Filed 12/6/18 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2018 ND 263
Scott A. Dahms & Shannon K. Dahms, Plaintiffs and Appellants
v.
Nodak Mutual Insurance Company
and Mike Bruckbauer, Defendants and Appellees
No. 20180202
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Steven E. McCullough, Judge.
AFFIRMED.
Opinion of the Court by VandeWalle, Chief Justice.
Jonathan T. Garaas, Fargo, ND, for plaintiffs and appellants.
Kraig A. Wilson, Grand Forks, ND, for defendant and appellee Nodak Mutual
Insurance Company.
Lisa M. L. Bachman (argued), and Jason T. Mohr (on brief), Minneapolis, MN,
for defendant and appellee Mike Bruckbauer.
Dahms v. Nodak Mutual Insurance Co.
No. 20180202
VandeWalle, Chief Justice.
[¶1] Scott and Shannon Dahms appealed from a summary judgment dismissing their
action against Nodak Mutual Insurance Company to obtain additional insurance
payments, and against their insurance agent, Mike Bruckbauer, for damages resulting
from his alleged violation of professional duties owed to them. Because the district
court correctly interpreted the insurance policy as applied to the undisputed facts, and
because the Dahms failed to raise a genuine issue of fact to support their professional
negligence claim, we affirm.
I
[¶2] In 2008 the Dahms purchased a Nodak homeowners insurance policy through
Bruckbauer, an independent insurance agent, and the policy was renewed annually.
At the time, the Dahms’ Fargo property consisted of a two-story residence and a
detached two-story carriage house which was used as a garage. After purchasing the
insurance policy, the Dahms constructed a deck between their dwelling house and the
garage. The “fairly elaborate deck” was attached to the garage and lag-bolted to the
house. The Dahms did not inform Bruckbauer about the addition of the deck. In
April 2013, the garage was destroyed by fire and the estimated damage exceeded
$87,003.40.
[¶3] The property coverage provision of the insurance policy provided:
A. Coverage A – Dwelling
1. We cover:
a. The dwelling on the “residence premises” shown
in the Declarations, including structures attached
to the dwelling; and
b. Materials and supplies located on or next to the
“residence premises” used to construct, alter or
repair the dwelling or other structures on the
“residence premises”.
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2. We do not cover land, including land on which the
dwelling is located.
B. Coverage B – Other Structures
1. We cover other structures on the “residence premises”
set apart from the dwelling by clear space. This includes
structures connected to the dwelling by only a fence,
utility line, or similar connection.
The limit of insurance for Coverage A was $348,907, and the limit of insurance for
Coverage B was $34,891.
[¶4] After Nodak determined Coverage B applied and paid the Dahms $34,891, the
Dahms brought this lawsuit against Nodak claiming Coverage A applied because the
garage was attached to their dwelling by the deck. They also sued Bruckbauer for
professional negligence, claiming he violated his duties to protect them from any gaps
in coverage and to advise them about their proper insurance needs. The district court
granted summary judgment dismissing the action. The court concluded as a matter
of law Coverage B applied:
The Court finds that the garage was not an attached structure as
stated in the policy. Coverage A provides a higher insurance total for
the dwelling and “structures attached to the dwelling.” Coverage B
provides a lower insurance limit for “other structures on the ‘residence
premises’ set apart by clear space.” This “includes structures
connected to the dwelling only by a fence, utility line, or similar
connection.” The Court finds that this language is clear on its face.
Coverage A provides insurance for the dwelling and structures
immediately attached to the dwelling; while Coverage B provides
insurance for other structures on the premises, including those
connected to the dwelling by another structure. Here, while bolts
connected the dwelling to the deck, and the deck to the garage, the
garage was not otherwise attached to the dwelling. The garage and the
dwelling share no walls, roofs, foundations, or entryways. The clear
space between the dwelling and the garage is the deck. To find that the
construction of a deck could render the garage attached to the home
under Coverage A would be to effectively render Coverage B
irrelevant, as any structure on the entire premises could be connected
to the home by way of a deck and, therefore, be insured under Coverage
A. The Court must construe the agreement as a whole, and, therefore,
must find that the deck in this situation is similar to a fence or utility
line which connects the garage to the dwelling, but does not “attach” it.
