McDonnell v. State Farm Mut. Auto. Ins. Co., s. S–14378
| Decision Date | 26 April 2013 |
| Docket Number | S–14407.,Nos. S–14378,s. S–14378 |
| Parties | Lori McDONNELL, individually, and on behalf of her minor son, Luke Appellants and Cross–Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee and Cross–Appellant. |
| Court | Alaska Supreme Court |
OPINION TEXT STARTS HERE
Michael J. Schneider, Law Offices of Michael J. Schneider, P.C., Anchorage, for Appellants and Cross–Appellees.
Kimberlee A. Colbo, Hughes Gorski Seedorf Odsen & Tervooren, LLC, Anchorage, for Appellee and Cross–Appellant.
Before: CARPENETI, Chief Justice, FABE, WINFREE, and STOWERS, Justices, and EASTAUGH, Senior Justice Pro Tem.**
Following a car accident with an uninsured motorist, Lori McDonnell filed suit against her insurer State Farm Mutual Automobile Insurance Company on behalf of herself and her minor son, Luke. McDonnell sought a declaratory judgment that: (1) she was entitled to have her personal injury claims settled by appraisal under the mandatory appraisal statute, AS 21.96.035; and (2) a provision in her State Farm insurance policies requiring her to file suit against the insurance company within two years of the accident was void as against public policy. The superior court ruled that the mandatory appraisal statute did not apply to personal injury claims. The court further ruled that the contractual two-year limitations provision was enforceable, but only if State Farm could show that it was prejudiced by an insured's delay in bringing suit, and that the appropriate accrual date for the limitations period was the date State Farm denied an insured's claim, rather than the date of the accident.
McDonnell and State Farm both appeal. McDonnell argues the mandatory appraisal statute applies to her personal injury claims and the two-year limitation provision is wholly void as against public policy. State Farm argues the two-year limitation provision is wholly enforceable. For the reasons explained below, we affirm the superior court's rulings.
On August 7, 2007, McDonnell and her son were involved in a car accident. The driver of the other vehicle fled the scene and was never identified.
McDonnell had two State Farm insurance policies that both provided uninsured motorist (UM) and underinsured motorist (UIM) coverage. McDonnell claimed that the accident had caused her and her son Luke to suffer back injuries. State Farm agreed that McDonnell and her son were entitled to UM coverage but disputed that the accident had caused all of their asserted injuries. The parties were unable to settle McDonnell's claims.
McDonnell's insurance policies required her to bring suit against State Farm within two years of the accident if the parties could not agree on the amount of her damages. On August 7, 2009, McDonnell filed a complaint against State Farm on behalf of herself and Luke.1 She sought a declaratory judgment that the two-year limitation provision was unenforceable and that she was entitled to resolve her claims by appraisal under AS 21.96.035.2 State Farm argued the two-year limitations period was a fully enforceable contract provision and the mandatory appraisal statute did not apply to McDonnell's personal injury claims. McDonnell and State Farm filed cross-motions for summary judgment on the mandatory appraisal issue. McDonnell also filed a motion for judgment on the pleadings on the enforceability of the two-year limitation provision.
Superior Court Judge Sen K. Tan granted State Farm's summary judgment motion, ruling that under the plain language of AS 21.96.035 the mandatory appraisal procedure did not apply to McDonnell's personal injury claims. The superior court also granted in part McDonnell's motion for judgment on the pleadings, ruling that even though the issue was technically moot it should nevertheless be reviewed under the public interest exception to the mootness doctrine. Relying on Estes v. Alaska Insurance Guaranty Association,3 the court then ruled that the contractual two-year limitations period was enforceable,but only if State Farm could show it had suffered prejudice from an insured's delay in filing suit. The court also ruled that the appropriate accrual date for the limitations period was the date when State Farm denied an insured's claim, not the date of the accident.
Both parties appeal, reiterating their arguments whether AS 21.96.035 applies to McDonnell's UM personal injury claims, whether McDonnell's challenge to the two-year limitations provision was moot, and whether that provision is void as against public policy.
