141 F.3d 819 (8th Cir. 1998), 97-3153, State Farm Mut. Auto. Ins. Co. v. Shahan

Docket Nº:97-3153.
Citation:141 F.3d 819
Party Name:STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee, v. Andrew SHAHAN, Nancy Hunolt, Leo Hunolt, Appellants.
Case Date:April 01, 1998
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 819

141 F.3d 819 (8th Cir. 1998)

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee,

v.

Andrew SHAHAN, Nancy Hunolt, Leo Hunolt, Appellants.

No. 97-3153.

United States Court of Appeals, Eighth Circuit

April 1, 1998

Submitted Jan. 12, 1998.

Page 820

Brent Mayberry, Kirksville, MO, argued, for Appellant.

Page 821

Gary Phillip Paul, St. Louis, MO, argued, for Appellee.

Before RICHARD S. ARNOLD, Chief Judge, WOLLMAN and HANSEN, Circuit Judges.

WOLLMAN, Circuit Judge.

This appeal stems from a dispute over the terms of automobile insurance policies issued by State Farm Mutual Automobile Insurance Company (State Farm) to Leo and Nancy Hunolt. After Andrew Shahan made a claim for underinsured motorist coverage under the policies, State Farm initiated this action seeking a declaration of non-responsibility. The Hunolts and Shahan counterclaimed, alleging vexatious refusal to pay. The district court 1 entered summary judgment for State Farm. We affirm.

I.

In 1991, Andrew Shahan sustained significant injuries in a single-vehicle accident while a passenger in a 1987 Chevrolet pickup driven by his half-brother. At the time of the accident, Shahan resided with his mother, Nancy Hunolt, and her husband, Leo. The pickup involved in the accident was owned by the Hunolts and was covered by an automobile insurance policy issued by State Farm. The Hunolts owned two other vehicles, a 1987 Oldsmobile and a 1956 Chevrolet, both of which were insured through State Farm. The policies for the three vehicles were identical. Each provided for $25,000 personal liability coverage. In addition, each provided for underinsured motorist coverage, with limits of $100,000 per person and $300,000 per occurrence. The Hunolts also carried an underinsured motorist umbrella policy that was issued by State Farm and had a policy limit of $1,000,000.

Shahan brought an action seeking damages for injuries sustained in the accident. This action resulted in a judgment for Shahan in the amount of $225,000. Because Shahan's half-brother was an authorized driver of the Hunolts' vehicle, he was insured under the liability portion of their policy. Consequently, State Farm paid Shahan $25,000 under the personal liability coverage in partial satisfaction of the judgment.

Shahan thereafter filed a claim with State Farm seeking satisfaction of the remainder of his judgment under the underinsured motorist provisions in the Hunolts' policies. State Farm denied Shahan's claim and initiated this proceeding. The district court concluded that Shahan was not entitled to underinsured motorist coverage under the terms of the policies and that State Farm had not acted vexatiously in refusing to pay. Accordingly, the court entered summary judgment in favor of State Farm. Shahan now appeals this ruling. The parties agree that the law of Missouri applies in this diversity action. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).

II.

We review a grant of summary judgment de novo, applying the same standard as that applied by the district court. See Rabushka ex rel. United States v. Crane Co., 122 F.3d 559, 562 (8th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 1336, 140 L.Ed.2d 498 (1998). We will affirm a grant of summary judgment if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. See id.

In arguing that the district court erred in granting summary judgment for State Farm, Shahan contends that: (1) the language excluding coverage under the policy covering the 1987 Chevrolet pickup violates public policy; (2) the language excluding coverage under the policies covering the 1987 Oldsmobile and the 1956 Chevrolet is ambiguous; (3) a genuine factual dispute exists regarding the precise umbrella policy in effect at the time of the accident, precluding summary judgment; and (4) the district court misapplied

Page 822

the law in assessing his counterclaim for vexatious refusal to pay.

The 1987 Chevrolet Pickup

The policy insuring the Hunolts' 1987 Chevrolet pickup promises to pay "damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle." An underinsured vehicle is defined as:

[a motor vehicle] whose limits of liability for bodily injury liability:

a. are less than the amount of the insured's damages; or

b. have been reduced by payments to persons other than the insured to less than the amount of the insured's damages.

In addition, the policy contains the following exclusion:

An underinsured motor vehicle does not include a land motor vehicle:

1. insured under the liability coverage of this policy.

As the district court noted, this language unambiguously states that a motor vehicle insured under the policy is not an underinsured motor vehicle. Nevertheless, Shahan contends that the exclusion violates public policy because it contravenes the letter and spirit of Missouri's Motor Vehicle Financial Responsibility Law. See Mo. Ann. Stat. § 303.010 et seq. (West 1994). This argument, however, is premised upon a fundamental misunderstanding of the nature and purpose of underinsured motorist coverage.

