State Farm Mut. Auto. Ins. Co. v. Vostad, 18603

• Decision Date: 24 May 1994
• Docket Number: No. 18603,18603
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Appellee, v. Deborah VOSTAD, Special Administratrix of the Estate of Jessica C. Regaldo, Deceased, Defendant and Appellant, and Northwestern National Insurance Company, Defendant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 273

520 N.W.2d 273

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Appellee, v. Deborah VOSTAD, Special Administratrix of the Estate of

Jessica C. Regaldo, Deceased, Defendant and Appellant,

and

Northwestern National Insurance Company, Defendant.

No. 18603.

Supreme Court of South Dakota.

Considered on Briefs May 24, 1994.

Decided Aug. 10, 1994.

Chester A. Groseclose of Richardson, Groseclose, Kornmann and Wyly, Aberdeen, for appellee State Farm.

Joe L. Maynes of Ronayne and Wein, Aberdeen, for appellant.

WUEST, Justice.

Deborah Vostad (Vostad), special administratrix of the estate of Jessica Regaldo (Jessica), deceased, appeals a judgment of the circuit court in favor of State Farm Mutual Automobile Insurance Company (State Farm). We affirm.

FACTS

The issue in this appeal involves uninsured motor vehicle liability coverage as a result of the unfortunate death by carbon monoxide poisoning of two young persons.

A review of the relationships and circumstances surrounding these deaths is necessary to an understanding of the unique facts of this case. Sheldon Manning (Sheldon), aged eighteen at the time of his death, was married to Tammy Muldoon Manning (Tammy) in September 1991. Shortly after the marriage, Sheldon and Tammy (along with their two young children) moved into the Redfield, South Dakota home of Tammy's older sister Deborah Vostad (Deborah) and her husband Eric Vostad (collectively referred to as Vostads). Sheldon and Tammy paid rent for the space they occupied in the Vostad house and constituted a separate economic unit, including separate food purchase and preparation. Also living in the house was Deborah's daughter from her first marriage Jessica Regaldo (Jessica), aged fifteen at the time of her death. Sheldon and Tammy did not own a vehicle at the time of this incident; however, Sheldon had borrowed a Chevrolet Citation automobile from his grandparents Jerry and Anna Marie Stuchl (Stuchl) for use during the Christmas holidays.

On December 23, 1991, Tammy was out of town visiting her parents overnight in Aberdeen, South Dakota. Sheldon was in Redfield with the children. That afternoon, Deborah came home from work, gave Sheldon some money, and asked Sheldon to take Jessica bowling. Sheldon and Jessica were seen in the bowling alley sometime during the evening but did not return home. Deborah reported the absence of Sheldon and Jessica to the sheriff's office at about 12:23 a.m. on December 24. Tammy called the sheriff's office at approximately 11:00 a.m. on December 24, and suggested that the Stuchl home located at Cottonwood Lake (southwest of Redfield) be checked sometime that day. (The Stuchls were out of town for the holidays.) Apparently Tammy thought that Sheldon might have driven onto the lake and fallen through the ice.

A deputy drove to the Stuchl lake home, arriving in the early afternoon of December 24, some time after 1:00 p.m. The deputy observed the Citation sitting in the driveway. When the deputy exited his vehicle, he thought he could hear a motor running inside a large metal pole building on the property. Thinking the noise was just a heater or air compressor, he first checked the house and found no one at home. He then checked the pole building, forcing open a large overhead door. Inside he found a motor home with its engine running, and heavy exhaust fumes inside the building. The deputy entered the motor home and found Sheldon laying on the floor, deceased. Jessica was laying in the bed, also deceased. Sheldon's trousers and underwear were pulled down and Jessica was wearing no clothes below her waist. The deputy also found a strong odor of beer and empty beer cans in the Citation automobile. Blood tests indicated that both Sheldon and Jessica had consumed alcoholic beverages. Sheldon's blood alcohol level was .042% and Jessica's blood alcohol was .167%.

The Stuchls had purchased liability insurance on the motor home from Northwestern National Insurance Company (Northwestern). Northwestern denied coverage on the ground that Sheldon did not have permission to use the motor home. Sheldon and Tammy did not own an automobile nor did they have any automobile liability insurance. Vostads (Jessica's mother and stepfather) owned a 1972 Ford on which they carried an automobile liability insurance policy issued by State Farm Mutual Automobile Insurance Company (State Farm) which included uninsured motorist coverage.

State Farm commenced this action against Deborah as special administratrix of Jessica's estate (Estate) and against Northwestern. State Farm sought a declaratory judgment that its automobile insurance contract with the Vostads did not provide uninsured motorist coverage to the Estate under the circumstances of Jessica's death. State Farm also alleged, in the alternative, that Sheldon was not "uninsured" because liability coverage was available under the Northwestern policy. The Estate answered, asserting that uninsured motorist coverage was available from State Farm; and cross-claimed against Northwestern, seeking a declaration that liability coverage was available under that policy. Northwestern denied all allegations and sought a declaration that such coverage was unavailable.

