Porter v. Shelter Mut. Ins. Co.
| Decision Date | 16 October 2007 |
| Docket Number | No. WD 65963.,WD 65963. |
| Citation | 242 S.W.3d 385 |
| Parties | Verdell PORTER, et al, Appellants, v. SHELTER MUTUAL INSURANCE COMPANY, Respondent. |
| Court | Missouri Court of Appeals |
Michael Pivac, Thomas Hearne, Springfield, David Lloyd Steelman, Rolla, for Appellant.
James Kent Lowry, Matthew D. Turner, Jefferson City, for Respondent.
Four "Policyholders"1 appeal from a judgment on the pleadings in favor of Shelter Mutual Insurance Company ("Shelter") on their action for declaratory judgment seeking a determination that Shelter is not entitled to withhold payment of the full cost of repair or replacement of partial property damage until repairs had been made or the property replaced. Stated another way, Policyholders contend that under their policies Shelter was not entitled to deduct depreciation in calculating their loss payments under their "replacement coverage policy."
Each of the policyholders sustained partial losses to their dwelling or other structure covered by their policies. Two sustained fire losses and the other two sustained storm damage. Neither the policyholders nor Shelter claim that the difference in covered risks affects the issues or interpretation of the policies except for one additional argument concerning the two fire losses.
Shelter investigated the losses and determined the estimated cost to repair the damage. It then deducted an amount it calculated to be depreciation and paid the balance to Policyholders. Shelter characterized this net sum as "actual cash value," a term not defined by the policy.2 Because Shelter refused to pay the full cost to repair until repairs were actually completed the Policyholders filed this suit seeking to have their identical policies construed and Shelter to be ordered to pay the full cost to repair regardless of whether the repairs were completed (i.e., without deduction for depreciation). On Shelter's Motion for Judgment on the Pleadings, the court made extensive findings and entered judgment against Policyholders, who now appeal. That judgment is affirmed.
On appeal from the grant of a motion for judgment on the pleadings, "we review the allegations of Appellants' petition to determine whether the facts pleaded therein are insufficient as a matter of law." State ex rel. Nixon v. Am. Tobacco Co., 34 S.W.3d 122, 134 (Mo. banc 2000). "The party moving for judgment on the pleadings admits, for purposes of the motion, the truth of all well pleaded facts in the opposing party's pleadings." Id. (quotation omitted). If the pleadings from their face demonstrate that the moving party is entitled to judgment as a matter, of law, then the trial court is justified in granting a motion for judgment on the pleadings. Id.
Because we are reviewing the meaning of insurance policy language, our review is de novo and, accordingly, we "need not give deference to the trial court's interpretation." Reese v. U.S. Fire Ins. Co., 173 S.W.3d 287, 297 (Mo.App. W.D.2005) (per curiam) (quoting Nat'l Union Fire Ins. Co. v. City of St. Louis, 947 S.W.2d 505, 506 (Mo.App. E.D.1997)). "The language used in an insurance policy is to be given its plain meaning." Farm Bureau Town & Country Ins. Co. of Mo. v. Barker, 150 S.W.3d 103, 105 (Mo.App. W.D.2004). Additionally, "[t]he plain meaning of the words and phrases used in an insurance policy is not determined in isolation, but with reference to the context of the policy as a whole." Id. at 105-06.
The relevant portions of the policies are contained in "Conditions-Section 1, 2 How Losses Are Settled." This section is divided into four (a, b, c, & d) subsections. Only subsections (b) and (d) are relevant here.3 Subsection 2(b) provides for full or partial loss payments generally for damages to "Dwelling and Other Structures" and subsection 2(d) deals with a Missouri only provision concerning partial damage caused by fire. The principal dispute herein centers on the interpretation and interrelationship of various provisions of subsection 2(b) and particularly subsections 2(b)(2), (4), (5), and (6).
