Purdy v. Farmers Ins. Co. of Idaho
| Decision Date | 24 January 2003 |
| Docket Number | No. 28023.,28023. |
| Citation | 65 P.3d 184,138 Idaho 443 |
| Parties | Beth PURDY and Curtis Purdy, Plaintiffs-Appellants, v. FARMERS INSURANCE COMPANY OF IDAHO, Defendant-Respondent. |
| Court | Idaho Supreme Court |
Belodoff Law Office, Boise, for appellants. Howard A. Belodoff argued.
Gjording & Fouser, Boise, for respondent. Bobbi K. Dominick argued.
This is an appeal from the judgment of the district court dismissing a bad faith claim against Farmers Insurance Company of Idaho. Because there was no coverage under the insurance policy, we affirm the judgment.
Farmers Insurance Company of Idaho (Farmers Insurance) issued a policy of car insurance to Curtis Purdy under which both he and his wife Beth were insureds. On August 23, 1997, during the term of the policy, Beth Purdy was severely injured while she was a passenger in a car owned and operated by her mother. While stopped because of a horse on the highway, the car was struck in the rear by a truck. The driver of the truck was covered by liability insurance with policy limits of $25,000 per person and $50,000 per occurrence. Farmers Alliance Mutual Insurance Company (Farmers Alliance) insured Beth's mother's car under a policy that provided underinsured motorist (UIM) coverage to Beth as a passenger in the car.
The Farmers Insurance policy also included UIM coverage. On June 29, 1999, the Purdys submitted a proof of loss to Farmers Insurance. The other-insurance clause in the UIM endorsement to the Farmers Insurance policy included a provision stating, "We will not provide insurance for a vehicle other than your insured car or your insured motorcycle, unless the owner of that vehicle has no other insurance applicable to this part." (Emphasis in original.) Therefore, Farmers Insurance initially denied payment because Beth's mother, the owner of the vehicle in which Beth was riding, had UIM coverage that covered Beth as a passenger in that vehicle.
On October 22, 1999, the Purdys settled their claim against the driver of the truck. They received $17,500; Beth Purdy's mother received $25,000; and other claimants received $7,500. Farmers Alliance then paid the Purdys the $25,000 limits of the UIM coverage under its policy.
On March 2, 2000, the Purdys filed this action against Farmers Insurance seeking to recover for breach of contract and bad faith. Thereafter, Farmers Insurance paid the Purdys $100,000, which were the limits of UIM coverage under its policy.
On August 2, 2001, Farmers Insurance filed a motion for summary judgment contending that there was no factual basis for the bad faith claim because there was no coverage or, if there was, the issue of coverage was fairly debatable. After a hearing, the district court agreed and granted the motion. On November 15, 2001, the district court entered judgment dismissing the complaint with prejudice, and the Purdys timely appealed.
A. Did the district court err in holding that the Farmers Insurance policy was not ambiguous and that there was no coverage under the insurance policy?
B. Is Farmers Insurance collaterally estopped by appellate decisions in other states from arguing that there was no coverage under the insurance policy?
C. Was there a conflict between the other-insurances clauses in the Farmers Insurance and Farmers Alliance policies so that both clauses are void and unenforceable?
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.
A. Did the District Court Err in Holding that the Farmers Insurance Policy Was Not Ambiguous and that There Was No Coverage under the Insurance Policy?
Whether an insurance policy is ambiguous is a question of law over which this Court exercises free review. Erland v. Nationwide Ins. Co., 136 Idaho 131, 30 P.3d 286 (2001). A policy provision is ambiguous if it is reasonably subject to differing interpretations. Moss v. Mid-Am. Fire and Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982). When deciding whether or not a particular provision is ambiguous, we must consider the provision within the context in which it occurs in the policy. North Pac. Ins. Co. v. Mai, 130 Idaho 251, 939 P.2d 570 (1997).
The main policy provided that UIM coverage only applied if an insured was occupying a vehicle insured under the policy. The relevant policy provisions are as follows:
The UIM provisions of the main policy were modified by an endorsement, the relevant portions of which provide as follows:
4. We will not provide insurance for a vehicle other than your insured car or your insured motorcycle, unless the owner of that vehicle has no other insurance applicable to this part.
The Purdys claim that paragraph 4 (Paragraph 4) of the above-quoted "Other Insurance" provision is ambiguous. They argue that the phrase "We will not provide insurance for a vehicle other than your insured car" is ambiguous because UIM coverage protects persons, not vehicles.
Because UIM coverage only provides bodily injury coverage, Paragraph 4 obviously does not refer to property damage coverage for the vehicle. Farmers Insurance contends that, in context, Paragraph 4 means that there is no UIM coverage if the Purdys were injured while in a vehicle other than one insured under the policy, unless that vehicle was not covered by UIM coverage. Although the Purdys acknowledge that interpretation, they do not offer an alternative. They simply argue that the words are ambiguous and therefore the provision does not apply.
A policy provision is ambiguous if it is reasonably subject to differing interpretations. Moss v. Mid-Am. Fire and Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982). It is not ambiguous merely because it is poorly worded if the meaning is otherwise clear when read in context. Likewise, it is not ambiguous merely because a reader may have to stop and think about what it means. Throughout their arguments, the Purdys assume that if the language of a provision is poorly written, then they are entitled to coverage. This issue, however, is not whether the policy provision could have been written more clearly. The issue is whether it is ambiguous. The interpretation offered by Farmers Insurance is reasonable. Absent a reasonable alternative interpretation, the provision is not ambiguous.1
The Purdys next argue that the phrase "We will not provide insurance for a vehicle other than your insured car" cannot mean that they did not have UIM coverage if injured in a vehicle they did not own. They argue that the policy contains exclusions expressly denying coverage if they are injured while occupying a car they do not own. Those exclusions are as follows:
a. While occupying any vehicle owned by you or a family member for which insurance is not afforded under this policy or through being struck by that vehicle.
....
c. While occupying your insured car when used to carry persons or property for a charge. This exclusion does not apply to shared-expense car pools.
d. If the injured person was occupying a vehicle you do not own which is insured for this coverage under another policy.2 (Emphasis in original.)
According to the Purdys, interpreting Paragraph 4 as suggested by Farmers Insurance would make it redundant because the exclusions address the situation in which the Purdys were injured while occupying a vehicle they do not own. Although redundancy may be considered...
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