Appeal from Atchison District Court; ROBERT J. BEDNAR, judge.
SYLLABUS BY THE COURT 1. An appellate court reviewing an order granting summary judgment applies the same standards the district court must apply in considering the summary judgment motion in the first instance. 2. In considering the language of a fire insurance policy, the court examines the language of the policy without applying any rules of construction if the terms of the policy are clear. The test for determining the meaning of the language of the policy is what a reasonable person in the position of the policyholder would understand the language to mean. Unless a contrary intention is shown, words used in an insurance policy are to be given the natural and ordinary meaning they convey to the ordinary mind.
The opinion of the court was delivered by: Mcanany, J.
Before MCANANY, P.J., HILL and LEBEN, JJ.
In this appeal we are asked to apply a requirement in a "Protective Safeguards" endorsement to a fire insurance policy that "All Electric is on Functioning and Operational Circuit Breakers."
Mount Vernon Fire Insurance Company (Mount Vernon) issued the policy that contained this endorsement to Gold Mine Investments, Inc., doing business as Gold Realty (Gold) for fire coverage on a commercial building Gold owned in Atchison. The building was destroyed by fire, and Mount Vernon denied coverage, claiming that Gold breached the policy by having both a fuse box and circuit breakers protecting the electrical service in the building. According to Mount Vernon, the building's electrical circuits had to be protected by circuit breakers to the exclusion of any fuses.
Gold sued Mount Vernon for its denial of coverage, and the district court granted summary judgment in favor of Mount Vernon on Gold's claims. In our de novo review we conclude that Mount Vernon was not entitled to summary judgment, so we reverse the judgment in its favor and remand the case for further proceedings in the district court.
The policy Mount Vernon issued to Gold was a commercial package policy which included general liability and commercial property coverage for Gold's building. The commercial property coverage portion of the policy was subject to a "Protective Safeguards" endorsement which required the insured to maintain certain protective safeguards listed on a schedule. The schedule included the following: "All Electric is on Functioning and Operational Circuit Breakers." Further, the endorsement stated:
"We will not pay for loss or damage caused by or resulting from fire if, prior to the fire, you:
"1. Knew of any suspension or impairment in any protective safeguard listed in the Schedule above and failed to notify us of that fact; or
"2. Failed to maintain any protective safeguard listed in the Schedule above, and over which you had control, in complete working order."
Mount Vernon's Summary Judgment Motion
The district court denied Mount Vernon's first summary judgment motion, finding unresolved issues of material fact for trial. Later, Mount Vernon filed the current summary judgment motion. In support of this motion, Mount Vernon stated that the "record establishes that Gold Realty failed to comply with the Endorsement because the building's electrical system at the time of the fire used both fuses and circuit breakers." Here, in abbreviated form, are Mount Vernon's key claimed uncontroverted facts:
8. Before the fire the building "did not have all electric power on functioning and operational circuit breakers."
12. The fuse panel "remained energized after Mr. Ochoa finished his work."
15. There was a three-phase fuse box in the building just before the fire.
19. The building had at least one fuse panel installed which was connected to the power source and ...