Allied Prop. & Cas. Ins. Co. v. Stuart

• Decision Date: 27 January 2017
• Docket Number: Case No. 4:16–CV–806 (CEJ)
• Parties: ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff, v. Lynn STUART, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

230 F.Supp.3d 969

ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,

v.Lynn STUART, Defendant.

Case No. 4:16–CV–806 (CEJ)

United States District Court, E.D. Missouri, Eastern Division.

Signed January 27, 2017

Russell F. Watters, Brown and James, P.C., St. Louis, MO, for Plaintiff.

Timothy R. Muehleisen, Edelman deRoode, LLC, St. Louis, MO, for Defendant.

MEMORANDUM AND ORDER

CAROL E. JACKSON, UNITED STATES DISTRICT JUDGE

This matter is before the Court on plaintiff's motion for summary judgment. Defendant has filed a memorandum in opposition, and all issues are fully briefed.

I. Background

Plaintiff Allied Property and Casualty Insurance Company issued an automobile insurance policy to defendant Lynn Stuart, providing underinsured motorist coverage (UIM) of up to $100,000 per person. On June 10, 2011, defendant sustained injuries in an automobile accident. She ultimately recovered $250,000—the full amount of coverage available under the negligent driver's insurance policy. However, defendant's damages exceeded $250,000. She therefore submitted a claim to plaintiff for $100,000 under the UIM provision in her policy. Plaintiff denied the claim. Plaintiff now brings this action pursuant to 28 U.S.C. § 2201, seeking a declaration that defendant is not entitled to UIM coverage under the policy.

II. Legal Standard

Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered if the moving party shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." In ruling on a motion for summary judgment a court is required to view the facts in the light most favorable to the non-moving party and must give that party the benefit of all reasonable inferences to be drawn from the underlying facts. AgriStor Leasing v. Farrow , 826 F.2d 732, 734 (8th Cir. 1987). The moving party bears the burden of showing both the absence of a genuine issue of material fact and its entitlement to judgment as a matter of law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Once the moving party has met its burden, the non-moving party may not rest on the allegations of his pleadings but must set forth specific facts, by affidavit or other evidence, showing that a genuine issue of material fact exists. United of Omaha Life Ins. Co. v. Honea , 458 F.3d 788, 791 (8th Cir. 2006) (quoting Fed. R. Civ. P. 56(e) ). Rule 56"mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

III. Discussion

In this diversity action, the Court is bound by the decisions of the Missouri Supreme Court regarding issues of substantive state law. Owners Ins. Co. v. Hughes , 712 F.3d 392, 393 (8th Cir. 2013). Decisions by the Missouri Court of Appeals may be used as "an indication of how the Missouri Supreme Court may rule," but the Court is "not bound to follow these decisions." Id.

"Insurance policies are read as a whole, and the risk insured against is made up of both the general insuring agreement as well as the exclusions and definitions." Todd v. Missouri United Sch. Ins. Council , 223 S.W.3d 156, 163 (Mo. 2007) (en banc). In construing the terms of an insurance policy, Missouri courts apply "the meaning an ordinary person of average understanding would attach if purchasing insurance, and resolve[ ] ambiguities in favor of the insured." Dutton v. Am. Family Mut. Ins. Co. , 454 S.W.3d 319, 322 (Mo. 2015). But, "[i]f the policy's language is unambiguous, it must be enforced as written." Floyd–Tunnell v. Shelter Mut. Ins. Co. , 439 S.W.3d 215, 217 (Mo. 2014). Ambiguities arise when there is "duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions." Burns v. Smith , 303 S.W.3d 505, 509 (Mo. 2010) (citation omitted). Ambiguity also arises where an insurance clause appears to furnish coverage but other provisions signal that such coverage is not provided. Seeck v. Geico Gen. Ins. Co. , 212 S.W.3d 129, 134 (Mo. 2007) (en banc). However, "[d]efinitions, exclusions, conditions and endorsements are necessary provisions in insurance policies. If they are clear and unambiguous within the context of the policy as a whole, they are enforceable." Todd , 223 S.W.3d at 163. Finally, "[a] court may not create an ambiguity in order to distort the language of an unambiguous policy, or, in order to enforce a particular construction which it might feel is more appropriate." Rodriguez v. Gen. Acc. Ins. Co. of Am. , 808 S.W.2d 379, 382 (Mo. 1991) (en banc).

