                                                                                             Filed
                                                                                       Washington State
                                                                                       Court of Appeals
                                                                                        Division Two

                                                                                        January 23, 2019




    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II

 HAROLD KALLES,                                                    No. 50827-3-II

                               Appellant,

        v.

 STATE FARM MUTUAL AUTOMOBILE                                  PUBLISHED OPINION
 INS. CO., a foreign insurance co..

                               Respondent.

       LEE, A.C.J. — Harold Kalles appeals the superior court’s order denying his motion for

partial summary judgment. The superior court concluded that Kalles’s underinsured motorist

(UIM) policy did not include coverage for loss of use while the insured vehicle was being repaired.

Kalles argues that the language in his UIM policy requires coverage for loss of use.

       We hold that the UIM policy language is ambiguous and should be interpreted in favor of

the insured.   Accordingly, we reverse the superior court’s order denying partial summary

judgment.

                                             FACTS

       Kalles’s new Land Rover was damaged by an uninsured motorist. Kalles had UIM

coverage through State Farm Mutual Automobile Insurance Co. The insuring agreement in

Kalles’s UIM policy states:
No. 50827-3-II


       [State Farm] will pay compensatory damages for property damage an insured is
       legally entitled to recover from the owner or driver of an underinsured motor
       vehicle.

Clerk’s Papers (CP) at 119 (emphasis in original). The UIM policy defines “property damage” as:

       physical damage to or destruction of: 1. your car or a newly acquired car, or 2.
       property owned by an insured while that property is in the passenger compartment
       of your car or a newly acquired car.

CP at 118 (emphasis in original). The “Deciding Fault and Amount” section in the UIM policy

provides,

       1 a. The insured and [State Farm] must agree to the answers to the following two
       questions:
              (1) Is the insured legally entitled to recover compensatory damages from
       the owner or driver of the underinsured motor vehicle?
              (2) If the answer to 1.a.(1) above is yes, then what is the amount of
       compensatory damages that the insured is legally entitled to recover from the
       owner or driver of the underinsured motor vehicle.

CP at 119 (emphasis in original).

       State Farm paid for the repairs to Kalles’s Land Rover. However, State Farm declined to

pay under the UIM coverage provisions for a car rental due to the loss of use of Kalles’s vehicle

while it was being repaired.

       Kalles filed a complaint against State Farm based on a dispute over the diminished value

of the vehicle and whether Kalles’s UIM coverage included loss of use of his vehicle. Kalles filed

a motion for partial summary judgment, arguing that loss of use was included in his UIM coverage.

State Farm opposed the motion for partial summary judgment, arguing that loss of use was not

covered property damage under Kalles’s UIM policy. The superior court denied Kalles’s motion

for partial summary judgment.




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No. 50827-3-II


         The parties entered a stipulated order dismissing the action. Kalles appeals the superior

court’s order denying partial summary judgment on coverage for loss of use.1

                                           ANALYSIS

         Kalles argues that the superior court erred by denying his motion for partial summary

judgment because loss of use is covered under the language of his UIM policy. Alternatively,

Kalles argues that the UIM statute, RCW 48.22.030, requires that UIM policies cover loss of use.

We agree that the superior court erred in denying Kalles motion for partial summary judgment.

         We review an order granting summary judgment de novo. Woo v. Fireman’s Fund Ins.

Co., 161 Wn.2d 43, 52, 164 P.3d 454 (2007). Summary judgment is proper when there is no

genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR

56(c).

         Interpretation of an insurance contract is a question of law we review de novo. Woo, 161

Wn.2d at 52. We construe insurance policies as contracts. Findlay v. United Pac. Ins. Co., 129

Wn.2d 368, 378, 917 P.2d 116 (1996). The insurance contract is construed as a whole, with the

policy given a “ ‘fair, reasonable, and sensible construction as would be given to the contract by

the average person purchasing insurance.’ ”          Key Tronic Corp. v. Aetna (CIGNA) Fire

Underwriters Ins. Co., 124 Wn.2d 618, 627, 881 P.2d 201 (1994) (quoting Queen City Farms, Inc.




1
  The parties do not dispute the appealability of the superior court’s order denying partial summary
judgment. The superior court’s order denying partial summary judgment effectively determined
Kalles’s right to pursue his claim for State Farm’s refusal to pay for loss of use under the UIM
policy. Accordingly, we review the superior court’s partial summary judgment order as reviewable
under RAP 2.2(a)(3) (a party may appeal “[a]ny written decision affecting a substantial right in a
civil case that in effect determines the action and prevents final judgment or discontinues the
action.”).


