Estate of Herbst v. The Standard Fire Ins. Co.
| Decision Date | 24 April 2023 |
| Docket Number | 4:23CV201 RHH |
| Parties | ESTATE OF RAYMOND J. HERBST, III, by SUSAN HERBST, Personal Representative, Plaintiff, v. THE STANDARD FIRE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant The Standard Fire Insurance Company's Motion to Dismiss for Failure to State a Claim, filed February 27, 2023. (ECF No. 8). The motion is fully briefed and ready for disposition.
BACKGROUND[1]
On March 28, 2022, Raymond J. Herbst, III (“Mr Herbst”) was a passenger in a motor vehicle being driven by Lisa Milton (“Ms. Milton”), when it was struck by a vehicle driven by Chelsea Webster (“Ms Webster”).[2] .[3] Ms. Webster was solely at fault for the accident. (Compl ¶ 6).
At the time of the accident, Ms. Webster was covered by an automobile liability insurance policy with bodily injury limits in the amount of $100,000 per person. (Compl., ¶ 7). With the consent of Defendant, Mr. Herbst settled his claims against Ms. Webster for the bodily injury limits of $100,000, and therefore, all applicable liability limits have been exhausted. (Id., ¶ 12). Mr. Herbst sustained damages in excess of $200,000, however. (Id., ¶ 11).[4]
At the time of the accident, Mr. Herbst was insured under Policy Number 603793931-203-1 (“Policy”), issued by Defendant The Standard Fire Insurance Company, and effective from February 5, 2022, to February 5, 2023. (Compl., ¶ 13). The Policy includes coverage for underinsured motorist protection in the amount of $100,000 per person, for which Mr. Herbst paid a separate premium. (Id., ¶ 14; Policy, attached to Defendant's Motion to Dismiss as Exh. A, P. 2[5]). “Underinsured motor vehicle” is defined as “a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but the amount paid for ‘bodily injury' under that bond or policy to an ‘insured' is not enough to pay the full amount the ‘insured' is legally entitled to recover as damages.” (Policy, P. 23). The Policy further contains a Named Driver Exclusion (“NDE”) Endorsement, stating as follows: (Id., P. 32). Lisa Milton is a Named Excluded Driver under the Policy. (Id.).[6]
On or about October 5, 2022, Plaintiff submitted a claim for benefits pursuant to the underinsured motorist bodily injury coverage of the Policy. (Compl., ¶ 18; Plaintiff's Demand, attached to Defendant's Motion to Dismiss as Exh. B). Defendant denied the claim on November 8, 2022, on the basis that coverage was precluded by the NDE Endorsement. (Compl., ¶ 19; Defendant's Exh. C). Plaintiff exhausted her administrative remedies with Defendant by filing an appeal of the denial, which was also denied. (Defendant's Exhs. D, E).
On or about January 18, 2023, Plaintiff initiated this action by filing a Complaint in the Circuit Court of Franklin County, Missouri. (ECF No. 4). Defendant removed the case to this Court on February 20, 2023, on the basis of diversity jurisdiction. (ECF No. 1). As noted above, Defendant filed the instant Motion to Dismiss for Failure to State a Claim on February 27, 2023, claiming the Policy excludes coverage for injuries sustained in the manner at issue here. (ECF No. 8).
In ruling on a motion dismiss, the Court must view the allegations in the complaint in the light most favorable to Plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). The Court, “must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party.” Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005) (citation omitted). The Complaint's factual allegations must be sufficient “to raise a right to relief above the speculative level,” however, and the motion to dismiss must be granted if the Complaint does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (). Furthermore, Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) ().
