigers "knew or should have known of the chronic water intrusion and the damage which would result from the wet conditions within the exterior walls of the Property." Thies alleged: (1) the Geigers' actions in actively and intentionally concealing the water and mold problems constituted actual fraud; (2) the Geigers' failure to disclose the actual condition of the house, which was known to them or should have been known to them, constituted constructive fraud; and (3) the Geigers' actions in knowingly misleading Thies into purchasing the house constituted consumer fraud under N.D.C.C. ch. 51-15.

[¶ 4] The Geigers denied all knowledge of the mold and all allegations of fraud, and they requested coverage by Grinnell Mutual for Thies' claims. Grinnell Mutual agreed to defend the Geigers in Thies' action, subject to a reservation of rights. Grinnell Mutual then brought this declaratory judgment action against the Geigers and Thies, seeking a determination that it was not obligated to provide coverage to the Geigers for Thies' action and that it had no duty to defend the Geigers in that action. The district court, relying on Friendship Homes, Inc. v. American State Ins. Co., 450 N.W.2d 778 (N.D.1990), granted Grinnell Mutual summary judgment, concluding Thies' alleged injuries did not constitute an occurrence or accident while Grinnell Mutual's policy with the Geigers was in effect. The court concluded Grinnell Mutual was not obligated to provide coverage for Thies' alleged injuries or to defend the Geigers.

II

[¶ 5] Summary judgment is a procedural device for promptly resolving a controversy on the merits without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving disputed facts would not alter the result. Grinnell Mut. Reinsurance Co. v. Lynne, 2004 ND 166, ¶ 9, 686 N.W.2d 118. A party moving for summary judgment has the burden of proving there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Witzke v. City of Bismarck, 2006 ND 160, ¶ 7, 718 N.W.2d 586. In considering a motion for summary judgment, a court must view the evidence in the light most favorable to the party opposing the motion and must give that party the benefit of all favorable inferences that reasonably can be drawn from the evidence. Id. Whether a district court properly granted summary judgment is a question of law that we review de novo on the record. Ernst v. Acuity, 2005 ND 179, ¶ 7, 704 N.W.2d 869.

III

[¶ 6] The Geigers argue the district court erred in granting summary judgment for Grinnell Mutual because an "occurrence" took place while the policy was in effect. The Geigers argue they may be liable in Thies' action if they negligently failed to discover and disclose mold in the house and negligence falls within the policy's broad definition of "occurrence." They thus claim Grinnell Mutual has a duty to defend them because there is a possibility of coverage for some of Thies' claims.

[¶ 7] The issues raised in this appeal involve the interpretation of Grinnell Mutual's insurance contract with the Geigers. Interpretation of an insurance contract is a question of law fully reviewable on appeal. Fisher v. American Family Mut. Ins. Co., 1998 ND 109, ¶ 5, 579 N.W.2d 599. We independently examine and construe an insurance contract to determine whether there is coverage. Id. In State v. North Dakota State Univ., 2005 ND 75, ¶ 12, 694 N.W.2d 225 (quoting Ziegelmann v. TMG Life Ins. Co., 2000 ND 55, ¶ 6, 607 N.W.2d 898), we summarized our standards for construing an insurance contract:

Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed 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.

[¶ 8] Under Section I of the insurance policy, Hartland Mutual provided "Property Coverages" to the Geigers for direct physical loss to the described property under coverages for "dwelling," "other structures," and "personal property" for any enumerated peril, unless the loss was excluded under listed exclusions. Under Section II of the insurance policy, Grinnell Mutual provided "Personal Liability Coverages" to the Geigers, and the parties do not dispute the issues in this case involve that section of the policy. Under that section, Grinnell Mutual agreed to "pay compensatory damages for which an `insured' becomes legally liable as a result of `bodily injury' or `property damage' caused by an `occurrence' to which [the personal liability] coverage applies." The policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in: a. `Bodily injury'; or b. `Property damage.'" The policy defines "bodily injury" to mean "bodily harm, sickness, or disease sustained by a person, including resulting death," and to also include "mental or physical anguish, pain, or suffering, but only if accompanied by physical symptoms." The policy defines "property damage" to mean "physical injury to or destruction of tangible property," and to "not include loss of use unless the property has been physically injured or destroyed."

[¶ 9] Relying on Kief Farmers Coop. Elevator Co. v. Farmland Mut. Ins. Co., 534 N.W.2d 28 (N.D.1995), the Geigers argue an "occurrence" is determined by when damage to the property occurs, not when the damage is discovered, and there are disputed factual issues in this case about whether any damage to the house took place while Grinnell Mutual's policy with the Geigers was in effect. The Geigers argue Friendship Homes, 450 N.W.2d 778, does not support a denial of coverage in this case, and the district court misinterpreted and misapplied that case, because the court erroneously focused on the date the mold was discovered, rather than when the mold accumulated.

