Pelkey v. GENERAL ELEC. CAPITAL ASSUR. CO.

• Decision Date: 21 August 2002
• Parties: Jack Dean PELKEY v. GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY.
• Court: Maine Supreme Court

804 A.2d 385

2002 ME 142

Jack Dean PELKEY v. GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY.

Supreme Judicial Court of Maine.

Argued: March 6, 2002.

Reargued: June 12, 2002.

Decided: August 21, 2002.

Arthur J. Greif, Esq. (orally), Julie D. Farr, Esq. (orally), Gilbert & Greif, P.A., Bangor, for plaintiff.

John B. Lucy, Esq. (orally), Richardson, Whitman, Large & Badger, P.C., Bangor, for defendant.

Panel: SAUFLEY, C.J., and CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS, and LEVY, JJ.

ALEXANDER, J.

[¶ 1] Jack Dean Pelkey appeals from the grant of a summary judgment entered in the Superior Court (Penobscot County, Mead, J.) in favor of General Electric Capital Assurance Company. Pelkey contends that the court erred in construing his insurance contract with General Electric Capital Assurance to exclude coverage for the accidental loss of his leg because his pre-existing condition contributed to the loss. Because the policy is ambiguous on the impact of pre-existing conditions, we vacate the judgment.

I. CASE HISTORY

[¶ 2] The case history is developed from the parties' jointly stipulated facts and a copy of Pelkey's original insurance contract.

[¶ 3] In 1986, Jack Pelkey obtained an accident insurance policy issued by AMEX Life Assurance Company. The policy was procured through Pelkey's credit union, with premiums to be deducted from his account. The coverage clause of the policy provided that:

"Injury" means bodily injury of an Insured Person which: (1) is caused by an accident that occurs while the policy is in force as to the Insured Person; (2) results directly in loss insured by the Policy; (3) creates a loss due, directly and independently of all other causes, to such accidental injury; and (4) occurs in the manner and under the circumstances described in the Descriptions of Hazards which apply.

[¶ 4] The policy also contained an exclusions clause that excluded from coverage losses caused by: (1) being under the influence of alcohol, drugs, or sedatives; (2) committing or attempting to commit illegal acts; or (3) suicide, war, or riding in an aircraft, except as a passenger. The policy contained no exclusions for pre-existing diseases or conditions.

[¶ 5] The policy continued in effect at all times relevant to this case. At some time General Electric Capital Assurance Company became the insurer for the policy.

[¶ 6] In April of 1998, Pelkey suffered an accidental fall resulting in an infection in his left knee. The infection did not respond to multiple treatments. Pelkey's condition worsened and eventually led to the amputation of his left leg below the knee.

[¶ 7] Prior to and during this incident, Pelkey suffered from and received treatment for pre-existing medical conditions, including diabetes and severe peripheral vascular leg disease. Before his accident, Pelkey had undergone a surgical bypass graft in his left leg, which provided the only means of circulation in that leg. The parties stipulated that Pelkey's pre-existing diabetes, peripheral vascular disease, and impaired circulation in his left leg, together with his fall on April 18, 1998, were substantial contributing factors to his development of infection, septic arthritis, and osteomyelitis, and the eventual amputation. The parties also stipulated that Pelkey's fall would not have resulted in the osteomyelitis and the need for amputation but for the contribution of the pre-existing diabetes and vascular disease, and the already precarious circulation in his left leg.

[¶ 8] General Electric determined that the fall was not the sole cause of the amputation and refused to pay pursuant to the policy. Pelkey filed a complaint in the Superior Court alleging breach of contract and unfair claims practices.¹ Following discovery, both parties submitted simultaneous motions for summary judgment based on the joint stipulation of the facts. The court concluded that Pelkey's injury was excluded from the scope of his insurance contract with General Electric and entered a summary judgment in favor of General Electric because the loss did not result, "directly and independently of all other causes," from his accidental fall. Pelkey appeals.

II. DISCUSSION

[¶ 9] There appears to be no dispute that the first, second, and fourth elements of the insurance contract's definition of injury are present in this case. Pelkey contends that coverage of his accidental loss is not excluded by the third element of the injury definition, which requires that the injury "creates a loss due, directly and independently of all other causes, to such accidental injury." He argues that a pre-existing medical condition is not a "cause" within the meaning of the policy and that, because the policy contains no separate "disease exclusion" for pre-existing medical conditions, the loss of his leg is compensable under the contract.

