Potlatch Grain and Seed v. MILLERS MUTUAL FIRE INSURANCE COMPANY

• Citation: 57 P.3d 765,138 Idaho 54
• Decision Date: 23 October 2002
• Docket Number: No. 28129.,28129.
• Parties: POTLATCH GRAIN AND SEED, an Idaho Corporation, Plaintiff-Appellant, v. MILLERS MUTUAL FIRE INSURANCE COMPANY, Defendant-Respondent.
• Court: United States State Supreme Court of Idaho

57 P.3d 765

138 Idaho 54

POTLATCH GRAIN AND SEED, an Idaho Corporation, Plaintiff-Appellant, v. MILLERS MUTUAL FIRE INSURANCE COMPANY, Defendant-Respondent.

No. 28129.

Supreme Court of Idaho, Lewiston, October 2002 Term.

October 23, 2002.

Mark S. Moorer, Moscow, for appellant.

Etter, McMahon, Lamberson & Clary, P.C., Spokane, Washington, for respondent. Stephen M. Lamberson argued.

EISMANN, Justice.

We affirm the district court's grant of summary judgment dismissing the complaint on the ground that the insurance policy issued by respondent had expired prior to appellant's loss.

I. FACTS AND PROCEDURAL HISTORY

Beginning in the early 1990's, the appellant Potlatch Grain and Seed (Potlatch Grain) purchased annual policies of property and casualty insurance from the respondent Millers Mutual Fire Insurance Company (Millers). In July 1997, Potlatch Grain renewed its insurance policy with Millers for a one-year term ending July 29, 1998. Millers renewed that policy through Millers' agent McDonald Insurance. Sometime prior to January 6, 1998, Millers terminated its agency relationship with McDonald Insurance. On July 16, 1998, McDonald Insurance sent a letter to Potlatch Grain informing it that its Millers insurance policy would expire on July 29, 1998; that McDonald Insurance was no longer an agent for Millers; and that Potlatch Grain may desire to find a Millers agent closer to Potlatch Grain.¹ There is nothing in the record indicating that Millers authorized McDonald Insurance to send that letter.

In April 1998, Potlatch Grain authorized its local agent Guilfoy Insurance to shop for property and casualty insurance to cover the same property insured under the Millers policy. In early July, Potlatch Grain received a bid from Guilfoy Insurance for a policy of property and casualty insurance from American West Insurance (American West). On July 14, 1998, Potlatch Grain authorized Guilfoy Insurance to purchase coverage through American West, which Guilfoy Insurance did. The American West policy provided the same coverage as the Millers policy and commenced on July 29, 1998, the day the Millers policy expired.

On August 5, 1998, Potlatch Grain had a fire in its crib warehouse and storage tanks. Potlatch Grain initially thought that the American West policy might not be in force because it had not yet negotiated payment terms with American West. Potlatch Grain submitted a proof of loss to American West, and it paid its policy limits. Potlatch Grain also submitted a proof of loss to Millers, along with a check in the amount of the prior year's premium payment. Millers denied coverage and returned the check along with a letter stating that the Millers policy had expired. On December 21, 2000, Potlatch Grain filed this action seeking to recover on the Millers policy.

The parties both filed motions for summary judgment, which were heard on October 29, 2001. On December 21, 2001, the district judge entered an order granting Millers' motion for summary judgment and a judgment dismissing the complaint. Potlatch Grain then appealed.

II. ISSUES ON APPEAL

A. Did the district court err in granting summary judgment holding that the policy of property and casualty insurance from Millers Mutual Fire Insurance Company terminated on July 29, 1998?

B. Is Millers Mutual Fire Insurance Company entitled to an award of attorney fees under Idaho Code § 12-121?

III. ANALYSIS

A. Did the District Court Err in Granting Summary Judgment Holding that the Policy of Property and Casualty Insurance from Millers Mutual Fire Insurance Company Terminated on July 29, 1998?

In an appeal from an order of summary judgment, this Court's standard of review is the same as the standard used by the trial court in ruling on a motion for summary judgment. Infanger v. City of Salmon, 137 Idaho 45, 44 P.3d 1100 (2002). All disputed facts are to be construed liberally in favor of the non-moving party, and all reasonable inferences that can be drawn from the record are to be drawn in favor of the non-moving party. Id. Summary judgment is appropriate if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Id. If the evidence reveals no disputed issues of material fact, then only a question of law remains, over which this Court exercises free review. Id. The parties' arguments center upon the meanings of Idaho Code § 41-1842(4) and a similar policy provision. Idaho Code § 41-1842(4) provides:

(4) Notice of nonrenewal.

