Western Heritage Ins. Co. v. Green

• Decision Date: 09 August 2002
• Docket Number: No. 26826.,26826.
• Citation: 54 P.3d 948,137 Idaho 832
• Parties: WESTERN HERITAGE INSURANCE COMPANY, Plaintiff-Counterdefendant-Appellant, v. Don R. GREEN and Laurel Green, Individually and as husband and wife, Defendants-Respondents, and J.R. Simplot Company, a Nevada Corporation, Defendant in Intervention-Counter-claimant-Respondent.
• Court: Idaho Supreme Court

54 P.3d 948

137 Idaho 832

WESTERN HERITAGE INSURANCE COMPANY, Plaintiff-Counterdefendant-Appellant, v. Don R. GREEN and Laurel Green, Individually and as husband and wife, Defendants-Respondents, and J.R. Simplot Company, a Nevada Corporation, Defendant in Intervention-Counter-claimant-Respondent.

No. 26826.

Supreme Court of Idaho, Boise, May 2002 Term.

August 9, 2002.

Lerma Law Office, P.A., Boise, for appellant. Michael G. Brady argued.

Brent M. Morgan, Pocatello, for respondent Green. Brent Morgan argued.

Cantrill, Skinner, Sullivan & King, LLP, Boise, for respondent Simplot. Robert D. Lewis argued.

TROUT, Chief Justice.

This is a declaratory judgment action interpreting a manufacturers' and contractors' Commercial General Liability insurance policy issued by Western Heritage Insurance Company ("Western Heritage") to Don and Laurel Green (the "Greens").

I. FACTUAL AND PROCEDURAL BACKGROUND

Western Heritage initiated this declaratory judgment action asking for the interpretation of its Commercial General Liability insurance policy with broad form property damage coverage issued to the Greens for the purpose of covering the Greens' commercial agricultural chemical application business during the period April 4, 1994 to April 4, 1995. J.R. Simplot Company ("Simplot") intervened in this case on the basis it is entitled to indemnification under the policy.

Sometime in the Spring of 1994, Ty Nedrow and Tuck Nedrow d/b/a the Nedrow Brothers (the "Nedrows") contracted with Simplot for the purchase of fertilizer and weed control and the application of those chemicals to their farmland in Fremont County. In turn, Simplot contracted with the Greens to apply the chemicals sold to the Nedrows. The fertilizer and weed control was to be applied to the farm ground prior to the planting of a potato crop. During the course of the application, the nozzles on the sprayer used to apply the chemicals became plugged, causing some areas of the fields to be skipped and other areas to be insufficiently sprayed. At the time, the exact area affected was unknown.

The Nedrows planted the entire field with potatoes after this incident had occurred. When the potato crop initially emerged, everything seemed normal. However, over the course of several weeks of growth, weeds began to appear in the strips where there was little or no chemical application. The weeds grew large and the potato foliage in these strips gradually yellowed and started to die. When plants from these strips were pulled, it was discovered that the affected plants had poor root systems. When the potatoes were harvested, fewer potatoes were produced, and the quality had been greatly diminished, as the potatoes were slimmer, rougher, blemished and hooked on the ends. Many of the potatoes were not marketable.

In June, 1995, the Nedrows filed a lawsuit against Simplot claiming damages in the amount of $180,000 for economic losses resulting from the diminution in yield from the 1994 potato crop due to this error in application. The Greens were not named as defendants in the lawsuit. Simplot tendered defense of the Nedrows' lawsuit to the Greens, who in turn tendered it to Western Heritage. Western Heritage recognized coverage under its policy and engaged counsel to defend Simplot in the lawsuit, but submitted a letter to the Greens identifying an "Endorsement limiting liability," limiting coverage to only $25,000 for crop spraying activities.

The Nedrows' lawsuit against Simplot was eventually settled for $128,000. Simplot contributed $103,000 towards the settlement and Western Heritage contributed $25,000.

On February 6, 1996, Simplot filed suit against Western Heritage on the basis it was a co-insured, arguing the policy provided coverage up to $500,000. The claim was subsequently amended to allege Simplot had been assigned the Greens' right to pursue a claim for damages under the policy. This action was dismissed on the basis Simplot was not an insured under the policy, and because no claim had been filed against the Greens, there was no basis for coverage under the policy. This Court upheld the dismissal in J.R. Simplot Company v. Western Heritage Insurance Company, 132 Idaho 582, 977 P.2d 196 (1999).

