Grinnell Mut. Reinsurance Co. v. Haight

Decision Date26 September 2012
Docket NumberNo. 11–1600.,11–1600.
Citation697 F.3d 582
PartiesGRINNELL MUTUAL REINSURANCE CO., Plaintiff–Appellant, v. Nicole A. HAIGHT, Defendant–Appellee.
CourtU.S. Court of Appeals — Seventh Circuit


Michael L. Resis (argued), Attorney, SmithAmundsen, LLC, Chicago, IL, for PlaintiffAppellant.

D. Phillip Kesler, Mary I. Wood (argued), Attorneys, MacCloskey Kesler & Associates, Rockford, IL, for DefendantAppellee.

Before EASTERBROOK, Chief Judge, and POSNER and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

Shawn Haight purchased an insurance policy that included underinsured motorist coverage for the named insured (him) and any family members. After his teenage daughter Nicole was injured while riding in a car driven by an acquaintance whose insurance did not fully compensate her, she made an underinsured motorist claim on her father's policy. The insurance company maintains that Nicole is not entitled to coverage because she was not riding in a vehicle listed on her father's policy when she was hurt. But we read the policy to provide underinsured motorist coverage to the named insured and his family members that does not require the named insured or his family members to be occupying a vehicle listed on the policy during the accident. We therefore affirm the district court's entry of summary judgment in favor of Nicole.


Nicole Haight was hurt in a single-car accident while a passenger in a car driven by Brian Day. Her medical bills exceeded the $50,000 in bodily injury coverage that Day had through his carrier, Country Insurance. She therefore made a claim seeking underinsured motorist (“UIM”) coverage on a policy Grinnell Mutual Reinsurance Co. had issued to her father. According to its website, Grinnell provides insurance in twelve states throughout the Midwest.

The policy Grinnell issued to Shawn Haight (sometimes referred to in the documents as Shawn Haight d/b/a/ SMH Rebuilding”) has a “Business Auto Coverage Form” and various endorsements. Grinnell used forms and endorsements created by the Insurance Services Office, Inc., a national clearinghouse. The endorsement at issue here, the Illinois Underinsured Motorists Coverage Endorsement, provides $300,000 in coverage for all amounts the “insured” is entitled to recover as compensatory damages from the owner or driver of an underinsured vehicle.

Day is not related to the Haights, nor does he work for Shawn Haight, and Day's car was not one of the two vehicles listed on Shawn Haight's policy. Maintaining that Nicole was not entitled to UIM coverage under the policy issued to her father because she was not riding in a “covered auto” during the accident, Grinnell filed this action in the United States District Court for the Northern District of Illinois seeking a declaratory judgment to that effect. The parties each moved for summary judgment, and the district court granted Nicole's motion. Grinnell appeals.

A. Subject Matter Jurisdiction

Our first task, as it is in every case, is to determine whether we have subject matter jurisdiction. The complaint asserts that the federal court has jurisdiction based on 28 U.S.C. § 1332(a) because the parties are citizens of different states and the amount in controversy exceeds $75,000. The jurisdictional statements in the parties' appellate briefs assert that we have jurisdiction but do not give any information beyond that in the complaint.

Nicole's medical damages at the time the suit was filed were approximately $60,000. Day's policy covered $50,000, so we wondered whether we had jurisdiction and inquired at oral argument. Grinnell took us up on our suggestion to seek leave after argument to amend its jurisdictional allegation, and it now seeks to supplement with additional facts. See28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.”); Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S. 826, 830–32, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989).

Grinnell would now like to add more detail about the accident and Nicole's injuries. The additional allegations include that in the accident, Nicole was ejected from the vehicle in which she was riding and suffered multiple pelvic fractures, a fractured lower vertebra, minor head injuries, and contusions. Her recovery included two months of bed rest and time in a wheelchair. She claims continued pelvic and low back pain, a reduced ability to walk and sit for extended periods, and possible complications during pregnancy. Grinnell also seeks to add to its jurisdictional allegation that it is exposed to $250,000 in liability under the policy at issue.

