Selkirk Seed Co. v. State Ins. Fund

• Decision Date: 21 December 2000
• Docket Number: No. 25173.,25173.
• Citation: 18 P.3d 956,135 Idaho 434
• Parties: SELKIRK SEED COMPANY, and all other corporations, entities or individuals similarly situated, Plaintiffs-Appellants, v. STATE INSURANCE FUND, Defendant-Respondent.
• Court: Idaho Supreme Court

18 P.3d 956

135 Idaho 434

SELKIRK SEED COMPANY, and all other corporations, entities or individuals similarly situated, Plaintiffs-Appellants, v. STATE INSURANCE FUND, Defendant-Respondent.

No. 25173.

Supreme Court of Idaho, Boise, October 2000 Term.

December 21, 2000.

Rehearing Denied March 5, 2001.

Starr Kelso Law Office, Chtd., Coeur d'Alene, for appellants. Starr Kelso argued.

Hon. Alan G. Lance, Attorney General; Elam & Burke, P.A., Boise for respondent. Ryan P. Armbruster argued.

SILAK, Justice.

NATURE OF THE CASE

This is an appeal by Selkirk Seed Company (Selkirk) from an order of the district court, granting summary judgment to the State Insurance Fund (SIF) on the issue of whether SIF's sale of "employers liability insurance" was authorized by statute. We affirm.

I. FACTS AND PROCEDURAL BACKGROUND

A. Factual Background.

Selkirk, an Idaho employer, purchased worker's compensation insurance from SIF beginning in April 1989. In return for payment of premiums, SIF provided Selkirk with a contract for insurance entitled "Workers Compensation And Employers Liability Insurance Policy," which provides in relevant part:

General Section

E. Locations—This policy covers all of your workplaces listed in items 1 or 4 of the Information Page; and it covers all other workplaces in item 3.A. state unless you have other insurance or are self-insured for such workplaces.

. . .

Part One — Workers Compensation Insurance

A. How This Insurance Applies—This workers compensation insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death.

1. Bodily injury by accident must occur during the policy period.

2. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee's last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

. . .

Part Two—Employers Liability Insurance

A. How This Insurance Applies—This employers liability insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death.

1. The bodily injury must arise out of and in the course of the injured employee's employment by you.

2. The employment must be necessary or incidental to your work in a state or territory listed in item 3.A. of the Information Page.

3. Bodily injury by accident must occur during the policy period.

4. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee's last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

5. If your are sued, the original suit and any related legal actions for damages for bodily injury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada.

. . .

C. Exclusions— This insurance does not cover:

4. Any obligation imposed by a workers compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law.

5. Bodily injury intentionally caused or aggravated by you.

...

The contract was renewed by Selkirk until January 1994. Insurance contracts containing "Part One—Workers Compensation Insurance" (Part One) and "Part Two—Employers Liability Insurance" (Part Two) were issued to other employers by SIF during this time.

B. Procedural Background.

In May 1996, Selkirk filed a class action against SIF in district court, alleging that the inclusion of Part Two in SIF's worker's compensation insurance policy was unlawful because it did not provide "worker's compensation insurance" as required by statute. Selkirk sought rescission of Part Two, injunctive relief against SIF's continued sale of insurance containing Part Two, and recovery of all premiums associated therewith. SIF filed a motion to dismiss Selkirk's complaint, which was treated by the district court as a motion for summary judgment, due to consideration of material outside of the pleadings.

The district court granted summary judgment to SIF, ruling that Part Two of the insurance policy provided insurance coverage against real and recognizable risks. The district court also denied Selkirk's motion for class certification, ruling that the issue was moot.

II. ISSUES ON APPEAL

The following issues are presented on appeal:

A. Whether SIF had authority to sell the insurance coverage provided by "Part Two."

B. Whether "Part Two," as sold by SIF, is insurance.

C. Whether the premiums paid by employers for "Part Two" coverage should be returned.

D. Whether this case should be certified as a class action.

III.

