Affirmative Ins. Co. v. Broeker

• Decision Date: 26 November 2013
• Docket Number: No. ED 98700.,ED 98700.
• Citation: 412 S.W.3d 314
• Parties: AFFIRMATIVE INSURANCE COMPANY, Plaintiff, v. John F. BROEKER, Jr., Tracy Broeker, Malayna Mendenhall, Cameron Mendenhall, Julian Mendenhall, Appellants, and Empire Fire and Marine Insurance Company, Respondent.
• Court: Missouri Court of Appeals

412 S.W.3d 314

AFFIRMATIVE INSURANCE COMPANY, Plaintiff,

v.John F. BROEKER, Jr., Tracy Broeker, Malayna Mendenhall, Cameron Mendenhall, Julian Mendenhall, Appellants,andEmpire Fire and Marine Insurance Company, Respondent.

No. ED 98700.

Missouri Court of Appeals,

Eastern District,

Division Four.

July 30, 2013.

Motion for Rehearing and/or Transfer to Supreme Court Denied Sept. 17, 2013.

Application for Transfer Denied Nov. 26, 2013.

Timothy J. Gallagher, St. Louis, MO, for appellants.

Russell F. Watters, St. Louis, MO, for respondent.

PATRICIA L. COHEN, Judge.

Introduction

This appeal arises out of a petition for declaratory judgment filed by Affirmative Insurance Company (Affirmative) ¹ against Empire Fire & Marine Insurance Co. (Empire) and John and Tracy Broeker (Appellants), grandparents and guardians of the children of Trenton and Casey Mendenhall, who died in an automobile accident while driving a vehicle rented from Enterprise Leasing Company of St. Louis (Enterprise). The parties filed cross-motions for summary judgment in an effort to determine whether Appellants were entitled to coverage under insurance policies issued by Affirmative (to Trenton Mendenhall) and Empire (to Enterprise). Appellants appeal the trial court's order granting Empire summary judgment and holding that Empire's policy neither provided excess coverage for Appellants' nor required Empire to pay Appellants the statutory mandatory minimum of $25,000. We affirm.

Factual and Procedural Background

On July 8, 2010, Enterprise rented a car to Casey Mendenhall. At the time of rental, Casey Mendenhall executed a rental agreement (Rental Agreement) and agreed to purchase, among other things, Optional Supplemental Liability Protection (OSLP) at an additional cost of $12.99 per day. In Paragraph 17 of the “Additional Terms and Conditions” section, the Rental Agreement set forth the OSLP as follows:

Optional Supplemental Liability Protection (SLP) provides Renter with minimum financial responsibility limits as outlined in the applicable motor vehicle financial responsibility laws of the state where Vehicle is operated [ ²] AND excess Insurance provided by the insurance policy, which supplies Renter and AAD(s)[ ³] with third-party liability protectionwith a combined single limit per accident equal to the difference between the minimum financial responsibility limits referenced above and $1,000,000 Combined Single Limit per accident. SLP will respond to third party accident claims that result from bodily injury, including death, and property damage that arise from the use or operation of Vehicle as permitted in this Agreement....

The “excess Insurance provided by the insurance policy” referenced in the OSLP referred to an excess insurance policy that Empire issued to Enterprise (Empire policy).⁴ The Empire policy provided excess coverage, subject to certain conditions and exclusions, to persons who paid to rent vehicles from Enterprise and opted to purchase the OSLP. More specifically, the Empire policy provided excess coverage in the amount of the difference between $1,000,000 and the limits of the underlying insurance, defined as the “policy or policies of insurance, bond, cash deposit or self insurance, maintained by the ‘policyholder’ or ‘insured’ which satisfy at least the Minimum Financial Responsibility requirements of the state where the accident occurred.”

While driving the rental vehicle on July 12, 2010, Casey Mendenhall's husband, Trenton Mendenhall, apparently fell asleep at the wheel and drove the rental car off an embankment. Both Mendenhalls died in the accident.

Following the Mendenhalls' deaths, Enterprise tendered to Appellants $25,000 consistent with the OSLP's promise to provide the “minimum financial responsibility limits as outlined in the [Missouri Motor Vehicle Financial Responsibility (MVFRL) ].” Empire denied coverage for Appellants' claim for Casey Mendenhall's wrongful death under the Empire policy's household exclusion.

Affirmative, which insured Trenton Mendenhall's personal automobile, filed a petition for a declaratory judgment that it had no duty to defend or indemnify Trenton Mendenhall in a potential wrongful death claim arising from Casey Mendenhall's death. Thereafter, Affirmative amended its petition for a declaratory judgment by joining Empire as a defendant. Subsequently, Appellants filed a wrongful death lawsuit against Trenton Mendenhall. Appellants also counter-claimed against Affirmative and cross-claimed against Empire seeking a declaration that Affirmative's and Empire's policies covered Appellants' wrongful death claim.

