Tyler v. Shelter Mut. Ins. Co.

• Decision Date: 29 January 2008
• Docket Number: No. 105,098.,105,098.
• Citation: 2008 OK 9,184 P.3d 496
• Parties: Clarence TYLER, Plaintiff/Appellee, v. SHELTER MUTUAL INSURANCE COMPANY, a Missouri Corporation, Defendant/Appellant.
• Court: Oklahoma Supreme Court

184 P.3d 496

2008 OK 9

Clarence TYLER, Plaintiff/Appellee, v. SHELTER MUTUAL INSURANCE COMPANY, a Missouri Corporation, Defendant/Appellant.

No. 105,098.

Supreme Court of Oklahoma.

January 29, 2008.

CERTIFIED QUESTION OF LAW FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

¶ 0 The United States District Court for the Western District of Oklahoma certified four questions under the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. As reformulated and consolidated, a single question asks:

Whether the term "actual cash value" included within Oklahoma standard fire insurance policies pursuant to 36 O.S. Supp.2003 § 4803 is synonymous with the terms "fair value" and "actual value" found in 36 O.S. 2001 § 4804?

We answer the certified question "yes."

CERTIFIED QUESTION ANSWERED.

Michael D. McGrew, Michael D. McGrew & Associates, P.C., T. Michelle McGrew, T. Michelle McGrew, P.C., Oklahoma City, OK, for plaintiff/appellee.

W.R. Cathcart, Virginia Cathcart Holleman, Carthcart & Dooley, Oklahoma City, OK, for defendant/appellant.

WATT, J.

¶ 1 The United States District Court for the Western District of Oklahoma certified four questions under the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. As reformulated and consolidated,¹ the single question asks:

Whether the term "actual cash value" included within Oklahoma standard fire insurance policies pursuant to 36 O.S. Supp. 2003 § 4803² is synonymous with the terms "fair value" and "actual value" found in 36 O.S.2001 § 4804?³

¶ 2 We answer the reformulated and consolidated certified question "yes." The answer is supported by: 1) this Court's opinion in Rochester American Ins. Co. v. Short, 1953 OK 4, 252 P.2d 490 in which virtually identical statutory language as that found in 36 O.S. Supp.2003 § 4083 and 36 O.S.2001 § 4084 was construed and in which the terms "actual cash value" and "actual value" were treated as having the same meanings; 2) Oklahoma jurisprudence⁴ and extant case law which has not treated the terms as synonymous with market value and with those court's which determine that the term "actual value" means nothing more than an expression of the actual value of property in terms of cash;⁵ 3) rules of statutory construction which dictate that legislative intent is to be ascertained from the entirety of the statutory enactment;⁶ and 4) our case law rejecting the argument that the terms "fair value" and "actual value" contained in 36 O.S.2001 § 4804 should be treated as consistent with fair market value.

CERTIFIED FACTS⁷ AND PROCEDURAL BACKGROUND

¶ 3 In 2001, the plaintiff/appellee, Clarence Tyler (Tyler/insured), paid $35,000 for rental property located in Oklahoma City. When Tyler applied for non-owner occupied insurance with the defendant/appellant, Shelter Insurance Company (Shelter/insurer), he indicated that the purchase price for the property was $40,000. Shelter insured the property for that value beginning on September 30, 2001, renewing the policy again in 2002 and in 2003.

¶ 4 The following year, Shelter renewed the policy with an increased dwelling limit of liability of $44,500. The increase was based on inflation rates and increased construction costs in the Oklahoma City area.

¶ 5 In the spring of 2005, Tyler sought to refinance the property for $61,750. Before loan approval, the insured was required to show evidence of insurance in the amount of $67,000. At Tyler's request and based on an appraisal, Shelter issued the policy on April 26, 2005. On June 1, 2005, Tyler closed the loan, receiving $26,734.79 in cash. None of these proceeds were put into the property, but the insured had improved the property prior to the refinancing.

¶ 6 The house had been vacant for approximately a year when it was destroyed by fire on January 28, 2006. Shelter representatives inspected the property on January 31st determining it was a total loss. On February 9, 2006, the insurer's appraiser placed an actual value of the property at $28,500. The following month, Shelter paid Tyler $27,500, an amount taking into consideration the policy's $1,000 deductible. The insurer also refunded the excess premiums pursuant to 36 O.S.2001 § 4804.⁸

¶ 7 Shelter filed a motion for summary judgement and a motion to certify questions of law in the district court. The certification motion was granted. Recognizing that the lawsuit involved unsettled issues of Oklahoma law, the United States District Court for the Western District filed its order of certification pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001 §§ 1601, et seq. with this Court on September 28, 2007. We set a briefing cycle which was concluded on November 19, 2006, with the simultaneous filing of the parties' answer briefs.

