Simmons v. Farmers Ins. Group

• Decision Date: 30 June 1994
• Docket Number: No. 930289-CA,930289-CA
• Citation: 877 P.2d 1255
• Parties: Barbara L. SIMMONS and Marvin Sam Clayson, Plaintiffs and Appellants, v. FARMERS INSURANCE GROUP, d/b/a Farmers Insurance Exchange; Randall L. Tuckett (agent); and John Does 1 through 5, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 1255

877 P.2d 1255

Barbara L. SIMMONS and Marvin Sam Clayson, Plaintiffs and Appellants, v. FARMERS INSURANCE GROUP, d/b/a Farmers Insurance Exchange;

Randall L. Tuckett (agent); and John Does 1

through 5, Defendants and Appellees.

No. 930289-CA.

Court of Appeals of Utah.

June 30, 1994.

James G. Clark, Provo, for appellants.

M. Dayle Jeffs, Provo, for appellees.

Before BENCH, GREENWOOD, and JACKSON, JJ.

OPINION

JACKSON, Judge:

Barbara L. Simmons and Marvin Sam Clayson appeal the trial court's grant of summary judgment regarding coverage provided by an insurance policy purchased by Simmons from Farmers Insurance Exchange (Farmers). We affirm.

FACTS

Simmons was involved in a motor vehicle accident on May 11, 1985. She was pulling a horse trailer borrowed from a friend, Marvin Clayson, and the trailer was damaged in the accident. Simmons submitted a claim to Farmers for the damage to the horse trailer. Upon review of the insurance policy, Farmers determined the collision damages were limited to $500, which it paid to Simmons. Clayson subsequently sued Simmons for damage to his horse trailer. Simmons requested that Farmers defend her in the lawsuit. Farmers declined, and Simmons took no further action in the suit, allowing a default judgment to be entered against her.

Clayson and Simmons then joined together to file an action against Farmers claiming breach of contract, fraud, and negligence. Farmers filed a motion for summary judgment "for all claims" but did not address the fraud and negligence claims in its motion. The trial court granted the motion, and Clayson and Simmons appealed to the supreme court. ¹ Farmers filed a motion to dismiss the appeal because the summary judgment was not a final order or judgment as to all claims. Simmons filed an objection to the motion, stating that all issues had been resolved. The supreme court denied summary disposition, stating that the issue should be addressed in the briefing, and transferred this case to the court of appeals.

ISSUES

Simmons asserts that the trial court (1) failed to dispose of her fraud and negligence claims, (2) incorrectly interpreted the insurance policy in ruling that it does not provide full coverage for Clayson's horse trailer, and (3) erred in not requiring Farmers to defend her against Clayson's suit for damage to his trailer. Additionally, Simmons claims Farmers breached the covenant of good faith and fair dealing by issuing collision coverage with a $500 deductible on a vehicle valued at $350 and by refusing to defend Simmons.

ANALYSIS

Dismissal of All Claims

In its motion to dismiss Simmons's appeal for lack of appellate jurisdiction, Farmers urged that the appeal was not from a final appealable order because claims against Randall Tuckett, the insurance agent for Farmers, remained pending in the trial court. In response, Simmons pointed out that Tuckett never became a party to this action because he was never served with a summons and complaint. Simmons went on to state that the summary judgment resolved all claims asserted against Farmers.

Somewhat disingenuously, Simmons now contends that her claims regarding fraud and negligence remain unlitigated. If that were the case, we would not have jurisdiction to hear the appeal because the summary judgment was never certified pursuant to Rule 54(b) of the Utah Rules of Civil Procedure. However, in its motion for summary judgment, Farmers clearly moved for judgment "against the plaintiffs for all claims asserted against it in this action." This motion was granted by the trial court. Thus, the appeal is from a final appealable order. Simmons's contention that she still has unlitigated claims against Farmers is without merit.

Policy Coverage

Simmons asserts that the language of the insurance policy provides full coverage for the damage to the horse trailer under both the liability and collision portions of the policy. However, Farmers claims that the policy exclusions and limitations completely exclude coverage under the policy's liability portion and limit coverage under the collision portion to $500.