[¶ 10] In reviewing the grant of a summary judgment, we take the evidence in the light most favorable to Pelkey to determine if the court committed any errors of law in the interpretation of his insurance policy. See Acadia Ins. Co. v. Mascis, 2001 ME 101, ¶ 9, 776 A.2d 617, 620

. The interpretation of an insurance contract is a matter of law that we review de novo. Id. Insurance contract language is ambiguous if it is reasonably susceptible of different interpretations or if any ordinary person in the shoes of the insured would not understand that the policy did not cover claims such as those brought. Hall v. Acadia Ins. Co., 2002 ME 110, ¶ 6, 801 A.2d 993, 995; Geyerhahn v. United States Fid. & Guar. Co., 1999 ME 40, ¶ 12, 724 A.2d 1258, 1261. Any ambiguity in an insurance contract is construed "strictly against the insurer and liberally in favor of the insured." Mascis, 2001 ME 101, ¶ 9,

776 A.2d at 620 (quoting Ray v. Blue Alliance Mut. Ins. Co., 594 A.2d 1110, 1111 (Me.1991)). It is Pelkey's burden, however, to show that his injury falls within the scope of the contract. See Bouchard v. Prudential Ins. Co. of Am., 135 Me. 238, 239, 194 A. 405, 406 (1937).

[¶ 11] We addressed a similar question in Bouchard v. Prudential Insurance Co. of America. Id. In that case, a restaurant owner died soon after engaging in a physical altercation to remove an unruly patron. Id. at 239, 194 A. at 406. He was covered by an accidental death insurance policy that provided for payment if "the death of the insured occurred ... as a result, directly and independently of all other causes, of bodily injuries ...." Id. (internal quotation marks omitted). Expert testimony revealed that the decedent also had advanced arteriosclerosis, and that his death was brought about by the exertion of the altercation in combination with his already weakened heart condition. Id. at 240, 194 A. at 406-07.

[¶ 12] In Bouchard, as here, the insured was covered by an accidental loss insurance policy. Id. at 239, 194 A. at 406. In Bouchard, as here, the insurance policy included other specific cause exclusions that would be unnecessary if the policy actually excluded coverage for all other causes of a loss. In Bouchard, as here, the accidental event combined with the insured's pre-existing disease to cause the loss. But in Bouchard, unlike this case, the policy contained a specific disease exclusion barring recovery if the loss resulted "directly or indirectly from bodily or mental infirmity or disease in any form." Id. That disease exclusion made our resolution of Bouchard rather simple. Because the death resulted "indirectly from bodily ... infirmity or disease," coverage was excluded. Id.

[¶ 13] In justifying its result, the Bouchard opinion includes, as dictum, some broader language that General Electric argues justifies exclusion of coverage. The dictum in Bouchard indicates that:

(1) When an accident caused a diseased condition, which together with the accident resulted in the injury or death complained of, the accident alone is to be considered the cause of the injury or death.

(2) When at the time of the accident the insured was suffering from some disease, but the disease had no causal connection with the injury or death resulting from the accident, the accident is to be considered as the sole cause.

(3) When at the time of the accident there was an existing disease, which, cooperating with the accident, resulted in the injury or death, the accident can not be considered as the sole cause or as the cause independent of all other causes.

Id. at 243, 194 A. at 408 (internal quotation marks omitted).

[¶ 14] The interpretation urged by General Electric would treat the explicit disease exclusion in Bouchard as surplusage. However, the dictum in Bouchard is appropriately viewed as supporting the lack of coverage based on the disease exclusion, rather than writing the disease exclusion out of the policy.

[¶ 15] The law was the same in 1937 as it is now. Where possible, we construe a contract to give force and effect to all of its provisions, and we avoid an interpretation that renders meaningless any particular provision of the contract. Acadia Ins. Co. v. Buck Constr. Co., 2000 ME 154, ¶ 9, 756 A.2d 515, 517; see also Blackard v. Nat'l Biscuit Co., 125 Me. 201, 202-03, 132 A. 386, 387 (1926). The disease exclusion in Bouchard had meaning to exclude coverage for a loss that was caused in part by a disease or physical condition, where, absent the condition, the loss would be covered under the policy. The intoxication and crime exclusions here must have been intended to have similar effect by the drafters of General Electric's policy.

[¶ 16] With the law in Maine established, since 1937, that an explicit disease exclusion will work to exclude coverage where a disease and an accident combine to produce a loss, a policy that does not include such an exclusion is certainly ambiguous on the issue of whether coverage may be excluded if an accidental event combines with the effects of a disease to produce a loss.²

[¶ 17] Today more than ever, we recognize that losses resulting from...