Lanningham v. Farm Bureau Mut. Ins. Co. of Idaho

1

JEREMY LANNINGHAM, an individual, and personal representative for the ESTATE OF JAY LANNINGHAM; JAMIE LANNINGHAM, an individual, and personal representative for the ESTATE OF JAY LANNINGHAM, Plaintiffs-Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF IDAHO, a corporation, Defendants-Respondents, and JOHN DOE CORPORATIONS I-X, unknown business entities, Defendants.

No. 50441

Supreme Court of Idaho

July 3, 2024

Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Samuel A. Hoagland, District Judge.

The judgment of the district court is affirmed.

Hepworth Law Offices, Boise, for Appellants, Jeremy Lanningham; Jamie Lanningham; and Estate of Jay Lanningham. J. Grady Hepworth argued.

Hawley Troxell Ennis &Hawley LLP, Boise, for Respondent, Farm Bureau Mutual Insurance Company of Idaho. Benjamin C. Ritchie argued.

John E. Rumel and Erica S. Phillips for Amicus Idaho Trial Lawyers Association Foundation.

MEYER JUSTICE

This case concerns an insurance company's denial of a claim for underinsured motorist (UIM) coverage by the adult heirs of Jay Lanningham. Lanningham died in a tragic car accident caused by an underinsured motorist.^[1] He had an insurance policy with Farm Bureau Mutual Insurance Company of Idaho that included UIM coverage (the Policy); however, Farm Bureau denied Jeremy's and Jamie's claim for UIM benefits for their father's wrongful death. On cross-motions for summary judgment, the district court granted Farm Bureau's motion, determining that Farm Bureau rightfully denied payment to Jamie and Jeremy because they did not qualify as insured persons under the Policy since they did not reside with Lanningham. We affirm the district court's judgment in favor of Farm Bureau.

I. Factual and Procedural Background

The material facts are undisputed by the parties. On June 18, 2017, Lanningham was driving his Suburban near McCammon, Idaho. His fifteen-year-old granddaughter, Payton, was riding in the passenger seat with him. At the same time, a vehicle driven by fifteen-year-old Eric Neibaur was traveling toward Lanningham's vehicle. Neibaur failed to maintain his lane of travel and suddenly crossed the center lane, causing a head-on collision with Lanningham's vehicle. Lanningham, Neibaur, and Neibaur's passenger, his sister, were killed instantly. Payton survived the collision but was seriously injured.

After the accident, Neibaur's parents agreed to split their Liberty Mutual liability coverage policy limit of $100,000, which paid $50,000 to them, apparently pertaining to the death of their daughter, and $25,000 each to Lanningham's sons, Jamie and Jeremy. Lanningham's Farm Bureau policy included UIM coverage with limits of $100,000 per person and a maximum of $300,000 per occurrence. The Policy had various coverages, including Medical Payment Coverage and Collision Rollover Coverage. Lanningham was the only named insured on the Policy.

On Payton's behalf, Jamie and Jeremy submitted a UIM claim to Farm Bureau requesting the policy per person limit of $100,000. Jamie and Jeremy also each submitted personal UIM claims of $100,000 for their father's wrongful death. Subsequently, Farm Bureau sent a $100,000 check for Payton's UIM claim. Farm Bureau denied payment to Jamie and Jeremy for the wrongful death of Lanningham because they did not live with their father and therefore did not qualify as insureds under the terms of the Policy. After Farm Bureau denied Jamie's and Jeremy's personal claims, they submitted a claim in their capacity as personal representatives of Lanningham's Estate. They asserted that Lanningham was entitled to recover under the insurance contract and, therefore, as Lanningham's heirs, Jamie and Jeremy succeeded to Lanningham's contract rights against Farm Bureau. Farm Bureau denied that claim as well.

Subsequently, Jamie and Jeremy filed this lawsuit against Farm Bureau seeking, first, a declaratory judgment "that the provisions and/or exclusions relied upon by Farm Bureau to deny underinsured motorist coverage to the Plaintiffs, to the extent such provisions and/or exclusions actually exist, violate the express public policy of the State of Idaho," and second, damages for breach of the insurance contract. Both parties filed motions for summary judgment. The parties stipulated to the underlying facts and agreed that the claims presented exclusively legal questions for the district court to resolve. After oral argument, the district court granted Farm Bureau's motion for summary judgment and denied the Estate's, as well as Jamie's and Jeremy's, motion for summary judgment.

Ruling in favor of Farm Bureau, the district court stated that Jamie and Jeremy are not "persons insured" under the policy:

[Jamie and Jeremy] are in a far different situation than those insured persons the UIM statute is meant to protect. The language on which [Jamie and Jeremy] rely from Idaho Code § 41-2502(1) plainly applies to the protection of "persons insured." [Lanningham's] adult sons who do not reside with him are not "persons insured" under the Policy.

