Daughhetee v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 18 March 2014
• Docket Number: No. 13–1185.,13–1185.
• Citation: 743 F.3d 1128
• Parties: Ronald E. DAUGHHETEE; Melissa L. Daughhetee, Plaintiffs–Appellants. Abby Burke, Plaintiff v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

743 F.3d 1128

Ronald E. DAUGHHETEE; Melissa L. Daughhetee, Plaintiffs–Appellants.

Abby Burke, Plaintiff

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee.

No. 13–1185.

United States Court of Appeals,

Eighth Circuit.

Submitted: Nov. 19, 2013.

Filed: Feb. 14, 2014.

Rehearing and Rehearing En Banc Denied March 18, 2014.

Christopher L. Yarbro, Poplar Bluff, MO, for appellant.

Dale Lee Beckerman and Meghan E. Lewis, Kansas City, MO, for appellee.

Before BENTON, BEAM, and SHEPHERD, Circuit Judges.

BENTON, Circuit Judge.

Ronald E. and Melissa L. Daughhetee were injured in a truck accident that killed their daughter Allison. After settling with the tortfeasor, the Daughhetees received payment for underinsured motorist (UIM) coverage from a State Farm policy insuring their truck. They sued for additional payment under a State Farm policy insuring another vehicle. It had identical UIM coverage. The district court ¹ granted State Farm summary judgment, citing anti-stacking language in the policies. The Daughhetees appeal. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

In June 2011, the Daughhetees' Ford F–150 truck collided with another vehicle. Ronald was driving the F–150. Passengers included Melissa, and children Abby and Allison. Ronald, Melissa and Abby were injured; Allison died. The Daughhetees settled with the tortfeasor for the full limits of liability coverage.

The F–150 was insured under a State Farm policy with UIM coverage up to $500,000 for all claims arising out of all injuries in one accident. State Farm paid the $500,000 limit of that policy.

The Daughhetees also owned a Hyundai, insured by a separate State Farm policy with identical UIM coverage. They demanded the limit of that policy from State Farm. State Farm refused to pay. The Daughhetees sued in state court for the limit of the Hyundai policy.

In a subsection of the UIM coverage entitled “If Other Underinsured Motor Vehicle Coverage Applies,” the Hyundai policy has this “other coverage” provision:

1. If Underinsured Motor Vehicle Coverage provided by this policy and one or more other vehicle policies issued to you or any resident relativeby the State Farm Companies apply to the same bodily injury, then:

a. the Underinsured Motor Vehicle Coverage limits of such policies will not be added together to determine the most that may be paid; and

b. the maximum amount that may be paid from all such policies combined is the single highest applicable limit provided by any one of the policies. We may choose one or more policies from which to make payment.

2. The Underinsured Motor Vehicle Coverage provided by this policy applies as primary coverage for an insured who sustains bodily injury while occupying your car.

a. If:

(1) this is the only vehicle policy issued to you or any resident relative by the State Farm Companies that provides Underinsured Motor Vehicle Coverage which applies to the accident as primary coverage; and

(2) underinsured motor vehicle coverage provided by one or more sources other than the State Farm Companies also applies as primary coverage for the same accident,

then we will pay the proportion of damages payable as primary that our applicable limit bears to the sum of our applicable limit and the limits of all other underinsured motor vehicle coverage that apply as primary coverage.

b. If:

(1) more than one vehicle policy issued toyou or any resident relative by the State Farm Companies provides Underinsured Motor Vehicle Coverage which applies to the accident as primary coverage; and

(2) underinsured motor vehicle coverage provided by one or more sources other than the State Farm Companies also applies as primary coverage for the same accident,

then the State Farm Companies will pay the proportion of damages payable as primary that the maximum amount that may be paid by the State Farm Companies as determined in 1. above bears to the sum of such amount and the limits of all other underinsured motor vehicle coverage that apply as primary coverage.