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The court dismissed the negligence claim against Bruckbauer, concluding as a matter
of law that he breached no professional duties owed to the Dahms.
II
[¶5] The Dahms argue the district court erred in dismissing their action on summary
judgment.
[¶6] Our standard of review for summary judgments is well established:
Summary judgment is a procedural device under N.D.R.Civ.P.
56(c) for promptly resolving a controversy on the merits without a trial
if there are no genuine issues of material fact or inferences that can
reasonably be drawn from undisputed facts, or if the only issues to be
resolved are questions of law. The party seeking summary judgment
must demonstrate there are no genuine issues of material fact and the
case is appropriate for judgment as a matter of law. In deciding
whether the district court appropriately granted summary judgment, we
view the evidence in the light most favorable to the opposing party,
giving that party the benefit of all favorable inferences which can
reasonably be drawn from the record. A party opposing a motion for
summary judgment cannot simply rely on the pleadings or on
unsupported conclusory allegations. Rather, a party opposing a
summary judgment motion must present competent admissible evidence
by affidavit or other comparable means that raises an issue of material
fact and must, if appropriate, draw the court’s attention to relevant
evidence in the record raising an issue of material fact. When
reasonable persons can reach only one conclusion from the evidence,
a question of fact may become a matter of law for the court to decide.
A district court’s decision on summary judgment is a question of law
that we review de novo on the record.
Pettinger v. Carroll, 2018 ND 140, ¶ 7, 912 N.W.2d 305 (quoting A.R. Audit Servs.,
Inc. v. Tuttle, 2017 ND 68, ¶ 5, 891 N.W.2d 757).
A
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[¶7] The Dahms argue the district court erred in ruling Coverage A policy limits did
not apply because they contend the garage was “attached” to their dwelling by the
deck.
[¶8] In Borsheim Builders Supply, Inc. v. Manger Ins., Inc., 2018 ND 218, ¶ 8, 917
N.W.2d 504, we recently explained the rules for interpreting insurance policies:
“Insurance policy interpretation is a question of law, which is
fully reviewable on appeal.” Forsman[v. Blues, Brews & Bar-B-Ques,
Inc.], 2017 ND 266, ¶ 10, 903 N.W.2d 524. This Court independently
examines and construes the insurance contract on appeal to decide
whether coverage exists. K & L Homes[, Inc. v. Am. Family Mut. Ins.
Co.], 2013 ND 57, ¶ 8, 829 N.W.2d 724. This Court construes policy
language to give effect to the parties’ mutual intention 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.
Forsman, at ¶ 10 (quoting K & L Homes, at ¶ 8).
[¶9] Whether Coverage A or Coverage B insurance policy limits apply under the
circumstances present in this case is a question of first impression in North Dakota.
The parties do not cite, and we have not found, any cases construing similar insurance
policy provisions from other jurisdictions that are factually on point. In deciding this
issue the district court found persuasive a hypothetical posed by the Texas Supreme
Court in Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 260 (Tex. 2017):
To illustrate using a hypothetical, a stand-alone barn on a
residence premises set apart from the dwelling by clear space would
clearly be covered under subsection (2). Yet without the second
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sentence in subsection (2), a barn that was connected to the dwelling by
only a fence would qualify as a “structure attached to the dwelling.”
This is because the fence, acting as a “structure attached to the
dwelling” and a “connection” to the barn that would otherwise be “set
apart by clear space,” acts to negate the clear space requirement that
places the barn neatly in the first sentence of subsection (2). An
insured could simply use some fencing (or a “utility line or similar
connection”) and attach his or her dwelling to every barn, garage, or
other building on the residence premises and secure coverage under
subsection (1) instead of subsection (2). What protects the insurer from
an insured determined to secure coverage for his or her other structures
in such a way? The second sentence of subsection (2) provides the
answer, and it does so with the distinction between “dwelling” and
“other structures.” In the above illustration, applying the second
sentence of subsection (2) would cause the barn, connected to the
dwelling by only a fence, to not be considered “attached to the
dwelling” but rather as effectively “separated by clear space.” The
second sentence of subsection (2) operates to prevent a fence (or similar
connection) attached to the dwelling from doing exactly what the court
of appeals contemplated the Nassars’ interpretation would do: cause
structures attached to the fence to be covered under subsection (1).
