Title: RIEFFLIN v HARTFORD INS CO

State: montana

Issuer: Montana Supreme Court

Document:

No. 12629 I N T H E S U P R E M E C O U R T O F THE STATE O F M O N T A N A ALBERT L. RIEFFLIN e t a l . , P l a i n t i f f s and Appellants, THE H A R T F O R D S T E A M BOILER INSPECTION AND INSURANCE C O M P A N Y , a Corporation, Defendant and Respondent. Appeal from: D i s t r i c t Court of the Fourth J u d i c i a l D i s t r i c t , Honorable E. Gardner Brownlee, Judge presiding. Counsel of Record: For Appellants : J u l i o K. Morales argued, Missoula, Montana For Respondent : Garlington, Lohn and Robinson, Missoula, Montana Gary L. Graham argued, Missoula, Montana Submitted: March 21, 1974 Filed : APR e 5 1974 Decided : M r . Justice Gene B. Daly delivered the Opinion of the Court. Plaintiffs and appellants, Albert L., Robert L., and Margaret A. Rief f l i n , d/b/a The Missoula Motel, hereinafter referred to as plaintiffs or Riefflins, bring this appeal from a judgment of the d i s t r i c t court of Missoula County in their favor i n the amount of $1,332.48 against defendant and respondent, The Hartford Steam Boiler Inspection and Insurance Company, a Corporation, hereinafter referred to as Hartford. The d i s t r i c t court judgment awarded costs of s u i t amounting to $197.24 to defendant Hartford. This litigation arises out of a contract of insurance existing between these litigants which covered a cast iron boiler located in the Missoula Motel, owned by the Rief flins. The boiler consisted of ten center sections and t w o end sections and was used to heat the motel. O n February 1, 1970, one of the end sections cracked. Hartford performed an inspection of the boiler and paid a claim in the amount of $440.43 for replace- ment of the cracked section. B y l e t t e r dated March 26, 1971, Hartford advised the Rief f l i n s : "In view of the amount of scale in the damaged section, it can be expected that the remaining sections i n the boiler may also contain excessive scale and are subject to future cracking in a similar fashion. "Since this boiler has been in service less than 3 years, the amount of internal scale would indicate to us that an excessive amount of make up water i s being required to maintain the water level. Excessive feedwater make up w i l l result in rapid scaling; therefore, w e strongly reconnnend that the entire heating system be investigated for leakage o r other conditions that are resulting in excessive or loss of water in the system. "As a safeguard against possible cracking of additional sections, w e strongly advise that the boiler be opened up either by removing wash out plugs o r disconnecting pipe connections to observe the internal surfaces. W e are advising our Inspector to contact you with regard to such an inspection sometime following the end of the present heating season. I f excessive scale is detected, it may then be necessary to remove the deposits by chemical means along with washing and flushing of the individual sections . I1 During the summer of 1971 the Riefflins had the boiler chemically cleaned a t their expense i n the amount of $911.96. Neither Hartford nor i t s inspector specified who would bear the cost of t h i s cleaning. On o r about October 18, 1971, an internal boiler section cracked. Again Hartford performed an inspection and acknowledge l i a b i l i t y i n the amount of $818.49 for replacement of the cracked section. While the boiler was dismantled for repair, a third cracked section was discovered on November 30, 1971. B y l e t t e r dated December 6, 1971, Hartford advised the Riefflins: "We are aware that the boiler had been dismantled during the Summer and the sections had been chemically treated to remove the scale; it i s quite evident that the cleaning process was not successful and in view of the density of the deposits and their location i n the sections, it i s doubtful that the deposits can ever be removed. "Under the circumstances, w e can only recommend the replacement of a l l intermediate sections containing scale o r that the entire boiler be replaced, depending on the expense involved. It has been our experience that it w i l l be less expensive to replace the entire boiler. "The Inspector reports that a new boiler has been placed on order and that it w i l l be installed to replace the present boiler when delivered. "In view of the trouble that has been experienced with t h i s boiler in the past year as the result of daily internal scaling, w e again strongly advise that the entire heating system be checked for leakage o r loss of water from the system. Any leakage found should be repaired to minimize trouble of this nature i n the future. I 1 The new boiler, ordered by the Riefflins prior to receipt of the above quoted l e t t e r , was installed i n l a t e February of 1972 a t a cost to them of $4,815.00. Again neither Hartford nor i t s inspector specified who would bear the cost of this replacement. While Riefflins were awaiting arrival and installation of their new boiler, the old boiler continued i n use. It appears that during t h i s period additional sections of the old boiler cracked, leaving only eight operational sections when the boiler was replaced i n February. N o proofs of loss were received by Hartford from Riefflins on any of these additional cracked sections. Rief f l i n s ' complaint claimed damages of $4,500 .OO caused by frozen heating pipes and appliances and loss of $3,000 motel income during the period from October 1, 1971 to March 1, 1972. Riefflins also sought judgment from Hartford for $911.96, the cost of cleaning the boiler; $4,815.00, the cost of replacing the entire boiler; and $818.49, the cost of replacing the second cracked section. Hartford made an offer of judgment i n the sum of $1,332.48 representing i t s l i a b i l i t y for replacement costs of the second cracked boiler section i n the sum of $818.49 and the third cracked boiler section in the s u m of $513.99, which was based on a plumber's estimate. The contract of insurance, introduced as plaintiffs' exhibit one, required written notfce and proof of loss to Hartford as soon as practicable after an accident occurred. The policy defined "accident" for purposes of its coverage as: "* * * a sudden and accidental breakdown of the Object, o r a par-r: thereof, which manifests i t s e l f a t the time of i t s occurrence by physical damage to the Object that necessitates repair o r replace- ment of the Object or a part thereof; but Accident shall not mean (a) depletion, deterioration, cor- rosion, o r erosion of material * * *." The policy specifically excluded: "* * * loss