TM ex rel. Cox v. EXECUTIVE RISK INDEM.

• Citation: 2002 WY 179,59 P.3d 721
• Decision Date: 16 December 2002
• Docket Number: No. 01-264.,01-264.
• Parties: T.M., a Minor, Through R.T. COX, her Guardian Ad Litem; A.O., a Minor, through Cheryl Ranck Schwartz, her Guardian Ad Litem, Appellants (Intervenors-Defendants), v. EXECUTIVE RISK INDEMNITY INC., a Delaware corporation, Appellee (Plaintiff).
• Court: United States State Supreme Court of Wyoming

59 P.3d 721

2002 WY 179

T.M., a Minor, Through R.T. COX, her Guardian Ad Litem; A.O., a Minor, through Cheryl Ranck Schwartz, her Guardian Ad Litem, Appellants (Intervenors-Defendants), v. EXECUTIVE RISK INDEMNITY INC., a Delaware corporation, Appellee (Plaintiff).

No. 01-264.

Supreme Court of Wyoming.

December 16, 2002.

Rehearing Denied January 15, 2003.

W.W. Reeves of Reeves & Miller, Casper, Wyoming, Representing Appellants.

Dan B. Riggs and Jonathan Botten of Lonabaugh & Riggs, Sheridan, Wyoming; and Cathy A. Simon, Charles A. Jones, and Vicki

E. Fishman of Ross, Dixon & Bell, L.L.P., Washington, DC, Representing Appellee.

Before HILL, C.J., and GOLDEN, LEHMAN,¹ KITE, and VOIGT, JJ.

KITE, Justice.

[¶ 1] T.M. and A.O. (children), through their appointed guardians ad litem, appeal from a summary judgment in favor of Executive Risk Indemnity Inc. (Executive) holding a professional liability policy issued to Beth D. Griswold, Ed.D. (Dr. Griswold), a psychologist, provides no coverage for injuries sustained by the children as a result of sexual abuse by Dr. Griswold's husband while they were in foster care in the Griswold home. We hold the professional services provision and the household member exclusion contained in the policy are ambiguous. Construing those provisions against the insurer, we further hold: (1) there is coverage under the professional services provision of the policy if a jury determines Dr. Griswold negligently performed or failed to perform psychological services for the children while they were under her care; and (2) whether the children "regularly reside[d] with" Dr. Griswold is a question of fact precluding application of the household member exclusion as a matter of law to deny coverage. Accordingly, we reverse the district court's order and remand for further proceedings.

ISSUES

[¶ 2] We address the following issues:²

1. Whether there is coverage for Dr. Griswold under the professional services provision of the policy if she negligently performed or failed to perform professional services for the children while they were under her care.

2. Whether application of the household member exclusion as a matter of law to deny coverage is precluded because whether the children regularly resided with Dr. Griswold is a question of fact.

FACTS

[¶ 3] Dr. Griswold was a licensed psychologist in the State of Wyoming with background and experience working with child victims of abuse. In 1996, the Department of Family Services (DFS) recruited and selected Dr. Griswold and her husband as foster parents, and it placed the children in their home for foster care. While the children were under the Griswolds' care, Mr. Griswold sexually abused them.³

[¶ 4] In 1999, the children, through their appointed guardians ad litem, filed a complaint against Dr. Griswold alleging claims for negligence⁴ and professional negligence. The complaint alleged Dr. Griswold knew, prior to taking the children into her home, that her husband had previously been accused of sexually abusing children and yet she informed no one at DFS of his prior history. It further alleged that Dr. Griswold held herself out to DFS as being specially qualified to serve as a foster parent and DFS relied on her professional expertise and experience in selecting her home for foster care and placing the children in her care. The complaint alleged that Dr. Griswold breached her professional duties as a psychologist by failing to disclose her husband's history to DFS, taking the children into her home when she knew his history, and failing to recognize and act upon signs that abuse was occurring.

[¶ 5] Executive filed a declaratory judgment action seeking a determination that the professional liability insurance policy issued to Dr. Griswold provided no coverage for the claims against her. The children intervened and counterclaimed for declaratory judgment requiring Executive to defend and indemnify Dr. Griswold. Executive responded with a motion to dismiss and for judgment on the pleadings, contending there was no coverage because Dr. Griswold had no duty to perform and, in fact, performed no professional services for the children and because the policy excludes claims by regular residents of the psychologist's household.

