Reynolds v. Shelter Mut. Ins. Co.

• Decision Date: 10 May 1993
• Docket Number: No. 92-1266,92-1266
• Parties: Doyle REYNOLDS and Alma Lou Reynolds, Appellants, v. SHELTER MUTUAL INSURANCE COMPANY and Wayne Scoggins, Appellees.
• Court: Arkansas Supreme Court

Page 799

852 S.W.2d 799

313 Ark. 145

Doyle REYNOLDS and Alma Lou Reynolds, Appellants, v. SHELTER MUTUAL INSURANCE COMPANY and Wayne Scoggins, Appellees.

No. 92-1266.

Supreme Court of Arkansas.

May 10, 1993.

Holly Smith, Lewis Jones, Fayetteville, for appellants.

James M. Roy, Jr., Springdale, for Shelter Mut. Ins. Co.

Stephen M. Schwartz, Springdale, for Wayne Scroggins.

CORBIN, Justice.

This appeal originated as a suit by the insureds against their insurer. Appellants, Doyle and Alma Lou Reynolds, purchased farmerowners insurance for their poultry farm from appellee Wayne Scoggins, who is an agent for appellee Shelter Mutual Insurance Company. A severe winter storm caused damage to four structures and their contents on appellants' farm. Appellants reported the damages to Shelter and Shelter refused to pay the claim stating that appellants' policy did not include "collapse coverage" or coverage for damages caused by the weight of ice or snow. Appellants sued Shelter and Scoggins alleging, inter alia, bad faith, breach of contract, negligence, and misrepresentation. The trial court entered partial summary judgment on the claim for bad faith and punitive damages. The trial court directed a verdict for appellee Scoggins on the claim for misrepresentation. A jury rendered verdicts in favor of Shelter and Scoggins on the other claims. Appellants appeal both the granting of partial summary judgment and the judgment entered pursuant to the jury's verdicts. We have jurisdiction of the appeal as it involves questions in the law of torts. Ark.Sup.Ct.R. 1-2(a)(16) (In re Rules of the Arkansas Supreme Court and the Arkansas Court of Appeals, 311 Ark.App'x (Feb. 1, 1993)). Appellants assert four arguments for reversal of the judgments appealed. We find no merit to the arguments and therefore affirm.

First, appellants claim the trial court erred in granting partial summary judgment on the claim for bad faith. They claim the record before the trial court showed there were genuine issues of material fact as to whether Shelter engaged in conduct sufficient to support a claim for bad faith.

On appellate review, we need only decide if the granting of summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of the motion left a material question of fact unanswered. Harvison v. Charles E. Davis & Assoc., 310 Ark. 104, 835 S.W.2d 284 (1992). The burden of sustaining a motion for summary judgment is always the responsibility of the moving party. Id. However, once the movant makes a prima facie showing of entitlement to summary judgment, the respondent must meet that proof with proof that a genuine issue of material fact exists. Bushong v. Garman Co., 311 Ark. 228, 843 S.W.2d 807 (1992). All proof submitted must be viewed in a light most favorable to the party resisting the motion and any doubts and inferences must be resolved against the moving party. Harvison, 310 Ark. 104, 835 S.W.2d 284.

The tort of bad faith is an extension of the well-established rule by which an insurance company may be held liable for its failure to settle a claim within policy limits. Members Mut. Ins. Co. v. Blissett, 254 Ark. 211, 492 S.W.2d 429 (1973). The tort of bad faith requires affirmative misconduct, without a good faith defense; the affirmative misconduct must be dishonest, malicious, or oppressive in an attempt to avoid the insurer's liability under an insurance policy. Findley v. Time Ins. Co., 264 Ark. 647, 573 S.W.2d 908 (1978). The mere failure to investigate a claim is not the sort of affirmative misconduct that gives rise to a cause of action in tort for bad faith. Id. In granting Shelter's motion for summary judgment, the trial court observed that the only argument appellants made concerning bad faith was Shelter's failure to adequately investigate their claim. The trial court concluded that such conduct did not give rise to a cause of action for bad faith according to Findley. We agree with this finding.

