Case Title: FARMERS INS. EXCH. v. DAHLHEIMER

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-04-05T00:00:00Z

Document:
FARMERS INS. EXCH. v. DAHLHEIMER2000 WY 743 P.3d 820Case Number: 98-111Decided: 04/05/2000Supreme Court of Wyoming
 
FARMERS INSURANCE 
EXCHANGE, a foreign insurance exchange, Appellant (Defendant)v. BYRON 
DAHLHEIMER, as personal representative of the Estate of Anne Foley, deceased, 
Appellee (Plaintiff).

Appeal from the District 
Court of Laramie County, The Honorable Nicholas G. Kalokathis, 
Judge.

George E. 
Powers, Jr. and John A. Coppede of Sundahl, Powers, Kapp & Martin, Cheyenne, 
Wyoming, representing appellant.Michael R. O'Donnell of Burke, 
Woodard & O'Donnell, P.C., Cheyenne, Wyoming, representing 
appellee.

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

THOMAS, 
Justice.

[¶1] The only 
question in this appeal is whether each of the survivors of a decedent who had 
contracted for uninsured motorist coverage qualified as an insured person so as 
to invoke the $300,000 limit of coverage for an occurrence rather than the 
$100,000 limit of coverage for a person. The district court ruled that each of 
the survivors was an insured under the policy and that the higher $300,000 limit 
would apply. We interpret the specific provision of the policy dealing with the 
uninsured motorist coverage as limiting the coverage to bodily injuries 
sustained by the insured person. We hold that the policy language is clear and 
unambiguous and that the individual survivors did not sustain bodily injuries. 
The coverage is limited to $100,000. The Order Granting Summary Judgment to 
Plaintiffs is reversed, and the district court is instructed to enter judgment 
in favor of Farmers Insurance Exchange.

[¶2] This 
statement of the issues is found in the Brief of Appellant, filed by Farmers 
Insurance Exchange (Farmers):

[¶3] Did the 
district court commit error, when it determined that Appellee/Plaintiff was 
entitled to collect uninsured motorist coverage up to the "each occurrence" 
limit rather than the "each person" limit in a claim arising out of an 
automobile accident resulting in one death?

[¶4] This 
Statement of the Issues is found in the Brief of Appellee, filed on behalf of 
Byron Dahlheimer (Dahlheimer), the personal representative of the estate of the 
deceased person:

1. If Farmers['] 
policy in this case is unambiguous, was the District Court correct that it 
provides coverage to multiple wrongful death claimants at the "each occurrence" 
limits of liability?

2. If Farmers['] 
policy in this case is ambiguous, must the policy, in any event, be construed in 
favor of the insureds to provide coverage to multiple wrongful death claimants 
at the "each occurrence" limits of liability?

[¶5] On October 
30, 1996, the decedent died in an automobile accident caused by an uninsured 
driver. The decedent was insured under a policy issued by Farmers, and the 
policy included uninsured motorist coverage. The limits of liability for the 
uninsured motorist coverage are $100,000 for each person and $300,000 for each 
occurrence. Surviving the decedent were her son, her parents, and six siblings. 
Under our Wyoming statutes, Wyo. Stat. Ann. §§ 1-38-101 through 1-38-102 (Lexis 
1999), each of these survivors would be entitled to prove damages in a wrongful 
death action against the uninsured driver. Dahlheimer is the personal 
representative of the decedent's estate, and he instituted this action in that 
capacity.

[¶6] Farmers 
paid the $100,000 per person policy limit, but Dahlheimer contends that the 
$300,000 policy limit for each occurrence is the appropriate amount. 
Dahlheimer's contention is based upon the proposition that there are multiple 
survivors and that each of them qualifies as an "insured person" under the 
policy definitions. Farmers agreed that the damages attributable to the death of 
the decedent are at least $300,000.

