Court Opinion

ID: 9513815
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:40:51.984555+00
Date Added: 2024-06-11T09:06:03.036966
License: Public Domain

KAPSNER, Justice.
[¶ 1] Martin Decker, Donald Decker, Gerald Decker, Jamie Iverson, and Rodney Iverson (“Decker”) appeal the summary judgment denying insurance coverage. Farmers Union Mutual Insurance Co. (“Farmers Union”) cross-appeals portions of the trial court’s order including the award of attorney fees and costs in the underlying action. We affirm the summary judgment and reverse the award of attorney fees and costs in accordance with this opinion.
I
[¶ 2] This action arises from a motorcycle accident on the Decker farm. Jamie Iverson, a minor, was injured in the accident as the sole motorcycle rider. Gerald Decker owned the motorcycle, a 1970 Honda Trail 70. Decker has a general farm liability insurance policy issued by Farmers Union. Decker submitted the claim to Farmers Union. After Farmers Union refused coverage, Jamie Iverson and Rodney Iverson, Jamie’s father, sued Gerald Decker in the underlying lawsuit. Farmers Union again denied coverage. The complaint in the underlying lawsuit was amended. Following the amendment, Farmers Union retained an attorney to provide Decker with a defense in the underlying action. The parties to the underlying lawsuit entered into a Miller-Shu-gart settlement agreement assigning Decker’s claim ■ against Farmers Union to the Iversons. Farmers Union initiated a declaratory judgment action to determine coverage. Both parties filed summary judgment motions asserting their respective positions on whether the general farm liability policy provided coverage for Jamie Iverson’s injury. The trial court granted Farmers Union summary judgment concluding the accident was not covered because the motorcycle did not satisfy the *860requirements of the exception to the motor vehicle exclusion in the policy. The trial court awarded Decker attorney fees and costs incurred by Decker during his own representation in the underlying action.
II
[¶ 3] Interpretation of an insurance contract is a question of law, fully reviewable on appeal. Hanneman v. Continental Western Ins. Co., 1998 ND 46, ¶ 19, 575 N.W.2d 445. “[0]n appeal we fully review the issues by independently examining the insurance policy to determine if there is coverage.” Nationwide Mut. Ins. Companies v. Lagodinski, 2004 ND 147, ¶ 7, 683 N.W.2d 903.
[¶ 4] We have summarized the standards for construing an insurance policy:
Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting. We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract. While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured. We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. The whole of a contract is to be taken together to give effect to every part, and each clause is to help interpret the others.
Ziegelmann v. TMG Life Ins. Co., 2000 ND 55, ¶ 6, 607 N.W.2d 898 (citations omitted).
[¶ 5] The contract provision at issue is the motor vehicle exclusion and the exception to that exclusion.
Exclusions from coverage in an insurance policy must be clear and explicit and are strictly construed against the insurer. Although this Court construes exclusionary provisions strictly, we do not automatically construe every insurance exclusion provision against an insurer and in favor of coverage for the insured. This Court will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. The insured still must prove he falls within an exception to the exclusion in order to benefit from coverage.
Nationwide Mut. Ins. Companies, 2004 ND 147, ¶ 9, 683 N.W.2d 903 (citations omitted). The relevant exclusion and exception provisions in Decker’s policy state: Coverage L — Personal Liability and Coverage M — Medical Payments to Others do not apply to bodily injury or property damage:
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f. arising from the ownership, maintenance, operation, use, entrustment to others, loading, or unloading of:
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(2) any motor vehicle loaned to an insured or which an insured owns, rents, or operates. Coverage applies on the insured location if the motor vehicle is subject to be licensed for use on public roads and it is unlicensed and it is used exclusively on the insured location, or is kept there in dead storage.
[¶ 6] Motor vehicle is defined as: a. a motorized land vehicle ... designed for travel on public roads or subject to motor vehicle registration; *861b. a motorized golf cart, snowmobile, all terrain vehicle, or other motorized land vehicle owned by an insured and designed for recreational use off public roads.
A
[¶ 7] Decker argues the motor vehicle exclusion does not apply because the motorcycle was not subject to motor vehicle registration; therefore, it was not a motor vehicle. Decker relies on the director of the North Dakota Motor Vehicle Registration’s affidavit concluding the motorcycle was not eligible for registration and licensure because of equipment violations. Decker incorrectly concludes that whether the motorcycle is a motor vehicle depends on its eligibility for motor vehicle registration. Under a policy containing a similar definition of motor vehicle, we stated, “The [vehicle] was designed for travel on public roads; thus, the vehicle was a motor vehicle as defined by the plain language of the policy.” Nationwide Mut Ins. Companies, 2004 ND 147, ¶ 13, 683 N.W.2d 903. The reference in the definition to a vehicle being “subject to motor vehicle registration” is an alternate basis for qualification as a motor vehicle and is not an additional requirement if the vehicle in question is designed for travel on public roads. The trial court correctly concluded the motorcycle is a motor vehicle under the policy. Therefore, the accident is excluded from coverage under the motor vehicle exclusion unless the exception applies.
