American Standard Ins. Co. of Wi v. Bracht

• Decision Date: 10 March 2003
• Docket Number: No. 24800.,24800.
• Citation: 103 S.W.3d 281
• Parties: AMERICAN STANDARD INSURANCE COMPANY OF WISCONSIN, Plaintiff-Appellant, v. Austin BRACHT, Bobby J. Stafford, Health Cost Controls, Empire Blue Cross/Blue Shield of Middleton, N.Y., and State of Missouri, Department of Social Services, Division of Medical Services, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 281

103 S.W.3d 281

AMERICAN STANDARD INSURANCE COMPANY OF WISCONSIN, Plaintiff-Appellant, v. Austin BRACHT, Bobby J. Stafford, Health Cost Controls, Empire Blue Cross/Blue Shield of Middleton, N.Y., and State of Missouri, Department of Social Services, Division of Medical Services, Defendants-Respondents.

No. 24800.

Missouri Court of Appeals, Southern District, Division One.

March 10, 2003.

Motion for Rehearing or Transfer Denied April 22, 2003.

Application for Transfer Denied May 27, 2003.

COPYRIGHT MATERIAL OMITTED

David F. Sullivan, Schmidt, Kirby & Sullivan, P.C., Springfield, for appellant.

Edward J. Hershewe, Daniel Robert De-Foe, Hershewe Law Firm, P.C., Joplin, for respondent.

PHILLIP R. GARRISON, Judge.

American Standard Insurance Company of Wisconsin ("American Standard") appeals from an adverse judgment entered in its suit for declaratory judgment. Each of its six points on appeal is directed to what it perceives as erroneous trial court conclusions concerning "set-off' provisions in the automobile liability and uninsured motorist portions of a policy issued by it.

American Standard issued an automobile liability policy to Bobby J. Stafford ("Stafford") providing liability coverage of $50,000/$100,000, and uninsured motorist coverage of $25,000/$50,000. On December 24, 1996, while the policy was in force, Austin Bracht ("Bracht") was a passenger in Stafford's vehicle when it was involved in an accident with an allegedly uninsured vehicle operated by Steven Lacey ("Lacey"). Bracht made a demand on American Standard for its policy limits under both its liability and uninsured motorists coverages. He subsequently filed suit against Stafford and Lacey, claiming personal injuries, and against American Standard based on its uninsured motorist coverage.

American Standard filed this declaratory judgment suit seeking a determination of the rights and obligations of the parties under the terms of its policy. In its petition, American Standard sought a declaration that, because of the set-off provisions in the policy, there would be a total of $50,000 of coverage available under its policy rather than $75,000.

One of the set-off provisions referred to in the petition is under the liability coverage, and one is under the uninsured motorists coverage. The set-off provision in the liability portion of the policy ("liability setoff') reads:

LIMITS OF LIABILITY

The limits of liability shown in the declarations apply, subject to the following:

1. The bodily injury liability limit for "each person" is the maximum for all damages sustained by all persons as the result of bodily injury to one person in any one occurrence.

2. Subject to the bodily injury liability limit for "each person," the bodily injury liability limit for "each occurrence" is the maximum for bodily injury sustained by two or more persons in any one occurrence.

3. The property damage liability limit for "each occurrence" is the maximum for all damages to all property in any one occurrence.

We will pay no more than these maximums no matter how many vehicles are described in the declarations, or insured persons, claims, claimants, policies or vehicles are involved.

Any amount payable under this coverage to or for an injured person will be reduced by any payment made to that person under the Uninsured Motorists coverage of this policy. (emphasis added). The set-off provision under the uninsured motorists coverage of the policy ("uninsured motorists set-off') provides:

LIMITS OF LIABILITY

The limits of liability of this coverage as shown in the declarations apply, subject to the following:

1. The limit for "each person" is the maximum for all damages sustained by all persons as the result of bodily injury to one person in any one accident.

2. Subject to the limit for "each person," the limit for "each accident" is the maximum for bodily injury sustained by two or more persons in any one accident.

We will pay no more than these maximums no matter how many insured persons, claims, claimants, or vehicles are involved in the accident.

