Hippler v. Allied Property and Casualty Insurance Co

Filing 34

MEMORANDUM DECISION granting 14 Motion for Summary Judgment ; denying 17 Motion for Summary Judgment ; denying 18 Motion to Stay. Signed by Magistrate Judge Paul M. Warner on 09/30/2013. (asp)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

KAREN HIPPLER,

MEMORANDUM DECISION
AND ORDER

Plaintiff,
v.

Case No. 2:12-cv-1039-PMW

ALLIED PROPERTY AND CASUALTY
INSURANCE COMPANY,
Defendant.

Magistrate Judge Paul M. Warner

All parties in this case have consented to having United States Magistrate Judge Paul M.
Warner conduct all proceedings, including entry of final judgment, with appeal to the United
States Court of Appeals for the Tenth Circuit.1 See 28 U.S.C. § 636(c); Fed. R. Civ. P. 73.
Before the court are Allied Property and Casualty Insurance Company’s (“Allied”) motion for
summary judgment,2 Karen Hippler’s (“Hippler”) cross-motion for partial summary judgment,3
and Hippler’s motion for a stay of summary judgment proceedings pursuant to rule 56(d) of the
Federal Rules of Civil Procedure.4 On June 21, 2013, the court held oral argument on the

1

See docket no. 9.

2

See docket no. 14.

3

See docket no. 17.

4

See docket no. 18.

motions.5 Joelle S. Kesler appeared on behalf of Hippler, and Byron G. Martin appeared on
behalf of Allied. The court has carefully considered the parties’ written submissions on the
motions, as well as the oral arguments presented by counsel at the hearing. Now being fully
advised, the court is prepared to rule on the motions.
BACKGROUND
The parties have agreed on the following undisputed material facts in this case.6 In the
spring of 2011, Hippler purchased a Homeowner’s Insurance Policy from Allied with a coverage
period of May 23, 2011, to May 23, 2012 (“Policy”).7 The Policy was numbered HMC
0015091386-6.8 The Policy had a Coverage C - Personal Property limit of $189,420.00.9
The personal property limit was subject to certain limitations. Specifically, but not
exclusively, the Coverage C - Personal Property limit was subject to the Premier Homeowners
Endorsement.10 The relevant portion of the Premier Homeowners Endorsement (“Special
Limitation”) states:

5

See docket no. 33.

6

See docket no. 14 at 3-8; docket no. 17 at 2.

7

See docket no. 15-2 at 13.

8

See id.

9

See id.

10

See id. at 64-67.
2

3.

Special Limits of Liability
These special limits do not increase the Coverage C limit of
liability. The special limit for each category below is the
total limit for each loss of all property in that category.
a.

$1,000 on money, bank notes, bullion, gold other
than goldware, silver other than silverware,
platinum other than platinumware, coins, medals,
scrip, stored value cards and smart cards.11

A separate special limit of $10,000 applies to silverware, platinumware, and goldware.12
Hippler claims that she was the victim of a burglary and theft at her home on or about
July 2, 2011.13 Hippler made a claim on Allied for various personal items that were allegedly
stolen during the burglary, including a rare coin collection.14 According to Hippler, the collection
consisted of various gold, silver, and platinum coins.15 Hippler alleges that the value of the coin
collection stolen exceeded $500,000.00.16 Allied made a payment on the stolen property claim to
Hippler for $14,868.94, which included $1,000.00 for various gold items that exhausted the
entire $1,000.00 Special Limitation.17

11

Id. at 64.

12

See id.

13

See docket no. 2-1 at 3.

14

See id. at 3-4.

15

See docket no. 15-2 at 71-93.

16

See docket no. 2-1 at 4.

17

See docket no. 15-2 at 3.
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Hippler claims that the Premier Homeowners Endorsement does not apply to her coin
collection claim and that Allied should have paid her the total Coverage C - Personal Property
Limit available under the policy of $189,420.00 to cover all her coins.18 In her complaint,
Hippler asserts claims for breach of contract, breach of the covenant of good faith and fair
dealing, and declaratory judgment.19
LEGAL STANDARDS
“Summary judgment is appropriate if ‘there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.’” Squires v. Breckenridge Outdoor
Educ. Ctr., 715 F.3d 867, 872 (10th Cir. 2013) (quoting Fed. R. Civ. P. 56(a)). In this case, the
court is faced with interpretation of an insurance contract. “The interpretation of an insurance
contract is governed by state law and, sitting in diversity, [this court] look[s] to the law of the
forum state.” Houston Gen. Ins. Co. v. Am. Fence Co., 115 F.3d 805, 806 (10th Cir. 1997). The
parties agree that Utah law applies in this case.
Under Utah law, “[a]n insurance policy is merely a contract between the insured and the
insurer and is construed pursuant to the same rules applied to ordinary contracts.” Alf v. State
Farm Fire & Cas. Co., 850 P.2d 1272, 1274 (Utah 1993). “[T]he terms of insurance contracts,
as well as all contracts, are to be interpreted in accordance with their usually accepted meanings

18

See docket no. 2-1 at 4-5.

