Case Title: Pribble v. State Farm Mut. Auto. Ins. Co.

Citation: 

Docket Number: 95-254

State: wyoming

Court: Wyoming Supreme Court

Date: 1997-02-28T00:00:00Z

Document:
Pribble v. State Farm Mut. Auto. Ins. Co.1997 WY 32933 P.2d 1108Case Number: 95-254Decided: 02/28/1997Supreme Court of Wyoming
 
 

Debora PRIBBLE and Heather 
Pribble

Appellants (Defendants),

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE 
COMPANY

Appellee (Plaintiff).

 

Appeal 
from the District Court of Albany County

The 
Honorable Arthur T. Hanscum, Judge

 

Representing Appellant:

John E. Stanfield and Bruce B. Waters of Smith, 
Stanfield & Scott, Laramie

 Representing Appellee:

Julie Nye Tiedeken, Cheyenne
 

Before TAYLOR, C.J.,* and THOMAS, MACY, 
and LEHMAN, JJ., and KAUTZ, District Judge.

* Chief Justice effective 
7/1/96.

 

KAUTZ, District 
Judge.

 [¶1]      Appellee, State 
Farm Mutual Automobile Insurance Company (State Farm), sought declaratory relief 
that the "household exclusion" portion of the liability insurance policy it sold 
to Mr. and Mrs. Pribble applied to a claim of Heather Pribble against her 
mother, Debora Pribble. The district court granted summary judgment in favor of 
State Farm and this appeal resulted. In this decision, we review the "household 
exclusion" provision in appellants' liability insurance policy, and consider 
several collateral concerns raised by appellants.

 

I. ISSUES

 

[¶2]      Appellants, 
Debora Pribble and Heather Pribble (the Pribbles), list nine "issues" in this 
appeal.1 Those lengthy issue statements, 
also containing argument, are not set out herein but are summarized as 
follows:

1. Is the "household exclusion" clause in the 
Pribbles' liability insurance policy vague and ambiguous?

2. Is the "household exclusion" clause in the 
Pribbles' liability insurance policy contrary to public 
policy?

3. Should the doctrine of reasonable expectations be 
applied?

4. Did State Farm lawfully seek declaratory 
relief?

5. Are the Pribbles entitled to attorney's 
fees?

 

II. FACTS

A. INSURANCE 
POLICY

 

[¶3]      The facts 
applicable to the summary judgment in this case are undisputed. Jerry and Debora 
Pribble bought automobile liability insurance from State Farm. They renewed that 
coverage and received a "Declarations Page" for each policy period. The 
Declarations Page generally appeared as follows:

 

 

DECLARATIONS PAGE

 

* * *

NAMED INSURED                                                         
POLICY NUMBER * * * 

 

* * *                                                                 POLICY 
PERIOD      * * * 
     TO       * * 
*

 

* * 
*

 

 

DESCRIBED YEAR MAKE MODEL BODY STYLE VEHICLE 
IDENTIFICATION NUMBER CLASS VEHICLE * * * 

 

 

COVERAGES (AS DEFINED IN 
POLICY)

SYMBOL-PREMIUM-COVERAGE 
NAME-LIMITS OF LIABILITY

 

A         $ 
47.26           
            
BODILY INJURY/PROPERTY DAMAGE LIABILITY LIMITS OF LIABILITY-COVERAGE 
A-BODILY INJURY

 EACH 
PERSON,                 
EACH ACCIDENT 

100,000                                  
300,000

 

[OTHER COVERAGE 
INFORMATION]

 

THIS IS YOUR DECLARATIONS PAGE. PLEASE ATTACH IT TO 
YOUR AUTO POLICY BOOKLET. 

 

YOUR POLICY CONSISTS OF THIS PAGE, ANY ENDORSEMENTS, 
AND THE POLICY BOOKLET, FORM PLEASE KEEP TOGETHER 

 

 

[¶4]      The "household 
exclusion" portion of the insurance policy states, in pertinent 
part:

When 
Coverage A Does Not Apply

 

THERE IS NO COVERAGE:

 

2. FOR ANY BODILY INJURY 
TO:

 

c. ANY INSURED OR ANY MEMBER OF AN INSURED'S HOUSEHOLD TO THE EXTENT 
THE LIMITS OF LIABILITY OF THIS POLICY EXCEED THE LIMITS OF LIABILITY REQUIRED 
BY LAW.

(Emphasis in original.)

 

B. ACCIDENT AND CLAIM

 

[¶5]      On July 8, 1991, 
Debora Pribble was driving a family vehicle covered by the State Farm liability 
insurance policy. She ran a stop sign and another vehicle collided with hers. 
Debora Pribble's daughter, Heather, was a passenger in her mother's car and was 
injured in the accident. Heather Pribble was a "member of an insured's 
household" under the terms of the Pribble's insurance 
policy.

