Cite as 2021 Ark. App. 300 ARKANSAS COURT OF APPEALS Elizabeth Perry I attest to the accuracy and DIVISION III integrity of this document No. CV-20-376 2023.06.28 15:20:12 -05'00' 2023.001.20174 Opinion Delivered June 2, 2021 SCOTTSDALE INSURANCE COMPANY APPELLANT APPEAL FROM THE OUACHITA COUNTY CIRCUIT COURT V. [NO. 52CV-18-253]
LATONYA THROWER, PERSONAL HONORABLE DAVID F. GUTHRIE, REPRESENTATIVE OF THE ESTATE JUDGE OF JASIAH THROWER APPELLEE AFFIRMED
MIKE MURPHY, Judge
Appellant Scottsdale Insurance Company appeals the order of the Ouachita County
circuit court interpreting its insurance policy as ambiguous and finding that it was not due
a credit for some payments already made. We affirm.
On February 20, 2018, three-year-old Jasiah Thrower died choking on a hot dog
given to him at daycare. His estate filed suit against the daycare, its agents, and its insurance
company. Eventually the parties reached a settlement for the liability limits of the daycare’s
general liability policy. That policy was with Scottsdale Insurance Company. At issue is
$5000, which Scottsdale had already paid out in medical payments. Scottsdale says the policy
limit is one million dollars, but since it had already paid $5000, the final amount paid to the
estate should be one million, less the $5000. The estate argued that the policy was ambiguous
regarding the applicable liability limits, and the court agreed. Construing the policy against
Scottsdale, the drafter, the court found that Scottsdale should not be credited for the $5000 already paid to the estate for medical payments. Scottsdale appealed. On appeal, it argues
that the circuit court erred in finding the policy language ambiguous and not crediting
Scottsdale the amount already issued in medical payments. The parties have agreed to the
settlement limits, and the lower court has approved the settlement in an order dated July
18, 2019. The issue before us now is all that is left to be resolved.
Our law regarding the construction of insurance contracts is well settled. The
language in an insurance policy is to be construed in its plain, ordinary, and popular sense.
Farmers Ins. Exch. v. Bradford, 2015 Ark. App. 253, at 4, 460 S.W.3d 810, 813. Different
clauses of an insurance contract must be read together and the contract construed so that all
of its parts harmonize. Id. Whether insurance-policy language is ambiguous is a question of
law to be resolved by the court. Castaneda v. Progressive Classic Ins. Co., 357 Ark. 345, 166
S.W.3d 556 (2004). We review questions of law de novo. Id.
What follows are the relevant portions of the policy. First, the declarations table:
Item 1. Limits of Insurance Coverage Limit of Liability Aggregate Limits of Liability Products/Completed $ 1,000,000 Operations Aggregate
General Aggregate (other than $ 2,000,000 Products/Completed Operations) Coverage A - Bodily Injury and any one occurrence subject to the Property Damage Liability Products/Completed Operations and General Aggregate Limits of $ 1,000,000 Liability
any one premises subject to the Coverage A occurrence and the General Aggregate Limits of Damage to Premises Rented to You Limit $ 100,000 Liability Coverage B – Personal and any one person or organization Advertising Injury Liability subject to the General Aggregate $ 1,000,000 Limits of Liability Coverage C – Medical Payments any one person subject to the Coverage A occurrence and the $ 5,000 General Aggregate Limits
2 It then goes on to provide the following:
SECTION I – COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” . . . But:
(1) The amount we will pay for damages is limited as described in Section III – Limits of Insurance. ....
COVERAGE C MEDICAL PAYMENTS
a. We will pay medical expenses as described below for “bodily injury” caused by an accident.
....
b. We will make these payments regardless of fault. These payments will not exceed the applicable limit of insurance. ....
SECTION III – LIMITS OF INSURANCE
1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay . . .
2. The General Aggregate Limit is the most we will pay for the sum of:
a. Medical expenses under Coverage C;
b. Damages under Coverage A, except damages because of “bodily injury” or “property damage” included in the “products-completed operations hazard”; and
c. Damages under Coverage B. ....