[¶7] On October 
14, 1997, Dahlheimer filed a Complaint for Declaratory Judgment in the district 
court, asking the court to decide the issue of the appropriate liability limit 
under the policy. In the district court, the parties stipulated to the material 
facts of this case, and there is no dispute relating to the facts. Since the 
facts were stipulated, the parties then filed cross-motions for summary 
judgment. A hearing on those motions was held on January 16, 1998, and the 
district court granted a summary judgment in favor of Dahlheimer on January 30, 
1998. Farmers' appeal is taken from the Order Granting Summary Judgment to 
Plaintiffs.

[¶8] In this 
case, the stipulation of the parties forecloses any factual dispute, and in 
accordance with our protocol for reviewing summary judgments granted pursuant to 
W.R.C.P. 56, we determine only whether the district court properly applied the 
law in ordering the summary judgment. Cities Service Oil and Gas Corp. v. State, 
838 P.2d 146, 150 (Wyo. 1992). Our review requires us to interpret the policy 
insuring the decedent under our usual rules of contract interpretation because 
we treat insurance policies as contracts. Doctors' Co. v. Insurance Corp. of 
America, 864 P.2d 1018, 1023 (Wyo. 1993). The rule we apply was articulated in 
Arnold v. Mountain West Farm Bureau Mut. Ins. Co., Inc., 707 P.2d 161, 166 (Wyo. 
1985):

[¶9] If a 
contract is clear on its face, we must assume it reflects the intent of the 
parties. Schacht v. First Wyoming Bank, N.A. - Rawlins, Wyo., 620 P.2d 561 
(1980). We are not free to rewrite contracts under the guise of interpretation. 
Adobe Oil & Gas Corp. v. Getter Trucking, Inc., Wyo., 676 P.2d 560 (1984). 
So long as there is no ambiguity, we are bound to apply the contract as it is 
written. Rouse v. Munroe, Wyo., 658 P.2d 74 (1983).

[¶10] This case 
presents a novel question in Wyoming, and the arguments presented by Dahlheimer 
are both ingenious and forceful. Dahlheimer and Farmers argue that in resolving 
the issue in this case, we must begin with and focus on the language of the 
policy. As identified by the parties, some of the important definitions and 
conditions in the policy are:

[¶11] Insured 
person means:

a. You or a 
family member.

b. Any other 
person while occupying your insured car.

c. Any person 
for damages that person is entitled to recover because of bodily injury to you, 
a family member, or another occupant of your insured car.

[¶12] Bodily 
injury means bodily injury to or sickness, disease or death of any 
person.

[¶13] Damages 
are the cost of compensating those who suffer bodily injury or property damage 
from an accident.

[¶14] (Emphasis 
in original.) The word "you" in the policy refers to the named insured, the 
decedent, and the word "we" refers to Farmers. In the section of the policy 
providing uninsured motorist coverage, "Coverage C," the policy provides, "[w]e 
will pay all sums which an insured person is legally entitled to recover as 
damages from the owner or operator of an uninsured motor vehicle because of 
bodily injury sustained by the insured person." (Emphasis in original.) The 
limits of liability under the uninsured motorist section of the policy are 
stated in this way:

1. The limit for 
"each person" is the maximum for bodily injury sustained by any person in any 
one occurrence. Any claim for loss of consortium or injury to the relationship 
arising from this injury shall be included in this limit.

2. Subject to 
the limit for "each person" the limit for "each occurrence" is the maximum 
combined amount for bodily injury sustained by two or more persons in any one 
occurrence.

[¶15] Our 
analysis of "Coverage C" begins with the statement of Farmers' obligation 
pursuant to which it agrees to "pay all sums which an insured person" could 
recover as damages from the operator of an uninsured motor vehicle "because of 
bodily injury sustained by the insured person." The limitations provide that 
Farmers is required to pay only in the event of bodily injury, and that it is 
not obligated to pay more than the "each person" amount unless more than one 
person has sustained bodily injury. Farmers does not question that the decedent 
sustained bodily injury because of her death in the accident. The focus of the 
debate then is not whether anyone other than the decedent sustained a bodily 
injury. Rather, it is whether the definition of an "insured person," 
specifically subparagraph c. of that definition, in conjunction with the 
obligation of Farmers under "Coverage C," leads to the conclusion that Farmers' 
obligation is properly construed to read:

[¶16] We will 
pay all sums which [any person who is entitled to recover damages because of 
bodily injury to the decedent] is legally entitled recover as damages from the 
owner or operator of an uninsured motor vehicle because of bodily injury 
sustained by [the decedent].