Appellants did respond to the motion for summary judgment with affidavits and depositions. However, none of the evidentiary items presented to the trial court--pleadings, depositions, answers to interrogatories, and affidavits--indicate that Shelter engaged in affirmative conduct that was malicious, dishonest, or oppressive in order to avoid paying appellants' claim. Even in resolving all inferences to be drawn from the evidence in favor of appellants, the evidence shows nothing other than Shelter delayed investigating appellants' claim for three months because the claim was initially reported as being caused by something for which appellants did not have coverage--the collapse of a roof due to the weight of accumulated ice and snow. It was only after appellants' attorney wrote a letter to Shelter requesting an investigation and suggesting that the damage could have been caused by something other than the weight of ice and snow that Shelter investigated the claim. We agree with the trial court that such conduct in waiting to investigate a claim is not the sort of malicious affirmative misconduct that gives rise to a cause of action in tort for bad faith. Despite appellants' claim that Shelter acted with bad faith or ill will, there is simply no evidence of any such ill will on Shelter's part. Without any evidence of malice or ill will on the part of the insurer, the failure to investigate a claim resulting from a reasonable belief that the damages reported are not covered under the policy does not amount to the tort of bad faith. See Findley, 264 Ark. 647, 573 S.W.2d 908.

Shelter met its burden of establishing a lack of a genuine issue of material fact and entitlement to judgment as a matter of law. Appellants did not meet this proof with proof that a genuine issue of material fact exists as to the claim for bad faith. Appellants simply failed to offer any proof that appellants acted maliciously, dishonestly, or oppressively. Therefore, we cannot say the trial court erred in granting summary judgment.

We reject appellants' argument that the rule requiring affirmative misconduct to support a claim for bad faith encourages inaction on the part of insurers. To the contrary, the rule as stated in Findley, provides yet another remedy in tort for an insured who feels his claim has not been adequately investigated by his insurer. Although an insurer's actions, or inaction as the case may be, may not amount to a claim for bad faith, those same actions or inactions may support a claim in contract for non- performance (breach of contract) or a claim in tort for defective performance (negligence). See Findley, 264 Ark. 647, 573 S.W.2d 908.

Second, appellants claim the trial court erred in ruling the insurance policy was not ambiguous. On appeal, appellants argue the policy's provision for loss due to windstorm is ambiguous in two respects, and therefore should be construed strictly against the insurer. The part of the policy in question states as follows:

PERILS WE INSURE AGAINST--SECTION 1

....

We cover direct loss to property insured under Coverage C, Farm Personal Property and Farm Structures caused by perils 1 thru 11 unless the loss is excluded elsewhere under this policy:

1. Fire or Lightning.

2. Windstorm or Hail.

This does not include loss:

(a) property in a building, caused by rain, snow, sand, sleet or dust unless the building is first damaged by the direct force of wind or hail, creating an opening through which the rain, snow, sand, sleet or dust enters[.]

On appeal, appellants claim the foregoing windstorm provision of the policy is ambiguous because it is not clear as to coverage when wind, snow, and hail combine to create a loss and because the exclusionary clause refers only to "property in a building." [Emphasis added.]

We do not address the merits of this argument because it is not preserved for our review. Although appellants did raise a general objection to the ambiguity of the windstorm and hail provision to the trial court, they did not raise it in either of the two specific ways argued in this court. At trial, appellants claimed that if Shelter intended to exclude from coverage damages that are clearly included under the windstorm and hail provision, it was required to express that exclusion in clear and unmistakable language. The trial court agreed that if there was an ambiguity, the policy should be construed against Shelter as the party who drafted the policy, and asked appellants exactly what language they thought was ambiguous. Appellants did not respond with a specific answer to the trial court's question. Instead, they merely reiterated their claim that the language "windstorm and hail" would commonly mean to anyone that his property would be covered in a storm and that Shelter could have easily excluded collapse...