Clark v. Alfa Ins. Corp.

390 So.3d 1021

Robert CLARK and Betty Haggard, Appellants

v.ALFA INSURANCE CORPORATION, Appellee

NO. 2022-CA-01251-COA

Court of Appeals of Mississippi.

07/23/2024

WINSTON COUNTY CIRCUIT COURT, HON. HENRY ROSS, JUDGE

ATTORNEYS FOR APPELLANTS: C. MAISON HEIDELBERG, Ridgeland, C. HUGH HATHORN, GINNY Y. DELIMAN

ATTORNEYS FOR APPELLEE: WALKER R. GIBSON, REBECCA S. BLUNDEN, Ridgeland

BEFORE BARNES, C.J., WESTBROOKS AND EMFINGER, JJ.

BARNES, C.J., FOR THE COURT:

¶1. This case stems from a motor vehicle accident where Betty Haggard collided with cows owned by Robert Clark in Winston County, Mississippi. Haggard suffered injuries and incurred damages from the collision; hence, she sued Clark and Alfa Insurance Corporation (Alfa), with whom Clark had his homeowner’s insurance policy. After discovery, Alfa moved for declaratory and summary judgment in the Circuit Court of Winston County, arguing that Alfa’s farming exclusion in Clark’s homeowner’s policy excluded liability coverage for Haggard’s bodily injury and personal property claims. The trial court agreed, finding Clark’s cattle made up an agricultural enterprise falling within the exclusion and granted Alfa declaratory and summary judgment.¹ Haggard and Clark (the Appellants) appealed.²

STATEMENT OF FACTS AND PROCEDURAL HISTORY

¶2. On November 6, 2018, Clark bought ten black heifers for $9,000,³ and they were delivered to Clark’s property the same day.⁴ That evening, unable to see the cattle in the . dark, Haggard’s vehicle collided with one or more of the heifers on Mississippi Highway 395, near Clark’s property in Winston County. Haggard suffered bodily injuries and incurred damages.

¶3. At the time of the accident, Clark had an Alfa homeowner’s insurance policy in force, insuring Clark against certain liability claims set forth in the policy. Coverage E insured Clark for personal liability, but Alfa had no obligation to defend Clark if the policy did not apply. Coverage F insured Clark for medical payments to others, including medical payments for bodily injuries to "a person (other than an insured) off the insured location, provided the injury … is caused by an animal owned by or in the care of an insured." The policy, however, excluded certain activities from Coverage E and F, specifically: "bodily injury or property damage arising out of business or farming engaged in by an insured …." (Emphasis added). The policy defined "farming" as "the operation of an agricultural or aquacultural enterprise or operation of a road-side stand." (Emphasis added).

¶4. In March 2020, Haggard sued Clark for negligence, seeking damages for bodily injuries. Haggard also sued Alfa, seeking a declaratory judgment that Alfa’s "policy applies to provide liability insurance … and that Alfa is obligated to defend and indemnify Mr. Clark against any loss arising from the accident …. " Haggard also sought "medical payments coverage" from Alfa. In May 2020, Alfa sent Clark a letter reserving its right to deny coverage for Haggard’s claim for damages, as well as to deny Clark a defense and indemnity under the policy’s farming exclusion; however, Alfa continued to provide Clark with defense counsel under the terms of the policy.

¶5. During discovery, Alfa requested from Clark details regarding his ownership of the cows. In its interrogatories, Alfa asked Clark about his general history of livestock ownership. Clark responded that he had never owned cattle or other farm animals until the purchase of the ten heifers. He has not bought any further cattle, only owning them and their offspring. Alfa also asked Clark to identify the purpose of the cattle and how they had been used from the purchase date to the current date (February 2021). The defendant responded: "At the time of the purchase, Clark did not have any specific plans for the cows, other than to purchase them in hopes of attempting to raise them with his son. The cows had calves this past fall. Clark has not sold any of the original cows, and he only recently sold five of their offspring."

¶6. Additionally, Alfa requested the production of Clark’s income tax returns from 2016 through 2020, a request Clark objected to as confidential and irrelevant.⁵ Ultimately, Clark provided a copy of his 2018 federal and state income tax returns, along with an affidavit authenticating his tax returns and responding to other interrogatories by Alfa.⁶

¶7. In Clark’s 2018 federal income tax return Form 1040, he filed a Schedule F, Profit or Loss From Farming, listing his "principal crop or activity" as "timberland," and affirming that he "materially participate[d]" in this operation during 2018. Additionally, Clark listed $9,000 as the "cost of livestock," and $9,000 as a loss in the next line of the schedule’s income section, which offset his farming income. There was no income shown for livestock sales. Further, Clark listed $1,624 in livestock feed as another deductible expense for his farming income.

¶8. After discovery, Alfa moved for summary judgment and/or declaratory judgment, arguing that the farming exclusion applied, and there was no genuine issue of material fact disputing that the cattle were part of Clark’s farming operation. Therefore, Alfa claimed it was entitled to a declaratory judgment that it was under no contractual obligation to defend the claim against Clark or provide him liability coverage. Both Clark and Haggard opposed Alfa’s motion.

¶9. In October 2022, the trial court granted summary judgment in favor of Alfa, finding no genuine issue of material fact concerning the applicability of the policy’s farming exclusion; accordingly, Alfa’s insurance coverage did not defend or indemnify Clark against Haggard’s claims as a matter of law. The trial court pointed to Clark’s 2018 tax form Schedule F, which reported farm expenses for the livestock and feed. The trial court also found, as a matter of law, there was no ambiguity in the term "enterprise" found in the policy’s farming exclusion, as Haggard and Clark had argued, which would require a jury determination of its meaning. The trial court rejected Haggard’s and Clark’s argument that because there was no evidence of income in 2018 from the livestock, the cows could not be considered an "agricultural enterprise." The court noted that the phrase "agricultural enterprise" was not defined in the policy.⁷ As far as the term "enterprise," the trial court found "to define enterprise in an economic sense" would be "extremely difficult and unwieldy because so many variables could apply."⁸

¶10. The trial court found Schedule F a "more concrete expression" of Clark’s intent to engage in an agricultural enterprise with the cattle than his response to Interrogatory 5, where he stated he had no specific plans for the cows other than "to raise them with his son." Further, the court found that Clark’s plans with his son could also be considered an agricultural enterprise. The court also noted Clark’s later interrogatory responses in June 2021, where he had recently sold five of the yearling calves born of the original ten cows. The court stated that "[e]very enterprise has to have a beginning" and found that Clark’s cattle endeavor, "although in its infancy, was an agricultural enterprise" falling within the farming exclusion.⁹ Even though Mississippi jurisprudence requires ambiguities be resolved in favor of the insured, thereby favoring insurance coverage, the court found Alfa’s farming exclusion "clear and unmistakable." Alfa had insured a homeowner’s risk, not a farm’s risk.

STANDARD OF REVIEW

¶11. An appellate court reviews the trial court’s grant or denial of summary judgment de novo. Karpinsky v. Am. Nat’l Ins. Co., 109 So. 3d 84, 88 (¶8) (Miss. 2013). The evidence is viewed in the light most favorable to the nonmoving party. Id. Summary judgment will be appropriate if the "pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Id. at (¶10) (quoting M.R.C.P. 56(c)). The movant carries the initial burden of persuading the trial court that no genuine issue of material fact exists and judgment as a matter of law is proper. Id. at (¶11).

ANALYSIS

¶12. The Appellants argue that the trial court erred in finding the policy’s farming exclusion applied, contending the court’s interpretation of the term "agricultural enterprise" as unambiguous was error, and arguing that a jury should determine the meaning. Further, the Appellants claim that on the date of the accident there existed a genuine issue of material fact about whether Clark intended to use the ten cows for an agricultural enterprise. We shall discuss each issue in turn.

I. Interpretation of the Farming Exclusion

¶13. The Appellants argue that there is ambiguity in the policy’s farming exclusion with the meaning of the phrase "agricultural enterprise," which is the definition of "farming." Further, they claim the trial court improperly construed the policy exclusion in favor of Alfa instead of the insured, Clark.

[1–8] ¶14. "The language and provisions of insurance policies are viewed as contracts and are subject to the same rules of interpretation as other contracts." Hayne v. The Drs. Co., 145 So. 3d 1175, 1180 (¶12) (Miss. 2014) (citing Hankins v. Maryland Cas. Co./Zurich Am. Ins. Co., 101 So. 3d 645, 653 (¶18) (Miss. 2012)). If the contract’s "language is clear and unambiguous, then the language of the policy must be interpreted as written." Id. The reviewing court "should look at the policy as a whole, consider all relevant portions together and, whenever possible, give operative effect to every provision in order to reach a reasonable overall result." Miss. Farm Bureau Cas. Ins. Co. v. Powell, 336 So. 3d 1079, 1084 (¶10) (Miss. 2022) (quoting J & W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 723 So. 2d 550, 552 (¶8) (Miss. 1998))....