[¶17] Farmers' 
argument emphasizes that the only bodily injury sustained was the death of the 
decedent. The ruling of the district court, however, apparently was premised 
upon the proposition that the definitions provisions could be applied in the 
manner suggested above. The district judge did not specify the basis for his 
decision, but he did say to Dahlheimer's attorney, "my reading of the policy is 
consistent with what you've argued." We can and will affirm a summary judgment 
on any proper legal theory disclosed by the record, and we address all of the 
arguments presented by Dahlheimer to sustain the judgment of the district court. 
Century Ready-Mix Co. v. Campbell County School Dist., 816 P.2d 795, 799 (Wyo. 
1991) (quoting Reeves v. Boatman, 769 P.2d 917, 918 (Wyo. 
1989)).

[¶18] Dahlheimer 
argues that if the policy is read to permit only the insured individual to 
collect for damages because of bodily injury sustained by the insured, the 
decedent's survivors could not recover unless they sustained a bodily injury 
themselves. The thrust of this reasoning is that if the policy is construed as 
Farmers argues, the survivors would be entitled to no recovery. This argument is 
fallacious with respect to the interpretation of the language in "Coverage C." 
The district court substituted language into "Coverage C," and it arrived at the 
following statement:

[¶19] We will 
pay all sums which a family member is legally entitled to recover as damages 
from the owner or operator of an uninsured motor vehicle because of the death 
sustained by the insured person.

(Emphasis 
added.)

[¶20] This 
construction is premised on a conclusion that the words "insured person" 
appearing in the obligation assumed by Farmers under "Coverage C" describe 
different persons. Construing the language in that fashion disregards the use of 
the indefinite article "an" in connection with the first reference to "insured 
person" and the definite article "the" used in the second reference to the 
"insured person." The definite article demonstrates that the second reference is 
to the "insured person" previously identified in that sentence. "An insured 
person" legally entitled to recover can be any insured person as defined by the 
policy, but with respect to "Coverage C," "the insured person" sustaining bodily 
injury must be the same person as the one legally entitled to recover. Thus, the 
sentence providing coverage correctly is read as:

[¶21] [Farmers] 
will pay all sums which a [decedent] is legally entitled to recover as damages 
from the owner or operator of an uninsured motor vehicle because of [death] 
sustained by [the decedent].

[¶22] (Emphasis 
added.) The thrust of this interpretation is that Farmers met its responsibility 
by paying the $100,000 to which an injured person would be entitled because of 
bodily injury to that injured person. The survivors of the decedent, under this 
construction did not sustain bodily injury, and we cannot affirm the summary 
judgment entered by the district court unless we find it supported in some other 
way.

[¶23] Dahlheimer 
cites Savoie v. Grange Mut. Ins. Co., 67 Ohio St.3d 500, 620 N.E.2d 809 (1993). 
In that case, the court held that each survivor who was entitled to bring a 
wrongful death action could collect up to the limit for each person, subject to 
the overall occurrence limit. Id. at 812-13. The Ohio court did not rule that 
each survivor had sustained a bodily injury. Instead, the Ohio court turned to a 
portion of the state's wrongful death statute that provided that each survivor 
is rebuttably presumed to have suffered damages.1 Id. at 812. The Ohio Supreme Court 
continued with an explanation that the Constitution of the State of Ohio 
says:

[¶24] The amount 
of damages recoverable by civil action in the courts for death caused by the 
wrongful act, neglect, or default of another, shall not be limited by law. Art. 
I, § 19a.

