Opinion ID: 2634779
Heading Depth: 1
Heading Rank: 5

Heading: Summary Judgment on Breach of Contract Claim

Text: [¶14] Ms. Cathcart's breach of contract argument is somewhat difficult to follow. She asserts the district court improperly based its summary judgment ruling solely on the fact that she accepted the $75,000 settlement offer and she released any other claims. She argues the insurance contract unambiguously required State Farm to decide if she was legally entitled to collect damages and, if so, to determine the amount. She argues the district court failed to make the fundamental determination required in all breach of contract claims, that is, whether or not the insurance contract was ambiguous. Regardless of its conclusion in that regard, however, she asserts the district court should have concluded State Farm breached the contract, either by failing to follow its unambiguous terms or by failing to comply with its ambiguous terms when construed in favor of the insured. She further argues the district court's error in this regard prejudiced her ability to present her bad faith claim to the jury. Unable to show that State Farm failed to comply with the insurance contract, she claims, she likewise was unable to show that it breached the covenant of good faith and fair dealing. Additionally, she asserts the district court erred in granting summary judgment prior to the discovery cutoff date, hampering her ability to present evidence demonstrating the existence of genuine issues of material fact. [¶15] State Farm contends the insurance contract clearly and unambiguously provided that the amount payable under the uninsured motorist provision could be decided by agreement of the parties. The parties agreed on the sum of $75,000. In exchange for payment of that amount, Ms. Cathcart signed a contract in full settlement of her claim, releasing any further claims under the uninsured motorist provision and barring her from seeking further payments. Given this undisputed evidence, State Farm argues, there were no genuine issues of material fact and the district court properly granted summary judgment on the breach of contract claim. [¶16] Responding to Ms. Cathcart's claim that the district court prematurely granted summary judgment, State Farm asserts there were no discovery disputes at the time of the summary judgment hearing, it was undisputed that she had signed a full and final release, and by the time of the hearing, discovery had been ongoing for a year and the depositions of all the main witnesses had been taken. Moreover, State Farms argues, Ms. Cathcart points to no evidence discovered after the summary judgment order to change the fact that she accepted the $75,000 and released her claims under the policy. [¶17] The record before this Court contains no transcript of the summary judgment hearing and no decision letter setting forth the district court's ruling. The only documentation contained in the record is the district court's initial summary judgment order, in which it did not decide the issue and gave the parties time to file additional briefs on the breach of contract claim, and the subsequent order summarily granting the motion after Ms. Cathcart failed to file a supplemental brief. Thus, we have no way of knowing the basis for the district court's decision to grant summary judgment on the breach of contract claim. [5] [¶18] Irrespective of the district court's reasoning, however, the standards governing our review of summary judgments on breach of contract claims are firmly established. As we said in Principal Life Ins. Co. v. Summit Well Service, Inc., 2002 WY 172, ¶¶ 17-19, 57 P.3d 1257, 1262 (Wyo. 2002) (citations omitted): An insurance policy constitutes a contract between the insurer and the insured. As with other types of contracts, our basic purpose in construing or interpreting an insurance contract is to determine the parties' true intent. We must determine intent, if possible, from the language used in the policy, viewing it in light of what the parties must reasonably have intended. The nature of our inquiry depends upon how clearly the parties have memorialized their intent. Where the contract is clear and unambiguous, our inquiry is limited to the four corners of the document. We interpret an unambiguous contract in accordance with the ordinary and usual meaning of its terms. The parties to an insurance contract are free to incorporate within the policy whatever lawful terms they desire, and the courts are not at liberty, under the guise of judicial construction, to rewrite the policy. It is only when a contract is ambiguous that we construe the document by resorting to rules of construction. Whether a contract is ambiguous is a question for the court to decide as a matter of law. A contract is ambiguous if indefiniteness of expression or double meaning obscure the parties' intent. Ambiguity cannot be created by the subsequent disagreement between the parties regarding the meaning of a contract. If the meaning of a provision in a contract is not readily apparent, the court may resort to competent evidence of extraneous circumstances to determine the parties' intent. Reviewing courts are free to make a determination as to the existence of ambiguity whether or not the parties agree one way or the other and whether or not the trial court has reached a conclusion one way or the other. [¶19] In claiming summary judgment was improper on her breach of contract claim, Ms. Cathcart points to the following language of the insurance policy: In order to determine the amount payable under uninsured motor vehicle coverage, two