from delay or interruption of business or manufacturing o r process, (f) loss from lack of power, light, heat, steam or refrigeration and (g) loss from any other indirect result of an Accident." Plaintiffs bring this appeal from the judgment and order of the d i s t r i c t court, and from i t s denial of their post t r i a l motions, assigning the following issues: (1) Whether the t r i a l court erred in denying (a larger) judgment to the plaintiffs and against the defendant. (2) Whether the t r i a l court erred in denying plaintiffs' motion to amend and make additional findings of fact and con- clusions of law. (3) Whether the t r i a l court erred in denying plaintiffs' motion for a new t r i a l on the ground the evidence did not justify the verdict. (4) Whether the t r i a l court erred i n failing to grant the m t i o n for a new t r i a l on the grounds that error was com- mitted during trial by denying plaintiffs' presentation of evidence regarding cracking of boiler sections which took place subsequent to October 31, 1971. The arguments propounded by plaintiffs i n support of these issues concern primarily the legal operation of the insurance contract between the l i t i g a n t s and collaterally the effect of alleged negligence by Hartford i n i t s performance of the boiler inspections and proposed application of the doctrine of equitable estoppel against Hartford. Regarding the primary argument, the t r i a l court found that the buildup of scale within the boiler was not "sudden and accidental" and was not a "breakdown of the object" which w a s manifested at the time of the accident "by physical damage to the object that necessitates repair o r replacement of the object" and hence was not an "accident" under the terms of the policy. Consequently, the t r i a l court ruled there w a s no coverage under the policy of the Riefflins' expenses of $911.96 for the boiler cleaning done during the summer of 1971 o r of their expenses of $4,815.00 for the boiler replacement done i n February of 1972. Based upon the record before us, we concur with these rulings of the trial court. Both these actions were undertaken by the Riefflins i n an attempt to remedy the internal scaling problem. In interpreting and applying insurance contracts, the Montana rule has been to use the common rather than some technical usage o r meaning of definitional terms i n the policy, W i l l s v. Midland Nat. L. Ins. Co., 108 Mont. 536, 91 P.2d 695. The internal boiler scaling problem was not an accident under the usual meaning of the term as defined i n the insurance policy issued by Hartford. Hartford has paid o r i s now obligated to pay, under the d i s t r i c t court's judgment, the replacement cost of three cracked boiler sections. The t r i a l court found that failure of the Riefflins to submit notifications of accident and proof of loss as soon as practicable, as required by the policy, barred any claims for reimbursement for sections which may have cracked subsequent to these f i r s t three. Appellants rely on the case of Staggers v. U.S.F.& G. Co., 159 Mont. 254, 496 P.2d 1161, in which this Court held that "substantial compliancef1 by insured i n furnishing insurer with proof of loss as required for recovery under a f i r e insurance policy was sufficient. The existence of "substantial compliance" in Staggers was predicated upon the fact that the insureds f i l l e d out and submitted statement of loss forms which the insurer did not object to for almost two years. In the instant case the insureds f i l e d nothing for nearly two years con- cerning the cracked boiler sections i n question. However, the Riefflins contend that their insurer knew of the prior scale accumulation problem and of the three boiler sections which had cracked previously and therefore should have anticipated the l a t e r cracking of boiler sections. To interpret the concept of sub- stantial compliance this broadly would eliminate the need for any compliance with insurance policy provisions. W e find that the t r i a l court was correct i n i t s ruling that the Riefflins failed to comply with the proof of loss requirements for any except the f i r s t three cracked boiler sections. The t r i a l court also found, and w e concur, that the insur- ance specifically excluded from coverage the incidental damages from frozen pipes claimed i n the amount of $4,500 and from interruption of business losses claimed i n the amount of $3,000. The record before us does not support appellants' allega- tions of negligence on the part of Hartford i n conducting the inspections of the boiler. Under the terms of the insurance contract Hartford reserved the right but did not assume the duty to inspect. A s a general principle of our law of torts, however, once Hartford undertook to inspect the boiler and make recommendations, they were obliged to do so i n a nonnegligent manner. The hereinabove quoted passages of l e t t e r s from Hartford to Riefflins recommend the "excessive feedwater" problem be remedied i n order to correct the scaling. There i s no evidence i n the record that these recommendations were followed u n t i l it became necessary to replace the entire boiler. The plumbing contractor who installed the new boiler testified that he used a water softener and chemical additives i n the new feed- water system, to help relieve scaling. There i s no testimony that these installations would have corrected the scaling con- dition existing i n the old boiler, or that a boiler not using excessive amounts of feedwater would require them. The appellants contention concerning application of equitable estoppel i s defective i n the f i r s t instance through their failure to raise the issue before the t r i a l court, State Highway C o m m . v. Voyich, 142 Mont. 355, 384 P.2d 765, and i n the second instance the record discloses no statement o r conduct on the part of Hartford anmunting to a misrepresentation, Mundt v. Mallon, 106Mont. 242, 76 P.2d 326. Finally, concerning the t r i a l court ' s ruling assessing costs against plaintiffs and appellants Riefflins, Rule 68, M.R.Civ.P. provides i n pertinent part: "* * * If the judgment finally obtained by the of feree i s not more favorable than the offer (of judgment), the offeree must pay the costs incurred after the making of the offer. * * *" W e find Rule 68, M.R.Civ.P. clearly applicable and correctly applied by the t r i a l court. W e find no error i n the judgment of the d i s t r i c t court, and it i s hereby affirmed. Justice W e goncur : : . . , - - r . - - - --- ' - . - AL Cr .%. Chief ~ u s g i c e J I y . \,A & & & & , - j 2 & & - Justices /