Lupo v. Shelter Mut. Ins. Co.

Decision Date29 January 2002
Docket NumberNo. ED 79238.,ED 79238.
Citation70 S.W.3d 16
PartiesSusan LUPO, Appellant, v. SHELTER MUTUAL INSURANCE COMPANY, Respondent.
CourtMissouri Court of Appeals

Michael A. Garvin, St. Louis, MO, for appellant.

Seth G. Gausnell, St. Louis, MO, for respondent.

ROBERT G. DOWD, JR., Judge.

Susan Lupo (Lupo) appeals from the trial court's grant of summary judgment in favor of Shelter Mutual Insurance Company (Shelter). Shelter's motion for summary judgment alleged that diminished value was not a loss covered under the terms of its Missouri automobile insurance policy. Lupo raises four points. She claims the trial court erred in granting summary judgment in favor of Shelter because (1) an analysis of the policy under contract construction rules does not establish that Shelter is entitled to judgment as a matter of law; (2) the trial court did not follow Missouri precedent; (3) the trial court failed to consider the majority view of other jurisdictions; and (4) Shelter's policy is ambiguous. We affirm because we find the policy to be unambiguous; and according to policy language, diminished value is not a covered loss as Shelter's liability is capped at either the actual cash value of the automobile or the cost to repair or replace the damaged automobile itself or with parts or property of like kind and quality.

On August 6, 1999, Lupo was in an automobile accident, which damaged her 1998 Pontiac Bonneville. A Shelter adjuster inspected the Bonneville to determine the extent of damage. Repairs were determined to cost approximately $4,642. The Bonneville was fully repaired and Shelter compensated Lupo for the damages.

On January 6, 2000, Lupo filed a class action suit against Shelter.1 She alleged that Shelter breached its contract with her and a class of similarly situated policyholders by not compensating them for the diminished value of their damaged and fully repaired vehicles. Lupo claims in her petition that she is entitled to diminished value damages in the amount equal to the difference in the "pre-loss value .... and the value after full and proper repair...."

Both Lupo and Shelter filed and argued motions for summary judgment. Lupo argued Shelter was required, under the terms of its automobile insurance policy, which allows Shelter the option to repair or replace the damaged automobile, to compensate her for any diminution in market value that might remain after Shelter has paid for repairs in order to restore the automobile to pre-accident physical condition. Shelter argued in its motion for summary judgment that diminished value was not a loss covered under the policy's provisions. The trial court granted summary judgment to Shelter and denied summary judgment to Lupo. This appeal follows.

Missouri courts regard summary judgment as an "extreme and drastic remedy" that must be applied with the exercise of "great care." ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 377 (Mo. banc 1993) (quoting Cooper v. Finke, 376 S.W.2d 225, 229 (Mo. 1964)); Hammonds v. Jewish Hospital of St. Louis, 899 S.W.2d 527, 529 (Mo.App. E.D.1995). Respondents bore the burden of demonstrating that there is no genuine dispute regarding any fact material to the outcome of the case. ITT Commercial Fin. Corp., 854 S.W.2d at 378. When considering an appeal from the grant of summary judgment, the appellate court will review the record in the light most favorable to the party against whom the judgment was entered. ITT, 854 S.W.2d at 376. We need not defer to the trial court's judgment as it is founded on the record submitted and the law; therefore, appellate review is essentially de novo. Id. Summary judgement is appropriate when there is no dispute of material fact, and the moving party had demonstrated that it is entitled to judgment as a matter of law. Id.

Summary judgment is particularly appropriate when construction of a contract is at issue and the contract is unambiguous on its face. Daniels Express and Transfer Co. v. GMI Corp., 897 S.W.2d 90 91-92 (Mo.App.1995). We will accord the non-moving party the benefit of all reasonable inferences from the record. ITT, 854 S.W.2d at 376.

The first issue we must address to resolve Lupo's other arguments is whether Shelter's policy is ambiguous. We find it is not. Part V, "Limits of Liability" provision states the following:

Under COVERAGES F and G [collision and comprehensive coverage], the limit of our liability for loss will not exceed the actual cash value of the stolen or damaged property, nor what it would then cost to repair or replace it or such part with other of like kind and quality, less depreciation.

