Allen v. Transamerica Ins. Co.

• Citation: 128 F.3d 462
• Decision Date: 11 June 1997
• Docket Number: No. 96-1865.,96-1865.
• Parties: Ella M. ALLEN, Plaintiff-Appellee, v. TRANSAMERICA INSURANCE COMPANY, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

128 F.3d 462

Ella M. ALLEN, Plaintiff-Appellee, v. TRANSAMERICA INSURANCE COMPANY, Defendant-Appellant.

No. 96-1865.

United States Court of Appeals, Seventh Circuit.

Argued November 4, 1996.

Decided June 11, 1997.^*

Richard G. Lambert (argued), Harris, Lambert, Howerton & Dorris, Marion, IL, for Plaintiff-Appellee.

John L. McMullin, T. Michael Ward (argued), Brown & James, St. Louis, MO, for Defendant-Appellant.

Before BAUER, RIPPLE, and MANION, Circuit Judges.

BAUER, Circuit Judge.

This diversity action requires us to interpret the underinsured motorists' provision of an insurance policy. The insured, Ella M. Allen, was in a car accident on May 2, 1994. She alleged that she sustained at least $150,000 in damages. She later filed a personal injury action against Candice Houston, the driver of the other car, and recovered $50,000 (the limit under Houston's policy) from Houston's insurer. Allen sought additional recovery from her own insurer, Transamerica Insurance Company, under the underinsured motorists' provision of her motor vehicle liability insurance policy. Allen filed a declaratory judgment action against Transamerica in state court, seeking a declaration that she was entitled to $100,000 in underinsured motorists' coverage. The action was later removed to federal court. The district court granted summary judgment in favor of Allen, declaring that Allen was entitled to $100,000 in coverage. Transamerica appeals. We affirm.

1. Jurisdiction

Allen originally filed this action in the Circuit Court for the First Judicial Circuit, Williamson County, Illinois, on April 7, 1995. Transamerica removed the action to federal court pursuant to 28 U.S.C. § 1446. The district court granted summary judgment in favor of Allen and against Transamerica on March 7, 1996 and issued a Memorandum and Order and a Judgment in a Civil Case. Transamerica filed its Notice of Appeal in this Court on April 5, 1996, and contended that we have jurisdiction over the final judgment of the district court pursuant to 28 U.S.C. § 1291. On April 17, 1996, we ordered Transamerica to show cause why the appeal should not be dismissed for lack of jurisdiction. We indicated that the appeal might be premature because the district court's judgment did not award any relief to Allen; it merely granted Allen's motion for summary judgment. See American Inter-Fidelity Exchange v. American Re-Insurance Co., 17 F.3d 1018, 1020 (7th Cir.1994) ("When the prevailing party is entitled to a declaratory judgment, the district court must draft and enter such a judgment rather than assume that the opinion serves the purpose"); see also Camp v. Gregory, 67 F.3d 1286, 1290 (7th Cir.1995), cert. denied, ___ U.S. ___, 116 S.Ct. 2498, 135 L.Ed.2d 190 (1996). Subsequent to our April 17 order, and in response to a motion by Transamerica, the district court entered an Amended Judgment in a Civil Case on May 6, 1996. It was appropriate for us to retain jurisdiction over this appeal until the district court entered a proper declaratory judgment because once the proper judgment was entered, the original Notice of Appeal was sufficient to confer jurisdiction. See American Inter-Fidelity Exchange, 17 F.3d at 1020; see also Metropolitan Life Ins. Co. v. Estate of Cammon, 929 F.2d 1220, 1222 (7th Cir.1991). We now proceed to the merits.

2. The Policy

The policy in issue, TRA 1348 85 89, was in effect from January 16, 1994 to July 16, 1994. Allen's husband, Alfred, was the named insured on the policy. The policy insured two cars belonging to Allen and her husband: a Chevrolet Cavalier and a Pontiac LeMans. The policy charged separate premiums for each vehicle. Allen was covered under the policy because she was Alfred's family member and because she was driving the Cavalier, a covered automobile, at the time of the accident.

A reproduction of the Declarations page of the policy is appended to this opinion for convenience. The Declarations page contains two columns for the Cavalier and two columns for the LeMans. For each car, the first column lists the type and limit of coverage, and the second column lists the premium paid for each type of coverage. Each car under the policy carries coverage of $50,000 per person and $100,000 per accident or occurrence for bodily injuries. The underinsured motorists' coverage also sets limits of $50,000 per person and $100,000 per accident or occurrence on each car. The policy provides that:

Transamerica 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;" or

2. Caused by an accident.

The policy defines an "underinsured motor vehicle" as "a land motor vehicle ... to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury is less than the limit of liability for this coverage."

