State Farm Fire and Cas. Co. v. Paulson

Decision Date03 June 1988
Docket Number87-260,Nos. 87-259,s. 87-259
Citation756 P.2d 764
PartiesSTATE FARM FIRE AND CASUALTY COMPANY, Appellant (Defendant), v. Herb J. PAULSON, Appellee (Plaintiff). Herb J. PAULSON, Appellant (Plaintiff), v. STATE FARM FIRE AND CASUALTY COMPANY, Appellee (Defendant).
CourtWyoming Supreme Court

John A. Sundahl of Godfrey, Sundahl & Jorgenson, Cheyenne, for State Farm Fire and Cas. Co.

Stanley K. Hathaway and Blair J. Trautwein of Hathaway, Speight & Kunz, Cheyenne, for Herb J. Paulson.

Before BROWN, C.J., THOMAS, CARDINE and MACY, JJ., and ROONEY, Retired Justice.

ROONEY, Retired Justice.

This appeal in Case No. 87-259, by State Farm Fire and Casualty company (hereafter referred to as "appellant") is from a judgment entered against appellant after a non-jury trial declaring that an insurance policy issued to Herb J. Paulson (hereafter referred to as "appellee") covered damage resulting from the entrance of water and hail into the basement of appellee's house after a severe storm. The basic issue presented on appeal is whether or not the trial court erred in declaring the existence of such coverage.

We reverse.

Uncontroverted are the facts that hail, followed by hail and rain, fell in Cheyenne on August 1, 1985; that the storm was severe; that hail broke sections of three basement windows on the east side of appellee's residence in Cheyenne; that water and hail, which were generated within a few blocks of the residence (a 62-acre drainage area), entered the basement through the windows; that the high water line was several inches above the basement and water completely filled the basement; that less water would have entered had the windows not been broken; and that the policy in question was in force at the time and provided in pertinent part:

"SECTION 1--LOSSES INSURED

"COVERAGE A--DWELLING

"We insure for accidental direct physical loss to the property described in Coverage A except as provided in SECTION I-LOSSES NOT INSURED.

"COVERAGE B--PERSONAL PROPERTY

"We insure for accidental direct physical loss to property described in Coverage B caused by the following perils except as provided in SECTION I-LOSSES NOT INSURED:

* * *

* * *

"2. Windstorm or hail. This peril does not include loss to property contained in a building caused by rain, snow, sleet, sand or dust. This limitation does not apply when the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

* * *

* * *

"11. Weight of ice, snow or sleet which causes damage to property contained in a building.

* * *

* * *

"SECTION I--LOSSES NOT INSURED

* * *

* * *

"2. We do not insure under any coverage for loss (including collapse of an insured building or part of a building) which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: a) the cause of the excluded event; or b) other causes of the loss; or c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss:

* * *

* * *

"c. Water Damage, meaning:

"(1) flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind."

An insurance policy is a contract (§ 26-15-101 et seq., W.S.1977).

"A policy of insurance is a contract between the insurer and the insured and construed in the same way. Worthington v. State, Wyo., 598 P.2d 796 (1979); State Farm Mutual Automobile Insurance Co. v. Farmer's Insurance Group, Wyo., 569 P.2d 1260 (1977). When terms of a contract are shown without any conflict of evidence, interpretation of a contract becomes a question of law for the court. Engle v. First National Bank of Chugwater, Wyo., 590 P.2d 826 (1979). Paraphrased, and as said approvingly from a quote in Horvath v. Sheridan-Wyoming Coal Co., 58 Wyo. 211, 131 P.2d 315 (1942), the interpretation of a written contract is a question of law for the court; but where the terms of a contract are conflicting or doubtful, it is for the jury to ascertain the intention of the parties and determine what the contract was under proper instructions. The interpretation and construction of a contract are done by the court as a matter of law. Amoco Production Co. v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463 (1980). See also, Goodman v. Kelly, Wyo., 390 P.2d 244 (1964)." Hursh Agency, Inc. v. Wigwam Homes, Inc., Wyo., 664 P.2d 27, 31 (1983).

The only exception to construing insurance contracts as other contracts are construed is the requirement that ambiguous language in an insurance contract is to be liberally construed in favor of the insured.

