Government Employees Ins. Co. v. Simon
| Decision Date | 01 November 1990 |
| Docket Number | No. 89-1853WM,89-1853WM |
| Parties | GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellee, v. Leonard SIMON, Personal representative of the Estate of Lewis E. Simon, Deceased, Susan Johnston, Lance E. Simon, (Intervenors Below), Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
John Housley, Springfield, Mo., for appellants.
Bradley J. Fisher and Rebecca B. Myers, Springfield, Mo., for appellee.
Before ARNOLD, FAGG and MAGILL, Circuit Judges.
In this insurance coverage declaratory action, intervenors Susan Johnston and Lance Simon appeal from the district court's 1 summary judgment order in favor of appellee Government Employees Insurance Company. Johnston and Simon make two arguments on appeal: (1) that the district court erred in determining that, under Missouri law, an insurance policy's household exclusion clause barred Johnston's claim against her ex-husband's estate for medical expenses on behalf of their son; and (2) that the district court erred in refusing to grant intervenors' motion to dismiss or stay pending the outcome of similar state court proceedings. Because we believe the district court's state law ruling
was proper and that the district court did not abuse its discretion by refusing to abstain, we affirm.
The facts in this case arise from a tragic automobile accident on December 22, 1985, in which Lance Simon was injured and his father, Lewis Simon, stepmother, and sister were killed. Lance's natural mother, Susan Johnston, incurred substantial medical expenses on behalf of her son and sought insurance coverage from Lewis Simon's insurer, Government Employees Insurance Company (GEICO). GEICO denied coverage based on the household exclusion clause of its insurance policy on March 31, 1986. The relevant provisions of GEICO's policy state:
LOSSES GEICO WILL PAY FOR YOU
Under Section I, we will pay damages, which an insured becomes legally obligated to pay because of:
1. bodily injury, sustained by a person, ... arising out of the ownership, maintenance or use of the owned auto....
EXCLUISIONS [sic]
....
PERSONS INJURED
Section I applies to the following as insureds with regard to an owned auto:
1. you and your relatives; ....
DEFINITIONS:
....
....
4. "Insured" means a person or organization described under "persons insured."
....
8. "Relative" means a person related to you who resides in your household.
Johnston and her son filed a lawsuit in Missouri state court against the estate of Lewis Simon and against American Family Insurance Company (American Family), Johnston's insurer. The state court action alleged negligence by Lewis Simon and sought damages from his estate for Lance Simon's injuries and for Susan Johnston's medical expenses on Lance Simon's behalf. The state court action also sought recovery from American Family under the uninsured motorist provisions of its policy on the theory that because GEICO denied coverage, Lewis Simon was an uninsured motorist.
On April 7, 1987, American Family filed a third-party complaint against GEICO, a cross-claim against Lewis Simon's estate, and a counterclaim against Johnston and Lance Simon. The complaint against GEICO alleged, inter alia, that GEICO wrongfully denied coverage to Johnston and Lance Simon, and asked the state court to determine the parties' rights and obligations under the various insurance policies.
On April 14, 1988, GEICO filed a declaratory judgment action in a Missouri federal district court against the estate of Lewis Simon. GEICO's complaint alleged that its liability to Johnston and Lance Simon was dependent on the construction of its insurance contract with Lewis Simon, and asked the federal court to determine whether GEICO would be liable for any judgments rendered in Johnston or Lance Simon's favor against the estate of Lewis Simon. Johnston and Lance Simon then sought permissive intervention pursuant to Fed.R.Civ.P. 24(b), claiming that the state and federal proceedings featured a common "primary" issue, namely, whether GEICO's policy provided coverage to Lance Simon. The district court granted the motion to intervene and in the ensuing petition in intervention, Johnston and Lance Simon alleged that GEICO sought to delay "wrongfully" their state court action and that GEICO was barred from seeking federal court declaratory relief because it had not initially sought to remove the state court action. The parties stipulated that their state court discovery would be used and filed in the federal action.
