Matlack v. MOUNTAIN WEST FARM BUREAU MUT. INSURANCE COMPANY, 01-42.

• Decision Date: 15 April 2002
• Docket Number: No. 01-42.,01-42.
• Citation: 44 P.3d 73,2002 WY 60
• Parties: Glenda H. MATLACK, Appellant (Defendant/Counterclaim Plaintiff), v. MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, a Wyoming corporation, Appellee (Plaintiff/Counterclaim Defendant).
• Court: Wyoming Supreme Court

44 P.3d 73

2002 WY 60

Glenda H. MATLACK, Appellant (Defendant/Counterclaim Plaintiff), v. MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, a Wyoming corporation, Appellee (Plaintiff/Counterclaim Defendant).

No. 01-42.

Supreme Court of Wyoming.

April 15, 2002.

C. John Cotton, Gillette, WY, Representing Appellant.

S.B. Freeman, III of Bormuth & Freeman, LC, Cody, WY, Representing Appellee.

Before LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.

KITE, Justice.

[¶ 1] Glenda Matlack sold land adjoining her home to Susan Moore, and a dispute over the ownership of a water well on the boundary between their properties resulted. Ms. Moore took matters into her own hands and pulled the well casing onto her property, thereby damaging Ms. Matlack's property. When Ms. Matlack sued, Ms. Moore made a claim under her homeowner's insurance policy. Ms. Moore's insurer refused coverage for her intentional acts. Ultimately, the two neighbors settled their dispute by assigning Ms. Moore's claims against her insurer to Ms. Matlack. The trial court granted summary judgment for the insurer on the breach-of-contract and bad faith claims because the policy provided no coverage for intentional acts. We affirm.

ISSUES

[¶ 2] Ms. Matlack presents the following issues for our review:

Issue No. 1: Did the lower court err in holding that there was no duty to defend the Original Complaint, which included claims for trespass, wrongful damage to personal property and real property, and negligent infliction of emotional distress?

Issue No. 2: Did the lower court err in holding that, as a matter of law, the conduct of the insured was intentional, and that there was no occurrence under the policy?

Issue No. 3: Did the lower court err in holding that there was no duty to defend the Amended Complaint?

Issue No. 4: Did the lower court err in its determination regarding bad faith?

Mountain West Farm Bureau Mutual Insurance Company phrases the issues as:

1. Whether the District Court erred in determining that the insurance policy did not provide coverage for the judgment entered by the District Court in accordance with the stipulated agreement of the parties in the underlying case?

2. Whether the District Court erred in its determination that the Appellee did not breach its duty to defend the original complaint filed in the underlying case?

3. Whether the District Court erred in its determination that the Appellee did not breach its duty to defend the amended complaint filed in the underlying case?

4. Whether the District Court erred in its determination that the Appellee did not breach its covenant of good faith and fair dealing to its insured?

In her reply brief, Ms. Matlack sets out these additional issues:

Issue No. 1: Do allegations and/or findings of punitive damages automatically invoke the intentional act exclusion?

Issue No. 2: Given the record in this case, is MWFB's position regarding the duty to defend and coverage contrary to Wyoming law?

Issue No. 3: Does MWFB concede the application of INA v. Spangler, 881 F.Supp. 539 (D.Wyo.1995)?

FACTS

[¶ 3] In 1994, Ms. Matlack sold to Ms. Moore one of two tracts she owned in a subdivision in Campbell County. At the time of the sale, one common water well located "almost precisely" on the boundary served both tracts. The parties agreed to share in the maintenance and operational costs of the well. Neither the agreement nor the warranty deed mentioned conveyance of the well to Ms. Moore. After the sale, the parties began haggling over ownership and operation of the well. Both parties sought to drag the state engineer's office into the fray which resulted in each of them receiving a certificate of title from that office at different times. After becoming aware of the parties' dispute, the state engineer's office bowed out claiming it was a civil matter to be resolved by the courts. Negotiations between the parties ensued with both parties being represented by counsel. Ms. Moore ultimately notified Ms. Matlack of her intent to physically hook on to the well casing and pull it onto her own property. Not surprisingly, Ms. Matlack responded by denying Ms. Moore permission to trespass onto her property to accomplish the task. Undaunted by her neighbor's position, Ms. Moore plowed ahead, started up her backhoe, dug out around the well, hooked on to the casing, and pulled it in her direction. None of these facts were disputed.

