Ferguson v. Coregis Insurance Company
Filed June 3, 2008
Cite as 06-35867

Endorsement Unenforceable upon Reference to Nonexistent Standard

John Ferguson filed an action in an Idaho court on behalf of his son. He prayed for a declaratory judgment as to the general liability limit of an insurance policy sold to a local school district by Coregis Insurance Company.

The issue of the case was the policy’s limits for “general liability” coverage granted to the school. Ferguson contended that the liability limits were $2,000,000. On the other hand, the insurance company asserted that the limit was $500,000.

Pursuant to the policy’s “Idaho Tort Claim Act” endorsement, it limited the liability amount indicated by §6-924, which provided that:

“Every policy or contract of insurance or comprehensive liability plan of a governmental entity as permitted under the provisions of this chapter shall provide that the insurance carrier pay on behalf of the insured governmental entity or its employee to a limit of not less than five hundred thousand dollars ($500,000) for bodily or personal injury, death, or property damage or loss as the result of any one (1) occurrence or accident, regardless of the number of persons injured or the number of claimants.”

Coregis successfully moved the action to federal district court. It then moved for, and was granted, summary judgment.

The district court held that the contract is unambiguous. In fact the limit is $500,000 because that was the only amount referred to in §6-924.

On appeal, the Ninth U.S. Circuit Court of Appeals reversed the decision of the district court by holding that:

• Since §6-924 did not contain any limit of liability, it could not be used as a standard for purposes of reducing the dollar limits in the policy endorsement


• The endorsement stated the insurer’s liability was limited to “the limit of liability per the amount indicated by the Idaho Code §6-924”. But reference to Sec. 6-924 showed that it only mandates a minimum dollar amount of coverage a governmental entity must purchase and does not contain a limit of liability.


• Therefore, reference to a nonexistent standard rendered the endorsement uncertain and unenforceable under Idaho law.


• District court erred in granting insurer’s motion for summary judgment because a judgment cannot be entered to enforce a contract’s term when that term does not exist.