This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).





Acuity Insurance Company,


R & H Painting, Inc.,


Filed December 11, 2007


Halbrooks, Judge


Wright County District Court

File Nos. 86-CV-06-5275, 86-CV-06-3364


Anamarie Reyes Kolden, Yost & Baill, L.L.P., 2050 U.S. Bank Plaza South, 220 South 6th Street, Minneapolis, MN 55402 (for respondent)


Gordon P. Raisanen, Raisanen & Associates Law Firm, Ltd., 15725 U.S. Highway 12 Southwest, Cokato, MN 55321 (for appellant)



            Considered and decided by Dietzen, Presiding Judge; Randall, Judge; and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant challenges the district court’s grant of summary judgment to respondent on the grounds that the district court erred in (1) its conclusion that the language of the insurance policy is unambiguous and (2) its determination that the reasonable-expectation doctrine is not applicable.  We affirm.


Appellant R & H Painting, Inc. is a commercial/industrial painting contracting business with business liability insurance from respondent Acuity Insurance Co.  Appellant’s insurance includes coverage for property-damage claims resulting from its painting operations.  The relevant language in the policy states:

1.         Our obligation under Liability and Medical Expense Coverages to pay damages on your behalf because of property damage applies only to the amount of damages in excess of the deductible amount shown in the Schedule.

2.         The deductible amount shown in the Schedule applies to all damages sustained by any one person or organization because of property damage as the result of any one occurrence.


            In 2003, appellant had an overspray incident while insured by respondent.  The incident resulted in damage to 15 cars owned by individual owners, 13 of whom made claims to respondent.  By letter dated January 12, 2004, respondent charged appellant for only one $250 deductible.  When appellant renewed its insurance policy with respondent on March 1, 2004, the relevant policy language remained the same.

            Appellant subsequently had two more overspray incidents on June 8 and September 2, 2004, that resulted in claims for property damage.  On December 17, 2004, respondent sent a written request to appellant for a $2,000 deductible as a result of eight claims from the June 8 incident, charging one $250 deductible for each of the eight claims.  Appellant paid only one deductible and attached respondent’s January 12, 2004 letter in explanation.  Respondent subsequently requested on multiple occasions that appellant pay the remaining seven deductibles.  When appellant refused to pay the other seven deductibles, respondent filed a claim in conciliation court, seeking $1,750 in damages.  The Wright County Conciliation Court heard the claim and ordered judgment for the full amount in favor of respondent.  Appellant filed a demand for removal and de novo trial.

            On March 18, 2005, respondent requested payment from appellant for 43 separate deductibles as a result of the claims associated with the September 2, 2004 overspray incident.  Appellant again paid one deductible, leaving the other 42 deductibles unpaid.  Respondent brought suit in district court, seeking $10,500 in damages (the amount of the 42 unpaid deductibles).  Both parties sought transfer of the case from Hennepin to Wright County district court and consolidation of the two pending cases.  The parties each moved for summary judgment, and the district court granted summary judgment to respondent.  This appeal follows.



I.         Ambiguity in the Insurance Contract

Appellant asserts that the district court erred in its determination that the language in the following clause in the insurance policy is unambiguous:

2.         The deductible amount shown in the Schedule applies to all damages sustained by any one person or organization because of property damage as the result of any one occurrence.


(Emphasis added.)

            Interpretation of the meaning of an insurance policy is a question this court reviews de novo.  Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 879 (Minn. 2002).  Contract language “is ambiguous if it is reasonably susceptible of more than one construction.”  Collins Truck Lines, Inc. v. Metro. Waste Control Comm’n, 274 N.W.2d 123, 126 (Minn. 1979). 

            “Provisions in an insurance policy are to be interpreted according to both plain ordinary sense and what a reasonable person in the position of the insured would have understood the words to mean.”  Farmers Home Mut. Ins. Co. v. Lill, 332 N.W.2d 635, 637 (Minn. 1983) (quotation omitted).  If the language of an insurance contract is unambiguous, it must be given its plain and ordinary meaning.  Thommes, 641 N.W.2d at 880.  But where the language is ambiguous, it will be construed against the insurer, as the drafter of the contract.  Progressive Specialty Ins. Co. v. Widness, 635 N.W.2d 516, 518 (Minn. 2001).  “Because of the presumption that the parties intended the language used to have effect, we will attempt to avoid an interpretation of the contract that would render a provision meaningless.”  Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 526 (Minn. 1990); see also Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn. 1995) (“A contract must be interpreted in a way that gives all of its provisions meaning.”).