19

See id. at 5-7.
4

and should be read as a whole, in an attempt to harmonize and give effect to all of the contract
provisions.” Nielsen v. O’Reilly, 848 P.2d 664, 665 (Utah 1992).
“[U]nless the language of an insurance contract is ambiguous or unclear, the court must
construe it according to its plain and ordinary meaning.” First Am. Title Ins. Co. v. J.B. Ranch,
Inc., 966 P.2d 834, 836 (Utah 1998); see also Alf, 850 P.2d at 1274 (“[I]f a policy is not
ambiguous, no presumption in favor of the insured arises and the policy language is construed
according to its usual and ordinary meaning.”). “Policy language is ambiguous if it is not plain to
a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in
accordance with the usual and natural meaning of the words, and in the light of existing
circumstances, including the purpose of the policy.” Nielsen, 848 P.2d at 666 (footnote,
quotations, and citations omitted). “A contract may be ambiguous because it is unclear, it omits
terms, or the terms used to express the intention of the parties may be understood to have two or
more plausible meanings.” Saleh v. Farmers Ins. Exch., 133 P.3d 428, 432 (Utah 2006)
(quotations and citations omitted). If a party proffers an alternate interpretation of contract
language to demonstrate an ambiguity, that interpretation “must be plausible and reasonable in
light of the language used” to create an ambiguity. J.B. Ranch, Inc., 966 P.2d at 837. “[W]ords
and phrases do not qualify as ambiguous simply because one party seeks to endow them with a
different interpretation according to his or her own interests.” Saleh, 133 P.3d at 433. An
ambiguity will not be found based on a “forced or strained construction” of the contract
language. Id. (quotations and citation omitted). “Whether an ambiguity exists in a contract is a
question of law.” Alf, 850 P.2d at 1274.
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ANALYSIS
As indicated above, the motions before the court are Allied’s motion for summary
judgment, Hippler’s cross-motion for partial summary judgment, and Hippler’s motion for a stay
pursuant to rule 56(d). The court will first address the motions for summary judgment together,
then address Hippler’s rule 56(d) motion.
I. Motions for Summary Judgment
Hippler alleges claims for breach of contract, breach of the covenant of good faith and
fair dealing, and declaratory judgment. Allied has moved for summary judgment on all of
Hippler’s claims. Hippler has filed a cross-motion for partial summary judgment on the limited
of issue of whether she is entitled to coverage under the Policy for her coin collection, up to the
total Coverage C - Personal Property Limit available under the policy of $189,420.00. Given that
Allied has presented arguments concerning each of Hippler’s claims, the court will address each
of those claims separately to determine whether either party is entitled to summary judgment on
each claim.
A. Breach of Contract
Hippler alleges that Allied breached the Policy by failing to pay her the entire total
Coverage C - Personal Property Limit available under the Policy of $189,420.00 to cover all her
coins. Hippler argues that the Special Limitation is not clear and unmistakable, or at the very
least, is ambiguous and, therefore, the Policy should be construed to cover her coin collection.
Allied responds by arguing that the Special Limitation is clear and unmistakable and is not
ambiguous. Based on that argument, Allied asserts that the Special Limitation is applicable to
6

Hippler’s coin collection, and since Allied has paid her the $1,000.00 limitation, it has not
breached the Policy.
Under Utah law, “[a]n insurer may exclude from coverage certain losses by using
language which clearly and unmistakably communicates to the insured the specific circumstances
under which the expected coverage will not be provided.” Alf, 850 P.2d at 1275 (footnote,
quotations, and citations omitted). “A provision excepting certain losses from coverage is
therefore not automatically construed against the insurer. Rather, it is only when the insurer uses
language that is ambiguous, that ‘doubt is resolved against the insurer.’” J.B. Ranch, Inc., 966
P.2d at 836 (quoting Alf, 850 P.2d at 1274).
As indicated above, the language of the Special Limitation provides a limitation of
coverage for “$1,000 on money, bank notes, bullion, gold other than goldware, silver other than
silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart
cards.”20 Hippler argues that there is an ambiguity in the Special Limitation because the phrase
“other than,” which precedes “platinumware, coins, medals scrip, stored value cards and smart
cards,” was intended to exclude coins from the Special Limitation. Hippler asserts that the
inclusionary list ends as soon as the reader reaches the third installment of the words “other
than,” and that a new exclusionary list then begins. The court disagrees.
As noted by Allied, Hippler’s position goes against basic rules of grammar. The Utah
Supreme Court has indicated that contracts, which include insurance policies, should include