3 5. Subject to 2. or 3. above, whichever applies, the Each Occurrence Limit is the most we will pay for the sum of:
a. Damages under Coverage A; and
b. Medical expenses under Coverage C because of all “bodily injury” and “property damage” arising out of one “occurrence”.
Also relevant, the policy defined “occurrence” as “an accident.”
The appellees contend and the circuit court found that this policy language creates
an ambiguity regarding which policy restriction is applicable. The “General Aggregate
Limits” provides that there is up to $2,000,000 in policy coverage available for the sum of
medical expenses under Coverage C, damages under Coverage A (with exceptions not
applicable here), and damages under Coverage B. The appellees would have us apply this
provision to conclude that we should add the medical expenses ($5,000) from Coverage C
with the bodily-injury-liability limit ($1,000,000) from Coverage A and arrive at a figure
less than the $2,000,000 General Aggregate Limit.
Scottsdale argues that the General Aggregate Limit is not applicable here. It explains
that the General Aggregate Limit would be triggered only in the event there was more than
one accident. It does not point to anywhere in its contract with the insured that says as
much. Instead, it cites cases from other jurisdictions interpreting general aggregate limits in
commercial general-liability policies to establish limits for multiple occurrences, while the
each-occurrence-limit governs a single occurrence. See generally Weyerhaeuser Co. v. Com.
Union Ins. Co., 15 P.3d 115 (Wash. 2000); Bituminous Cas. Corp. v. Iles, 992 N.E.2d 1257
(Ill. App. Ct. 2013). Again, neither General Aggregate Limit nor Each Occurrence Limit is
defined within the contract.
4 Scottsdale directs our attention to the fine print in the supplemental declarations. It
would have us reason that even though General Aggregate Limit does not provide that it is
for multiple occurrences, we should infer it because Coverage A limits itself to “any one
occurrence.” And because this is a single occurrence, the limit that may be paid to the estate
is $1,000,000 from Coverage A.
Policy language is ambiguous if there is doubt or uncertainty as to its meaning and it
is fairly susceptible to more than one reasonable interpretation. Nichols v. Farmers Ins. Co.,
83 Ark. App. 324, 128 S.W.3d 1 (2003). Provisions of an insurance policy are construed
most strongly against the insurance company that prepared it. Zulpo v. Farm Bureau Mut.
Ins. Co. of Ark., 98 Ark. App. 320, 255 S.W.3d 494 (2007). If the language of the policy is
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Cite as 2021 Ark. App. 300 ARKANSAS COURT OF APPEALS Elizabeth Perry I attest to the accuracy and DIVISION III integrity of this document No. CV-20-376 2023.06.28 15:20:12 -05'00' 2023.001.20174 Opinion Delivered June 2, 2021 SCOTTSDALE INSURANCE COMPANY APPELLANT APPEAL FROM THE OUACHITA COUNTY CIRCUIT COURT V. [NO. 52CV-18-253]
LATONYA THROWER, PERSONAL HONORABLE DAVID F. GUTHRIE, REPRESENTATIVE OF THE ESTATE JUDGE OF JASIAH THROWER APPELLEE AFFIRMED
MIKE MURPHY, Judge
Appellant Scottsdale Insurance Company appeals the order of the Ouachita County
circuit court interpreting its insurance policy as ambiguous and finding that it was not due
a credit for some payments already made. We affirm.
On February 20, 2018, three-year-old Jasiah Thrower died choking on a hot dog
given to him at daycare. His estate filed suit against the daycare, its agents, and its insurance
company. Eventually the parties reached a settlement for the liability limits of the daycare’s
general liability policy. That policy was with Scottsdale Insurance Company. At issue is
$5000, which Scottsdale had already paid out in medical payments. Scottsdale says the policy
limit is one million dollars, but since it had already paid $5000, the final amount paid to the
estate should be one million, less the $5000. The estate argued that the policy was ambiguous
regarding the applicable liability limits, and the court agreed. Construing the policy against
Scottsdale, the drafter, the court found that Scottsdale should not be credited for the $5000 already paid to the estate for medical payments. Scottsdale appealed. On appeal, it argues
that the circuit court erred in finding the policy language ambiguous and not crediting
Scottsdale the amount already issued in medical payments. The parties have agreed to the
settlement limits, and the lower court has approved the settlement in an order dated July
18, 2019. The issue before us now is all that is left to be resolved.
