file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
No. 99-656
IN THE SUPREME COURT OF THE STATE OF MONTANA
2000 MT 114
299 Mont. 407
99 P. 2d 347
KELLA BABCOCK,
Plaintiff and Appellant,
v.
FARMERS INSURANCE EXCHANGE,
Defendant and Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John S. Henson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Christian T. Nygren; Milodragovich, Dale, Steinbrenner & Binney,
Missoula, Montana
For Respondent:
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (1 of 6)3/28/2007 1:26:19 PM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
William R. Bieler; Williams & Ranney, Missoula, Montana
Submitted on Briefs: March 30, 2000
Decided: May 4, 2000
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Appellant Kella Babcock (Babcock) appeals from the order of the Fourth Judicial
District Court, Missoula County, granting summary judgment in favor of Respondent
Farmers Insurance Exchange (Farmers).
¶2 We affirm.
¶3 The following issue is presented on appeal:
¶4 Whether the District Court correctly concluded that the liability portion of Babcock's
insurance policy did not provide coverage for a horse trailer.
Standard of Review
¶5 The interpretation of an insurance contract is a question of law. See Stutzman v. Safeco
Ins. Co. of America (1997), 284 Mont. 372, 376, 945 P.2d 32, 34. We review a district
court's conclusions of law de novo to determine whether they are correct. See Steer, Inc. v.
Dept. Of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603. Our standard of
review in appeals from grants of summary judgment is de novo. See Meyer v. Creative
Nail Design, Inc., 1999 MT 74, ¶ 13, 294 Mont. 46, ¶ 13, 975 P.2d 1264, ¶ 13. To be
granted summary judgment, the "moving party has the burden of showing a complete
absence of any genuine issue as to all facts considered material in light of the substantive
principles that entitle the moving party to judgment as a matter of law and all reasonable
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (2 of 6)3/28/2007 1:26:19 PM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
inferences are to be drawn in favor of the party opposing summary judgment." Kolar v.
Bergo (1996), 280 Mont. 262, 266, 929 P.2d 867, 869.
Factual and Procedural Background
¶6 The parties have stipulated to the following facts. Babcock purchased insurance for her
Ford truck from Farmers. In August, 1997 Babcock borrowed a neighbor's horse trailer
and attached it to her truck. Her truck's trailerball had a diameter of two inches. However,
the trailer she borrowed had a hitch that required a two and 5/8ths inch diameter ball.
Babcock attempted to tow the trailer with her truck's two-inch trailerball. While she drove
on highway 12, the trailer came unhooked, left the road, and struck a fence. The trailer and
fence were damaged.
¶7 Farmers paid Babcock for the full cost of the fence's repair. Babcock requested that
Farmers also pay for damage to the horse trailer that she estimated at $4,500. Farmers paid
$500 toward the trailer, that amount constituting her policy's limit for collision and
comprehensive coverage.
¶8 In June, 1998 Babcock brought suit in Justice Court, claiming that Farmers was
required to pay for the damage to the horse trailer under the provisions of her liability
coverage. The Justice Court granted summary judgment in favor of Babcock. Farmers
appealed that decision to District Court. The District Court sua sponte determined that the
case was appropriate for summary judgment and granted summary judgment in favor of
Farmers, concluding that the "plain and ordinary language of the policy's exclusions to
liability prevents coverage for damage to the horse trailer beyond the express limitation."
From that judgment and order Babcock appeals.
Discussion
¶9 Whether the District Court correctly concluded that the liability portion of Babcock's
insurance policy did not provide coverage for a horse trailer.
¶10 Babcock's policy with Farmers provided in pertinent part
1. Exclusions
This coverage does not apply to:
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (3 of 6)3/28/2007 1:26:19 PM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
....
7. Damage to property owned or being transported by an insured person.
8. Damage to property rented to, or in the charge of, an insured person except a
residence or private garage not owned by that person.
¶11 Babcock argues that the provisions of her policy are inherently ambiguous and that the
doctrine of reasonable expectations should defeat the exclusionary provisions of the
policy. Babcock argues that under her policy's provisions, a consumer of average
intelligence would have believed that if an insured became liable for damages to a trailer,
Farmers would cover the damages. In support of her contention, Babcock points to
"Coverage B" of the policy, which provides that Farmers will "pay damages for which any
insured person is legally liable because of . . . property damage arising out of the
ownership, maintenance, or use of a . . . utility trailer." Babcock argues further that
because the policy defines insured car as including "any utility trailer . . . while attached to
your car," the policy's exclusions only apply "when the property damaged is 'being
transported.' " Babcock argues that the trailer was not transported when it was damaged
because it had separated from her truck.
