The parties have stipulated that the facts recited here are undisputed, at least for the purposes of summary judgment. Buckeye State Mutual Insurance Company ("Buckeye") issued personal automobile policy #PA080002377 ("the Policy") to Brent Moens and Tanya Dee Moens. The Policy's bodily injury limits are $250,000 for each person and $500,000 for each accident. The Policy covered the period from September 15, 2009, to September 15, 2010.
The Policy provides underinsured motorist coverage and states:
We 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" caused by an accident.
The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "underinsured motor vehicle".
Insurance Policy at 10; Defendants' App. at 15. The Policy contains the following pertinent definitions:
"Insured" as used in this endorsement means:
1. You or any "family member".
2. Any other person "occupying" "your covered auto".
3. Any person for damages that person is entitled to recover because of bodily injury to which this coverage applies sustained by a person described in 1. or 2. above.
C. "Underinsured motor vehicle" means a land motor or trailer of any type to which a bodily injury liability bond or policy limit applies at the time of the accident but its limit for bodily injury liability is either:
1. Not enough to pay the full amount the "insured" is legally entitled to recover as damages; or
2. Reduced by payments to others injured in the accident to an amount which is not enough to pay the full amount the "insured" is legally entitled to recover as damages.
However, "underinsured motor vehicle" does not include any vehicle or equipment:
1. To which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the minimum limit for bodily injury liabilityspecified by the financial responsibility laws of Iowa.
2. Owned by or furnished or available for the regular use of you or any "family member".
3. Owned by any governmental unit or agency.
4. Operated on rails or crawler treads.
5. Designed mainly for use off public roads while not upon public roads.
6. While located for use as a residence or premises.
7. Owned or operated by a person qualifying as a self-insurer under any applicable motor vehicle law.
8. To which a bodily injury liability bond or policy applies at the time of the accident but the bonding or insuring company:
a. Denies coverage; or
b. is or becomes insolvent.
Insurance Policy at 10; Defendants' App. at 15.
The Policy's underinsured motorist section also includes the following "exclusions" provision:
We do not provide Underinsured Motorist Coverage for "bodily injury" sustained by an "insured":
1. While "occupying", or when struck by, any motor vehicle owned by you which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle.
2. While "occupying" "your covered auto" when it is being used as a public or livery conveyance. ThisExclusion (A.2.) does not apply to a share-the-expense car pool.
3. Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (A.3.) does not apply to a "family member" using "your covered auto" which is owned by you.
B. This coverage shall not apply directly or indirectly to benefit any insurer or self-insurer under any of the following or similar law:
1. Workers' compensation law; or
2. Disability benefits law.
C. We do not provide Underinsured Motorist Coverage for punitive or exemplary damages.
Insurance Policy at 10-11; Defendants' App. at 15-16.
The Policy further has a "limit of liability" provision which states:
A. 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 liability shown in the Schedule or in the Declarations for each accident for Underinsured Motorist 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 Schedule or in the Declarations; or
4. Vehicles involved in the accident.
B. No one will be entitled to receive duplicate payments for the same elements of loss under this coverage and Part A, Part B or Part C of this policy.
C. We will not make duplicative payment under this coverage for any element of loss for which payment has been made by or on behalf of persons or organizations who may be legally responsible.
D. We will not pay for any element of loss if a person is entitled to receive payment for the same element of loss under any of the following or similar law:
1. Workers' compensation law; or
2. Disability benefits law.
E. We will reduce the "insured's" total damages by any amount available to that "insured", under any bodily injury liability bonds or policies applicable to the "underinsured motor vehicle", that such "insured" did not recover as a result of a settlement between that "insured" and the insurer of an "underinsured motor vehicle." However, any reduction of the "insured's" total damages will not reduce the limit of liability of this coverage.
This Paragraph (E.) shall not apply if we advance payment to the "insured" in an amount equal to the tentative settlement with the insurer of the "underinsured motor vehicle".
Insurance Policy at 11; Defendants' App. at 15.
The Policy covered a 2000 Dodge Durango which, on August 11, 2010, was being driven by Cole Moens, Brent and Tanya's minor son. On that date, while driving the Durango, Cole was involved in a four vehicle accident at the intersection of Highway 71 and C25 in Buena Vista County, Iowa. Cole received citations for failure to yield upon entering through a highway and violation of a minor's school license. After a trial, Cole was found guilty of both charges.
Cole was the sole negligent party and his negligence was the sole substantial factor resulting in damage to the following:
• Braeden Jay Bailey, a passenger in the Durango, and Daniel Bailey and Tracey Bailey's son; Daniel and Tracey's claims for loss of consortium (collectively "the Baileys");
• Gerald Ralph Boge a/k/a Jerald Ralph Boge, n/k/a Estate of Boge, the driver of a semi-truck owned by Hog Slat, Inc.;
• Douglas Lee Oldenkamp, the driver of a semi-truck owned by GCC Alliance Concrete, Inc.;
• Lee Rae Geisinger and Alice Marie Geisinger, and their conservatorships, the driver and passenger, respectively of another vehicle involved in the accident.
The potential plaintiffs' demands exceed the liability limits of the Policy. The Baileys claim that their damages exceed the portion of the Moens' liability limits they may receive.
After investigating the accident, Buckeye found that the injuries sustained were likely to exceed what it considered to be the Policy's aggregate limit of $500,000. Realizing that individuals' claims would be in competition with each other, Buckeye found itself trapped between the proverbial rock and a hard place. Attempting to extricate itself from this difficult position, Buckeye brought the present interpleader action on July 24, 2012, pursuant to 28 U.S.C. § 1335 and Federal Rule of Civil procedure 22, by which it seeks to serve as a mere stakeholder, depositing $500,000 with the Clerk of Court to permit the resolution of the competing claims, and requesting a declaratory judgment of the rights of each claimant against the Policy. The Baileysmoved for partial summary judgment, contending that the Policy provides both liability and underinsured motorist coverage to Braeden, based on his status as a passenger in the Durango. Buckeye resisted the Baileys' motion and filed...
