Case Title: TYLER v. SHELTER MUTUAL INSURANCE CO.

Citation: 

Docket Number: 105098

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2008-01-29T00:00:00Z

Document:
TYLER v. SHELTER MUTUAL INSURANCE CO.  TYLER v. SHELTER MUTUAL INSURANCE CO. 2008 OK 9 184 P.3d 496 Case Number: 105098 Decided: 01/29/2008 THE SUPREME COURT OF THE STATE OF OKLAHOMA CLARENCE TYLER, Plaintiff/Appellee, v. SHELTER MUTUAL INSURANCE COMPANY, a Missouri Corporation, Defendant/Appellant. CERTIFIED QUESTION OF LAW FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA ¶0 The United States District Court for the Western District of Oklahoma certified four questions under the Revised Uniform Certification of Questions of Law Act, Whether the term "actual cash value" included within Oklahoma standard fire insurance policies pursuant to We answer the certified question "yes." CERTIFIED QUESTION ANSWERED. Michael D. McGrew, Michael D. McGrew & Associates, P.C., T. Michelle McGrew, T. Michelle McGrew, P.C., Oklahoma City, Oklahoma, for plaintiff/appellee. W.R. Cathcart, Virginia Cathcart Holleman, Carthcart & Dooley, Oklahoma City, Oklahoma, for defendant/appellant. WATT, J.: ¶1 The United States District Court for the Western District of Oklahoma certified four questions under the Revised Uniform Certification of Questions of Law Act, Whether the term "actual cash value" included within Oklahoma standard fire insurance policies pursuant to ¶2 We answer the reformulated and consolidated certified question "yes." The answer is supported by: 1) this Court's opinion in Rochester American Ins. Co. v. Short, CERTIFIED FACTS ¶3 In 2001, the plaintiff/appellee, Clarence Tyler (Tyler/insured), paid $35,000 for rental property located in Oklahoma City. When Tyler applied for non-owner occupied insurance with the defendant/appellant, Shelter Insurance Company (Shelter/insurer), he indicated that the purchase price for the property was $40,000. Shelter insured the property for that value beginning on September 30, 2001, renewing the policy again in 2002 and in 2003. ¶4 The following year, Shelter renewed the policy with an increased dwelling limit of liability of $44,500. The increase was based on inflation rates and increased construction costs in the Oklahoma City area. ¶5 In the spring of 2005, Tyler sought to refinance the property for $61,750. Before loan approval, the insured was required to show evidence of insurance in the amount of $67,000. At Tyler's request and based on an appraisal, Shelter issued the policy on April 26, 2005. On June 1, 2005, Tyler closed the loan, receiving $26,734.79 in cash. None of these proceeds were put into the property, but the insured had improved the property prior to the refinancing. ¶6 The house had been vacant for approximately a year when it was destroyed by fire on January 28, 2006. Shelter representatives inspected the property on January 31st determining it was a total loss. On February 9, 2006, the insurer's appraiser placed an actual value of the property at $28,500. The following month, Shelter paid Tyler $27,500, an amount taking into consideration the policy's $1,000 deductible. The insurer also refunded the excess premiums pursuant to 36 O.S. 2001 §4804.8 ¶7 Shelter filed a motion for summary judgement and a motion to certify questions of law in the district court. The certification motion was granted. Recognizing that the lawsuit involved unsettled issues of Oklahoma law, the United States District Court for the Western District filed its order of certification pursuant to the Revised Uniform Certification of Questions of Law Act, ¶8 THE TERM "ACTUAL CASH VALUE" INCLUDED WITHIN OKLAHOMA STANDARD FIRE INSURANCE POLICIES PURSUANT TO a) Policy and statutory provisions at issue. ¶9 The policy in effect when the property was destroyed contains provisions defining the term "actual cash value" and provides the manner in which losses are to be settled. Actual cash value is defined as "the amount which it would cost to repair or replace damaged property with material of like kind and quality, less allowance for physical deterioration and depreciation." The policy also provides that losses will be settled as follows: "(a) Losses will be settled at the actual cash value of damaged property at the time of loss. We will pay not more than the smaller of the following: (1) the cost to repair or replace the damaged property with property of like kind and quality; or (2) the limits of liability of this policy." In addition, the amendatory endorsements to the policy provide that the policy includes standard fire insurance endorsements for an Oklahoma fire insurance policy. ¶10 Title 36 O.S. Supp. 2003 §4803 provides in pertinent part: "A. The printed form of a policy of fire insurance as set forth in subsection G of