questions must be decided: 1. Is the insured legally entitled to collect damages from the owner or driver of the uninsured motor vehicle ; and 2. If so, in what amount? She contends this language unambiguously required State Farm to answer these two questions. Given that State Farm made a payment to her, she contends the answer to the first question was undisputedly yes. The remainder of her argument is difficult to discern, but seems to be that the district court erred in granting summary judgment because genuine issues of material fact existed as to whether State Farm breached the provision by failing to make a good faith decision as to the amount she was entitled to collect from the uninsured motorist. [¶20] In response, State Farm points to the provision cited by Ms. Cathcart and the provision following it: In order to determine the amount payable under uninsured motorist vehicle coverage, two questions must be decided: 1. Is the insured legally entitled to collect damages from the owner or driver of the uninsured motor vehicle ; and 2. If so, in what amount? The questions can be decided by agreement between the insured and us. [¶21] State Farm contends summary judgment was proper because the policy language is unambiguous and the evidence was undisputed that, in accordance with that language, the questions were decided by agreement between the parties when Ms. Cathcart and her parents agreed to accept the $75,000 State Farm offered in full payment of the uninsured motorist claim. [¶22] We agree that the policy language is clear and unambiguous. Therefore, we limit our inquiry to the four corners of the document and interpret it in accordance with the ordinary and usual meaning of its terms. Pursuant to the clear language of the policy, in determining the amount payable to Ms. Cathcart under the uninsured motorist provision, State Farm was required to decide if Ms. Cathcart was legally entitled to collect damages from the uninsured motorist and, if so, the amount. Pursuant to the clear language of the policy, these determinations could be made by agreement between the parties. [¶23] Considering the record in the light most favorable to Ms. Cathcart, and giving to her all favorable inferences that may be drawn from the evidence presented in support of State Farm's summary judgment motion on the breach of contract claim, the undisputed evidence was that State Farm concluded that if the witness testimony concerning the phantom vehicle was believed, there was a chance that Ms. Cathcart would be adjudged legally entitled to collect damages from the uninsured motorist. Thus, it is undisputed that State Farm complied with the first requirement of the policy provision. Thereafter, the evidence was undisputed that State Farm estimated that although Ms. Cathcart's actual damages exceeded the policy limits of $100,000, her damages would be reduced by some percentage for her comparative fault in causing the accident. Using a 40 to 50 percent comparative fault figure, State Farm estimated the amount Ms. Cathcart was legally entitled to collect from the uninsured motorist was between $59,500 and $69,000. Thus, the evidence was undisputed that State Farm made the second determination it was required to make under the provision. Thereafter, State Farm made an offer of $75,000. Ms. Cathcart and her father accepted the offer, signed a full and final release in settlement of her claims and accepted the $75,000 check from State Farm. [6] There simply was no evidence that State Farm breached the uninsured motorist provision of the policy. Therefore, the district court properly granted summary judgment on Ms. Cathcart's breach of contract claim. [¶24] We are not persuaded by Ms. Cathcart's further contention that the district court's ruling on the breach of contract claim prejudiced her ability to present her claim for breach of the implied covenant of good faith and fair dealing. Wyoming has recognized that a breach of the implied covenant of good faith and fair dealing may be actionable in contract for compensatory damages. Wyoming has also acknowledged that a breach of the implied covenant of good faith and fair dealing which rises to the level of an independent tort is actionable for compensatory and punitive damages under proper circumstances. A recovery in tort for the breach of the duty of good faith and fair dealing is premised upon the existence of a special relationship created by the unequal bargaining power that an insurer has over an insured. State Farm Mutual Auto Ins. Co. v Shrader, 882 P.2d 813, 825 (Wyo. 1994) (citations omitted). The independent tort theory adopted by this Court imposes an obligation that neither party will do anything to injure the right of the other to receive the benefits of the agreement. Id. Liability, in tort, is imposed not for a bad faith breach of contract, but for the failure to comply with the duty of good faith and fair dealing. The duty of good faith and fair dealing is not a requirement mandated by the terms of the policy. It is the obligation, deemed to be imposed by the law, under which the insurer must act fairly and in good faith in discharging its contractual responsibilities. Where in so doing, it fails to deal fairly and in good faith with its insured by refusing, without proper cause, to compensate its insured for a loss covered by the policy, such conduct may give rise to a cause of action in tort for breach of an implied covenant of good faith and fair dealing. Id. [¶25] To establish a breach of an insurance contract, the insured must show the existence of a contract, a breach and damages. To