State Farm Fire & Casualty Co. v. Heinz

SCHROEDER, Justice.

This case arises from the district court’s grant of summary judgment to State Farm Fire & Casualty Company (State Farm), finding that an injury suffered by Michael R. Heinz (Heinz) was covered under Rex and Paula Nebeker’s (the Nebekers) Homeowner’s Insurance Policy, not them contractor’s policy.

I.

BACKGROUND AND PRIOR PROCEEDINGS

The Nebekers own a construction company which builds residential homes, mostly log cabins, in the Stanley Basin area. They purchased a lot near Smiley Creek and built a cabin on the lot. The cabin was initially used as a residence for the Nebekers, but at times they used it as a model home and advertisement for the construction company. Occasionally the Nebekers used the cabin as an office and to house company employees who were working on construction sites in the area. In February of 1995 a neighbor notified the Nebekers that them use of the property violated a restrictive covenant and a Blaine County zoning ordinance prohibiting commercial activities on the property. The Nebekers’ attorney responded with a letter denying their use of the property was commercial. The Nebekers subsequently removed commercial vehicles and a company *382sign from the property and stopped further log peeling on the property.

State Farm issued a homeowner’s policy on the Smiley Creek cabin with a $100,000 limit for personal liability for each occurrence. The application signed by Mr. Nebeker indicated that no business would be conducted on the property. State Farm also issued a contractor’s policy covering the Nebekers’ business with a $300,000 limit of liability.

On July 3, 1997, Heinz, the Nebekers’ nephew, arrived at the cabin at the end of the day. That evening Nebeker decided to plant a tree in the cabin yard to “honor” Heinz. Nebeker used a company owned backhoe to dig the hole but hit some metal and asked Heinz to remove it. While Heinz was in the partially dug hole, the backhoe’s bucket fell on his foot causing serious permanent injuries. Heinz filed a claim against the Nebekers’ contractor’s insurance policy to recover damages incurred from the injury.

State Farm filed a complaint for declaratory relief seeking a judgment that: (1) the accident is covered by State Farm’s Homeowner Insurance Contract and is not covered by the contractor’s policy and (2) the maximum amount of liability available to cover the injury is $100,000 and maximum amount for medical coverage is $1,000. The Nebekers and Heinz moved for summary judgment, seeking a ruling that the contractor’s policy was applicable. The district court denied the Nebeker/Heinz motion but granted summary judgment to State Farm, finding the homeowner’s policy, not the contractor’s policy, provided coverage for Heinz’s injury. Heinz and the Nebekers appealed.

II.

STANDARD OF REVIEW

This Court’s standard of review on appeal is the same standard used by the district court in ruling on the motion for summary judgment. See, e.g., First Security Bank v. Murphy, 131 Idaho 787, 790, 964 P.2d 654, 657 (1998); Richards v. Idaho State Tax Comm’n, 131 Idaho 476, 478, 959 P.2d 457, 459 (1998). Summary judgment is appropriate only when the pleadings, depositions, affidavits and admissions on file show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Murphy, 131 Idaho at 790, 964 P.2d at 657.

Generally, when considering a motion for summary judgment, a court “liberally construes the record in a light most favorable to the party opposing the motion and draws all reasonable inferences and conclusions in that party’s favor.” Brooks v. Logan, 130 Idaho 574, 576, 944 P.2d 709, 711 (1997). However, where the evidentiary facts are undisputed and the trial court rather than a jury will be the trier of fact, “summary judgment is appropriate, despite the possibility of conflicting inferences because the court alone will be responsible for resolving the conflict between those inferences.” Riverside Development Co. v. Ritchie, 103 Idaho 515, 519, 650 P.2d 657, 661 (1982), see also Cameron v. Neal, 130 Idaho 898, 900, 950 P.2d 1237, 1239 (1977) (Where the district court sits as the trier of fact, it may draw reasonable inferences based upon the evidence before it and may grant summary judgment despite the possibility of conflicting inferences.).

