Viking Ins. Co. of Wis. v. Link

Decision Date27 September 2018
Docket NumberNo. 1 CA-CV 16-0646,1 CA-CV 16-0646
PartiesVIKING INSURANCE COMPANY OF WISCONSIN, Plaintiff/Appellant, v. MARVIN LINK and CAROLE LINK, et al., Defendants/Appellees.
CourtArizona Court of Appeals

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Mohave County

No. S8015CV201100599

The Honorable Lee Frank Jantzen, Judge

VACATED; REMANDED

COUNSEL

Jones, Skelton & Hochuli, P.L.C., Phoenix

By Michael W. Halvorson, Jennifer B. Anderson

Counsel for Plaintiff/Appellant

The Sutherland Law Firm, Kingman

By Douglas D. Sutherland

Counsel for Defendant/Appellee Herbert Walton

MEMORANDUM DECISION

Presiding Judge Jennifer M. Perkins delivered the decision of the Court, in which Judge Lawrence F. Winthrop and Judge Jon W. Thompson joined.

PERKINS, Judge:

¶1 An insurance carrier brought this action seeking declaratory relief that its policy did not cover damages to a tractor towed behind the insured's vehicle. For the following reasons, we vacate the trial court's judgment and remand for entry of judgment in favor of insurance carrier.

FACTUAL AND PROCEDURAL HISTORY

¶2 The relevant facts are undisputed. Marvin Link insured his Silverado pickup truck through Viking Insurance Company of Wisconsin ("Viking"). Link originally had the vehicle insured when he bought it in 2009; because Link had previously insured two other trucks through Viking, the salesperson at the dealership contacted Link's insurance broker and arranged for the insurance policy. Link had no direct contact with any representative of Viking at that time, although the salesperson at the car dealership relayed to Link that he had "full coverage" on the truck. Within two weeks, Viking sent Link a copy of the insurance policy, which Link never read other than to confirm that the policy related to and listed the Silverado pickup truck.

¶3 In 2010, Link borrowed a tractor from Herbert Walton; once finished with it, Link rented a utility trailer from a commercial rental company to return the tractor to Walton. The rental company hooked the trailer onto Link's truck, then Link returned to his property and loaded the tractor onto the trailer. While towing the tractor from his property back to Walton's, the trailer detached from Link's truck and, although the safety chains remained attached, the trailer drifted into the median and rolled over with the tractor, causing substantial damage. A passenger in the truck was also injured and Viking asserts it covered Link's liability as to the passenger's injuries; that coverage is not at issue here.

¶4 Walton filed suit in trial court against Link and the rental company for the damages to the tractor. Viking provided Walton a defense for this civil action, reserved its rights to deny coverage for Walton'sclaimed damages, and brought the instant suit for declaratory relief against Link and Walton. Viking's complaint asked the court to construe its policy with Link and hold that it did not cover the damages to the tractor. Viking later voluntarily dismissed its claim against the rental company with prejudice. Viking moved for summary judgment, which the court denied. Thereafter, Walton and Link settled the underlying suit pursuant to United Services Auto. Ass'n v. Morris, 154 Ariz. 113, 121 (1987).

¶5 Under the Morris agreement, Link consented to a judgment awarding $75,000 to Walton for damages of "destruction of property; loss of use; mental anguish; depression; and pain and suffering," all related to the damaged tractor. Under the agreement, in return for a covenant not to execute on the judgment, Link also assigned to Walton any claims Link had against Viking arising out Viking's issuance and subsequent denial of insurance coverage. Walton then filed a counterclaim against Viking in this case for breach of the insurance contract, negligence, and consumer fraud. Walton alleged that Viking had represented to Link that it provided "a comprehensive insurance policy which would cover the Links for all types of accidents which could happen while operating" the pickup truck. Viking later renewed its motion for summary judgment, and, following oral argument, the court denied the motion.

¶6 At the next status conference, the parties discussed the court's intended meaning of certain language in the order denying Viking's motion and whether the court had ruled in favor of Walton. The court clarified that its intent had been to rule for Walton on the merits of Walton's counterclaim and ordered his counsel to draft a judgment. The court entered its judgment on September 30, 2016, then amended the judgment on October 25 to conform with Arizona Rule of Civil Procedure 54(c).