20

Docket no. 15-2 at 64.
7

consideration of normal grammar rules. See Encon Utah, LLC v. Fluor Ames Kraemer, LLC,
210 P.3d 263, 270 (Utah 2009) (“Proper contract interpretation includes application of ordinary
rules of grammar.” (footnote, quotations, and citation omitted)). Allied correctly asserts that
Hippler’s interpretation of the Special Limitation disregards the grammatical rule that items in a
series separated by commas and joined at the end by a conjunction constitute a single list or
series. See, e.g., Marcotte v. Timberlane/Hampstead Sch. Dist., 733 A.2d 394, 400 (N.H. 1999)
(“According to normal rules of English punctuation, the placement of commas between each
element enumerated and before the conjunction, ‘and,’ generally dictates that the elements are to
be read as a consecutive series of discrete items.”). The Special Limitation provides a single list
of items subject to the Special Limitation as indicated by the presence of multiple items separated
by commas and joined at the end by a single conjunction, “and.” Since coins are part of that list,
they are included in the Special Limitation.
Further, Hippler’s interpretation is not grammatically feasible because the original list’s
conjunction has not yet appeared by the time the reader reaches the phrase “other than
platinumware.” At that point, the list is not yet complete, and no new list has begun. Moreover,
Hippler’s interpretation is somewhat arbitrary because the phrase “other than” appears on two
prior occasions in the list.
Hippler’s interpretation is also erroneous because it does not harmonize with the other
policy provisions, and fails to consider the Policy as a whole as required under Utah law. See
Nielsen, 848 P.2d at 665. There is a separate special limit of $10,000.00 that applies to goldware
and silverware. That corroborates Allied’s position that the phrase “other than” as it appears in
8

the Special Limitation was used as a linguistic device to describe what forms of precious metal
were and were not included. Hippler’s interpretation also fails to consider that preceding the
phrase “platinum other than platinumware, coins, medals, scrip” are the words “gold other than
goldware, silver other than silverware.” It is clear from those words that the list is forming a
pattern. In that pattern, precious metals are described generally (e.g., gold, silver, and platinum),
and then the words “other than” are being used to narrow the application of the Special
Limitation to specific forms of precious metals. The phrase “platinum other than platinumware”
is the last of three examples of noun phrases in that pattern, and it is clear that the “other than”
language is intended to apply for the specific purpose of exempting platinumware from the
otherwise limited platinum.
In sum, the court has determined Hippler’s interpretation of the Special Limitation results
in a tortured and strained construction that disregards basic grammatical rules and the plain
language of the Special Limitation. The court concludes that the language of the Special
Limitation is clear and unmistakable and is not ambiguous. The court further concludes that
coins are included in the Special Limitation, and since that limit has already been exhausted,
Allied has not breached the terms of the Policy. Therefore, Hippler’s breach of contract claim
fails as a matter of law.
B. Breach of the Covenant of Good Faith and Fair Dealing
Hippler alleges that Allied breached the covenant of good faith and fair dealing by not
fairly evaluating her claims. Allied asserts that it did not breach the covenant.

9

Like parties to any contract, Allied and Hippler have parallel obligations to perform their
contractual duties in good faith. See Beck v. Farmers Ins. Exch., 701 P.2d 795, 801 (Utah 1985).
“[T]he implied obligation of good faith performance contemplates, at the very least, that the
insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will
fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling
the claim.” Id. “ If an insurer acts reasonably in denying a claim, then the insurer did not
contravene the covenant.” Prince v. Bear River Mut. Ins. Co., 56 P.3d 524, 533 (Utah 2002).
“The denial of a claim is reasonable if the insured’s claim is fairly debatable. Under Utah law, if
an insurer denies an insured’s claim [that] is fairly debatable, [then] the insurer is entitled to
debate it and cannot be held to have breached the implied covenant if it chooses to do so.” Id. at
533-34 (quotations and citations omitted) (alterations in original).
Allied was entitled to debate the extent of coverage available for Hippler’s coin collection
claim. Indeed, the court has already concluded that the Special Limitation does in fact include
coins. As such, Allied undertook a fair reading of the Special Limitation to take the position that
Hippler’s claim concerned coins, money, gold, silver, and/or platinum. For those reasons, the
court concludes that Allied’s application of the Special Limitation was, at a minimum, fairly
debatable. As such, Allied did not breach the covenant of good faith and fair dealing, and
Hippler’s claim in that regard fails as a matter of law.
C. Declaratory Judgment
Hippler’s claim for declaratory judgment is based entirely on the success of her claims for
breach of contract and breach of the covenant of good faith and fair dealing. Because the court
10