Our law regarding the construction of insurance contracts is well settled. The
language in an insurance policy is to be construed in its plain, ordinary, and popular sense.
Farmers Ins. Exch. v. Bradford, 2015 Ark. App. 253, at 4, 460 S.W.3d 810, 813. Different
clauses of an insurance contract must be read together and the contract construed so that all
of its parts harmonize. Id. Whether insurance-policy language is ambiguous is a question of
law to be resolved by the court. Castaneda v. Progressive Classic Ins. Co., 357 Ark. 345, 166
S.W.3d 556 (2004). We review questions of law de novo. Id.
What follows are the relevant portions of the policy. First, the declarations table:
Item 1. Limits of Insurance Coverage Limit of Liability Aggregate Limits of Liability Products/Completed $ 1,000,000 Operations Aggregate
General Aggregate (other than $ 2,000,000 Products/Completed Operations) Coverage A - Bodily Injury and any one occurrence subject to the Property Damage Liability Products/Completed Operations and General Aggregate Limits of $ 1,000,000 Liability
any one premises subject to the Coverage A occurrence and the General Aggregate Limits of Damage to Premises Rented to You Limit $ 100,000 Liability Coverage B – Personal and any one person or organization Advertising Injury Liability subject to the General Aggregate $ 1,000,000 Limits of Liability Coverage C – Medical Payments any one person subject to the Coverage A occurrence and the $ 5,000 General Aggregate Limits
2 It then goes on to provide the following:
SECTION I – COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” . . . But:
(1) The amount we will pay for damages is limited as described in Section III – Limits of Insurance. ....
COVERAGE C MEDICAL PAYMENTS
a. We will pay medical expenses as described below for “bodily injury” caused by an accident.
....
b. We will make these payments regardless of fault. These payments will not exceed the applicable limit of insurance. ....
SECTION III – LIMITS OF INSURANCE
1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay . . .
2. The General Aggregate Limit is the most we will pay for the sum of:
a. Medical expenses under Coverage C;
b. Damages under Coverage A, except damages because of “bodily injury” or “property damage” included in the “products-completed operations hazard”; and
c. Damages under Coverage B. ....
3 5. Subject to 2. or 3. above, whichever applies, the Each Occurrence Limit is the most we will pay for the sum of:
a. Damages under Coverage A; and
b. Medical expenses under Coverage C because of all “bodily injury” and “property damage” arising out of one “occurrence”.
Also relevant, the policy defined “occurrence” as “an accident.”
The appellees contend and the circuit court found that this policy language creates
an ambiguity regarding which policy restriction is applicable. The “General Aggregate
Limits” provides that there is up to $2,000,000 in policy coverage available for the sum of
medical expenses under Coverage C, damages under Coverage A (with exceptions not
applicable here), and damages under Coverage B. The appellees would have us apply this
provision to conclude that we should add the medical expenses ($5,000) from Coverage C
with the bodily-injury-liability limit ($1,000,000) from Coverage A and arrive at a figure
less than the $2,000,000 General Aggregate Limit.
Scottsdale argues that the General Aggregate Limit is not applicable here. It explains
that the General Aggregate Limit would be triggered only in the event there was more than
one accident. It does not point to anywhere in its contract with the insured that says as
much. Instead, it cites cases from other jurisdictions interpreting general aggregate limits in
commercial general-liability policies to establish limits for multiple occurrences, while the
each-occurrence-limit governs a single occurrence. See generally Weyerhaeuser Co. v. Com.
Union Ins. Co., 15 P.3d 115 (Wash. 2000); Bituminous Cas. Corp. v. Iles, 992 N.E.2d 1257
(Ill. App. Ct. 2013). Again, neither General Aggregate Limit nor Each Occurrence Limit is
defined within the contract.
