Austin Mut. Ins. Co. v. King, 93-2410

• Decision Date: 08 July 1994
• Docket Number: No. 93-2410,93-2410
• Citation: 29 F.3d 385
• Parties: AUSTIN MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Deborah KING; Robert King, Individually and as Guardian Ad Litem for Amber King, a minor, and as Special Administrator of the Estate of Aaron King; Sheila Michels, Individually and as Special Administrator of the Estate of Christopher Lee Michels, and as Special Administrator of the Estate of Jasmine Elaine Miller, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 385

29 F.3d 385

AUSTIN MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Deborah KING; Robert King, Individually and as Guardian Ad Litem for Amber King, a minor, and as Special Administrator of the Estate of Aaron King; Sheila Michels, Individually and as Special Administrator of the Estate of Christopher Lee Michels, and as Special Administrator of the Estate of Jasmine Elaine Miller, Defendants-Appellants.

No. 93-2410.

United States Court of Appeals Eighth Circuit.

Submitted March 15, 1994.

Decided July 8, 1994.

John C. Sogn, Sioux Falls, SD, argued (Dean Nasser, Jr., and R. Alan Peterson, Sioux Falls, SD, on the brief, for all appellants as counsel for appellants King; Thomas M. Issenhuth, on the brief, of appellants as counsel, for appellants Michels), for appellants.

Cheryle M. Wiedmeier, Sioux Falls, SD, argued, for appellee.

Before MAGILL, Circuit Judge, HEANEY and JOHN R. GIBSON, Senior Circuit Judges.

JOHN R. GIBSON, Senior Circuit Judge.

This appeal arises from the district court's entry of summary judgment in favor of Austin Mutual Insurance Company regarding Austin Mutual's obligation to pay underinsured motorist benefits after an automobile accident involving six persons. The individuals involved in the accident, or the estates of those who died, and the husband of one occupant of the vehicle recovered the policy limit of $100,000 under the tortfeasor's liability insurance, which was less than their damages. They then claimed damages under the driver's underinsured motorist coverage, which allowed a maximum recovery of $50,000 per person and $100,000 per accident and contained an offset provision reducing the insurer's "limit of liability" by amounts already recovered from the tortfeasor's insurer. The sole question before us is whether the "limit of liability" referred to in the underinsured motorist policy is the $50,000 per-person limit or the $100,000 per-accident limit. If it is the $50,000 limit, each occupant will have a net recovery, because each received less than $50,000 from the tortfeasor. If it is the $100,000 aggregate limit, the $100,000 recovered from the tortfeasor reduces the victims' recovery to zero. The district court held that the policy limit was the $100,000 per-accident limit, and because this policy limit had to be offset against the $100,000 the Kings and Michels already received from the tortfeasor, they could not recover any more under the policy. The occupants of the King vehicle appeal. We reverse.

On April 21, 1991, Timothy Leichtenberg ran a stop sign and hit a car driven by Deborah King. King and two passengers in her car, Amber King and Sheila Michels, suffered serious injuries, and three other passengers in her car, Aaron King, Jasmine Miller, and Christopher Michels, were killed. All of the occupants of the vehicle made claims against Leichtenberg's automobile insurance policy, which had limits of $50,000 per person and $100,000 per accident. The per-accident limit of coverage of $100,000 from Leichtenberg's insurer was distributed among King, the surviving passengers, and the estates of the deceased passengers. The amount each victim received of the $100,000 from Leichtenberg's insurer is as follows: Deborah King, $12,500; Amber King, $12,500; Robert King, $12,500; Aaron King, $12,500; Sheila Michels, $20,000; Christopher Michels, $15,000; and Jasmine Miller, $15,000. The parties stipulated that the victims sustained injuries in amounts greater than Leichtenberg's insurance limit. The Kings and Michels made claims against King's insurer, Austin Mutual, under the underinsured motorist coverage of King's policy. This policy also had limits of $50,000 per person and $100,000 per accident, and contained an offset provision under which the coverage available is reduced by "all sums paid because of the 'bodily injury' " by other parties or organizations.

Austin Mutual denied coverage, interpreting the offset provision of the policy to allow Austin Mutual to offset any amount received from the tortfeasor's insurer, in this case $100,000, against the per-accident maximum of underinsured motorist coverage available, in this case also $100,000. Austin Mutual also brought a declaratory judgment action seeking a determination that there was no coverage available for the Kings and Michels under either South Dakota Codified Laws Sec. 58-11-9.5 (1990 & Supp.1993), which governs underinsured motorist coverage, ¹ or the terms of the policy. The district court granted summary judgment for Austin Mutual, holding that under the policy's terms and the South Dakota underinsured motorist coverage law the persons involved in the accident had no remaining coverage available to them from Austin Mutual, since Austin Mutual could offset the amount the victims received from Leichtenberg's insurer ($100,000) against the amount of underinsured motorist coverage on a per-accident basis (also $100,000). The district court reasoned that because the Kings and Michels had already received $100,000 from Leichtenberg's insurer and King's policy only provided $100,000 per-accident coverage, they were precluded from further recovery from Austin Mutual. In addition, the court held that the policy language concerning the insurer's limit of liability on underinsured motorist coverage was not ambiguous. This appeal followed.

The facts in this case are undisputed and the parties ask us only to consider and resolve issues of interpreting the insurance policy. We review the grant of summary judgment de novo. Brandenburg v. Allstate Ins. Co., 23 F.3d 1438, 1440 (8th Cir.1994). We also review a district court's interpretation of state law under a de novo standard without deference. Salve Regina College v. Russell, 499 U.S. 225, 239, 111 S.Ct. 1217, 1225, 113 L.Ed.2d 190 (1991).

The final sentence in Part A of the Limit of Liability for the underinsured motorist coverage section of King's policy states that the limit "shall be reduced by all sums paid because of the 'bodily injury' by or on behalf of persons or organizations who may be legally responsible." Austin Mutual argues this sentence requires that the $100,000 per-accident limit of King's policy be reduced by "all sums paid" by Leichtenberg's insurer ($100,000). In other words, it argues the Kings and Michels cannot recover any additional money under King's policy because the $100,000 per-accident limit must be reduced by the $100,000 already paid by Leichtenberg's insurer. We reject this argument, as we are convinced that when this provision is read together with the other terms of the underinsured motorist coverage in the policy, including the Insuring Agreement and Limit of Liability, and the...