Volquardson v. Hartford Ins. Co.

Decision Date12 July 2002
Docket NumberNo. S-01-972.,S-01-972.
Citation647 N.W.2d 599,264 Neb. 337
PartiesHelen VOLQUARDSON, Plaintiff, v. HARTFORD INSURANCE COMPANY OF THE MIDWEST, Defendant.
CourtNebraska Supreme Court

Ronald E. Temple, of Gatz, Fitzgerald, Vetter & Temple, Norfolk, for plaintiff.

Thomas H. Cellilli III and Michelle Dreesen Epstein, of Locher, Cellilli, Pavelka & Dostal, L.L.C., Omaha, for defendant.

HENDRY, C.J., and WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

STEPHAN, J.

In a pending civil action captioned "Helen Volquardson, Plaintiff v. Hartford Insurance Company of the Midwest, Defendant," No. 4:00CV3340, the U.S. District Court for the District of Nebraska certified six questions of state law to this court under the procedure established by Neb. Rev.Stat. §§ 24-219 through 24-225 (Reissue 1995). We accepted the certification request and hereby answer the certified questions, which concern the interpretation of two insurance policies issued by Hartford Insurance Company of the Midwest (the Hartford) to Helen Volquardson and William J. Volquardson.

UNCONTESTED FACTS

Pursuant to § 24-221, the U.S. District Court included in its certification request the following uncontested facts relevant to the certified questions of law: Helen is a resident of Cedar County, Nebraska, and is married to William. The Hartford is an insurer licensed and authorized to conduct business in the State of Nebraska.

The Volquardsons owned a residence, outbuildings, and a 1984 Mercury Lynx as joint tenants with rights of survivorship on July 30, 2000. The Volquardsons' residence and outbuildings were insured by a homeowner's policy issued by the Hartford, which specifically provided insurance coverage against peril of fire. The 1984 Mercury Lynx was insured by an automobile liability policy also issued by the Hartford. Helen and William were named insureds under both policies, and both policies were in effect on July 30, 2000. In 1994, the Hartford had the contents of the Volquardsons' homeowner's policy approved by the director of the Department of Insurance for the State of Nebraska.

On July 30, 2000, at approximately 8:30 a.m., William intentionally set fire to the residence, its contents, the outbuildings, and the 1984 Mercury Lynx. All of the aforementioned property was completely destroyed by the fire. William set the fire as part of a suicide attempt.

Helen was in no way involved in setting fire to the property, nor did she have any actual or constructive knowledge that William was going to set the fire. Furthermore, there is no evidence to indicate that William's actions on July 30, 2000, constituted an act of abuse as that term is defined by Neb.Rev.Stat. § 44-7402(1) (Reissue 1998).

After the fire, Helen timely complied with all conditions precedent to coverage and then made claims against the insurance policies to recover for the destroyed property, but the Hartford refused to pay. On December 22, 2000, Helen filed a complaint in the U.S. District Court for the District of Nebraska alleging she was entitled to a judgment requiring the Hartford to pay her claims for property damage pursuant to the policies. The Hartford filed an answer in which it affirmatively alleged that the intentional acts exclusion in the homeowner's policy precluded coverage for the damage to the residence, its contents, and the outbuildings because William had intentionally burned the property. The Hartford also affirmatively alleged that part D of the insuring agreement in the automobile liability policy, which stated that the Hartford would pay for only "direct and accidental loss" to a covered automobile, prevented Helen from recovering for the damage to the 1984 Mercury Lynx.

The U.S. District Court also provided certain documents for our review and consideration in responding to the certified questions. These documents include the complaint and answer filed in the pending federal action, the two insurance policies issued by the Hartford and identified in the uncontested facts, and the 1943 New York Standard Fire Insurance Policy (1943 NYSFIP) certified by the State of Nebraska, Department of Insurance.

CERTIFIED QUESTIONS

The U.S. District Court certified the following six questions of state law for resolution by this court:

1. Is the language of the intentional acts exclusion in SECTION [I]-EXCLUSIONS, Paragraph 1.h.1. and 1.h.2 of Hartford's Homeowner's Policy ambiguous?

2. Is the intentional acts exclusion in SECTION [I]—EXCLUSIONS, Paragraph 1.h.1. and 1.h.2 of the Hartford's Homeowner's Policy contrary to the public policy of Nebraska, as expressed by statute and case law, when applied to preclude coverage against peril of fire to an innocent co-insured?
3. Does the intentional acts exclusion in SECTION [I]—EXCLUSIONS, Paragraph 1.h.1 and 1.h.2 of the Hartford's Homeowner's Policy comply with the provisions of § 44-501(6), R.R.S. 1998, and provide the substantial equivalent of the minimum provisions of the 1943 New York Standard Fire Insurance Policy?

