Opinion
Case No. 00-0251-BH-C, (Consolidated 00-0280-BH-C)
April 24, 2001
JUDGMENT
On April 10, 2001, a jury returned a special verdict in this case, whereby the jury determined that the proximate cause of the loss in question was corrosion. The Court hereby confirms and adopts the juries verdict and enters JUDGMENT thereon.
JUDGMENT
It is ORDERED, ADJUDGED and DECREED, that JUDGMENT be entered in favor of Reliance Insurance Company, and against Cooper/T. Smith Corp. and Chipco.
ORDER
This matter is before the Court on the parties' cross-motions for judgment as a matter of law. The Court has considered the arguments of the parties. After reviewing all pertiment portions of the record, and for the reasons set forth below, Cooper/T. Smith's and Chipco's (collectively Cooper/T. Smith) motion for judgment as a matter of law is due to be DENIED and Reliance's motion for judgment as a matter of law is due to be GRANTED.
UNDISPUTED FACTS
1) Reliance issued an insurance policy insuring, among other things, a crane (known as the RG III) owned by Cooper/T. Smith.
2) The policy has two major sections entitled Section I and Section II.
3) Section I specifically insures against damage to the RG III.
4) Section I also has an exclusionary clause which excludes the RG III from coverage if the cause of damage is corrosion.
5) Section II of the policy generally insurers "all" of Cooper/T. Smith's personal property against damage. The RG III is personal property.
6) Section II does not have an exclusionary clause which specifically mentions "corrosion". However, Section IT of the policy does exclude coverage for damage resulting from "gradual deterioration".
7) During the policy period, the RG III was damaged when parts of the crane broke, dislodged, fell and collided with one another.
8) After a jury trial on the issue of causation, the jury determined that the proximate cause of the damage to the RG III was corrosion of certain bolts which failed.
9) The parties agree that there are no remaining disputes of material fact.
CONCLUSIONS OF LAW
The questions of law before the Court are whether the contract for insurance (the policy) covers the property in question, and, if so, whether there are any exclusions in the policy which apply in this instance. The Court determines as a matter of law, and the parties agree, that the policy in question is unambiguous. However, the parties disagree about what the policy unambiguously says regarding coverage of the RG III and any applicable exclusions.
As one might expect, "insurance companies are entitled to have their policy contracts enforced as written." Gregory v. Western World Ins. Co., 481 So.2d 878, 881 (Ala. 1985).
Absent public policy considerations that dictate a contrary result, courts will not, in order to create a new contract for the parties, ignore express provisions of a policy, including exclusionary clauses or terms limiting the insurance company's liability. Where there is no ambiguity in the terms of an insurance contract as written, express provisions of the policy, including any exclusions, cannot be defeated by making a new contract for the parties. Although insurance policies containing ambiguities are to be construed in favor of the insured, it is imperative that courts enforce unambiguous policies as written.Carpet Installation and Supplies of Glenco v. Alfa Mut. Ins. Co., 628 So.2d 560, 562 (Ala. 1993). Adhering to this principle, the Court cannot rewrite the policy to provide coverage when an applicable exclusion is found in the policy. Id.
SECTION I OF THE POLICY
In this case, it is undeniable that Section I specifically covers the RG III, and the cause of the damage (corrosion) is also specifically excluded under Section I. Thus, Cooper/T. Smith clearly cannot recover under Section I of the policy.
SECTION II OF THE POLICY
Cooper/T. Smith correctly points out that the RG III was also covered under Section II of the policy because Section II generally covered "all" personal property, and the RG III is personal property. However, Cooper/T. Smith does not believe any exclusions in the policy apply to exclude coverage under Section II, and the Court disagrees. This Court concludes that the cause of the damage to the RG III is excluded under the terms of the policy because there is an exclusion under Section II which applies in this instance, and to hold otherwise would do violence to the unambiguously expressed intentions of the parties.
THE "GRADUAL DETERIORATION" EXCLUSION OF SECTION II
According to Section II, subsection 8, subparagraph g, of the policy, damage caused by "gradual deterioration" is excluded from coverage. The meaning of the word "deterioration" is an issue of law to be determined by this Court. For the following reasons, this Court determines that the word "deterioration", as used in this policy, incorporates within its meaning the term "corrosion".
When interpreting an insurance policy, courts give the policy language the meaning that an ordinary layperson would give to the language. See Taylor v. Aetna Life Ins. Co., 54 F. Supp.2d 1076, 1088 (M.D. Ala. 1999); Liggans R.V. v. John Deere Ins. Co., 575 So.2d 567, 571 (Ala. 1991). To say it another way, this Court must apply the ordinary and usual meaning of the words used in the policy. Cook v. Aetna Ins. Co., 661 So.2d 1169, 1172 (Ala. 1995).