4 Scottsdale directs our attention to the fine print in the supplemental declarations. It
would have us reason that even though General Aggregate Limit does not provide that it is
for multiple occurrences, we should infer it because Coverage A limits itself to “any one
occurrence.” And because this is a single occurrence, the limit that may be paid to the estate
is $1,000,000 from Coverage A.
Policy language is ambiguous if there is doubt or uncertainty as to its meaning and it
is fairly susceptible to more than one reasonable interpretation. Nichols v. Farmers Ins. Co.,
83 Ark. App. 324, 128 S.W.3d 1 (2003). Provisions of an insurance policy are construed
most strongly against the insurance company that prepared it. Zulpo v. Farm Bureau Mut.
Ins. Co. of Ark., 98 Ark. App. 320, 255 S.W.3d 494 (2007). If the language of the policy is
susceptible to two interpretations—one favorable to the claimant and one favorable to the
insurer—then the interpretation most favorable to the claimant must be adopted. Id. We
cannot arrive at Scottsdale’s conclusion that a payment made under Coverage C is part of
the Coverage A limit. To such an extent that the language on the declarations page makes
that so, it is, at best, ambiguous. 1
Affirmed.
ABRAMSON, J., agrees.
HIXSON, J., concurs.
1 In addition to the concurrence’s observation that even if this was not ambiguous, offsetting coverage is arguably barred under Escobar v. A&A Orchard, LLC, 2021 Ark. App. 128, we further note that, even strictly applying the Each Occurrence Limit formula as requested by Scottsdale, we still arrive at the $1,005,000 figure because it calls for the sum of Coverage A and C. The result would be the same.
5 KENNETH S. HIXSON, Judge, concurring. I agree with the majority that the
language in the commercial general-liability insurance policy of Nationwide Insurance
underwritten by Scottsdale Insurance Company (Scottsdale) was ambiguous and that the
circuit court did not err in construing the policy liberally in favor of the insured and strictly
against the insurer for that reason. Philadelphia Indem. Ins. Co. v. Austin, 2011 Ark. 283, 383
S.W.3d 815. However, I write separately to explain that even if the policy was
unambiguous as Scottsdale alleges on appeal, I would still affirm on the basis of our recent
decision in Escobar v. A&A Orchard, LLC, 2021 Ark. App. 128, 620 S.W.3d 534.
In Escobar, Miguel Escobar appealed from a judgment entered in a negligence action
against his employer, A&A Orchard, LLC. A&A Orchard’s insurance carrier, Southern
Farm Bureau Casualty Insurance Company, paid $14,976.12 in medical bills and expenses
incurred by Escobar from its no-fault medical coverage. A&A Orchard argued that it was
entitled to a set-off in the amount of these payments from a jury verdict on liability coverage,
which the circuit court allowed. Escobar argued on appeal that this was error, and we
agreed. We specifically held that “A&A Orchard was not entitled to set off payments made
to Escobar under the no-fault medical coverage of its insurance policy against the liability
coverage in the same policy after the jury determined that A&A Orchard was 51 percent at
fault for the incident in which Escobar lost part of his finger.” Escobar, 2021 Ark. App. 128,
at 15, 620 S.W.3d at 543. We reasoned that our supreme court had previously held that
“an insurance company is prohibited from setting off one payment under its policy against
another one under the same policy.” Escobar, 2021 Ark. App. 128, at 13–14, 620 S.W.3d
at 542 (quoting Shelter Mut. Ins. Co. v. Tucker, 295 Ark. 260, 269, 748 S.W.2d 136, 141
6 (1988)); see also State Farm Mut. Auto. Ins. Co. v. Sims, 288 Ark. 541, 708 S.W.2d 72 (1986).
I see no appreciable difference between Escobar and the facts of this case. In both cases, the
insurance company is attempting to set off its medical-coverage payments under one
provision of its policy against its liability-coverage payments under another provision of the
same policy. For the reasons explained in Escobar, this is prohibited, and I would affirm
regardless of whether the language in the insurance policy was ambiguous or unambiguous.
Watts, Donovan & Tilley, P.A., by: David M. Donovan, for appellant.
Lyons & Cone, P.L.C., by: Jim Lyons and David D. Tyler, for appellee.