Shahan points to Mo. Ann. Stat. § 303.190, which requires that a liability policy be carried on every motor vehicle owned, maintained, or used in the United States or Canada. This statute reflects a clear public policy interest in ensuring that all motor vehicles carry liability coverage. The Missouri Code contains no statute requiring underinsured motorist coverage, however, nor is such coverage mandated by Missouri public policy. See Rodriguez v. General Acc. Ins. Co. of America, 808 S.W.2d 379, 383 (Mo.1991) (en banc). Rather, underinsured motorist coverage is entirely optional and is governed only by the law of contracts. See American Family Mut. Ins. Co. v. Turner, 824 S.W.2d 19, 21 (Mo.Ct.App.1991). Shahan nevertheless argues that because an insured's underinsured motor vehicle coverage will be rendered inapplicable whenever the insured carries the liability coverage required by section 303.190, the exclusionary language in question is incompatible with the policy concerns expressed in section 303.190.

Shahan's argument is misconceived. The policy's exclusionary clause states simply that the vehicle insured under the liability portion of that same policy will not be considered an underinsured motor vehicle. This exclusion precludes coverage where, as here, a passenger is injured in a single vehicle accident while riding in the insured vehicle. Shahan's assertion that coverage will inevitably be precluded in every imaginable scenario is simply false. Indeed, the...

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  • 830 N.E.2d 603 (Ill.App. 1 Dist. 2005), 1-04-1808, Mercury Indem. Co. of Illinois v. Kim
    • United States
    • Illinois Court of Appeals of Illinois
    • May 23, 2005
    ...majority of our sister states that have considered the issue. See, e.g., State Farm Mutual Automobile Insurance Co. v. Shahan, 141 F.3d 819 (8th Cir.1998) (applying Missouri law); Kang v. State Farm Mutual Automobile Insurance Co., 72 Haw. 251, 815 P.2d 1020 (1991); Sullivan v. State Farm M......
  • 181 F.3d 955 (8th Cir. 1999), 98-3276, United States v. Ramirez
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • June 22, 1999
    ...which they were directly involved and were not held accountable for the total amount of drugs involved in the conspiracy"); Belitz, 141 F.3d at 819 (affirming denial of minor role adjustment where defendant was held accountable only for amount of drugs foreseeable to him rather than fu......
  • 820 F.3d 950 (8th Cir. 2016), 15-1727, 32nd St. Surgery Ctr., LLC v. Right Choice Managed Care
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • April 26, 2016
    ...cause or excuse" as both the statute and the case law require. See State Farm Mut. Auto. Ins. Co. v. Shahan, 141 F.3d 819, 824 (8th Cir. 1998) ( applying the Missouri vexatious-refusal statute in finding that " refusal to pay . . . based on the clear and u......
  • 85 F.Supp.2d 349 (D.N.J. 1999), Civ. A.98-5091, Pepe v. Rival Co.
    • United States
    • Federal Cases United States District Courts 3th Circuit District of New Jersey
    • December 15, 1999
    ...See Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo.1993) (en banc); see also State Farm Mutual Automobile Ins. Co. v. Shahan, 141 F.3d 819, 823 (8th Cir. 1998) (interpreting Missouri law). Provided the terms are clear and unambiguous, Missouri courts will give the words of the c......
  • Free signup to view additional results
14 cases
  • 830 N.E.2d 603 (Ill.App. 1 Dist. 2005), 1-04-1808, Mercury Indem. Co. of Illinois v. Kim
    • United States
    • Illinois Court of Appeals of Illinois
    • May 23, 2005
    ...majority of our sister states that have considered the issue. See, e.g., State Farm Mutual Automobile Insurance Co. v. Shahan, 141 F.3d 819 (8th Cir.1998) (applying Missouri law); Kang v. State Farm Mutual Automobile Insurance Co., 72 Haw. 251, 815 P.2d 1020 (1991); Sullivan v. State Farm M......
  • 181 F.3d 955 (8th Cir. 1999), 98-3276, United States v. Ramirez
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • June 22, 1999
    ...which they were directly involved and were not held accountable for the total amount of drugs involved in the conspiracy"); Belitz, 141 F.3d at 819 (affirming denial of minor role adjustment where defendant was held accountable only for amount of drugs foreseeable to him rather than fu......
  • 820 F.3d 950 (8th Cir. 2016), 15-1727, 32nd St. Surgery Ctr., LLC v. Right Choice Managed Care
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • April 26, 2016
    ...cause or excuse" as both the statute and the case law require. See State Farm Mut. Auto. Ins. Co. v. Shahan, 141 F.3d 819, 824 (8th Cir. 1998) ( applying the Missouri vexatious-refusal statute in finding that " refusal to pay . . . based on the clear and u......
  • 85 F.Supp.2d 349 (D.N.J. 1999), Civ. A.98-5091, Pepe v. Rival Co.
    • United States
    • Federal Cases United States District Courts 3th Circuit District of New Jersey
    • December 15, 1999
    ...See Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo.1993) (en banc); see also State Farm Mutual Automobile Ins. Co. v. Shahan, 141 F.3d 819, 823 (8th Cir. 1998) (interpreting Missouri law). Provided the terms are clear and unambiguous, Missouri courts will give the words of the c......
  • Free signup to view additional results