NATIONWIDE MUTUAL FIRE INSURANCE COMPANY v. Tufts

DAVIS, Judge. Nationwide Mutual Fire Insurance Company (Nationwide or appellant) appeals from the judgment of the Circuit Court for Howard County (Kane, J.) denying its motion for summary judgment, motions for judgment, and motion for judgment notwithstanding the verdict. Appellees Stephen C. Tufts and Sandra Tufts filed suit against Nationwide to recover $24,-244.35 in stipulated damages under a homeowner’s “golden blanket” insurance policy for the value of their barn which had been destroyed by fire. The court denied Nationwide’s motion for summary judgment, motions for judgment, and motion for judgment notwithstanding the verdict and entered judgment in favor of appellees.

On January 2, 1997, appellant timely noted this appeal and raised one question for our review, which we restate below: Did the trial court err when it denied appellant’s motion for summary judgment, motions for judgment, and motion for judgment notwithstanding the verdict when the insurance policy excluded coverage of other structures used for “business purposes,” and the barn was periodically used for the storage of business property? We answer the question in the negative and affirm the judgment of the trial court. FACTS Appellees owned a “golden blanket” homeowner’s insurance policy from appellant. On November 8,1994, a fire destroyed appellees’ barn and its contents.

At the time of the fire, appellees stored both personal property and business property in the barn. The business property included tools, equipment, and materials from appellees’ business, Dayton Drywall Com ¹⁸⁴ pany, Inc. (Dayton Drywall). Appellees made claims for both types of property with their respective insurers. Aetna Insurance Company (Aetna), the insurer of appellees’ business, paid its $10,000 limit for the business property damaged and destroyed in the fire.

Appellant made payments for the personal property but denied coverage for the barn structure based on an exclusion contained in the homeowner’s policy. The coverage exclusion, under Section I — Property Coverages, Coverage B — Other Structures, provides: We do not cover other structures: a. used in whole or in part for business purposes. The policy defines “business” as follows: “ ‘Business ’ includes trade, profession, or occupation. An office, school, studio, barber or beauty shop of an insured on the residence premises is not a business if its occupancy is described in the policy.” The terms “business purposes” and “purpose” are not defined in the policy.

Appellant filed a motion for summary judgment on March 5, 1996, asserting that the undisputed facts and the clear language of the policy entitled it to judgment as a matter of law. Appellees countered, arguing that the policy provision in question was ambiguous giving rise to different permissible inferences. As such, appellees contended that there was a question as to whether appellees’ storage of business property in the barn constituted use for “business purposes.” The trial court, by memorandum and order, dated April 8, 1996, denied appellant’s motion for summary judgment and the case proceeded to trial on November 4,1996. During appellees’ case, Mr. Tufts testified that, at the time of the fire, he was using the barn partly for storage of business equipment and supplies, as he did on occasion.

Ms. Tufts testified that, at the time of the fire, she and her husband were essentially self-employed, working for Dayton Drywall, which did commercial drywall work in Maryland, Northern Virginia, and the District of Columbia. Ms. Tufts testified that ninety percent of the barn was used for storage of personal property, but the other ten percent was occupied ¹⁸⁵ by left-over business supplies and tools. She claimed that the business tools and equipment that were in the barn at the time of the fire were a result of the business’s impending failure. Mr. Tufts stated that the barn was never used to construct anything used for the company’s jobs and that no business was conducted out of the barn.

He testified that the company did use the barn to store some business tools and equipment, but only between jobs. Additionally, he verified that he had made a claim with Aetna for the business property that had been destroyed by the fire in the barn. At the end of appellees’ case, appellant made a motion for judgment, arguing that the evidence and the language of the policy entitled appellant to judgment as a matter of law. The trial court reserved ruling on the motion.

Appellant’s case began with the testimony of Mark Pilch, the Aetna claims representative who handled appellees’ claim for lost business property. Mr. Pilch testified that Aetna paid the claim because the tools and equipment damaged or destroyed in the fire were owned by the appellees’ business, Dayton Drywall. Next, James Reilly, appellant’s claims representative, testified regarding the basis for the denial of appellees’ claim for the barn structure. He stated that Nationwide believed that the storage of business property in the barn constituted use for business purposes, and thus, appellant denied the claim.

At the conclusion of all the evidence, appellant renewed its motion for judgment and again the court reserved its ruling. The case was submitted to the jury, which found that appellees were not using the barn, in whole or in part, for business purposes. The court denied appellant’s subsequent motion for judgment notwithstanding the verdict and this appeal followed. DISCUSSION I Appellant argues that the trial court erred when it denied appellant’s motion for summary judgment, motions for judg ¹⁸⁶ ment, and motion for judgment notwithstanding the verdict.