In its Motion to Dismiss, Defendant asserts the Policy precludes all coverage, including underinsured motorist (“UIM”) coverage, if Ms. Milton is operating the vehicle at the time of loss. As noted above, the Policy contains an NDE Endorsement, stating as follows: “With respect to all coverages under this policy, we will not pay damages expenses or loss arising out of the maintenance or use of any auto or trailer while operated by the ‘Named Excluded Driver'.” (Policy, P. 32). Lisa Milton is a Named Excluded Driver under the Policy. (Id.). Defendant thus maintains that “[u]nder settled Missouri law, and under the weight of authority nationwide, the NDE Endorsement in the Standard Fire Policy excludes coverage for Plaintiff's UIM claim as a matter of law.” (Defendant's Motion to Dismiss, P. 2).
“Under Missouri law, applicable in this diversity case, [t]he interpretation of the meaning of an insurance policy is a question of law.” Capitol Indem. Corp. v. 1405 Associates, Inc., 340 F.3d 547, 549 (8th Cir. 2003) (internal quotation marks and citation omitted). Further, “‘[a]bsent an ambiguity, an insurance policy must be enforced according to its terms.'” Wyland v. Hartford Life Ins. Co., 210 F.Supp.3d 1164, 1167 (E.D. Mo. 2016) (quoting Lang v. Nationwide Mut. Fire Ins. Co, 970 S.W.2d 828, 830 (E.D. Mo. 1998) (citation omitted)). “An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy.” Taylor v. Bar Plan Mut. Ins. Co., 457 S.W.3d 340, 344 (Mo. banc 2015) (citing Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010)). A court may not create an ambiguity in order to distort the language of an unambiguous policy and enforce a construction it feels is more appropriate. Id. “Thus, where insurance policies are unambiguous, they will be enforced as written absent a statute or public policy requiring coverage.” Progressive Northwestern Ins. Co. v. Talbert, 407 S.W.3d 1, 9 (Mo. App. 2013) (internal quotation marks and citations omitted).
In her response Plaintiff first contends the language of the NDE Endorsement is ambiguous, particularly as it pertains to an absence of coverage when the damages, expenses or loss arise out of the maintenance or use of a vehicle while operated by Ms. Milton. Under Missouri insurance law, “‘arising out of' has been interpreted ‘to be a very broad, general and comprehensive phrase' meaning ‘originating from' or ‘having its origins in' or ‘growing out of' or ‘flowing from.'” Capitol Indem. Corp., 340 F.3d at 550 (quoting Colony Ins. Co. v. Pinewoods Enters., Inc., 29 F.Supp.2d 1079, 1083 (E.D. Mo. 1998) (citations and quotations omitted)). “When this phrase is used, as it is in the relevant Policy exclusion, the applicable causation standard is not the strict ‘direct and proximate cause' standard applicable in general tort law.” Id. (citations omitted). Instead, “[i]nsurance contracts containing this language....only require that the insurer show a causal relationship between the excluded cause and the injury.” Safeco Ins. Co. of Am. v. Yount, No. 4:19-CV-890-MTS, 2020 WL 6445840, at *2 (E.D. Mo. Nov. 3, 2020) (citations omitted).
Upon consideration of the foregoing, the Court finds such a relationship exists here. In other words, there exists a causal relationship between the excluded cause, i.e., Ms. Milton's driving, and the injuries suffered by Mr. Herbst. The unambiguous terms of the Policy thus preclude coverage under the circumstances present here. See Capitol Indem. Corp., 340 F.3d at 550.
Plaintiff next asserts Defendant's enforcement of the NDE Endorsement violates public policy under the circumstances of this case. The Missouri Court of Appeals considered an excluded driver endorsement in White v. Illinois Founders Ins. Co., 52 S.W.3d 597 (Mo. App. 2001). In that case, Thornton White, Sr. (“Husband”) was involved in an accident with an uninsured driver while operating his own motor vehicle. The uninsured driver was found to be 100% at fault. After collecting the maximum amount of uninsured motorist coverage from his own policy, Husband applied for uninsured motorist benefits under Ethel White's (“Wife”) policy with Illinois Founders. Wife's policy provided in relevant part as follows: “ALL coverage afforded by this policy is void and shall not apply to any claim or suit which occurs as the result of any auto being operated by the following person(s): THORNTON WHITE SR....
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