III.

THE DISTRICT COURT PROPERLY DENIED THE NEBEKERS’ MOTION FOR SUMMARY JUDGMENT.

Heinz and the Nebekers claim Heinz’s injury was covered by the contractor’s policy because the tree planting activity was for business purposes. Heinz and the Nebekers argue the tree was planted with equipment from them business to further their business because the cabin where the tree was planted was used to advertise for the business. State Farm asserts the tree was being planted on personal property for personal reasons and, consequently, the homeowner’s insurance policy, not the contractor’s policy, should apply.

The district court identified the issue in the case as a determination of which insurance policy should apply and analyzed the case in “either or” terms because both parties agreed that “only one of the policies will *383apply.” That is, if the homeowner’s policy applied, the contractor’s policy could not apply. On the other hand, if the contractor’s policy applied, the homeowner’s policy could not apply. It might be that under a different set of facts, pleadings, and argument both policies could apply. However, the district court’s analysis is supported by the record. The Heinz/Nebeker reply brief in the district court makes this statement:

Plaintiff cites case law from outside of Idaho for the proposition that “insurance policies are not designed to provide overlapping coverage,” and then concludes that “only one policy applies.” While defendants do not concede that the law supports the conclusion, Defendants do agree that by their terms only one of the policies applies in this case. There is no overlapping of coverage. The Homeowner’s policy excludes coverage for Heinz’ injuries and the Contractor’s policy provides coverage. The factors for determining coverage under the Contractor’s policy are discussed in Defendant’s initial brief.

(footnote omitted). At oral argument in the district court State Farm argued that only one policy could apply. Heinz and Nebeker did not present a contrary argument.

Heinz and Nebeker’s also argued in their brief to this Court that, “since only one policy applies, the challenge for the Court is to determine which policy applies.” The Nebekers’ motion for summary judgment asked the district court for a determination that the contractor’s policy applied. The district court properly stated the standard for summary judgment: “[vjiewing the facts and all reasonable inferences in the light most favorable to [State Farm], as this Court must do pursuant to I.R.C.P. 56(c), the facts surrounding the case are as follows.....” The record contains evidence to defeat the Nebekers’ motion for summary judgment, e.g., their statements that the property was not used for business purposes, that the tree was planted to “honor” Heinz, and other facts surrounding the tree planting that are inconsistent with a business activity. Consequently, the district court properly denied the Nebekers’ motion for summary judgment.

IV.

THE DISTRICT COURT PROPERLY GRANTED SUMMARY JUDGMENT IN FAVOR OF STATE FARM.

Although the district court applied the correct standard in considering Nebekers’ motion for summary judgment, the district court did not restate the standard in considering whether to grant summary judgment in favor of State Farm. Regardless, since the district judge sat as the trier of fact, he was entitled to examine the undisputed evidence, draw reasonable inferences, and, despite the possibility of conflicting inferences, grant summary judgment. See Cameron, 130 Idaho at 900, 950 P.2d at 1239. The district judge’s opinion indicates that he properly reviewed the undisputed facts and drew reasonable inferences from those facts in concluding that the homeowner’s policy not the contractor’s policy applied. The undisputed facts included (1) the statement by the Nebekers’ attorney denying there was commercial use of the property in response to the alleged violations of a restrictive covenant and a zoning ordinance; (2) the Nebekers’ statement that the tree was being planted to “honor” Heinz; and (3) the statement in the application for the homeowner’s policy that no business would be conducted on the property. From those undisputed facts it was reasonable for the district court to conclude that the homeowner’s policy was applicable not the contractor’s policy.

V.

CONCLUSION

The decision of the district court denying the Nebekers’ motion for summary judgment is affirmed. The decision of the district court granting summary judgment in favor of State Farm is affirmed. State Farm is awarded costs but no attorney fees.

Chief Justice TROUT and Justice WALTERS concur.