¶7 In the judgment, the trial court held that none of the contract's exclusions limited coverage for damage to the towed tractor. The court explained that, although the policy defined the term "property damage," it did not define the term "damage to property," and that, because the policy used the term "damage to property" in the exclusion upon which Viking relied, neither "property damage" nor "loss of use" were part of the exclusion. The court further held that the policy contained no exclusion for claims regarding "mental anguish, depression and emotional distress damages." The court went on to hold that, in any event, "Link reasonably believed that he would be covered for all of his negligent acts in operating his vehicle while pulling a trailer." The court reasoned that pulling a trailer is an intended use of a pickup truck and that Link could reasonably expectthat the Viking policy would cover all damages arising out of an intended use.

¶8 Viking timely appealed from the final judgment, but we stayed the appeal after Viking filed a motion with the trial court "for new trial or in the alternative to alter or amend the judgment." The court denied the motion as to a new trial, but granted the motion to amend the judgment to allocate damages to the categories identified in the $75,000 Morris agreement and subsequent judgment. The trial court again ordered Walton to prepare a judgment, and signed its final judgment on October 23, 2017.

¶9 In the final judgment, the trial court again denied Viking's request for a new trial and apportioned damages in the amounts of $29,000 for the tractor, $36,000 for Walton's loss of use of the tractor, and $10,000 "for pain and suffering, emotional distress and mental anguish damages, for Walton not having" the tractor. Viking timely filed an amended notice of appeal from that judgment and we reinstated the appeal.

DISCUSSION

¶10 As an initial matter, the parties dispute the standard of review. On appeal, Viking now argues that no trial took place and the court entered a sua sponte summary judgment pursuant to Arizona Rule of Civil Procedure 56(h)(1) (now 56(f)(1)). Walton argues that the court converted the final status conference into a bench trial, and thus the applicable standard of review should be abuse of discretion for factual matters.

¶11 The parties do not dispute any facts, however. The only disputes presented in the briefs involve contract interpretation and the reasonable expectations doctrine, each of which we review de novo. Am. Power Prod., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 367, ¶ 12 (2017) (contract interpretation); Harrington v. Pulte Home Corp., 211 Ariz. 241, 246-47, ¶ 16 (App. 2005) ("reasonable-expectations claims may present questions of both fact and law," and we will apply the clear-error standard to review factual findings, but "[w]e will review the trial court's conclusions of law . . . de novo."). Because the parties have not argued that any errors arose from either the court's factual findings or procedural foibles, our review is de novo.

I. Contract Interpretation

¶12 In interpreting a contract, our goal is "to determine and enforce the parties' intent." Dunn v. FastMed Urgent Care PC, 793 Ariz. Adv. Rep. 20, *2, ¶ 10 (App. Jun 19, 2018). To do so, we begin with the plain meaning of the words, taken in the context of the entire contract. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009). "Where the intent of the parties is expressed in clear and unambiguous language, there is no need or room for construction or interpretation and a court may not resort thereto." Mining Inv. Grp., LLC v. Roberts, 217 Ariz. 635, 639, ¶ 16 (App. 2008) (quoting Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472 (1966)). A term of an insurance policy is ambiguous if it "is subject to conflicting reasonable interpretations." Teufel v. Am. Family Mut. Ins. Co., 244 Ariz. 383, 385, ¶ 10 (2018) (quotation omitted).

¶13 The policy insured Link's truck "subject to the terms and conditions of this policy . . . up to the limits of liability." The terms and conditions included several exclusions, including an exclusion for "[d]amage to property owned by, rented to, or being transported by, used by, or in the charge of an insured person, except damage to a private residence or garage you rent." Furthermore, the policy states: "'Property damage' means damage to or destruction of tangible property, including loss of its use." The policy also defines "insured person" as "[y]ou" or "[a]ny person using your insured car."

¶14 By the plain meaning of the contract, the tractor was tangible property that was damaged while an insured person transported it. Link, the insured person, put the tractor onto the trailer to transport it back to Walton's property. The tractor was damaged during this trip. Under these circumstances, the policy does not cover the physical damage to the tractor.

¶15 Nevertheless, Walton argues that the "loss of use" damages do not fall under the exclusion because the exclusion uses the term "damage to property" whereas the policy defines only the term "property damage." Because the policy fails to define "damage to property" as including "loss of use," Walton argues, loss of use...

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