Muir v. Cincinnati Insurance

2022 UT App 80

THE UTAH COURT OF APPEALS

KEVIN MUIR,
Appellant,
v.
CINCINNATI INSURANCE COMPANY,
Appellee.

Opinion
No. 20210289-CA
Filed June 24, 2022

Fourth District Court, Provo Department
The Honorable Christine S. Johnson
No. 200400938

Michael J. Petro, Leah Jordana Aston, Eva Marie
Brady, and Lindsey Brinton Harris, Attorneys for
Appellant
Vincent J. Velardo and Katia K. Conrad,
Attorneys for Appellee

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES GREGORY K. ORME and RYAN M. HARRIS
concurred.

CHRISTIANSEN FORSTER, Judge:

¶1 After sustaining injuries in an automobile accident, Kevin
Muir made a claim for underinsured motorist benefits, but his
insurance company denied the claim because Muir had
previously made fraudulent statements in an effort to obtain
personal injury protection benefits related to the same accident.
Muir sued the insurance company, and the district court
dismissed Muir’s lawsuit on summary judgment. Muir appeals,
and we affirm.
Muir v. Cincinnati Ins. Co.

BACKGROUND

¶2 Muir is listed as a “covered driver” under an auto
insurance policy (the Policy) issued to him by Cincinnati
Insurance Company (Cincinnati). The Policy provided several
types of coverage, including liability, personal injury protection
(PIP), uninsured/underinsured motorist (UIM), and collision.

¶3 In 2017, Muir was riding as a passenger in a vehicle that
was rear-ended by another vehicle. Muir suffered injuries and
received $25,000 in damages from each of the two drivers’
insurance companies—amounts that represented the policy limits
of those policies. Cincinnati also paid out PIP benefits to Muir
under the Policy.

¶4 In connection with his PIP claim, Muir “stated that he was
not working due to the injuries he sustained,” but this statement
was false: Muir was, in fact, “working as a self-employed truck
driver.” As a result of his false statement, Muir “was charged
criminally with insurance fraud and entered ‘no contest’ pleas to
reduced Class A misdemeanors.”

¶5 Muir subsequently made a demand for UIM benefits under
the Policy. However, Cincinnati denied coverage, relying on the
Policy’s fraud exclusion, which reads, “‘We’ do not provide
coverage for any ‘covered person’ who has made fraudulent
statements or engaged in fraudulent conduct in connection with
any accident or loss for which coverage is sought under this
policy.”

¶6 Following this denial, Muir sued Cincinnati for breach of
contract and breach of the duty of good faith and fair dealing. The
parties filed cross-motions for summary judgment on the
question of whether the Policy’s fraud exclusion precluded Muir’s
claim for UIM benefits.

¶7 The district court granted Cincinnati’s motion and denied
Muir’s. Muir appeals.

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Muir v. Cincinnati Ins. Co.

ISSUE AND STANDARD OF REVIEW

¶8 Muir argues that the district court erred in granting
Cincinnati’s motion for summary judgment. “We review the
district court’s grant of summary judgment for correctness and
accord no deference to its conclusions of law.” Gardiner v.
Anderson, 2018 UT App 167, ¶ 14, 436 P.3d 237 (quotation
simplified).

ANALYSIS

¶9 Muir urges us to determine that the Policy’s fraud
exclusion is ambiguous and to construe the ambiguity in his favor.
“An insurance policy is merely a contract between the insured
and the insurer and is construed pursuant to the same rules
applied to ordinary contracts.” Alf v. State Farm Fire & Cas. Co., 850
P.2d 1272, 1274 (Utah 1993). “An insurer may exclude from
coverage certain losses by using language which clearly and
unmistakably communicates to the insured the specific
circumstances under which the expected coverage will not be
provided.” Id. at 1275 (quotation simplified). “If a policy is
ambiguous, doubt is resolved against the insurer. However, if a
policy is not ambiguous, no presumption in favor of the insured
arises and the policy language is construed according to its usual
and ordinary meaning.” Id. at 1274 (quotation simplified).

