Farm Bureau Mutual Insurance Co. of Arkansas v. Sells

JOSEPHINE LINKER HART, Judge. | TAppeIlant, Farm Bureau Mutual Insurance Company of Arkansas, Inc., filed a complaint for declaratory judgment seeking a declaration that it had no duty to indemnify appellee, Danny W. Sells, under an insurance policy. The circuit court, after finding that a policy exclusion was ambiguous, granted summary judgment to appellee. On appeal, we hold that because the parties submitted disputed extrinsic evidence on the meaning of the policy exclusion, we are required to reverse and remand the case for findings of fact. As found by the court, on September 6, 2007, a fire destroyed a home owned by appellee. Appellant, who had issued an insurance policy to appellee, filed a complaint for declaratory judgment, seeking a declaration that it had no duty to indemnify appellee. In its complaint, appellant asserted that appellee operated his computer repair business from his | dwelling. In pertinent part, the insurance policy provided that it covered “the dwelling described on your Declaration,” and that “[t]he dwelling must be used principally as a private residence.” Further, “[djwelling” was defined in the contract as “the building ... principally occupied as a home.” The policy’s exclusion provided in part that “[ujnless specifically described on your latest Declaration, or provided by endorsement, we do not cover ... any building used to any extent for business purposes.” The policy defined the term “[bjusiness” as “a trade, profession or occupation ... whether full or part time.” Appellant argued that because appellee used his dwelling for business purposes and because the policy excluded coverage for any building used to any extent for business purposes, appellee was not entitled to coverage for his dwelling under the policy. Appellee answered and counterclaimed, seeking damages for breach of contract. Appellee contended that the policy covered the loss of the dwelling. Appellee further moved for summary judgment, accompanying his motion with several exhibits, including excerpts from depositions. Appel-lee asserted that he used the dwelling principally as a private residence. Appel-lee relied on excerpts from depositions to make his point, asserting that the depositions showed that while he might have a home office, he did most of his work outside of the home. Appellant filed its own motion for summary judgment, and in doing so, incorporated the exhibits attached to appellee’s motion and attached additional exhibits to its own motion. In its argument, appellant asserted that appellee was “conducting his business from his home |sand doing so with such regularity and frequency that his coverage should be abrogated by the exclusion.” Appellant acknowledged, however, that it would be “absurd” and “patently unreasonable” to suggest that bringing work home at night would transform a home into a business. The circuit court granted summary judgment to appellee. The court found that the phrase “use[d] to any extent” found in the exclusion, “we do not cover ... any building used to any extent for business purposes,” was ambiguous as a matter of law and therefore unenforceable. The court granted summary judgment in favor of appellee, and appellant filed this appeal. As is apparent from the parties’ briefs, the parties dispute the nature of the conduct engaged in by appellee at his dwelling. Appellant proposes that appellee used the dwelling “to any extent for business purposes,” and it asserts that its position is fully supported by the accompanying depositions attached to the motion for summary judgment. Appellee, on the other hand, asserts that the dwelling was used as a residence, and he supports his position with other deposition excerpts. Ordinarily, the question of whether the language of an insurance policy is ambiguous is one of law to be resolved by the court. McGrew v. Farm, Bureau Mut. Ins. Co. of Arkansas, Inc., 371 Ark. 567, 268 S.W.3d 890 (2007). Where, however, parole evidence has been admitted to explain the meaning of the language, the determination becomes one of fact for a factfinder to determine. Id. Where there is a dispute as to the meaning of an insurance hcontract term or provision, the circuit court must act as a gatekeeper, determining first whether the dispute may be resolved by looking solely to the contract or whether the parties rely on disputed extrinsic evidence to support their proposed interpretation. Id. Thus, where the issue of ambiguity may be resolved by reviewing the language of the contract itself, it is the circuit court’s duty to make such determination as a matter of law. Id. However, when the parties go beyond the contract and submit disputed extrinsic evidence to support their proffered definitions of the term, this is a question of fact for the factfinder. Id. In the latter situation, summary judgment is not proper. Id. In McGrew — a case upon which both parties rely — the Arkansas Supreme Court was faced with a situation similar to what we have here. There, the court was asked to determine what was meant by a phrase “full-time occupation” found in an insurance policy exclusion. In addressing the matter in circuit court, the parties offered evidence extrinsic to the insurance policy in support of varying definitions of the phrase. After reciting the above standard of review, the Arkansas Supreme Court concluded that given the extrinsic evidence presented for the purpose of determining the issue, the circuit court erred when it resolved the issue as a matter of law. Accordingly, it reversed and remanded for a jury to determine the question of fact. Here, the parties submitted extrinsic evidence to support their respective positions on what was meant by the use of the dwelling “to any extent for business purposes.” Appellee asserted that the dwelling was used as a residence, and appellant asserted that appellee’s use 15of the dwelling fell within the stated exclusion of use “to any extent for business purposes.” But appellant acknowledges that a home is not transformed into a business by bringing work home. The parties presented extrinsic evidence regarding what activities appellee performed at the dwelling, and both argued their respective positions regarding whether such use of the dwelling would fall within the meaning of the exclusion. Because the parties submitted extrinsic evidence, the question became an issue of fact for a fact-finder. Accordingly, summary judgment was improper, and we must reverse and remand for a fact-finder to determine a question of fact. Reversed and remanded. GRUBER and BAKER, JJ., agree. PITTMAN, J., concurs. VAUGHT, C.J., and HENRY, J., dissent.