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Hall v. Acadia
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MAINE SUPREME JUDICIAL COURT                                                       Reporter of Decisions
Decision:   2002 ME 110
Docket: 	   Cum-01-692
Submitted
on Briefs:  April 18, 2002
Decided:	July 9, 2002

Panel: 	SAUFLEY, C.J., CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS, and 
		        LEVY, JJ.

DAVID HALL et al.

v.

ACADIA INSURANCE COMPANY

									
LEVY, J. 

	[¶1]  David and Kimberly Hall appeal from a judgment entered in the
Superior Court (Cumberland County, Humphrey, J.) denying their motion for
summary judgment and granting Acadia Insurance Company's motion for
summary judgment on the Halls' claims for confirmation of an umpire's award
and for breach of an insurance contract.   The issue presented in this case is one of
first impression in Maine: whether an automobile insurance policy provision
limiting the insurer's liability to the amount necessary to "repair" the vehicle
includes liability to pay for the diminution in the value of the vehicle resulting
from the fact that it has been involved in an accident in addition to the cost of
physically repairing the vehicle.   We conclude that the insurer is not liable for the
diminution in the value of the vehicle and, finding no error, affirm the judgment.

                                                       I. BACKGROUND

	[¶2]  The Halls purchased an automobile insurance policy from Acadia that
included coverage for damage caused by collision.  Following an accident that
resulted in damage to their vehicle, the Halls submitted a claim seeking payment
for the repair work done to the vehicle and the inherent diminution in the value of
the vehicle caused by "the fact that a 'repaired' vehicle is less desirable than a
vehicle of identical make and model which has not been in a collision and
repaired."{1}  Because the Halls and Acadia were unable to agree on the amount of
damages compensable under the policy, they submitted their dispute to an umpire
pursuant to the policy's provisions.  The umpire ultimately determined that the
Halls' compensable losses amounted to $17,174.45--$12,198.70 for the cost of
parts and labor to repair the vehicle and $4,975.75 for the diminished value of the
vehicle.  Acadia paid the Halls for the physical repair of the vehicle, but it refused
to pay for its diminished value.  This action to confirm the umpire's award and
for breach of contract soon followed.  

	[¶3]  Following the parties' submission of a joint stipulation of facts and
motions for summary judgment addressing the issue of diminished value, the court
denied the Halls' motion and granted Acadia's motion.  The court concluded that
"the policy language is unambiguous and does not entitle the plaintiffs to recover
for any diminution in the value of their vehicle in addition to repair costs that
have been incurred by them and paid by defendant."  The Halls then timely filed
the present appeal.  

                                                           II. DISCUSSION

	[¶4]  We review the grant of a summary judgment for errors of law, and we
view the evidence presented in the light most favorable to the nonprevailing party. 
Geyerhahn v. United States Fid. & Guar. Co., 1999 ME 40, ¶ 11, 724 A.2d 1258,
1261.  "Summary judgment is appropriate when the record discloses that there is
no genuine issue of material fact and the moving party is entitled to judgment as a
matter of law."  Id. 
	[¶5]  The parties agree that the Halls' claim turns on the proper construction
of the limitation of liability provision in the insurance policy issued by Acadia to
the Halls: 

		LIMIT OF LIABILITY
		A.	Our limit of liability for loss will be the lesser of the:
			1.  Actual cash value of the stolen or damaged property; or
			2.  Amount necessary to repair or replace the property.

The Halls argue that section A(2) of this provision is ambiguous because the
"[a]mount necessary to repair or replace" may reasonably be construed to include
payment not only for physical repair work but also for diminished value.  Such a
payment is a "repair," they contend, because it supplies that which is lost, namely
the value of the car.  Specifically, they argue that the policy equates the amount
necessary to repair their car with the amount necessary to replace the car and that
the amount necessary to replace the property "most definitely refers to the value
of the vehicle before the repairs were necessary."  Thus, they conclude, an
ordinary person would expect the automobile insurance to compensate for any loss
of value resulting from an accident.  Acadia responds that the provision is
unambiguous and that an ordinary insured would expect the insurance company to
compensate for the cost of the repairs made to the vehicle or the cost of replacing
the vehicle, not both.

	[¶6]  "Insurance contract language is ambiguous 'if it is reasonably
susceptible of different interpretations' [or] .  . . 'if an ordinary person in the
shoes of the insured would not understand that the policy did not cover claims
such as those brought.'"  Geyerhahn, 1999 ME 40, ¶ 12, 724 A.2d at 1261
(quoting Cambridge Mut. Fire Ins. Co. v. Vallee, 687 A.2d 956, 957 (Me.  1996);
Peerless Ins. Co. v. Brennon, 564 A.2d 383, 384 (Me.  1989)).  The
determination of "[w]hether an insurance contract is ambiguous is a question of
law for the court."  Id.  "[I]t is a well-settled principle that if the language of an
insurance policy is ambiguous or susceptible of varying interpretations, then the
policy 'is construed against the insurer in favor of coverage.'" Id. (quoting
Genthner v. Progressive Cas. Ins. Co., 681 A.2d 479, 482 (Me. 1996)).

 	[¶7]  Although jurisdictions that have considered this issue have split on the
question of whether insurance providers are liable for losses associated with
diminished value under policies that limit their liability to the amount necessary to
repair the vehicle, see State Farm Mut. Auto. Ins. Co. v. Mabry, 556 S.E.2d 114,
122 (Ga. 2001), we find that they are not.  The operative term at issue is "repair,"
which means "[t]o restore to sound condition after damage or injury." Webster's
II: New Riverside University Dictionary  996 (Soukhanov et al. eds., 1984). 
As commonly used, "the word 'repair' means to fix by replacing or putting
together what is broken, or . . . 'to bring back to good or useable condition.'"
O'Brien v. Progressive N. Ins. Co., 785 A.2d 281, 290 (Del. 2001) (quoting
Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454, 464 (Tex. App. 2000)). 
The act of repairing an object typically focuses upon restoring the object's
function and purpose, and not upon returning the object to its earlier worth or
value. 

	[¶8]  The limits of Acadia's liability are expressed in a concrete and direct
manner: pay the lesser of either the actual cash value of the vehicle at the time of
the loss or the amount necessary to repair or replace the property.  The necessary
cost of a repair is fairly understood to mean the amount that will be required to
fix the car, not, in addition, the difference between the amounts a hypothetical
willing and able buyer might pay to purchase the vehicle in its pre-accident
condition versus its post-repair condition.
 
	[¶9]  We conclude that the policy's use of the term "repair" is unambiguous
and that Acadia's liability for a loss under the policy extends only to the loss that
can be repaired as that term is commonly understood.  Because diminution in
value is a loss that cannot be repaired, an ordinary person would reasonably
conclude that a claim for diminished value is not covered by the policy.  The
court was correct to grant Acadia's motion for a summary judgment.  

	The entry is:

			Judgment affirmed
                                               

Attorney for appellant:

Steven Kommel, Esq.
P O Box 268
Portland, ME 04112-0268

Attorney for defendant:

James M. Bowie, Esq.
Thompson & Bowie
P O Box 4630
Portland, ME 04112-4630