Browning v. Guideone Specialty Mut. Ins. Co.

CourtCourt of Appeal of Missouri (US)
Citation341 S.W.3d 897
Docket NumberNo. WD 72484.,WD 72484.
PartiesLyle BROWNING, et al., Respondents,v.GUIDEONE SPECIALTY MUTUAL INSURANCE COMPANY, Appellant.
Decision Date07 June 2011

341 S.W.3d 897

Lyle BROWNING, et al., Respondents,
v.
GUIDEONE SPECIALTY MUTUAL INSURANCE COMPANY, Appellant.

No. WD 72484.

Missouri Court of Appeals, Western District.

June 7, 2011.


[341 S.W.3d 898]

Kevin P. Schnurbusch and Maureen A. McMullan, St. Louis, MO, for appellant.Ronald K. Barker, Lee's Summit, MO, for respondents.Before Division One: GARY D. WITT, Presiding Judge, JAMES E. WELSH, Judge and ALOK AHUJA, Judge.GARY D. WITT, Judge.

This is a declaratory judgment and vexatious refusal to pay action based on disputed insurance coverage for an accident that occurred when a motorcycle was run off the road by another vehicle. GuideOne Specialty Mutual Insurance Company (“GuideOne”), insured the motorcycle and appeals the judgment of the trial court, which after a bench trial found in favor of Lyle and Linda Browning (“Plaintiffs”) as it pertained to Plaintiffs' declaratory judgment and vexatious refusal to pay action against GuideOne. For the reasons explained herein, we reverse and remand.

Factual Background

In August 2002, Plaintiffs were riding their motorcycle on B Highway in Benton County, Missouri, when Joseph Hagston crossed the center line thereby forcing Plaintiffs off the road and into the ditch because of Hagston's undisputed negligence. Plaintiff Linda Browning sustained injuries as a result of this accident, and it is undisputed that her medical bills eventually exceeded $150,000.00.

Hagston carried State Farm liability insurance on the date of the accident, with limits of $100,000 per person and $300,000 per accident. Linda Browning accepted the sum of $100,000 from State Farm for Hagston's liability in causing her damages, which represented the total coverage available pursuant to the State Farm policy.

On the date of the accident, Plaintiffs also had a motorcycle insurance policy, issued by GuideOne (“Policy”). Plaintiffs filed the instant lawsuit against GuideOne in Benton County. In Count One of the Petition, Plaintiffs alleged that under the Policy, there was Underinsured Motorist (“UIM”) coverage of $50,000.00 for each person and $300,000 for each accident. The Petition went on to allege that Plaintiffs complied with all the conditions contained in the policy and GuideOne refused to pay benefits under the policy claiming that there is no coverage under the policy for UIM claims. In Count Two, Plaintiffs alleged that GuideOne denied coverage under the Policy without reasonable and just cause and that, therefore, this constituted a vexatious refusal to pay benefits under the Policy.

After a bench trial, the trial court found in favor of Plaintiffs on both of their claims. In its judgment, the Court found that the Policy is ambiguous as it relates

[341 S.W.3d 899]

to Uninsured/Underinsured motorist coverage and resolved this “ambiguity” in favor of coverage as a matter of law. The trial court found GuideOne was liable to Plaintiffs pursuant to the Policy's uninsured coverage limit of $50,000. Furthermore, as it pertained to Plaintiffs' vexatious refusal to pay claim, the trial court found that GuideOne refused to pay the loss without reasonable cause or excuse; therefore, the Court ordered the following pursuant to Section 375.420 1: “Statutory penalties are calculated as $8,047.00. Prejudgment interest calculated to the date of Judgment (March 30, 2010), is $26,295.82. Plaintiffs' reasonable attorneys' fees and expenses are $30,295.82.” In total, the trial court entered a judgment in favor of Plaintiffs and against GuideOne in the amount of $114,638.64 in addition to the costs which were assessed against GuideOne. GuideOne now appeals.

Further details will be outlined in the analysis section below as necessary for the resolution of this appeal.