Stated differently, the first sentence of subsection (2) identifies what is
to be covered, and the second sentence limits that coverage. Applying
this interpretation to our hypothetical, the barn would be covered as an
“other structure” even though it is connected to the dwelling by a fence.
[¶10] Courts in other jurisdictions construing nearly identical policy language are in
accord and have concluded, as did the district court here, that decks and concrete
patios connected to a dwelling and other structures constitute “clear space” which do
not functionally differ from a lawn or garden, rendering Coverage B limits applicable.
The most extended discussion of the issue appears in Porco v. Lexington Ins. Co., 679
F.Supp.2d 432, 434 (S.D.N.Y. 2009), which involved an insured’s attempt to claim
Coverage A limits applied to damage to a swimming pool connected to the dwelling
by a patio, stairs, and a pool deck, none of which was covered by a roof. The pool’s
filtration system was located in the dwelling and was connected to the pool by pipes.
Id. The court relied on ordinary dictionary definitions of “attached,” meaning
“‘joined or fastened to something,’” and “connected,” meaning “‘joined or linked
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together,’” to resolve the issue. Id. at 437. The court determined the language used
in Coverage A and Coverage B was not ambiguous and explained:
The plain language of “attached” renders unpersuasive
Plaintiff’s claim that the dwelling is connected to the pool via the back
patio, the steps, and the pool deck. In essence, Plaintiff asserts that
because the house is “connected to” the patio, and the patio is
“connected to” the steps, and the steps are “connected to” the pool
deck, and the pool deck is “connected to” the pool, by some transitive
property, the pool is “attached” to the house and, therefore, Coverage
A applies. If the patio is joined or fastened to the dwelling, as it would
seem to be, then that might distinguish the patio from a lawn or other
obviously clear space separating the house from other structures.
However, a dwelling might well be connected to a patio, and the patio
to a walkway, and a walkway to a dog house or a mail box, but it would
be absurd to conclude that the dog house and mail box are “attached”
to the dwelling. Plaintiff’s implicit argument that manmade structures
that are all connected to each other have a property of being “attached”
must, therefore, be limited in some way.
That limitation is found in the language of the Policy as applied
to the relationship between the structure at issue and the dwelling. . . .
Even granting that the patio and stairs are attached to the dwelling and
that the pool deck is attached to the pool, it strains the ordinary use of
“attached” to argue that the steps, fence, and elevation do not set the
dwelling apart from the pool. Put another, simpler way, the pool is
indisputably not joined or fastened to the dwelling, and the fact that the
pool deck is between the stairs and the pool, even if they touch each
other, does not change the analysis.
Id. at 438. The court reasoned that “the pool deck is clear space separating the
dwelling (even if defined to include the stairs from the back patio) from the swimming
pool” because the “Court is at a loss to understand how cement is any more of a
restriction of the space than grass would be.” Id. at 439. The court granted summary
judgment concluding the pool was an “other structure” and Coverage B applied. Id.
at 441.
[¶11] Two unreported decisions applying the same policy language are in accord.
See Mentesana v. State Farm Fire & Cas. Co., No. 07-0456-CV-W-ODS, 2008 WL
2225737, at *3 (W.D. Mo. May 28, 2008) (“Plaintiff’s pool and waterfall are
separated from his house by clear space. While this clear space is a concrete patio,
6
rather than grass, it still provides separation from the house. Plaintiff’s interpretation
. . . would allow for any structure to be brought within the ‘Dwelling’ coverage
merely by placing it on a concrete slab and connecting that slab to the foundation of
the house.”); Arch v. Nationwide Mut. Fire Ins. Co., CIV. A. No. 88-5421, 1988 WL
122408, at *3 (W.D. Pa. Nov. 10, 1988) (unroofed twelve-foot concrete patio between
pool and dwelling was clear space because “a patio merely comprises part of one’s
yard as does any lawn or garden”).