The parties entered a joint stipulation of facts, and Empire filed a motion for summary judgment against Appellants and Affirmative. Appellants and Affirmative also filed motions for summary judgment. In its motion for summary judgment, Empire contended that: (1) its excess policy did not cover Appellants' claims arising from the July 12, 2010 accident because the policy excluded from coverage “bodily injury” sustained by an insured or an insured's household member, and the term “bodily injury” included death; and, alternatively, (2) if coverage existed, the maximum amount of coverage to which Appellants were entitled was $25,000. The trial court granted Empire's motion for summary judgment holding that: (1) as a result of the household exclusion, the Empire policy did not provide Appellants $1,000,000 in excess coverage; and (2) because the Empirepolicy “provides only excess coverage,” Empire did not owe Appellants a minimum payment of $25,000.⁵ This appeal follows.

Standard of Review

Summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Rule 74.04(c); ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). There is no dispute as to the material facts in this case. Both points on appeal involve only the interpretation of an insurance policy, which is a question of law that this court reviews de novo. Karscig v. McConville, 303 S.W.3d 499, 502 (Mo. banc 2010).

Discussion

In their first point on appeal, Appellants claim that the trial court erred when it held that the Empire policy did not entitle Appellants to excess coverage up to $1,000,000 for their loss resulting from Casey Mendenhall's death.⁶ More specifically, Appellants contend that the excess coverage applies because, according to the Rental Agreement, although the Empire policy's household exclusion excluded third party liability claims resulting from bodily injury and property damage, the policy did not exclude liability for a wrongful death. Empire counters that the trial court properly declared that no coverage existed under the Empire policy for Casey Mendenhall's wrongful death because Appellants' “claim was precluded by the household exclusion in that the exclusion included death claims and the Rental Agreement accurately reflected that fact.”

The interpretation of an insurance policy is a question of law. Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). In construing the terms of an insurance policy, this court “applies the meaning which should be attached by an ordinary person of average understanding if purchasing insurance and resolves ambiguities in favor of the insured.” Id. (internal quotations omitted). “The plain meaning of the various terms of an insurance policy is not determined by viewing the terms in isolation but by viewing them in reference to the whole policy.” Golden Rule Ins. Co. v. R.S., 368 S.W.3d 327, 334 (Mo.App. W.D.2012).

“When the words and phrases in the policy, viewed as a whole, are ambiguous, we must resort to the rules of contract construction applicable to insurance policies.” Id. at 334. “[A]n ambiguity arises in an insurance contract when, due to duplicity, indistinctness, or uncertainty in the meaning of the words used, the policy is reasonably open to different constructions.” Nat'l Union Fire Ins. Co. v. Maune, 277 S.W.3d 754, 758 (Mo.App. E.D.2009); see also Seeck, 212 S.W.3d at 132. If an ambiguity exists in an insurance policy, the court must construe the policy in favor of the insured. Seeck, 212 S.W.3d at 132. However, when the insurancepolicy is unambiguous, the court will enforce the policy according to its terms. Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991).

A household exclusion is a “limitation or exclusion from providing coverage for bodily injury to the insured or anyone connected with the insured by blood or affinity.” Jensen v. Allstate Ins. Co., 349 S.W.3d 369, 375 (Mo.App. W.D.2011). “While generally disfavored, [household exclusion] clauses are permissible to exempt the insurer from being required to cover claims by those persons to whom the insured, on account of close family ties, would be apt to be partial in the case of injury....” Progressive Northwestern Ins. Co. v. Talbert, 407 S.W.3d 1, 6 (Mo.App. S.D.2013) ( quoting Shahan v. Shahan, 988 S.W.2d 529, 539 (Mo. banc 1999) (J. White, dissenting)). The Supreme Court has held that a household exclusion can limit coverage to $25,000 per person, the amount of minimal coverage required by the MVFRL. Halpin v. Am. Family Mut. Ins. Co., 823 S.W.2d 479, 482–83 (Mo. banc 1992).

At the time of rental, Enterprise provided Casey Mendenhall a four-page Rental Agreement, which offered, among other things, the option to purchase OSLP. Casey Mendenhall agreed to purchase OSLP by initialing a box that stated: “RENTER ACCEPTS OPTIONAL SUPPLEMENTAL LIABILITY PROTECTION (SLP) AT FEE SHOWN IN COLUMN TO RIGHT. SEE PAGE 3, PARAGRAPH 17.” Paragraph 17 of the Rental Agreement described the OSLP as follows:

17. Optional Supplemental Liability Protection.

THE PURCHASE OF SUPPLEMENTAL LIABILITY PROTECTION IS OPTIONAL AND IS NOT REQUIRED IN ORDER TO RENT A VEHICLE. THIS IS A SUMMARY ONLY AND IS SUBJECT TO ALL PROVISIONS, LIMITATIONS, EXCEPTIONS AND...