3. Except as provided in 2. above, the Underinsured Motor Vehicle Coverage provided by this policy applies as excess coverage.

a. If:

(1) this is the only vehicle policy issued to you or any resident relative by the State Farm Companiesthat provides Underinsured Motor Vehicle Coverage which applies to the accident as excess coverage; and

(2) underinsured motor vehicle coverage provided by one or more sources other than the State Farm Companies

also applies as excess coverage for the same accident,

then we will pay the proportion of damages payable as excess that our applicable limit bears to the sum of our applicable limit and the limits of all other underinsured motor vehicle coverage that apply as excess coverage.

b. If:

(1) more than one vehicle policy issued to you or any resident relative by the State Farm Companies provides Underinsured Motor Vehicle Coverage which applies to the accident as excess coverage; and

(2) underinsured motor vehicle coverage provided by one or more sources other than the State Farm Companies also applies as excess coverage for the same accident,

then the State Farm Companies will pay the proportion of damages payable as excess that the maximum amount that may be paid by the State Farm Companies as determined in 1. above bears to the sum of such amount and the limits of all other underinsured motor vehicle coverage that apply as excess coverage.

After removing the case to federal court, State Farm moved for summary judgment, arguing the anti-stacking language of the “other coverage” provision prevents recovery from the Hyundai policy. The Daughhetees moved for summary judgment, arguing the “other coverage” provision is ambiguous and should be construed in favor of coverage. The Daughhetees also asserted that State Farm's construction of the “other coverage” provision renders the Hyundai policy illusory.

The district court granted summary judgment for State Farm. It found that the “other coverage” provision—read in its entirety and context—unambiguously prohibited UIM stacking. The court ruled that such a construction was not illusory.

This court reviews de novo a grant of summary judgment, viewing the record most favorably to the nonmoving party and drawing all reasonable inferences for that party. Chambers v. Pennycook, 641 F.3d 898, 904 (8th Cir.2011). This court reviews de novo the district court's construction of an insurance policy and its interpretation of state law.²Arkansas Power & Light Co. v. Hartford Steam Boiler Inspection & Ins. Co., 257 F.3d 853, 856 (8th Cir.2001) (insurance policy); Salve Regina Coll. v. Russell, 499 U.S. 225, 239, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991) (state law).

“ ‘Stacking’ refers to an insured's ability to obtain multiple insurance coverage benefits for an injury either from more than one policy, as where the insured has two or more separate vehicles under separate policies, or from multiple coverages provided for within a single policy, as when an insured has one policy which covers more than one vehicle.” Niswonger v. Farm Bureau Town & Country Ins. Co. of Mo., 992 S.W.2d 308, 313 (Mo.App.1999). Because Missouri does not require UIM coverage, “the existence of the coverage and its ability to be stacked are determined by the contract entered between the insured and the insurer.” Rodriguez v. General Accident Ins. Co. of Am., 808 S.W.2d 379, 383 (Mo. banc 1991).

Under Missouri law, general rules of contract construction apply when interpreting an insurance policy. Todd v. Missouri United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. banc 2007). “The key is whether the contract language is ambiguous or unambiguous.” Peters v. Emp'rs Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo. banc 1993). If unambiguous, the policy will be enforced as written, absent statutory or policy considerations. Rodriguez, 808 S.W.2d at 383. If ambiguity exists, the court interprets the policy in favor of the insured. Todd, 223 S.W.3d at 160. “An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions.” Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010), quoting Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). “Courts should not interpret policy provisions in isolation but rather evaluate policies as a whole.” Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. banc 2009). Courts must “endeavor to give each provision a reasonable meaning and to avoid an interpretation that renders some provisions useless or redundant.” Dibben v. Shelter Ins. Co., 261 S.W.3d 553, 556 (Mo.App.2008). Courts must apply “the meaning which would be attached by an ordinary person of average understanding if purchasing insurance.” Seeck, 212 S.W.3d at 132,quoting McCormack Baron Mgmt. Servs., Inc. v. American Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 171 (Mo. banc 1999).

The parties agree that paragraph 1 unambiguously precludes stacking. This anti-stacking paragraph says UIM coverage in different State Farm policies will “not be added together” to determine the most an insured is paid. “[T]he maximum amount that may be paid from all such policies combined is the single highest applicable limit provided by any one of the policies.” An ordinary reader would understand this prohibition.

The Daughhetees argue that the policy is ambiguous because the first sentence of paragraph 3 refers to “excess” coverage. If a policy has “clauses that claim to prohibit ‘stacking’ and also contain[s] clauses that appear to authorize ‘stacking,’ ” coverage is ambiguous and must be resolved in favor of the insured. Jordan v. Safeco Ins. Co. of Ill., 741 F.3d 882, 884–85, 2014 WL 128692, at *2 (8th Cir. Jan. 15, 2014).

The Daughhetees focus on one sentence, yet the Hyundai policy must be evaluated as a whole. See Ritchie, 307 S.W.3d at 135. This court will “endeavor to give each...