[¶ 10] Relying on Friendship Homes, Grinnell Mutual responds there was no occurrence while its policy with the Geigers was in effect because there were no damages to Thies on her third-party claim against the Geigers during the policy period. Grinnell Mutual argues Kief Farmers Coop. is not controlling because that case involved a first-party claim, and this action involves a third-party claim by Thies against the Geigers.

[¶ 11] In Friendship Homes, 450 N.W.2d at 778, a fireplace installer negligently installed a fireplace in a building in 1984. The owner of the building damaged by a 1987 fire caused by the negligently installed fireplace sued the fireplace installer's liability insurer for...

To continue reading

Request your trial
9 cases
  • K&L Homes, Inc. v. Am. Family Mut. Ins. Co.
    • United States
    • North Dakota Supreme Court
    • 5 Abril 2013
    ...N.W.2d 146. This Court independently examines and construes the insurance contract to decide whether there is coverage. Grinnell Mut. Reinsurance v. Thies, 2008 ND 164, ¶ 7, 755 N.W.2d 852. “Our goal when interpreting insurance policies, as when construing other contracts, is to give effect......
  • State ex rel. Dept. v. Matrix Properties
    • United States
    • North Dakota Supreme Court
    • 21 Julio 2009
    ...was barred by the two-year statute of limitations in 42 U.S.C. § 3613(a)(1)(A) and N.D.C.C. § 14-02.5-39(1). [¶ 5] In Grinnell Mut. Reinsurance Co. v. Thies, 2008 ND 164, ¶ 5, 755 N.W.2d 852 (citations omitted), we outlined our standard for review of summary Summary judgment is a procedural......
  • Tibert v. Nodak Mut. Ins. Co.
    • United States
    • North Dakota Supreme Court
    • 12 Abril 2012
    ...is a question of law fully reviewable on appeal. Wisness v. Nodak Mut. Ins. Co., 2011 ND 197, ¶ 5, 806 N.W.2d 146;Grinnell Mut. Reinsurance Co. v. Thies, 2008 ND 164, ¶ 7, 755 N.W.2d 852;State v. North Dakota State Univ., 2005 ND 75, ¶ 12, 694 N.W.2d 225. We independently examine and constr......
  • Forsman v. Blues, Brews & Bar-B-Ques, Inc.
    • United States
    • North Dakota Supreme Court
    • 16 Noviembre 2017
    ...This Court independently examines and construes the insurance contract to decide whether coverage exists. Id. ; see also Grinnell Mut. Rein. v. Thies, 2008 ND 164, ¶ 7, 755 N.W.2d 852. As with other contracts, this Court construes insurance policy language to give effect to the parties' mut......
  • Request a trial to view additional results
8 books & journal articles
  • Chapter 2
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Salas v. Mountain States Mutual Casualty Co., 145 N.M. 542, 202 P.3d 801 (2009). North Dakota: Grinnell Mutual Reinsurance Co. v. Thies, 755 N.W.2d 852 (N.D. 2008). Pennsylvania: Zimmerman v. Harleysville Mutual Insurance Co., 860 A.2d 167, 178 (Pa. Super. 2004), alloc. denied 881 A.2d 820 ......
  • Chapter 3
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Insurance Co. v. Glascarr Properties, Inc., 688 S.E.2d 508 (N.C. App. 2010). North Dakota: Grinnell Mutual Reinsurance Co. v. Thies, 755 N.W.2d 852 (N.D. 2008). Ohio: Nationwide Insurance Co. v. Alli, 178 Ohio App.3d 17, 896 N.E.2d 742 (2008). Oregon: Smith v. State Farm Insurance Co., 927 ......
  • CHAPTER 5 Comprehensive or Commercial General Liability (CGL) Insurance: Coverage A for "Bodily Injury" or "Property Damage" Liabilities
    • United States
    • Full Court Press Insurance for Real Estate-Related Entities
    • Invalid date
    ...v. Certain Underwriters at Lloyd’s, London, 362 S.W.3d 472, 480 (Mo. App. 2012). North Dakota: Grinnell Mutual Reinsurance Co. v. Thies, 755 N.W.2d 852 (N.D. 2008). [216] See Chapter 2 supra.[217] See § 7.04[1] infra.[218] Standard Fire Insurance Co. v. Spectrum Community Ass’n, 46 Cal. Rpt......
  • Chapter 4
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Salas v. Mountain States Mutual Casualty Co., 145 N.M. 542, 202 P.3d 801 (2009). North Dakota: Grinnell Mutual Reinsurance Co. v. Thies, 755 N.W.2d 852 (N.D. 2008). Pennsylvania: Zimmerman v. Harleysville Mutual Insurance Co., 860 A.2d 167, 178 (Pa. Super. 2004), appeal denied 881 A.2d 820 ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT