Hurst v. Nationwide Mutual Insurance Co ( 2020 )


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  •                                                                                   FILED
    United States Court of Appeals
    UNITED STATES COURT OF APPEALS                          Tenth Circuit
    FOR THE TENTH CIRCUIT                             June 4, 2020
    _________________________________
    Christopher M. Wolpert
    Clerk of Court
    SARA E. HURST; LAW OFFICE OF
    SARA WILLIAMS HURST, LLC,
    Plaintiffs - Appellants,
    v.                                                         No. 19-8040
    (D.C. No. 2:18-CV-00081-NDF)
    NATIONWIDE MUTUAL INSURANCE                                  (D. Wyo.)
    COMPANY; ALLIED INSURANCE
    COMPANY OF AMERICA,
    Defendants - Appellees.
    _________________________________
    ORDER AND JUDGMENT*
    _________________________________
    Before TYMKOVICH, Chief Judge, BACHARACH, and CARSON, Circuit Judges.
    _________________________________
    This case involves a dispute over insurance coverage. Plaintiffs sued
    Defendants Nationwide Mutual Insurance Company and Allied Insurance Company
    of America (collectively, Nationwide) under various theories after Nationwide
    declined uninsured motorist (UM) coverage to Plaintiff Sara Hurst (Ms. Hurst) for
    injuries she sustained in a tragic collision. The district court granted summary
    judgment to Nationwide. Plaintiffs appeal.
    *
    This order and judgment is not binding precedent, except under the doctrines
    of law of the case, res judicata, and collateral estoppel. It may be cited, however, for
    its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
    Our jurisdiction arises under 28 U.S.C. § 1291. We address whether an
    insurance policy (the Policy) issued to Plaintiff Law Office of Sara Williams Hurst,
    LLC (Hurst LLC) provides UM benefits to Ms. Hurst individually. Because the
    Policy did not list Ms. Hurst as a named insured and because she was not otherwise
    occupying a vehicle covered by the Policy at the time of the collision, we affirm.
    I.
    On May 31, 2014, as Ms. Hurst and her husband rode bicycles on the shoulder
    of a roadway in Sheridan, Wyoming, an uninsured motorist veered off the road and
    hit them. The impact seriously injured Ms. Hurst and killed her husband.
    About a month before the accident, Nationwide issued a commercial auto
    policy covering a 2007 Lexus owned by Hurst LLC. Following the accident, Ms.
    Hurst submitted a claim to Nationwide under the commercial auto policy. She
    asserted it provided her, as an individual, with UM coverage.1 Nationwide denied her
    claim. In Nationwide’s view, the policy provided no coverage because Ms. Hurst
    was not in the 2007 Lexus when the uninsured motorist struck her.2 Further, the
    commercial policy did not list Ms. Hurst as an individually named insured.
    1
    Ms. Hurst also claimed UM coverage against her personal auto insurer,
    MetLife, whose policy did in fact list Ms. Hurst, as well as her husband, as
    individually named insureds. Evidently, because her personal policy’s UM coverage
    was insufficient, she tried to “stack” her law firm’s commercial policy on top of her
    personal UM coverage by filing a claim with Nationwide.
    2
    Ms. Hurst suffered a concussion, collapsed lung, pulmonary contusion,
    internal bleeding, a thoracic fracture, and fractures to her leg and ribs. Her injuries
    required several surgeries and physical therapy.
    2
    After Nationwide denied her claim, Ms. Hurst asked her broker, David Alden,
    to add her to the Policy as an individually named insured going forward. Nationwide
    refused Mr. Alden’s request, however, citing its normal practice of not naming
    individuals as insureds on commercial policies. But, twenty-six days before the
    Policy expired, Nationwide ultimately gave in and added Ms. Hurst to the Policy.
    Mr. Alden told Ms. Hurst that Nationwide “is going to add you to the policy and pick
    up future uninsured and UM pedestrian claims.”
    After the revision, Ms. Hurst sued Nationwide for denying her claim. She
    argued that by adding her to the Policy during the same coverage period in which the
    May 2014 accident occurred, Nationwide created backdated coverage. Ms. Hurst
    claimed the Policy’s “liberalization clause” expanded coverage to the May 2014
    accident. Alternatively, she sought reformation of the Policy because she and Mr.
    Alden had intended for the Policy to provide her with UM coverage regardless of
    whether she was occupying the covered 2007 Lexus.
    Both parties moved for summary judgment. The district court granted
    summary judgment to Nationwide, holding that the Policy’s liberalization clause did
    not retroactively create coverage for the May 2014 accident. The court also declined
    to reform the Policy because Ms. Hurst had failed to present evidence supporting
    such relief.
    Plaintiffs now appeal. We review the district court’s judgment de novo.
    Carpenter v. Boeing Co., 
    456 F.3d 1183
    , 1192 (10th Cir. 2006).
    3
    II.
    This appeal requires interpretation of a Wyoming insurance policy. Because
    Ms. Hurst sued in federal court based on diversity jurisdiction, we “must ascertain
    and apply state law to reach the result the Wyoming Supreme Court would reach if
    faced with the same question.” Cooperman v. David, 
    214 F.3d 1162
    , 1164 (10th Cir.
    2000).
    Under Wyoming law, the rules of contract interpretation apply to insurance
    policies. Hurst v. Metro. Prop. & Cas. Ins. Co., 
    401 P.3d 891
    , 895 (Wyo. 2017).
    And as with ordinary contracts, we interpret unambiguous insurance policies as a
    matter of law.
    Id. In interpreting
    an unambiguous policy, we focus on “the parties’
    intent from the contract language alone . . . although it may consider the context in
    which the contract was written, including the subject matter, the purpose of the
    contract, and the circumstances surrounding its making.”
    Id. (quoting Fox
    v.
    Wheeler Elec., Inc., 
    169 P.3d 875
    , 878 (Wyo. 2007)). The words used in insurance
    policies “are given the plain meaning that a reasonable person, in the position of the
    insured, understands them to mean.”
    Id. (quoting Doctors’
    Co. v. Ins. Corp. of Am.,
    
    864 P.2d 1018
    , 1023 (Wyo. 1993)).
    But because “insurance policies represent contracts of adhesion where the
    insured has little or no bargaining power to vary the terms, if the language is
    ambiguous, the policy is strictly construed against the insurer.” N. Fork Land &
    Cattle, LLLP v. First Am. Title Ins. Co., 
    362 P.3d 341
    , 346 (Wyo. 2015) (quoting
    Doctors’ 
    Co., 864 P.2d at 1024
    ). A court will find an ambiguity in the language of
    4
    an insurance policy only if the language is capable of more than one reasonable
    interpretation.
    Id. III. We
    begin by interpreting the Policy language. Nationwide issued the Policy to
    Hurst LLC to provide coverage for a 2007 Lexus the LLC owned. The Policy’s
    Business Auto Declarations page lists Hurst LLC, but not Ms. Hurst, as the named
    insured and has effective coverage dates of April 7, 2014 through April 7, 2015.
    Under the Policy, if the named insured is an LLC, the UM provision provides
    coverage for “[a]nyone occupying a covered auto or a temporary substitute for a
    covered auto.” App., Vol. I at 96–97 (internal quotation marks omitted). Similarly,
    the Policy’s medical payments provision provides “reasonable expenses” and
    “necessary medical and funeral services” to either the named insured or “[a]nyone
    else occupying a covered auto or a temporary substitute for a covered auto.”
    Id. at 92
    (internal quotation marks omitted). Ms. Hurst concedes she was neither a named
    insured, nor occupying the 2007 Lexus or a substitute auto at the time of the May
    2014 accident.
    Ms. Hurst, therefore, cannot claim coverage under the Policy as it existed on
    the date of the accident. Indeed, the Policy’s language as of that date unambiguously
    did not provide her with personal coverage. She instead claims coverage under either
    the liberalization clause of the Policy or through reformation of the Policy.
    5
    A.
    As to the liberalization clause, Plaintiffs contend that because Nationwide
    added Ms. Hurst to the Policy as an individually named insured—less than a month
    before the policy’s expiration and more than 9 months after the accident—it
    retroactively triggered coverage for the May 2014 accident. The liberalization clause
    states that revisions to the policy apply immediately:
    If we adopt any revision that would broaden coverage under this policy
    without additional premium within 60 days prior to or during the policy
    period, the broadened coverage will immediately apply to this policy.
