Curtis v. Farmers Ins.

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J. Kent Curtis, Bonnie L. Curtis, John H. Wilcox, and Kathleen Wilcox,
Plaintiffs and Appellants,

v.

Farmers Insurance Exchange and John Paris,
Defendants and Appellees.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 990058-CA

F I L E D
January 21, 2000
  2000 UT App 007 -----

Third District, Salt Lake Department
The Honorable Roger A. Livingston

Attorneys:
Daniel F. Bertch and Kevin K. Robson, Salt Lake City, for Appellants
Aaron Alma Nelson, Salt Lake City, for Appellees

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Before Judges Greenwood, Davis, and Orme.

GREENWOOD, Associate Presiding Judge:

J. Kent and Bonnie Curtis and John H. and Kathleen Wilcox (the insureds) appeal from an order granting summary judgment in favor of Farmers Insurance Exchange and John Paris (collectively Farmers) and denying their cross-motion for summary judgment. We affirm.

Summary judgment is appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Utah R. Civ. P. 56(c). "In this case, there are no issues of material fact, and our review is limited to determining whether the district court correctly applied the governing law." S.W. Energy Corp. v. Continental Ins. Co., 974 P.2d 1239, 1242 (Utah 1999). In particular, so long as extrinsic evidence is not necessary in order to construe an ambiguity, interpretation of an insurance policy, like any other written contract, is a question of law which we review for correctness. See id.

The insureds claim the trial court erred in concluding that Farmers appropriately denied them insurance coverage when heavy snow collapsed their mountain cabin. The insureds argue the insurance contract for the cabin is ambiguous because the terms of the insurance application are inconsistent with the terms of the issued policy. The insureds further assert the insurance contract consists of both the application and the issued policy, although the application was not attached to the policy at the time of delivery.(1)

An insurance contract is subject to normal rules of contract construction. See Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272, 1274 (Utah 1993). "Courts determine the legal import of insurance policies, affording the policy terms their usually accepted meanings and giving effect to and harmonizing to the extent possible all policy provisions." S.W. Energy Corp., 974 P.2d at 1242. When an insurance policy is ambiguous, we construe the policy in favor of the insured; however, when a policy is not ambiguous, there is no presumption in favor of coverage and we construe the policy pursuant to its ordinary meaning. See id.

"A policy is ambiguous only if it is not '"plain to a person of ordinary intelligence and understanding."'" First Am. Title Ins. v. J.B. Ranch, 966 P.2d 834, 836 (Utah 1998) (citations omitted). Insurance contracts may be ambiguous because they are unclear, omit terms, or use terms with two or more plausible meanings. See id. at 837. "'However, policy terms are not necessarily ambiguous just because one party seeks to endow them with a different interpretation according to his or her own interests.' Rather, the other interpretation proposed must be plausible and reasonable in light of the language used." Id. (citations omitted).

The insurance policy at issue does not extend coverage for damage caused by the weight of snow,(2) and the insureds do not claim the policy itself is ambiguous. Instead, they argue that the ambiguity is created by the application which contains a box labeled "All Perils" in a section entitled "Deductibles," checked "yes," with the amount of $500 written below it. The insureds contend, based on the application's language, they reasonably believed and were entitled to an insurance policy for "all perils," including coverage for snow damage. We disagree.

The insured's interpretation of the application's language is not plausible or reasonable. The section upon which the insureds rely only describes deductible amounts (in this case, $500 for all perils to be covered) and has no bearing on the scope of coverage. As such, the application creates no ambiguity when compared with the policy itself. Further, "all perils" insurance policies may include limits in coverage. See Alf, 850 P.2d at 1274 (upholding exclusion for loss due to earth movement in "all risks" homeowners insurance policy).

Finally, the insureds argue the contract is ambiguous because they reasonably believed the policy was an "all perils" policy, citing conversations they had with a Farmers' insurance agent. In making this argument, the insureds implicitly encourage us to consider their reasonable expectations. The Utah Supreme Court considered reasonable expectations evidence in Allen v. Prudential Property & Cas. Ins., 839 P.2d 798, 805 (Utah 1992), and rejected the reasonable expectations doctrine and expressed its unwillingness to alter the terms of an insurance policy based on the expectations or intent of the insured. See id. After Allen, Utah appellate courts have consistently rejected the reasonable expectations doctrine. See, e.g., AOK Lands, Inc. v. Shand, Morahan & Co., 860 P.2d 924, 927 (Utah 1993); Alf, 850 P.2d at 1275; National Farmers Union Property & Cas. Co. v. Moore, 882 P.2d 1168, 1169 (Utah Ct. App. 1994). Therefore, we reject the insured's intent or reasonable expectations arguments.

Accordingly, we affirm the trial court's grant of summary judgment in favor of Farmers.
 
 
 

______________________________
Pamela T. Greenwood,
Associate Presiding Judge

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WE CONCUR:
 
 
 
 

______________________________
James Z. Davis, Judge
 
 
 
 

______________________________
Gregory K. Orme, Judge

1. Farmers asserts the application is part of the insurance contract only if it is attached to the policy when delivered. Both parties base their arguments on different interpretations of section 31A-21-106(1) of the Utah Code, which provides that an "insurance policy may not contain any agreement or incorporate any provision not fully set forth in the policy or in an application or other document attached to and made a part of the policy at the time of its delivery." Utah Code. Ann. § 31A-21-106(1)(1999) (emphasis added). Because we find no inconsistency between the application and the issued policy, we do not reach this issue.

2. The policy states, "This insurance applies to the Described Location, Coverage for which a Limit of Liability is shown and Perils Insured Against for which a Premium is stated." The policy further lists "Perils Insured Against" as including (1A) fire or lightning; (1B) internal explosion; (2) windstorm or hail; (3) explosion; (4) riot or civil commotion; (5) aircraft; (6) vehicles; (7) smoke; and, (8) vandalism or malicious mischief.