¶12 Babcock asserts further that exclusion 7 fails to define "property" and that it is
therefore ambiguous. Noting that her policy elsewhere defines utility trailer, Babcock
argues that had Farmers intended to specifically exclude trailers from coverage, it "needed
to have done so with particularity and precision." Babcock also argues that the phrase
"being transported by" is ambiguous and that it is reasonable to interpret this phrase to
refer to "items of property within the insured vehicle without actually referring to the
vehicle itself."
¶13 Babcock further contends that exclusion 8 is ambiguous because property again is not
defined and because the term " 'in the charge of' is problematic and equivocal." Babcock
suggests that "in charge of" suggests a legal responsibility on the part of the person
charged with the property in question. Babcock asserts that she "ha[d] no such formal,
legally binding agreement with the third-party owner of the borrowed horse trailer."
Babcock relies on Miller v. Elite Ins. Co. (Cal. Ct. App. 1980), 161 Cal.Rptr. 322, where
the court concluded that an insurance policy's exclusion, which referred to " 'property
owned or transported by the insured, or property rented to or in charge of the insured,' "
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (4 of 6)3/28/2007 1:26:19 PM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
was ambiguous because that language did not indicate whether "property" referred to real
property or chattel goods. Miller, 161 Cal.Rptr. at 329.
¶14 Farmers responds that Babcock has fundamentally misconstrued the purpose of a
liability policy and that as a general rule liability policies do not cover damage to the
insured's own property or to property within her control. Farmers argues that to receive
coverage for such property, the insured must obtain collision or comprehensive coverage.
Farmers recognizes that Babcock had collision coverage but notes that her coverage was
limited to $500, which Farmers has paid
¶15 Farmers argues further that Babcock's policy exclusions are clear and unambiguous.
Farmers cites Simmons v. Farmers Ins. Group (Utah App. 1994), 877 P.2d 1255, where
the insured towed a borrowed horse trailer that was damaged in an accident. Farmers
argues and Babcock does not dispute that the insurance policy at issue in Simmons had
language identical to that of the policy in the present case. The Simmons court concluded
that the insured's liability policy did not cover damage to the borrowed horse trailer:
the liability statement of coverage, standing alone, could be read as covering
damage to the horse trailer. However, the exclusions to liability coverage prevent
coverage for the borrowed trailer. Exclusion 7 states that liability coverage does not
apply to "[d]amage to property owned or being transported by an insured person."
The horse trailer was being transported by Simmons, the insured in this case.
Further, Exclusion 8 provides that liability coverage does not extend to damage to
property "in the charge of, an insured person . . . not owned by that person."
Simmons clearly did not own the horse trailer. Accordingly, the plain and ordinary
language of the policy's exclusions to liability prevent coverage for damage to the
horse trailer.
Simmons, 877 P.2d at 1257.
¶16 Farmers argues that in essence Babcock is seeking to convert liability coverage into
collision coverage that she did not purchase, thus obtaining a "windfall" for herself.
Further, Farmers distinguishes Miller, arguing that Babcock's policy addressed the
ambiguity in the meaning of the word "property" that the Miller court recognized by
excepting, in provision 8, "a residence or private garage not owned by that person."
¶17 Farmers also responds to Babcock's argument that the exclusion does not apply
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (5 of 6)3/28/2007 1:26:19 PM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm
because the trailer was not "being transported" when it was damaged. Farmers argues that
Babcock has cited no authority for this interpretation and that the accident clearly occurred
while Babcock was in charge of and transporting the trailer. Farmer notes that under
Babcock's interpretation, a passenger ejected from a car would have no claim for medical
payments because the passenger did not "occupy" the vehicle at the time of injury.
¶18 We agree. The doctrine of reasonable expectations does not apply to create coverage
where "the terms of the insurance policy clearly demonstrate an intent to exclude [such]
coverage." Stutzman, 284 Mont. at 381, 945 P.2d at 37 (citation omitted). The liability
exclusions in the present case are not ambiguous on their own terms nor are they
ambiguous in light of Babcock's policy as a whole. Babcock's policy clearly demonstrates
an intent to exclude liability coverage for the damage to the borrowed horse trailer: at the
time of the accident, Babcock was transporting the horse trailer and the horse trailer was
"in her charge." The District Court correctly concluded that the liability portion of
Babcock's policy did not cover the damage to the borrowed horse trailer.
¶19 We hold that the District Court did not err in granting Farmers' motion for summary
judgment.
¶20 Affirmed.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ J. A. TURNAGE
/S/ JAMES C. NELSON
/S/ KARLA M. GRAY
/S/ WILLIAM E. HUNT, SR.
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/99-656%20Opinion.htm (6 of 6)3/28/2007 1:26:19 PM