The UIM Coverage endorsement in the policy involved in this case provides as follows:

I. UNDERINSURED MOTORISTS COVERAGE INSURING AGREEMENT

A. We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "underinsured motor vehicle" because of "bodily injury":

1. Sustained by an "insured"; and

2. Caused by an accident.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "underinsured motor vehicle".

We will pay under this coverage only if 1. or 2. below applies:

1. The limits of liability under any bodily injury liability bonds or policies applicable to the "underinsured motor vehicle" have been exhausted by payment of judgments or settlements; or

2. A tentative settlement has been made between an "insured" and the insurer of the "underinsured motor vehicle" and we:

a. Have been given prompt written notice of such tentative settlement; and

b. Advance payment to the "insured" in an amount equal to the tentative settlement within 30 days after receipt of notification.

[Doc. # 1–1 at 33].

Then, within that same section, the policy sets forth the following definition:

C. "Underinsured motor vehicle" means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage.

Id.

The above-quoted excerpt describes an "underinsured motor vehicle" as one that has a limit for liability that is less than the limit of liability for this coverage . The parties stipulate that the defendant had $100,000 in UIM coverage. [Doc. # 20 at 2; Doc. # 17 at 2]. They also stipulate that the "limit of liability" under the negligent driver's policy was $250,000. [Doc. # 17 at 1; Doc. # 20 at 1]. By its plain language, therefore, the policy definition of "underinsured motor vehicle" does not apply to the negligent driver's vehicle, resulting in no coverage for defendant's claim. See Burger v. Allied Prop. & Cas. Ins. Co. , 822 F.3d 445, 448 (8th Cir. 2016) (holding that, under Missouri law, a tortfeasor with $100,000 liability limit was not an underinsured motorist within the meaning of a UIM provision with a liability limit of less than $50,000); Owners Ins. Co. v. Hughes , 712 F.3d 392, 394 (8th Cir. 2013) (because tortfeasor's coverage was equal to liability limit of insured's policy, tortfeasor was not underinsured motorist).

The Missouri Supreme Court addressed a similar UIM provision in Rodriguez v. Gen. Acc. Ins. Co. of Am. , 808 S.W.2d 379 (Mo. 1991) (en banc). The insured in Rodriguez was injured in a car accident with a negligent driver whose insurance company paid $50,000, the limit of the negligent driver's policy. Rodriguez , 808 S.W.2d at 380. The insured's damages exceeded $50,000 and she sought coverage under her policy, which provided UIM coverage up to a limit of $50,000. Id. In Rodriguez , as here, the insuring agreement defined "underinsured motor vehicle" as a vehicle for which the "limit for bodily injury is less than the limit of liability for this coverage." Id. at 380–81.Rodriguez held that this definition of underinsured motor vehicle was "neither ambiguous nor misleading." Id. at 383. And, under this definition, the insured was not entitled to coverage because the tortfeasor's bodily injury limit was not "less than" the insured's UIM limit and, therefore, the vehicle driven by the tortfeasor was not an "underinsured motor vehicle." Id. at 382.

Defendant does not dispute that, under Rodriguez , the definition of "underinsured motor vehicle" is unambiguous. Instead, defendant cites a number of subsequent Missouri cases in which the courts found that ambiguity arose from other provisions of UIM policies. [Doc. # 21 at 3, 5–7, 10] (citing Jones v. Mid–Century Ins. Co. , 287 S.W.3d 687 (Mo. 2009) (en banc); Ritchie v. Allied Prop. & Cas. Ins. Co. , 307 S.W.3d 132 (Mo. 2009) (en banc); Seeck v. Geico Gen. Ins. Co. , 212 S.W.3d 129 (Mo. 2007) (en banc); Miller v. Ho Kun Yun , 400 S.W.3d 779 (Mo. Ct. App. 2013) ; Long v. Shelter Ins. Co. , 351 S.W.3d 692 (Mo. Ct. App. 2011) ; Wasson v. Shelter Mut. Ins. Co. , 358 S.W.3d 113 (Mo. Ct. App. 2011) ; Am. Family Mut. Ins. Co. v. Ragsdale , 213 S.W.3d 51 (Mo. Ct. App. 2006) ; Ware v. Geico Gen. Ins. Co. , 84 S.W.3d 99 (Mo. Ct. App. 2002) ; Niswonger v. Farm Bureau Town & Country Ins. Co. of Mo. , 992 S.W.2d 308 (Mo. Ct. App. 1999) ; Zemelman v. Equity Mut. Ins. Co. , 935 S.W.2d 673 (Mo. Ct. App. 1996).

Of these cases, only Jones , Seeck , and Ritchie were decided by the Missouri Supreme Court and therefore bind this Court. And, as addressed by other federal courts, these cases do not lessen the force of the holding in Rodriguez . See Owners Ins. Co. v. Hughes , 712 F.3d 392, 395 (8th Cir. 2013) (explaining that Jones "actually confirms ... the operative holding of Rodriguez "); ...