As we have explained, the standard for determining the amount in controversy requirement “was established by the Supreme Court in St. Paul Mercury: unless recovery of an amount exceeding the jurisdictional minimum is legally impossible, the case belongs in federal court.” Back Doctors Ltd. v. Metro. Prop. and Cas. Ins. Co., 637 F.3d 827, 830 (7th Cir.2011) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). The demonstration “concerns what the plaintiff is claiming (and thus the amount in controversy between the parties), not whether plaintiff is likely to win or be awarded everything he seeks.” Id. at 829–30 (quoting Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449 (7th Cir.2005)). Also relevant in this regard, in addition to the other information about Nicole's claimed injuries and their long-term effects, is that Grinnell has now informed us that Nicole's settlement demand was $250,000. Although settlement negotiations are not admissible at trial pursuant to Federal Rule of Evidence 408 to prove liability for or invalidity of the claim or its amount, they can be considered “to show the stakes” when determining whether the amount in controversy is met. Rising–Moore v. Red Roof Inns, Inc., 435 F.3d 813, 816 (7th Cir.2006). The additional information we have received assures us that Nicole is seeking damages in excess of the jurisdictional threshold. Cf. Walton v. Bayer Corp., 643 F.3d 994, 998 (7th Cir.2011) (finding federal jurisdiction based on litany of injuries plaintiff claimed to have sustained). We grant Grinnell's request to amend its jurisdictional allegation, and, satisfied that jurisdiction exists, we proceed to the merits.

B. Whether Nicole Haight Receives Underinsured Motorist Coverage

We review de novo the district court's grant of summary judgment as well as its construction of the insurance policy. See Auto–Owners Ins. Co. v. Munroe, 614 F.3d 322, 324 (7th Cir.2010). The parties agree that Illinois law governs the interpretation of the policy. In construing the policy, our primary objective is to ascertain and give effect to the parties' intentions as expressed by the words of the policy. Rich v. Principal Life Ins. Co., 226 Ill.2d 359, 314 Ill.Dec. 795, 875 N.E.2d 1082, 1090 (2007). As with any contract, we construe an insurance policy according to the plain and ordinary meaning of its unambiguous terms. Auto–Owners Ins. Co., 614 F.3d at 324 (citing Nicor, Inc. v. Associated Elec. & Gas, 223 Ill.2d 407, 307 Ill.Dec. 626, 860 N.E.2d 280, 286 (2006)). Where a policy provision is ambiguous, Illinois courts liberally construe it in favor of coverage. Founders Ins. Co. v. Munoz, 237 Ill.2d 424, 341 Ill.Dec. 485, 930 N.E.2d 999, 1004 (2010).

Grinnell maintains that Nicole Haight is not entitled to UIM coverage under the policy because the car in which she was riding when injured was not a “covered auto.” Nicole, on the other hand, maintains that she is an “insured” under the UIM policy as Shawn Haight's family member. We note at the outset that this is not a case about a claim on a liability insurance policy. Illinois imposes a mandatory liability insurance requirement on all motor vehicles operating on its highways, and the liability policy must cover any person using the vehicle. See625 ILCS 5/7–601(a); 625 ILCS 5/7–317(b)(2); Schultz v. Ill. Farmers Ins. Co., 237 Ill.2d 391, 341 Ill.Dec. 429, 930 N.E.2d 943, 950 (2010). In contrast to liability insurance's focus on the vehicle, uninsured and underinsured motorist coverage can protect the named insured and family members “when they are operating or are passengers in a motor vehicle, as well as when they are engaged in any other activity such as walking, riding a bicycle, driving a hay wagon, or even sitting on a front porch.” See 3 Alan I. Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance § 4.2 (3rd ed. 2005); see also id. § 33.2; Doyle v. State Farm Mut. Auto. Ins. Co., 333 Ill.App.3d 81, 266 Ill.Dec. 618, 775 N.E.2d 180, 181–82 (2002) (detailing policy that provided for uninsured motorist coverage if insured sustained bodily injury while walking and was struck by motor vehicle).

With that background in mind, we turn to the policy at issue here. The policy consists of a Business Auto Coverage Form and several endorsements, with the “Illinois Underinsured Motorists Coverage” endorsement the one in question. This document begins by stating in all capital letters: “THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.” Underneath the “ILLINOIS UNDERINSURED MOTORISTS COVERAGE” heading are the words:

For a covered “auto” licensed or principally garaged in, or “garaged operations” conducted in Illinois, this endorsement modifies insurance provided under the following:





Next, underneath boxes containing the effective date, named insured, and $300,000 insurance limit, the endorsement states:

With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement.

A. Coverage

1. We will pay all sums the “insured” is legally entitled to recover as compensatory damages from the owner or driver of an ...

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