[¶ 4] Ms. Matlack alleged damages including disconnection of her home from the well, damage to the integrity of the well casing, the cost of drilling a replacement well, and emotional distress. She filed the predictable complaint claiming trespass, wrongful damage to and\or conversion of personal property, wrongful taking of and\or damage to real property, negligent infliction of emotion distress, intentional infliction of emotional distress, civil conspiracy, and punitive damages. Ms. Moore, faced with the consequences of her action, tendered the matter to her insurance carrier, Mountain West Farm Bureau Mutual Insurance Company (Mountain West), under her homeowner's policy. Mountain West responded within days of receiving the claim by denying both coverage and any duty to defend under the circumstances alleged in the complaint which in its opinion constituted intentional acts. Eight and a half months later, Ms. Matlack amended her complaint by adding a cause of action entitled "negligence," relying on the exact same facts. The trial court issued a decision letter granting summary judgment in Ms. Moore's favor on all claims except negligence, trespass, and punitive damages. Ms. Moore's counsel provided the amended complaint, the summary judgment decision letter, and a letter from Ms. Matlack's attorney offering to settle for the $100,000 policy limits to the insurer. Mountain West claimed it did not receive the information for several months. Upon review of the amended complaint, which now claimed negligence, Mountain West agreed to provide a defense but reserved its right to claim no coverage existed for damage cause by Ms. Moore's intentional acts. Facing trial on the remaining claims, Ms. Moore and Ms. Matlack settled their differences by stipulating to a judgment against Ms. Moore for $110,678.11, which included $19,763.95 for punitive damages, an assignment to Ms. Matlack of Ms. Moore's rights and claims against her insurer, and an agreement the judgment would only be satisfied through any recovery from the insurer.

[¶ 5] Mountain West filed a declaratory judgment action against Ms. Matlack, seeking a determination that the policy did not provide coverage for the stipulated damages. Ms. Matlack counterclaimed for breach of contract for failure to defend and provide coverage and for insurance bad faith. The trial count granted summary judgment in favor of Mountain West on coverage and all of Ms. Matlack's counterclaims. Ms. Matlack appealed.

STANDARD OF REVIEW

[¶ 6]

Summary judgment is appropriate when no genuine issue as to any material fact exists and the prevailing party is entitled to have a judgment as a matter of law. A genuine issue of material fact exists when a disputed fact, if it were proven, would have the effect of establishing or refuting an essential element of the cause of action or defense which has been asserted by the parties. We examine the record from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all favorable inferences which may fairly be drawn from the record. We evaluate the propriety of a summary judgment by employing the same standards and by using the same materials as were employed and used by the lower court. We do not accord any deference to the district court's decisions on issues of law.

Baker v. Pena, 2001 WY 122, ¶ 6, 36 P.3d 602, ¶ 6 (Wyo.2001) (citations omitted).

DISCUSSION

[¶ 7] The fundamental question presented in this appeal is whether the insurance policy issued by Mountain West to Ms. Moore provided coverage for damages resulting from these intentional acts. Section II of the policy describes the terms under which Mountain West contracted to provide coverage. Those terms unambiguously state Mountain West will pay up to the limit of liability in the policy for any property or bodily injury damages the insured is legally liable for as a result of an "occurrence" caused by the insured. The specific language of the policy provides in part:

COVERAGE F—Liability

If a claim is made or suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which the insured is legally liable;

....

COVERAGE M—Damage to Property of Others

We will pay for property damage to property of others caused by an insured, at replacement cost, up to $500 for any one occurrence.

By the clear language of the policy, coverage is limited to damages from an "occurrence." As set out in the definitions in the policy:

Occurrence means an unexpected and unintended accident, including continuous or repeated exposure to conditions, which result in bodily injury or property damage during the policy period. All bodily injury or property damage resulting from a common cause shall be considered the result of one occurrence.

In addition to the clear terms limiting coverage to accidents, the policy specifically excluded coverage for intentional acts, actions arising out of an insured's violation of a criminal law, and punitive damages.

[¶ 8] We have found similar language unambiguous and discussed the definition of "accident" in this context. In Reisig v. Union Insurance Company, 870 P.2d 1066, 1069-70 (Wyo.1994), we stated:

In determining the question of whether the intentional tort of conversion can be considered an "accident," we look only to the allegations of the Complaint filed by Rocky Mountain to see if there is alleged a loss "caused

...