Smith v. Southern Farm Bureau Casualty Insurance

Hoffman, action never initiated forfeiture since DTF money law in this issue of trial court resolved under 5-64-505. § $2,000 to seizure favor, Hoffman’s subject Hoffman’s holding Moreover, that no we jury agree under 5-64-505. and forfeiture § court recognizes R. Civ. P. our 39(a), Under Ark. was needed. absolute, not and provides trial right jury initiative, find that court, its own may motion or on trial upon not exist or all of the issues does trial of some by jury right this state. or statutes of under the constitution denied DTF’s court request The trial properly was entitled trial, that Hoffman determined correctly jury $2,000; we therefore affirm. return of his Corbin, J., participating. FARM BUREAU

Sarah v. SOUTHERN SMITH INSURANCE COMPANY CASUALTY S.W.3d 205 02-787 of Arkansas Court Supreme delivered May Opinion Slaton, for appellant. Jeff PLC, Carithers, ConstanceG.

Davis, Clark, Butt & by: Wright, Don A. Clark and Taylor, appellee. Smith, Thornton, Sarah Appellant, Justice.

Ray the trial court’s summary judgment granting appeals Bureau Insurance Company of Southern Farm Casualty in favor decision that the trial court’s Mrs. Smith Bureau). (Farm appeals member of family residing your or your phrase “you any and that insurance was not ambiguous, household” in an policy of the material the terms no fact concerning there was underinsured-motorist clause. policy’s Glass, Smith, 29, 1999, now Sarah was Sarah On November which Mrs. struck a vehicle in when Melbern Samuels injured carrier settled Mr. Samuel’s insurance was a Smith passenger. $25,000.00. Mrs. Smith limit of with Mrs. Smith for the policy $25,000.00 and that her exceeded attempted contended damages of her underinsured-motorist coverage a claim under the to make Smith, Farm issued Southern by then boyfriend, Raymond car was Smith’s Insurance Raymond Bureau Casualty Company. denied the Farm Bureau in Mrs. accident. not involved Smith’s on the that claim basis covered holder policy only policy members and/or holder’s policy in his family residing household. Because Mr. Smith and Mrs. Glass were living time, at but not married together she not considered to be a member Farm Bureau. family Smith, her

After Sarah marriage Raymond Smith filed suit 1, 2001, Farm Bureau against on October that she was arguing entitled to covered the underinsured-motorist clause and under her husband’s Farm medical-payment coverage Bureau pol- icy. disputed insurance states that portion under medical-payment covered defined as coverage, “you member of your household.” family residing Mrs. Smith moved for on the that the summary judgment grounds did not define and it was ambiguous term that as a matter of law must be construed Farm against Bureau in favor Farm Bureau coverage.' also moved for sum- on the that the mary judgment not grounds and that Mrs. ambiguous, Glass was a member of Mr. Smith’s at the time of the accident. A was held on March hearing where trial court Bureau, granted summary favor of judgment Farm finding reasonable only conclusion was that the word “family” implies or blood legal The trial court found that relationship. other would render the interpretation of the language policy reading “you any member of your family residing your household” 29, An order 2002, was entered meaningless. and it is from April that order that Mrs. Smith We affirm the appeals. summary judg- ment hold that there was no of fact con- jury of cerning the word meaning “family.” is to be

Summary judgment granted trial court by when it is clear that only there are no issues of material genuine fact be to and the is litigated entitled to party as matter judgment of law. v. 305,92S.W.3d Spears City 351 Ark. Fordyce, 38 of Once the (2002). has established a moving party enti primafade tlement to summary must meet judgment, opposing party with proof proof demonstrate the existence a material issue review, of fact. Id. On we determine if appellate summary judg- 192 items the evidentiary on whether based was

ment appropriate leave a of the motion support moving party presented Id. fact unresolved. material insurance should terms within an