this section shall be known and designated on the standard fire insurance policy to be used in the State of Oklahoma. . . . G. The form of the standard fire insurance policy, with permission to substitute for the word 'company' a more accurate descriptive term for the type of insurer, shall be as follows: . . . IN CONSIDERATION OF THE PROVISIONS AND STIPULATIONS HEREIN OR ADDED HERETO AND OF the premium above specified, this Company, for the term of . . . does insure . . . to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss . . . DIRECT LOSS BY FIRE . . ." [Emphasis in original.] Section 4804 provides: "No insurance company shall, knowingly, issue any fire insurance policy upon property within this state for an amount which, with any existing insurance thereon, exceeds the fair value of the property. If buildings insured against loss by fire, and situated within this state, are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage, and if it shall appear that the insured has paid premiums on an amount in excess of said actual value, the assured [sic] shall be reimbursed the proportionate excess of premiums paid on the difference between the amount named in the policy and said actual value, with interest at six per centum per annum from the date of issue." b) Party contentions and analysis. ¶11 Tyler contends that the term "actual cash value" utilized in the policy and the terms "fair value" and "actual value" found in §4804 are synonymous. Shelter argues that the terms "fair value" and "actual value" in the statutory enactment control and that the terms mean nothing more than the property's fair market value immediately before the fire loss. Nevertheless, Shelter and Tyler agree that if the insured is correct, the insurer owes an additional $23,500 for a total payment of $52,000. The $52,000 figure represents the amount to replace Tyler's property less depreciation.9 ¶12 In determining whether a statute applies to a given set of facts, we focus on legislative intent ¶13 In determining the certification of a class action in Scoufos v. State Farm Fire & Casualty Co., ¶14 Scoufus did not address whether the terms "fair value" and "actual value" in §4804 should be considered synonymous with the term "actual cash value" utilized in §4803 and standard Oklahoma fire insurance policies. As to the meaning of these terms, the language of the two statutes is not so clear as to be beyond interpretation. ¶15 Rochester American Ins. Co. v. Short, "'The actual cash value of a building is the cost of replacing said building with material of like kind and quality less depreciation. In arriving at the amount of depreciation you shall consider the age of the building, the condition in which it was maintained, and changes in the neighborhood which might affect the value of the building and any other facts and circumstances which affect the value of the property.'" ¶16 The statutes in effect, under which the jury was instructed to determine the actual cash value of the property destroyed, utilize language virtually identical to that found in §§4803 and 4804, supra. The Rochester Court considered the statutory language of 36 O.S. 1941 §241 providing in pertinent part: ". . . If buildings insured against loss by fire, and situated within this State, are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage . . ." Section §244.1 provided that the company would insure the property "to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss . . ." Relying on the language of these statutes, the Court held that actual cash value of a building totally destroyed by fire was a matter of fact to be determined by a consideration of all relevant factors and circumstances existing at the time of the loss. In so doing, it treated the terms "actual value" found in §241 and "actual cash value" utilized in §244.1 as synonymous. ¶17 The position taken by the Rochester Court reflects the historical application in Oklahoma of the term "actual cash value" in relation to fire indemnity policies. ¶18 The insurer's assertion that the terms "fair value" and "actual value" contained in CONCLUSION ¶19 The term "actual cash value" included within Oklahoma standard fire insurance policies pursuant to 36 O.S. Supp. 2003 §480326 is synonymous with the terms "fair value" and "actual value" found in 36 O.S. 2001 §4804.27 The answer is supported by both Oklahoma and extant jurisprudence from other states, rules of statutory construction and this Court's rejection of the argument that the terms "fair value" and "actual value" should be treated as consistent with "fair market value" in standard fire insurance policies. CERTIFIED QUESTION ANSWERED. EDMONDSON, V.C.J., HARGRAVE, OPALA, KAUGER, WATT, TAYLOR, COLBERT, REIF, JJ. - CONCUR WINCHESTER, C.J. - DISSENTS FOOT