Atl. Mut. Ins. Co. v. Yates, 10-6077
| Decision Date | 29 August 2012 |
| Docket Number | No. 10-6077,10-6077 |
| Parties | ATLANTIC MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. MICHAEL YATES, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0959n.06
ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE WESTERN
DISTRICT OF KENTUCKY
Before: CLAY and KETHLEDGE, Circuit Judges; DOW, District Judge.*
DOW, District Judge. The issues in this case turn on constructions of Kentucky insurance law. With no facts in dispute, the parties - an insurance company and its policyholder - filed cross-motions for summary judgment. The district court resolved the dispute in favor of the insurance company. We affirm.
Starting in 2000, Plaintiff Atlantic Mutual Insurance Co. ("Atlantic") provided Defendant Michael Yates ("Yates") with insurance coverage. In particular, Atlantic issued to Yates and his family a comprehensive automobile, property, uninsured motorist, and personal umbrella insurance policy (the "Plan"). The policy in force as of 2000 provided auto coverage, including uninsuredmotorist coverage, to two vehicles owned by the Yates family. Under the policy in effect then, Yates paid a premium of $228.00 for $500,000.00 of uninsured motorist ("UM") coverage. As of 2000, Atlantic calculated the premium for UM coverage on a per vehicle basis. As a result, the more vehicles that the insured included on the Plan, the more the insured paid in premium for the coverage.
In 2001, Atlantic changed its method of setting premiums for UM coverage in response to a Kentucky Supreme Court opinion that allowed "stacking" of UM limits where the UM premiums were paid on a "per-vehicle" basis.1 In an attempt to avoid the consequences of that decision, Atlantic began setting its UM premiums at a constant, per-policy rate, pursuant to which the price for UM coverage is the same regardless of how many vehicles are insured. Under the new rate structure, Yates paid $253.00 for $500,000.00 of UM coverage. Atlantic sent Yates an amended copy of the insurance policy showing this change.
In 2003, Yates renewed his insurance coverage under the Plan. At that time, the Plan divided the premiums for various types of coverage between Yates' two vehicles, clearly indicating the premium assessed for each. Next to "Unins./Underins.," the column for each vehicle contained an asterisk that directed the policyholder to the "Optional Coverages Page." On that page, the Plan stated as follows: It is undisputed thatYates received a copy of the 2003 Plan.
In addition to automobile coverage, the Plan included an umbrella provision that was designed to protect the Yates family beyond the limits of their underlying insurance coverage and had a total policy limit of $1,000,000.00. Under the heading "DAMAGES WE WON'T PAY," the umbrella provision specifically stated, The "Coverages Page" did not list UM coverage. Atlantic did not obtain a signed waiver of UM coverage from Yates in relation to the umbrella coverage.
On December 7, 2003, Yates was involved in a motor vehicle accident with an uninsured motorist. As a result of the injuries that he sustained in the accident, Yates incurred more than $1,000,000.00 in medical bills. Atlantic paid its policy limit of $500,000.00 and informed Yates of its position that it owed nothing more. To resolve the lingering coverage dispute, Atlantic filed a complaint for declaratory judgment. Yates claims entitlement to additional UM coverage on two grounds. First, he contends that because his UM insurance covered two vehicles, he should be allowed to "stack" the $500,000.00 limit to obtain a total of $1,000,000.00 in coverage. Second, he asserts that an additional $1,000,000.00 of UM protection should be imputed into his umbrella coverage because Atlantic failed to provide UM coverage under the umbrella provision of the Plan and neglected to obtain a rejection of such coverage in writing.
In the absence of any dispute on the material facts, the parties presented cross motions for summary judgment to the district court. Yates also filed a motion to certify several questions to theKentucky Supreme Court. In a memorandum opinion and order, 2010 WL 890182 (W.D. Ky. Mar. 9, 2010), the district court declined to certify any questions and granted summary judgment for Atlantic Mutual and against Yates. Yates filed a timely motion to alter, amend, or vacate the district court's rulings, which the district court denied. This appeal followed.