[¶25] Savoie, 
620 N.E.2d  at 812. The Ohio Supreme Court reached inconsistent conclusions that 
the constitutional provision precluded any per person limitation in a wrongful 
death claim, but it assumed that, under the same constitutional language, the 
limitation per occurrence would still apply. Id. at 813. The then Chief Justice 
of the Ohio Supreme Court dissented, pointing out that the phrase "by law" in 
the constitutional provision was addressed to limitations imposed on liability 
by statute, but did not reach limitations set forth in private contracts such as 
insurance policies. Id. at 821. The Chief Justice noted the inconsistency and 
asserted that if a limitation per person is unconstitutional, then a limitation 
per occurrence also must be unconstitutional. He then pointed out that the 
majority had not hesitated to enforce the per occurrence limitation. Id. at 821. 
The next event in Ohio, a response to Savoie, was the enactment by the Ohio 
legislature of Am. Sub. S.B. No. 20, which "explicitly allows automobile 
insurance policies to treat all claims for bodily injury to a person as a single 
claim." Smith v. Mancino, 119 Ohio App.3d 418, 695 N.E.2d 354, 355 (1997). It 
follows that even in the courts of Ohio, Dahlheimer's claim would not be 
sustained.

[¶26] In another 
argument, Dahlheimer relies upon Treichel v. State Farm Mut. Auto. Ins. Co., 280 
Mont. 443, 930 P.2d 661 (1997). In Treichel, the court ruled that a wife could 
recover a separate per person amount for negligent infliction of emotional 
distress after witnessing the accident in which her husband lost his life. Id. 
at 665. The rationale invoked by the court was that the wife herself was an 
injured person, and that negligent infliction of emotional distress was not 
derivative of the injury to her husband. Id. The facts in that case distinguish 
it from the arguments of Dahlheimer. Had any of the survivors of the decedent in 
this case witnessed the accident in which the decedent was killed, the Treichel 
reasoning could be applied. The district court in Montana had explained that the 
wife's claim arose "out of the traumatic personal impact upon her own emotional 
and physical well-being by actually and immediately experiencing the accident 
which killed her husband directly in front of her." Id. at 663. The Montana 
Supreme Court, however, conceded that derivative claims still were subject to 
the limit of liability for injury to each person. Id. at 665. Our law in Wyoming 
is consistent with the concession by the Montana court in that wrongful death 
claims are derivative claims in Wyoming. Edwards v. Fogarty, 962 P.2d 879, 883 
(Wyo. 1998). See Anderson v. Solvay Minerals, Inc., 3 P.3d 236, 237 (Wyo. 2000). 
Our conclusion is that under the circumstances presented by Dahlheimer, the 
Montana court would invoke the per person limitation set forth in the policy 
language.

[¶27] Neither 
Savoie nor Treichel serves to justify the summary judgment entered by the 
district court. Neither is helpful in determining whether the survivors 
represented by Dahlheimer can be perceived as fitting within the definition of 
coverage found in "Coverage C." We have canvassed other jurisdictions with 
respect to this particular problem. In Campbell v. Farmers Ins. Co. of Arizona, 
155 Ariz. 102, 745 P.2d 160 (1987), the court considered a policy encompassing 
the same limitations of liability and the same definitions as the policy before 
us. In that case, the surviving spouse and children of the decedent each sought 
to recover up to the per person limitation. Id. at 161. The Arizona court held 
that the several claimants had not sustained bodily injury, but that their 
claims were derivative of the injuries suffered by the decedent. Id. at 165. In 
an earlier decision, another court in Arizona considered substantially identical 
language, and said:

[¶28] [T]here is 
no coverage provided to the plaintiffs in their capacities as insureds because 
of some injury which they themselves might have received resulting from (the 
decedent's) death. Whatever their injuries might be, they were not "bodily 
injuries." The coverage provided is for the "bodily injury" which another 
insured, (the decedent), received.

[¶29] Bakken v. 
State Farm Mut. Auto Ins. Co., 139 Ariz. 296, 678 P.2d 481, 485 (1983). See also 
Green v. Mid-America Preferred Ins. Co., 156 Ariz. 265, 751 P.2d 581, 584 (1987) 
(holding "[u]nless the [claimants] can show they suffered bodily injuries in the 
accident in which [decedent] was killed, the `each person' limit applies, since 
only one person * * * suffered bodily injury or death.").

