McDonough v. Liberty Mut. Ins. Co., Inc.

• Decision Date: 19 March 1996
• Docket Number: No. 68245,68245
• Citation: McDonough v. Liberty Mut. Ins. Co., Inc., 921 S.W.2d 90 (Mo. App. 1996)
• Parties: Loretta McDONOUGH, Respondent/Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., Appellant/Defendant.
• Court: Missouri Court of Appeals

Page 90

921 S.W.2d 90

Loretta McDONOUGH, Respondent/Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, INC., Appellant/Defendant.

No. 68245.

Missouri Court of Appeals,

Eastern District,

Division Four.

March 19, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied April 30, 1996.

Application to Transfer Denied

May 28, 1996.

Riethmann, Valentine & Rouse, Michael A. Shaughnessy, Jr., St. Louis, for appellant.

Susman, Schermer, Rimmel & Shifrin, Norton Y. Beilenson, Joy D. McMillen, St. Louis, for respondent.

AHRENS, Presiding Judge.

Plaintiff, Loretta McDonough, instituted this action against defendant, Liberty Mutual Insurance Company, Inc. ("Liberty Mutual") claiming breach of contract and vexatious refusal to pay in Count I and negligence in Count II after Liberty Mutual refused to defend plaintiff in a suit brought by Michael and Teresa Schiff. The parties submitted cross-motions for summary judgment. The trial court granted plaintiff's motion as to Count I, denied plaintiff's motion for summary judgment on Count II, and denied defendant's motion on both counts. Defendant appeals the granting of plaintiff's summary judgment motion as to Count I. We reverse and remand with instructions. ¹

On appeal from summary judgment, the appellate court views the record in the light most favorable to the party against whom judgment was entered. ITT Commercial Finance Corporation v. Mid-America Marine Supply Corporation, 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment shall be entered when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 74.04(c). As summary judgment is an issue of law, our review is essentially de novo. ITT Commercial Finance Corporation, 854 S.W.2d at 376.

The facts, viewed in the light most favorable to Liberty Mutual, are as follows:

Michael and Teresa Schiff filed suit against plaintiff in her capacity as trustee of the Terrace Gardens Subdivision. The Schiffs' lawsuit arose from the refusal of the trustees of Terrace Gardens Subdivision to allow the Schiffs to construct a hockey rink on their property within the subdivision. Count I of the Schiffs' petition requested declaratory judgment regarding their right to build the ice rink. Count II consisted of a claim for promissory estoppel.

Pursuant to two insurance policies issued to plaintiff, a homeowners policy and a personal catastrophe liability (or umbrella) policy, plaintiff requested Liberty Mutual to defend her against the Schiff suit. Liberty Mutual refused to provide plaintiff's defense, claiming the policies issued to plaintiff did not provide coverage for the type of claims asserted by the Schiffs. Plaintiff hired an attorney and financed her own defense to the Schiff suit. The case was tried by the court which found in favor of plaintiff and against the Schiffs on both counts.

Following Liberty Mutual's refusal to defend, but prior to the disposition of the Schiff lawsuit, plaintiff brought suit against Liberty Mutual asserting alternative claims for breach of contract/vexatious refusal to pay and negligence. The trial court granted plaintiff's motion for summary judgment on the breach of contract claim and denied the motion for summary judgment on plaintiff's negligence claim. Liberty Mutual appeals the former ruling.

We set out the relevant provisions of each insurance policy below for purposes of discussion:

Liberty Guard Deluxe Homeowners Policy

SECTION II--LIABILITY COVERAGES

COVERAGE E--Personal Liability

If a claim is made or a suit is brought against an 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....

2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent....

* * * * * *

DEFINITIONS

5. "occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:

a. bodily injury; or

b. property damage.

6. "property damage" means physical injury to, destruction of, or loss of use of tangible property.

Liberty Guard Personal Catastrophe Liability Policy

I. DEFINITIONS

7. "property damage" means: (a) injury to or destruction of tangible property; (b) injury to intangible property sustained by an organization as the result of eviction, malicious persecution, libel, slander, or defamation.

III. DEFENSE COVERAGE, ASSISTANCE AND COOPERATION

If a suit is brought against an insured for personal injury or property damage covered by this policy, but not covered by any underlying policy or any other insurance, we will:

a. defend the insured, even if the suit is groundless or fraudulent....