Ambiguous Bureau Insurance insurer. Southern Farm be construed against 659, Williams, 467 (1976). 260 Ark. 543 S.W.2d v.Co. Casualty contract are However, of an insurance held that “the terms we also strict the rule of construction against rewritten under not be to a risk which is it bind the insurer so issuing company it Id. Insurance for which was not paid.” excluded and plainly insurer, but where are be construed strictly against contracts one reasonable only is unambiguous, language effect to the of the courts to give plain it is the duty possible, Co. v. Insurance Murphy Unigard Security wording policy. 211, Inc., Our court Oil, USA, (1998). 331 Ark. 962 S.W.2d the “lan and stated that on this has expanded appeals ordi construed in its be plain, guage Co. v. PrudentialInsurance Sing, sense.” Tri-State nary, popular 142, Co PrudentialInsurance (1993); Ark. 850 S.W.2d App. (1981). Ark. 613 S.W.2d 114 Americav. Jones, App. the term that because Mrs. Smith argues There is no it must be ambiguous. defined not Furthermore, we have encountered for this argument. authority the terms and deemed undefined terms in insurance policies Mutual InsuranceCo. v. For in Nationwide example, unambiguous. held that a we (1993), 314 Ark 861 S.W.2d Worthey, vehicle” streets was a “motor used on motor-driven cycle public as a motor it listed even though specifically vehicle. as a of contract interpre have established guideline

We a contract must read together the different clauses of tation that all so that harmo the contract should be construed and that parts Davidson, 35, 463 v. 250 Ark. Co. nize. Continental Casualty that neutralizes provision Construction any 652 (1971). S.W.2d if can be con the contract a should never adopted of contract to Id. effect all strued give provisions. of of encountered a Washington recently Court Appeals in a a man in an

similar issue casewhere automo- injured young under bile accident then to make claim the insur- attempted of v. ance his mother’s Matthews Penn-America boyfriend.

Insurance P.3d 451 That Wash. court (2001). App. victim, held lived same that the who in the household as his mother accident, and her at the time of the not a of member boyfriend the insured’s “immediate for of under his family” coverage purposes mother’s The court that the boyfriend’s explained policy. must be in the construed sense:

“family” popular of from “a of con- meanings “family” range group persons “ blood, by by by nected or law” to affinity, group people live, and eat who cook house- sleep, upon premises single unit.” The question is whether the keeping average purchaser insurance would reasonably read Penn-America’s blood, intend for traditional coverage connected group by law, or for the affinity, or more defined broadly group people live . . . who same If is to be con- upon premises. “family” he, mother, strued would broadly, Blake be covered because his lived Edinger together under same roof most of the five before his 1994 But years “family” accident. if is read in sense, more limited traditional Blake would be covered blood, because he was not related or law by Edinger. affinity, that, We conclude in the context of Penn-America’s policy, traditional, would average purchaser read “con- blood, Thus, nected by affinity, or law.” Blake was by not cov- ered as a member.

Id. (Citations omitted.) case,

This case on with the instant directly point we that if we were construe the term agree to mean law, other than related blood or then anything the terms “household” would merge, words making “your family” member of phrase “you your family residing household” both redundant and We meaningless. agree “ with the court’s Washington must further holding ‘family’ definition ‘insured’ qualify beyond qualification imposed by residency.” further

We with the court in trial agree finding: case for coverage instant provides in the [T]he household.” residing member in family your “you any your or A, In afford added). coverage order to (Exhibit ll)(Emphasis p. claimant 1) must be met: two

under the policy, requirements the claim- 2) member of the family; must be a policyholder’s To construe ant in the householdof policyholder. must reside who sense of “all those the term non-traditional roof,” into those two merge requirements live under one would construction one requiring one would the rules of reject that harmonize the contract of insurance so all clauses construe to all used. one to effect give legal requiring entire that effect conclude to give phrase, We household,” in or member of residing your family your “you any kin, in common as by the term has meaning parlance blood, other nullifies or adoption. Any marriage, to be a the claimant requiring portion policy language Otherwise, the claimant could member of the insured’s family. in the same home as insured. any living there is find no error the trial court’s that We finding as included in the no in the word ambiguity was we affirm. that summary judgment Accordingly, appropriate. Corbin, concurs. J.,

Imber, dissents. J., Corbin, was

L. This case Justice, concurring. Donald to us the Arkansas Court of certified Appeals inter- of first and substantial an issue public presenting impression in an insur- est: Whether the term as used automobile “family,” I with ance together. living agree policy, encompasses couple the trial court was correct that the ruling plain majority kin, related blood or mar- of the term is or meaning persons not, that because Sarah Smith further riage. agree Appellant accident, insured, at the married to Raymond time of Smith, she not covered under his insurance policy. cov- in this case underinsured-motorist provided member of resid- erage your “you insured] [the she and Sarah because household.” argued ing unit, and resided as an economic shared living expenses, Raymond household, in the same she was a member of his The trial family. from bench: court disagreed, ruling term,

