Fanning v. Progressive Nw. Ins. Co.

• Decision Date: 26 November 2013
• Docket Number: No. WD 75943.,WD 75943.
• Citation: 412 S.W.3d 360
• Parties: Stanley FANNING, Respondent, v. PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Appellant.
• Court: Missouri Court of Appeals

412 S.W.3d 360

Stanley FANNING, Respondent,

v.PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Appellant.

No. WD 75943.

Missouri Court of Appeals,

Western District.

Aug. 27, 2013.

Motion for Rehearing and/or Transfer to Supreme Court Denied Oct. 1, 2013.

Application for Transfer Denied Nov. 26, 2013.

Walter R. Simpson, Kansas City, MO, for respondent.

Nikki Cannezzaro, Kansas City, MO, for appellant.

Before Division Two: THOMAS H. NEWTON, Presiding Judge, KAREN KING MITCHELL, Judge and GARY D. WITT, Judge.

GARY D. WITT, Judge.

This case involves the interpretation of underinsured motorist provisions contained in a motorcycle insurance policy. The insured party, Stanley Fanning (“Fanning”), and the insurer, Progressive Northwestern Insurance Company (“Progressive”), filed cross motions for summary judgment. The trial court found the policy to be ambiguous and entered summary judgment in favor of Fanning. Progressive appeals. We affirm.

Factual and Procedural History

The facts are undisputed. While riding his motorcycle, Fanning was involved in an accident with a vehicle operated by Kathleen Burnham (“Burnham”) on June 26, 2010. The accident was caused by Burnham's negligence. Burnham was insured by GEICO Indemnity Company (“GEICO”), under a policy which provided liability coverage of $50,000 per person/$100,000 per accident. On Burnham's behalf, GEICO paid its policy limit of $50,000 to Fanning. At the time of the accident, Fanning was insured by Progressive, which had notice of and consented to Fanning's settlement with Burnham. Fanning's injuries and damages exceeded $100,000.

Progressive's motorcycle insurance policy with Fanning begins with a declarations page. After the declarations page, page 1 of the policy includes general definitions of fifteen defined terms that appear throughout the policy. There are additional definitions of certain terms contained in various other parts of the policy. Part III(B), titled “Underinsured Motorist Coverage,” contains its own “additional definitions.” Terms appearing in boldface type throughout the policy are defined terms, and even the definitions sections include bolded terms which are separately defined.

“Declarations page” is defined in the general definition section as; “means the document showing your coverages, limits of liability, covered motorcycles, premium, and other policy-related information” and “may also be referred to as the Motorcycle Insurance Coverage Summary.” ¹

Progressive's declarations page provides underinsured motorist coverage, subject to the terms outlined in the policy, with “limits” of “$50,000 each person/$100,000 each accident.” The declarations page has a column titled “deductible,” and includes deductibles for comprehensive coverage and collision coverage. As to underinsured motorist coverage, the declarations page does not state a deductible, nor does it alert to or identify any trigger, set-off, or any other listed limit of liability or any other limit of coverage.

Part III(B) of the policy contains the underinsured motorist coverage provisions, which grant coverage per the following:

INSURING AGREEMENT

If you pay the premium for this coverage, we will pay for damages that an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury:

1. sustained by that insured person;

2. caused by an accident; and

3. arising out of the ownership, maintenance, or use of an underinsured motor vehicle.

We will pay under this Part III(B) only after the limits of liability under all applicablebodily injury liability bonds and policies have been exhausted by payment of judgments or settlements.

Part III(B) also contains the following additional definitions (again, not included in the general definitions section of the policy):

ADDITIONAL DEFINITIONS

When used in this Part III(B):

1. “Insured person” means:

a. you or a relative;

b. any person while operating a covered motorcycle with the permission of you or a relative;

c. any person occupying, but not operating, a covered motorcycle;

d. any person who is entitled to recover damages covered by this Part III(B) because of bodily injury sustained by a person described in a, b, or c above.

2. “Underinsured motor vehicle” means a land motor vehicle or trailer of any type for which the sum of the limits of liability under all bodily injury liability bonds or policies applicable at the time of the accident is less than the coverage limit for Underinsured Motorist Coverage shown on the declarations page.