We review de novo the district court's grant of summary judgment. Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir. 2009). Summary judgment is proper where, after drawing all reasonable inferences in favor of the non-moving party, no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Id.; see also Fed. R. Civ. P. 56©. In considering a motion for summary judgment, the district court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
Where, as in this case, jurisdiction exists on the basis of diversity of citizenship, federal courts apply the substantive law of the forum state. Pennington, 553 F.3d at 450 (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). The parties agree that Kentucky law governs the insurance contract at issue. In looking to Kentucky law, we "follow the decisions of the state's highest court when that court has addressed the relevant issue." Talley v. State Farm Fire & Cas. Co. , 223 F.3d 323, 326 (6th Cir. 2000). In the absence of an on-point decision of the Kentucky Supreme Court, our task is to anticipate or predict how that court would rule in the case.Pennington, 553 F.3d at 450. In making that prediction, we may look to the decisions of the intermediate Kentucky appellate courts "as persuasive unless it is shown that the state's highest court would decide the issue differently." Id. (citing In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005)).
Nearly two decades ago, the Kentucky Supreme Court observed that appellate decisions on issues pertaining to stacking are "not written on a clean slate." State Farm Mut. Auto. Ins. Co. v. Mattox, 862 S.W.2d 325, 325 (Ky. 1993). Both before and after Mattox, Kentucky courts frequently have addressed stacking issues in a variety of contexts. See Adkins v. Kentucky Nat'l Ins. Co., 220 S.W.3d 296 (Ky. App. 2007); Cole v. State Auto Ins. Co., 19 S.W.3d 115 (Ky. App. 2000); Marcum v. Rice, 987 S.W.2d 789 (Ky. 1999); Estate of Swartz v. Metro. Prop. & Cas. Co., 949 S.W.2d 72 (Ky. App. 1997); Allstate Ins. Co. v. Dicke, 862 S.W.2d 327 (Ky. 1993); Hamilton v. Allstate Ins. Co., 789 S.W.2d 751 (Ky. 1990); Ohio Cas. Ins. Co. v. Stanfield, 581 S.W.2d 555 (Ky. 1979); Meridian Mut. Ins. Co. v. Siddons, 451 S.W.2d 831 (Ky. 1970). In fact, the decision in Marcum precipitated the change in the language of Atlantic's policy that gave rise to this dispute. U p o n consideration of the Kentucky decisions on stacking of insurance coverage cited above, including decisions addressing uninsured and underinsured motorist coverage,2 we conclude that the districtcourt acted well within the scope of its discretion in declining to certify any questions to the Kentucky Supreme Court. See Transam. Ins. Co. v. Duro Bag Mfg. Co., 50 F.3d 370, 372 (6th Cir. 1995) (). Kentucky case law "provides sufficient guidance to allow us to make a clear and principled decision" such that certification of the stacking issue in the case is not necessary. Pennington, 553 F.3d at 450. We now turn to a discussion of the applicable legal principles.
When interpreting insurance contracts, the Kentucky Supreme Court has stressed that courts should look to the "reasonable expectations" of the insured. Marcum, 987 S.W.2d at 791. The Kentucky decisions have been equally clear that "reasonable expectations" must be viewed on the basis of "an objective analysis of separate policy items and the premiums charged for each," not on the subjective expectations of any specific insured based on what he or she knew, read, or expected. Id.; see also Swartz, 949 S.W.2d at 75. Under Kentucky law, "when one has bought and paid for an item of insurance coverage, he may reasonably expect it to be provided." Marcum, 987 S.W.2d at 791; Dicke, 862 S.W.2d at 329; Hamilton, 789 S.W.2d at 753. Conversely, "there is no entitlement to that which has not been bought and paid for nor should have been expected." Marcum, 987 S.W.2d at 792.
One unusual feature of UM (and UIM) coverage is that it is "personal" in nature. See Hamilton, 789 S.W.2d at 753. In other words, UM coverage differs from typical liability insurance because it "follows an insured person as opposed to any particular vehicle." Pennington, 553 F.3d at 451. Because the personal nature of UM coverage creates a "reasonable expectation that paymentof separate premiums results in separate coverages" (Dicke, 862 S.W.2d at 328), an insured generally is entitled to stack separate coverages and, in the event of a covered loss, collect money for each unit of UM coverage purchased. See Chaffin v. Kentucky Farm Bureau Ins. Co., 789 S.W.2d 754, 756 (Ky. 1990).
Both Marcum and Swartz suggest that in assessing whether stacking should be permitted, the court must focus on how many items (or units) of...
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