We review a judgment on the pleadings under Alaska Civil Rule 12(c) and a summary judgment under Alaska Civil Rule 56 de novo.4 Both judgments are appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.5 A judgment on the pleadings must be based solely on the pleadings, however, while a summary judgment may be supported by evidence outside the pleadings, such as affidavits and depositions.6
Whether State Farm is entitled to summary judgment on the mandatory appraisal issue turns on the interpretation of AS 21.96.035. We apply our independent judgment to questions of statutory interpretation, adopting the rule of law that is “most persuasive in light of precedent, reason, and policy.” 7 Whether McDonnell is entitled to a judgment on the pleadings on the two-year limitation issue turns on the enforceability of that contract provision, a question of law that we review de novo.8
IV. DISCUSSIONA. Mandatory Appraisal Under AS 21.96.035 Does Not Apply To McDonnell's Personal Injury Claims.
Alaska regulates insurance through a comprehensive insurance code.9Alaska Statute 21.96.035 provides that certain types of insurance policies must include an appraisal clause for resolving disputes over the value of a covered loss:
A motor vehicle or similar policy, a policy providing property coverage, or any other policy providing first party property, casualty, or inland marine coverage, issued or delivered in this state, must include an appraisal clause providing a contractual means to resolve a dispute between the insured and the insurer over the value of a covered first party loss for real property, personal property, business property, or similar risks.10
The statute also describes in detail the appraisal process that the insurer and insured must follow:
If the insured and the insurer fail to agree on the amount of a covered first party loss, either may make written demand upon the other to submit the dispute for appraisal. Within 10 days of the written demand, the insured and insurer must notify the other of the competent appraiser each has selected. The two appraisers will promptly choose a competent and impartial umpire. Not later than 15 days after the umpire has been chosen, unless the time period is extended by the umpire, each appraiser will separately state in writing the amount of the loss. If the appraisers submit a written report of agreement on the amount of the loss, the agreed amount will be binding upon the insured and insurer. If the appraisers fail to agree, the appraisers will promptly submit their differences to the umpire. A decision agreed to by one of the appraisers and the umpire will be binding upon the insured and insurer.11
McDonnell describes AS 21.96.035 as mandating an “appraisal-arbitration process” and argues that she has a right to resolve her UM dispute with State Farm by way of this process. She argues that under the plain language of the statute, the appraisal process applies to personal injury claims because the statute applies to disputes over the value of “a covered first party's loss for real property, personal property, business property, or similar risks.” 12 Although the insurance code does not define “personal property,” 13 the general statutory definition under AS 01.10.060 provides, “In the laws of the state, unless the context otherwise requires, ... ‘personal property’ includes money, goods, chattels, things in action, and evidences of debt.” 14 A “thing in action,” also called a “chose in action,” includes claims for damages, such as a personal injury claim.15 We have recognized that “a chose in action, such as [a plaintiff's] claim for personal injuries, is a form of property.” 16 McDonnell argues that we must presume the legislature knew the term “personal property” included personal injury claims,17 therefore this term should be given its plain meaning under the general statutory definition of “personal property.”
State Farm counters that the general definition of “personal property” under AS 01.10.060 is not conclusive because the statute requires consideration of the context in which the term is used,18 and McDonnell's interpretation is inconsistent with the ordinary meaning of the term “appraisal.”
The superior court rejected McDonnell's interpretation of AS 21.96.035, ruling that the context and structure of the statute show the mandatory appraisal procedure is limited to disputes over the value of tangible property. The court reasoned that: (1) the statute's expedited timeline suggests the legislature did not intend for the process to apply to complex medical disputes; (2) the legislature specifically used the term “appraisal,” which is not synonymous with “arbitration”; and (3) McDonnell's interpretation would require the “appraisal” of essentially all claims, thereby rendering superfluous the statute's limitation to certain types of property loss. The court also noted a “conceptual issue” with McDonnell's argument that a chose in action is personal property subject to mandatory appraisal, reasoning “the right to sue is the property right, not the injury on which the right to sue is based”; therefore McDonnell and her son “should not be able to arbitrate their right to sue when what they want is to arbitrate the value of the injury itself.” 19
We interpret statutes “according to...
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