4. If the answer to Question No. 3 is "no," did the Director of Insurance of the State of Nebraska, pursuant to § 44-501(11), R.R.S.1998, have the lawful authority in 1994 to approve the variations in Hartford's Homeowners policy notwithstanding its noncompliance with the 1943 New York Standard Fire Insurance Policy?

5. Is the language "direct and accidental loss" in the insuring agreement in PART D—COVERAGE FOR DAMAGE TO YOUR AUTO, Paragraph A. of Hartford's Auto Policy ambiguous?
6. Is the language "direct and accidental loss" in the insuring agreement in PART D—COVERAGE FOR DAMAGE TO YOUR AUTO, Paragraph A. of Hartford's Auto Policy contrary to the public policy of Nebraska, as expressed by statute and case law, when applied to preclude comprehensive coverage to an innocent co-insured?
ANALYSIS
INTRODUCTION

Certain well-established principles of Nebraska law form the foundation for our resolution of the questions of law certified by the U.S. District Court. An insurance policy is a contract. Ohio Cas. Ins. Co. v. Carman Cartage Co., 262 Neb. 930, 636 N.W.2d 862 (2001); Callahan v. Washington Nat. Ins. Co., 259 Neb. 145, 608 N.W.2d 592 (2000); Neb.Rev.Stat. § 44-102 (Reissue 1998). Parties to an insurance contract may contract for any lawful coverage, and the insurer may limit its liability and impose restrictions and conditions upon its obligation under the contract not inconsistent with public policy or statute. Hood v. AAA Motor Club Ins. Assn., 259 Neb. 63, 607 N.W.2d 814 (2000); American Family Ins. Group v. Hemenway, 254 Neb. 134, 575 N.W.2d 143 (1998). In an appellate review of an insurance policy, the court construes the policy as any other contract to give effect to the parties' intentions at the time the writing was made. Where the terms of a contact are clear, they are to be accorded their plain and ordinary meaning. Austin v. State Farm Mut. Auto. Ins. Co., 261 Neb. 697, 625 N.W.2d 213 (2001); Callahan v. Washington Nat. Ins. Co., supra.

QUESTION ONE The first certified question asks this court to determine whether the intentional acts exclusion in the Volquardsons' homeowner's policy is ambiguous. The exclusion provides:

SECTION I—EXCLUSIONS

1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss:
....
h. Intentional Loss, meaning any loss arising out of any act committed:
(1) By or at the direction of an insured; and
(2) With the intent to cause a loss.

Helen argues that the phrase "an insured" is ambiguous as to whether an innocent coinsured may recover despite the intentional act(s) of a coinsured, because the phrase does not exclude coverage for the intentional act(s) of "any insured." The Hartford argues that the language is not ambiguous and that the plain meaning of the exclusion negates coverage to Helen based upon the intentional acts of her husband, who is "an insured" under the policy.

In Nebraska, a contract, such as an insurance policy, is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. Tighe v. Combined Ins. Co. of America, 261 Neb. 993, 628 N.W.2d 670 (2001); Callahan v. Washington Nat. Ins. Co., supra. However, the fact that parties to a document have or suggest opposing interpretations of the document does not necessarily, or by itself, compel the conclusion that the document is ambiguous. Id.; Moller v. State Farm Mut. Auto. Ins. Co., 252 Neb. 722, 566 N.W.2d 382 (1997). Moreover, while an ambiguous insurance policy will be construed in favor of the insured, ambiguity will not be read into policy language which is plain and unambiguous in order to construe against the preparer of the contract. Callahan v. Washington Nat. Ins. Co., supra; American Family Ins. Group v. Hemenway, supra.

This court has not previously determined whether the phrase "an insured" in an insurance policy clearly and unambiguously creates joint rights and obligations on the part of coinsureds, or whether the phrase is ambiguous and should therefore be construed in favor of a coinsured who does not participate in an excluded loss. Those courts which have addressed this issue have reached strikingly dissimilar conclusions. In Michigan Millers Mut. Ins. Corp. v. Benfield 140 F.3d 915 (11th Cir.1998), for example, the court held that the phrase "an insured" in the homeowner's policy under consideration was ambiguous because it did not clearly impose joint obligations on the part of coinsureds. In determining that an ambiguity existed, the Benfield court noted that the phrases "an insured" and "the insured" were used throughout the policy "with apparent interchangeability." Id. at 926. The same is true of the Hartford policy under consideration here.

In McFarland v. Utica Fire Ins. Co., 814 F.Supp. 518, 525 (S.D.Mi...

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