(a) An insurer may decline to renew a policy if the insurer delivers or mails to the first-named insured, at the last known mailing address, written notice that the insurer will not renew the policy. Such notice shall be mailed or delivered at least forty-five (45) days before the expiration date. If the notice is mailed less than forty-five (45) days before expiration, coverage shall remain in effect until forty-five (45) days after notice is mailed or delivered. Earned premium for any period of coverage that extends beyond the expiration date shall be considered pro rata based upon the previous year's rate. For purposes of this section, the transfer of a policyholder between companies within the same insurance group is not a nonrenewal or a refusal to renew. In addition, changes in deductibles, changes in premium, and changes in the amount of insurance or reductions in policy limits or coverage shall not be deemed to be nonrenewals or refusals to renew. Notice of nonrenewal is not required if:

(i) The insurer or a company within the same insurance group has offered to issue a renewal policy; or

(ii) Where the named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage.

(b) If an insurer provides the notice described in subsection (4) of this section and thereafter the insurer extends the policy for ninety (90) days or less, an additional notice of nonrenewal is not required with respect to the extension.

The policy included an endorsement applicable to Idaho. That endorsement contained the following provision:

G. Nonrenewal.

1. If we elect not to renew this policy, we will mail or deliver to the first Named Insured shown in the Declarations, a written notice of intention not to renew at least 45 days prior to the expiration or anniversary date of the policy.

2. We will mail or deliver our notice to the first Named Insured's last mailing address known to us.

3. If notice is not mailed or delivered at least 45 days before the expiration or anniversary date of this policy, this policy will remain in effect until 45 days after notice is mailed or delivered. Earned premium for the extended period of coverage will be calculated pro rata at the rates applicable to the expiring policy.

4. We need not mail or deliver this notice if:

a. We have offered to renew this policy;

b. You have obtained replacement coverage; or

c. You have agreed in writing to obtain replacement coverage.

5. If notice is mailed, proof of mailing will be sufficient proof of notice.

Potlatch Grain argues that the letter sent to it by McDonald Insurance on July 16, 1998, was a notice of nonrenewal from Millers and that because the letter was mailed less than forty-five days before the policy's expiration date, the policy remained in effect for forty-five days after the notice was mailed. The policy was therefore in effect when the fire occurred. Millers contends that the letter from McDonald Insurance was not a notice of nonrenewal from Millers because McDonald Insurance was no longer its agent and was not authorized by it to send the letter. Millers also asserts that because Potlatch Grain obtained replacement coverage before the loss, it was not required to send any notice. Potlatch Grain counters by arguing that whether or not the insurance it purchased from American West was replacement coverage or additional coverage is an issue of fact that must be resolved by the jury. Potlatch also argues that the statutory and policy provisions stating that the insurer need not give notice of nonrenewal if the insured has obtained replacement coverage should not apply in this case because Millers did not know whether or not Potlatch Grain had obtained replacement coverage. The interpretation of a statute is a question of law over which this Court exercises free review. State v. Hart, 135 Idaho 827, 25 P.3d 850 (2001). If the language of the statute is clear and unambiguous, we will not consider the legislative history or other extrinsic evidence offered for the purpose of altering the clearly expressed intent of the legislature. Id. When interpreting the statute, we must give the words used their plain, usual, and ordinary meaning, and we must construe the statute as a whole. Id. Similarly, whether or not an insurance contract is ambiguous is a question of law over which this Court exercises free review. Mutual of Enumclaw Life Ins. Co. v. Lincoln, 131 Idaho 454, 958 P.2d 1140 (1997). A contract is ambiguous if it is reasonably subject to conflicting interpretations. Id. If the language of the contract is not ambiguous, coverage must be determined in accordance with the plain meaning of the words used.

In this case, Millers did not give notice of nonrenewal to Potlatch Grain. The only notice sent to Potlatch Grain regarding the expiration of the Millers policy was the letter sent by McDonald Insurance on July 16, 1998. There is nothing in the record indicating that McDonald Insurance was acting as an agent for Millers when it sent that letter. Indeed, in the letter McDonald Insurance stated, "We no longer represent Millers and perhaps you will be able to find a[sic] agent representing Millers closer to you and sign a broker letter."

Idaho Code § 41-1842(4)(a) provides, "Notice of nonrenewal is not required if: . . . Where the named insured has obtained...