The underinsured motorist coverage provisions in the policy contain the following Limit of Liability clause:

LIMITS OF LIABILITY

The limit of liability shown on the declarations page for Underinsured Motorist Coverage is the most we will pay regardless of the number of:

1. claims made;

2. covered motorcycles;

3. insured persons;

4. lawsuits brought;

5. vehicles involved in the accident; or

6. premiums paid.

* * * * * *

The Limits of Liability under this Part III(B) will be reduced by all sums: 1. paid because of bodily injury by or on behalf of any persons or organizations that may be legally responsible, including, but not limited to, all sums paid under Part I—Liability to Others;

The underinsured motorist coverage provisions also include the following “other” insurance clause:

OTHER INSURANCE

If there is other applicable underinsured motorist coverage, we will pay only our share of the damages. Our share is the proportion that our limit of liability bears to the total of all available coverage limits. However, any insurance we provide with respect to a vehicle that is not a covered motorcycle will be excess over any other underinsured motorist coverage.

In their motions for summary judgment, the parties only dispute whether the Underinsured Motorist Coverage provisions provide coverage to Fanning for the injuries he sustained in the accident with Burnham. For purposes of the motions, the parties stipulate that Burnham was at fault for the accident and that Fanning's total damages exceed $100,000.

Based on the stipulated facts and the policy language, the trial court granted Fanning's motion for summary judgment, determining that there is an ambiguity as to the definition of “underinsured motor vehicle” and denied Progressive's motion for summary judgment. Whether there is an ambiguity in the policy which results in coverage, is the sole issue on appeal.² In its two points on appeal, Progressive argues that the trial court erred in granting summary judgment to Fanning and in denying Progressive's motion for summary judgment.

Further facts are set forth below as necessary.

Standard of Review

Our Supreme Court has set forth our standard of review:

Summary judgment is appropriate only when the moving party demonstrates that “there is no genuine dispute as to the facts” and that “the facts as admitted show a legal right to judgment for the movant.” The movant bears the burden of establishing both a legal right to judgment and the absence of any genuine issue of material fact required to support the claimed right to judgment. The propriety of summary judgment is purely an issue of law, and this Court's review is essentially de novo. “As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment.”

Bob DeGeorge Assoc.'s, Inc. v. Hawthorn Bank, 377 S.W.3d 592, 596 (Mo. banc 2012) (quoting ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 380 (Mo. banc 1993)) (citations omitted). The interpretation of an insurance policy is a question of law that we also determine de novo. Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007) (citation omitted).

General Principles of Interpretation

As the issue framed is solely one of interpretation of an insurance policy, we look to determine whether the insurance policy language is ambiguous or unambiguous. Blumer v. Automobile Club Inter–Ins. Exch., 340 S.W.3d 214, 218 (Mo.App. W.D.2011) (citation omitted); Miller v. Ho Kun Yun, 400 S.W.3d 779, 784 (Mo.App. W.D.2013). If no ambiguity exists, the insurance contract will be enforced as written. Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991). If an ambiguity exists, we construe the language of the policy against the insurer. Blumer, 340 S.W.3d at 218. “An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy.” Seeck, 212 S.W.3d at 132. When determining whether an ambiguity exists, “[w]ords or phrases in an insurance contract must be interpreted by the court in the context of the policy as a whole and are not to be considered in isolation.” Miller, 400 S.W.3d at 784.

“To test whether the language used in the policy is ambiguous, the language is considered in the light in which it would normally be understood by the lay person who bought and paid for the policy.” Blumer, 340 S.W.3d at 218 (citation omitted). In other words, we apply “the meaning which would be attached by an ordinary person of average understanding if purchasing insurance” and we resolve “ambiguities in favor of the insured.” Seeck, 212 S.W.3d at 132 (citations omitted). “In Missouri, this rule is more rigorously applied in insurance contracts than in other contracts.” Long v. Shelter Ins. Co., 351 S.W.3d 692, 696 (Mo.App. W.D.2011) (citation omitted).

Ambiguities are construed in favor of the insured because:

(1) insurance is designed to furnish protection to the insured, not defeat it; ambiguous provisions of a policy designed to cut down, restrict, or limit insurance coverage already granted, or which introduce exceptions or exemptions, must be strictly construed against the insurer; and (2) as the drafter of the policy, the insurance company is in the better position to remove the ambiguity from the contract.

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