"When there are any ambiguities or uncertainties in the meaning of the language used in a policy, they must be strictly construed against the insurer who drafted the contract. Wilson v. Hawkeye Casualty Co., 67 Wyo. 141, 215 P.2d 867, 874-875 (1950). However, if the language is clear and unambiguous, there is no room for the court to resort to a strict construction against the insurer, and the insurance policy must be interpreted according to the ordinary and the usual meaning of its terms. McKay v. Equitable Assurance Society of U.S., [Wyo., 421 P.2d 166,] 168 [ (1966) ]; Addison v. Aetna Life Insurance Company, Wyo., 358 P.2d 948, 950 (1961); Coit v. Jefferson Standard Life Ins. Co., 28 Cal.2d 1, 168 P.2d 163, 169-170 (1946); Ostendorf v. Arrow Insurance Company, , 182 N.W.2d [190,] 192 [ (1970) ]." Worthington v. State, Wyo., 598 P.2d 796, 806 (1979).

The basic considerations for construing a contract are summarized in Amoco Production Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 (1980):

"Our basic purpose in construing or interpreting a contract is to determine the intention and understanding of the parties. Fuchs v. Goe, 62 Wyo. 134, 163 P.2d 783 (1945); Shellhart v. Axford, Wyo., 485 P.2d 1031 (1971); Oregon Short Line Railroad Company v. Idaho Stockyards Company, 12 Utah 2d 205, 364 P.2d 826 (1961). If the contract is in writing and the language is clear and unambiguous, the intention is to be secured from the words of the contract. Pilcher v. Hamm, Wyo., 351 P.2d 1041 (1960); Fuchs v. Goe, supra; Hollabaugh v. Kolbet, Wyo., 604 P.2d 1359 (1980); Wyoming Bank and Trust Company v. Waugh, Wyo., 606 P.2d 725 (1980). And the contract as a whole should be considered, with each part being read in light of all other parts. Shepard v. Top Hat Land & Cattle Co., Wyo., 560 P.2d 730 (1977); Rossi v. Percifield, Wyo., 527 P.2d 819 (1974); Shellhart v. Axford, supra; Quin Blair Enterprises, Inc. v. Julien Construction Company, Wyo., 597 P.2d 945 (1979). The interpretation and construction is done by the court as a matter of law. Hollabaugh v. Kolbet, supra; Bulis v. Wells, Wyo., 565 P.2d 487 (1977); Shepard v. Top Hat Land & Cattle Co., supra.

"If the contract is ambiguous, resort may be had to extrinsic evidence. J.W. Denio Milling Co. v. Malin, 25 Wyo. 143, 165 P. 1113 (1917); Kilbourne-Park Corporation v. Buckingham, Wyo., 404 P.2d 244 (1965). An ambiguous contract 'is an agreement which is obscure in its meaning, because of indefiniteness of expression, or because a double meaning is present.' Bulis v. Wells, supra, 565 P.2d at 490. Ambiguity justifying extraneous evidence is not generated by the subsequent disagreement of the parties concerning its meaning. Homestake-Sapin Partners v. United States, 10th Cir.1967, 375 F.2d 507."

The language of the contract quoted supra is not ambiguous. 1 It is plain and clear. It does not have a double meaning, nor is it indefinite or obscure in its meaning. It is definite in expression and can be understood in only one way. It has but a single meaning, and that meaning is not uncertain. It provides that there is no coverage for loss due to "water damage" as "water damage" is defined in the contract, i.e., that resulting from "flood, surface water, waves, tidal water, * * * or spray from any of these, whether or not driven by the wind." Appellee argues that the loss was caused by "rain"--which is not listed under the contract definition of "water damage"--and therefore coverage existed. Appellant argues that the loss was caused by "surface water" and therefore is within the contract exclusion. This resulting issue was accepted by the trial court as the crux of the case. It said, in the Declaratory Judgment, Findings of Fact and Conclusions of Law:

"The Court views the coverage issue in this case as follows: if the water which fell with and after the hail and [d]id the damage is considered 'rain', then there is coverage. If such water is considered 'flood' or 'surface water', there is no coverage * * *."

The trial court also recognized that contract language to be unambiguous--but it inconsistently concluded that the words "rain," "flood," and "surface water" were latently ambiguous. It said, in its second Conclusions of Law:

"While the policy language is not inherently ambiguous, it is ambiguous as applied to the extraordinary facts in this case because the terms 'rain', 'flood', and 'surface water', are not defined in the insurance policy. An examination of the cases referred to in the February 2, 1987 letter decision reveal that the Courts have not necessarily agreed upon the 'plain' meaning to be given to 'flood', 'surface water' or 'rain'. Because the terms are not defined, the Court concludes that rain does not become surface water immediately after it hits the ground; rather it remains 'rain' (a non-excluded peril)."

We cannot accept this conclusion. A policy must be construed according to its plain language, giving to the words their common and ordinary meaning.

"[W]ords used will be given their common and ordinary meaning. 13 Appleman, Insurance Law and Practice, § 7402 (1943). * * * Absent ambiguity, there is no room for construction and the policy will be enforced according to its terms. Addison v....

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