Title: Columbia Heights Motors v. Allstate Ins. Co.

State: minnesota

Issuer: Minnesota Supreme Court

Document:

275 N.W.2d 32 (1979) COLUMBIA HEIGHTS MOTORS, INC., Respondent, v. ALLSTATE INSURANCE COMPANY, Appellant. No. 48431. Supreme Court of Minnesota. January 12, 1979. *33 Meagher, Geer, Markham, Anderson, Adamson, Flaskamp & Brennan & Gary M. Hagstrom and J. Richard Bland, Minneapolis, for appellant. Rischmiller, Wasche & Knippel, Minneapolis, for respondent. Heard before PETERSON, YETKA, and WAHL, JJ., and considered and decided by the court en banc. YETKA, Justice. This is an appeal by defendant Allstate Insurance Company from an order of the Hennepin County District Court granting summary judgment to plaintiff Columbia Heights Motors, Inc., and from judgment entered October 27, 1977. We affirm. Plaintiff is a corporation engaged in the sales and service of automobiles. In 1973, plaintiff contracted with defendant for business insurance, and defendant issued its Business Package Policy No. 11 599 944BP to plaintiff, effective June 1, 1973. The policy provided several types of coverage, including general liability, garage liability, automobile liability, automobile physical damage, loss of business income, and loss or damage to property. Premiums were computed on an annual basis; the policy period ran from June 1, 1973 to June 1, 1976. During the policy period plaintiff sustained a loss through the dishonest activities of one of its employees. The yearly breakdown of that loss was as follows: Defendant acknowledges that the type of loss incurred is covered by the policy, but argues that because the loss was caused by the activities of only one employee, maximum liability under the policy is $25,000 for the entire policy period. Plaintiff contends that the policy covers the loss up to $25,000 per year for each of the three years. *34 After a hearing on cross motions for summary judgment on the issue of the limits of defendant's liability, the district court granted plaintiff's motion for summary judgment on the basis that the policy was ambiguous with respect to the amount of coverage.[1] Judgment was entered pursuant to the order, and defendant appealed. The legal issue posed in this appeal is whether the trial court erred in finding that the language of the insurance policy was ambiguous and in resolving that ambiguity in favor of the insured. Whether the language of an insurance policy is ambiguous is a question of law to be decided initially by the trial court. This court, on appeal, must determine whether the trial court was correct in finding ambiguity. ICC Leasing Corp. v. Midwestern Machinery Co., 257 N.W.2d 551, 554 (Minn.1977). If the language of the policy is reasonably subject to more than one interpretation, there is ambiguity. Id. If it is not reasonably subject to more than one interpretation, there is no ambiguity. A court may not "read an ambiguity into the plain language of a policy in order to provide coverage." Farkas v. Hartford Accident and Indemnity Co., 285 Minn. 324, 327, 173 N.W.2d 21, 24 (1969). In interpreting the policy language, a court is to give the terms "their plain, ordinary, and popular meaning." Ostendorf v. Arrow Insurance Co., 288 Minn. 491, 495, 182 N.W.2d 190, 192 (1970). In this case, four policy provisions are relevant to determining appellant's liability: (1) Condition 10 of the General Provisions, which states: (2) Insuring Agreement IA of the Comprehensive Crime Form, which provides that "Allstate agrees to pay for:" (3) the Table of Limits of the Comprehensive Crime Form, which indicates that the limit of liability under Insuring Agreement IA is $25,000; and (4) Section 11 (Limits of Liability) of the Comprehensive Crime Form, which provides that There seems to be no dispute as to the meaning of Condition 10; the meaning of Insuring Agreement IA is not in dispute insofar as both parties apparently agree that defendant may, in some circumstances, be liable for up to $25,000 per year; and there is no dispute that the Table of Limits of Liability limits liability to $25,000. Section 11 is the provision in dispute. Defendant contends that this provision limits total liability for the entire policy period for all loss caused by a single employee. Plaintiff argues that this provision states a $25,000 limit per "consecutive annual period." The trial court's memorandum of law, accompanying its findings, is brief and to the point, so we will set it out in full herein: We agree with the trial court that certainly the policy is subject to more than one interpretation. Were we to accept one interpretation, plaintiff's interpretation would appear to be the more reasonable. Both the general conditions and the insuring agreement use the word "aggregate" to refer to an annual limitation on defendant's liability; the insuring agreement and the table of limits of liability, read together, limit defendant's liability for any particular year to $25,000. In addition, the last paragraph of section 11 of the comprehensive crime form would appear to prevent cumulation of any portion of the $25,000 annual limit unpaid in previous years. However, we need not decide which interpretation is the more accurate. The reference in section 11 to a limitation on "total" liability and the reference in the insuring agreement to a limitation on annual liability raise a reasonable doubt regarding the limitations of liability. The general rule in Minnesota is that any reasonable doubt as to the meaning of the language of an insurance policy must be resolved in favor of the insured. Farkas v. Hartford Accident and Indemnity Co., supra, 285 Minn. at 327, 173 N.W.2d at 24. Since such a reasonable doubt exists, the trial court correctly found for plaintiff. Affirmed. OTIS, J., took no part in the consideration or decision of this case. [1] The actual amount of plaintiff's loss and defendant's liability is yet to be litigated.