Generally, the interpretation of insurance policy language presents a question of law, which we review for correctness. Nielsen v. O'Reilly, 848 P.2d 664, 665 (Utah 1992). The terms of the policy should be interpreted according to their usually accepted meanings and should be read as a whole, to give effect to all of the policy provisions. Id.; accord Gee v. Utah State Retirement Bd., 842 P.2d 919, 921 (Utah App.1992) (appellate courts interpret clear and unambiguous policy terms in accordance with their plain and ordinary meaning). Policy language is ambiguous if it is not " 'plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of the words, and in the light of existing circumstances, including the purpose of the policy.' " Nielsen, 848 P.2d at 666 (quoting LDS Hosp. v. Capitol Life Ins. Co., 765 P.2d 857, 858-59 (Utah 1988)).

We agree with Farmers that the liability portion of the policy provides no coverage for damage to the borrowed horse trailer and that the collision portion of the policy limits coverage to $500. The liability policy provides coverage for "property damage arising out of the ... use of a ... utility trailer." "Utility trailer" is defined by the policy as "a vehicle designed to be towed by a private passenger car and includes a farm wagon or farm implement while towed by a private passenger car or utility car. It does not include a trailer used as an office, store, display or passenger trailer." We believe the horse trailer fits within the definition of a utility trailer under the policy because the trailer was clearly designed to be towed by a private passenger car and can fairly be characterized as a farm wagon or implement. Thus, the liability statement of coverage, standing alone, could be read as covering damage to the horse trailer. However, the exclusions to liability coverage prevent coverage for the borrowed trailer. Exclusion 7 states that liability coverage does not apply to "[d]amage to property owned or being transported by an insured person." The horse trailer was being transported by Simmons, the insured in this case. Further, Exclusion 8 provides that liability coverage does not extend to damage to property "in the charge of, an insured person ... not owned by that person." Simmons clearly did not own the horse trailer. Accordingly, the plain and ordinary language of the policy's exclusions to liability prevent coverage for damage to the horse trailer.

Further, the collision portion of the policy provides coverage for only $500, rather than full coverage for damage to the horse trailer as Simmons asserts. The collision coverage states that Farmers will "pay for loss to your insured car caused by collision." "Your insured car" is defined as including a "utility trailer not owned by or furnished or available for the regular use of you or a family member." Thus, as with the liability coverage, the general statement of collision coverage appears to fully cover the damage to the horse trailer. However the "Limits of Liability" section of the policy's collision portion states that coverage is limited to the lowest of (1) the "actual cash value" of the damaged property, (2) the amount necessary to repair the property, or (3) "$500 for a utility trailer not owned by you or a family member." We believe this policy language plainly and unambiguously provides coverage but expressly limits that coverage to $500 on the horse trailer not owned by Simmons. ²

Duty to Defend

Simmons claims Farmers had a duty to defend her in the suit brought by Clayson to recover for damage to his horse trailer. ³ Farmers claims that because it paid Simmons the policy limits, it no longer had any duty to defend Simmons. The insurance policy provides that Farmers "will defend any claim or suit" for damages for which any insured person is legally liable because of property damage arising out of the use of a utility trailer. However, the policy also states that Farmers "will not defend any suit, or make additional payments, after we have paid the limit of liability for the coverage." We must consider whether the provision in Simmons's insurance policy allows Farmers to terminate its defense by paying the policy limit of $500 for the horse trailer.

Each case involving an insurer's promise to defend must be considered independently on the basis of the particular language of the insurance policy at issue. Gross v. Lloyds of London Ins. Co., 121 Wis.2d 78, 358 N.W.2d 266, 270 (1984). Language limiting an insurer's duty to defend an insured must be clear, unambiguous, and sufficiently conspicuous in order to give proper notice to the insured of the limitations on the duty to defend. See Johnson v. Continental Ins. Cos., 202 Cal.App.3d 477, 248 Cal.Rptr. 412, 414-15 (1988).

Simmons's policy stated that...