B
[¶ 8] Farmers Union argues the accident is not covered because the motorcycle does not satisfy the requirements of the exception to the motor vehicle exclusion. The exception to the exclusion requires that the incident occurred on the insured location, that the motor vehicle is subject to be licensed for use on public roads, that the motor vehicle is unlicensed, and that it is used exclusively on the insured location. The fact the accident occurred on the insured location and the motorcycle was unlicensed are undisputed. To fall within the exception to the motor vehicle exclusion, the evidence must show that the motorcycle was subject to be licensed and was used exclusively on the insured location.
[¶ 9] Similar to Decker’s position that the motor vehicle exclusion does not apply because the motorcycle was not subject -to vehicle registration due to its equipment violations, Farmers Union first argues the exception’s language “subject to” means the motorcycle had to be equipment-ready for licensure on the date of the accident because this is an occurrence policy. The trial court disagreed stating:
The sentence “subject to be licensed for use on public roads” is intended to mean that if the policy-holder wished to use the vehicle on public roads, he could do so only after obtaining a license to do so. The wording does not mean that the vehicle must be fit for registration or licensing at this exact moment in time.
The word “subject,” as used in the policy, means “under the authority or control of.” Webster’s New World Dictionary 1417 (2d ed.1980); see also Kimball v. New England Guar. Ins. Co., 642 A.2d 1347, 1349 (Me.1994). The trial court correctly found the language of the policy does not require the vehicle to be equipment-ready for li-censure on the date of the accident. The plain language of the exception means that if the vehicle were used on public roads, it would be subject to North Dakota license and registration requirements.
[¶ 10] Farmers Union argues the motorcycle did not satisfy the last element of the exception requiring that the motor vehicle is used exclusively on the insured location. Decker admitted to using the *862motorcycle at a resort off the insured property but argues the resort was a temporary residence under the policy. Under the policy, “insured location” is defined as:
a. all farm locations which you own, rent, or operate or other locations you maintain as a residence premises. “Insured location” also includes
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c. locations in which you temporarily reside but do not own;
The policy does not define “temporarily reside.” The issue is whether Decker was “residing” at the resort during his camping trip. “The plain and ordinary meaning of reside is ‘to dwell permanently or for a considerable time.’ ” Ctr. Ins. Co. v. Blake, 370 F.Supp.2d 951, 957 (D.N.D.2005) (quoting Webster’s Unabridged Dictionary (2d ed.1997)). Decker’s brief summer camping trip is not a “considerable time.” “Temporarily reside” clearly contemplates a longer stay than this brief onetime camping trip. If “temporarily reside” were defined as Decker argues, any location an insured stayed overnight would become an “insured location.” This interpretation defies common sense. “We will not strain the definition of an undefined term to provide coverage.” Nationwide Mut. Ins. Companies v. Lagodinski, 2004 ND 147, ¶ 8, 683 N.W.2d 903. Because the motorcycle was not used exclusively on an insured location, it does not satisfy the requirements of the exception to the motor vehicle exclusion and we affirm the trial court’s order denying coverage.
[¶ 11] In response to this holding, the dissent suggests the court should go further and decide whether use of the motorcycle off the farm premises occurred outside the policy term. We decline to do so because the issue was not raised or argued to the trial court. It was first mentioned in Decker’s reply brief on appeal, and then without citation to authority. This Court held reargument and asked for briefing on this issue and on the timeliness of its being raised. At reargument, the parties confirmed the record did not contain crucial evidence connected to the argument such as the identity of the insurer when the motorcycle was used off the insured premises in 2000, whether the policy under which coverage was sought was the same, or a new, or continuation of the policy in effect when off-farm use occurred, or (if in fact there were multiple policies) whether they had identical provisions. Based on this record, we decline to address the argument because issues not timely raised or adequately briefed are deemed waived. Riverside Park Condominiums Unit Owners Association v. Lucas, 2005 ND 26, ¶34, 691 N.W.2d 862; Riemers v. Grand Forks Herald, 2004 ND 192, ¶ 11, 688 N.W.2d 167; State v. Koble, 2000 ND 29, ¶ 5, 606 N.W.2d 521. Consequently, we do not decide whether use of the motorcycle off the insured location outside the policy term impacts the exception to the motor vehicle exclusion.
Ill
[¶ 12] Farmers Union argues the trial court erred by awarding Decker attorney fees for defending the underlying action. Farmers Union argues the duty to defend did not arise until Iverson filed the amended complaint. Farmers Union argues there was no possibility of coverage based on the original complaint’s allegations. After the complaint was amended, Farmers Union provided Decker a defense admitting it contained allegations that could possibly be covered under the policy. Farmers Union paid for the defense of the amended complaint through settlement. The trial court determined Farmers Union duty to defend arose when the claim was originally asserted against Decker.