[¶12] The Dahms rely on Lazechko v. Auto Owners Ins. Co., No. 276111, 2008 WL
2697428, at *4 (Mich. Ct. App. July 10, 2008), where the court ruled Coverage A
limits applied to a garage connected to the dwelling by a breezeway based on a
dictionary definition of breezeway as “‘an open-sided roofed passageway for
connecting two buildings, as a house and a garage.’” Id. But the present case does
not involve a roofed breezeway, and the insured in Lazechko was attempting to invoke
Coverage B limits to obtain additional insurance proceeds.
[¶13] We reject the Dahms’ argument that the analysis need go no further than an
interpretation of Coverage A. We interpret insurance contracts as a whole to give
meaning and effect to each clause, and each clause may be used to interpret others.
See Borsheim Builders Supply, 2018 ND 218, ¶ 8, 917 N.W.2d 504. Coverage A
policy limits apply to dwellings and structures attached to the dwelling. Coverage B
policy limits apply to other structures separated by clear space. The Dahms’
argument that their deck attached to their dwelling and their other structure invokes
Coverage A policy limits would render Coverage B policy limits meaningless.
[¶14] We agree with the district court and other courts that have addressed similar
policy provisions in analogous circumstances. We conclude as a matter of law that
the Dahms’ deck constituted “clear space” between the “dwelling” and the “other
structure,” even though the garage was connected to the dwelling by the deck. The
court did not err in granting summary judgment concluding Coverage B policy limits
applied and dismissing the Dahms’ claim against Nodak.
7
B
[¶15] The Dahms argue the district court erred in dismissing their professional
negligence claim against Bruckbauer because “[a]gents, or their principals, are liable
if coverages do not exist.”
[¶16] In a negligence action, whether a duty exists is generally an initial question of
law for the courts. See APM, LLLP v. TCI Ins. Agency, Inc., 2016 ND 66, ¶ 8, 877
N.W.2d 34. The district court thoroughly analyzed this claim, recognizing that the
standard of care “requires an insurance agent to exercise the skill and care which a
reasonably prudent person engaged in the insurance business would use under similar
circumstances,” and that an agent’s duties are ordinarily limited to “act in good faith
and follow instructions.” Rawlings v. Fruhwirth, 455 N.W.2d 574, 577 (N.D. 1990).
The court ruled that on the undisputed evidence presented Bruckbauer breached no
professional duty because when he sold the policy to the Dahms as requested, there
was no deck in existence, and the Dahms never informed him or requested higher
coverage when the deck was constructed. The court further noted that “[a]n
affirmative duty to take action not specifically requested by the insured may arise on
behalf of an insurance agent if some sort of special circumstances are present.” Id.
at 578. But the court ruled no special circumstances existed because, although the
parties had a “‘long-standing relationship,’” the Dahms sought no advice about the
garage, did not contact Bruckbauer regularly, and Bruckbauer did not visit their
property. The Dahms do not argue the court misapplied the law and do not point to
any evidence to dispute these facts. Summary judgment is appropriate against a party
who fails to establish the existence of a factual dispute as to an essential element of
his claim and on which he will bear the burden of proof at trial. See Bjerk v.
Anderson, 2018 ND 124, ¶ 9, 911 N.W.2d 343. The Dahms failed to raise a genuine
issue of fact on this claim.
[¶17] We conclude the district court did not err in dismissing the Dahms’
professional negligence claim against Bruckbauer as a matter of law.
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III
[¶18] It is unnecessary to address other arguments raised because they are
unnecessary to the decision or are without merit. We deny Bruckbauer’s request for
an award of costs and attorney fees for a frivolous appeal under N.D.R.App.P. 38.
The summary judgment is affirmed.
[¶19] Gerald W. VandeWalle, C.J.
Jon J. Jensen
Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
9