Case Title: Moore v. Continental Ins. Co.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1991-06-21T00:00:00Z

Document:
Moore v. Continental Ins. Co.1991 WY 92813 P.2d 1296Case Number: 90-241Decided: 06/21/1991Supreme Court of Wyoming
DOUGLAS A. MOORE, 
APPELLANT (PLAINTIFF),

v.

THE CONTINENTAL INSURANCE 
COMPANY, APPELLEE (DEFENDANT).

Appeal from the District 
Court, NatronaCounty, Dan Spangler, 
J.

Glenn E. Smith (argued), 
Glenn E. Smith & Associates, Cheyenne, and 
Peter J. Feeney, Casper, for 
appellant.

Ann M. Rochelle (argued), 
Williams, Porter, Day & Neville, Casper, for 
appellee.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, 
Justice.

[¶1.]     Appellant, Douglas A. 
Moore (Moore), 
seeks review of a summary judgment in favor of appellee, The Continental 
Insurance Company (Continental). Continental provided Moore with insurance on 
his home. On January 3, 1988, the policy was canceled for failure to pay 
premiums. Moore 
claimed that Continental wrongfully canceled his insurance coverage and was, 
therefore, liable to him for fire damage to his home that occurred on May 2, 
1988.

[¶2.]     We affirm, holding that 
Moore could have 
easily avoided the damages he suffered and, therefore, Continental cannot be 
held liable for them.

ISSUES

[¶3.]     Moore states these 
issues:

"I. When the last day 
upon which a premium payment may be made to avoid cancellation of a homeowner's 
policy falls upon a Sunday or legal holiday, is an insurer entitled to cancel 
the policy after receiving the premium payment on the first business day 
following a Sunday or legal holiday?

"II. Was the premium 
payment received by the appellee on January 4, 1988, under the `mailbox rule' 
deemed to have been received on the date of mailing, December 28, 
1987?

"III. Did Continental 
adopt the United States Postal Service as its agent and, if so, was the premium 
payment mailed in due time to reasonably reach Continental by the date of 
cancellation?

"IV. Is the appellee's 
contract of insurance ambiguous with regard to whether there was a nonpayment of 
premium by the `due date'?

"V. Is appellee estopped 
to deny or has appellee waived the right to claim proper cancellation of the 
appellant's policy?

"VI. Are there issues of 
material fact in this proceeding which should have precluded the district court 
from granting the appellee's motion for summary judgment?"

[¶4.]     Continental considers 
the sole issue to be whether it properly canceled Moore's homeowner's policy in January 1988. 
Implicit also in their brief and arguments is the contention that Continental 
could not, under any theory, be held liable for the damages sustained by 
Moore.

FACTS

[¶5.]     The facts of this case 
are, at once, simple and yet terribly complicated. Following is a chronology of 
pertinent facts.

[¶6.]     Continental issued a 
homeowner's policy to Moore. The policy stated that coverage began on 
June 10, 1986, and was to continue until June 10, 1987. Moore opted to pay 
premiums in installments. He made a down payment of $140.00, and expected to be 
billed by Continental for the remainder of the required premiums. Moore received a billing 
in the amount of $43.00 dated July 18, 1986, which was not 
paid.

[¶7.]     A statement of account 
was sent to Moore by Continental dated August 19, 1986. It 
required payment to Continental in the amount of $113.00, not later than the 
date shown (that date is not visible on the exhibit, but testimony established 
that payment was due 21 days after the billing date). That billing also 
contained this notation: "Please be advised that your homeowner's policy * * * 
is in jeopardy of cancellation. It will be necessary for us to institute 
cancellation proceedings unless at least the minimum amount due is received by 
the date shown below." The quoted notice, as well as all other quoted notices 
which appear below, are computer generated - not the work of human hands. This 
bill was not paid either.

[¶8.]     By notice dated 
September 17, 1986, Continental informed Moore that his homeowner's policy was 
canceled for non-payment of premiums: "This policy is hereby cancelled in 
accordance with its terms, effective 12:01 pm standard time on the cancellation 
date shown above [October 4, 1986] due to non-payment of premium amount billed." 
The billing which accompanied this notice indicated that $108.00 was due. 
Moore did not 
receive a bill for September 1986, because of the cancellation 
notice.

[¶9.]     Moore submitted a payment 
to Continental in late September 1986, which was recorded by Continental in its 
records on October 8, 1986. Continental's procedures provided that seven days 
was tacked on to the cancellation date given to customers, but that was not 
"publicized" because, if it were, customers, "are going to wait." Continental's 
employee speculated that customers probably would assume their payments were 
received on time and, therefore, cancellation did not take place. By notice 
dated October 9, 1986, Moore was informed: "Please be informed that 
the notice which we sent to you cancelling or terminating the policy * * * is 
recalled and that said notice is void and of no effect. We hereby reinstate the 
described policy with the same force and effect as if the said cancellation or 
termination notice had not been sent."

