Kaul v. State Farm Mut. Auto. Ins. Co.

• Citation: 2021 MT 67,482 P.3d 1196,403 Mont. 387
• Decision Date: 16 March 2021
• Docket Number: DA 20-0052
• Parties: Gary and Carolyn KAUL, Plaintiffs and Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellee.
• Court: United States State Supreme Court of Montana

403 Mont. 387

482 P.3d 1196

2021 MT 67

Gary and Carolyn KAUL, Plaintiffs and Appellants,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellee.

DA 20-0052

Supreme Court of Montana.

Argued and Submitted: January 6, 2021

Decided: March 16, 2021

For Appellants: Lincoln Palmer (argued), Rex L. Palmer, Attorneys Inc., P.C., Missoula, Montana

For Appellee: Bradley J. Luck (argued), Katelyn J. Hepburn, Garlington, Lohn & Robinson, PLLP, Missoula, Montana

For Amicus Curiae Montana Trial Lawyers Association: Domenic A. Cossi (argued), Western Justice Associates, PLLC, Bozeman, Montana

Justice Ingrid Gustafson delivered the Opinion of the Court.

¶1 Plaintiffs and Appellants Gary and Carolyn Kaul appeal the June 19, 2019 Opinion and Order (Summary Judgment) issued by the Fourth Judicial District Court, Missoula County.

¶2 The Kauls raise three issues on appeal, which we renumber and restate as follows:

1. Whether the damage to the wall of the Kauls’ RV constitutes "sudden damage" under the language of the policy.

2. Whether coverage for the wall repair is mandated under Montana's efficient proximate cause doctrine.

3. Whether the Kauls’ wall repair is covered as a mitigation expense under the insurance agreement.

¶3 We reverse on Issue 1, finding coverage is mandated under the language of the Kauls’ insurance policy, and therefore find it unnecessary to address Issues 2 and 3.

FACTUAL AND PROCEDURAL BACKGROUND

¶4 In 2013, the Kauls purchased a new 2014 Northwood Arctic Fox 5th Wheel Trailer (the RV). The Kauls purchased a Recreational Vehicle Policy through State Farm Mutual Automobile Insurance Company (State Farm) to insure their RV. In 2017, the Kauls left Montana on an RV trip to Arizona. Gary inspected the roof of the RV on March 24, 2017, before leaving for Arizona. The Kauls returned to Missoula on April 17, 2017. At some point during the trip to Arizona, the roof of the RV was damaged. The Kauls did not discover the damage at the time.

¶5 After returning to Montana, the Kauls stored the RV, uncovered, at Dry Dock RV and Yacht Storage, located near the Missoula International Airport from April 18 to May 25, 2017. Missoula experienced rainy periods while the Kauls’ RV was in storage. Between April 18 and April 30, 2017, it rained 10 of 14 days for a total of 0.56 inches, and between May 1 and May 18, 2017, it rained 10 of 18 days for a total of 1.33 inches. Specifically, at issue in the present proceeding is the rainfall of April 20, 2017. On that day, it rained .08 inches.

¶6 The Kauls took an RV trip to Glacier National Park from May 26 to May 29, 2017. During this trip, Gary noticed bubbling on the outer layer of the RV's passenger-side fiberglass wall but did not know why there was bubbling. The Kauls continued to use the RV throughout June 2017, and noticed more bubbling on the wall later that month. In late June of 2017, the Kauls took an RV trip to Coeur d'Alene, Idaho. While on that trip, Gary discovered an approximately 12- to 15-foot-long tear in the roof membrane directly above the passenger-side wall and presumed it was damaged by a tree branch at some point during the Kauls’ Arizona trip earlier that year. The roof tear was not visible from ground level as the RV is approximately 13 feet tall. Gary repaired the tear to the manufacturer's specifications by sealing it with duct tape on June 26, 2017, and submitted a claim to State Farm that same day.

¶7 After Gary sealed the roof tear, the Kauls hauled the RV to Gardner's RV in Kalispell. Gardner's RV estimated it would cost $9,054.33 to fix the roof, but informed the Kauls that it could not repair the wall. State Farm did not send an adjuster to inspect the RV. The Kauls attempted, without success, to find an RV shop in Montana that could fix the wall, before ultimately hauling the RV to be repaired by Curt Hurst of Curt's RV Service in LaGrange, Oregon, in October of 2017. Hurst inspected Gary's temporary repair to the roof tear and found it was watertight and secure. Prior to the temporary repair, however, water penetrated the walls through the roof tear and leaked into the wall panel. Because the RV wall was constructed with channels and cavities, water collected inside the wall panel and eventually led to the bubbling observed by the Kauls.

