Hill v. Gov't Emp. Ins. Co.

• Court: Missouri Court of Appeals
• Writing for the Court: GARY D. WITT
• Citation: Hill v. Gov't Emp. Ins. Co., 390 S.W.3d 187 (Mo. App. 2012)
• Decision Date: 18 December 2012
• Docket Number: No. WD 74985.,WD 74985.
• Parties: Leslie HILL, Appellant, v. GOVERNMENT EMPLOYEE INSURANCE COMPANY, Respondent.

390 S.W.3d 187

Leslie HILL, Appellant,

v.GOVERNMENT EMPLOYEE INSURANCE COMPANY, Respondent.

No. WD 74985.

Missouri Court of Appeals, Western District.

Nov. 20, 2012.

Application for Transfer to Supreme Court Denied

Dec. 18, 2012.

Application for Transfer Denied Jan. 29, 2013.

Stephen R. Bough and M. Blake Heath, Kansas City, MO, for appellant.

Scott D. Hofer and James P. Maloney, Kansas City, MO, for respondent.

Before Division One: THOMAS H. NEWTON, Presiding Judge, JOSEPH M. ELLIS, Judge and GARY D. WITT, Judge.

GARY D. WITT, Judge.

Leslie Hill (“Hill”) appeals from the Circuit Court of Jackson County's grant of summary judgment in favor of Government Employee Insurance Company (“GE”). Hill contends that her claim for uninsured motorist coverage (“UM”) against GE, with whom she had a policy, raised a genuine issue of material fact such that summary judgment was not warranted. For the reasons explained below, we affirm.

Factual Background¹

On September 13, 2008, Hill was injured when the automobile she was driving was struck from behind by a Dodge Ram being driven by Matthew Malone (“Matthew”).² Hill was stopped at an intersection when Matthew struck her vehicle. Matthew was intoxicated at the time of the crash. The Dodge Ram that Matthew was driving was owned by his father, Phillip Malone (“Phillip”). Matthew was insured under his father's automobile insurance policy issued by GEICO General Insurance Company (“GEICO”); we will refer to this as the “GEICO policy” or “Malone policy.” ³ Hill filed suit against Matthew, alleging negligence in the operation of the vehicle.

The GEICO policy contained liability coverage limits of $100,000. The GEICO policy covered both Matthew's negligent operation of the vehicle and Phillip's negligence as the owner. GEICO paid Hill its $100,000 liability limits under its policy in exchange for settlement of all claims against Matthew. By agreement of the parties, Phillip was not included in the release, even though it was his policy that funded the settlement of the claims against Matthew. Following the settlement with Matthew, Hill filed suit against Phillip for negligent entrustment of the vehicle to Matthew.

GEICO agreed to provide Phillip with a defense and hired an attorney to represent Phillip but stated in correspondence to Phillip that because GEICO had already paid out the liability limits under its policy to settle the claims against Matthew, there was no amount left under the policy limits to pay any judgment Hill may be awarded on her claim against Phillip. GEICO asserted that it was not denying liability coverage for the tort action against Phillip; rather, GEICO asserted that, while the claim against Phillip was covered by the terms of the policy, the existing liability coverage had been exhausted by the prior settlement payment.

Hill then brought this suit against her own insurance carrier, GE, in an attempt to recover under her “uninsured and underinsured motorist protection.” Hill's petition against GE alleged that her damages were in excess of what she received from the settlement of her claims against Matthew under the GEICO policy. She alleged that Phillip was “not insured for this loss.” In support, Hill attached the affidavit of Sheila Turner, a claims examiner with GEICO, who stated that Phillip had liability coverage but that GEICO had already paid out the policy limits to Hill under the claim against Matthew.

On September 26, 2011, GE filed a motion for summary judgment, arguing that Phillip was not uninsured as evidenced by his having a GEICO liability insurance policy in place that had previously paid out its limits to Hill for her injuries from the same accident. GE further argued that the appropriate coverage under which Hill could recover additional damages would have been underinsured motorist coverage (“UIM”), but the Hill policy did not include such coverage because Hill had failed to purchase such coverage.

In her reply, Hill argued that genuine issues of material fact existed involving whether a lack of available funds within the policy limits meant that Phillip was uninsured and that Hill's policy with GE (“Hill policy” or “GE policy”) was ambiguous in its description of UM coverage.

On February 6, 2012, the trial court granted GE's motion for summary judgment on the basis that under the Hill policy, Phillip was not an uninsured motorist, and thus UM coverage would not apply. It further found that the Hill policy was clear and unambiguous.

Hill appeals.