I think the that’s reasonableconstruction of that clearly and sentence, in this used or this because it especially paragraph, does “member of in say your family your household.” residing household, So if we’re to say means then just going you there; don’t need the word in just about you’re talking it, job household. . . . is to the as I My law understand interpret and for me to means say just anybody house- hold in this me, is really situation that contract straining language. To in this state means interpretation somebody that’s household, kin to you, they’re residing your they’re going not, to be coveredunder And if not. policy. they’re Other- wise, how are these insurance to know how to people going charge premium? Thereafter, the trial court to granted summary judgment Appellee Farm Southern Bureau.

Where there is a as to the of a contract term dispute meaning contract, be it an insurance or other the trial court provision, must the role of initially perform first determining gatekeeper, the be whether resolved to the con- dispute may by looking solely tract or whether the on extrinsic evidence to rely parties disputed their Elam v. First Unum proposed interpretation. Ins. support Life Co., 291, 346 Ark. 57 S.W.3d 165 (2001). Where issue may itself, be resolved of the contract it is reviewing language the trial court’s to make such a determination as a matter duty law, and is Id. summary judgment appropriate.

The law and construction of an regarding interpretation insurance is well settled this state. The policy in an language is to be construed in its plain, ordinary, pop- 360, ular sense. Norris v. Farm State Fire & 341 Ark. Cas. 16 S.W.3d If the (2000). is this court language unambiguous, will effect to the give without language resort- plain Elam, 291, to the rules of construction. 346 Ark. ing S.W.3d “In 165. of an insurance considering phraseology common of terms should usage when is prevail Davidson, 35, 42, Continental Co. v. Cas. 250 Ark. required.” 652, hand, S.W.2d On the if (1971). other this court will construe the ambiguous, in favor of policy liberally the insured and the insurer. Id. strictly against Language ambig- and it is as to doubt or uncertainty meaning

uous if there is Id. more than one reasonable interpretation. fairly susceptible must an insurance contract different clauses of Additionally, so of its construed that all parts contract be read together and, harmonize, clause effect to one is at all giving if that possible, the two are on the same where subject of another exclusion 35, Continental, 652. reconcilable, 250 Ark. 463 S.W.2d is error. should of a contract that neutralizes A construction any provision effect can be construed to never be if contract give adopted, Co., 180 Ark. Fowlerv. Ins. all Unionaid (citing provisions. Life 611, word 613 (1929) (holding: “Every 20 S.W.2d be taken have been used for a must purpose, agreement can if the court as mere rejected surplusage no should which thereof can gathered discover reasonable purpose any from the whole instrument.”)). in the word as used

The then is whether “family,” more reasona- to than one fairly Raymond’s susceptible and it is ble when given ordinary, interpretation, plain, popular, the not. When read within common I believe that it is usage. residing context of the entire member your family phrase, “any household,” be one there can reasonable interpreta- only This same reached tion: means kin. is the conclusion family Matthewsv. Ins. the Court of Penn-America Appeals Washington Co., 745, 25 P.3d 451 (2001). Wash. App. Matthews,

In the an adult his mother was with living appellant wreck, her He was a car seriously injured boyfriend. mother’s he claim underinsured from his coverage attempted such coverage boyfriend’s policy. policy provided insured, his or her and members insured’s family spouse, who are of the household. The residents policy specifically pro- “You, named on the Dec- vided: means your, yourself includes the if a resident of the same larations page spouse a a resi- also means member of who is household. This family at a ward or child.” Id. dent of and includes foster household a member at 452. The claimed he was P.3d appellant held Court of insured’s Washington Appeals family. First, deci- three the court relied on a that he was not for reasons. Court, held that from which sion the Washington Supreme the broader can be used with although “family” synonymously “household,” the most term common use of “family” implies blood Collins v. Northwest Cas. relationship. (citing P.2d Wash. 986 (1935)).