On August 8, 1997, the Greens filed a Chapter 13 bankruptcy action, later amended to a Chapter 7 proceeding. On November 26, 1997, Simplot filed a motion to lift the bankruptcy stay in order to pursue an action against the Greens to the extent of insurance coverage. That motion was granted, and on March 2, 1998, Simplot filed an action against the Greens for indemnification based upon the damages suffered as a result of the Nedrows' crop loss claim. The Greens tendered the claim to Western Heritage pursuant to its insurance policy.

Western Heritage denied coverage beyond the $25,000 already paid and filed this declaratory action against the Greens seeking a determination of their legal obligations under the policy. Simplot was permitted to intervene.

Both Simplot and Western Heritage moved for summary judgment. On February 24, 2000, the district judge issued a Memorandum Decision and Order denying both motions, finding there were issues of material fact regarding whether or not the Greens' misapplication or non-application of fertilizer and herbicide caused property damage as covered by the policy. The district judge ordered a court trial to resolve this issue.

A court trial was held on March 20-21, 2000. On June 9, 2000, the trial judge issued a Memorandum Decision and Order, concluding coverage existed up to $500,000 based upon his finding that the Nedrows' potato plants were "tangible property" which were damaged under the insurance policy, and that no applicable exclusions and/or endorsements applied.

Simplot and the Greens moved for costs and attorney's fees. The trial judge then issued a third Memorandum Decision and Order, awarding the Greens and Simplot costs and attorney's fees under Idaho Code § 41-1839.

II. STANDARD OF REVIEW

A trial judge's findings of fact in a court tried case will be liberally construed on appeal in favor of the judgment entered, in view of the trial judge's role as trier of fact. Conley v. Whittlesey, 133 Idaho 265, 269, 985 P.2d 1127 (1999); Lindgren v. Martin, 130 Idaho 854, 857, 949 P.2d 1061, 1064 (1997). Review of the trial judge's decision is limited to ascertaining whether the evidence supports the findings of fact and whether the findings of fact support the conclusions of law. Conley at id. If the findings of fact are based on substantial evidence, even if the evidence is conflicting, they will not be overturned on appeal. Id. However, this Court exercises free review over questions of law. Id.

III. DISCUSSION

1. We decline to review the denial of summary judgment.

This Court has adopted the general rule that an order denying a motion for summary judgment is not reviewable on appeal from a final judgment. Leavitt v. Swain, 133 Idaho 624, 631, 991 P.2d 349, 356 (1999) (holding the denial of a motion for summary judgment on an issue which is later submitted to the jury is not reviewable); Watson v. Idaho Falls Consol. Hosps., Inc., 111 Idaho 44, 46, 720 P.2d 632, 634 (1986); P.N. Cedar, Inc. v. D & G Shake Co., 110 Idaho 561, 565, 716 P.2d 1333, 1337 (Ct.App. 1986) (declining to review the denial of the summary judgment motion on issue later submitted to the court).

The rationale of this rule, as articulated by the Court of Appeals in Evans v. Jensen, 103 Idaho 937, 942, 655 P.2d 454, 459 (Ct.App. 1982), is that review of the denial of summary judgment motions would be unjust to the party who prevailed at trial after the evidence was more completely presented and would be inconsistent with the admonition given to trial courts to resist granting motions for summary judgment if doubt exists as to a party's right to a trial. Id. The Court of Appeals in Evans noted that an improper denial of a motion for summary judgment does not constitute reversible error because the result becomes merged in the subsequent trial. Id.

Based upon this rule, we decline to review the denial of Western Heritage and Simplot's motions for summary judgment.

2. The district judge erred in holding the policy provided the Greens insurance coverage for property damage in excess of $25,000.

This Court's standard of review concerning a lower court's interpretation of an insurance contract depends on whether the contract is ambiguous. Ryals v. State Farm Mut. Auto. Insur. Co., 134 Idaho 302, 304, 1 P.3d 803, 805 (2000); DeLancey v. DeLancey, 110 Idaho 63, 65, 714 P.2d 32, 34 (1986). Determination of whether a document is ambiguous is itself a question of law. DeLancey at id. Interpretation of an ambiguous document presents a question of fact. Id. On the other hand, interpretation of an unambiguous document is a question of law subject to free review. Ryals at id; DeLancey at id.

To determine whether the Western Heritage insurance policy is ambiguous, this Court is to look at the relevant provisions. See id. The relevant coverage provisions of the Western Heritage Insurance policy provide:

COVERAGE B—PROPERTY DAMAGE LIABILITY

The company will pay on behalf of the insured all sums that the insured shall become legally obligated to pay as damages because of ...

B. property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such ... property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

Thus, the claim against Western Heritage is only viable if the crop spraying activities...