has concluded that those claims fail as a matter of law, it follows that Hippler’s claim for
declaratory judgment likewise fails.
D. Conclusion
The court has concluded that all the claims in Hippler’s complaint fail as a matter of law.
Accordingly, Allied’s motion for summary judgment is granted, and Hippler’s cross-motion for
partial summary judgment is denied.
II. Hippler’s Rule 56(d) Motion
As an alternative to her motion for summary judgment, Hippler moves the court for a stay
of summary judgment proceedings so that she can conduct further discovery into her claim for
breach of the covenant of good faith and fair dealing. Rule 56(d) provides: “If a nonmovant
shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to
justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow time
to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.”
Fed. R. Civ. P. 56(d).21 The Tenth Circuit reviews the denial of a rule 56(d) for abuse of
discretion. See World Publ’g Co. v. United States Dep’t of Justice, 672 F.3d 825, 832 (10th Cir.
2012).

21

Prior to the 2010 amendments to rule 56, the provisions of subdivision (d) were found
at subdivision (f). However, there were no substantial changes when the provisions were moved
to subdivision (d). See Fed. R. Civ. P. 56, Advisory Committee Notes to 2010 Amendments,
Subdivision (d) (“Subdivision (d) carries forward without substantial change the provisions of
former subdivision (f).”). Accordingly, in this decision, the court will cite to and rely upon cases
addressing former subdivision (f).
11

In order to invoke the protection of rule 56(d), “the party filing the affidavit must state
with specificity how the desired time would enable [the nonmoving party] to meet its burden in
opposing summary judgment.” Jensen v. Redevelopment Agency, 998 F.2d 1550, 1554 (10th Cir.
1993) (quotations and citations omitted) (alteration in original). “[T]he party filing the affidavit
must show how additional time will enable him to rebut [the] movant’s allegations of no genuine
issue of fact.” Id. (quotation and citation omitted) (second alteration in original). An affidavit is
“insufficient” if the nonmoving party “merely states in conclusory terms” that he or she was
unable to obtain discovery or that he or she “could have conducted further discovery if given
more time.” Id. Instead, a nonmoving party’s affidavit should show that “facts, if discovered,
would [be] useful in opposing the motion[] for summary judgment” and that “additional
discovery time would have established facts sufficient to create a genuine issue of fact.” Id. at
1555.
The court concludes that Hippler has not satisfied the requirements for a stay pursuant to
rule 56(d). Hippler’s rule 56(d) motion and the supporting affidavit are deficient. Hippler has
not identified any probable facts that are unavailable to her that could change the outcome on
Allied’s Motion for Summary Judgment on her claim for breach of the covenant of good faith
and fair dealing. Hippler has not explained how additional discovery time would reveal facts
sufficient to create a genuine issue of material fact. Hippler makes only a vague and conclusory
assertion that she needs additional discovery regarding Allied’s evaluation of her claim and the
rationale it used to deny said claim. Hippler has not described how discovery of such
information would enable her to rebut Allied’s motion for summary judgment. Hippler also
12

asserts that additional time may be spent consulting with and/or retaining an expert in the
insurance industry. However, Hippler does not provide an explanation as to why consulting with
an expert may be helpful or what information an expert could provide that would preclude
summary judgment. As indicated above, rule 56(d) requires an affirmative explanation as to how
additional discovery time would be used and how it would allow the nonmovant to be better able
to oppose the motion for summary judgment. Ms. Hippler has not made such a showing.
In the court’s view, the matters at issue in Allied’s motion for summary judgment are
questions of law. There are no additional facts that would be relevant to the motion that would
need to be uncovered through discovery. The court concludes that all the information necessary
to make a decision on Allied’s motion is already before the court and that there is no need for
further discovery. Accordingly, Hippler’s rule 56(d) motion is denied.
CONCLUSION AND ORDER
Based on the foregoing, IT IS HEREBY ORDERED that:
1.

Allied’s motion for summary judgment22 is GRANTED.

2.

Hippler’s cross-motion for summary judgment23 is DENIED.

3.

Hippler’s motion for a stay of summary judgment proceedings pursuant to rule
56(d)24 is DENIED.

22

See docket no. 14.

23

See docket no. 17.

24

See docket no. 18.
13

4.

The Clerk of the Court shall enter judgment in favor of Allied and close this case.

IT IS SO ORDERED.
DATED this 30th day of September, 2013.
BY THE COURT:

PAUL M. WARNER
United States Magistrate Judge

14