As review of the motions requires us to apply different standards of review, 1 we discuss the motions separately. Motion for Summary Judgment The standard for appellate review of a trial court’s denial of a motion for summary judgment requires us to determine whether the trial court was legally correct. Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 590-91 , 578 A.2d 1202 (1990); Barnett v. Sara Lee Corp., 97 Md.App. 140, 146 , 627 A.2d 86 , cert. denied, 332 Md. 702 , 632 A.2d 1207 (1993). In so doing, we review the same material from the record and decide the same legal issues as the circuit court.

Nationwide Mut. Ins. Co. v. Scherr, 101 Md.App. 690, 695 , 647 A.2d 1297 (1994), cert. denied, Scherr v. Nationwide, 337 Md. 214 , 652 A.2d 670 (1995). Motions for summary judgment are governed by Maryland Rule 2-501, which provides that, “[t]he court shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” Maryland Rule 2-501(e) (1997).

See also Bagwell v. Peninsula Regional Medical Ctr., 106 Md.App. 470, 488 , 665 A.2d 297 (1995) (holding trial court to same requirements as Md.Rule 2-501). In making its determination, the circuit court must view the facts and all inferences from those facts in the light most favorable to the non-moving party. Brown v. Wheeler, 109 Md.App. 710, 717 , 675 A.2d 1032 (1996). When the underlying facts are undisputed, but produce more than one permissible inference, the choice between those inferences should not be made by the court as a matter of law, but should be submitted to the trier of fact.

Fenwick Motor ¹⁸⁷ Company v. Fenwick, 258 Md. 134, 138 , 265 A.2d 256 (1970). The Court of Appeals has observed that [t]he jury’s function in the interpretation of documents then will arise wherever, in view of the surrounding circumstances and usages offered in evidence, the meaning of the writing is not so clear as to preclude doubt by a reasonable man of its meaning. If the meaning after taking the parol evidence, if any, into account is so clear that no reasonable man could reach more than one conclusion as to the meaning of the writing under the circumstances, the court will properly decide the question of fact for itself as it may any question of fact which is equally clear. Montauk Corp. v. Seeds, 215 Md. 491, 497 , 138 A.2d 907 (1958) (quoting S. Williston, 4 A Treatise on the Law of Contracts § 616 at 660-63 (3d ed.1957)).

Citing Cheney v. Bell Nat’l Life Ins. Co., 315 Md. 761 , 556 A.2d 1135 (1989), appellant correctly asserts that, when there are no factual disputes, the trial court must interpret insurance policies using the ordinary and accepted meanings of the words set out in the policy. Appellant, however, contends that the undisputed storage of business tools, equipment, and supplies in appellees’ barn required the lower court to determine as a matter of law whether the barn was being used for “business purposes” as meant by the insurance policy. We disagree.

In order to see whether there existed a dispute as to material facts, we must determine first whether the terms of the contract are ambiguous. Consumers Life Insurance Company v. Smith, 86 Md.App. 570, 574 , 587 A.2d 1119 (1991). Ambiguities in insurance policies are construed against the drafter. Bailer v. Erie Ins.

Exchange, 344 Md. 515, 522 , 687 A.2d 1375 (1997) (citing Cheney, 315 Md. at 766-67 , 556 A.2d 1135 (1989)). Additionally, as stated supra, even if the underlying facts are undisputed, if they give rise to more than one permissible inference, the trial court must submit the issue to the jury. Fenwick, 258 Md. at 138 , 265 A.2d 256 . Therefore, in order to be successful on a motion for summary judgment, ¹⁸⁸ there must be no ambiguity in the insurance policy on its face.

Id. There is “no hard and fast” rule for resolving whether certain language is ambiguous. Winterwerp v. Allstate Ins. Co., 277 Md. 714, 718 , 357 A.2d 350 (1976). “Each case must, in the final analysis, stand or fall upon its own facts.” Id.

The insurance policy in this case clearly defines “business,” but fails to define “business purposes” and “purpose.” There are no Maryland cases directly on point defining “business purpose.” Black’s Law Dictionary 137 (6th ed.1991), defines “business purpose” in relevant part as a “[t]erm used on occasion to describe the use to which property may be put or not, as in a deed’s restrictive covenant. A justifiable business reason for carrying out a transaction.... ” It defines “purpose” as [t]hat which one sets before him to accomplish or attain; an end, intention, or aim, object, plan, project. Term is synonymous with ends sought, an object to be attained, an intention, etc. Black’s Law Dictionary 862 (6th ed.1991). The underlying evidence regarding the fire and the contents of the barn is undisputed.

The facts are that appellees occasionally used the barn for storage of some business supplies, equipment, and tools between jobs. The business property amounted to approximately ten percent of the contents of the barn; the rest was personal property. No work for the business was done in the barn. At the time of the fire, appellees were storing some business property in the bam because the business had been experiencing financial difficulty and was closing down.

The fire was set by an unknown individual or individuals. The facts create more than one possible inference. One possible inference is that the storage of