Standard of Review

This court reviews the propriety of the trial court's grant of summary judgment de novo. Waldrop v. Shelter Mut. Ins. Co., 221 S.W.3d 401, 403 (Mo.App. W.D.2006) (citations omitted). Summary judgment is appropriate if no genuine issue of material fact exists and the moving party has a right to judgment as a matter of law. Id. “The record is read in the light most favorable to the party against whom summary judgment was granted, and all the facts properly pled by the nonmoving party and all inferences therefrom are assumed as true.” Id. “Reversal of a grant of summary judgment is required if either (1) there is a genuine issue as to a material fact, or (2) the trial court erred as a matter of law.” Id.

Analysis

In Point One, Hill argues that the trial court erred in granting summary judgment to GE because “whether UM coverage applies turns on the tort liability alleged and whether coverage exists for that particular tort in that Hill's negligent entrustment claim can form the basis of her UM claim even though GEICO provided coverage for the negligent operation of the Dodge Ram.” The gist of Hill's argument in Point One is that contract law does not govern whether UM coverage applies; rather, tort law does. Hill argues that her claim should survive because it is based in tort liability, which can specifically trigger UM coverage. Hill relies on our holding in Stotts v. Progressive Classic Ins. Co., 118 S.W.3d 655 (Mo.App. W.D.2003) to support this proposition.

Hill points out that she made two separate and distinct claims in tort against two separate and distinct individuals, even though they are both covered under the same GEICO policy. Her claim against Matthew was based upon his negligent operation of the vehicle causing the accident in which she was injured. Her claim against Phillip was for a separate tort based on Phillip's negligence in entrusting the vehicle he owned to his son Matthew. Both parties agree that the GEICO policy covered the tort claims Hill brought against Matthew and Phillip. However, Hill argues that because the limits of the GEICO policy were then fully expended in her settlement with Matthew, that her remaining tort claim against Phillip is one for which coverage is no longer provided, thus implicating the UM coverage in her own policy with GE.

GE agrees that the tort claim against Matthew and the separate tort claim against Phillip were both covered by the GEICO policy. However, GE argues that because the limits of the GEICO policy were expended in settling Matthew's claim, while there is coverage under that policy for the claim against Phillip, there are no funds left to satisfy the second claim against Phillip. They argue that Phillip was insured, even though there were no funds available from his policy left to pay this claim. Therefore, GE argues that Phillip was not an uninsured motorist under the terms of the GE policy.

It is important to first distinguish between which portion of the analysis is governed by contract law and which is governed by tort law. In Gaunt v. State Farm Mut. Auto. Ins. Co., 24 S.W.3d 130, 136 (Mo.App. W.D.2000) we clarified that:

[I]t is well established that the right of the injured party to recover from an uninsured motorist carrier arises from the insurance contract rather than in tort. Uninsured motorist insurance cases combine tort liability and contract liability into one action. The obligation of the uninsured motorist to respond in money damages is governed by tort rules and that of the insurer is governed by contract. (Emphasis added and citation omitted.)

Thus, GE's obligation is governed by contract law. The contract in question is the insurance contract which comprises the GE policy. GE's obligation regarding UM coverage is dictated by the policy terms of the GE policy and by section 379.203.1.⁴ In contrast, the obligation of the alleged tort-feasor to pay money damages is governed by tort law and the funds could come from other sources such as an employer's policy, a personal liability policy, an umbrella policy or personal assets of the tort-feasor. Using two different lenses ensures that the obligations of each party are addressed appropriately.

In Point One, Hill contends that GE is liable for UM coverage but bases that conclusion on tort law. However, GE's obligations are not established by tort law; rather, it is contract law and statutory interpretation that govern whether UM coverage applies. An analysis under tort law views the driver and the owner of the vehicle as separate tortfeasors and looks to see if each tort-feasor has separate liability insurance. The analysis is different when reviewing a policy based in contract law where, in the case of UM coverage, if either the driver or owner has insurance coverage for the accident, then typically UM coverage does not apply. In tort law, if the tort-feasor has no insurance coverage, then UM applies. Stotts v. Progressive Classic Ins. Co., 118 S.W.3d 655 (Mo.App. W.D.2003). See also Arnold v. American Family Mut. Ins., 987 S.W.2d 537 (Mo.App. W.D.1999).

We explained this concept in Stotts v. Progressive Classic Ins. Co., 118 S.W.3d 655 (Mo.App. W.D.2003). In Stotts, the plaintiffs sued their insurer for UM coverage because although the driver had liability coverage, the owner of the vehicle did not. Id. at 659. Hill points to our language that

the issue of whether a vehicle is considered uninsured, for purposes of § 379.230, does not...