Scottsdale Insurance Company v. Latonya Thrower, Personal Representative of the Estate of Jasiah Thrower

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

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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

1. Insuring Agreement

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.
....

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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.

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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.

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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

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(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.

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