Hanson Farm Mut. Ins. Co. of S.D. v. Degen

• Decision Date: 03 April 2013
• Docket Number: No. 26435.,26435.
• Parties: HANSON FARM MUTUAL INSURANCE COMPANY OF SOUTH DAKOTA, Plaintiff and Appellee, v. Marcus DEGEN, Defendant and Appellant, and Tina Sellers, as Personal Representative of the Estate of Adrianna Summer Sellers, Defendant and Appellant.
• Court: South Dakota Supreme Court

829 N.W.2d 474

2013 S.D. 29

HANSON FARM MUTUAL INSURANCE COMPANY OF SOUTH DAKOTA, Plaintiff and Appellee,

v.Marcus DEGEN, Defendant and Appellant,andTina Sellers, as Personal Representative of the Estate of Adrianna Summer Sellers, Defendant and Appellant.

No. 26435.

Supreme Court of South Dakota.

Considered on Briefs Feb. 12, 2013.

Decided April 3, 2013.

Craig A. Kennedy of Kennedy, Pier & Knoff, LLP, Yankton, South Dakota, Attorneys for plaintiff and appellee.

Douglas M. Dailey of Morgan Theeler, LLP, Mitchell, South Dakota, Attorneys for defendant and appellant Marcus Degen.

Rollyn H. Samp, Sioux Falls, South Dakota, Attorney for defendant and appellant Tina Sellers.

WILBUR, Justice.

[¶ 1.] Tina Sellers, as the personal representative of her daughter's estate, and Marcus Degen appeal the trial court's determination that Hanson Farm Mutual Insurance Company of South Dakota (HFMIC) had no obligation to indemnify or to defend Marcus in an underlying wrongful death action. We affirm.

FACTS AND PROCEDURAL HISTORY

[¶ 2.] Marcus and Tina met in the spring of 2006 at work. Their work relationship quickly developed into a romantic one. At that same time, Marcus was living with his parents. Tina and her daughters, Adrianna and Zeraya, were living between an apartment and with her parents while Tina was in the process of divorcing the girls' father.

[¶ 3.] As their relationship progressed, Tina and Marcus began to look for a home in Alexandria, South Dakota, Marcus's hometown. After finding a house they liked, Marcus purchased the home in February 2007. As a part of qualifying for a home loan, Marcus also purchased a homeowner's insurance policy with HFMIC. Marcus was the named insured on the policy. The policy defined certain specific terms that it used. “Insured” was defined in part as:

a. “you”;

b. “your” relatives if residents of “your” household;

c. persons under the age of 21 residing in “your” household and in “your” care or in the care of “your” resident relatives;

...

The policy also contained a household exclusion, which read: “Coverage L [personal liability coverage] does not apply to: ... ‘bodily injury’ to ‘you’, and if residents of ‘your’ household, ‘your’ relatives and persons under the age of 21 in ‘your’ care or in the care of ‘your’ resident relatives.” “[I]n ‘your’ care” was not defined in the policy nor did the policy place a specific time frame as to when “care” had to be rendered in order to fit the definition. “Bodily injury” was defined to “include[ ] sickness, disease, or death.”

[¶ 4.] Marcus, Tina, and both of Tina's daughters moved into the home. Marcus and Tina then began to fix up the house, purchasing furniture, appliances, and other necessities within their financial means.

[¶ 5.] Following Marcus and Tina's move to Alexandria, Marcus and Tina enrolled Adrianna in school. In addition to Tina and the family doctor, Marcus was listed as one of the girls' emergency contacts.

[¶ 6.] A few months after moving into the house in Alexandria, Tina took a position with a different company with hours that allowed her to start work later in the morning and leave work earlier in the afternoon. This schedule enabled Tina to get the girls ready in the morning and pick them up in the afternoon. Marcus got the girls ready for the day and picked them up in the afternoon when Tina was unable to do so.

[¶ 7.] Even though they maintained separate checkbooks, Marcus and Tina pooled their financial resources to pay their monthly expenses with each helping the other out in the event that there was a shortfall in finances. Marcus paid the mortgage on the home, insurance, real estate taxes, and all of the utilities. Tina bought groceries for Marcus, the girls, and herself. She also purchased the girls' clothing and school supplies. Tina's purchaseswere supplemented by monthly child support payments from Tina's ex-husband. Marcus and Tina each paid for their own fuel for their vehicles. Additionally, the couple divided the household duties evenly.

[¶ 8.] During this time, the couple also discussed and participated in various facets of the girls' lives, including appropriate discipline, education, religion, and recreation activities. Marcus and Tina discussed and developed a plan to discipline the girls and Marcus or Tina disciplined the girls when they misbehaved. Additionally, Marcus helped Adrianna with learning her alphabet and numbers, and read books to the girls at night. Marcus, Tina, and the girls all attended a local church because Marcus and Tina agreed that it would be best for the girls. Together, they would often watch movies, play outside, and camp in the local park. Both Marcus and Tina tucked the girls in bed at night and told the girls that they loved them. The girls returned this affection to both Marcus and Tina. The girls often called Marcus “Dad” and he considered them his daughters. Marcus also purchased birthday and Christmas presents for the girls. Lastly, Marcus named Adrianna as the primary beneficiary in his retirement plan and Zeraya as the secondary beneficiary.

