Court Opinion

ID: 7826813
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:09:02.412717+00
Date Added: 2024-06-11T16:30:53.190708
License: Public Domain

Robert L. Brown, Justice, dissenting. The exclusionary language at issue in this case is the following: 4. Other exclusions Loss caused by or resulting from: b. Fire or explosion that occurs at the same time as an “accident” or that ensues from an “accident.” With respect to any electrical equipment forming a part of an “object,” this exclusion is changed to read: Fire or explosion outside the “object” that occurs at the same time as an “accident” or ensues from an “accident” . . . At Ratliff Enterprises, electrical equipment was involved in the explosion inside the object, which was the ice machine, so the more limited exclusion controls. The confusion in this matter comes from the failure of the insurance company to clarify in its exclusion whether the fire or explosion must originate outside the “object” for the exclusion to apply, or merely occur outside the “object.” The exclusion is silent on this point. American Employers reads the exclusion to mean: Fire or explosion [occurring] outside the “object” that occurs at the same time as “accident” or ensues from an “accident” . . . Ratliff Enterprises, on the other hand, reads the exclusion as: Fire or explosion [originating] outside the “object” that occurs at the same time as an “accident” or ensues from an “accident” . . . The majority opts for the insurance company’s interpretation and quotes from a federal district court case, which, in dictum, read the language the same way. See Preferred Mut. Ins. Co. v. Travelers Co., 955 F. Supp. 9 (D. Mass. 1997) aff'd 127 F.3d 136 (1st Cir. 1997). The dictum in the federal district court opinion reads: “[W]ith respect to any electrical equipment forming part of an ‘object,’ coverage will be excluded for any fire or explosion that occurs outside the ‘object.’” Preferred Mut. Ins. Co., 955 F. Supp. at 12 (emphasis added). On appeal, the First Circuit Court of Appeals did not consider this point worthy of comment. In interpreting the insurance policy the way it did, the federal district court sloughed over the ambiguity question and made no statement regarding it. It is equally plausible, however, to read the exclusionary language in dispute in that case as well as in the instant case as denying coverage only for explosions or fires that originate outside of the “object.” Here, it is undisputed that the explosion and fire originated inside the ice machine. For that reason, Ratliff Enterprises reasonably believed that the exclusion from coverage did not apply. By our decision today, we put the court’s imprimatur on one interpretation of this highly questionable exclusionary language. In doing so, we do a disservice to insureds generally because we perpetuate the use of this dubious language. As a result, insurance companies can now foist this confusing and muddled exclusion on insureds with the full weight of precedent behind them. Our law in the area of unclear provisions in insurance policies is well settled: It is also established law in our state that provisions contained in a pohcy of insurance must be construed most strongly against the insurance company which prepared it, and if a reasonable construction may be given to the contract which would justify recovery, it is the duty of the court to do so. See Drummond Citizens Ins. v. Sergeant, 266 Ark. 611, 588 S.W.2d 419 (1979). Further, this court has held that if there is doubt or uncertainty as to the pohcy’s meaning and it is fairly susceptible of two interpretations, one favorable to the insured and the other favorable to the insurer, the former will be adopted. Id. Home Indem. Co. v. City of Marianna, 297 Ark. 268, 272, 761 S.W.2d 171, 173 (1988). It is difficult to maintain seriously that doubt does not pervade the wording in question. I would admit the doubt and construe the policy in favor of the insured. For these reasons, I respectfully dissent. Glaze, J., joins in this dissent.