Summers v. Great Southern Life Ins. Co., 31878-4-II.

• Decision Date: 08 November 2005
• Docket Number: No. 31878-4-II.,31878-4-II.
• Citation: 122 P.3d 195,130 Wn. App. 209
• Court: Washington Supreme Court
• Parties: Shannon W. SUMMERS, Appellant, v. GREAT SOUTHERN LIFE INSURANCE COMPANY, a foreign insurer, Respondent.

122 P.3d 195

130 Wn. App. 209

Shannon W. SUMMERS, Appellant, v. GREAT SOUTHERN LIFE INSURANCE COMPANY, a foreign insurer, Respondent.

No. 31878-4-II.

Court of Appeals of Washington, Division 2.

November 8, 2005.

Matthew Bryan Edwards, Owens Davies PS, Olympia, WA, for Appellant.

John Peter Mele, Attorney at Law, Bellevue, WA, for Respondent.

QUINN-BRINTNALL, C.J.

¶ 1 The Federal Aviation Administration (FAA) revoked Shannon Summers's medical certificate for approximately 21 months, thereby making him ineligible to perform his duties as a commercial airline pilot. Summers sought coverage under an insurance policy which provided benefits in the event of a permanent and continuous disability. After the insurer, Great Southern Life Insurance Co. (Great Southern), denied coverage, Summers sued. The superior court granted Great Southern's motion for summary judgment, concluding that Summers had not satisfied the permanency requirements of the insurance policy. We affirm.

FACTS

¶ 2 Summers is a commercial airline pilot. Commercial pilots are required to maintain a medical certificate issued by the FAA. 14 C.F.R. § 61.3(c). One of the requirements for a medical certificate is that the individual have "[n]o established medical history or clinical diagnosis" of "[a] disturbance of consciousness without satisfactory medical explanation of the cause." 14 C.F.R. § 67.109(a)(2).

¶ 3 After Summers lost consciousness while skydiving in July 2000, the FAA revoked his medical certificate. Summers's physician submitted a report to the FAA, opining that Summers's loss of consciousness was likely due, not to a medical condition, but to being hit in the face with a parachute buckle. Summers moved for reconsideration of the FAA decision, which was denied in March 2001. The FAA recommended that Summers remain in a recovery period until July 2002, at which time he was encouraged to reapply. The FAA informed Summers that he could seek reconsideration if he had "significant medical evidence to offer." 2 Clerk's Papers (CP) at 289.

¶ 4 Following the FAA's revocation, Summers filed for benefits under an Airline Pilots Occupational Disability policy he purchased through Great Southern.¹ The policy awarded $250,000, payable in 18 monthly installments, in the event that Summers became "continuously Disabled and complied with all Benefit Conditions for at least the Waiting Period ... [and] has survived the waiting period." 1 CP at 86. The "Waiting Period" was 12 months and the policy defined "disability" or "disabled" as "the permanent inability to perform the material duties of a commercial pilot as the result of any sickness, or accidental bodily injury." 1 CP at 86. The policy went on to state: "Permanency is a necessary requirement and recovery must not be reasonably expected based upon accepted medical standards." 1 CP at 86.

¶ 5 A Great Southern medical consultant, who was formerly responsible for the FAA's issuing and revoking of medical certificates, reviewed Summers's records and concluded that Summers's medical certificate would likely be reissued after 12 to 24 months had passed from the date of the skydiving incident. Great Southern then sent a letter to Summers explaining the denial of coverage and stating that Summers's policy "requires his medical condition to permanently prevent him from performing his duties." 1 CP at 115.

¶ 6 In response, Summers submitted a report from his treating physician in which the physician concluded that while Summers would likely be cleared to fly by the FAA in a "few more months," he was currently "totally disabled." 1 CP at 76. Two physicians who would examine Summers during ensuing arbitration proceedings also concluded that Summers's medical certificate would likely be reissued.

¶ 7 In April 2002, after Summers submitted these medical reports to the FAA, his medical certificate was reissued. Great Southern then denied Summers's renewed request for coverage, stating that because his medical certificate was reissued, his injury was "neither lasting nor non-remediable" and thus, could not be "permanent" within the meaning of the policy. 2 CP at 295.

¶ 8 Summers sued Great Southern for breach of contract. On cross-motions for summary judgment, the superior court granted Great Southern's motion, concluding that the term "permanent" was unambiguous and required Summers to show more than just a temporary inability to perform as a commercial pilot. This appeal followed.

