Filed
Washington State
Court of Appeals
Division Two
January 23, 2019
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
HAROLD KALLES, No. 50827-3-II
Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE PUBLISHED OPINION
INS. CO., a foreign insurance co..
Respondent.
LEE, A.C.J. — Harold Kalles appeals the superior court’s order denying his motion for
partial summary judgment. The superior court concluded that Kalles’s underinsured motorist
(UIM) policy did not include coverage for loss of use while the insured vehicle was being repaired.
Kalles argues that the language in his UIM policy requires coverage for loss of use.
We hold that the UIM policy language is ambiguous and should be interpreted in favor of
the insured. Accordingly, we reverse the superior court’s order denying partial summary
judgment.
FACTS
Kalles’s new Land Rover was damaged by an uninsured motorist. Kalles had UIM
coverage through State Farm Mutual Automobile Insurance Co. The insuring agreement in
Kalles’s UIM policy states:
No. 50827-3-II
[State Farm] will pay compensatory damages for property damage an insured is
legally entitled to recover from the owner or driver of an underinsured motor
vehicle.
Clerk’s Papers (CP) at 119 (emphasis in original). The UIM policy defines “property damage” as:
physical damage to or destruction of: 1. your car or a newly acquired car, or 2.
property owned by an insured while that property is in the passenger compartment
of your car or a newly acquired car.
CP at 118 (emphasis in original). The “Deciding Fault and Amount” section in the UIM policy
provides,
1 a. The insured and [State Farm] must agree to the answers to the following two
questions:
(1) Is the insured legally entitled to recover compensatory damages from
the owner or driver of the underinsured motor vehicle?
(2) If the answer to 1.a.(1) above is yes, then what is the amount of
compensatory damages that the insured is legally entitled to recover from the
owner or driver of the underinsured motor vehicle.
CP at 119 (emphasis in original).
State Farm paid for the repairs to Kalles’s Land Rover. However, State Farm declined to
pay under the UIM coverage provisions for a car rental due to the loss of use of Kalles’s vehicle
while it was being repaired.
Kalles filed a complaint against State Farm based on a dispute over the diminished value
of the vehicle and whether Kalles’s UIM coverage included loss of use of his vehicle. Kalles filed
a motion for partial summary judgment, arguing that loss of use was included in his UIM coverage.
State Farm opposed the motion for partial summary judgment, arguing that loss of use was not
covered property damage under Kalles’s UIM policy. The superior court denied Kalles’s motion
for partial summary judgment.
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No. 50827-3-II
The parties entered a stipulated order dismissing the action. Kalles appeals the superior
court’s order denying partial summary judgment on coverage for loss of use.1
ANALYSIS
Kalles argues that the superior court erred by denying his motion for partial summary
judgment because loss of use is covered under the language of his UIM policy. Alternatively,
Kalles argues that the UIM statute, RCW 48.22.030, requires that UIM policies cover loss of use.
We agree that the superior court erred in denying Kalles motion for partial summary judgment.
We review an order granting summary judgment de novo. Woo v. Fireman’s Fund Ins.
Co., 161 Wn.2d 43, 52, 164 P.3d 454 (2007). Summary judgment is proper when there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR
56(c).
Interpretation of an insurance contract is a question of law we review de novo. Woo, 161
Wn.2d at 52. We construe insurance policies as contracts. Findlay v. United Pac. Ins. Co., 129
Wn.2d 368, 378, 917 P.2d 116 (1996). The insurance contract is construed as a whole, with the
policy given a “ ‘fair, reasonable, and sensible construction as would be given to the contract by
the average person purchasing insurance.’ ” Key Tronic Corp. v. Aetna (CIGNA) Fire
Underwriters Ins. Co., 124 Wn.2d 618, 627, 881 P.2d 201 (1994) (quoting Queen City Farms, Inc.
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The parties do not dispute the appealability of the superior court’s order denying partial summary
judgment. The superior court’s order denying partial summary judgment effectively determined
Kalles’s right to pursue his claim for State Farm’s refusal to pay for loss of use under the UIM
policy. Accordingly, we review the superior court’s partial summary judgment order as reviewable
under RAP 2.2(a)(3) (a party may appeal “[a]ny written decision affecting a substantial right in a
civil case that in effect determines the action and prevents final judgment or discontinues the
action.”).