[¶30] A 
California court reach a similar result, although applying a different 
rationale. Hauser v. State Farm Mut. Auto. Ins. Co., 205 Cal. App. 3d 843, 252 Cal. Rptr. 569 (1988). Hauser died in an automobile accident, and his spouse 
endeavored to collect up to the each occurrence limitation of the policy 
coverage. Id. at 570. It is to be noted that Hauser did not involve non-insured 
motorist coverage. The policy language provided for recovery up to the each 
occurrence limit for "bodily injury to two or more persons in the same 
accident." Id. at 571 n. 1. The language in the policy considered in Hauser was 
similar to the language in the policy relied upon by Dahlheimer, which allows 
recovery up to the each occurrence limit for "bodily injury sustained by two or 
more persons in any one occurrence." The court in California 
held:

[¶31] This 
definition of "each accident" implicitly distinguishes between a person harmed 
in the accident, and one harmed only as a result of injuries sustained by one in 
the accident. Since the (claimant) was not in the accident, but only harmed as a 
result of injuries sustained in the accident by (the decedent), the policy 
limits her recovery for damages to that applicable to "each 
person."

Hauser, 252 Cal. Rptr.  at 
571 n.1 (emphasis in original).

[¶32] The 
Supreme Court of Nevada extended the rationale articulated in Hauser to 
uninsured motorist coverage in Nationwide Mut. Ins. Co. v. Moya, 108 Nev. 578, 
837 P.2d 426 (1992). The Nevada court agreed that the each person limit was 
invoked if only one insured individual was injured in the accident, regardless 
of the number of persons who might have suffered damage. Id. at 430. In 
Oklahoma, a federal court ruled that the each person limit "refers to the person 
actually physically injured in the automobile accident." Economy Fire & Cas. 
Co. v. Faulkner, 790 F. Supp. 1082, 1084 (W.D. Okla. 1991). The court 
explained:

[¶33] To extend 
the meaning of "each person" to the injured person's parents, spouse, children, 
or others who could conceivably bring a cause of action against a tortfeasor for 
the injuries of the claimant would gut the purpose of the "each person" and 
"each accident" provisions.

Faulkner, 790 F. Supp.  at 
1084.

[¶34] In New 
Mexico, recovery is limited for death to the per person limitation in 
conjunction with a wrongful death statute that is very similar to the Wyoming 
statute. Lewis v. Dairyland Ins. Co., 113 N.M. 686, 831 P.2d 985 (1992). The New 
Mexico wrongful death statute provides:

[¶35] Whenever 
the death of a person shall be caused by the wrongful act, neglect or default of 
another, * * * and the act, or neglect, or default, is such as would, if death 
had not ensued, have entitled the party injured to maintain an action and 
recover damages in respect thereof, then * * * the person who * * * would have 
been liable, if death had not ensued, shall be liable to an action for damages, 
notwithstanding the death of the person injured.

[¶36] Lewis, 831 P.2d  at 987 (emphasis in original). The Supreme Court of New Mexico agreed with 
the insurer's assertion that "a wrongful death gives rise to one indivisible 
claim that is * * * subject to the per-person limit of liability." Id. at 987. 
The New Mexico court decided that the reference to a single action for wrongful 
death means that wrongful death claimants have a single collective right of 
action. Id. That action, like the wrongful death action in Wyoming, is described 
as invoked in a situation in which the person would have been entitled to 
maintain an action to recover damages if the person had not died, and, of 
course, the action by the injured person would have been limited to the per 
person recovery described in the policy. Id.

