Martin v. Farmers Ins. Exchange, 93-241

• Decision Date: 04 May 1995
• Docket Number: No. 93-241,93-241
• Citation: 894 P.2d 618
• Parties: Whitney MARTIN and James Martin, Appellants (Defendants), v. FARMERS INSURANCE EXCHANGE, a foreign insurance exchange, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 618

894 P.2d 618

Whitney MARTIN and James Martin, Appellants (Defendants), v. FARMERS INSURANCE EXCHANGE, a foreign insurance exchange, Appellee (Plaintiff).

No. 93-241.

Supreme Court of Wyoming.

May 4, 1995.

Dallas J. Laird, Casper, for appellants.

George E. Powers, Jr. and Kay Lynn Bestol of Sundahl, Powers, Kapp & Martin, Cheyenne, for appellee.

Bruce B. Waters and John E. Stanfield of Smith, Stanfield & Scott, Laramie, for amicus curiae Debora Pribble.

Julie Nye Tiedeken, Cheyenne, for amicus curiae State Farm Mut. Auto. Ins. Co.

Before GOLDEN, C.J., and THOMAS, MACY, TAYLOR, and LEHMAN, JJ.

TAYLOR, Justice.

Whitney Martin was seriously injured when a car she and her husband owned was in an accident caused by the negligent driving of Annette Failes. Mr. and Mrs. Martin and Annette Failes carried virtually identical liability insurance through Farmers Insurance Exchange. Paying Whitney Martin the full $100,000.00 on Annette Failes' policy, Farmers Insurance Exchange relied upon a "household exemption" to limit recovery to $25,000.00 under Mr. and Mrs. Martin's policy. Having stipulated to all operative facts, Farmers Insurance Exchange sought declaratory approval for that limited payout. From the success of Farmers Insurance Exchange's endeavor, Mr. and Mrs. Martin prosecute this appeal. We affirm.

I. ISSUES

Appellants, James and Whitney Martin (the Martins), present the following issue:

Is there an ambiguity in the appellants' insurance policy which would require the court to enter summary judgment favoring appellants?

Appellee, Farmers Insurance Exchange (Farmers), states the issue as:

Did the District Court correctly rule that an insurance policy must be read as a whole and that certain language on the declarations sheet did not conflict with the exclusionary provision of the policy at issue?

II. FACTS

The Martins were the named insureds on a policy with Farmers providing coverage for the Martins' 1988 Subaru. Whitney Martin's mother, Annette Failes (Failes), was the named insured on a separate policy with Farmers providing coverage for her 1986 Comanche. Each insurance contract consisted of a 1st Edition Wyoming "Your E-Z-Reader Car Policy" and a "Declarations" page.

Each declarations page identifies, inter alia, the insureds, the covered vehicle, and the coverages, including $100,000.00 per person for bodily injury. Each declarations page includes the following:

This Declarations page, when signed by us, becomes part of the policy numbered on the reverse side. It supersedes or controls anything to the contrary. It is subject to all the other terms of the policy.

"Us" is defined on page one of the policy as meaning Farmers. The validity of each declarations page and each policy, as constituting a contract for insurance, at the time of the accident is not in dispute.

Each policy lists, at page two, exclusions: "This coverage does not apply to: * * * 11. The amount of liability for bodily injury to an insured person in excess of the minimum limits of the Wyoming Financial Responsibility Law." (Emphasis in original). "Insured person" is defined as including "[y]ou or any family member." (Emphasis in original). "You" means the "named insured" and "[f]amily member means a person related to you by blood, marriage or adoption who is a resident of your household." (Emphasis in original).

Each declarations page states that "[t]he policy is issued in reliance upon the statements in the Declarations." Each policy repeatedly refers to the declarations page as an integral part of the contract, stating, inter alia:

AGREEMENT

We [Farmers] agree with you [insureds], in return for your premium payment, to insure you subject to all the terms of this policy. We will insure you for the coverages and the limits of liability shown in the Declarations of this policy.

