LEWIS J. HAMPTON; MICHAEL WORTHINGTON and TERESA WORTHINGTON v. KENTUCKY GROWERS INSURANCE, INC.
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RENDERED:
AUGUST 31, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 2000-CA-001609-MR
LEWIS J. HAMPTON;
MICHAEL WORTHINGTON and
TERESA WORTHINGTON
v.
APPELLANTS
APPEAL FROM GREENUP CIRCUIT COURT
HONORABLE LEWIS D. NICHOLLS, JUDGE
CIVIL ACTION NO. 97-CI-00662
KENTUCKY GROWERS INSURANCE, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
HUDDLESTON, KNOPF and TACKETT, Judges.
HUDDLESTON, Judge:
Lewis J. Hampton, Michael Worthington and
Teresa Worthington (hereinafter sometimes collectively referred to
as “Hampton”) appeal from a Greenup Circuit Court order that denied
their motion to alter, amend or vacate the court’s prior order
dismissing their complaint against Kentucky Growers Insurance Co.,
Inc. for lack of prosecution.
In July 1996, the appellants purchased a homeowner’s
insurance policy from Kentucky Growers for the residence where
Lewis Hampton lived.1
In July 1997, a water hose connecting the
washing machine to the water pipe burst while Lewis Hampton was on
vacation resulting in extensive damage on the second and first
floors of the residence.
When Hampton attempted to file a claim,
a representative of Kentucky Growers told him that the damage was
not covered under the insurance policy.
On November 25, 1997, Hampton filed a complaint claiming
coverage for the water damage based on the insurance policy and
Kentucky Growers’ failure to pay under the contract.
On December
15, 1997, Kentucky Growers filed an answer acknowledging the
existence of the insurance policy but denying coverage under the
contract.
At the same time, it propounded its first set of
interrogatories and request for documents. Nothing happened in the
case until January 1998 when Kentucky Growers took the depositions
of each of the three appellants.
On December 30, 1998, Hampton filed a motion for summary
judgment pursuant to Kentucky Rules of Civil Procedure (CR) 56.01.
He asserted that there was no factual dispute that he had suffered
water damage from a burst hose connected to the washing machine.
Hampton
alleged
that
Kentucky
Growers
was
liable
under
the
“Explosions” provision of the insurance policy, which did not
specifically include an explosion from a water hose among its list
of exclusions.
The motion included an affidavit from one of Lewis
Hampton’s daughters stating that she
discovered water damage
caused by a ruptured water hose.
1
The residence was owned by Teresa and
Worthington, Lewis Hampton’s daughter and son-in-law.
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Michael
In January 1999, Kentucky Growers filed a response to
Hampton’s motion for summary judgment and a motion to compel a
response to its discovery requests.
It argued that the situation
was not an explosion covered by the insurance policy.
On January
14, 1999, the circuit court conducted a hearing on the summary
judgment motion and the motion to compel.
The court orally denied
the summary judgment motion and granted the motion to compel.
While the court entered a written order on the motion to compel, it
did not issue a written order on the summary judgment motion.
Again there was no activity in the case for over a year,
so on February 21, 2000, the court issued a notice to dismiss for
lack of prosecution under CR 77.02(2) and scheduled a show cause
hearing for April 27.
On April 24, 2000, Hampton filed a response
to the notice to dismiss in which he requested a review of his
motion for summary judgment because he was without knowledge that
the court had ruled on the motion.
On April 27, 2000, Kentucky
Growers appeared for the show cause hearing and filed a response to
the renewed motion for summary judgment.
At the hearing, Kentucky
Growers restated the arguments it raised in its initial response to
the summary judgment motion.
Hampton’s attorney failed to appear
for the show cause hearing, so after Kentucky Growers presented its
position, the court indicated it would take the matter under
submission.
On May 11, 2000, the circuit court entered an order
dismissing the complaint without prejudice for lack of prosecution
under CR 77.02(2).
On May 19, 2000, Hampton filed a CR 59.05
motion to alter, amend or vacate the order dismissing the complaint
for lack of prosecution stating he had filed a response to the show
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cause notice to dismiss in which he requested a continuance of the
action and an order directing the parties to engage in mediation.
On May 23, 2000, Kentucky Growers filed a response to the CR 59.05
motion stating the motion failed to set forth any justification for
vacating the order of dismissal.
On May 25, 2000, the court conducted a hearing on the CR
59.05 motion with attorneys for both parties arguing the merits of
Hampton’s request for summary judgment. On June 1, 2000, the court
entered an order denying the motion to alter, amend or vacate the
prior order dismissing the complaint for lack of prosecution.