[¶ 9.] Despite this relationship, Marcus never adopted the girls. Their biological father maintained his parental rights and paid child support monthly. Additionally, even though both Marcus and Tina hoped the relationship would last forever, Marcus and Tina never discussed marriage or an engagement.

[¶ 10.] On the evening of October 27, 2007, Marcus was leveling dirt on the property with a skid loader. Later, Tina and Adrianna joined Marcus outside. Tragically, while operating the skid loader, Marcus, hit and killed Adrianna. Following the accident, Marcus, Tina, and Zeraya continued to live together for more than a year until the difficulty in dealing with the accident caused the couple to split. Tina then pursued a wrongful death action against Marcus.

[¶ 11.] Based on the household exclusion, HFMIC filed a declaratory judgment action and asked the trial court to determine whether HFMIC had an obligation to indemnify or to defend Marcus in the underlying wrongful death action. Additionally, HFMIC filed a motion for summary judgment and a hearing on that motion was held. In a memorandum decision, the trial court concluded that the phrase in the insurance contract “in ‘your’ care” was unambiguous, and yet denied HFMIC's motion on the basis that issues of material fact existed as to whether Adrianna was in Marcus's care.

[¶ 12.] A court trial on the declaratory judgment was held on June 19, 2012. Marcus and Tina both testified. The trial court ruled in favor of HFMIC and determined that Adrianna was in Marcus's care and therefore excluded from coverage under the household exclusion contained in the policy. Both Tina, as personal representative of her daughter's estate, and Marcus appeal.

[¶ 13.] The issues on appeal are:

1. Whether the phrase “in ‘your’ care” is ambiguous as it relates to coverage under a homeowner's insurance policy.

2. Whether the trial court erred in concluding that Adrianna was in Marcus's care and therefore excluded from coverage under the household exclusion contained in the policy.

STANDARD OF REVIEW

[¶ 14.] “We review declaratory judgments as we would any other order, judgment, or decree.” Mid–Century Ins. Co. v. Lyon, 1997 S.D. 50, ¶ 4, 562 N.W.2d 888, 890 (citing SDCL 21–24–13) (additional citation omitted). “A trial court's findings of fact are examined under a clearly erroneous standard and its conclusions of law under a de novo standard.” Id. Additionally, “[i]nsurance contract interpretation is a question of law, reviewable de novo.” Ass Kickin Ranch, LLC v. N. Star Mut. Ins. Co., 2012 S.D. 73, ¶ 7, 822 N.W.2d 724, 726 (quoting De Smet Ins. Co. of S.D. v. Gibson, 1996 S.D. 102, ¶ 5, 552 N.W.2d 98, 99). “This includes determining whether an insurance contract is ambiguous.” Id. (quoting Roden v. Gen. Cas. Co. of Wis., 2003 S.D. 130, ¶ 6, 671 N.W.2d 622, 625).

ANALYSIS AND DECISION

[¶ 15.] 1. Whether the phrase “in ‘your’ care” is ambiguous as it relates to coverage under a homeowner's insurance policy.

[¶ 16.] Marcus and Tina contend that the phrase “in ‘your’ care” is ambiguous. They argue that an ambiguity exists because “care” has several different dictionary definitions and a number of courts have utilized different definitions for the term “care.” Marcus and Tina also assert that the phrase is susceptible to two different interpretations in that one interpretation of the phrase may invoke the exclusion if the child is “in ‘[the insured's]’ care” at the moment of the occurrence for which coverage is sought and another interpretation may invoke the exclusion if the child has ever been “in ‘[the insured's]’ care.”

[¶ 17.] Initially, we note that whether or not the phrase “in ‘your’ care” is ambiguous as used in the insurance policy is an issue of first impression for this Court. We have recently reviewed the law on insurance contract interpretation:

The scope of coverage of an insurance policy is determined from the contractual intent and the objectives of the parties as expressed in the contract. When an insurer seeks to invoke a policy exclusion as a means of avoiding coverage, the insurer has the burden of proving that the exclusion applies. Where the provisions of an insurance policy are fairly susceptible to different interpretations, the interpretation most favorable to the insured should be adopted. However, this rule of liberal construction in favor of the insured and strictly against the insurer applies only where the language of the insurance contract is ambiguous and susceptible of more than one interpretation.... The fact that the parties differ as to the contract's interpretation does not create an ambiguity.

Further, a court may not seek out a strained or unusual meaning for the benefit of the insured. Instead, an insurance contract's language must be construed according to its plain and ordinary meaning and a court cannot make a forced construction or a new contract...