Insurance policies are contracts; therefore, the rules of contract construction apply. Auto. Club Inter-Ins. Exch. v. Farmers Ins. Co., Inc., 778 S.W.2d 772, 774 (Mo.App. E.D.1989). Lupo claims Shelter's policy is ambiguous and open to different constructions. However, she does not refer us to any specific instances of ambiguous language. Rather, she simply claims that the meaning of the "limit of liability" provision which includes "repair or replace" language may be uncertain and open to different meanings. Lupo not only argues that the provision is open to different meanings, she alleges, without citing to Missouri precedent, that this provision does not operate to exclude coverage for a vehicle's diminished value.

The issue of whether a contract is ambiguous is a question of law. Follman Properties Co. v. John Henry Foster Co., 872 S.W.2d 499, 501 (Mo.App. E.D.1994). To determine whether a contract is ambiguous, this Court considers the whole document, and absent any definition within the contract, gives contract terms their natural and ordinary meaning. Lake Cable, Inc. v. Trittler, 914 S.W.2d 431, 435-436 (Mo.App. E.D.1996).

A contract is ambiguous only if reasonable people may fairly and honestly differ in their construction of the terms because the terms are susceptible of more than one meaning. Follman, 872 S.W.2d at 501. A contract is not ambiguous merely because the parties disagree over its meaning. Daniels Express v. GMI Corp., 897 S.W.2d 90, 92 (Mo.App. E.D.1995). We find that the "limit of liability" provision clearly states Shelter's liability will not exceed either the actual cash value of the damaged automobile or the payment for full repair or replacement with like kind and quality. The provision does not require a restoration of pre-accident value, but rather a restoration of the physical condition of the automobile. In Shapiro v. Kravitz, 754 S.W.2d 44 (Mo.App. E.D. 1988), this Court stated, "[g]enerally the measure of damage to an automobile is the decrease in its fair market value after the accident. However, if it can be repaired to its prior state, the cost of repair is a measure of damages." Id. at 45.

Further, in addition to the "limits of liability" provision, the "loss settlement" provision also explains that Shelter "may pay the loss in money or repair or replace damaged or stolen property." Together, these provisions make clear to the layperson insured that she is either entitled under the policy to the actual cash value of the damaged property or the cost to repair or replace said property. Therefore, we find no ambiguity in these policy provisions.

Where no ambiguity exists in the contract, the court enforces the policy as written. Peters v. Employers Mut. Casualty. Co., 853 S.W.2d 300, 302 (Mo. banc. 1993). Evidence of how the contract was understood or acted upon by the parties is only used when the contract or a contract term is unclear. Nickles v. Auntie Margaret Daycare Corp., 829 S.W.2d 614, 616 (Mo.App. E.D.1992). This Court will not create an ambiguity by using extrinsic or parole evidence. Lake Cable, 914 S.W.2d at 436.

In Lupo's first point on appeal, she contends that analysis of the policy under rules of construction establish that Shelter is not entitled to judgment as a matter of law. Lupo directs us to different sections of the policy to support her contention that diminished value is covered. She first claims that the terms "loss," "direct," and "accidental" are not defined in the policy and therefore should be construed to encompass any loss to the insured vehicle, including diminution in value. The "Coverage" provisions state in relevant part: "We will pay for direct and accidental loss to the described auto....." The "loss settlement" provision states that, "[Shelter] may pay the loss in money or repair or replace damaged or stolen property." Lupo further alleges, that because the terms "direct" and "accidental" used in the "coverage" provision are not defined in the policy it is logical that diminished value is "no less a direct and accidental loss to an insured car than any other loss resulting from accidental loss to the vehicle."

We agree that the insuring language of the policy covering "direct and accidental loss" may be broad enough to encompass diminished value. However, the "limits of liability" clause is also broad enough to cap Shelter's obligation to either repair or replace the damaged automobile.

A limitation of liability clause in an automobile policy is enforceable according to its own terms as long as the same is not invalidated by statute. Williams v. Farm Bureau Mut. Ins. Co. of Mo., 299 S.W.2d 587, 588 (Mo.App.1957). Plaintiff has the burden to prove that the loss is covered by the policy. Am. States Ins. Co. v. Mathis, 974 S.W.2d 647, 649 (Mo.App. E.D.1998). The policy's language clearly provides Shelter with the three options to compensate the insured. Shelter may pay the lesser of either the "actual cash value" or the cost to "repair" or "replace" the automobile when a loss occurs. This language does not state, as Lupo argues, that Shelter must pay to repair the automobile and pay any loss in value. There is no dispute that Shelter fulfilled its obligation to pay for the full...

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