Another reason if Matthewscourt was that “fam- given broad the insured’s live-in ily” enough encompass girl- friend, then it would also his and there would encompass spouse, have been need no extend to a specifically coverage spouse. if a live-in son included Similarly, in the term girlfriend’s then ward foster child with “family,” the insured living included; thus, would also be inclusion those terms specific would have been superfluous. case, like trial court in this

Lastly,just Matthewscourt concluded that the term within the entire construing “fam- phrase, meant than more The court ily” plainly residency. explained: roof, means all those “family” who five under one Penn- [I]f America’s an insured be requirements both member family and a resident merge. would be appellant] member [The because he lives with And he would be a resident [the insured]. of the same household because he lives with [the insured]. Thus, would establish simple residency coverage and “resident” would would have merge; no we independent But construe the meaning. insur- ance to all give the words of the if meaning policy pos- sible. This we can do only by some assigning meaning to short, In “family” beyond must residency. further qual- ify the definition of “insured” beyond qualification imposed by residency. Id. at 25 P.3d at 453 (citation omitted). in Matthewsis instructive on the holding issue presented

in this case. the dissent out the differ- Although correctly points ence in the the of two I language believe that such differ- policies, ence one without distinction. Sarah is correct in Additionally, out that the of standard review set in pointing out Matthews is different from ours. In slightly the of an Washington, language insurance is viewed the policy insur- through eyes average ance Be as it that purchaser. may, reasoning expounded by Court of Washington is sound and consistent Appeals with our case law us to view the of a in its requiring policy plain, and common ordinary, popular, usage. conclusion Sarah’s with the dissent’s disagree

Finally, does not into merge as an economic unit definition of “family” of the same household.” By way example, in “residing the phrase boarder, out room a that if a rents Sarah explains person household, his is not land- in the same but boarder resides part is not “House- unit. That persuasive. lord’s economic example as an understood commonly comprising hold” popularly house, but not in A reside in one’s unit. boarder economic may hand, decide to the other two students who household. On one’s make share would living expenses rent together apartment household, not be a but would family. they up

Here, lived and shared living Sarah and Raymond together Thus, were resided in the same household. They expenses. they however, were related to each other because not they family, that “fam- blood law. The trial court correct ruling in the has mean mere same residency ily” something beyond otherwise, household; this the term is The courts of superfluous. an insurance are state to give meaning every required this The trial court’s satisfies if interpretation possible. in the and it must be affirmed. I therefore concur requirement, decision. majority’s Imber, This .Justice, dissenting.

Clinton term as involves Annabelle appeal The circuit court it is used in a motor-vehicle insurance policy. as in the ruled that the term is not used ambiguous conclude that term I must majority agrees. Therefore, I dissent. used is ambiguous. respectfully at issue mem- coverage “any provides household.” ber of family residing [the insured’s] [the insured’s] insured, Thus, is extended to those other than coverage persons, First, must who meet two be member person qualifications. Second, must reside in the insured’s “family.” case, this it is that Sarah insured’s household. In Smith undisputed the date the accident. resided in Smith’s household on Raymond Therefore, a member is whether Sarah Smith was also Smith’s on that date. of Raymond the The circuit court’s as by majority, recog- ruling, adopted the and concluded nized the two insurance coverage prongs

199 that define as “to the would [‘family’] requested by plaintiff, ” ‘in render the household’ with phrase synonymous ‘family.’ conclusion, however, Such a misconstrues Smith’s argument below and on In the raised issues the addressing appeal. parties’ motions for Smith contended: respective summary judgment, in the household” is not with “Residing synonymous “family.” family The definition of use is an economic unity. Clearly boarder, rent someonecan out a room to a “resides person but that is not household” an economic unit with their landlord.”

