Opinion ID: 2637500
Heading Depth: 1
Heading Rank: 1

Heading: We resolve any ambiguity in Simmons's favor by determining Walldow's reasonable expectations.

Text: Assuming arguendo that the term individual is ambiguous, we resolve any ambiguity in Simmons's favor, because she is the purported insured. [31] A contract provision is ambiguous if it is reasonably susceptible to more than one interpretation. [32] We have stated that courts must resolve ambiguity in insurance contracts by determining the reasonable expectations of the contracting parties. [33] We discern the reasonable expectations from the language of the disputed provisions, other provisions, and relevant extrinsic evidence, with guidance from case law interpreting similar provisions. [34] The question is, assuming the policy had named Walldow d/b/a Happy Puppy Enterprises as an insured, whether Walldow could have reasonably expected the policy to cover him as an individual, thereby affording coverage to his household family members. Given the broad consensus that a private, noncorporate business is not separate from the individuals comprising it, and that a trade name is merely the alter ego [35] of the individual, we conclude that Walldow's expectation was reasonable. The case law, other legal authority, and our analysis of reasonable expectations all support the conclusion that, where individual persons are listed as insureds under their trade names or partnerships, coverage extends to those individuals as well as to their businesses. Thus, it was error to conclude that Walldow would not have been covered as an individual even if the policy had listed him along with Carol Mills under their trade name Happy Puppy Enterprises, and it was error to grant summary judgment to INA on those grounds.
In the alternative, INA argues that summary judgment was proper because the contract cannot be reformed to include Walldow in any event. INA asserts that Happy Puppy Enterprises was Mills's sole proprietorship, and that there was no mutual mistake to justify reformation. Simmons responds that reformation is proper because the parties' clear intention was to include Walldow as a named insured on the policy, and because his name was omitted only due to the insurance agency's mistake. She contends that the superior court should have granted her summary judgment on those grounds. Whether the evidence regarding the parties' intentions justifies reformation of a contract is ordinarily a question of fact for the superior court. [36] In this case, however, the superior court did not reach this issue, so there are no findings for us to review on appeal. We have stated that reformation of a contract is proper when it is alleged that the instrument does not conform to the actual intentions of the parties. [37] Moreover, reformation is justified when the parties have come to a complete mutual understanding of all the essential terms of their bargain, but by reason of mutual mistake the written agreement is not in conformity with such understanding. [38] Thus, in determining whether to reform a contract, the parties' intentions are dispositive. [39] The party wishing to reform the contract bears the burden of establishing through clear and convincing evidence that the omission was a mutual mistake. [40] A leading treatise has stated that [r]eformation will be granted where property owned jointly was, through the ... mutual mistake of the parties, insured in the name of one as sole owner. [41] Also, when an individual partner seeks insurance on behalf of the partnership, but by mistake the insurance contract lists only the individual partner, courts will decree its reformation so as to make it cover the partnership interest, even after loss. [42] Although Simmons submitted substantial evidence that Happy Puppy Enterprises was a joint business and that all the parties intended to insure both Mills and Walldow under the policy, INA also submitted evidence that Happy Puppy Enterprises was Mills's sole proprietorship. Thus, a genuine factual dispute remains as to whether Walldow and Mills jointly owned and operated Happy Puppy Enterprises and whether the parties intended to insure both Mills and Walldow under the trade name Happy Puppy Enterprises. We therefore conclude, based on the record before us, that neither INA nor Simmons is entitled to summary judgment on this issue, and we remand for a determination of whether the evidence supports reforming the policy to include James Walldow as a named insured. INA also asserts that even if the Stein Agency's Marlo Miller did make a mistake in failing to include Walldow's name on the policy, that mistake is not a mistake attributable to INA. But the CIGNA companies (including INA) never terminated their agency relationship with the Stein Agency, which serviced the Happy Puppy Enterprises policy. Simmons produced an agreement between INA and the Stein Agency in which INA appointed Stein to be its insurance agent, instructing Stein to act as our agent, and to solicit, accept and bind risks in accordance with the underwriting rules, regulations and directives we give you. Thus, because Stein acted as INA's agent, INA is responsible for any mistake made by the Stein Agency. [43]
If the superior court reforms the Happy Puppy Enterprises policy to include Walldow as a named insured, the final issue is whether Simmons qualifies for coverage as his family member. The INA policy defines family member as a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child. We have declined to formulate a fixed rule for determining whether a person is a resident of an insured's household. [44] Rather, we have stated that the facts of each case must be examined to determine whether the named insured ... and his relatives have ceased to be residents of the same household. [45] Moreover, we have noted that a child may be a resident of the household of one parent for coverage purposes even when the other parent has custody. [46] In this case, the superior court did not address whether Simmons qualifies as a resident of Walldow's household. Because this is a factual issue, we remand for a determination of whether Simmons is a family member of Walldow's household for purposes of the INA UIM policy.
Because it was error to conclude that a person who is insured under his trade name is not an individual insured, we REVERSE the grant of summary judgment. Moreover, because genuine factual issues remain as to whether Happy Puppy Enterprises was a partnership and whether the parties intended to insure both Mills and Walldow under the policy, we REMAND to the superior court. On remand, the court should determine whether the UIM policy should be reformed to include Walldow as a named insured and whether the UIM policy covers Simmons as a resident of Walldow's household.