GEICO then moved for summary judgment, arguing that Lance Simon was an "insured" under the GEICO policy because he was related to Lewis Simon and resided in Lewis Simon's household. Because Lance Simon was an "insured," GEICO argued, the policy explicitly excluded his injuries from coverage. GEICO also contended that the household exclusion clause was not contrary to public policy. Johnston and Lance Simon argued in opposition to the motion that the household exclusion clause was void as a matter of public policy, and that the insurance policy was ambiguous. They also argued that even if the policy did not cover Lance Simon's damages, Johnston's claim for medical expenses was separate, and that because Johnston no longer resided with her ex-husband, she was not an "insured" and the policy covered her damages. Johnston and Simon moved the district court to stay or dismiss GEICO's action because of the pending state court proceedings.
On March 22, 1989, the district court granted GEICO's motion for summary judgment. After reviewing the grounds for granting a summary judgment motion, the district court found that Lance Simon was a member of Lewis Simon's household. Applying the relevant GEICO policy provisions, the district court held that the policy was clear and excluded insurance coverage for Lance Simon's injuries. The district court also addressed Johnston and Lance Simon's contention that the household exclusion clause was contrary to public policy. The district court noted that numerous Missouri courts had upheld such clauses, and cited two of the most recent cases. The district court stated that it "felt confident" that Missouri courts would continue to uphold the clauses, thus rejecting the public policy challenge.
The district court next addressed Johnston and Lance Simon's argument that Johnston's claim for medical expenses was separate from Lance Simon's claim for damages and that the household exclusion did not apply to Johnston. The district court characterized Johnston's claim as dependent on coverage for Lance Simon's injuries. The district court, after reviewing Missouri case law that held that the rights of an injured party against a negligent party's insurer are no greater than those of the insured, ruled that GEICO was entitled to summary judgment.
As a final matter, the district court rejected Johnston and Lance Simon's contention that it should have stayed or dismissed GEICO's action because of the pending state court action. The district court recognized that the state court action involved the same accident and claims as the federal action did, but decided that dismissal would be "inappropriate" and that there was no novel issue of Missouri law that would warrant a stay.
After the district court refused to grant Johnston and Lance Simon's motion for a new trial or to amend the judgment, they appealed to this court.
Johnston and Lance Simon's first argument on appeal is that the district court erred in determining that, under Missouri law, the GEICO policy's household exclusion clause barred Johnston's claim for medical expenses on Lance Simon's behalf. When we review a district court's grant of summary judgment, we must apply the same standard the district court applied. McCuen v. Polk County, Iowa, 893 F.2d 172, 173 (8th Cir.1990). The district court in this case discussed numerous summary judgment considerations, noting in particular that a summary judgment motion must be viewed in the light most favorable to the opposing party, and that the opposing party must receive the benefit of all reasonable inferences. See Green v. United States Dep't of Labor, 775 F.2d 964, 973 (8th Cir.1985).
Johnston and Lance Simon argue that the district court's finding that the GEICO policy does not provide Lance Simon with coverage does not automatically compel the finding that no coverage exists for Johnston's damages. The plain language of GEICO's insurance policy refutes this argument. The policy states that GEICO will not pay damages that the estate of Lewis Simon becomes obligated to pay resulting from bodily injury to an insured. Lance Simon is an "insured" under the policy: he is Lewis Simon's son and lived in Lewis Simon's household. Johnston and Lance Simon do not challenge the district court's finding concerning this issue. Johnston contends that her claim for medical expenses, together with the fact that she is not an "insured" under the policy because she did not reside with Lewis Simon, removes her from the purview of the policy exclusion. This contention is irrelevant; she is still trying to obtain damages resulting from bodily injuries to an insured. The policy's plain language bars this result.
The district court relied on two cases interpreting Missouri law that examined the rights of injured parties against an insurer to reach this conclusion. In McNeal v. Manchester Ins. & Indem. Co., 540 S.W.2d 113 (Mo.Ct.App.1976), a Missouri appellate court stated that "Missouri has held to the doctrine that the rights of the injured person are derivative and that those rights can rise no higher than those of the insured so that the insurer can set up as a defense [against the injured party a defense it had against the...
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