The
court stated that after reviewing the motion for summary judgment,
it was again denying the motion.
It said, “The Court is convinced
that under the terms of the insurance policy, the Defendant has no
liability.
Therefore, the Court will not resurrect this case
pursuant to the terms of the insurance policy.
Since the case was
dismissed with out [sic] prejudice, however, the Plaintiffs may
refile the case but only with a cause of action other than
contract.”
This appeal followed.
As an initial matter, we recognize the unusual procedural
posture
of
this
case,
which
affects
the
standard
of
review.
Hampton’s initial motion for summary judgment was denied by the
circuit court.
Due to inactivity in the case, the court issued a
show cause notice of dismissal under CR 77.02(2).
CR 77.02(2) is
a “housekeeping” rule designed to expedite the removal of stale
cases from the docket.2
A dismissal for lack of prosecution
2
Hertz Commercial Leasing Corp. v. Joseph Ky. App., 641
S.W.2d 753, 755 (1982); Bohannon v. Rutland, Ky., 616 S.W.2d 46
(1981).
-4-
pursuant to CR 77.02(2) operates as a dismissal without prejudice.3
Dismissal of a claim with prejudice acts as an adjudication on the
merits and bars subsequent assertion of the cause of action under
the doctrine of res judicata.4
Meanwhile, dismissal of a claim
without prejudice does not prevent a party from refiling and
raising the same cause of action at a later time.
Summary judgment
constitutes an adjudication on the merits.
In the current case, Hampton’s initial motion for summary
judgment was denied by the circuit court; however, it failed to
enter an order and merely noted its ruling on the court calender,
which is insufficient to constitute an order or judgment.5
Hampton
renewed his summary judgment motion through his CR 59.05 motion to
alter, amend or vacate and asked the court to reconsider the issues
raised in the summary judgment motion as part of the CR 59.05
motion involving the order of dismissal under CR 77.02(2).
The
court’s order denying the CR 59.05 motion states that it had
reconsidered the issues in the summary judgment motion and that
Kentucky Growers had no liability under the insurance policy.
The
court further stated that Hampton could refile the case but could
not reassert a contracts claim.
the
merits
within
prosecution
under
the
CR
This mixing of an adjudication on
framework
77.02(2)
of
a
dismissal
introduces
inconsistency in the circuit court’s action.
3
for
lack
confusion
of
and
Hampton argues that
See CR 77.02(2) and CR 41.02(3).
4
See, e.g., Commonwealth v. Hicks, Ky., 869 S.W.2d 35
(1994); Polk v. Wimsatt, Ky. App., 689 S.W.2d 363 (1985); Hertz,
supra, n. 2.
5
See CR 58; Hertz, supra, n. 2.
-5-
the circuit court dismissed the action based on its view of the
merits rather than for a lack of prosecution, and therefore should
be considered in the nature of a summary judgment for Kentucky
Growers.
We agree that the circuit court’s order constitutes an
adjudication on the merits and should be treated as a summary
judgment.
Thus, we will review the appeal under the standards
applicable to summary judgment, rather than those for dismissal for
lack of prosecution.
The law involving interpretation of insurance policies
shares many of the same principles for contracts generally, but
with a few nuances.
“The words employed in insurance policies, if
clear and unambiguous, should be given their plain and ordinary
meaning.”6
favor
of
Insurance contracts should be liberally construed in
the
insured
and
any
exclusions
construed in favor of coverage.7
should
be
strictly
However, insurance policies
should be construed according to the mutual intention of the
parties deducible, if possible, from the language of the contract.8
Under the doctrine of reasonable expectations, an insured is
entitled to all the coverage he may reasonably expect to be
6
Nationwide Mut. Ins. Co. v. Nolan, Ky., 10 S.W.3d 129,
131 (1999); Sutton v. Shelter Mut. Ins. Co., Ky. App., 971 S.W.2d
807, 808 (1997); City of Louisville v. McDonald, Ky. App., 819
S.W.2d 319, 320 (1991).
7
See Kentucky Farm Bureau Mut. Ins. Co. v. McKinney, Ky.,
831 S.W.2d 164, 166 (1992); Transport Ins. Co. v. Ford, Ky. App.,
886 S.W.2d 901, 904 (1994).
8
Nolan, supra, n. 6 at 131-32; National Ins. Underwriters
v. Lexington Flying Club, Inc., Ky. App., 603 S.W.2d 490, 493
(1979).