In Liberty Mutual's first point, it argues the trial court erred in granting plaintiff's motion for summary judgment because the claim asserted against plaintiff by the Schiffs was not covered by either policy issued to plaintiff by Liberty Mutual. When determining an insurer's duty to defend, we look to the insurance policy provisions and the allegations of the petition charging liability to the insured. Steve Spicer Motors v. Federated Mutual Insurance Co., 758 S.W.2d 191, 193 (Mo.App.1988). Unless the facts alleged in the petition come within the coverage of the insurance policy, the insurer has no duty to defend the insured. Id.

Liberty Mutual contends the policies it issued to plaintiff provide "coverage only when a claim or lawsuit alleged money damages as a result of an occurrence producing bodily injury or property damage or personal injury." The Schiffs' petition contained counts in declaratory judgment and promissory estoppel. It prayed for declaratory relief, specific performance and an award of costs and attorney's fees. ² Liberty Mutual based its denial of coverage on three grounds: (1) the Schiffs' petition did not request monetary damages; (2) no "occurrence," as defined by the homeowners policy, took place; and (3) the Schiffs sustained no bodily injury or property damage as a result of plaintiff's actions. Because we are dealing with two insurance policies, we must apply these three grounds to each policy, separately.

Interpretation of the meaning of an insurance policy is a question of law for the trial court. Chase Resorts, Inc. v. Safety Mutual Casualty Corp., 869 S.W.2d 145, 150 (Mo.App.1993). We are presented with the same record as was viewed by the trial court and thus, we do not defer to the trial court's interpretation of the policy.

The homeowners policy covers suits or claims brought against the insured "for damages." Liberty Mutual interprets damages to mean monetary damages. Plaintiff counters that neither of the policies explicitly states that damages means monetary damages and that the use of the term in one policy and its absence in the other creates an ambiguity which should be resolved in favor of the insured. When determining whether an insurance policy, or any other contract, contains ambiguous language, the court examines the four corners of the document. Arbeitman v. Monumental Life Insurance Co., 878 S.W.2d 915, 916 (Mo.App.1994). Extrinsic evidence is not considered when determining ambiguity. Therefore, we look only at the language of the homeowners policy when considering whether damages is ambiguous. The absence of the term in the umbrella policy has no bearing on its meaning in the homeowners policy.

In construing insurance policies we are to give the language of the policy its ordinary meaning. Id. Unless an ambiguity exists or statute or public policy require otherwise, the policy must be enforced as written. Jasper v. State Farm Mutual Auto. Ins. Co., 875 S.W.2d 954, 957 (Mo.App.1994); Hempen v. State Farm Mutual Auto Ins. Co., 687 S.W.2d 894 (Mo. banc 1985). Ambiguity exists when the language of an insurance policy reasonably and fairly is open to different constructions. Standard Artificial Limb, Inc. v. Allianz Insurance Co., 895 S.W.2d 205, 209 (Mo.App.1995). Ambiguity arises when there is "duplicity, indistinctness or uncertainty in meaning." Id. There is nothing in the language of the homeowners policy which creates a duplicity or uncertainty as to the term damages. We find no inconsistencies in the use of the term within the policy, and therefore, no ambiguity. We must enforce the homeowners policy as written giving the term damages its ordinary meaning.

Black's Law Dictionary defines damages as "[a] pecuniary compensation or indemnity ... [a] sum of money awarded to a person injured by the tort of another." Black's Law Dictionary, p. 351 (5th ed. 1979). The term is defined by Webster's Dictionary as "compensation in money imposed by law for loss or injury." Webster's Ninth New Collegiate Dictionary, p. 323 (1991). Although our research has produced no cases which define the term, we believe the dictionary references reflect the plain meaning of damages. We agree that damages, as used in the homeowners policy issued to plaintiff, is limited to monetary damages and does not include equitable relief. The Schiffs' petition requested declaratory judgment and specific performance which are forms of equitable relief, not damages.

Plaintiff contends that the attorney's fees and costs and expenses requested fulfill the damages requirement of the policy; but those items are not the relief for which the Schiffs sued. Attorney's fees, costs and expenses are merely incidental to the equitable relief requested. For these reasons, we find the Schiffs' suit did not fall within the damages requirement of the homeowners policy issued to plaintiff and consequently is not covered by that policy.

Moreover, the circumstances underlying the Schiffs' suit do not meet the occurrence requirement of the homeowners policy. The homeowners policy issued to plaintiff by Liberty Mutual covers...