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Wellcome v. Home Insurance3/25/1993
, 967 (1970), for the proposition that the objectively reasonable expectations of the purchaser would be honored notwithstanding the fact that a "painstaking study" of the policy would have negated the expectations. Royle, 656 P.2d at 824. The reasonable expectations doctrine is in accord with our strong public policy that insurance is intended to serve a fundamental protective purpose; to this extent the doctrine goes hand in hand with our rule of strictly construing policy exclusions. See Oakland, 825 P.2d at 556.
We next considered, and declined to apply, the reasonable expectations doctrine in Passage v. Prudential-Bache Securities, Inc. (1986), 223 Mont. 60, 727 P.2d 1298. In Passage, plaintiffs contended that the arbitration clause in their client agreement form, printed in the same typeface as the other agreement provisions, was unenforceable as outside their reasonable expectations. Stating that there was nothing in the record to indicate that the arbitration clause was not within the parties' expectations, we affirmed the enforceability of the clause. Passage, 727 P.2d at 1302.
We most recently addressed the reasonable expectations of an insured in State Farm v. Estate of Braun (1990), 243 Mont. 125, 793 P.2d 253. There, the underinsured policy at issue specifically provided that coverage extended to Canada. Canadian law severely restricted damages in wrongful death tort actions. We determined that, given the policy's specific extension of coverage for accidents occurring in Canada, a reasonable average insured would not be aware that, in relation to Montana law, Canadian law severely restricted damages. Braun, 793 P.2d at 256. We noted that accepting the insurer's position would produce the result that State Farm sold, and collected premiums for, coverage in Canada that was worthless to the insured. Braun, 793 P.2d at 256.
Nothing in our cases supports the applicability of the reasonable expectations doctrine in this case. In neither Royle nor Braun did we apply the doctrine to require coverage where clear policy language excluded the coverage. We decline to do so here. Expectations which are contrary to a clear exclusion from coverage are not "objectively reasonable" as we used that term in Royle.
We have concluded herein that the definition of damages in Wellcome's policy with Home which excludes "fines" clearly and unambiguously excluded coverage under the facts of this case. To require Home to provide coverage where the policy manifests a clear intent to do otherwise would violate our most basic contract law and rules of interpretation. See, e.g., ยง 28-3-401, MCA, and Waller, 828 P.2d at 1386. We conclude, therefore, that the doctrine of reasonable expectations does not require Home to provide coverage for the sanctions imposed against Wellcome.
Based on the above discussion and conclusions, we answer the certified questions as follows:
"First, was there ambiguity in the contract language that should be construed against Home to require it to provide coverage for the sanctions imposed against Wellcome?" No.
"Second, does the doctrine of reasonable expectations require Home to provide coverage for the sanctions imposed against Wellcome?" No.
JUSTICES TRIEWEILER, HUNT, HARRISON and WEBER concur.
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