A trial was held to the circuit court. The court entered findings of fact and conclusions of law and judgment declaring that both the Northwestern and State Farm policies were inapplicable to the wrongful death claims of the Estate and that neither insurance company is obligated to make payment of any kind. The Estate appeals only those portions of the findings of fact, conclusions of law and judgment which relate to State Farm.

STANDARDS OF REVIEW

We review the trial court's findings of fact under the clearly erroneous standard. R & S Constr. Co. v. BDL Enter., 500 N.W.2d 628, 630 (S.D.1993); Arnold Murray Constr. v. Wittrock, 487 N.W.2d 33, 35 (S.D.1992). In applying this standard, we will not overturn the trial court's findings unless, after reviewing all the evidence, "we are left with a definite and firm conviction that a mistake has been made." Arnold Murray Constr., 487 N.W.2d at 35. We review the trial court's conclusions of law de novo, and will overturn these conclusions of law when the trial court has erred as a matter of law. R & S Constr., 500 N.W.2d at 630; Century 21 Assoc. Realty v. Hoffman, 503 N.W.2d 861, 864 (S.D.1993).

INTERPRETATION OF INSURANCE CONTRACTS

Construction of a written contract is a question of law. Dirks v. Sioux Valley Empire Elec. Ass'n, 450 N.W.2d 426, 427-28 (S.D.1990). " '[W]here the provisions of an insurance policy are fairly susceptible of different interpretations, the interpretation most favorable to the insured should be adopted.' " Kremer v. American Family Mut. Ins. Co., 501 N.W.2d 765, 767-68 (S.D.1993) (quoting Prokop v. North Star Mut. Ins. Co., 457 N.W.2d 862, 864 (S.D.1990)). We have also noted:

'We are mindful of the rule of construction that where the provisions of an insurance contract are not clear and are fairly susceptible of different interpretation that one most favorable to the insured should be adopted. This rule does not mean, however, that the court may seek out a strained or unusual meaning for the benefit of the insured.'

City of Fort Pierre v. United Fire and Casualty Co., 463 N.W.2d 845, 848 (S.D.1990) (quoting Black Hills Kennel Club v. Firemens' Fund Indemnity Co., 77 S.D. 503, 506-07, 94 N.W.2d 90, 92 (1959)).

"[T]he provisions of an insurance contract 'are to be read and understood according to the natural and obvious import of the language, without resorting to subtle and forced construction for the purpose of either limiting or extending their operation.' " Prokop, 457 N.W.2d at 864 (quoting Cheney v. Metropolitan Life Ins. Co., 370 N.W.2d 569, 573 (S.D.1985)). "Moreover, insurance policies must be subject to a reasonable interpretation and not one that amounts to an absurdity." Prokop, 457 N.W.2d at 864 (citing Helmbolt v. LeMars Mut. Ins. Co., Inc., 404 N.W.2d 55, 59 (S.D.1987)). Where it is necessary to review an insurance policy provision in light of statutory law, the court treats the statute as if it were actually written into the policy. " 'The terms of the policy are to be construed in light of the purposes and intent of the applicable statute.' " Kremer, 501 N.W.2d at 768-69 (quoting Veach v. Farmer's Ins. Co., 460 N.W.2d 845, 847 (Iowa 1990)).

ANALYSIS AND DECISION

This appeal requires us to interpret portions of a standard preprinted "State Farm Car Policy" purchased by the Vostads. The section describing the uninsured motor vehicle coverage provides in pertinent part:

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.

Uninsured Motor Vehicle--means:

1. a land motor vehicle, the ownership, maintenance or use of which is:

. . . . .

b. insured or bonded for bodily injury liability at the time of the accident; but ...

(2) the insuring company denies coverage[.]

(Emphasis original in policy and indicating words defined within the policy.)

Embarking on an analysis of this policy language, we first note that it was undisputed that Jessica was an "insured" who suffered "bodily injury." ¹ Because Northwestern denied coverage, the motor home became an "uninsured motor vehicle" under the terms of the State Farm policy quoted above (item (1.) (b.)(2)). ² There is no appeal from this decision; thus, it is final.

The policy next requires that the bodily injury be caused by "accident." In its conclusion of law 4-12, the trial court quoted a 1940 case for the proposition that in South Dakota "the word 'accident' denotes an event which occurs upon the instant, rather than something that continues." State v. Clark, 67 S.D. 133, 137, 290 N.W. 237, 239 (1940) (construing the meaning...