-6-
provided
under
expectations
subjective,
the
terms
doctrine
analysis
conspicuous,
plain
of
involves
of
and
the
clear
policy.9
the
an
The
objective,
policy
and
reasonable
rather
than
circumstances.10
manifestation
of
the
A
insurance
company’s intent to exclude coverage will defeat the insured’s
expectation
of
coverage.11
Both
the
principles
of
strict
construction and the doctrine of reasonable expectations apply only
when the language of the insurance contract is ambiguous.12
As the
court stated in St. Paul Ins. Co. v. Powell-Walton-Milward, Inc.:13
The rule of strict construction against an insurance
company certainly does not mean every doubt must be
resolved
against
it
and
does
not
interfere
with
a
reasonable interpretation consistent with the parties’
object and intent or narrowly expressed in the plain
meaning and/or language of the contract.
Neither should
a nonexistent ambiguity be utilized to resolve a policy
against the company.
We consider that courts should not
9
Marcum v. Rice, Ky., 987 S.W.2d 789, 791 (1999); Hendrix
v. Fireman’s Fund Ins. Co., Ky. App., 823 S.W.2d 937, 938
(1991)(citing Woodson v. Manhattan Life Ins. Co., Ky., 743 S.W.2d
835, 839 (1987)).
10
Consolidated American Ins. Co. v. Anderson, Ky. App.,
964 S.W.2d 811, 814-15 (1998); Marcum, supra, n. 9 at 791; Estate
of Swartz v. Metropolitan Property and Cas. Co., Ky. App., 949
S.W.2d 72, 75 (1997).
11
Philadelphia Indemnity Ins. Co. v. Morris, Ky., 990
S.W.2d 621, 625 (1999).
12
Peoples Bank and Trust Co. v. Aetna Cas. and Surety Co.,
113 F.3d 629, 636 (6th Cir. 1997)(applying Kentucky law).
13
Ky., 870 S.W.2d 223 (1994).
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rewrite an insurance contract to enlarge the risk to the
insurer.14
The standard of review on appeal when a trial court
grants summary judgment is “whether the trial court correctly found
that there were no genuine issues as to any material fact and that
the moving party was entitled to judgment as a matter of law.”15
The court must view the evidence in the light most favorable to the
nonmoving party and resolve all doubts in favor of that party.16
The moving party bears the initial burden of showing that no
genuine issue of material fact exists, and then the burden shifts
to the party opposing summary judgment to present “at least some
affirmative evidence showing that there is a genuine issue of
material fact for trial.”17
In the case under consideration, as discussed earlier, we
treat the trial court’s dismissal as a summary judgment on the
merits.
Although Kentucky Growers did not formally move for
summary judgment, it argued in its response to Hampton’s motion for
summary judgment that there was no liability under the insurance
policy.
The trial court had authority to consider and enter
14
Id. at 226-27. See also Meyers v. Kentucky Medical Ins.
Co., Ky. App., 982 S.W.2d 203 (1997).
15
Scifres v. Kraft, Ky. App., 916 S.W.2d 779, 881 (1996);
Palmer v. International Ass’n of Machinists & Aerospace Workers,
Ky., 882 S.W.2d 117, 120 (1994); CR 56.03.
16
Steelvest, Inc. v. Scansteel Service Center Inc., Ky.,
807 S.W.2d 476, 480 (1991); Leslie v. Cincinnati Sub-Zero Products,
Inc., Ky. App., 961 S.W.2d 799, 804 (1998).
17
Steelvest, supra, n. 16 at 482. See also Hubble v.
Johnson, Ky., 841 S.W.2d 169, 171 (1992); Hibbitts v. Cumberland
Valley Nat’l Bank and Trust Co., Ky. App., 977 S.W.2d 252, 253
(1998).
-8-
summary judgment in favor of Kentucky Growers upon a finding that
no genuine issues of fact existed and Kentucky Growers was entitled
to judgment as a matter of law because Hampton’s renewal of his
summary judgment motion put the relevant issues before the court,
and a formal motion by Kentucky Growers was not required.18
In
addition, the trial court conducted two hearings on Hampton’s
motion for summary judgment and he was allowed to fully argue the
issues therein.
Hampton argues the trial court erred in construing the
insurance policy.
He contends that the damage caused by the burst
water hose was covered by the homeowner’s insurance policy, and
that the disputed issue of coverage is factual one precluding
summary judgment.
Hampton’s claim to coverage relies on the
section discussing explosions in the contract, which provides as
follows:
3.
EXPLOSION, including direct loss resulting from the
explosion of accumulated gases or unconsumed fuel with
the firebox (or combustion chambers) of any fire vessel
or within the flues or passages which conduct the gases
or
combustion
therefrom;
but
excluding
loss
from
explosion, rupture or bursting of steam boilers, steam
pipes, steam engines or rotating parts of machinery
caused by centrifugal force, if owned by, leased by, or
18
See Green v. Bourbon County Joint Planning Commission,
Ky., 637 S.W.2d 626 (1982); Collins v. Duff, Ky., 283 S.W.2d 179
(1955); Cellular Telephone Co. v. Commonwealth Revenue Cabinet, Ky.
