Case Title: MARTIN v. FARMERS INS. EXCHANGE

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1995-05-04T00:00:00Z

Document:
MARTIN v. FARMERS INS. EXCHANGE1995 WY 64894 P.2d 618Case Number: 93-241Decided: 05/04/1995Supreme Court of Wyoming

Whitney 
MARTIN and James Martin, Appellants (Defendants),

v.

FARMERS INSURANCE EXCHANGE, a foreign insurance 
exchange, Appellee (Plaintiff).

Appeal 
from District Court, Natrona County, Harry E. Leimback, 
J.

Dallas J. Laird, Casper, for appellants.

George E. Powers, Jr. and 
Kay Lynn Bestol of Sundahl, Powers, Kapp & Martin, Cheyenne, for appellee.

Bruce B. Waters and John E. 
Stanfield of Smith, Stanfield & Scott, Laramie, for amicus curiae Debora 
Pribble.

Julie Nye Tiedeken, 
Cheyenne, for amicus curiae State Farm 
Mut. Auto. Ins. Co.

Before GOLDEN, C.J., and THOMAS, MACY, TAYLOR, and 
LEHMAN, JJ.

TAYLOR, 
Justice.

[¶1]      Whitney Martin 
was seriously injured when a car she and her husband owned was in an accident 
caused by the negligent driving of Annette Failes. Mr. and Mrs. Martin and 
Annette Failes carried virtually identical liability insurance through Farmers 
Insurance Exchange. Paying Whitney Martin the full $100,000.00 on Annette 
Failes' policy, Farmers Insurance Exchange relied upon a "household exemption" 
to limit recovery to $25,000.00 under Mr. and Mrs. Martin's policy. Having 
stipulated to all operative facts, Farmers Insurance Exchange sought declaratory 
approval for that limited payout. From the success of Farmers Insurance 
Exchange's endeavor, Mr. and Mrs. Martin prosecute this appeal. We 
affirm.

I. 
ISSUES

[¶2]      Appellants, James 
and Whitney Martin (the Martins), present the following 
issue:

Is there an ambiguity in the appellants' insurance 
policy which would require the court to enter summary judgment favoring 
appellants?

[¶3]      Appellee, Farmers 
Insurance Exchange (Farmers), states the issue as:

Did the District Court correctly rule that an 
insurance policy must be read as a whole and that certain language on the 
declarations sheet did not conflict with the exclusionary provision of the 
policy at issue?

II. 
FACTS

[¶4]      The Martins were 
the named insureds on a policy with Farmers providing coverage for the Martins' 
1988 Subaru. Whitney Martin's mother, Annette Failes (Failes), was the named 
insured on a separate policy with Farmers providing coverage for her 1986 
Comanche. Each insurance contract consisted of a 1st Edition Wyoming "Your 
E-Z-Reader Car Policy" and a "Declarations" page.

[¶5]      Each declarations 
page identifies, inter alia, the 
insureds, the covered vehicle, and the coverages, including $100,000.00 per 
person for bodily injury. Each declarations page includes the 
following:

This Declarations page, when signed by us, becomes 
part of the policy numbered on the reverse side. It supersedes or controls 
anything to the contrary. It is subject to all the other terms of the 
policy.

"Us" is defined on page one 
of the policy as meaning Farmers. The validity of each declarations page and 
each policy, as constituting a contract for insurance, at the time of the 
accident is not in dispute.

[¶6]      Each policy 
lists, at page two, exclusions: "This coverage does not apply to: * * * 11. The 
amount of liability for bodily injury 
to an insured person in excess of the 
minimum limits of the Wyoming Financial Responsibility Law." (Emphasis in 
original). "Insured person" is defined as including "[y]ou or any family member." (Emphasis in original). 
"You" means the "named insured" and "[f]amily member means a person related to 
you by blood, marriage or adoption who is a resident of your household." 
(Emphasis in original).

[¶7]      Each declarations 
page states that "[t]he policy is issued in reliance upon the statements in the 
Declarations." Each policy repeatedly refers to the declarations page as an 
integral part of the contract, stating, inter alia: 

            
AGREEMENT

We [Farmers] agree with you [insureds], in return for 
your premium payment, to insure you subject to all the terms of this policy. We 
will insure you for the coverages and the limits of liability shown in the 
Declarations of this policy.

