Okla. Sch. Risk Mgmt. Trust v. Mcalester Pub. Sch.

• Decision Date: 29 January 2019
• Docket Number: No. 114,553,114,553
• Citation: 457 P.3d 997
• Parties: OKLAHOMA SCHOOLS RISK MANAGEMENT TRUST, Plaintiff/Appellee, v. MCALESTER PUBLIC SCHOOLS, Defendant/Appellant.
• Court: Oklahoma Supreme Court

457 P.3d 997

OKLAHOMA SCHOOLS RISK MANAGEMENT TRUST, Plaintiff/Appellee,

v.MCALESTER PUBLIC SCHOOLS, Defendant/Appellant.

No. 114,553

Supreme Court of Oklahoma.

FILED January 29, 2019

REHEARING DENIED April 29, 2019

John C. Lennon, D. Lynn Babb, Pierce Counch Hendrickson Baysinger & Green, L.L.P., Oklahoma City, Oklahoma, for Plaintiff/Appellee.

Rex Travis, Oklahoma City, Oklahoma, for Defendant/Appellant.

Joe Ervin, Ervin & Ervin, McAlester, Oklahoma, for Defendant/Appellant.

EDMONDSON, J.

¶ 1 The controversy presented by the parties is whether an insurance policy covers the damage to a school caused by the rupture of a water pipe beneath the school. We agree with McAlester Public Schools that the policy covers the event.

¶ 2 The Oklahoma Schools Risk Management Trust is an interlocal cooperative composed of public schools and alternative education cooperatives for the purpose of pooling their property casualty risks by a member-funded self-insurance program. The Oklahoma Schools Risk Management Trust (OSRMT) issued a Plan of Coverage to McAlester Public Schools (McAlester Schools) for the period August 15, 2012 to August 15, 2013. On August 13, 2013 a water pipe underneath one of the McAlester Schools, Parker Middle School, broke causing damage to the school.

¶ 3 The OSRMT brought a declaratory judgment action in District Court and sought an adjudication holding the Plan of Coverage for McAlester Schools did not cover the damage from the broken water pipe. McAlester Schools answered and alleged counterclaims for declaratory judgment and a breach of contract by OSRMT, and for indemnification for losses resulting from the damage allegedly covered by the Plan of Coverage. McAlester Schools sought damages "in an amount in excess of $75,000.00."¹

¶ 4 The OSRMT filed a motion for summary judgment on its declaratory judgment cause of action. OSRMT stated the loss suffered from earth movement, or water under the ground, or "wear and tear" was excluded by the parties' agreement. OSRMT argued these policy exclusions were unambiguous.

¶ 5 McAlester Schools filed a response to the OSRMT's motion combined with a cross-motion for summary judgment. The text of the motion states McAlester Schools is entitled to a summary judgment.

¶ 6 McAlester Schools' response stated a water supply line ruptured under the school and caused "the slab to heave under a jet of high pressure water." The response stated the rupture was a "sudden event," when the water flow was turned off to the school the slab subsided, and "there is no evidence or earth movement." McAlester Schools argued "there is no evidence of any earth movement (naturally occurring, or otherwise) was any cause of the damage." It also argued the earth movement exclusion did not apply because the damage was caused by "jetting water" and not natural earth movement.

¶ 7 McAlester Schools' also argued the policy's water exclusion language did not apply. The response argued the language in the policy did not address "the majority rule" where an exclusion clause for damage or loss resulting from water is understood as applied to naturally occurring water movement and not to water movement caused or resulting from the acts of people.

¶ 8 The OSRMT responded to McAlester Schools' cross-motion for summary judgment. It argued the temporal nature of the loss-creating event as either sudden or gradual has nothing to do with the coverage exclusions at issue. The OSRMT stated "there is indeed, evidence of "earth movement" as the term is used in the Plan of Coverage, and argued the earth movement exclusion "specifically includes within its ambit: ‘... the action of water under the ground surface.’ " The OSRMT argued the earth movement exclusion clause contained an anti-concurrent causation clause, and must be read with other language indicating "the movement of earth caused by ‘the action of water under the ground surface’ is still movement of the earth."

¶ 9 McAlester Schools replied and argued the only issue is "whether the earth movement exclusion (and, to some extent, the water exclusion) apply when the cause of the ‘movement’ (or ‘water’) is man-made as opposed to naturally occurring."