At the top of each policy's table of contents, appearing just prior to page one in each case, is the following statement: "Declarations--Your Personal Coverage Page is attached inside the front cover."

On August 22, 1992, with Failes at the wheel, the Martins' Subaru was in a single car "roll-over" accident on U.S. Interstate 15, just north of Scipio, Utah, resulting in severe injuries to passenger Whitney Martin. Farmers paid $100,000.00 to the Martins, fully discharging Failes' insured liability, but relied upon the policy exclusion regarding bodily injury to an insured to limit payment on the Martins' policy to $25,000.00, the minimum required by Wyoming's financial responsibility law, Wyo.Stat. § 31-9-405(b)(ii) (1989). For purposes of the action, Farmers agreed that the Martins' damages exceeded $200,000.00.

Stipulating to all of the foregoing with the Martins, Farmers obtained summary judgment that the $25,000.00 payment fully discharged Farmers' liability on the Martins' policy.

III. STANDARD OF REVIEW

We will affirm a summary judgment provided there is no genuine issue of material fact and the law clearly entitles the moving party to prevail. Lincoln v. Wackenhut Corp., 867 P.2d 701, 702 (Wyo.1994). An insurance policy constitutes a contract between insurer and insureds. Worthington v. State, 598 P.2d 796, 806-07 (Wyo.1979). When the parties have stipulated to all material facts, summary judgment is proper if such an insurance contract is found to be unambiguous. Prudential Preferred Properties v. J and J Ventures, Inc., 859 P.2d 1267, 1271 (Wyo.1993).

Without deference to the district court's conclusions of law, our threshold inquiry plumbs the contract in question for ambiguity. Hayes v. American Nat. Bank of Powell, 784 P.2d 599, 604 (Wyo.1989); International Surplus Lines Ins. Co. v. University of Wyoming Research Corp., 850 F.Supp. 1509, 1518 (D.Wyo.1994). Ambiguity exists where a contract "is obscure in its meaning because of indefiniteness of expression or because it contains a double meaning." Ferguson v. Reed, 822 P.2d 1287, 1289 (Wyo.1991). Whether there is ambiguity within the four corners of the contract is a question of law. Burk v. Burzynski, 672 P.2d 419, 423 (Wyo.1983).

Only when a contract is ambiguous do we acquire license to construe that document by resort to extrinsic evidence. Amoco Production Co. v. Stauffer Chemical Co. of Wyoming, 612 P.2d 463, 465 (Wyo.1980). Such construction is not, in the first instance, an appropriate appellate task because doubt about the meaning of a contract creates a genuine issue of material fact and thereby renders summary judgment inappropriate. Jackson Hole Racquet Club Resort v. Teton Pines Ltd. Partnership, 839 P.2d 951, 958 (Wyo.1992).

Finding a contract to be unambiguous necessarily impresses us with a firm understanding of the parties' agreement. Any unavailing search for ambiguity must, necessarily, yield a singular interpretation of that contract, as a matter of law. Feather v. State Farm Fire and Cas., 872 P.2d 1177, 1180 (Wyo.1994). Interpretation connotes consideration of the contract as a whole, reading each provision in light of all the others to find the plain and ordinary meaning of the words, as they are juxtaposed. Lund v. Lund, 849 P.2d 731, 739 (Wyo.1993).

IV. DISCUSSION

The Martins urge us to rule that the $100,000.00 bodily injury liability limit on their declarations page voids the household exclusion contained in the body of the policy by operation of the statement that "[i]t [the declarations page] supersedes or controls anything to the contrary." Such an interpretation is not without its appeal, particularly in light of Whitney Martin's grievous injuries. However, the issue here is not certification of the Martins' need, which is manifest, but interpretation of the pre-existing agreement made between the Martins and Farmers.

The difficulty with the Martins' position, as correctly...