[¶10.]  Moore had not been billed for September 1986, 
but in October he was billed for both September and October. This billing was 
not paid. 

[¶11.]  In November 1986, another warning was 
issued by Continental to Moore, but not a cancellation notice. Moore issued a check to 
Continental for $319.50, which was dated December 9, 1986, and which was entered 
on Continental's records on December 16, 1986. Although this payment was $2.50 
short of the total due for the balance of the policy year, Continental wrote off 
this small amount and credited Moore with being paid up through the end of the 
policy year (June 10, 1987).

[¶12.]  In April 1987, Moore was sent a renewal 
notice indicating the amount of premium due to renew the policy. By notice dated 
June 21, 1987, Moore was informed: "Notice is hereby given 
that this policy expired at 12:01 pm standard time on the expiration date shown 
above [June 10, 1987]. The policy terminated at that time and all liability of 
the company under said policy ceased at and from that time." Moore sent Continental a 
check, which was dated June 23, 1987, and entered in their accounting system on 
June 30, 1987. The amount of this payment, though less than the amount due, was 
within tolerances for Continental and the policy was renewed. By notice dated 
July 1, 1987, Moore was informed: "Please be informed that 
the notice which we sent to you cancelling or terminating the policy described 
above is recalled and that said notice is void and of no effect. We hereby 
reinstate the described policy with the same force and effect as if the said 
cancellation or termination notice had not been sent."

[¶13.]  Moore did not make the next payment due in July 
1987. In August 1987, he received a billing for both July and August with a 
warning message.

[¶14.]  By notice dated September 17, 1987, Moore 
was informed: "This policy is hereby cancelled in accordance with its terms, 
effective 12:01 pm standard time on the cancellation date shown above [October 
4, 1987] due to non-payment of premium amount billed." Moore sent Continental a 
check dated September 25, 1987, which was posted by Continental on October 6, 
1987. By notice dated October 7, 1987, Moore was then informed that: "Please be 
informed that the notice which we sent to you cancelling or terminating the 
policy described above is recalled and that said notice is void and of no 
effect. We hereby reinstate the described policy with the same force and effect 
as if said cancellation or termination notice had not been sent." Once again, 
because of the cancellation notice, Moore received no September billing. He was 
billed in October 1987, but did not pay. And, again as in the past, he was 
billed in November with a warning.

[¶15.]  By notice dated December 17, 1987, Moore 
was informed: "This policy is hereby cancelled in accordance with its terms, 
effective 12:01 pm standard time on the cancellation date shown above [January 
3, 1988] due to non-payment of premium amount billed."

[¶16.]  Moore sent Continental a check dated December 
28, 1987, in the amount of $264.00 - a sum sufficient to pay through the end of 
the policy year, June 10, 1988. Continental posted that check on January 4, 
1988, negotiated it, and sent a refund of $224.00 to Moore on January 4, 1988, which represented the excess over 
what Moore owed 
Continental up to the January 3, 1988 cancellation date. Continental explained 
that they had reprogrammed their computer to delete the extra time that 
previously had been afforded to customers. Continental's employee speculated 
that Moore would 
not have known that, nor would he have known he had been afforded additional 
time in the past. Although Moore had made several claims against his 
policy, the justification for cancellation given by Continental was that 
premiums were not paid when due. Continental made it clear that if the payment 
had been received on or before January 3, 1988, the policy would have been 
renewed. January 1, 1988 was a holiday, January 2, 1988, was a Saturday, and 
January 3, 1988, was a Sunday. Moore did not receive a notice reinstating his 
policy as he had on past occasions.

[¶17.]  Bonnie Fulton was Moore's secretary and, in fact, had taken care of all the 
transactions described above for Moore. No question is raised in this case that 
notices to her were also notices to Moore. In January 1988, she received the refund 
check from Continental in the amount of $224.00. The check did not indicate what 
it was for, so Bonnie called Moody Insurance, the local agent for Continental, 
to find out. She was told that the homeowner's policy had been canceled. Bonnie 
asked Moody Insurance to see if another company would pick up the policy. She 
did not remember talking with Moody again until she called them on May 2, 1988, 
to tell them that Moore's home had been seriously damaged by fire 
in excess of $100,000. Moody claimed it informed Bonnie that it had no carriers 
which would pick up the policy and she should look elsewhere for insurance. We 
note at this juncture that, although Moody Insurance was originally a party to 
this action, it was dismissed from the case early on. There are no issues in 
this appeal which relate to Moody Insurance.

