Sawyer v. Farm Bureau Mut. Ins. Co.

Citation619 N.W.2d 644,2000 SD 144
Decision Date21 November 2000
Docket Number No. 21296., No. 21267
CourtSupreme Court of South Dakota
PartiesShon SAWYER, Plaintiff and Appellee, v. FARM BUREAU MUTUAL INSURANCE COMPANY, an Iowa Mutual Property & Casualty Insurance Company, Defendant and Appellant.

Steven W. Sanford of Cadwell, Sanford, Deibert & Garry, Sioux Falls, SD, Attorneys for plaintiff and appellee.

Mark D. O'Leary, Sioux Falls, SD, Attorney for defendant and appellant.


[¶ 1.] Defendant Farm Bureau Mutual Insurance Company (Farm Bureau) appeals from a jury verdict in favor of Plaintiff, Shon Sawyer (Sawyer). The jury awarded damages for breach of contract, bad faith, and punitive damages to Sawyer arising out of a dispute as to insurance coverage relating to the death of livestock. Farm Bureau also appeals an award of Sawyer's attorney's fees. We affirm in part and reverse and remand in part.


[¶ 2.] Sawyer operates a cattle-feeding operation near Hurley, South Dakota. In June of 1995, Sawyer procured insurance from Farm Bureau through its agent, Kurtis Berndt, of Sioux Falls. This initial policy covered all his property except his livestock. In January of 1996, the policy was expanded to include livestock. The trial court found that Sawyer's livestock coverage was designated as "Special Form" as indicated on the Declarations page of the policy. Special Form is also referred to as "all-risks" in the industry, and applies to all loss except as otherwise excluded. Under Sawyer's original policy, Farm Bureau would not cover "loss to livestock or poultry caused in whole or in part: ... by smothering; [or] by freezing in blizzards or snowstorms." However, for an additional premium, Sawyer obtained an endorsement to his policy. This endorsement provided that Farm Bureau would cover "Freezing and Smothering in Blizzards or Snowstorms."

[¶ 3.] In November of 1996, 109 head of cattle died during a winter storm, defined by the parties as an "ice storm." Another 188 head died during a December blizzard. When Sawyer submitted a claim for the loss of the cattle, Farm Bureau required all the cattle to be necropsied, which is a procedure similar to an autopsy. This procedure required Sawyer to stockpile the 297 frozen carcasses in his yard, and then individually move each carcass into a building heated to 100 degrees. The carcass was left in the building to thaw, a process that took several days. Once the carcass was thawed, it was inspected to determine whether death resulted from disease rather than freezing. After inspection, the carcass was restacked outside. Farm Bureau demanded that each animal be necropsied to determine that the death was covered by the policy. It took the position that Sawyer must prove that the animals' death resulted from "freezing or smothering in snowstorms or blizzards," as defined in the policy's endorsement before coverage would apply. Sawyer argued that because his livestock coverage was "Special Form," all losses were covered unless otherwise excluded.

[¶ 4.] Farm Bureau also refused payment on the grounds that Sawyer had not told it that he was feeding other people's cattle. It based this position on a clause in the policy that stated as follows: "We cover: Direct loss to unscheduled farm personal property owned by you, being purchased by you or rented or leased to you which is used in the operation of your farm as a farm." Farm Bureau interpreted this clause as requiring 100% ownership of the livestock by Sawyer. Sawyer did not own 100% of the livestock he was feeding. During the course of his operation, he had needed to secure additional financing. Unable to secure the necessary financing through a financial institution, he instead solicited and obtained several investors in his operation. These investments were in a variety of forms, but usually involved a partial ownership in certain livestock. At all times, Sawyer continued to provide feed, medicine and other supplies for the livestock. Sawyer was responsible for insuring the livestock. All livestock was purchased and sold in Sawyer's name. However, because Sawyer did not own 100% of the livestock, Farm Bureau denied coverage under Sawyer's policy. As a result, the parties were unable to reach a settlement and the dispute went to a jury trial on July 21, 1999.

[¶ 5.] After the close of evidence at trial, both parties moved for a directed verdict. In ruling on those motions, the trial court made several findings. It found as a matter of law that Sawyer had an ownership interest in the cattle sufficient to satisfy the requirements of the policy. In addition, it found that the coverage was "Special Form" and hence, the loss during the ice storm was covered under the policy because it was not specifically excluded. It also found that the endorsement purchased by Sawyer eliminated the exclusion contained in the policy for death from freezing or smothering in a blizzard or snowstorm. As a result, the trial court granted Sawyer's motion for directed verdict as to the loss from the November ice storm. It also granted Sawyer's motion as to coverage for the loss resulting from the December blizzard. The question as to whether Sawyer was required to prove the cattle died during the blizzard rather than some time afterward, was reserved for the jury. As to Sawyer's bad faith claim, the trial court ruled there was clear and convincing evidence of a reasonable basis to believe there had been willful, wanton, and malicious behavior by Farm Bureau, sufficient to submit the claim to the jury.