The provision of the policy that is most relevant to this case is the "anti-stacking" provision, which is found in the "Split Underinsured Motorists Limits" Endorsement. The anti-stacking provision reads:

The limit of liability shown in the Schedule or in the Declarations for each person for Underinsured Motorists Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of "bodily injury" sustained by any one person in any one accident. Subject to this limit for each person, the limit of liability shown in the Schedule or in the Declarations for each accident for Underinsured Motorists Coverage is our maximum limit of liability for all damages for "bodily injury" resulting from any one accident. This is the most we will pay regardless of the number of:

1. "Insureds;"

2. Claims made;

3. Vehicles or premiums shown in the Declarations; or

4. Vehicles involved in the accident.

(emphasis added). There is no ambiguity in this language, read alone. Illinois courts have held similar provisions to be unambiguous and sufficient to prevent the stacking of coverage when one policy covers multiple vehicles. See Grzeszezak v. Illinois Farmers Ins. Co., 168 Ill.2d 216, 224-25, 213 Ill.Dec. 606, 610-11, 659 N.E.2d 952, 956-57 (1995); Frigo v. Motors Ins. Corp., 271 Ill.App.3d 50, 64, 207 Ill.Dec. 724, 733, 648 N.E.2d 180, 189 (1st Dist.1995); Obenland v. Economy Fire & Cas. Co., 234 Ill.App.3d 99, 174 Ill.Dec. 915, 599 N.E.2d 999 (1st Dist.1992), aff'd, 191 Ill.Dec. 158, 623 N.E.2d 748 (1993). But see Gibbs v. Madison Mut. Ins. Co., 242 Ill. App.3d 147, 152-53, 182 Ill.Dec. 719, 723-24, 610 N.E.2d 143, 147-48 (5th Dist.), appeal denied, 151 Ill.2d 563, 186 Ill.Dec. 380, 616 N.E.2d 333 (1993) (addressing multiple policies).

However, this case requires us to answer the question: what is the limit of liability referred to in the provision? The provision directs the reader to either the "Schedule" or the "Declarations" to determine the amount of the limit. In the policy, there are two documents labeled "Schedule," both of which provide spaces for the insurer to fill in the limits of liability for coverage. These spaces have been left blank on both Schedules. Therefore, the Declarations page is the only place to look to determine the limit of liability. And herein lies the problem.

Under the heading "Coverages and Limits," the Declarations page lists the limits of coverage and the premiums paid for the Cavalier in two columns and the separate limits of coverage and premiums paid for the LeMans in two adjacent columns. Allen argues that this columnar arrangement renders the anti-stacking clause ambiguous, because it is unclear whether the "limit of liability" only refers to the limit on the Cavalier, the limit on the LeMans, or the two limits added together. That is, Allen believes that the policy's underinsured coverage is $100,000 per person and $200,000 per accident. Transamerica contends that the coverage is only $50,000 per person and $100,000 per accident.

3. The Summary Judgment Motions

Allen filed a motion for summary judgment in the district court, arguing that she was entitled to "stack" the $50,000 per person limit for underinsured motorists' coverage for each car insured under the policy for a total of $100,000 in underinsured motorists' coverage. She contended that ambiguities in the policy exist when the antistacking clause is read in conjunction with the Declarations page, rendering the anti-stacking language unenforceable. Transamerica also filed a motion for summary judgment, arguing that Allen was not entitled to underinsured motorists' coverage because (1) Houston was not an underinsured motorist because her liability limit was not less than the underinsured motorist limit under Allen's policy and (2) the anti-stacking provision was unambiguous and barred Allen from stacking the second $50,000 under the policy.

The district court agreed with Transamerica that the language in the anti-stacking provision was clear and unambiguous. The district court noted that three Illinois courts had construed nearly identical language and found it to be unambiguous and enforceable, thereby preventing the insured from stacking coverage. See Grzeszczak, 168 Ill.2d at 224-25, 213 Ill.Dec. at 610-11, 659 N.E.2d at 956-57; Frigo, 271 Ill.App.3d at 64, 207 Ill.Dec. at 733, 648 N.E.2d at 189; Obenland, 234 Ill.App.3d at 107-08, 174 Ill. Dec. at 920, 599 N.E.2d at 1004. Despite these Illinois cases, however, the district court found itself constrained to grant summary judgment for Allen, finding that dicta in an Illinois Supreme Court decision controlled the case. See Bruder v. Country Mutual Ins. Co., 156 Ill.2d 179, 189 Ill.Dec. 387, 620 N.E.2d 355 (1993). The policy in issue in Bruder for our purposes was a business automobile policy which covered two business trucks and contained an anti-stacking provision. The antistacking provision provided:

The most we will pay for all damages resulting from bodily

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