    App., Vol. I at 91 (emphasis added). The parties agree that this policy language
    applied to Ms. Hurst, but disagree as to whether it provided retroactive or prospective
    coverage to her, as a newly named insured. We conclude that the language provided
    only prospective coverage.
    Wyoming courts give the words used in insurance policies their plain meaning,
    as “a reasonable insured would understand” them. N. Fork Land & Cattle, 
    LLLP, 362 P.3d at 346
    . The plain meaning of the word “immediately” includes “without
    any delay or lapse of time; instantly, directly, straightaway; at once” (Oxford English
    Dictionary), and “without interval of time” (Merriam-Webster). See also Moe v.
    State, 
    123 P.3d 148
    , 152 (Wyo. 2005) (“A dictionary definition of the word
    ‘immediately’ is ‘without interval of time; straightway.’”). By using the word
    “immediately,” the liberalization clause unambiguously intended for the Policy
    revision to take effect “instantly” or “at once.” Neither the word “immediately,” nor
    the liberalization clause as a whole, suggest any retroactive or backdated effect. If
    6
    broadened coverage applied retroactively to accidents occurring before the policy
    revision took effect, then the clause would say so. But it does not. Instead, the
    clause’s only reasonable interpretation is that the broadened coverage applied
    instantly for the rest of the Policy period.
    We therefore reject Ms. Hurst’s argument that the liberalization clause
    retroactively created coverage for the May 2014 accident. Moreover, because Ms.
    Hurst was neither a named insured, nor occupying the 2007 Lexus when the
    uninsured motorist hit her, the Policy provides no UM or medical payment benefits
    for the May 2014 accident. We thus affirm the district court’s grant of summary
    judgment on this ground.
    B.
    Plaintiffs next claim the district court erred by not reforming the Policy
    because Ms. Hurst and Mr. Alden had intended for the Policy’s UM coverage to
    apply regardless of whether Ms. Hurst occupied the 2007 Lexus.3 Wyoming law
    permits courts to reform contracts under the equitable “maxim that equity treats that
    as done which ought to have been done.” Hutchins v. Payless Auto Sales, Inc., 
    38 P.3d 1057
    , 1063 (Wyo. 2002) (internal quotation marks and citation omitted).
    3
    The parties dispute whether Mr. Alden acted as Nationwide’s agent—
    specifically whether Plaintiff may impute Mr. Alden’s knowledge to Nationwide.
    Nationwide appears to acknowledge that Mr. Alden “was Nationwide’s agent for
    purposes of selling insurance policies.” The district court, however, did not address
    any agency issue in its summary judgment order. But even assuming we can impute
    Mr. Alden’s knowledge to Nationwide, Plaintiffs failed to raise a fact issue on their
    reformation claim.
    7
    Reformation is proper where clear and convincing evidence establishes: “(1) a
    meeting of the minds—a mutual understanding between the parties—prior to the time
    a writing is entered into, (2) a written contract, or agreement, or deed (3) which does
    not conform to the understanding, by reason of mutual mistake.”
    Id. The availability
    of the remedy depends “upon two particulars: (1) that the
    mistake occurred in the drafting of the instrument, rather than in reaching the
    antecedent agreement; and (2) that the mistake was reciprocal and common to both
    parties with each being under the same misconception as to the terms of the written
    instrument.” W.N. McMurry Const. Co. v. Cmty. First Ins., Inc. Wyoming, 
    160 P.3d 71
    , 78 (Wyo. 2007) (internal quotation marks and citations omitted). Moreover, the
    “required mutuality of mistake can only be found if the parties had identical
    intentions as to the material terms of the policy.” Ohio Cas. Ins. Co. v. W.N.
    McMurry Const. Co., 
    230 P.3d 312
    , 321 (Wyo. 2010).
    Plaintiffs cite Mr. Alden’s testimony to show that both she and Mr. Alden
    intended for the Policy to provide her UM coverage even if she did not occupy the
    2007 Lexus. Mr. Alden testified:
    Q      When you procured this policy, did you intend for Sara Hurst to
    be covered for uninsured motorist benefits under this policy
    regardless of whether she was occupying a covered auto?
    A.     I procured uninsured motorist for Sara Hurst individually to be
    covered when she was hit by an uninsured motorist. I did not
    ever – the pedestrian part never came into play. I procure
    uninsured motorist for people who are injured in an automobile
    accident by somebody who doesn’t have liability insurance.