DISCUSSION

[¶18.]  A district court, when deciding a motion 
for summary judgment, does not sit as a fact finder. Nor do we act as a fact 
finder when we review a summary judgment. Our standard in reviewing summary 
judgments is this. Summary judgment is only appropriate on a dual finding that 
there is no genuine issue of material fact and that the prevailing party is 
entitled to judgment as a matter of law. The record on appeal must be viewed 
most favorably to the party opposing the motion, giving to him all favorable 
inferences that may reasonably be drawn from the record. Summary judgment is not 
appropriate when material issues of fact exist. A fact is material if it would 
establish or refute one of the essential elements of a cause of action or 
defense asserted by either party. Bowlerama, Inc. v. Woodside Realty Co., 752 P.2d 1377, 1380 (Wyo. 1988).

[¶19.]  The district court's decision letter, 
which is our only clue to the reasoning behind the grant of summary judgment, is 
set out verbatim for illustrative purposes:

"The above matter has 
come before the Court upon motions for summary judgment by both sides. The Court 
finds that there is no genuine dispute as to any material fact and that 
defendant is entitled to judgment as a matter of law.

"The primary claim of 
plaintiff is based upon a breach of contract theory. The insurance policy states 
in unambiguous terms that cancellation can occur for nonpayment of a premium by 
the date due. The due date is clearly stated on each statement. After plaintiff 
failed to make premium payments, the subsequent billing established a 
cancellation date. Defendant has complied with the cancellation requirements of 
the policy and with Wyoming law regarding notice to plaintiff. The 
premium arrived after the cancellation date. Defendant then refunded the 
unearned premium by a check which was cashed by plaintiff. The agent for 
plaintiff knew that coverage had been cancelled and that insurance should be 
obtained from somewhere else.

"Plaintiff argues that 
coverage would have continued if the payment had been made by the Sunday upon 
which it was due, that the payment was made by the next business day, and that 
coverage thus was still in effect. The statute and rule cited from Wyoming admittedly do not 
apply to insurance policies. Plaintiff also cites cases applying the `mailbox' 
rule, so that the premium is considered to be paid at the time of mailing. I do 
not have any quarrel with the results of those cases under the particular facts 
involved in those situations. However, the circumstances are different here 
where the cancellation provisions of the policy are clear, where they were 
followed by the defendant, where we do not have a statute providing otherwise, 
and where plaintiff accepted the return of premium and knew that coverage was no 
longer in effect.

"Plaintiff also alleges 
that defendant violated Wyoming Statutes section 26-35-102 by cancelling the 
policy before return of the unearned premium. The statute does not apply here 
where there was no unearned premium at the time of 
cancellation.

"Plaintiff also alleges 
waiver and estoppel. Waiver is the intentional relinquishment of a known right. 
There is no evidence of waiver in this case. Also, the policy provides that any 
waiver must be in writing. As for estoppel, there is no showing that the 
plaintiff relied upon particular conduct by the defendant. Defendant made it 
clear to plaintiff what the cancellation provisions and dates were. Plaintiff 
did not comply and defendant notified plaintiff that the policy was cancelled. 
There was no reason for plaintiff to believe that the policy provisions were to 
the contrary or that coverage continued.

"Concerning allegations 
of fraud and negligence, there is no evidence of misrepresentations by 
defendant. There is no showing of a duty owed by defendant to plaintiff which 
was breached by defendant to serve as the basis of a negligence 
action."

[¶20.]  Moore raises many issues which likely would 
require consideration by a fact finder, thus precluding summary judgment were a 
finding necessary as to those issues. For instance, it is likely, though we do 
not decide the issue definitively, that whether Continental was required to 
accept the premium payment, which arrived on the Monday following New Year's Day 
weekend, is a question that could require the fact finder to decide if Moore 
acted reasonably, under the terms of his contract with Continental and based 
upon past experience, in mailing a premium payment on December 28, 1987, that 
needed to arrive by January 3, 1988. See 6 Couch on Insurance 2d § 32:127 (Rev. 
ed. 1985).

[¶21.]  Moore claims that his premium payment should 
have been deemed delivered to Continental when he placed it in the mail on 
December 28, 1987, or within a reasonable time thereafter. In addition, he 
asserts Continental adopted the United States Postal Service as its agent, and 
he mailed the premium payment in time for it to arrive at Continental's offices 
to beat the deadline. If there was a failure of timely delivery, it was the 
fault of Continental's agent and not Moore. There is authority to support this 
proposition, though, again, we do not definitively decide the question as it is 
presented in this case. See 15 Appleman, Insurance Law and Practice § 8559 (Rev. 
ed. 1985). The question, if it were to be decided, would likely have to be 
referred to a fact finder.