App., 897 S.W.2d 601 (1995)(“If the trial court, in ruling on one
party’s motion for summary judgment, determines that the other
party is entitled to the relief they seek, then a motion for
summary judgment by that party is not required”).
-9-
actually operated under the control of the insured or
located in the insured building(s) or in building(s)
containing the property insured.
The following are not explosions within the meaning of
these
provisions:
(a)
Concussion
unless
caused
by
explosion, (b) Electrical arcing, (c) Water hammer, (d)
Rupture or bursting of water pipes, (e) Sonic Boom.
Hampton asserts that the determinative issue on appeal is
whether a hose is a pipe.
He maintains that because the word
“hose” does not specifically appear in the exceptions listed in the
Explosion provision, damage related to a burst hose is covered by
the policy.
He further contends that a hose is not a pipe, and
therefore is not excluded under the exception for the rupture or
bursting of water pipes.
We begin with Hampton’s contention that the coverage
issue is a material issue
of fact in dispute.
First, this
assertion is contrary to the position Hampton presented in his
motion for summary judgment.
A party generally may not raise an
issue or argument on appeal that was not raised before the trial
court.19
Additionally, this issue involves interpretation of the
insurance policy, which is a matter of law for the court.20
Thus,
there are no genuine issues of material fact in dispute.
19
See Commonwealth v. Lavit, Ky., 882 S.W.2d 678, 680
(1994); Kennedy v. Commonwealth, Ky., 544 S.W.2d 219, 222 (1976).
20
Stone v. Kentucky Farm Bureau Mut. Ins. Co., Ky. App.,
34 S.W.3d 809, 810 (2000); Foster v. Kentucky Housing Corp., 850
F.Supp. 558, 560-61 (E.D. Ky. 1994)(applying Kentucky law); Perry’s
Adm’x v. Inter-Southern Life Ins. Co., 254 Ky. 196, 71 S.W.2d 431
(1934).
-10-
Hampton’s second argument that his homeowners policy
covered the damage caused by the burst water hose is likewise
without merit.
The Explosion provision provides coverage for gas
or fuel explosions but specifically exempts situations involving
the rupture or bursting of water pipes and water hammer.
A “pipe”
is defined as “a long tube or hollow body for conducting a liquid,
gas, or finely divided solid” or “a tubular or cylindrical object,
part, or passage.”21
or
sound
of
A “water hammer” is defined as “a concussion
concussion
moving
water
against
the
sides
of
a
containing pipe or vessel (as a steam pipe).”22 A “hose” is defined
as “a flexible tube for conveying fluids (as from a faucet or
hydrant).”23
The plain, ordinary meaning of pipe would reasonably
include a hose used to connect an appliance such as a washing
machine to the main source of water in the house.
In this
situation, the hose was merely an extension of the metal pipe and
served the same purpose.
The list of situations excluded from the
Explosion section is not necessarily exhaustive and the failure to
use the exact word “hose” does not preclude a finding that the
rupture or bursting of a water hose is a covered explosion.
Furthermore, Hampton has not shown that the doctrine of
reasonable
expectations
insurance policy.
compels
finding
coverage
under
the
Hampton testified that he believed the policy
covered his situation because homeowner’s insurance is supposed to
21
Webster’s Ninth New Collegiate Dictionary (1988).
22
Id.
23
Id. See also Encarta World English Dictionary (1999),
defining “hose” as “a flexible tube or pipe, often made of rubber
or plastic through which fluids such as water or gasoline can
flow.”
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cover accidents at home and protect property.
He was unable to
identify any language in the contract to support his belief of a
broad all-encompassing scope of coverage.
contains numerous exclusions.
Indeed, the policy
An objective review of the policy
and the record does not indicate that he paid for extended coverage
for water related damage.
In conclusion, even taking in consideration the principle
of construing insurance contracts in favor of the insured, the
policy
language
is
sufficiently
clear
under
a
reasonable
interpretation that the damage caused by the burst water hose in
this
situation
was
insurance policy.
not
covered
under
Hampton’s
homeowner’s
Consequently, there was no genuine issue of
material fact in dispute and Kentucky Growers was entitled to
judgment as a matter of law.
Treating the order as a summary
judgment, we hold that the trial court did not err in dismissing
the complaint.
The judgment is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Michael C. Wilson
Russell, Kentucky
J. Clarke Keller
Daniel E. Danford
Lexington, Kentucky
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