At the top of each policy's 
table of contents, appearing just prior to page one in each case, is the 
following statement: "Declarations - Your Personal Coverage Page is attached 
inside the front cover."

[¶8]      On August 22, 
1992, with Failes at the wheel, the Martins' Subaru was in a single car 
"roll-over" accident on U.S. Interstate 15, just north of Scipio, Utah, 
resulting in severe injuries to passenger Whitney Martin. Farmers paid 
$100,000.00 to the Martins, fully discharging Failes' insured liability, but 
relied upon the policy exclusion regarding bodily injury to an insured to limit 
payment on the Martins' policy to $25,000.00, the minimum required by Wyoming's 
financial responsibility law, Wyo. Stat. § 31-9-405(b)(ii) (1989). For purposes 
of the action, Farmers agreed that the Martins' damages exceeded 
$200,000.00.

[¶9]      Stipulating to 
all of the foregoing with the Martins, Farmers obtained summary judgment that 
the $25,000.00 payment fully discharged Farmers' liability on the Martins' 
policy.

III. 
STANDARD OF REVIEW

[¶10]   We will affirm a summary judgment 
provided there is no genuine issue of material fact and the law clearly entitles 
the moving party to prevail. Lincoln v. Wackenhut Corp., 867 P.2d 701, 702 (Wyo. 
1994). An insurance policy constitutes a contract between insurer and insureds. 
Worthington v. State, 598 P.2d 796, 806-07 (Wyo. 1979). When the parties have 
stipulated to all material facts, summary judgment is proper if such an 
insurance contract is found to be unambiguous. Prudential Preferred Properties 
v. J and J Ventures, Inc., 859 P.2d 1267, 1271 (Wyo. 
1993).

[¶11]   Without deference to the district 
court's conclusions of law, our threshold inquiry plumbs the contract in 
question for ambiguity. Hayes v. American Nat. Bank of Powell, 784 P.2d 599, 604 
(Wyo. 1989); International Surplus Lines Ins. Co. v. University of Wyoming 
Research Corp., 850 F. Supp. 1509, 1518 (D.Wyo. 1994). Ambiguity exists where a 
contract "is obscure in its meaning because of indefiniteness of expression or 
because it contains a double meaning." Ferguson v. Reed, 822 P.2d 1287, 1289 
(Wyo. 1991). Whether there is ambiguity within the four corners of the contract 
is a question of law. Burk v. Burzynski, 672 P.2d 419, 423 (Wyo. 
1983).

[¶12]   Only when a contract is ambiguous 
do we acquire license to construe that document by resort to extrinsic evidence. 
Amoco Production Co. v. Stauffer Chemical Co. of Wyoming, 612 P.2d 463, 465 
(Wyo. 1980). Such construction is not, in the first instance, an appropriate 
appellate task because doubt about the meaning of a contract creates a genuine 
issue of material fact and thereby renders summary judgment inappropriate. 
Jackson Hole Racquet Club Resort v. Teton Pines Ltd. Partnership, 839 P.2d 951, 
958 (Wyo. 1992).

[¶13]   Finding a contract to be 
unambiguous necessarily impresses us with a firm understanding of the parties' 
agreement. Any unavailing search for ambiguity must, necessarily, yield a 
singular interpretation of that contract, as a matter of law. Feather v. State 
Farm Fire and Cas., 872 P.2d 1177, 1180 (Wyo. 1994). Interpretation connotes 
consideration of the contract as a whole, reading each provision in light of all 
the others to find the plain and ordinary meaning of the words, as they are 
juxtaposed. Lund v. Lund, 849 P.2d 731, 739 (Wyo. 1993).

IV. 
DISCUSSION

[¶14]   The Martins urge us to rule that 
the $100,000.00 bodily injury liability limit on their declarations page voids 
the household exclusion contained in the body of the policy by operation of the 
statement that "[i]t [the declarations page] supersedes or controls anything to 
the contrary." Such an interpretation is not without its appeal, particularly in 
light of Whitney Martin's grievous injuries. However, the issue here is not 
certification of the Martins' need, which is manifest, but interpretation of the 
pre-existing agreement made between the Martins and 
Farmers.