 

[¶6]      Heather Pribble 
made a claim against her mother for the injuries she suffered in the accident. 
That claim was referred to State Farm who offered to pay what it believed was 
the limit of its coverage - $25,000.00. State Farm based this position on the 
household exclusion found in the policy booklet. The Pribbles, on the other 
hand, argued the limit of insurance coverage was $100,000.00, based on the 
Declarations Page. When the Pribbles disagreed with State Farm over the amount 
of coverage, State Farm filed a suit seeking a declaratory judgment about the 
extent of coverage under the insurance policy.

 

III. STANDARD OF REVIEW

 

[¶7]      The Pribbles 
claim that the district court should not have granted summary judgment. Summary 
judgments are affirmed if there are no issues of material fact and the moving 
party is entitled to prevail on those undisputed facts as a matter of law. 
Lincoln v. Wackenhut Corp., 867 P.2d 701, 702 (Wyo. 1994). Here, the material 
facts are undisputed. This appeal, then, reviews only the district court's 
determination that the undisputed facts mandate a judgment in favor of State 
Farm. No deference is given to the district court's conclusions of law. Martin 
v. Farmers Ins. Exchange, 894 P.2d 618, 620 (Wyo. 1995).

 

[¶8]      In granting 
summary judgment, the district court necessarily held as a matter of law that 
(1) the "household exclusion" in the Pribble's insurance policy was not 
ambiguous; (2) the "household exclusion" provision did not violate public 
policy; (3) the doctrine of reasonable expectations did not apply; (4) State 
Farm was entitled to utilize declaratory relief; and (5) the Pribbles were not 
entitled to attorney's fees.

 

IV. DISCUSSION

            
 

            
A. IS THE "HOUSEHOLD EXCLUSION" 
CLAUSE IN THE PRIBBLES' INSURANCE POLICY CONTRARY TO PUBLIC 
POLICY?

 

[¶9]      The Pribbles 
argue that the "household exclusion" clause in their insurance policy is part of 
a "ploy" against the public which this court should prohibit. They ask this 
court to invalidate the "household exclusion" clause because "[t]he legislative 
and executive branches * * * have failed" to do so. This argument amounts to a 
claim that the "household exclusion" clause is contrary to public 
policy.

 

[¶10]   Insurance policies are contracts. 
Those contracts may include whatever terms the parties want, so long as statutes 
or public policy are not violated. Allstate Ins. Co. v. Wyoming Ins. Dept., 
672 P.2d 810, 816 (Wyo. 1983).

 

[¶11]   Wyoming statutes require every 
driver to have a minimum amount of liability insurance coverage. Wyo. Stat. § 
31-4-103(a) (1994). Liability insurance policies must provide at least that much 
coverage, even for claims made by members of the insured's household. Allstate Ins. Co., 672 P.2d  at 814-15. 
The Pribbles' insurance policy met this requirement of public policy. The 
"household exclusion" clause reduces liability coverage to the "limits of 
liability required by law," but not below.

 

[¶12]   Public policy may be found in case 
precedent as well as in statutes. "The vast majority of cases * * * have held 
that household exclusions or analogous exclusions are enforceable with respect 
to policy amounts in excess of the statutory minimum * * *." State Farm Mut. Auto. Ins. Co. v. 
Mastbaum, 748 P.2d 1042, 1043 (Utah 1987). 

 

[¶13]   Wyoming case precedent is against 
the Pribbles' argument. Wyoming recognizes that a "policy containing a household 
exclusionary clause * * * is void to the 
extent of the minimum coverage contemplated by law, since the exclusion is 
in violation of * * * public policy * * *." Allstate Ins. Co., 672 P.2d  at 823 
(emphasis added). In other words, Allstate Ins. Co. establishes that 
household exclusionary clauses may reduce coverage to the statutory minimum. 
This court upheld a household exemption clause similar to the one here in Martin, 894 P.2d 618. We held that 
"neither stated statutory public policy nor persuasive precedent afford us 
sufficient license to disregard the clear terms of the contract for insurance * 
* *" where the household exclusion provides for the statutory minimum coverage. 
Id. at 621.

 

[¶14]   We reaffirm our decision in Martin and hold that the "household 
exclusion" clause in the Pribbles' insurance policy does not violate public 
policy in Wyoming.