STANDARD OF REVIEW

Appellate review of a trial court's ruling on a motion for summary judgment is the same as that required of the trial court when ruling on the motion. See I.R.C.P. 56(c); Cook v. State, Dept. of Transp., 133 Idaho 288, 293, 985 P.2d 1150, 1155 (1999); Turpen v. Granieri, 133 Idaho 244, 246, 985 P.2d 669, 671 (1999). On review, summary judgment is proper "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." I.R.C.P. 56(c). This Court liberally construes all disputed facts in favor of the nonmoving party and draws all reasonable inferences and conclusions supported by the record in favor of the party opposing the motion. See Cook, 133 Idaho at 294,

985 P.2d at 1156. If reasonable people could reach different conclusions or draw conflicting inferences from the evidence, the motion must be denied. See id. However, if the evidence reveals no disputed issues of material fact, and the moving party is entitled to judgment as a matter of law, the motion for summary judgment should be granted. See State v. Rubbermaid Inc., 129 Idaho 353, 356, 924 P.2d 615, 618 (1996).

IV. ANALYSIS

A. SIF Has Statutory Authority To Sell This Insurance Policy Because Part Two Of The Policy Provides Liability Coverage For Compensation Under The Idaho Worker's Compensation Law.

Selkirk argues SIF is without statutory authority to sell the insurance coverage provided in Part Two. Selkirk's primary assertion is that since the controlling statute only authorizes SIF to provide worker's compensation insurance, and Part Two of the insurance contract does not provide worker's compensation but instead provides liability insurance, Part Two is without statutory authorization. Selkirk's second claim is that Part Two is not a worker's compensation policy because it specifically excludes any obligations imposed by worker's compensation law to provide coverage for "employer liability."

Regarding Selkirk's initial assertion that Part Two is liability insurance, not worker's compensation, we disagree. This issue turns on the interpretation of the insurance policy in light of the statutes controlling the SIF. As a creature of statute, SIF is limited to the power and authority granted to it by the legislature. See Kelso & Irwin, P.A. v. State Ins. Fund, 134 Idaho 130, 135, 997 P.2d 591, 596 (2000)

. However, at the same time, it is an independent agency having the status of a private insurance company. See I.C. § 72-901(1); Atwood v. State of Idaho, Dept. of Agriculture, 80 Idaho 349, 353, 330 P.2d 325, 326 (1958). Since the legislation controlling SIF is remedial in nature, this Court will interpret it broadly to effectuate the intent of the legislature. See State v. Hobby Horse Ranch Trac. & Equip. Co., 129 Idaho 565, 567, 929 P.2d 741, 743 (1996).

The interpretation and legal effect of an unambiguous contract are questions of law over which this Court exercises free review. See Hanks v. Sawtelle Rentals, Inc., 133 Idaho 199, 202-03, 984 P.2d 122, 125-26 (1999)

; First Security Bank of Idaho, N.A. v. Murphy, 131 Idaho 787, 791, 964 P.2d 654, 658 (1998). In construing a written instrument, this Court must consider it as a whole and give meaning to all provisions of the writing to the extent possible. See Magic Valley Radiology Associates, P.A. v. Professional Business Services, Inc., 119 Idaho 558, 565, 808 P.2d 1303, 1310 (1991). Because the insurance contract at issue does not appear ambiguous on its face, nor has either party asserted that it contains ambiguity, this Court exercises free review over its interpretation.

A plain reading of the insurance contract reveals that Part Two is a worker's compensation policy, not merely a liability insurance policy. The state insurance fund was created "for the purpose of insuring employers against liability for compensation . . . and of securing to the persons entitled thereto the compensation provided by said laws." I.C. § 72-901(1). Part Two satisfies this purpose because it insures against liability for compensation to employees.

Moreover, Part Two, by definition, is a "worker's compensation" policy not "liability insurance." By its enabling legislation, the SIF is subject to the provisions of the Idaho insurance code. See I.C. § 72-901(4). The insurance code defines "worker's compensation" as "[i]nsurance of the obligations accepted by, imposed upon, or assumed by employers under law for death, disablement, or injury of employees." I.C. § 41-506(1)(d). Liability insurance, on the other hand, is defined as "[i]nsurance against legal liability for the death, injury, or disability of any human being." See I.C. § 41-506(1)(c). Thus, the two types of coverage are distinctly different. Liability insurance deals with injury to any person, while worker's compensation insurance is applied exclusively to employees. Part Two falls within the statutory scheme of worker's compensation because it "applies to bodily injury by accident or bodily injury by disease." Further, "[t]he bodily injury must arise out of and in the course of the injured employee's employment." (emphasis added). Nothing in Part Two indicates its...