establish a breach of the implied covenant of good faith and fair dealing, the insured must show: 1) the absence of any reasonable basis for denying a claim for benefits; and 2) the insurer's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim for benefits. Shrader, 882 P.2d at 825. Thus, the two claims require proof of independent elements and are not mutually dependent, meaning one can be maintained without the other. While an insured may state causes of action for breach of contract and breach of the duty of good faith and fair dealing, the insured does not need to prevail on the breach of contract claim to prevail on the claim for breach of the duty of good faith and fair dealing. Id. The district court's ruling that no genuine issue of material fact existed on the question of whether State Farm made the determinations required by the uninsured motorist provision had no legal effect upon Ms. Cathcart's ability to present her claim that State Farm knew there was no reasonable basis for denying her uninsured motorist claim. Despite the district court's ruling, Ms. Cathcart still had a full opportunity to present the latter claim. [¶26] Addressing Ms. Cathcart's contention that the district court prematurely granted summary judgment prior to the discovery cut-off, we note the following rather unusual course of events. Ms. Cathcart filed her complaint against State Farm in state district court in May 2002. The case was removed to federal court five months later. On February 13, 2003, an initial pretrial conference was held in accordance with federal practice and procedure. Following the conference, the court entered an order requiring the parties to complete discovery and file dispositive motions by July 7, 2003. Pursuant to the order, State Farm filed a summary judgment motion on February 28, 2003. Ms. Cathcart requested additional time to respond and the federal court granted an extension until March 21, 2003. Before that date, however, on March 11, 2003, the federal court entered an order remanding the case to state district court. [¶27] Back in state district court, State Farm simply re-filed the summary judgment that had been pending in federal court. Subsequently, the state district court held a scheduling conference and set new deadlines for completing discovery and filing dispositive motions. The scheduling order entered in state district court on April 22, 2003, set pending motions for hearing on May 28, 2003, and required the parties to complete discovery by October 31, 2003, and file dispositive motions by November 17, 2003. [¶28] On April 24, 2003, Ms. Cathcart filed a response to State Farm's summary judgment motion. In a supplemental response filed the day before the hearing, Ms. Cathcart asked the district court to deny the motion or refrain from ruling until further discovery was completed. In an affidavit attached to the supplemental response, counsel for Ms. Cathcart stated his experts were still in the process of formulating their final opinions for the June 27, 2003, expert designation deadline and other discovery likewise remained to be completed. [¶29] In accordance with the scheduling order, the district court heard argument for and against the pending summary judgment motion on May 28, 2003. In its July 3, 2003, order, the district court reserved ruling on the summary judgment motion on the breach of contract claim and gave the parties additional time to file supplemental briefs. As of August 27, 2003, three months after the summary judgment hearing, Ms. Cathcart had filed no supplemental materials opposing the motion. Only then did the district court grant summary judgment for State Farm on the breach of contract claim. By that time, the case had been pending for fifteen months, State Farm's summary judgment motion had been pending for six months, one deadline for completion of discovery had been avoided as a result of the remand and Ms. Cathcart had been given an additional three months to file supplemental materials opposing summary judgment on the breach of contract claim. Under these circumstances, we are hard pressed to find error, particularly where the summary judgment at issue involves interpretation of clear contract language and little in the way of factual dispute. [¶30] We have said that, ordinarily, discovery on issues which are the subject of a summary judgment motion should be allowed to be completed before the motion is scheduled, heard and decided. Abraham v. Great Western Energy, LLC, 2004 WY 145, ¶ 19-22, 101 P.3d 446, 454-55 (Wyo. 2004). On that basis we held in Abraham that the district court abused its discretion when it denied a motion for continuance of a summary judgment hearing until discovery was completed. We said, by scheduling the hearing on the motions for summary judgment before the deadline for discovery had passed and, thus, not allowing the Abrahams adequate time to prepare and file any other pertinent materials prior to that hearing, they were deprived of the protections to due process afforded by the applicable rules of civil procedure. Id. at 455. [¶31] In contrast to the situation in Abraham, we conclude under the particular circumstances presented here that the district court's action in hearing the summary judgment motion before discovery was completed did not deprive Ms. Cathcart of adequate time to prepare or the opportunity to file additional materials. Additionally, Ms. Cathcart offers no evidence discovered after the summary judgment ruling to show the result might have been different if the district court had waited to rule. Under these facts, we can find no error.