¶ 8 THE TERM "ACTUAL CASH VALUE" INCLUDED WITHIN OKLAHOMA STANDARD FIRE INSURANCE POLICIES PURSUANT TO 36 O.S. Supp.2003 § 4803 IS SYNONYMOUS WITH THE TERMS "FAIR VALUE" AND "ACTUAL VALUE" FOUND IN 36 O.S.2001 § 4804.

a) Policy and statutory provisions at issue.

¶ 9 The policy in effect when the property was destroyed contains provisions defining the term "actual cash value" and provides the manner in which losses are to be settled. Actual cash value is defined as "the amount which it would cost to repair or replace damaged property with material of like kind and quality, less allowance for physical deterioration and depreciation." The policy also provides that losses will be settled as follows:

"(a) Losses will be settled at the actual cash value of damaged property at the time of loss.

We will pay not more than the smaller of the following:

(1) the cost to repair or replace the damaged property with property of like kind and quality; or

(2) the limits of liability of this policy."

In addition, the amendatory endorsements to the policy provide that the policy includes standard fire insurance endorsements for an Oklahoma fire insurance policy.

¶ 10 Title 36 O.S. Supp.2003 § 4803 provides in pertinent part:

"A. The printed form of a policy of fire insurance as set forth in subsection G of this section shall be known and designated on the standard fire insurance policy to be used in the State of Oklahoma....

G. The form of the standard fire insurance policy, with permission to substitute for the word `company' a more accurate descriptive term for the type of insurer, shall be as follows:

... IN CONSIDERATION OF THE PROVISIONS AND STIPULATIONS HEREIN OR ADDED HERETO AND OF the premium above specified, this Company, for the term of ... does insure ... to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss ... DIRECT LOSS BY FIRE ..." [Emphasis in original.]

Section 4804 provides:

"No insurance company shall, knowingly, issue any fire insurance policy upon property within this state for an amount which, with any existing insurance thereon, exceeds the fair value of the property. If buildings insured against loss by fire, and situated within this state, are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage, and if it shall appear that the insured has paid premiums on an amount in excess of said actual value, the assured [sic] shall be reimbursed the proportionate excess of premiums paid on the difference between the amount named in the policy and said actual value, with interest at six per centum per annum from the date of issue."

b) Party contentions and analysis.

¶ 11 Tyler contends that the term "actual cash value" utilized in the policy and the terms "fair value" and "actual value" found in § 4804 are synonymous. Shelter argues that the terms "fair value" and "actual value" in the statutory enactment control and that the terms mean nothing more than the property's fair market value immediately before the fire loss. Nevertheless, Shelter and Tyler agree that if the insured is correct, the insurer owes an additional $23,500 for a total payment of $52,000. The $52,000 figure represents the amount to replace Tyler's property less depreciation.⁹

¶ 12 In determining whether a statute applies to a given set of facts, we focus on legislative intent¹⁰ which controls statutory interpretation.¹¹ Intent is ascertained from the whole act in light of its general purpose and objective¹² considering relevant provisions together to give full force and effect to each.¹³ The Court presumes that the Legislature expressed its intent and that it intended what is expressed.¹⁴ Only where the legislative intent cannot be ascertained from the statutory language, i.e. in cases of ambiguity or conflict, are rules of statutory construction employed.¹⁵

¶ 13 In determining the certification of a class action in Scoufos v. State Farm Fire & Casualty Co., 2001 OK 113, 41 P.3d 366, this Court considered the statutory language of 36 O.S.1991 § 4084.¹⁶ In so doing, we held that the provision clearly reflected that the Legislature intended its application to be conditioned upon the insured property being totally destroyed by fire.

¶ 14 Scoufos did not address whether the terms "fair value" and "actual value" in § 4804 should be considered synonymous with the term "actual cash value" utilized in § 4803 and standard Oklahoma fire insurance policies. As to the meaning of these terms, the language of the two statutes is not so clear as to be beyond interpretation.

¶ 15 Rochester American Ins. Co. v. Short, 1953 OK 4, 252 P.2d 490 is instructive. Like here, the property in Rochester was totally destroyed by fire. The trial judge in Rochester instructed the jury that the insured was entitled to recover the actual cash value of the property in the event of a total loss. The trial judge went on to define the...