The limits of liability of this coverage will be reduced by:

1. A payment made by the owner or operator of the uninsured motor vehicle or organization which may be legally liable.

2. A payment under the Liability coverage of this policy.

(emphasis added). American Standard requested that the trial court declare that the "set-off provisions" of the policy were "valid and enforceable, and thereby preclud[ed] [Bracht] from entitlement to liability coverage of $50,000.00 and uninsured motorists coverage of $25,000.00 under this policy." American Standard therefore asked that the court "enforce the set[-]off language contained therein so as to limit total recovery under the terms and conditions of the subject policy to $50,000.00, instead of $75,000.00[.]"

In its judgment, the trial court noted evidence that separate premiums were charged for the liability coverage and the uninsured motorists coverage, and that the premium charged for the bodily injury liability coverage of $50,000/$100,000 was more than the premium would have been for bodily injury liability coverage of $25, 000/$50,000.

In its conclusions of law, the trial court referred to the provisions of Sections 303.030 and 379.203.¹ Chapter 303 is known as the Motor Vehicle Financial Responsibility Law ("MVFRL"). Section 303.010. Section 303.025(1) provides that no owner of a motor vehicle shall operate, register or maintain registration of a motor vehicle, or permit another person to operate such vehicle unless the owner maintains the financial responsibility which conforms to the requirements of the laws of this state. Section 303.030(5) provides, in pertinent part, that:

every such policy or bond is subject, if the accident has resulted in bodily injury or death, to a limit, exclusive of interest and costs, of not less than twenty-five thousand dollars because of bodily injury to or death of one person in any one accident and, subject to said limit for one person, to a limit of not less than fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident[.]

Section 303.190(2) also provides that an owner's motor vehicle liability policy shall provide liability coverage of $25,000/$50, 000.

Section 379.203(1) provides, in pertinent part:

No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein in not less than the limits for bodily injury or death set forth in section 303.030, RSMo, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom[.]

The trial court concluded that one purpose of Section 379.203 is to establish a minimum level of protection equivalent to the liability coverage the insured would have received had the insured been involved in an accident with an insured tortfeasor, and that it requires that coverage in the amounts mandated by the MVFRL not be diminished by contractual limitation of those amounts, absent express statutory authority therefor. The court explained that if the uninsured motorist set-off were enforced, Stafford would have $50,000 of coverage, consisting entirely of the policy's $50,000 liability coverage. It also observed that if the liability set-off were enforced, Stafford would have $50,000 of coverage, consisting of $25,000 for the policy's liability coverage and $25,000 for the policy's uninsured motorist coverage. In either instance, the trial court said, the available coverage would be less than if Stafford had been involved in an accident with an insured motorist.²

The trial court held that both set-off provisions defeated the purpose of Section 379.203³ and were, therefore, void and unenforceable as contrary to public policy; that "the paying a[sic] higher premium for the additional coverages, American Family⁴ will be unjustly enriched by the set-off provisions"; and that an attempt to limit the coverage provided in the policy would create an ambiguity, which should be construed against American Standard. The trial court entered its judgment that the policy in question exposed American Standard to liability in the amount of $50,000 under the liability coverage and $25,000 for uninsured motorists coverage, and that it was obligated to pay any amount awarded to Bracht against Stafford up to a limit of $75,000.⁵ American Standard appeals.

In reviewing a court-tried case, we must sustain the judgment unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).⁶ In applying this standard of review, we give considerable deference to judgments turning on evidentiary and factual evaluations by the trial court, but no such deference is afforded when the law has been erroneously declared or applied. In re Marriage of Fry, 827 S.W.2d 772, 773 (Mo.App. S.D.1992). Interpretation of the meaning of an insurance policy is a question of law. Millers Mut. Ins. Ass'n of Illinois v. Shell Oil Co., 959 S.W.2d 864, 866 (Mo.App. E.D.1997).

In its first point, American Standard asserts that the trial court erred in concluding that both set-off provisions of the policy are void and unenforceable as contrary to public policy. It argues that only $25,000 is required in Missouri as minimum limits for the liability and uninsured motorist coverages, and makes a point of the fact that it is not seeking to enforce the uninsured motorist set-off. It contends, therefore, that under these facts...