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Ass Kickin Ranch, LLC v. North Star Mutual

October 17, 2012

ASS KICKIN RANCH, LLC,
PLAINTIFF AND APPELLANT,
v.
NORTH STAR MUTUAL INSURANCE COMPANY, DEFENDANT AND APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA THE HONORABLE MARK BARNETT Judge

The opinion of the court was delivered by: Gilbertson, Chief Justice

CONSIDERED ON BRIEFS

ON AUGUST 27, 2012

[¶1.] North Star Mutual Insurance Company (North Star) denied coverage for two unassembled wind turbines that were destroyed in a fire on Ass Kickin Ranch's property. North Star claimed a policy exclusion permitted it to deny coverage for the loss. Ass Kickin Ranch (Ranch) sued North Star, asserting North Star committed a breach of contract and acted in bad faith in denying coverage for the unassembled wind turbines. The parties filed cross-motions for summary judgment. The circuit court granted North Star's motion for summary judgment, finding the policy exclusion applied. Ranch appealed. We affirm.

FACTS

[¶2.] Ranch purchased an insurance policy from North Star in 2009. This insurance policy included coverage for unscheduled farm personal property from November 14, 2009, to November 14, 2010. On March 31, 2010, the shop building on Ranch's property burned down. The building and its contents were destroyed in the fire. The contents of the building included the complete set of unassembled parts for two electric generating wind turbines.

[¶3.] The unassembled wind turbines were purchased by Ranch with a check which indicated on the memo line that the payment was for "2 windmills."

Each of the unassembled wind turbines consisted of a tower, a generator, a transmission, blades, and controls. The wind turbines had never been assembled or installed on Ranch's property prior to being destroyed. In order to complete installation, Ranch would have needed to pour cement footings to support the assembled wind turbines and then connect the assembled wind turbines to a power source.

[¶4.] Ranch made a $100,000 claim on its insurance policy to recover for its loss of the unassembled wind turbines. However, North Star denied Ranch's claim, concluding coverage for the unassembled wind turbines was expressly excluded by the policy. Under Coverage F, subparagraph 5(g), the policy excluded coverage for "fences, windmills, windchargers, or their towers."

[¶5.] In February 2011, Ranch sued North Star alleging breach of contract for North Star's failure to pay Ranch's $100,000 claim. Further, Ranch sought an award of punitive damages based on its allegation that North Star acted in bad faith by failing to properly evaluate Ranch's claim.*fn1 The parties filed cross-motions for summary judgment. After a hearing, the circuit court granted North Star's motion for summary judgment, finding the policy exclusion applied. The circuit court's rationale for granting North Star's motion was set forth in its order and memorandum decision. Ranch appeals, arguing the circuit court erred in denying its motion for summary judgment and in granting summary judgment in favor of North Star.

STANDARD OF REVIEW

[¶6.] When reviewing a circuit court's grant of summary judgment, this Court only decides "whether genuine issues of material fact exist and whether the law was correctly applied." Zephier v. Catholic Diocese of Sioux Falls, 2008 S.D. 56, ¶ 6, 752 N.W.2d 658, 662 (quoting Bordeaux v. Shannon Cnty. Sch., 2005 S.D. 117, ¶ 11, 707 N.W.2d 123, 126). "With the material facts undisputed, [this Court's] review is limited to determining whether the trial court correctly applied the law." De Smet Ins. Co. of S.D. v. Gibson, 1996 S.D. 102, ¶ 5, 552 N.W.2d 98, 99. If there is any legal basis to support the circuit court's decision, the case will be affirmed on appeal. Bozied v. City of Brookings, 2001 S.D. 150, ¶ 8, 638 N.W.2d 264, 268.

[¶7.] "Insurance contract interpretation is a question of law, reviewable de novo." Gibson, 1996 S.D. 102, ¶ 5, 552 N.W.2d at 99 (citing State Farm Mut. Auto. Ins. Co. v. Vostad, 520 N.W.2d 273, 275 (S.D. 1994)). "This includes determining whether an insurance contract is ambiguous." Roden v. Gen. Cas. Co. of Wis., 2003 S.D. 130, ¶ 6, 671 N.W.2d 622, 625 (quoting ...


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