[¶ 13] Attorney fees are recoverable as damages if the insured can show *863a breach of the insurer’s duty to defend. State Farm Fire & Cas. Co. v. Sigman, 508 N.W.2d 323, 326 (N.D.1993); Prince v. Universal Underwriters Ins. Co., 143 N.W.2d 708, 717 (N.D.1966); see also Am. Family Ins. Co. v. Dewald, 597 F.2d 1148, 1151 (8th Cir.1979). Although the duty to defend is broader than the duty to indemnify under an insurance policy, the duty to defend is generally determined by the allegations of an injured claimant. Where the claims against the insured potentially come within the coverage provisions of the policy, the insurer has a duty to defend. While the trial court acknowledged our jurisprudence on determining the duty to defend, citing Applegren v. Milbank Mut. Ins. Co., 268 N.W.2d 114, 116 (N.D.1978); Kyllo v. Northland Chem. Co., 209 N.W.2d 629, 634 (N.D.1973); Schultze v. Cont’l Ins. Co., 2000 ND 209, ¶ 8, 619 N.W.2d 510, it nevertheless held Farmers Union’s duty to defend began when the original claim was asserted against Decker. This is inconsistent with its holding that a motorcycle is a motor vehicle excluded from coverage under the terms of the policy.
[¶ 14] An insurer does not have a duty to defend an insured if there is no possibility of coverage under the policy. Schultze, 2000 ND 209, ¶8, 619 N.W.2d 510. We have defined when the duty to defend arises:
A liability insurer’s obligation to defend its insured is ordinarily measured by the terms of the insurance policy and the pleading of the claimant who sues the insured. If the allegations of the claimant’s complaint could support recovery upon a risk covered under the insurer’s policy, a liability insurer has a duty to defend its insured. We have formulated the duty to defend to require a liability insurer to defend an underlying action against its insured if the allegations in the complaint give rise to potential liability or a possibility of coverage under the insurance policy.
Id. (citations omitted).
[¶ 15] The original complaint alleged the accident occurred on a dirt bike motorcycle on the farm and fell within the motor vehicle exclusion. The duty to defend is measured by the terms of the policy and the pleading of the claimant who sues the insured. Applegren, 268 N.W.2d at 116 (citing Kyllo v. Northland Chemical Co., 209 N.W.2d 629, 634 (N.D.1973); Eichler Homes, Inc. v. Underwriters at Lloyd’s, London, 238 Cal.App.2d 532, 47 Cal.Rptr. 843, 847 (1965)). After Farmers Union denied coverage based upon the original complaint, Iverson hired an attorney with experience in insurance litigation to add specific language to the complaint that would bring the allegations within the insurance policy’s coverage. The amended complaint inserted the following language that could possibly bring the accident within the exception to the motor vehicle exclusion.
5
The motorcycle was designed for travel on public roads and was subject by law to licensure if used upon the public roads.
6
The motorcycle was not, however, used on the public roads, but was operated exclusively upon the defendant’s premises, or in other places not owned by the defendant, off the public roads, where the defendant was physically present, residing on a temporary basis.
An insurer does not have a duty to defend unless there is a possibility of coverage contained in the allegations of the claimant’s complaint. Schultze, 2000 ND 209, ¶8, 619 N.W.2d 510. Where an insurer has rightfully denied coverage, the insur*864er’s duty may be revived by the insured’s new allegations that possibly bring the claim within the scope of the policy’s provisions. Senger v. Minnesota Lawyers Mut. Ins. Co., 415 N.W.2d 364, 370 (Minn.Ct.App.1987). Farmers Union’s duty to defend arose when the complaint was amended.
[¶ 16] This Court has not previously decided when an insurer’s responsibility for attorney fees arises after a complaint is amended to include a possibility of coverage thereby reviving the insurer’s duty to defend. A review of jurisdictions deciding this issue concludes an insurance company is only responsible for the portion of attorney fees incurred from the time the duty to defend arose. See Lafarge Corp. v. Hartford Cas. Ins. Co., 61 F.3d 389, 397 (5th Cir.1995); Auto Owners Ins. Co. v. Tripp Constr., Inc., 821 So.2d 1157, 1159 (Fla.Dist.Ct.App.2002). Therefore, Farmers Union was only obligated to pay Decker’s defense after the amended complaint. We reverse the award of attorney fees incurred before the complaint was amended and the duty to defend arose.
IV
[¶ 17] We affirm the summary judgment denying insurance coverage and reverse the award of attorney fees and costs incurred by Gerald Decker in his own representation in the underlying action.
[¶ 18] DALE V. SANDSTROM and DANIEL J. CROTHERS, JJ., concur.