[¶37] Two 
treatises on automobile insurance report that the per person limitation is the 
appropriate result in a case such as this. One dealing specifically with 
uninsured motorist coverage states, "courts have almost uniformly held that the 
liability of an insurance company for either direct or consequential damage 
claims is subject to the insurance policy limit of liability for bodily injuries 
to one person as a result of one accident." Alan I. Widiss, Uninsured and 
Underinsured Motorist Insurance § 6.4 (2d ed. 1992). A general treatise on 
automobile liability insurance agrees and expresses the proposition in this 
language, "the great majority of the courts have held that consequential and 
derivative loss claimants who were not themselves physically injured in the 
accident did not sustain separate bodily injury within the contemplation of the 
policy language." Irvin E. Schermer, Automobile Liability Insurance 3d § 
44.03[1] at 44-6 (1995). In addition, Schermer explains: 

[¶38] The right 
to recover consequential and derivative losses is recognized by the insurer, but 
at the same time is exercisable only under the single injury limits restrictions 
of the policy. The fact of only a single death insulates the insurer against 
"per accident" liability according to a majority position.

Irvin E. Schermer, 
Automobile Liability Insurance 3d § 44.03[1] at 44-8.

[¶39] In his 
second approach to resolution of this problem identified by the second issue 
quoted above, Dahlheimer asserts that if the policy is not read according to his 
interpretation, it must be perceived as ambiguous and we should afford a 
construction in favor of the insured. Dahlheimer argues that there is ambiguity 
to be found in the second sentence of the language describing the per person 
limitation, which says, "[a]ny claim for loss of consortium or injury to the 
relationship arising from this injury shall be included in this limit." 
Dahlheimer's point is that the phrase "injury to the relationship" could be 
construed as either an explanation of the phrase "loss of consortium" or as a 
separate claim for damages.

[¶40] Dahlheimer 
has not persuaded this Court that this policy is ambiguous. We have said "[a]n 
ambiguity is not created by the subsequent disagreement of the parties regarding 
the contract's meaning." Frost Const. Co. v. Lobo, Inc., 951 P.2d 390, 394 (Wyo. 
1998) (citing Svalina v. Split Rock Land and Cattle Co., 816 P.2d 878, 881 (Wyo. 
1991)). The phrase "loss of consortium or injury to the relationship" 
unambiguously describes two separate concepts. At the beginning of the policy, 
Farmers set forth an extensive list of definitions, and additional 
section-specific definitions are included as appropriate. If the policy was 
intended to define "loss of consortium" as "injury to the relationship," we 
conclude that the policy would have done so explicitly. There is no place in the 
policy that a word or term is defined without labeling it as a definition. 
Furthermore, when the word "or" appears in the policy, it denotes that the items 
are not the same. It is not a plausible construction that in one isolated 
instance the intention articulated in the policy was to use "or" to indicate 
that the two phrases have an identical meaning. In Campbell, the court dealt 
with a similar contention of ambiguity. Campbell, 745 P.2d  at 165. As in this 
case, the claimants in Campbell argued that the phrases "loss of consortium" and 
"injury to the relationship" were "unclear and ambiguous, especially to persons 
untrained in law or insurance." Id. The court held that the phrases, as they 
were used in the context of the policy, were neither unclear nor ambiguous. Id. 
at 166.

[¶41] Although 
Dahlheimer, on behalf of the survivors, clearly is entitled to recover damages 
because of the death of the policy holder, none of the survivors suffered bodily 
injuries. The only insured who sustained bodily injury was the decedent. The 
unambiguous language of this policy, limits claims arising from that death to 
the per person limitation on liability. A contrary holding would render 
meaningless the per person limitation in a death case unless there were only 
three or less than three survivors. To adopt Dahlheimer's interpretation would 
leave an inconsistency in our law in that an injured person would be limited to 
the per person recovery, but that limitation would be disregarded in the 
instance in which the injured person died. The Court is satisfied that the 
majority rule represents the better policy for the State of 
Wyoming.

[¶42] Reversed 
and remanded for entry of a judgment in favor of Farmers Insurance 
Exchange.

FOOTNOTES

1 The 
wrongful death statute in Wyoming encompasses no such presumption, and this 
Court has never previously inferred such a presumption. Instead, each person 
entitled to participate must establish damages.

Every person for whose benefit such action is brought may prove his 
respective damages, and the court or jury may award such person that amount of 
damages to which it considers such person entitled, including damages for loss 
of probable future companionship, society and 
comfort.

Wyo. Stat. Ann. § 1-38-102(c).