Nodak Mut. Ins. Co. v. Heim

• Decision Date: 27 February 1997
• Docket Number: No. 960187,960187
• Citation: 559 N.W.2d 846,1997 ND 36
• Parties: NODAK MUTUAL INSURANCE COMPANY, Plaintiff and Appellee, v. Maurus HEIM, Alan Heim and Corey Heim, Defendants and Appellants. Civil
• Court: North Dakota Supreme Court

Page 846

559 N.W.2d 846

1997 ND 36

NODAK MUTUAL INSURANCE COMPANY, Plaintiff and Appellee, v. Maurus HEIM, Alan Heim and Corey Heim, Defendants and Appellants.

Civil No. 960187.

Supreme Court of North Dakota.

Feb. 27, 1997.

Duane Ilvedson (argued), of Nilles, Hansen & Davies, Ltd., Fargo, and William M. Hart (on brief) and Randy A. Sharbono (on brief), of Meagher & Geer, Minneapolis, MN, for plaintiff and appellee. Appearance by Paul Traynor of Nodak Mutual, Fargo.

Jon R. Brakke, of Vogel, Kelly, Knutson, Weir, Bye & Hunke, Ltd., Fargo, for defendant and appellant Maurus Heim.

Robert Snyder (no appearance), of Snyder Coles Lawyers, Bismarck, for defendants and appellants Alan Heim and Corey Heim.

VANDE WALLE, Chief Justice.

¶1 Maurus Heim appealed from a summary judgment declaring Nodak Mutual Insurance Company had no duty to defend or indemnify him in an underlying lawsuit brought by his nephews, Alan and Corey Heim. We hold Nodak's insurance policies and public policy preclude coverage for Maurus's continuous pattern of intentional molestation of his nephews. We affirm.

¶2 In February 1994 the State charged Maurus with two counts of gross sexual imposition for sexual contact with Alan and Corey when they were less than 15 years old and two counts of sexual assault for sexual contact with them when they were older than 15. See N.D.C.C. §§ 12.1-20-03 and 12.1-20-07.

¶3 In a deposition for the criminal action, Alan testified to seven different instances in which Maurus engaged in sexual contact with him. According to Alan, on each occasion Maurus entered a bedroom after Alan was in bed and fondled his genitals. Corey also testified by deposition in the criminal action that Maurus engaged in two different instances of sexual contact with him. According to Corey, on each occasion Maurus entered a bedroom after Corey was in bed and fondled his genitals.

¶4 Corey also testified:

"Q. You discussed the fact that there were some other times when you were touched over the clothing by Maurus?

"A. Yes.

"Q. About how many times did that happen?

"A. I would have to--50 plus.

"Q. And you talked about it being in the pickup. Were there other places where that happened?

"A. It happened in the yard of his farm, in the shop, the machine shop.

* * * * * *

"Q. I want to make sure we have clarified what it was he was doing. You talked about that the contact wasn't as long as it was during these other two incidents you talked about. Is that right?

"A. Right.

"Q. Was he touching--tell me what part of your body he was touching when he did that.

"A. The penis. And testicles.

"Q. Would he say anything to you when he was doing that?

"A. When it happened in the vehicle it was when he would go to shift for a gear and he'd--he would say, 'I grabbed the wrong stick.'

* * * * * *

"Q. Do you have any estimate of the amount of seconds or minutes that that type of conduct lasted on any of those occasions?

"A. I would have to say three to five seconds. To the best of my knowledge that's what they were."

¶5 Maurus pled guilty to one count of gross sexual imposition and two counts of sexual assault. At his sentencing, Maurus admitted he had had sexual contact with his nephews by fondling their genitals directly and through their clothing.

¶6 In August 1994 Corey and Alan sued Maurus for assault and battery, intentional infliction of emotional distress, negligent infliction of emotional distress, and invasion of privacy. For each claim, Corey and Alan sought damages sustained as a result of Maurus's "wrongful actions" and "sexual abuse," which they alleged consisted of "fondling [their] genitals" and other "frequent inappropriate touching."

¶7 Nodak insured Maurus under a Farm and Ranch Policy and a Bonanza Umbrella Policy. Nodak brought this declaratory judgment action seeking a determination that, under those insurance policies, Nodak had no duty to defend or indemnify Maurus for his nephews' claims. The trial court granted summary judgment for Nodak, concluding the nephews' claims all were for intentional sexual abuse by Maurus although framed as different causes of action. The court ruled that public policy and the insurance policies precluded coverage for those claims and held Nodak had no duty to defend or to indemnify Maurus.

