Dutton v. Am. Family Mut. Ins. Co.

• Decision Date: 03 February 2015
• Docket Number: No. SC 94075,SC 94075
• Citation: 454 S.W.3d 319
• Parties: Adam Dutton, Appellant, v. American Family Mutual Insurance Company, Respondent.
• Court: Missouri Supreme Court

454 S.W.3d 319

Adam Dutton, Appellant

v.American Family Mutual Insurance Company, Respondent.

No. SC 94075

Supreme Court of Missouri, en banc .

Opinion issued February 3, 2015

Randall W. Brown of Thorberry, Eischens & Brown LLC in Kansas City, (816) 531–8383, for Dutton.

Susan Ford Robertson and J. Zachary Bickel of The Robertson Law Group LLC in Kansas City, (816) 221–7010; and Christopher J. Carpenter and Tracy M. Hayes of Sanders Warren & Russell LLP in Overland Park, Kansas, (913) 234–6100 for American Family.

Dale L. Beckerman and Mimi E. Doherty of Deacy & Deacy LLP in Kansas City, (816) 421–4000, for The Missouri Organization of Defense Lawyers.

Russell F. Watters and T. Michael Ward of Brown & James PC in St. Louis, (314) 421–3400 for Farmers Insurance Company Inc.

Jill R. Jackson of Ford, Parshall & Baker in Columbia, (573) 449–2613, for The Missouri Insurance Coalition and the National Association of Mutual Insurance Companies.

Opinion

LAURA DENVIR STITH, JUDGE

Adam Dutton appeals the trial court's entry of judgment in favor of American Family Mutual Insurance Company on Mr. Dutton's claim that coverage was provided for an accident caused by American Family's insured under two policies purchased by the insured, one on a Nissan owned by the insured and that the insured was driving at the time of the accident and the other on a Ford also owned by the insured but not involved in the accident. The policy on the vehicle not involved in the accident by its terms does not provide coverage because the policy contains a specific exclusion for other vehicles owned by the insured but not insured under that policy. But Mr. Dutton argued that the Motor Vehicle Financial Responsibility Law (MVFRL), section 303.010 to section 303.390,¹ required American Family to pay the statutory minimum of $25,000 as a matter of public policy, which could not be negated by an exclusion.

The trial court rejected this argument as to the policy on the vehicle not involved in the accident. This Court agrees and affirms. The MVFRL by its terms only requires coverage of specifically designated vehicles and of other vehicles used by the insured but that are not owned by the insured. Therefore, the Ford policy does not cover the Nissan because it was owned but not designated in the Ford policy.

I. FACTUAL AND PROCEDURAL HISTORY

Barbara Hiles owned two vehicles: a 2007 Nissan Maxima and a 2003 Ford F–250. Ms. Hiles is the named insured on separate American Family insurance policies she purchased on each of these owned vehicles (“the Nissan policy” and “the Ford policy”). Both policies are identical, and each has a policy limit of $25,000 per person/$50,000 per accident.

On May 25, 2009, Mr. Dutton was injured in a motor vehicle accident when Ms. Hiles' Nissan collided with his vehicle at or near the intersection of NE Adams Dairy Parkway and NE Napoleon Drive in Blue Springs. Ms. Hiles' Ford was not involved in the accident. It is undisputed that Ms. Hiles was at fault for the collision. On December 2, 2010, Mr. Dutton filed a lawsuit against Ms. Hiles in the Jackson County circuit court for damages related to the May 25, 2009, accident. Although the Ford was not involved in the accident, Mr. Dutton made a settlement demand of $50,000, which was the combined policy limits of the Nissan policy added to what he claims are the minimum policy limits required under the MVFRL for the Ford policy issued to Ms. Hiles by American Family.

On March 30, 2011, Mr. Dutton, Ms. Hiles, and American Family entered into a settlement of Mr. Dutton's claims against Ms. Hiles under which Mr. Dutton received $25,000 under the Nissan policy and was assigned Ms. Hiles' right to sue American Family for any coverage provided by the Ford policy.

On April 4, 2011, Mr. Dutton filed a declaratory judgment action against American Family seeking a determination whether the Ford policy provides $25,000 coverage for the injuries sustained by Mr. Dutton in the May 25, 2009, accident (in addition to the $25,000 provided by the Nissan policy). Mr. Dutton moved for summary judgment, arguing that every owner's liability policy issued in Missouri must meet the minimum requirements of the MVFRL and, therefore, the Ford policy must cover an accident in the Nissan even though the Ford was not involved in the accident.

