Alfa Specialty Ins. Co. v. Ellis

• Court: U.S. District Court — Western District of Missouri
• Writing for the Court: HOWARD F. SACHS
• Decision Date: 10 September 2013
• Docket Number: Case No. 11-6118-CV-SJ-HFS
• Citation: Alfa Specialty Ins. Co. v. Ellis, Case No. 11-6118-CV-SJ-HFS (W.D. Mo. Sep 10, 2013)
• Parties: ALFA SPECIALTY INSURANCE CO. Plaintiff, v. MADDISON ELLIS, et al., Defendants.

ALFA SPECIALTY INSURANCE CO. Plaintiff, v. MADDISON ELLIS, et al., Defendants.

Case No. 11-6118-CV-SJ-HFS

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI ST. JOSEPH DIVISION

Dated: September 10, 2013

MEMORANDUM AND ORDER

Plaintiff, Alfa Specialty Insurance Corporation, has filed a motion for summary judgment. Alfa commenced this action seeking a declaratory judgment that with respect to claims of negligent driving by a decedent, asserted in an underlying action, it is not required to provide coverage or indemnification to the late Daniel L. Brill¹ or coverage to claimant, Jeri Campbell, individually or as personal representative of James O. Blizzard, a passenger killed in a wreck.

Factual And Procedural Background

This dispute arises from a motor vehicle accident that occurred in March 2001, in Andrew County, Missouri which resulted in the deaths of the driver, Daniel L. Brill, and the passenger, Blizzard. (Alfa, SUMF: ¶¶ 2-3). At the time of the accident, Brill wasdriving a 1997 Pontiac Grand Am, owned by insured Maddison Ellis² under a Missouri Private Passenger Auto Policy, number 14-42-002766741, issued by Alfa. (Id: ¶¶ 4-6).

After commencement in Andrew County, the underlying action, Jeri Campbell v. The Estate of Daniel L. Brill, deceased, Case No. 11BU-CV03920, was transferred to the Circuit Court of Buchanan County, Missouri; in August 2012, the parties dismissed the action without prejudice. (Complaint: ¶ 5).³ Alfa seeks a declaration of its insurance coverage obligations to Brill who has sought indemnification under the Policy and with respect to claims asserted against Brill by claimant. (Id: ¶¶ 14, 16-17).

At the time of the accident Alfa had issued an automobile insurance policy to Ellis, entitled "Part A: Liability Coverage," which provided in part:

We will pay damages, other than punitive or exemplary, for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident ...

(Motion for Summary Judgment, pg. 3, ¶ 7; see Alfa Policy, Exh. 3, pg. 7).

Because Brill was expressly excluded from coverage in the Ellis insurance, indirect coverage is sought by claimant on behalf of Blizzard under the uninsured motorist portion of the policy, as discussed below.

Standard of Review

Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Bolin v. Progressive Northwestern Ins. Co., 2009 WL 1010770 *6 (E.D.Mo.); citing, Fed.R.Civ.P. 56( c ). Themoving party has the burden to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. Once the movant has met this burden, the non-movant may not rely on mere denials or bare allegations, but must point to specific facts that raise a triable issue. United Fire & Casulty Company v. Lipps, 2009 WL 2143766 * 3 (E.D.Mo.). The non-movant must set forth specific facts, by affidavit or otherwise, sufficient to raise a genuine issue of material fact for trial. Id.

Alfa states, and claimant does not dispute that Missouri law applies to this diversity action, and that the task of a federal court sitting in diversity is to attempt to predict how the forum state's highest court would resolve the issues. Id. Under Missouri law, the insured has the burden of proving coverage under the insurance policy, and the insurer has the burden of showing that an exclusion from coverage applies. Id.

Discussion

Excluded Driver Provision

The Named Driver Exclusion provides:

You have named the following persons in your household as excluded drivers under this policy.

Excluded Driver Name

Relationship

Birthdate

Daniel Brill

Non-Relative-Other

January 7, 1987

No coverage is provided for any claim arising from an accident or loss involving a motorized vehicle being operated by an excluded driver. This includes any claim for damages made against any named insured, resident relative, or any other person or organization that is vicariously liable for an accident or loss arising out of the operation of a motorized vehicle by the excluded driver. (Motion for Summary Judgment, pg. 4, ¶ 9; see Alfa Policy, Exh. 3, Form 14 PA MO AP(1/11)).