[¶22.]  Moore also claims that exactly what the 
"due date" for premiums was is not clear under the terms of the policy itself 
and that the course of dealings of over eighteen months between Continental and 
Moore further obscured what "due date" meant. In this same vein, Moore claims Continental 
waived the explicit terms of the contract that the policy could be canceled if 
premiums were not received when due, or should be estopped from defending on 
that basis, because of the course of dealings between Moore and Continental. 
Moore contends 
that Continental's acceptance of his late payment was a forbearance that he 
could and did rely on. There is authority to support these assertions, though 
again we do not purport to decide this question. See 15 Appleman, Insurance Law 
and Practice §§ 8551-68; 3A Corbin on Contracts §§ 721-22 (1960). In this 
regard, these are also questions of fact which would likely have needed the 
services of a fact finder.

[¶23.]  However, it would be useless to present 
all this evidence to a fact finder if Moore was not entitled to any damages under the 
circumstances presented by this case. That is exactly the position in which he 
finds himself. Implicit in the district court's findings was a recognition that 
Moore knew that 
his insurance had been canceled, whether that was done wrongfully or not, and 
that he needed to obtain insurance elsewhere. The record is abundantly clear 
that he accepted return of unearned premium without complaint. Four months 
passed during which time he neither objected, inquired or attempted to pay. A 
party may, in certain instances, be required to mitigate his damages, and 
whether an injured party has exercised reasonable diligence and care in 
mitigating damages is for the trier of fact to decide. Hollon v. McComb, 636 P.2d 513, 516 (Wyo. 1981). And where reasonable minds could 
not differ with respect to efforts to mitigate, as here, summary judgment is 
appropriate.

[¶24.]  This case might present a different 
posture if Moore 
had been attempting to mitigate his loss by seeking other insurance. Such was 
not the case, and there is no need to assign the resolution of the mitigation 
question to a fact finder because the record demonstrates that Moore made no effort to 
mitigate his damages. Although he was informed in January of 1988 that his 
homeowner's policy was canceled, he made no effort to either contest the 
cancellation of his policy or obtain other insurance. Bonnie Fulton testified 
that she was informed, on behalf of her employer, that the policy was canceled, 
and that she simply forgot to do anything about it. The first effort Moore made to do anything 
did not take place until after his home had been damaged by 
fire.

[¶25.]  There is a refinement of the mitigation 
rule which we hold to be applicable here, i.e., Restatement, Second, Contracts § 
350 (1981):

"(1) Except as stated in 
Subsection (2), damages are not recoverable for loss that the injured party 
could have avoided without undue risk, burden or 
humiliation.

"(2) The injured party is 
not precluded from recovery by the rule stated in Subsection (1) to the extent 
that he has made reasonable but unsuccessful efforts to avoid 
loss."

The rationale of this 
principle, which differentiates it from mitigation in a more general sense, is 
that damages which the plaintiff might have avoided with reasonable effort and 
without undue risk, expense, or humiliation are either not caused by the 
defendant's wrong or need not have been, and, therefore, are not to be charged 
against him. 11 Williston on Contracts § 1353 (3rd ed. 1968); 5 Corbin on 
Contracts § 1039 (1964). For instance, in the case Coury Bros. Ranches, Inc. v. 
Ellsworth, 103 Ariz. 515, 446 P.2d 458, 463 (1968) it was 
held:

"The record is therefore 
clear that Ellsworth brought his sheep back to the Coury Ranch, knowing that the 
feed was insufficient and improper. It does not reflect that he made any effort 
to obtain additional feed, either through other pasturing or supplemental feed 
such as hay, until death from bloat, starvation and disease was imminent or had 
occurred. Under these circumstances in the language of Justice Cardozo in 
McClelland v. Climax Hosiery Mills, supra [252 N.Y. 347, 169 N.E. 605, 609 
(1930)], the chain of causation was broken and the loss resulting thereafter was 
`suffered through his own act.'"

Moore may have been able 
to have his policy renewed had he demanded such from Continental and tendered 
the premiums which had been refunded to him. Moore may have had a remedy by way 
of an action for reinstatement, or for the increased cost of other insurance. 
See Annotation, Remedies and measure of damages for wrongful cancellation of 
liability and property insurance, 34 A.L.R.3d 385 (1970). Here, however, the 
record is undisputed that Moore took no action to avoid the loss which he seeks 
to recover from Continental. Almost four months after Moore was aware that the 
insurance on his home had been canceled, it was damaged by fire. It was only 
then that Moore undertook to seek recovery from Continental for wrongful 
termination of his insurance policy. The loss for which Moore seeks to recover 
damages from Continental occurred through his own act, or failure to act, and 
Continental cannot be held liable for those damages.

[¶26.]  The judgment of the district court is 
affirmed.