The trial court entered judgment for American Family, explaining in relevant part:

The Court, after considering the parties' positions, and it appears as a matter of law that: (1) while every owner's liability policy issued in Missouri must meet the minimum requirements of the Missouri Motor Vehicle Financial Responsibility Law, MVFRL, § 303.190.2, RSMo, there is no requirement in the MVFRL that each owner's liability policy must provide the minimum limits under the MVFRL when the motor vehicle covered by such owner's policy is not involved in an accident; ...

Mr. Dutton appealed.² Following an opinion by the court of appeals, this Court granted transfer. Mo. Const. art. V, § 10.

II. STANDARD OF REVIEW

Because the propriety of summary judgment is an issue of law, this Court reviews the grant of summary judgment de novo. It considers the record in the light most favorable to the party against whom judgment was entered, without deference to the trial court's findings, and accords the non-movant “the benefit of all reasonable inferences from the record.” ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The interpretation of an insurance policy is a question of law that this Court also determines de novo. Rice v. Shelter Mut. Ins. Co., 301 S.W.3d 43, 46 (Mo. banc 2009). In construing the terms of the policy, this Court applies the meaning an ordinary person of average understanding would attach if purchasing insurance and resolves ambiguities in favor of the insured. Id.

III. THE MVFRL DOES NOT REQUIRE COVERAGE

The issue before the Court on this appeal is whether, when an individual has purchased two separate policies of insurance, one on each of two automobiles owned by her, and only one of those owned vehicles is involved in an accident, the MVFRL requires the policy on the uninvolved vehicle to provide the minimum $25,000 statutory limit of liability even though the accident vehicle was not listed as a covered vehicle and even though the policy specifically excluded from coverage the insured's use of another owned but undesignated vehicle. On these facts, this Court determines that the MVFRL's minimum statutory limit of liability coverage simply does not require coverage by the policy on the vehicle that was not involved in the accident. Mr. Dutton's argument to the contrary improperly mixes the concepts and requirements of the MVFRL for vehicles designated by an owner's policy with the requirements of the MVFRL for vehicles that are not designated in the policy but are used by the insured.³

A. The Ford Policy Does Not Provide Coverage for Use of the Nissan

Ms. Hiles is the named insured in the Ford policy. The Ford policy defines “your insured car” as “[a]ny car described in the declarations and any private passenger car ... you replace it with.” (Emphasis added.) The Ford policy's coverage provision states: “We will pay compensatory damages an insured person is legally liable for because of bodily injury and property damage due to the use of a car or utility trailer.”⁴ The Ford policy's declarations page describes only the Ford F–250, and that vehicle has not been replaced. Therefore, the Ford F–250 is the only insured car under the Ford policy. But the policy is written so that Ms. Hiles is also insured for her use of other, non-designated private passenger cars, except as limited by various exclusions. Exclusion 9 excludes coverage for “[b]odily injury or property damage arising out of the use of any vehicle, other than your insured car [the Ford F–250], which is owned by or furnished or available for regular use by you or any resident of your household.” (Emphasis added.) In other words, the coverage provided to Ms. Hiles under the Ford policy for her operation of cars other than the Ford does not extend to other cars owned by her but not insured by her under the Ford policy. The Nissan, which is the car that she was operating when she had the accident for which coverage is sought, is owned by her but not insured under the Ford policy. The plain language of the Ford policy does not provide coverage for the property damage or personal injury caused by Ms. Hiles' use of the Nissan.

The reason why other owned but undesignated vehicles are excluded previously has been explained by this Court:

The purpose of the ‘drive other cars' provision in an automobile liability policy is to cover occasional or incidental use of other cards [sic] without the payment of an additional premium, but to exclude the habitual use of other cars, which would increase the risk on the insurance company without a corresponding increase in the premium.

State Farm Mut. Auto. Ins. Co. v. W. Cas. & Sur. Co., 477 S.W.2d 421, 424 (Mo. banc 1972) (internal citation and quotations marks omitted) (emphasis added). That is, one cannot simply buy a policy of insurance on one vehicle and then argue that the policy covers other vehicles that the insured also owns but chose not to insure. The policy only provides coverage of owned cars that are insured under a policy as well as an insured's operation of other cars so long as they are not owned and uninsured by the policy.

B. The MVFRL Does Not Read Into an Owner's Policy Coverage of Another Vehicle Owned by the Insured but not Insured Under the Policy

Mr. Dutton concedes that the terms of the Ford policy do not cover the accident in the Nissan for the above reasons. He contends that the MVFRL nevertheless requires that American Family provide coverage under the Ford policy for the accident involving the Nissan up to the MVFRL's mandatory statutory minimum limit of liability coverage of $25,000.⁵ This Court, therefore, turns to...