    Q      Is the answer to my question yes?
    8
    A      Yes.
    App., Vol. II at 84. And by declaration, Ms. Hurst stated she “intended and
    understood that [she] purchased complete individual uninsured motorist coverage.”
    Id. at 88.
    Mr. Alden also testified, however, that Ms. Hurst “bought a Lexis in the
    name of her law firm, or the LLC” so he put the Policy “with her LLC business
    owner’s policy.”
    Id. at 78.
    Indeed, Mr. Alden never contemplated coverage under
    the Policy for the type of accident that occurred here—a Saturday-morning bicycle
    accident—as he testified that the “pedestrian part never came into play.”
    Id. at 84.
    Moreover, for the Policy to cover Ms. Hurst “regardless of whether she was
    occupying a covered auto”—i.e., for the type of accident that occurred here—she
    would have to have been a named insured on the Policy. But Ms. Hurst presents no
    evidence (much less clear and convincing evidence) showing that she and Mr. Alden
    shared an understanding that Ms. Hurst be an individually named insured, nor that the
    Policy inadvertently failed to include coverage for the type of accident in this case.
    
    Hutchins, 38 P.3d at 1063
    (stating that reformation requires clear and convincing
    evidence of a “mutual understanding” between the parties). Thus, we conclude that
    Mr. Alden’s testimony does not show a meeting of the minds about whether the
    Policy would cover Ms. Hurst for the injuries she sustained in the bicycling accident.
    Ms. Hurst’s own declaration fares no better. Ms. Hurst merely stated she
    wanted “complete individual uninsured motorist coverage.” App., Vol. II at 88. She
    offered no evidence that she understood or expected to be individually named on the
    9
    Policy or that she and Mr. Alden discussed specifics regarding the scope of UM
    coverage. Instead, the record reveals that Ms. Hurst contacted Mr. Alden to provide
    “full coverage” for a vehicle bought by her law firm and that Mr. Alden procured the
    policy with “Hurst LLC” as the named insured. Small v. King, 
    915 P.2d 1192
    , 1194
    (Wyo. 1996) (concluding that a full coverage request “is not a specific inquiry about
    a specific type of coverage”). Plaintiffs fail to demonstrate why we should reform
    the Policy to provide coverage for personal activities (bicycling) unrelated to her law
    firm or the 2007 Lexus the Policy covered.
    Because Plaintiffs present no evidence showing a “mutual understanding
    between the parties,” no fact issue exists supporting reformation, and we affirm the
    district court’s grant of summary judgment to Nationwide. Ohio Cas. Ins. 
    Co., 230 P.3d at 320
    , 321.
    IV.
    Finally, Plaintiffs argue that the district court erred by granting summary
    judgment to Nationwide on Plaintiffs’ statutory attorneys’ fees claim. Wyoming law
    authorizes an award of attorneys’ fees when an insurer “refuses to pay the full
    amount of a loss covered by the policy and that the refusal is unreasonable or without
    cause.” Wyo. Stat. § 26-15-124(c). We, as well as the Wyoming Supreme Court,
    recognize the district court’s discretion to award fees and interest under the statute.
    Stewart Title Guar. Co. v. Tilden, 
    181 P.3d 94
    , 102 (Wyo. 2008) (“Use of the word
    ‘may’ suggests that the award of both attorney’s fees and the award of interest are
    discretionary.”); Bruegger v. National Old Lines Ins. Co., 
    529 F.2d 869
    , 870 (10th
    10
    Cir. 1976) (“[W]e . . . agree with the court’s generalization that awards of attorney
    fees and prejudgment interest under Wyoming case and statutory law are matters
    directed to the court’s discretion.”).
    The district court determined that “Plaintiffs’ claims for relief required either
    reformation of the contract, or for the Court to find that the Liberalization clause
    provided retroactive coverage.” And because Plaintiffs failed to show that coverage
    existed for the May 2014 accident, the district court found Nationwide reasonably
    denied Ms. Hurst’s insurance claim. 
    See supra
    Part III(B). We agree that
    Nationwide reasonably denied Plaintiffs’ claim. Thus, we affirm the district court’s
    grant of summary judgment to Nationwide on Plaintiffs’ contingent claim for
    statutory attorneys’ fees.
    AFFIRMED.
    Entered for the Court
    Joel M. Carson III
    Circuit Judge
    11