¶8 We review this case under the summary judgment standards of N.D.R.Civ.P. 56. Summary judgment is a procedure for deciding an action without a trial if, after viewing the evidence in the light most favorable to the party opposing the motion and giving that party the benefit of all favorable inferences which can reasonably be drawn from the evidence, there is no genuine dispute as to either the material facts or the inferences to be drawn from the undisputed facts, or if only a question of law is involved. Northwest G.F. Mut. Ins. Co. v. Norgard, 518 N.W.2d 179 (N.D.1994).

¶9 Maurus asserts the trial court erred in deciding this declaratory judgment action. He argues Nodak's action was premature, because there are factual disputes about whether his nephews' underlying claims are based solely on intentional sexual misconduct. His argument misconstrues the requirements for assessing an insurer's duty to defend in the context of a declaratory judgment action.

¶10 Section 32-23-06, N.D.C.C., says a "court shall render ... a declaratory judgment ... in an action brought by or against an insurance company to determine liability of the insurance company to the insured to defend, or duty to defend, although the insured's liability for the loss may not have been determined." In Blackburn, Nickels & Smith, Inc. v. National Farmers Union Property & Cas. Co., 452 N.W.2d 319 (N.D.1990), we construed that language to require a court to render a declaratory judgment on both coverage and duty to defend, even if the insured's underlying liability has not been decided.

¶11 Ordinarily, an insurer has a duty to defend an underlying action against its insured if the allegations in the complaint give rise to potential liability or a possibility of coverage under the insurance policy. National Farmers Union Property & Cas. Co. v. Kovash, 452 N.W.2d 307 (N.D.1990); Applegren v. Milbank Mut. Ins. Co., 268 N.W.2d 114 (N.D.1978); Kyllo v. Northland Chem. Co., 209 N.W.2d 629 (N.D.1973). Any doubt about whether a duty to defend exists is resolved in favor of the insured. Hart Const. Co. v. American Family Mut. Ins. Co., 514 N.W.2d 384 (N.D.1994). When several claims are made against the insured, the insurer has a duty to defend the entire lawsuit if there is potential liability or a possibility of coverage for one of the claims. Rolette Cty. v. Western Cas. & Sur. Co., 452 F.Supp. 125 (D.C.N.D.1978); Horace Mann Ins. Co. v. Barbara B., 4 Cal.4th 1076, 17 Cal.Rptr.2d 210, 846 P.2d 792 (1993). In that framework, the issue is not the timing of the declaratory judgment action. Rather, the issue is whether the nephews' claims give rise to potential liability or a possibility of coverage under the insurance policies.

¶12 We thus consider the language of Nodak's insurance policies with Maurus. In Norgard, 518 N.W.2d at 181 (citations omitted), we outlined our framework for construing insurance policies:

"The interpretation of an insurance policy is a question of law, fully reviewable on appeal.... Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting.... Generally, we attempt to ascertain the intent of the parties through the language of the contract itself.... To the extent practicable, we give effect to every provision of the contract.... Unambiguous language will be given its clear meaning ...; we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage....

"We regard insurance policies as adhesion contracts, ... and therefore, in applying the rules to resolve ambiguities, we balance the equities against the insurer, i.e., in favor of providing coverage to the insured.... Furthermore, if the rules for interpreting a written contract do not remove uncertainty, the language of the contract is to be construed most strongly against the party who drafted the contract.... The determination of whether a contract is ambiguous is a question of law.... Contract language is ambiguous if it can be reasonably construed as having at least two alternative meanings.... We consider whether a person not trained in the law or in the insurance business can clearly understand the language."

¶13 Maurus contends the trial court erred in concluding Nodak did not have a duty to defend or to indemnify him under its umbrella policy, which provides:

"The company will indemnify the insured for ultimate net loss in excess of the applicable underlying or retained limit hereinafter stated which the insured may sustain by reason of liability imposed upon the insured by law for damages because of

"(a) Personal Injury

"(b) Property Damage. Caused by or arising out of an occurrence happening anywhere in the world."

The umbrella policy does not specifically exclude coverage for intentional acts by the insured, and, instead, defines "occurrence" as "an accident ... which results in personal injury or property damage neither expected nor intended from the standpoint of the insured."

¶14 Maurus argues that, when construed in favor of the insured and against the insurer, the term "occurrence" modifies "property damage," but does not modify "personal injury." ¹ Maurus thus contends Nodak's umbrella policy provides coverage for "personal injury" resulting from intentional acts by the insured.

¶15 We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. Kief Farmers Coop. Elevator Co. v. Farmland Mut. Ins. Co., 534 N.W.2d 28 (N.D.1995); Norgard; N.D.C.C. § 9-07-06. If there is a conflict between the provisions of an insurance...