[¶15]   The difficulty with the Martins' 
position, as correctly diagnosed by the district court, is that it impermissibly 
tortures one sentence on the declarations page in an effort to create a 
semblance of ambiguity where none actually exists. Commercial Union Ins. Co. v. 
Stamper, 732 P.2d 534, 539 (Wyo. 1987) (quoting McKay v. Equitable Life 
Assurance Society of the United States, 421 P.2d 166, 168 (Wyo. 1966)). This 
confounds our general reluctance to read parts of an insurance contract, such as 
the declarations page, in isolation as opposed to interpreting the contract as a 
whole to effectuate the intent of the parties. Carlson v. Water Unlimited, Inc., 
822 P.2d 1278, 1281 (Wyo. 1991) (quoting Amoco Production Co., 612 P.2d at 465); 
National Farmers Union Property and Cas. Co. v. Zuber, 824 F. Supp. 1017, 1020 
(D.Wyo. 1993).

[¶16]   Hard by the assertion of the 
declarations page that it "supersedes and controls anything to the contrary" is 
the caveat that "[i]t [the declarations page] is subject to all the other terms 
of the policy." This is but one of the ubiquitous reminders that the contract 
between the Martins and Farmers encompasses both the declarations page and the 
policy.

[¶17]   Before the declarations page is 
competent to supersede and control anything to the contrary, it must be 
possessed of sufficient integrity, standing alone, to convey a clear and 
definite meaning. Moreover, the same must be true of "anything to the contrary," 
in order that it may be adjudged "contrary" ab initio. Put another way, the 
declarations page cannot supersede and control the policy when both are inchoate 
and without meaning unless read in concert with the other.

[¶18]   The Martins do not, because they 
cannot, argue that the declarations page conveys a certain and definite meaning 
without the necessary matrix of the contract contained in the policy. For 
example, the Martins' claim depends upon the facial expression of the 
declarations page that coverage for bodily injury is $100,000.00 for each 
person. Absent reference to the policy (or some extrinsic source), a case might 
be made that the named insured receives $100,000.00 every time he or she is 
injured in an accident. Such a reductio ad absurdum may not be avoided on the 
grounds that everybody knows better, because the parties have stipulated (with 
our concurrence) that we are about the task of interpreting a contract within 
the bounds of its four corners.

[¶19]   It is noteworthy that Failes' 
declarations page describes her 1986 Comanche as the insured vehicle. If, as the 
Martins argue, the declarations page may not be modified by reference to the 
policy, then the $100,000.00 payout on the Failes' policy would have been in 
error as Failes was not driving her Comanche when the accident occurred. Of 
course, any such notion is quickly dispelled by reference to the following 
passage on page one of each policy:

PART I - 
LIABILITY

*           
*           
*           
*           
*           
*

Your 
insured car as used in this part 
shall also include any other * * * car * * * [when] the use is with 
permission of the owner * * *.

[¶20]   Even the very centerpiece of the 
Martins' claim - "[t]his Declarations page, when signed by us, becomes part of 
the policy numbered on the reverse side" - is without force, effect, or basic 
meaning without reference to definitions contained within the body of the 
policy.

[¶21]   The amici curiae entice us to some 
sweeping declaration as to the efficacy vel non of the so-called "household 
exemption" contained in many contracts of insurance similar to that in the 
instant case. However, the Martins' coverage under their policy with Farmers met 
the statutory requirement as a minimum coverage, and neither stated statutory 
public policy nor persuasive precedent afford us sufficient license to disregard 
the clear terms of the contract for insurance between the Martins and Farmers. 
Commercial Union Ins. Co., 732 P.2d  at 537-38. The Martins do not argue that the 
"household exemption" in their policy is ambiguous or expressed in arcane terms, 
and have failed to present any viable theory upon which it may be 
disregarded.

V. 
CONCLUSION

[¶22]   We have not turned a blind eye to 
the unequal bargaining position of parties to most contracts of insurance. State 
Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813, 827 (Wyo. 1994). However, 
consumer expectations can hardly be reasonable, by definition, if they are 
cultivated in contravention of clear and unambiguous language contained within 
the contract of insurance. The Martins had an unambiguous contract with Farmers 
and cannot reasonably expect benefits in excess of the clear terms of that 
contract.

[¶23]   The district court's grant of 
summary judgment in favor of Farmers Insurance Exchange is 
affirmed.