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No. 50827-3-II
v. Cent. Nat’l Ins. Co., 126 Wn.2d 50, 65, 882 P.2d 703, 891 P.2d 718 (1994)). Words in an
insurance contract are given their ordinary, usual, and popular meaning unless the insurance
contract, as a whole, clearly demonstrates contrary intent. Hearst Commc’ns, Inc. v. Seattle Times
Co., 154 Wn.2d 493, 504, 115 P.3d 262 (2005). We will harmonize clauses that seem to conflict
in order to give effect to all the contract’s provisions. Nishikawa v. U.S. Eagle High, LLC, 138
Wn. App. 841, 849, 158 P.3d 1265 (2007), review denied, 163 Wn.2d 1020 (2008).
A provision in an insurance contract is ambiguous only when “it is fairly susceptible to two
different interpretations, both of which are reasonable.” Am. Nat’l Fire Ins. Co. v. B & L Trucking
& Constr. Co., 134 Wn.2d 413, 428, 951 P.2d 250 (1998). We will not construe an insurance
contract provision as ambiguous simply because the provision is complex or confusing. McDonald
v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 734, 837 P.2d 1000 (1992). Any ambiguity is
resolved against the insurer and in favor of the insured. American Star Ins. Co. v. Grice, 121
Wn.2d 869, 874-75, 854 P.2d 622 (1993).
The issue here is whether the language in Kalles’s UIM policy includes coverage for loss
of use. We conclude that the policy language is ambiguous as to whether it covers loss of use and,
therefore, should be interpreted in favor of Kalles.
Under the UIM policy language, State Farm is obligated to pay “compensatory damages
for property damage.” CP at 119 (emphasis in original). Kalles argues the UIM insuring
agreement should be read to “ ‘provide/include the same elements of damages that would be
recoverable from the at-fault tortfeasor under Washington law’ ” and that “ ‘for property damage’
” acts as triggering language rather than limiting language. Br. of App. at 11. We agree that
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No. 50827-3-II
Kalles’s interpretation is reasonable from the perspective of an average person purchasing
insurance.
“Compensatory damages” means “damages awarded to make good or compensate for an
injury sustained.” MERRIAM-WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY at 463 (1961).
“Compensatory damages” read together with the language “is legally entitled to recover from the
owner or driver of an underinsured motor vehicle” would reasonably lead an average person
purchasing insurance to believe that the policy covered all damages resulting from the property
damage caused by the underinsured motorist—including loss of use. CP at 119. Therefore, the
provision is at least ambiguous and must be interpreted in favor of the insured.
Kalles’s interpretation is further supported by reading the UIM policy as a whole, including
the “Deciding Fault and Amount” section of the policy. The “Deciding Fault and Amount” section
provides,
1 a. The insured and [State Farm] must agree to the answers to the following two
questions:
(1) Is the insured legally entitled to recover compensatory damages from
the owner or driver of the underinsured motor vehicle?
(2) If the answer to 1.a.(1) above is yes, then what is the amount of
compensatory damages that the insured is legally entitled to recover from the
owner or driver of the underinsured motor vehicle?
CP at 119 (emphasis in original). Also, the policy defines an “insured” as “any person entitled to
recover compensatory damages as a result of property damage of an insured.” CP at 118. Reading
these sections, along with the insuring agreement, would lead an average purchaser of insurance
to fairly, reasonably construe the policy as providing coverage for the amounts he or she would be
able to recover directly from the owner or driver of the uninsured vehicle. Therefore, Kalles’s
interpretation of the UIM policy is reasonable.
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No. 50827-3-II
State Farm argues that the UIM policy provides coverage only for physical damage because
“property damage is defined as physical damage to or destruction of the insured vehicle plus
damaged contents.” Br. of Resp. at 6. Even if State Farm’s interpretation of the policy also is
reasonable, the policy is ambiguous at best. Because the language of the UIM policy is ambiguous,
it must be interpreted in favor of Kalles’s to cover loss of use resulting from property damage
caused by an uninsured/underinsured motorist. Therefore, the trial court erred by denying Kalles’s
motion for partial summary judgment.
We reverse the superior court’s order denying partial summary judgment.
Lee, A.C.J.
We concur:
Worswick, J.
Sutton, J.
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