            The June 8, 2004 overspraying incident caused property damage to the vehicles of eight employees of DEW, a company involved in the construction of the Metropolitan Airport Commission freight facility.  According to appellant, all eight vehicle owners had been asked to move their vehicles before the painting started.  On September 2, 2004, the vehicles of 43 Menards employees were damaged by appellant’s overspraying.  Because in each instance the claimants were all employed by a single company, appellant argues that the “one organization” language in paragraph 2 of the policy results in assessment of just one deductible payment. 

Based on the plain language of the policy, we disagree.  The property damage was not sustained by DEW or Menards, but, rather, by their employees.  Therefore, the “damages sustained by any one person” language is triggered.  The injury occurred to the individuals, not to their companies. 

            Appellant also argues that respondent’s conduct in 2003 when it charged only one deductible for a series of claims illustrates ambiguity in this portion of the insurance policy.  The language in appellant’s initial policy and in the renewed 2004 policy is identical.  It is true that respondent only requested payment for one deductible in 2003.  For the 2004 claims, respondent required deductible payments for each claim.  Thus, appellant contends that respondent interpreted “one occurrence” to mean all damages arising from the same incident in 2003, and in 2004, to mean every claim, regardless of the number arising out of one incident.  Appellant contends that this lack of consistency illustrates an ambiguity in the contract.  Again, we disagree.

            The term “occurrence” is defined in the insurance contract as, “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  As defined in the policy itself, an “occurrence” must be an accident, and it must involve harmful conditions.  This definition is capable of only one reasonable interpretation in the plain language of the insurance policy.  Respondent’s earlier conduct in not collecting the number of deductibles that it was due may very well have been a mistake, but it does not change the plain language of the insurance policy itself.  See Colangelo v. Norwest Mortgage, Inc., 598 N.W.2d 14, 18 (Minn. App. 1999) (“‘Where the terms of a contract are clear and unambiguous, there is no room for construction or interpretation.’” (quoting Pierce v. Grand Army of the Republic, 224 Minn. 248, 253, 28 N.W.2d 637, 640 (1947)), review denied (Minn. Oct. 21, 1999). 

II.        Reasonable-Expectations Doctrine

            Appellant argues that even if there is no ambiguity in the contract, the doctrine of reasonable expectations applies, so that appellant had a reasonable expectation that it would be charged only one deductible, based on respondent’s conduct after appellant’s first overspray incident.  Appellant contends the district court erred in concluding that the reasonable-expectations doctrine cannot be applied where there are no ambiguities. 

            In Minnesota, the reasonable-expectations doctrine has been applied to an insurance contract to establish the reasonable expectations of the insured, even when terms were unambiguous.  Atwater Creamery Co. v. W. Nat’l Mut. Ins. Co., 366 N.W.2d 271 (Minn. 1985).  Subsequent decisions by this court have limited the reasonable-expectations doctrine to contracts with ambiguous language or contracts with hidden exclusions.  Merseth by Merseth v. State Farm Fire & Cas. Co., 390 N.W.2d 16, 18 (Minn. App. 1986), review denied (Minn. Aug. 13, 1986).  When there is no ambiguity or hidden exclusion, the doctrine of reasonable expectations cannot be applied to modify the plain language of an insurance policy.  Levin v. Aetna Cas. & Surety Co., 465 N.W.2d 99, 102 (Minn. App. 1991), review denied (Minn. Mar. 27, 1991).

            Here, we have concluded that the insurance policy is unambiguous.  Further, the policy contains no hidden exclusions.  The policy in this case is clearly distinguishable from other cases where the reasonable-expectations doctrine has been applied.  See Rusthoven v. Commercial Standard Ins. Co., 387 N.W.2d 642 (Minn. 1986) (concluding that a policy was ambiguous because it contained irreconcilably inconsistent language); Curtis v. Home Ins. Co., 392 N.W.2d 44 (Minn. App. 1986) (concluding that internally inconsistent terms create ambiguity). 

            The district court properly declined to apply the reasonable-expectations doctrine.  Although appellant points to inconsistencies in respondent’s actions under the initial policy and under the 2004 renewal, application of appellant’s reasonable expectations to defeat the plain language of the policy is not appropriate.