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No. 50827-3-II


v. Cent. Nat’l Ins. Co., 126 Wn.2d 50, 65, 882 P.2d 703, 891 P.2d 718 (1994)). Words in an

insurance contract are given their ordinary, usual, and popular meaning unless the insurance

contract, as a whole, clearly demonstrates contrary intent. Hearst Commc’ns, Inc. v. Seattle Times

Co., 154 Wn.2d 493, 504, 115 P.3d 262 (2005). We will harmonize clauses that seem to conflict

in order to give effect to all the contract’s provisions. Nishikawa v. U.S. Eagle High, LLC, 138

Wn. App. 841, 849, 158 P.3d 1265 (2007), review denied, 163 Wn.2d 1020 (2008).

       A provision in an insurance contract is ambiguous only when “it is fairly susceptible to two

different interpretations, both of which are reasonable.” Am. Nat’l Fire Ins. Co. v. B & L Trucking

& Constr. Co., 134 Wn.2d 413, 428, 951 P.2d 250 (1998). We will not construe an insurance

contract provision as ambiguous simply because the provision is complex or confusing. McDonald

v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 734, 837 P.2d 1000 (1992). Any ambiguity is

resolved against the insurer and in favor of the insured. American Star Ins. Co. v. Grice, 121

Wn.2d 869, 874-75, 854 P.2d 622 (1993).

       The issue here is whether the language in Kalles’s UIM policy includes coverage for loss

of use. We conclude that the policy language is ambiguous as to whether it covers loss of use and,

therefore, should be interpreted in favor of Kalles.

       Under the UIM policy language, State Farm is obligated to pay “compensatory damages

for property damage.” CP at 119 (emphasis in original). Kalles argues the UIM insuring

agreement should be read to “ ‘provide/include the same elements of damages that would be

recoverable from the at-fault tortfeasor under Washington law’ ” and that “ ‘for property damage’

” acts as triggering language rather than limiting language. Br. of App. at 11. We agree that




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No. 50827-3-II


Kalles’s interpretation is reasonable from the perspective of an average person purchasing

insurance.

       “Compensatory damages” means “damages awarded to make good or compensate for an

injury sustained.” MERRIAM-WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY at 463 (1961).

“Compensatory damages” read together with the language “is legally entitled to recover from the

owner or driver of an underinsured motor vehicle” would reasonably lead an average person

purchasing insurance to believe that the policy covered all damages resulting from the property

damage caused by the underinsured motorist—including loss of use. CP at 119. Therefore, the

provision is at least ambiguous and must be interpreted in favor of the insured.

       Kalles’s interpretation is further supported by reading the UIM policy as a whole, including

the “Deciding Fault and Amount” section of the policy. The “Deciding Fault and Amount” section

provides,

       1 a. The insured and [State Farm] must agree to the answers to the following two
       questions:
              (1) Is the insured legally entitled to recover compensatory damages from
       the owner or driver of the underinsured motor vehicle?
              (2) If the answer to 1.a.(1) above is yes, then what is the amount of
       compensatory damages that the insured is legally entitled to recover from the
       owner or driver of the underinsured motor vehicle?

CP at 119 (emphasis in original). Also, the policy defines an “insured” as “any person entitled to

recover compensatory damages as a result of property damage of an insured.” CP at 118. Reading

these sections, along with the insuring agreement, would lead an average purchaser of insurance

to fairly, reasonably construe the policy as providing coverage for the amounts he or she would be

able to recover directly from the owner or driver of the uninsured vehicle. Therefore, Kalles’s

interpretation of the UIM policy is reasonable.



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No. 50827-3-II


       State Farm argues that the UIM policy provides coverage only for physical damage because

“property damage is defined as physical damage to or destruction of the insured vehicle plus

damaged contents.” Br. of Resp. at 6. Even if State Farm’s interpretation of the policy also is

reasonable, the policy is ambiguous at best. Because the language of the UIM policy is ambiguous,

it must be interpreted in favor of Kalles’s to cover loss of use resulting from property damage

caused by an uninsured/underinsured motorist. Therefore, the trial court erred by denying Kalles’s

motion for partial summary judgment.

       We reverse the superior court’s order denying partial summary judgment.




                                                    Lee, A.C.J.
 We concur:



Worswick, J.




Sutton, J.




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