Thus, below, as Smith framed the there is no argument merger the two-prong requirement.1 then becomes whether the term is terms within

ambiguous. Ambiguous should be construed the insurer. SouthernFarm Bureau Ins. Cas. against Williams, 659, Co. v. 260 Ark. (1976). S.W.2d Co., on Matthews v. Penn-AmericaIns. 106 Wash. majority, relying 745, 25 P.3d 451 (2001), states has com- App. “‘family’ kin, blood, mon Matthews, parlance marriage adoption.” however, is not apposite. Matthews,

In Washington Court Appeals emphasized that the defined to include a ward or child. foster Matthews v. Penn-AmericaIns. 106 Wash. 25 P.3d App. addition, In (2001). stated that insured spouse if a resident of the same household. Id. The court went on to that if it were to explain broad definition adopt then proposed, the words “ward” and “foster child” would those simply repeat included in the persons already broad definition of “family,” 1 The concurrence construing also concludes that term to mean merge economic unit causes toit with the “resides in the household” because the phrase term “household” means an economic unit. As conclusion, this support concurrence draws a distinction between the words “house” and “household.” Such a ambiguity construction out an eg., in the term “household.” Black’s merely points See, (7th 1999) (“household, Law ed. 1. living together. n. A 2. A group Dictionary family roof.”); who dwell under the same Unabridged Webster’s people Encyclopedic Dictionaryof English Language (1989) (“household, 1. n. of a house people collectively; including servants.”). ambiguous against Arkansas, In are terms construed insurer. Southern Farm Bureau Ins. Cas. Co. v. Williams, 260 Ark. 543 S.W.2d 467 (1976). Thus, because term “household” than more one susceptible it should be construed favor of Sarah Smith. interpretation, 200 the Washington appel- Id. In opinion,

be meaningless. crafting ward, or “Thus, references spouse, late stated: court specific traditional definition—(cid:127) to the child foster strongly point or blood law.” those connected by decision by Washington another More importantly, cited, Court, court also recognized which Matthews Supreme one to more than is term inherently susceptible reasonable interpretation: notion of some relationship, word ‘family’conveys

The blood father, use, the word implies In its most common or otherwise. relatives; mother, children, immediate blood is but the word used to other extended many relationships. also designate 352, 986, 347, Co., P.2d 180 Wash. 39 v. Northwest Cas. Collins Court added). Washington Supreme (1935) (emphasis concluded, do, in its is indefinite as term “family” appli- various relationships.. that it can be used identify cation such ed. (4th (“Family. Law 727-28 1968) See also Black’s Dictionary Collins is used to many relationships, [citing designate sense Co., ‘family’ v. Cas. In broad or Northwest supra.] primary in one two living together means: a collective body persons time; a collective body house as their common home for home, in and domes- in one persons, living together permanent character, a collective head body tic under one or management; head or who live in one house and under one manage- persons omitted)). ment.’’(citations Matthews, at

Unlike insurance policy supra, “ward,” or “foster issue here has no such as qualifiers “spouse,” child”; instead, term and undefined. unqualified Moreover, that: a cardinal rule of insurance law in Arkansas is liberally and construed interpreted of insurance will be [PJolicies the insurer. . . . An strictly

in favor of the insured and against one to more than existswhen ambiguity susceptible provision there is uncertainty reasonable If doubt interpretation. of two fairly interpreta- and it is policy’smeaning susceptible tions, to the to the insured and the other favorable one favorable insurer, will . . . the former be adopted. Co., 257, 261-62, v. U.S. Credit Ins. 336 Ark. Phelps Life Life S.W.2d Keller v. Ins. (1999) Ark. (quoting Safeco 308, 311, 877 S.W.2d 92 (1994)). I conclude that the term used Accordingly, “family,” is, Southern Farm Bureau’s insurance ambiguous; the undefined term to more than one rea susceptible sonable As Southern Farm Bureau in its interpretation. suggested brief, the of that term will on extrinsic evi depend dence, and, therefore, Smith v. Prudential presents jury question. and Cas. Ark. 10 S.W.3d 846 Prop. (2000). This case should be reversed and remanded trial. reasons,

For the above-stated dissent. respectfully CONTRACTORS, INC., RAY & SONS MASONRY Son, Inc., Franklin & and Fireman’s Fund Insurance Company v. UNITED STATES FIDELITY & GUARANTY

COMPANY and Crane Construction Company 02-697 114 S.W.3d 189 Court of Arkansas

Supreme delivered Opinion May

Case Details

Case Name: Smith v. Southern Farm Bureau Casualty Insurance

Court Name: Supreme Court of Arkansas

Date Published: May 15, 2003

Citation: 114 S.W.3d 205

Docket Number: 02-787

Court Abbreviation: Ark.