[¶ 6] After a hearing, the district court denied the motion, finding "a reasonable person might conclude that Dr. Griswold was providing professional services to the [children] and that they were not regular residents of the household." The parties proceeded with discovery and then filed cross-motions for summary judgment. After a hearing, the district court—a different judge presiding—granted Executive's motion for summary judgment, holding there was no coverage under the professional liability policy for Dr. Griswold's alleged negligence. The decision letter states, "a reasonable person would probably conclude that Dr. Griswold exhibited negligence in her dealings with [the children], D.F.S., and her husband." However, the district court concluded that, as a matter of law, the professional services provision did not apply because Dr. Griswold did not have a solely professional relationship with the children and the household member exclusion did apply because the children regularly resided with her.

STANDARD OF REVIEW

[¶ 7] Summary judgment is appropriate when no genuine issue as to any material fact exists and the prevailing party is entitled to judgment as a matter of law. Matlack v. Mountain West Farm Bureau Mutual Insurance Company, 2002 WY 60, ¶ 6, 44 P.3d 73, ¶ 6 (Wyo.2002). A genuine issue of material fact exists when a disputed fact, if it were proven, would have the effect of establishing or refuting an essential element of the cause of action or defense which the parties have asserted. Id. We examine the record from the vantage point most favorable to the party who opposed the motion, and we give that party the benefit of all favorable inferences which may fairly be drawn from the record. Id. We evaluate the propriety of a summary judgment using the same standards and materials as the lower court used. Id. We do not accord deference to the district court's decisions on issues of law. Id.

DISCUSSION

[¶ 8] An insurance policy is a contract and is subject to the general rules of contract construction. First Wyoming Bank, N.A., Jackson Hole v. Continental Insurance Company, 860 P.2d 1094, 1097 (Wyo.1993). Where the contract is clear and unambiguous, our inquiry is limited to the four corners of the document. Principal Life Insurance Company v. Summit Well Service, Inc., 2002 WY 172, ¶ 17, 57 P.3d 1257; Evans v. Farmers Insurance Exchange, 2001 WY 110, ¶ 8, 34 P.3d 284, ¶ 8 (Wyo.2001); Sierra Trading Post, Inc. v. Hinson, 996 P.2d 1144, 1148 (Wyo.2000). We interpret an unambiguous contract in accordance with the ordinary and usual meaning of its terms. St. Paul Fire and Marine Insurance Co. v. Albany County School District No. 1, 763 P.2d 1255, 1258 (Wyo.1988). It is only when a contract is ambiguous that we construe the document by resorting to rules of construction. Evans, 2001 WY 110, ¶ 9,34 P.3d 284; Sinclair Oil Corporation v. Republic Insurance Company, 929 P.2d 535, 539 (Wyo.1996); Martin v. Farmers Insurance Exchange, 894 P.2d 618, 620 (Wyo.1995). Whether a contract is ambiguous is for the court to decide as a matter of law. Evans, 2001 WY 110, ¶ 9,34 P.3d 284; Martin, 894 P.2d at 620. A contract is ambiguous if indefiniteness of expression or double meaning obscure the parties' intent. Evans, 2001 WY 110, ¶ 9,34 P.3d 284; Hansen v. Little Bear Inn Company, 9 P.3d 960, 964 (Wyo.2000). Because insurance contracts are contracts of adhesion where the insured has little or no bargaining power to vary the terms, we strictly construe ambiguities against the insurer. Evans, 2001 WY 110, ¶ 9,34 P.3d 284. In the case before us, two particular provisions of the Executive insurance policy are at issue: the professional services provision and the household member exclusion.

A. Professional Services Provision

[¶ 9] The policy provides that it covers claims made against Dr. Griswold for her wrongful acts. The term "wrongful act" is defined in the policy as follows:

"Wrongful Act" means any actual or alleged negligent act, error or omission, or any actual or alleged Defamation solely in the performance of, or actual or alleged failure to perform, professional services for others in Your profession as a psychologist, including Your services as a member of a formal accreditation or professional review board of a hospital or professional society, or professional licensing board.

(Emphasis added.) The children argue there is insurance coverage pursuant to this provision because, in failing to recognize the risk of or prevent the sexual abuse, Dr. Griswold negligently performed or failed to perform professional services in her profession as a psychologist within the meaning of the policy. Executive disputes this reading of the policy, arguing there is no coverage because Dr. Griswold was acting as a foster parent, not a psychologist, to the children and any wrongful acts or omissions she may have committed were not solely in the performance of or failure to perform professional services as the policy requires.

[¶ 10] In interpreting the professional services provision, as with any other contract provision, we look first to the four corners of the document and interpret the language, if possible, according to its plain and ordinary meaning. The provision states there is coverage for any negligent act or omission or any defamation solely in the performance of or failure to perform professional services to others as a psychologist. The most striking feature of the provision is that it does not lend itself easily to reasonable interpretation. When read literally as it is written, the provision suggests there is coverage for: (1) any negligent acts and omissions, whether or not in the performance of professional...