¶8 Hurst determined the only way to repair the wall was to remove and repair the wall panel in order to check for moisture and protect the RV from further water damage. The Kauls had Hurst perform all necessary repairs to the RV. Curt's RV Service charged $5,474.79 to repair the roof. In accordance with the policy, the Kauls paid the $500 deductible and State Farm paid the remaining $4,975.79 for the roof repair. Curt's RV Service charged $10,669.84 for the wall repair, which the Kauls paid for out of pocket. State Farm denied coverage for the wall repair, finding it was not a "covered loss" under the terms of the policy.

¶9 On June 13, 2018, the Kauls filed their Complaint in this matter, seeking to recover, among other claims not relevant to the present proceeding, "[t]he full benefits due under the insurance contract[.]" The Kauls also sought to recover their reasonable expenses incurred to protect and repair the RV, later calculated to be $3,177. Those expenses included materials, time, mileage, meals, and lodging associated with the Kauls’ trips to repair shops in Kalispell and Oregon. State Farm filed its Answer to Complaint and Jury Demand, and Counterclaim for Declaratory Judgment on November 20, 2018. Relevant here, State Farm requested both dismissal of the Kauls’ complaint and a declaratory judgment that the wall damage caused by water infiltration was not covered because that damage was not "direct, sudden, and accidental" as required by the policy.

¶10 On February 20, 2019, the Kauls filed the Plaintiffs’ Motion for Partial Summary Judgment and Brief in Support, seeking summary judgment on their entitlement to both reimbursement for the wall repair under the policy and for their reasonable expenses. State Farm filed the Defendant's Cross-Motion for Summary Judgment on February 28, 2019. After the parties fully briefed their motions, and with no party having requested oral argument, the District Court issued its Opinion and Order (Summary Judgment) on June 19, 2019. The District Court granted State Farm's motion for partial summary judgment and denied the Kauls’ motion for partial summary judgment with respect to the coverage issue, finding the water damage was not covered by the policy, and granted the Kauls’ motion for partial summary judgment regarding the reasonable expenses issue.¹

¶11 On December 11, 2019, the Kauls filed an Unopposed Motion for Rule 54(b) Certification and Brief in Support, requesting the District Court enter its judgment on the wall coverage issue as final for the purposes of immediate appeal. On December 31, 2019, the District Court issued its Opinion and Order Granting Rule 54(b) Certification and certified the order as final pursuant to M. R. Civ. P. 54(b). The Kauls appeal.

STANDARD OF REVIEW

¶12 We review summary judgment orders de novo, performing the same M. R. Civ. P. 56 analysis as the district court. McClue v. Safeco Ins. Co. , 2015 MT 222, ¶ 8, 380 Mont. 204, 354 P.3d 604 (citing Albert v. City of Billings , 2012 MT 159, ¶ 15, 365 Mont. 454, 282 P.3d 704 ). Summary judgment is only appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Kucera v. City of Billings , 2020 MT 34, ¶ 6, 399 Mont. 10, 457 P.3d 952 (citing Davis v. Westphal , 2017 MT 276, ¶ 9, 389 Mont. 251, 405 P.3d 73 ).

¶13 We review determinations underlying the order granting summary judgment under the standard of review appropriate to that determination. McClue , ¶ 13 (citation omitted). We review evidentiary rulings for an abuse of discretion. McClue , ¶ 8 (citing Harris v. Hanson , 2009 MT 13, ¶ 18, 349 Mont. 29, 201 P.3d 151 ).

DISCUSSION

¶14 The Kauls assert they are entitled to reimbursement for the RV's wall repair under three separate and independent theories of recovery. First, the Kauls argue coverage is mandated under the efficient proximate cause doctrine because the water damage would not have occurred but for the roof damage. Second, the Kauls contend the water damage to the wall of the RV was in fact "sudden" damage under the plain language of the policy. Third, the Kauls argue reimbursement for the wall repair is due to them as a covered mitigation expense under the policy. The Kauls ask for a ruling on each of their three theories of recovery. Because we find the water damage was "sudden damage" and the Kauls are entitled to coverage under the plain language of the policy, we find it unnecessary to address the Kauls’ alternative theories of recovery.

¶15 1. Whether the damage to the wall of the Kauls’ RV constitutes "sudden damage" under the language of the policy.

¶16 The Kauls’ policy with State Farm provides, as relevant here, that "loss" means "direct, sudden, and accidental damage to ... a covered vehicle." It is undisputed the Kauls’ RV is a covered vehicle for purposes of the policy. The District Court, in its summary judgment order, determined the water damage to the Kauls’ RV was not a covered loss under the policy, "because the water damage to the wall of the RV was not the result of sudden damage."² The District Court found because the wall damage was not sudden damage as required by the terms of the policy that it therefore was not a covered loss. We disagree.

¶17 While it is unknown exactly when and where the roof of the RV was torn during the Kauls’ trip to Arizona, State Farm paid for the roof repair pursuant to the terms of the policy after determining the damage—likely from striking an overhanging tree branch—was direct, sudden, and accidental. Due to the location of the strike, which was too high off the ground to be seen, the Kauls were unaware the RV had been damaged at all, let alone had...