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Ross v. State Farm Mutual Automobile Insurance Co.

filed: July 30, 1996.


Appeal from SUPERIOR COURT SPOKANE COUNTY. Superior Court No: 93-2-00255-1. Date filed in Superior Court: 11/18/94. Superior Court Judge signing: RICHARD SCHROEDER.

Author: John A. Schultheis, Concurring: Dennis J. Sweeney & Philip J. Thompson

Author: Schultheis

SCHULTHEIS, J. -- Betty Ross had an accident in 1987 with an underinsured motorist (UIM) while driving her nonresident husband's car as a substitute for her own. State Farm Mutual Automobile Insurance Company invoked "owned by" or "available for regular use of" exclusions in Mrs. Ross's policy and denied her UIM claim on the basis her husband's car, which was not insured under the policy, was both owned by her and her "spouse," and available for her and his regular use. The Rosses filed suit, and on cross motions for summary judgment, the court determined Mrs. Ross had coverage: it found her nonresident husband was not a "spouse" within the terms of the policy and resolved a perceived policy ambiguity in the definition of "temporary substitute car" in her favor. The court dismissed the Rosses' claim for bad faith damages and awarded the Rosses their attorney fees without a requested enhancement. State Farm appeals the determination of UIM coverage and award of attorney fees. The Rosses cross-appeal the dismissal of their damages claim and denial of their request for a 50 percent attorney fees enhancement. We affirm, though we decide the coverage issue in part on different grounds: because Mrs. Ross did not own her husband's car within the meaning of the policy and it was neither owned nor available for her regular use, the UIM exclusion did not apply.

At the time of the accident, Mrs. Ross was driving her husband Clyde's AMC Eagle because he had taken her Chevrolet Monte Carlo to Montana for service and repairs. Mr. Ross was living in Libby, Montana, because he had a job there, but he often spent weekends with Mrs. Ross, who lived and worked in Spokane. Both vehicles were insured by State Farm, but under separate policies because State Farm did not permit the Rosses to purchase one policy insuring both vehicles. The Washington policy insuring the Monte Carlo included UIM coverage, but the Montana policy insuring the Eagle did not.*fn1 State Farm denied coverage, contending Mrs. Ross's claims were not covered under either policy.

In January 1993 Mr. and Mrs. Ross commenced this action seeking a declaration of coverage, damages for violations of an insurer's duty of good faith under the Washington insurance code and the Consumer Protection Act (CPA), and attorney fees. The parties filed cross motions for summary judgment, and submitted two stipulated statements of facts. The court granted judgment to the Rosses on coverage, finding the Eagle was a covered temporary substitute car, and awarded them prevailing party costs of $120 and attorney fees of $13,194.50. The court granted judgment to State Farm on the claim for bad faith damages. Both parties appeal.


When reviewing an order of summary judgment, this court engages in the same inquiry as the trial court. RAP 9.12; Wilson v. Steinbach, 98 Wash. 2d 434, 437, 656 P.2d 1030 (1982). After considering all evidence and reasonable inferences in the light most favorable to the nonmoving party, summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Wilson, 98 Wash. 2d at 437.

Interpretation of an insurance policy is a matter of law, reviewed de novo. Mutual of Enumclaw Ins. Co. v. Jerome, 122 Wash. 2d 157, 160, 856 P.2d 1095 (1993). Insurance policies should be construed in a fair, reasonable and sensible manner, consistent with the construction that would be given the policy by the average person purchasing insurance. Id. at 160. The purpose of insurance is to insure; therefore, inclusionary clauses are construed liberally in favor of coverage and exclusionary clauses are construed narrowly. See McGreevy v. Oregon Mut. Ins. Co., 74 Wash. App. 858, 865, 876 P.2d 463 (1994), aff'd, 128 Wash. 2d 26, 904 P.2d 731 (1995); Prosser Comm'n Co. v. Guaranty Nat'l Ins. Co., 41 Wash. App. 425, 430, 700 P.2d 1188 (citing Phil Schroeder, Inc. v. Royal Globe Ins. Co., 99 Wash. 2d 65, 68-69, 659 P.2d 509 (1983), modified on reconsideration, 101 Wash. 2d 830, 683 P.2d 186 (1984)), review denied, 104 Wash. 2d 1016 (1985).

If language in an insurance contract is clear and unambiguous, the court may not modify the contract or create ambiguity where none exists. Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.' Util. Sys., 111 Wash. 2d 452, 456, 760 P.2d 337 (1988); Schelinski v. Midwest Mut. Ins. Co., 71 Wash. App. 783, 787, 863 P.2d 564 (1993). Language in an insurance policy that is reasonably susceptible to more than one commonsense interpretation is ambiguous. Jerome, 122 Wash. 2d at 161. Any ambiguity should be resolved so the doubtful provision in the contract will not unfairly devour the whole policy or relieve the insurer from liability fairly within the spirit of the policy. E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 Wash. 2d 901, 907, 726 P.2d 439 (1986); Riley v. Viking Ins. Co., 46 Wash. App. 828, 829, 733 P.2d 556, review denied, 108 Wash. 2d 1015 (1987).


The Washington State Farm policy covering the Monte Carlo, issued to Mrs. Ross at her Spokane address, defines the following relevant terms:

Non-Owned Car -- means a car not:

1. owned by,

2. registered in the name of, or

3. furnished or available for the regular or ...

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