Miller v. Nodak Ins. Co.
| Docket Number | 20210341 |
| Decision Date | 03 March 2023 |
| Citation | 987 N.W.2d 369 |
| Parties | John D. MILLER, Jr. d/b/a John Miller Farms, Inc. and JD Miller, Inc., Plaintiffs, Appellees, and Cross-Appellants v. NODAK INSURANCE COMPANY, Defendant, Appellant, and Cross-Appellee |
| Court | North Dakota Supreme Court |
Benjamin J. Williams (argued) and Brayden K. Harwood (appeared), Fargo, ND, for plaintiffs, appellees, and cross-appellants.
Scott K. Porsborg (argued) and Austin T. Lafferty (appeared), Bismarck, ND, for defendant, appellant, and cross-appellee.
[¶1] Nodak Insurance Company ("Nodak") appeals, and John D. Miller, Jr. d/b/a John Miller Farms, Inc. and JD Miller, Inc. (collectively, "Miller") cross-appeals from a judgment determining Miller's insurance policy with Nodak provided coverage and awarding Miller damages. Because we conclude a policy exclusion applies and precludes coverage, we reverse.
[¶2] This insurance coverage dispute arises out of Miller's sale of seed potatoes to Johnson Farming Association, Inc. ("Johnson"). Miller operates a farm in Minto, North Dakota. At the relevant time period, Miller was insured by a Farm and Ranch policy and Excess Liability policy issued by Nodak.
[¶3] During the 2015 planting season, Miller planted seed potatoes. Miller asserts a North Dakota State Seed Department representative inspected the field where the seed was being grown on July 13, July 26, and September 3, 2015, which indicated no problems with the seed crop. On or about September 3, 2015, Miller "killed the vines" in anticipation of and as required to harvest the seed crop. Miller harvested the seed crop between September 18 and September 25, 2015, and the harvested seed crop was immediately taken from the field to Miller's storage facility south of Minto.
[¶4] On December 31, 2015, Miller and Johnson entered into a contract for the sale of seed potatoes, specifically to purchase "10,400 CWT - ND CERTIFIED BULK DARK RED NORLAND SEED POTATOES GENERATION 3." The contract for sale disclaimed any express or implied warranty of merchantability or fitness for a particular purpose and contained a limitation of consequential damages and remedies, stating in part:
Under the contract Johnson paid $104,000 for the seed potatoes. Johnson picked up the seed potatoes in May 2016.
[¶5] In June or July 2016, Johnson informed Miller of problems with some of the seed potatoes he had purchased. Johnson stated an analysis definitively showed very high levels of the herbicide glyphosate, which caused the problems with the seed potatoes. The seed potatoes did not grow properly, and Johnson alleged damages as a result. It is undisputed that the seed potatoes were damaged because an employee of Miller inadvertently contaminated the seed potatoes with glyphosate while they were growing on Miller's Farm. Miller asserts that the glyphosate product was applied inadvertently by Miller's employee, likely at the time the vines were killed and the seed harvested.
[¶6] In July 2016, Miller sought coverage for the loss from Nodak. On July 12, 2016, Nodak sent Miller a letter denying coverage and citing a policy exclusion, which the parties herein have alternately referred to as the "seed performance" or "failure to conform" exclusion. In October 2017, Johnson sent Miller a written demand for losses totaling $365,593.45. Miller personally reimbursed Johnson for this amount in full.
[¶7] In December 2018, Miller commenced this action against Nodak seeking damages after Nodak refused to provide coverage under the insurance policies for Miller's claim relating to damaged seed potatoes. Miller sought damages from Nodak in excess of $421,890.18, alleging breach of contract, negligence, unjust enrichment, and bad faith. Nodak answered, denying Miller's claims and maintaining denial of coverage was proper.
[¶8] In May 2019, Nodak moved for summary judgment arguing that Nodak properly denied coverage under an exclusion to coverage when it denied Miller's claim, was not negligent, and acted in good faith in denying the claim. Miller made a cross-motion for summary judgment on its claims for breach of contract, negligence, unjust enrichment, and bad faith. In January 2020, the district court denied both parties’ motions for summary judgment.
[¶9] In April 2020, Nodak moved for reconsideration and clarification. In its December 2020 order, the district court granted summary judgment to Nodak on Miller's claims for negligence and unjust enrichment but held the exclusions relied on by Nodak to preclude Miller's claim for coverage were inapplicable. In August 2021, the court held a bench trial at which the parties’ stipulated exhibits were admitted into evidence and the issue of calculating damages was taken under advisement.
[¶10] In November 2021, the district court issued its findings of fact, conclusions of law, and order for judgment. The court found the parties had agreed on the record that Miller was no longer pursuing the bad faith claim originally raised in the complaint. The court held Miller's contract with Johnson limited damages in this matter to the stipulated contract price paid of $104,000 and the insurance policy did not require Nodak to compensate Miller beyond the contractual liability. The court awarded statutory pre-judgment interest at a rate of 6 percent beginning November 1, 2017.
[¶11] A final judgment was subsequently entered awarding Miller damages of $104,000, plus pre-judgment interest of $25,216.44, for a total award of $129,216.44.
[¶12] Our standard for reviewing a district court's summary judgment decision is well established:
In deciding whether the district court appropriately granted summary judgment, we view the evidence in the light most favorable to the opposing party, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record. A party opposing a motion for summary judgment cannot simply rely on the pleadings or on unsupported conclusory allegations. Rather, a party opposing a summary judgment motion must present competent admissible evidence by affidavit or other comparable means that raises an issue of material fact and must, if appropriate, draw the court's attention to relevant evidence in the record raising an issue of material fact. When reasonable persons can reach only one conclusion from the evidence, a question of fact may become a matter of law for the court to decide. A district court's decision on summary judgment is a question of law that we review de novo on the record.
N. Star Mut. Ins. v. Ackerman , 2020 ND 73, ¶ 6, 940 N.W.2d 857 (quoting Dahms v. Nodak Mut. Ins. Co. , 2018 ND 263, ¶ 6, 920 N.W.2d 293 ). The district court also made findings of fact and conclusions of law after the August 2021 bench trial, which this Court reviews as follows:
In an appeal from a bench trial, the district court's findings of fact are reviewed under the clearly erroneous standard of review, and its conclusions of law are fully reviewable.... In a bench trial, the district court is the determiner of credibility issues and we will not second-guess the district court on its credibility determinations. Findings of the trial court are presumptively correct.
Pavlicek v. Am. Steel Sys., Inc. , 2022 ND 35, ¶ 6, 970 N.W.2d 171 (quoting Gimbel v. Magrum , 2020 ND 181, ¶ 5, 947 N.W.2d 891 (cleaned up)).
[¶13] Nodak contends Miller's damages are the result of activities excluded from coverage under the applicable Nodak policy.
[¶14] Interpretation of an insurance policy presents a question of law, reviewed de novo on appeal. N. Star Mut. Ins. , 2020 ND 73, ¶ 7, 940 N.W.2d 857. We independently examine the insurance contract to decide whether coverage exists, construing policy language to give effect to the parties’ mutual intention at the time of contracting. Borsheim Builders Supply, Inc. v. Manger Ins., Inc. , 2018 ND 218, ¶ 8, 917 N.W.2d 504. In interpreting an insurance policy:
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Koon v. State
...Id. The finding here turned on which of Koon's conflicting statements was more credible. See Miller v. Nodak Ins. Co., 2023 ND 37, ¶ 12, 987 N.W.2d 369 (citations omitted) ("In a bench the district court is the determiner of credibility issues and we will not second-guess the district court......