The parties are agreed that the Ellis liability coverage excluded such coverage for Brill, the driver of her car, and Alfa acknowledges that, as a passenger in her car Blizzardwould normally have categorical insured status in the uninsured motorist provisions. On Blizzard's behalf, claimant contends that there is a genuine issue of material fact as to whether Brill had express or implied permission to operate the vehicle.⁴ Alfa argues that the policy provision identifying Brill as an excluded driver is unambiguous, leaving no genuine issue of material fact on the question of whether he had implied permission to operate the Grand Am.

Alfa relies on several cases in support of its argument, the most factually similar of which may be found in the opinion of the Missouri Court of Appeals in Yates v. Progressive Preferred Insurance Company, 331 S.W.3d 324 (Mo.App. W.D. 2011). In Yates, an accident occurred while a named excluded driver, the wife, operated an automobile and collided with a motorcycle. Id, at 325. The motorcycle driver obtained a judgment against the wife and then sought, but was denied, equitable garnishment from the insurer. Id. After determining that the driver of the vehicle was an excluded driver under the policy, the trial court granted summary judgment in favor of the insurer. Id.

On appeal, the plaintiff motorcycle driver claimed, among other things, that the exclusion provision could not exclude persons operating the vehicle with the express permission of the insured because such persons are required to be covered pursuant to the Motor Vehicle Financial Responsibility Law "MVFRL" 303.190.2(2). Id, at 325-26 n. 2. The appellate court tangled with a seeming conflict between two statutes relied upon by the respective parties, i.e. sections 303.190(2) and the later amended section 303.190(3)of the MVFRL. Id, at 326-28. ⁵ The court noted that where two statutory provisions covering the same subject matter are unambiguous when read separately but conflict when read together, the reviewing court must attempt to harmonize them and give effect to both. Id, at 327; citing, Anderson v. Ken Kauffman & Sons Excavating, 248 S.W.3d 101, 107 (Mo.App. W.D. 2008). In so doing, the court found that the purpose of the MVFRL under section 303.190(2), was to ensure that persons injured on Missouri highways may collect at least minimal damage awards against negligent motor vehicle operators. Yates, at 331. The amendment of the MVFRL with the addition of 303.190(3), however, evidenced yet another important purpose of the law, which is to encourage all owners to obtain coverage by removing a cost-impediment to obtaining coverage and to encourage owners not to allow uninsured drivers to operate their vehicles. Id. Persuaded by the underlying purpose of the MVFRL, and notwithstanding the court's acknowledgment that the wife was operating the vehicle with the full knowledge and consent of her husband (the named insured), the court affirmed the trial court's decision that based on the named excluded driver provision, the insurer was not obligated to defend or indemnify the driver and the insurance company was entitled to summary judgment.

There are noteworthy differences between the facts of Yates and here. First, the named excluded driver in Yates was the wife of the named insured who was sitting beside her in the passenger seat at the time of the accident; thereby evincing express permission to operate the vehicle, whereas here, there is no evidence tending to show that Brill had either the express or implied permission of Ellis to operate the Grand Am. Secondly, although the court in Yates did not directly deal with the question of whether express or implied permission to an named excluded driver is determinative for insurance coverage, in reviewing cases from other states on the question of denial of coverage where a named excluded driver operated a vehicle involved in an accident, the court found that the exclusion was permissible, even when pre-amended statutes declared such insurance provisions invalid as against public policy. Yates, at 330.⁶

The Yates court noted that states which permit named driver exclusions, depending on the law of the particular state, usually find guidance from public policy that favors such provisions. Id. The court reasoned that policies containing exclusion provisions enable drivers with family members having poor driving records to procure affordable insurance, rather than obtaining coverage from an assigned risk pool at a greater cost or not securing insurance at all. Id. This reasoning furthers that initial legislative purpose of the MVFRL to ensure that persons injured on Missouri highways may collect at least minimal damage awards against negligent motor vehicle operators. Id, at 326. Additionally, because these policy exclusions subject automobile owners to personal liability, they deter these owners from negligently entrusting their automobiles to unsafe excluded drivers, which helps to keep these drivers off of the roads. Id, at 331.

Claimant argues that Alfa has failed to "conclusively" show that Brill did not have permission to drive the Grand Am, and likewise, has failed to show that Blizzard did not have a reasonable belief that he was entitled to occupy the vehicle. In support of this argument Campbell relies on LeCave v. Hardy, 73 S.W.3d 637 (Mo.App. 2002). There, the LeCaves commenced suit against the defendant father, James Hardy, for negligently entrusting his vehicle to his son who then hit and killed the LeCave's son as he rode his bicycle. Id, at 639. On appeal, after summary judgment was granted to Hardy, the Court of Appeals reversed and remanded after finding sufficient evidence for a jury to find that...