Shelter's insurance policy provides that the method of settlement depends upon "how the amount of insurance relates to the full replacement cost." The policy makes a distinction based on whether or not the affected property is underinsured. If the amount of insurance provided by the policy is less than 80% of the full replacement cost, the policyholder becomes a coinsurer of part of the loss. All partied agree that the amount of insurance of each policyholder was at least 80% of the full replacement cost. Under such circumstances, subsection 2(b)(2) of the policy states that Shelter "will pay the full cost to repair or replace the damaged part of the dwelling or other structure without deduction for depreciation." This section is qualified, however, by subsection 4(iii) which states that Shelter will pay no more than "the amount actually spent for necessary repair or replacement of the damaged dwelling or other structure." There are two other provisions of this section of the policy about which the parties disagree as to both applicability and/or meaning.
Subsection (b)(5) deals with costs to repair or replace of more than either $1000 or 5% of the insurance on the property. That subsection provides: "we will not be liable for full replacement cost until actual repair or replacement is completed." (Emphasis added.) Policyholders contend that this provision covers only non-fire losses and does not apply to partial losses. If correct, these provisions would have no effect on the policy claims brought by the two policyholders claiming partial fire losses.4
Finally the parties cite to subsection 2(d) (a Missouri only provision) and disagree on whether the main policy term or a provision contained in an amendatory endorsement applies. The main policy provision states:
In the event of partial damage to insured property caused by the peril of fire, we will, at your option, pay you up to the limit of liability that applies to the property, the repair cost of the damage or repair the damage so that the property will be in as good condition as before the fire.
The amendatory endorsement provides (in relevant part):
In the event of partial damage to your insured property caused by the peril of fire, we will, at your option;
(1) Pay you a sum of money equal to the damage to the property incurred to the property (damage means the difference between the actual cash value of the property immediately before and immediately after the fire); or
(2) Repair the damage so that the property will be in as good of condition as before the fire.
Payment will not exceed the limits of liability which apply to the property. You must notify us in writing of your option when you submit your proof of loss.
Finally, subsection 2(b)(7) provides:
You may disregard these replacement cost loss settlement provisions when making a claim. If you do you may make further claim within 180 days after the loss for any additional loss you incur in replacing the damaged property.
In Point one, Policyholders contend that the trial court erroneously interpreted the law because the policies neither require nor permit payment of actual cash value. We interpret, as does Shelter, this point to argue that the only provisions of the policy applicable to partial losses, such as those of Policyholders, provide for payment of cost to repair or replace without deduction for depreciation. Closely related is Point Two, which contends the court again erroneously interpreted the policies because the policies do not condition payment of full cost to repair or replace damage on actual repair or replacement. In essence this argument has three parts: (1) that Shelter chose to omit any reference to actual cash value payments from the provisions governing their losses (where the insurance exceeds 80% of value and loss exceeds $1000 or 5%) whereas actual cash value payment is expressly provided for in the sections dealing with personal property and where the coinsurance clause applies; (2) that section 2(b)(7) is ambiguous in not specifying what payment is to be made if the insured elects to disregard the loss payment provisions and therefore should be construed against Shelter; and (3) that contrary to what the trial court found, 20 CSR 500-1.100 does not "supplement" the policy language by requiring payment of actual cash value as a minimum benefit of the policy.
Point three deals with only the Beth and Cano partial fire losses and contends that the trial court erroneously interpreted the policies because the "Missouri only" provision of 2(d) is not subject to the limitations of 2(b)(5) () both under principles of policy interpretation and because section 379.150 prohibits any such condition.
Finally, Point four contends that judgment on the pleadings was inappropriate, because the policy was ambiguous in that Policyholders presented evidence that Shelter's practical construction of the policy and other factors, including its claim adjusting practices, were contrary to the trial court's construction of the policy. We need reach this point only if we determine that the policy language is, in fact, ambiguous.
In their first point, all Policyholders argue that cost of repair or replacement is the only damage calculation method set forth in the policy for partial storm or fire. loss damages. Thus they argue that the trial court erred in finding that the policy permits Shelter to pay actual cash value as damages for these partial losses. Shelter responds essentially that its policy has a clause amending it to conform to Missouri law and that 20 C.S.R. 500.1.100...
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