 

B. IS THE "HOUSEHOLD EXCLUSION" CLAUSE IN THE 
PRIBBLES' INSURANCE POLICY VAGUE AND AMBIGUOUS?

 

[¶15]   The Pribbles argue that their 
insurance policy is ambiguous because the "household exclusion" language is 
difficult to understand because it refers to "the limits of liability required 
by law" and because the exclusion does not appear on the Declarations Page. The 
district court held that the insurance policy is unambiguous, and we agree with 
the district court's determination.

 

[¶16]   The issue of ambiguity from a 
household exclusion question was largely decided in Martin, 894 P.2d 618. In Martin, we found language similar to the 
first portion of the exclusion here to be unambiguous. "The Martins had an 
unambiguous contract with Farmers and cannot reasonably expect benefits in 
excess of the clear terms of that contract." Id. at 622. In Martin, we described the contract terms 
as "clear," and find them to be just as clear in the instant case. Id. at 621.

 

[¶17]   Ambiguity exists where a contract 
"`is obscure in its meaning because of indefiniteness of expression or because 
it contains a double meaning.'" Id. 
at 620 (quoting Ferguson v. Reed, 822 P.2d 1287, 1289 (Wyo. 1991)). A contract is unambiguous if it can be read with 
only one interpretation. Martin, 894 P.2d  at 620.

 

[¶18]   The "household exclusion" language 
in the Pribbles' insurance policy is not indefinite, and supports only one 
interpretation. The "household exclusion" language clearly states: "There is no 
coverage * * * [f]or any bodily 
injury to * * * any insured or 
any member of an insured's household 
to the extent the limits of liability of this policy exceed the limits of 
liability required by law." (Emphasis in original.)

 

[¶19]   This language is clear. The 
Pribbles do not and cannot offer any logical meaning for this language other 
than that presented by State Farm. The insurance policy clearly does not cover 
bodily injury to a member of an insured's household to a certain 
extent.

 

[¶20]   The Pribbles argue that the second 
part of the exclusion - "to the extent the limits of liability of this policy 
exceed the limits of liability required by law" - is ambiguous because it does 
not appear on the Declarations Page. We rejected that argument in Martin, and do 
so again.

 

[¶21]   In Martin, we approved an exclusion which 
did not appear on the declarations page, and found that all parts of the 
insurance contract require each other for complete meaning. Martin, 894 P.2d  at 621. The same is 
true here. The Pribbles' Declarations Page clearly indicates that the policy 
booklet and the Declarations Page are both part of the insurance contract. The 
Declarations Page obviously does not include the terms and conditions of the 
policy booklet. The location of the "household exclusion" in the policy booklet 
does not create any potential double meaning or ambiguity.

 

[¶22]   The Pribbles point out that the 
second portion of the "household exclusion" in their insurance policy is not 
identical to that in Martin. The Martin exclusion restricted insurance 
coverage "`in excess of the minimum limits of the Wyoming Financial 
Responsibility Law.'" Id. at 619. The Pribbles' insurance policy excludes 
insurance coverage for claims of household members "to the extent the limits of 
liability of this policy exceed the limits of liability required by 
law."

 

[¶23]   The Pribbles also claim that the 
second portion of the exclusion is vague and indefinite because it does not 
specifically indicate what limits of liability are referred to. We disagree. The 
term "limits of liability" is used in the Declarations Page to indicate the 
extent of insurance coverage. That same specific meaning applies to the 
"household exclusion" clause. In other words, in the context of the whole 
insurance policy, the term "limits of liability required by law" means extent of 
insurance coverage required by law.

 

[¶24]   The exclusionary language in the 
Pribbles' insurance policy, while more general than the terminology in Martin, is not vague or indefinite. In 
Wyoming, the "limits of liability required by law" are established by Wyo. Stat. 
§§ 31-9-101 through 31-9-414 (1994).2 The Pribbles do not suggest that 
there is some other minimum liability coverage required by law. As in Martin, only one logical interpretation 
of this exclusionary language exists, making the language unambiguous. Martin, 894 P.2d  at 
620.

 

[¶25]   The Pribbles also claim that their 
insurance coverage must be ascertainable by reference to the policy documents 
alone, and without reference to anything outside the policy. They cite Leibrand v. National Farmers Union Property 
and Cas. Co., 272 Mont. 1, 898 P.2d 1220, 1223 (1995) as support for this 
proposition and suggest that contract language is void if it requires 
information from a library or expert for complete understanding. It is a common 
and necessary practice, however, for contracts to refer to and obtain meaning 
from other documents. A contract may refer elsewhere for full understanding of 
its terms, just as it may adopt another document by reference. 17A Am.Jur.2d, Contracts § 400 (1991). The Pribbles' 
"household exclusion" clause is not ambiguous simply because one must refer to 
the laws of Wyoming for a complete understanding of the extent of that 
exclusion.