(Footnote omitted). The district court held that the Policy is consistent with the public policy of the state of Idaho as stated in Idaho Code section 41-2502 which governs underinsured motorist coverage:

[Jamie and Jeremy] criticize [Farm Bureau Mut. Ins. Co. of Idaho v. Eisenman, 153 Idaho 549, 286 P.3d 185 (2012)] for not addressing the UIM requirements set forth in [s]ection 41-2502(1). However, the plain language of this statute parallels the language in the Farm Bureau Policy at issue in that and this case. Both limit the application and protection to "persons insured" under a policy "who are legally entitled to recover damages from owners or operators of uninsured and underinsured motor vehicles." I.C. § 41-2502(1).

Jamie and Jeremy timely appealed. The Idaho Trial Lawyers Association (the amicus) filed an amicus curiae brief in support of Jamie and Jeremy.

II. Standards of Review

When this Court reviews a trial court's ruling on a motion for summary judgment, we apply the same standard used by the trial court originally ruling on the motion. Krinitt v. Idaho Dep't of Fish &Game, 162 Idaho 425, 428, 398 P.3d 158, 161 (2017) (citation omitted). Pursuant to the Idaho Rules of Civil Procedure, a "court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). "If the evidence reveals no disputed issues of material fact, what remains is a question of law, over which this Court exercises free review." Krinitt, 162 Idaho at 428-29, 398 P.3d at 161-62 (citation omitted). The standard of review does not change if the parties have filed cross-motions for summary judgment. Tiller White, LLC v. Canyon Outdoor Media, LLC, 160 Idaho 417, 419, 374 P.3d 580, 582 (2016) (citing Shawver v. Huckleberry Est., L.L.C., 140 Idaho 354, 360, 93 P.3d 685, 691 (2004)). "This Court reviews questions of law de novo." Farm Bureau Mut. Ins. Co. of Idaho v. Cook, 163 Idaho 455, 458, 414 P.3d 1194, 1197 (2018) (italics omitted).

III. Analysis

On appeal, Jamie's and Jeremy's position is twofold. First, as their father's heirs, they assert a claim for UIM benefits for Lanningham's wrongful death. Second, they assert that Lanningham was indisputably an insured, and as such, the Estate may step into Lanningham's shoes to collect UIM benefits for his wrongful death, just as Lanningham's heirs would against a third-party insured. Under either theory, their arguments lack merit.

A. The plain language of Lanningham's Policy precludes non-insureds from recovering UIM benefits.

"Insurance policies are contracts, and 'the parties' rights and remedies are primarily established within the four corners of the policy.'" Andrae v. Idaho Cntys. Risk Mgmt. Program Underwriters, 145 Idaho 33, 36, 175 P.3d 195, 198 (2007) (quoting Featherston ex rel. Featherston v. Allstate Ins. Co., 125 Idaho 840, 843, 875 P.2d 937, 940 (1994)). Interpretation of an insurance contract is a question of law. Fisher v. Garrison Prop. &Cas. Ins. Co., 162 Idaho 149, 153, 395 P.3d 368, 372 (2017). This Court applies the general rules of contract law when interpreting insurance policies subject to certain canons of construction. Clark v. Prudential Prop. &Cas. Ins. Co., 138 Idaho 538, 540, 66 P.3d 242, 244 (2003). This Court begins with the plain language of the insurance policy to determine whether there is an ambiguity. Progressive Nw. Ins. Co. v. Lautenschlager, 168 Idaho 841, 845, 488 P.3d 509, 513 (2021) (citation omitted). To determine whether an ambiguity exists, "the Court must construe the policy 'as a whole, not by an isolated phrase.'" Id. (quoting Cascade Auto Glass, Inc. v. Idaho Farm Bureau Ins. Co., 141 Idaho 660, 663, 115 P.3d 751, 754 (2005)). "The language of an insurance policy 'is ambiguous if it is subject to conflicting but reasonable interpretations.'" Id. "If the language used is unambiguous, this Court gives effect to the plain and ordinary meaning of the words used in the policy." Id.

The parties do not argue that the UIM provision is unclear. Lanningham's Policy included UIM coverage of $100,000 per person with a maximum of $300,000 per occurrence. Coverage P1 of the Policy, the UIM provision, states:

We will pay damages which an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by an insured and caused by an occurrence. The owner's or operator's liability for these damages must arise from the ownership maintenance, or use of the underinsured motor vehicle. ^[2]

"Underinsured motor vehicle" is defined in the Policy as

a motor vehicle

...