Oftentimes, when trying to determine the ordinary and usual meaning of words found in insurance policies, the Supreme Court of Alabama has resorted to a dictionary of the English language. See e.g. Carpet Installation and Supplies of Glenco v. Alifa Mutual Ins. Co., 628 So.2d 5-60, 561 (Ala. 1994); Cook v. Aetna Ins. Co., 661 So.2d 1169, 1172 (Ala. 1995); Davis v. State Farm Mut. Auto. Ins. Co., 583 So.2d 225 (Ala. 1991); Dutton v. State Farm Mut. Auto. Ins. Co., 383 So.2d 519, 521 (Ala. 1980). This Court finds it equally helpful in this case to refer to a dictionary to determine the ordinary and usual meaning of the words "corrosion" and "deterioration". The AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (4th Ed. 2000) defines the word "corrode" in these terms: "To impair steadily; deteriorate."4 The same dictionary defines "deteriorate" as follows: "To diminish or impair in quality, character, or value . . . . To grow worse; degenerate . . . . To weaken or disintegrate; decay."
This Court's review of the dictionary reveals that deterioration can occur in a variety of ways. For instance, the following is an incomplete list of words which are defined by the term "deteriorate": "atrophy", "degrade", "erode", "rust" and "corrode". AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (4th Ed. 2000). Thus, it is the determination of this Court that "corrosion" is one of many ways in which "deterioration" may occur. In other words, if corrosion has occurred, then deterioration has occurred, but the converse is not necessarily true. In the instant case, the jury determined that corrosion caused the injury to the RG III. Corrosion is a form of deterioration, and deterioration is an excluded cause under Section II of the policy. Therefore, under Section II of the policy, the RG III is covered, but the cause of the damage in this case is excluded under Section II.5
The Court not only determines that this is the meaning an ordinary layperson would attribute to the words of the contract, the Court further finds that this was the actual intent of the parties, because to hold otherwise would ignore the unambiguously expressed intention of the parties to exclude coverage of the RG III if corrosion caused the loss. Although the insurance policy in question is divided into sections, it is clearly one complete contract and this Court must view it in its entirety and interpret it from its four corners. Taylor v. Aetna Life Ins. Co., 54 F. Supp.2d 1076, 1088 (M.D. Ala. 1999). It is the responsibility of this Court, if possible, to interpret the entire contract in such a way that each part has meaning and operation consistent with the other parts. See Id.; See also Ligans R.V. Center v. John Deere Ins. Co., 575 So.2d 567, 569 (Ala. 1991).
Cooper/T. Smith argues the contract specifically provides coverage for the RG III under Section I, and corrosion is an excluded cause of loss under Section I. Additionally, according to Cooper/T. Smith, coverage is generally provided again for the RG III under section II, but under this section there is no exclusion for corrosion. In other words, Cooper/T. Smith agrees that the parties specifically intended, for the RG III to be covered under Section I and the parties further intended that corrosion would be an excluded cause of loss. However, Cooper/T. Smith believes that the intention of the parties, regarding the corrosion exclusion which is specifically applicable to the RG III, is obliterated by Section II of the contract which covers the RG III in general terms but does not contain an exclusion which specifically mentions corrosion. Such an interpretation of the contract completely eviscerates the corrosion exclusion of Section I.6 If the contract can be reasonably interpreted to avoid such a result, the Court must apply the more consistent interpretation. See Taylor v. Aetna Life Ins. Co., 54 F. Supp.2d 1076, 1088 (M.D. Ala. 1999); Ligans R.V. Center v. John Deere Ins. Co., 575 So.2d 567, 569 (Ala. 1991).
As the policy relates to the RG III, the Court interprets the policy as follows: 1) Section I is written in more specific language and Section II is written in broader, more general, language; 2) the parties specifically intended to provide for coverage of the RG III under Section I, and the parties specifically intended to exclude coverage for the RG III if the loss was caused by the specific form of deterioration known as "corrosion"; 3) although Section II of the policy also generally covers the RG III, (along with "all" other personal property owned by Cooper/T. Smith), and Section II does not specifically mention an exclusion for "corrosion", it does exclude coverage when the cause of the loss is gradual "deterioration"; 4) the average lay person would understand "corrosion" to be included within the meaning of the broader term "deterioration"; 5) the parties in this instance actually intended for "corrosion" to be included within the meaning of "deterioration". Thus, the cause of this loss, corrosion, is excluded under both sections of the policy.
The Court's interpretation of this policy not only gives the words of the policy the same meaning an ordinary layperson would attribute to them, but is also gives force and meaningful operation to all aspects of the policy and does no violence to the unambiguous intentions of the parties.
CONCLUSION
After a full and proper review of the record, and for the reasons set forth above, Cooper/T. Smith's motion for judgment as a matter of law is due to be and is hereby DENIED, and Reliance's motion for judgment as a matter of law is due to be and is hereby GRANTED.