[¶ 6.] The jury returned a verdict in favor of Sawyer awarding $500 per head for all cattle lost in the November storm and $500 per head for 175 of the 188 cattle killed in the December blizzard, for a total of $142,000. In addition, the jury awarded bad faith damages of $34,155 and punitive damages of $125,000, as well as pre-judgment interest on the breach of contract and bad faith damages.

[¶ 7.] On appeal, Farm Bureau raises five issues for our consideration. Sawyer raises two issues by notice of review.


[¶ 8.] 1. Whether Farm Bureau's notice of appeal was timely so as to give this Court jurisdiction to hear the appeal.

[¶ 9.] Initially we address Sawyer's contention that the appeal of Farm Bureau is not timely and the case should be dismissed for want of jurisdiction. Under SDCL 15-26A-6, an appeal must be taken within 60 days after the judgment is signed, attested, filed and notice given to the adverse party. The initial or preliminary judgment, filed on August 13, 1999, was entered with this condition, "[t]his Judgment is expressly subject to amendment, if necessary to conform to the Court's ruling on Plaintiff's Motion for Substitution of Party Defendant dated August 10, 1999." This motion to amend was previously filed by Sawyer on August 10, 1999, requesting the court to substitute Farm Bureau Mut. Ins. Co. for the originally named defendant, South Dakota Farm Bureau Mut. Ins. Co.1 The trial court orally granted this motion on September 16, 1999 and the order finalizing the judgment pursuant to this motion was filed on September 22, 1999.

[¶ 10.] Sawyer was the moving party on this motion. The order was significant in that it properly identified the party against whom his judgment would be enforced. As such, Sawyer will not now be heard to complain when his own motion prevented the entry of a final judgment prior to September 22, 1999 and notice of entry thereon on September 24, 1999. Therefore, the 60 day appeal period began to run from September 25, 19992 and Farm Bureau's notice of appeal on November 17 was timely.3

[¶ 11.] 2. Whether the trial court erred in failing to instruct the jury that Sawyer had to prove he owned the cattle for which he claimed money damages.

[¶ 12.] At the close of evidence, the trial court determined that Sawyer did have "an ownership interest in [the] cattle." As such, the jury was instructed that "[r]egardless of whether [Sawyer] was the sole owner of [the] cattle, a part-owner of [the] cattle or was custom feeding the cattle for others, [Sawyer] had an insurable interest in the cattle sufficient to obligate [Farm Bureau] to provide coverage on the cattle for their full value." Farm Bureau requested an instruction requiring Sawyer to prove "that he owned each of the animals for which he claims money damages." The request was refused. Based upon this proposed instruction, it appears Farm Bureau interprets the term "owned" in the policy to mean "100% owned by the insured." We do not agree.

[¶ 13.] We review the interpretation of an insurance contract de novo. National Sun Indus., Inc. v. S.D. Farm Bureau Ins. Co., 1999 SD 63, ¶ 7, 596 N.W.2d 45, 46. Whether the contract is ambiguous is also reviewed de novo. Id. ¶ 7, 596 N.W.2d at 46-7. We have previously stated that "[a]n insurance policy is ambiguous when it `is fairly susceptible to two constructions.'" Id. When ambiguity is found, "the interpretation most favorable to the insured should be adopted." Id. Farm Bureau relies heavily on its interpretation of the term "owned." Yet, the term is not defined anywhere in the policy. While it is reasonable to conclude that ownership implies complete ownership to the exclusion of others, it is equally as reasonable to conclude that the term encompasses an infinite number and combinations of ownership interests so long as some ownership interest exists. As such, the policy is ambiguous, and the term will be construed in favor of the insured. Sawyer had at least a 25% ownership interest in the livestock that died during the storms. He is deemed to have "owned" that livestock for purposes of the Farm Bureau policy. [¶ 14.] This decision is in line with those from other jurisdictions that have interpreted similar terms. In Dolan v. Welch, the Appellate Court of Illinois found the term "ownership" in an automobile insurance policy to be ambiguous. 123...

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