¶ 10 The trial court granted OSRMT's motion for summary judgment. The trial court found "pursuant to the majority teachings of Broom , this Court finds the relevant portions of the plan of coverage are not ambiguous [and] therefore, Plaintiff's Motion for Summary Judgment is granted."² McAlester Schools' motion for summary judgment was denied. McAlester Schools appealed and then sought certiorari review in this Court after the Court of Civil Appeals affirmed the trial court's judgment.

I. Procedural Issue

¶ 11 We must first address what appears to have been decided by the trial court, what appears to have not been decided, and the effect on this Court's review of the summary judgment. OSRMT's motion for summary judgment argued for application of more than one exclusionary clause in the policy. The exclusionary clauses invoked were (1) "earth movement," (2) "water," including "water under the ground" and (3) "wear and tear" which included as a subcategory "rust or corrosion." Broom relied on Powell v. Liberty Mut. Fire Ins. Co. ,³ where a water pipe had broken, and we discussed the relationship of this event to an earth movement exclusion in an insurance policy.⁴ Broom did not address movement of water, or wear and tear, or rust or corrosion as separate exclusions. We did not address what factors make, or do not make, ambiguous policy exclusions other than the particular earth movement exclusion that was before the court. The trial court's journal entry granting summary judgment and expressly relying on Broom appears to grant judgment solely on the earth movement exclusion.

¶ 12 The Court of Civil Appeals stated McAlester Schools' property loss was caused by two factors, water movement and earth movement, and that both were excluded risks in the policy. The appellate court determined "a discussion of the earth movement exclusion is unnecessary" because "attention must be given to the water exclusion provision of the policy." McAlester Schools sought certiorari and argued the earth movement exclusion rationale in Broom applied to a water movement exclusion. OSRMT responded on certiorari and argued the trial court correctly determined that the earth movement exclusion applied. OSRMT also argued the appellate court correctly concluded a water exclusion barred any recovery by McAlester Schools. OSRMT did not raise on certiorari the application of a wear and tear exclusion, or application of the rust or corrosion language which OSRMT did raise in the trial court.

¶ 13 Generally, an appellate court will not make first instance determinations of disputed law or fact issues, and will not affirm a summary judgment based upon facts and legal issues unadjudicated by the trial court when it granted summary judgment.⁵ Although a decree in equity is affirmed if it is sustainable on any rational theory when the ultimate conclusion by the trial court is correct, a party's legal argument on appeal which is not supported with authority supplied by counsel will be deemed waived when a decree is reviewed on appeal.⁶ Fundamental fairness cannot be afforded except within a framework of orderly procedure, and that fairness includes giving notice of certain judicial events altering legally cognizable rights.⁷ If parties invoke a rule or principle of appellate procedure for an appellate court to determine an entire cause of action with its affirmative defenses and compulsory counterclaims on all of the theories raised before the trial court , then the parties must actually present those claims and theories to the appellate court in a judicially cognizable form with supporting authority where all opposing parties possess an opportunity to address them before the court. We decline to hold policy exclusions raised by OSRMT in the trial court are waived due to OSRMT failing to raise them on certiorari with supporting authority supplied by counsel.

¶ 14 When parties submit a case on agreed facts an appellate court may apply the law to those facts as a court of first instance and direct judgment.⁸ However, this procedure is less than ideal for parties if (1) their causes of action were not presented for a complete and final adjudication before either the trial court or the appellate court due to a decision-making procedure used by the trial court or the actions by the parties, or (2) the parties' legal arguments before the trial court are truncated before the appellate court due to either appellate procedure or the actions by the parties. One approach taken herein appears to be that as long as parties agree on facts, but not necessarily consequences flowing from those facts, if a trial court grants a final judgment on one legal theory of recovery, then all legal theories raised in the trial court may be decided by the appellate court regardless of the supporting authority supplied on certiorari or on appeal. McAlester Schools' Answer and Counterclaim sought damages in excess of $ 75,000.00, and its motion for summary judgment in the trial court does not seek a judgment for any money damages, specific or otherwise. A motion for summary judgment is a motion for a judgment on the merits, and a judgment on a party's motion for summary judgment must be based upon the record in support for a judgment for that party's motion and not deficiencies in the opposing party's motion.⁹ The petition in error and certiorari petition do not assign as error the trial court's denial of summary judgment to McAlester Schools. We need not reach the issue of the sufficiency of McAlester Schools' motion for judgment on breach of contract, indemnity, and declaratory judgment causes of action.¹⁰ The issue of McAlester School's quest for summary judgment relief like OSRMT's claims for policy exclusion unresolved by our opinion herein must be decided by the trial court...