 

[¶26]   The Pribbles ask this court to hold 
the "household exclusion" clause void, without any meaning. Each provision of a 
contract is presumed to have a purpose. "We must avoid construing a contract so 
as to render one of its provisions meaningless * * *." Moncrief v. Louisiana Land and Exploration 
Co., 861 P.2d 516, 524 (Wyo. 1993). We cannot conclude that this "household 
exclusion" clause is meaningless.

 

[¶27]   The "household exclusion" clause in 
the Pribbles' insurance policy is not ambiguous. It is not indefinite and 
supports only one logical interpretation. It limits coverage for claims by 
household members to $25,000.00.

 

C. SHOULD THE DOCTRINE OF REASONABLE EXPECTATIONS BE 
APPLIED?

 

[¶28]   The Pribbles argue that even if the 
"household exclusion" clause were clear and unambiguous, the district court 
should have permitted a jury to consider the Pribbles' "reasonable expectations" 
in determining the amount of insurance coverage available.

 

[¶29]   Where insurance contract terms are 
clear and unambiguous, the "reasonable expectations" of the contracting parties 
are irrelevant to contract construction issues. State ex rel. Farmers Ins. Exchange v. 
District Court of Ninth Judicial Dist., County of Teton, 844 P.2d 1099, 1102 
(Wyo. 1993). "A rule of construction that considers the reasonable expectations 
of the parties is of no assistance where the policy terms are clear and 
unambiguous." St. Paul Fire and Marine 
Ins. Co. v. Albany County School Dist. No. 1, 763 P.2d 1255, 1263 (Wyo. 
1988). We hold that the contract terms here are clear and unambiguous, and rules 
of construction such as the doctrine of reasonable expectations are 
inapplicable.

 

D. DID STATE FARM LAWFULLY SEEK DECLARATORY 
RELIEF?

 

E. ARE THE PRIBBLES ENTITLED TO ATTORNEY'S 
FEES?

 

[¶30]   The Pribbles argue that State Farm, 
an insurance company, should not be able to seek declaratory judgment about the 
extent or application of its insurance coverage. The Pribbles fail to cite any 
case authority or cogent argument in support of this proposition. They assert 
that because insurance companies have greater economic ability than their 
insureds, this court should require an insurance company to pay defense 
attorney's fees when bringing such a declaratory relief 
action.

 

[¶31]   We do not consider these arguments 
because they are wholly without support. We note that Wyo. Stat. § 1-37-103 
(1988) specifically provides for declaratory relief actions to be initiated for 
the purpose of construing contract provisions. Wyoming consistently follows the 
rule that attorney's fees are not recoverable unless provided for by statute, 
rule or contract. State Sur. Co. v. Lamb Const. Co., 625 P.2d 184, 198 (Wyo. 
1981).

 

V. CONCLUSION

 

[¶32]   The "household exclusion" provision 
in the Pribbles' insurance policy is plain and unambiguous and is not contrary 
to public policy. It is inappropriate to utilize rules of contract construction 
such as "reasonable expectations" because the insurance contract is unambiguous. 
State Farm properly sought declaratory judgment, and the Pribbles are not 
entitled to attorney's fees. The decision of the district court is affirmed in 
all respects.

 

Footnotes

1 The Pribbles' issues are not set out 
individually in this decision. They contain substantial argument and are not 
helpful in understanding or identifying the matters which must be considered to 
resolve this appeal. An example of those "issues" 
is:

Should an insurance carrier which 
promises unrestricted liability coverage of $100,000/$300,000 on the Declaration 
Sheet be allowed to reduce that coverage to $25,000 without ever using that term 
or numbers and without any warning of the reduction on the Declaration Sheet or 
under the portion of the policy dealing with and where the purported policy 
limit reduction provision is contained in an exclusion section and specifies no 
amounts and merely attempts to reduce coverage to "the limits of liability 
required by law"?

 

2 These statutes generally require 
drivers involved in accidents or whose licenses have been suspended to be able 
to show

evidence of ability to respond in 
damages for liability * * * in the amount of twenty-five thousand dollars 
($25,000.00) because of bodily injury to or death of one (1) person in any one 
(1) accident, and subject to the limit for one (1) person, in the amount of 
fifty thousand dollars ($50,000.00) because of bodily injury to or death of two 
(2) or more persons in any one (1) accident, and in the amount of twenty 
thousand dollars ($20,000.00) because of injury to or destruction of property of 
others in any one (1) accident[.]

Wyo. Stat. § 
31-9-102(a)(xi). The evidence may be in the form of an insurance policy, a bond, 
or self-insurance.

Wyo. Stat. § 31-4-103 prohibits driving 
without an insurance policy or bond in these 
amounts.