ANALYSIS

¶ 9 This appeal requires that we interpret the provisions of Great Southern's disability insurance policy. The interpretation of an insurance policy is a question of law that we review de novo. Butzberger v. Foster, 151 Wash.2d 396, 401, 89 P.3d 689 (2004). An insurance policy is construed as a whole, with the policy being given a fair, reasonable, and sensible construction. Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wash.2d 654, 666, 15 P.3d 115 (2000). But if the policy is clear and unambiguous, we must enforce it as written and may not modify it or create ambiguity where none exists. Weyerhaeuser Co., 142 Wash.2d at 666, 15 P.3d 115. A policy clause is ambiguous when, on its face, it is fairly susceptible to two different but reasonable interpretations. Weyerhaeuser, 142 Wash.2d at 666, 15 P.3d 115. An interpretation is not reasonable if it leads to a strained construction or fails to give meaning to every term in a policy provision. Allstate Ins. Co. v. Hammonds, 72 Wash.App. 664, 667-68, 865 P.2d 560, review denied, 124 Wash.2d 1010, 879 P.2d 292 (1994). Where an ambiguity does exist, the policy must be construed in favor of the insured. Weyerhaeuser Co., 142 Wash.2d at 666, 15 P.3d 115.

¶ 10 It is undisputed that the FAA's revocation of Summers's medical certificate rendered Summers ineligible to perform the material duties of a commercial pilot. What is disputed is whether this ineligibility was "permanent" within the meaning set forth in Great Southern's policy. Summers maintains that the term "permanent" is inherently ambiguous and must therefore be construed in his favor to provide coverage. Alternatively, he maintains that the $250,000 policy award is intended to offset 30 months of his salary should he be unable to work as a commercial pilot during such period. According to Summers, this is why the policy has a "waiting period" of 12 months and then pays the policy award in 18 monthly installments. Summers contends that this asserted purpose renders the term "permanent" ambiguous, and thus, the term should be construed to mean "having continuously existed for the twelve month waiting period, with no reason to expect a change for the remaining eighteen months for which the policy provides a replacement benefit." Br. of Appellant at 23. Summers's arguments are not persuasive.²

¶ 11 Great Southern's policy is similar to that addressed in Richards v. Metropolitan Life Insurance Co., 184 Wash. 595, 55 P.2d 1067 (1935). There, the policy provided benefits if Richards "bec[a]me totally and permanently disabled... so as to be prevented thereby from engaging in any occupation and performing any work for compensation or profit, and that such disability has already continued uninterruptedly for a period of at least three months." Richards, 184 Wash. at 596-97, 55 P.2d 1067 (emphasis omitted). Richards was totally disabled for three years before returning to work. He argued that he was entitled to coverage and that the insurance policy should be interpreted to require total and permanent disability for only the specified three-month period. In rejecting the insured's position, the court stated:

So far as this action is concerned, the vital word in the policy is "permanent." That word is not a technical one, but a common, ordinary word with a well-recognized meaning, even to the lay mind ...:

"Continuing or enduring in the same state, status, place, or the like, without fundamental or marked change; not subject to fluctuation or alteration; fixed or intended to be fixed; lasting; abiding; stable; not temporary or transient."

....

The words "permanent" and "temporary" are antonyms of each other and readily occur to the ordinary mind as such. A disability that is transient or temporary cannot be a permanent one. It is reasonable and proper to say that one has been "totally disabled" for a definite period of time, but it would do violence to the language, and would be utterly contradictory, to speak of a "permanent disability" as being for a limited period. To give the word "permanent" the meaning of "temporary," would be to delete the word "permanent" from the contract entirely.

The concluding words of that paragraph in the supplemental agreement in which the word "permanently" is used contain a further restriction or condition. They provide that such disability, referring to permanent disability, must already have continued uninterruptedly for a period of at least three months before the company shall be called upon to waive further payment of premium or to pay the monthly income. A testing or waiting period, sometimes designated as a moratorium, is thus prescribed, during which the company is relieved of the necessity of investigating premature or immature claims....

... If, at the end of the waiting period, it appears with reasonable certainty that the insured is permanently disabled, he is then entitled to payment of the installments provided in the contract.

Richards, 184 Wash. at 602-03, 55 P.2d 1067 (emphasis and quotation omitted).

¶ 12 Likewise, as used in the policy at issue here, "permanent" is a term of common understanding; it is not ambiguous. Under the definition put forth in Richards and other cases,³ "permanent" refers to "a state of indefinite continuance,... something incapable of alteration, fixed, or immutable." 1C JOHN ALAN APPLEMAN & JEAN APPLEMAN, INSURANCE LAW AND PRACTICE § 641, at 206 (1981). Under this definition, "it must appear that the disability will probably...