¶10 “We construe insurance contracts by considering their
meaning to a person of ordinary intelligence and understanding,
viewing the matter fairly and reasonably, in accordance with the
usual and natural meaning of the words, and in the light of
existing circumstances, including the purpose of the policy.”
Doctors’ Co. v. Drezga, 2009 UT 60, ¶ 12, 218 P.3d 598 (quotation
simplified). “Ambiguity exists if a provision of a contract is
capable of more than one reasonable interpretation because of
uncertain meanings of terms, missing terms, or other facial
deficiencies.” Id. (quotation simplified). If the contract is capable
of more than one reasonable interpretation, then it cannot be

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Muir v. Cincinnati Ins. Co.

interpreted as a matter of law. Brady v. Park, 2019 UT 16, ¶¶ 53–
56, 445 P.3d 395. “However, policy terms are not necessarily
ambiguous simply because one party seeks to endow them with a
different interpretation according to his or her own interests.” Alf,
850 P.2d at 1274–75.

¶11 As stated, the Policy contains a fraud exclusion that bars
coverage when a claimant makes a fraudulent statement in
connection with any accident or loss for which coverage is sought.
Muir acknowledges that he made fraudulent statements in
securing PIP benefits in connection with the accident in question
but argues that those fraudulent statements should not negate his
claim for UIM benefits. Muir asserts that the Policy’s fraud
exclusion is ambiguous because the Policy itself provides for
multiple types of coverage. Because the word “coverage” is
undefined, he asserts, the fraud exclusion could reasonably be
read in two different ways: (1) it could be read to preclude all
types of coverage under the Policy when fraud is committed, or
(2) it could be “read so as to preclude just the specific type of
coverage the insured was in fact seeking” at the time they “made
the fraudulent misrepresentation.”

¶12 However, we do not agree that the second interpretation is
a reasonable reading of the Policy language. The fraud exclusion
is contained in the “General Provisions” section of the Policy, not
within any specific coverage provision, so the exclusion is at least
potentially applicable to all types of coverage provided by the
Policy. Moreover, the Policy explicitly excludes a “covered
person” from receiving coverage if the covered person “made
fraudulent statements or engaged in fraudulent conduct in
connection with any accident or loss for which coverage is sought
under [the Policy].” (Emphasis added.) The inclusion of the word
“accident” in this clause links the misrepresentation to the
accident in question, not just to the coverage sought, and makes
Muir’s preferred reading of the provision unreasonable,
especially given Muir’s admission that his “fraudulent conduct
was indeed ‘connected’ to the accident” at issue.

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Muir v. Cincinnati Ins. Co.

¶13 The inclusion of the word “accident” also makes this case
distinguishable from Flores v. Allstate Insurance Co., 819 So. 2d 740
(Fla. 2002), on which Muir heavily relies. The fraud exclusion at
issue in Flores, which the Florida Supreme Court determined to be
ambiguous, read, “Allstate will not provide coverage for any loss
which occurs in connection with any material misrepresentation,
fraud, or concealment of material facts.” Id. at 743 (quotation
simplified). Since different types of coverage concern different
types of losses, this language could reasonably be interpreted “as
affecting coverage only in connection with the subsection or
element of the claim to which the material misrepresentation or
fraud relates.” Id. at 750. On the other hand, since a single accident
can encompass all types of coverage, the use of the word
“accident” in the fraud exclusion at issue here makes a similar
reading of the Policy unreasonable.

¶14 The accident for which Muir sought UIM coverage is the
same accident for which he made fraudulent statements in
seeking PIP coverage. And the Policy precludes coverage sought
in connection with any accident for which a covered person has
made fraudulent statements. We therefore agree with the district
court’s determination that Cincinnati was, as a matter of law,
within its rights under the Policy to deny Muir’s claim for UIM
coverage.

CONCLUSION

¶15 The district court correctly interpreted the Policy’s fraud
exclusion to preclude all benefits related to a particular accident
when fraudulent statements were made in connection with that
accident. Accordingly, the court did not err in granting
Cincinnati’s motion for summary judgment and denying Muir’s.
We therefore affirm.

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