Standard of Review

This court reviews a bench-tried case under the standard established by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Rissler v. Heinzler, 316 S.W.3d 533, 536 (Mo.App. W.D.2010). Under this standard, the “trial court's decision will be affirmed unless it is not supported by substantial evidence, it is against the weight of the evidence, or it misstates or misapplies the law.” Id. (quotation omitted). “This court must view the evidence in a light most favorable to the judgment and disregard all contrary evidence and permissible inferences.” Id.

However, because the primary dispute on appeal pertains to the interpretation of an insurance policy, we are not restricted to this standard of review in that context. “In a court-tried declaratory judgment action, interpretation of an insurance policy is a question of law and, where resolution of a controversy is a question of law, the trial court receives no deference.” Foremost Signature Ins. Co. v. Montgomery, 266 S.W.3d 868, 871 (Mo.App. E.D.2008). “We apply the Murphy v. Carron standard only when there is an ambiguity within the policy necessitating a factual determination.” Id.

Analysis

In Point One, GuideOne argues that the trial court erred in finding that the GuideOne insurance policy was ambiguous and provided UIM coverage to Plaintiffs because, as a matter of law, the policy is not ambiguous under its plain language and no UIM coverage was provided. We agree.2

In Todd v. Missouri United School Ins. Council, 223 S.W.3d 156, 160 (Mo. banc 2007), the Missouri Supreme Court outlined the following relevant principles in interpreting the Policy:

“The general rules for interpretation of other contracts apply to insurance contracts as well. The key is whether the contract language is ambiguous or unambiguous.”

[341 S.W.3d 900]

Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 301–02 (Mo. banc 1993). When there is ambiguity in an insurance policy, the Court must interpret the policy in favor of the insured. Bellamy v. Pacific Mut. Life Ins. Co., 651 S.W.2d 490, 496 (Mo. banc 1983). However, “where insurance policies are unambiguous, they will be enforced as written.” Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991). “Whether an insurance policy is ambiguous is a question of law.” Martin v. U.S. Fidelity and Guar. Co., 996 S.W.2d 506, 508 (Mo. banc 1999).

It is undisputed that Plaintiff Linda Browning received the maximum coverage ($100,000) from State Farm based on Hagston's undisputed liability in causing the accident. The question before us is whether any provision in Plaintiffs' Policy would provide UIM coverage and cover any of Linda Browning's other damages not covered by State Farm in light of the fact that her medical bills alone eventually exceeded $150,000.

The Eastern District outlined the difference between Uninsured Motorist (“UM”) coverage and UIM coverage in Niswonger v. Farm Bureau Town & Country Ins. Co. of Missouri:

Though similar, uninsured motorist coverage and underinsured motorist (UIM) coverage are not the same thing. The former refers to coverage intended to provide a source of recovery for insureds who are legally entitled to recover damages for bodily injury caused by the negligent owner or operator of a completely uninsured motor vehicle. UIM coverage, on the other hand, refers to coverage intended to provide a source of recovery for insureds (up to the insurer's liability limit for such coverage) who have been bodily injured by a negligent motorist whose own automobile liability insurance coverage is insufficient to fully pay for the injured person's actual damages ... Both uninsured motorist coverage and UIM coverage are in the nature of floating, personal accident insurance rather than insurance on a particular vehicle, and thus follow the insured individual wherever he goes.

992 S.W.2d 308, 313 (Mo.App. E.D.1999) (citations omitted and emphasis original).

Here it is undisputed that, although the Policy contained an endorsement denominated “UNINSURED MOTORISTS COVERAGE,” it did not contain such an endorsement denominated underinsured motorist coverage. The trial court concluded in its Judgment that the Policy “is ambiguous as it related to ‘Uninsured/Underinsured’ motorist coverage” and that, therefore, this “ambiguity must be resolved in favor of coverage as a matter of law.”

While the Judgment in question did not outline the reasons for the trial court's conclusion that the Policy was ambiguous, the Court's “Decision of Court After Bench Trial” illuminates in detail the presumed reasoning for its ruling.3 Specifically, the trial court stated the following:

[The Policy] is ambiguous as it relates to underinsured motorist coverage. Part 1, Coverage A (Liability), Limits of Liability (Page 3 of 6) contains the following

[341 S.W.3d 901]

language: “We will pay no more than these maximums regardless of the number of insured persons, claims, claimants, or policies or vehicles involved in an accident or loss. Any...

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