Shriner v. Amica Mutual Insurance Co.

         On Appeal from Superior Court, Chittenden Unit, Civil Division Helen M. Toor, J.

          Kevin E. Brown of Langrock Sperry & Wool, LLP, Middlebury, for Plaintiff-Appellant.

          Gary R. Kupferer of Webber, Chapman & Kupferer, Ltd., Rutland, for Defendant-Appellee.

          PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

          EATON, JUDGE

         ¶ 1. Wilbur Shriner, the holder of a homeowner's insurance policy from Amica Mutual Insurance Company (Amica), appeals the trial court's grant of summary judgment to Amica and denial of his cross-motion for summary judgment. We affirm.

         ¶ 2. This Court reviews a grant of summary judgment de novo and under the same standard as that applied by the trial court. Co-op. Ins. Cos. v. Woodward, 2012 VT 22, ¶ 8, 191 Vt. 348, 45 A.3d 89. We will uphold the decision of the trial court if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id.; see also V.R.C.P. 56(a).

         ¶ 3. The material facts in this case are undisputed. Shriner, a retired physician, owned a glassblowing studio on Church Street in Burlington until he sold the property in December 2007 and moved the glassblowing equipment to his home in Charlotte. He and his friend, also a glassblower, eventually set up the equipment in the garage at Shriner's property and began making glass in late 2008 or early 2009. From 2009 to 2012, Shriner and his friend "sometimes made glass for a week or two, and then would shut down for weeks due to lack of money." During that three-year period, they made glassware approximately one time per week on average, and glassmaking was never more than an occasional or part-time activity for him. Throughout those three years, Shriner earned income from glassblowing, as well as from the redevelopment and rental of investment properties and from an organic honey and vegetable operation.

         ¶ 4. Shriner and his friend called their enterprise Church and Maple Glass Studio and maintained a website from which customers could purchase their glassware. Shriner identified himself as an "artisan" on his tax forms, and in all years relevant to this case, he filed a Schedule C form for business profits or losses with the Internal Revenue Services (IRS). He described his business type as "blown glass manufacturing" on the IRS forms and reported sales ranging from $4036 in 2013 to $30, 350 in 2010. He also reported business expenses for items including advertising, contract labor, legal and professional services, office space, meals, and entertainment.

         ¶ 5. On January 12, 2012, the furnace exhaust system in a piece of glassmaking equipment malfunctioned and caused a fire that destroyed the garage and all of the property and equipment inside it. At the time, Shriner's home was covered by his homeowner's policy with Amica, which covered losses from fire and provided replacement coverage for buildings and personal property. The policy carried a $25, 000 deductible and contained an exclusion from coverage for structures from which a business was conducted. Shriner submitted a personal property inventory for the property destroyed in the fire, with a replacement cost totaling $88, 354.91. Amica accepted Shriner's fire-loss claim and determined the replacement cost of the garage to be $42, 422.97. Amica applied the policy's $25, 000 deductible and made an actual cash-value payment of $1460.53 as an advance partial payment to Shriner for the garage. Amica then changed positions and, asserting that Shriner's glassblowing activities constituted a "business" for the purposes of the policy's exclusion, refused to make any further payments to replace the garage. Amica paid Shriner $11, 613 for nonbusiness property that was destroyed in the garage but capped its payment for other property in the inventory at $2500, which was the maximum reimbursement permitted under the policy for "business" personal property. Shriner brought suit to recover the full amount of his claim, and the court granted summary judgment to Amica. This appeal followed.

         ¶ 6. An insurance policy is a contract and its interpretation is therefore a question of law for which this Court's review is nondeferential and plenary. Fireman's Fund Ins. Co. v. CNA Ins. Co., 2004 VT 93, ¶ 8, 177 Vt. 215, 862 A.2d 251. We give effect to the terms in an insurance policy according to their "plain, ordinary and popular meaning, " and our interpretation of an insurance policy is guided by a "review [of] the language . . . from the perspective of what a reasonably prudent person applying for insurance would have understood it to mean." Woodward, 2012 VT 22, ¶ 9 (quotations omitted). Where policy language is ambiguous we resolve ambiguity in favor of the insured, "but we will not deprive the insurer of unambiguous terms place in the contract for its benefit." Fireman's Fund, 2004 VT 93, ¶ 9. Additionally, "[i]nsurance policies and their endorsements must be read together as one document and the words of the policy remain in full force and effect except as altered by the words of the endorsement." Id. ¶ 20 (quotation omitted). The insurer bears the burden of showing that an insured's claim is excluded by the policy. N. Sec. Ins. Co. v. Perron, 172 Vt. 204, 209, 777 A.2d 151, 154 (2001).

         ¶ 7. With those principles in mind, we look to the language of the policy at issue here. The policy capped recovery for "property, on the residence premises, used primarily for business purposes" at $2500 and excluded entirely from coverage "structures from which business is conducted" and "structures used to store business property." A Vermont-specific amendatory endorsement attached to the policy deleted the standard-form homeowner's policy definition of "business" and replaced it with the following language: "Business includes trade, profession or occupation."^[1]

         ¶ 8. Shriner argues that "the Court must read the policy and the amendatory endorsement together" and that reading the deleted language from the standard insurance provision and the amended language from the endorsement together creates ambiguity. We cannot accept this attempted construction of the policy. It is a basic rule of insurance policy construction that if an endorsement creates or expands an exclusion and the endorsement language is unambiguous, the insurer has carried its burden and the exclusion applies. See, e.g., Clarendon Am. Ins. Co. v. Miami River Club, Inc., 417 F.Supp.2d 1309, 1317-18 (S.D. Fla. 2006) (applying Illinois law); Liberty Mut. Ins. Co. v. Lone Star Indus., Inc., 967 A.2d 1, 28 (Conn. 2009). Language deleted from a policy by an amendatory endorsement therefore cannot be considered for purposes of creating an ambiguity within the policy. See Caudill Seed & Warehouse Co., Inc. v. Houston Cas. Co., 835 F.Supp.2d 329, 337-38 (W.D. Ky. 2011) (applying Kentucky law); Ryan v. Mountain States Helicopter, 686 P.2d 95, 98-99 (Idaho 1984). This position is consistent with the general rule of construction concerning endorsements to insurance policies that " 'if an endorsement extinguishes a policy provision or declares it void and of no effect, such provision cannot be considered in construing the policy.' " Mountain States, 686 P.2d at 99 (quoting 2 R. Long, The Law of Liability Insurance, § 16.09 (rev. ed. 1983)); see also 4 E. Holmes, Holmes' Appleman on Insurance § 20.1, at 155 (2d ed. 2008) ("Such rules are consistent with the precept that provisions should not be read in isolation but must be considered as a whole with any conflicts being first resolved by applying the terms of the endorsement. Then if the ambiguity persists, the ambiguity will be construed against the insurer." (emphasis added)).

         ¶ 9. Shriner argues that although his glassblowing was a part-time trade, profession or occupation, it nevertheless falls outside the policy because the Vermont endorsement "narrowed the definition of 'business' " by removing "part-time or occasional trade, profession, or occupation from the definition." However, the limitation Shriner seeks to apply was never in his insurance policy; the policy that Shriner purchased always deleted the standard-form definition of "business" and the "original" definition from the standard-form policy was never operative. The only definition of "business" that applied to Shriner was that in the Vermont endorsement, and our analysis therefore requires us to consider only the language of that endorsement. Thus, in interpreting the insurance policy at issue here, we cannot, as Shriner urges us to do, compare the language of the endorsement to the language of the standard-form provision unless we ...