Kearbey by Kearbey v. Kinder

• Decision Date: 01 June 1998
• Docket Number: No. 21664,21664
• Citation: 972 S.W.2d 575
• Parties: Kara KEARBEY, a minor, by her Next Friend, Earl Lee KEARBEY, Jr., and Earl Lee Kearbey, Jr. personally and Karen Kearbey, Plaintiffs-Appellants, v. Valerie KINDER and Progressive Insurance Company, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 575

972 S.W.2d 575

Kara KEARBEY, a minor, by her Next Friend, Earl Lee KEARBEY Jr., and Earl Lee Kearbey, Jr. personally and Karen Kearbey, Plaintiffs-Appellants, v. Valerie KINDER and Progressive Insurance Company Defendants-Respondents.

No. 21664.

Missouri Court of Appeals,

Southern District,

Division Two.

June 1, 1998.

Motion for Rehearing or Transfer Denied

June 22, 1998.

Application for Transfer Denied Aug. 25, 1998.

Douglas R. Kennedy, Kennedy & Kennedy, Poplar Bluff, for Plaintiffs-Appellants.

Jeffrey P. Hine, Osburn, Hine, Kuntze & Yates, L.L.C., Cape Girardeau, for Respondent, Progressive Insurance Company.

BARNEY, Judge.

This action involves the construction of a "household exclusion" clause of an automobile Plaintiffs filed their first amended petition in three counts against Insurer. Count I was a claim for daughter's personal injuries caused by Defendant Kinder's negligent operation of an automobile. Count II consisted of a claim by daughter's parents for damages arising from her medical expenses and loss of their daughter's society, services and companionship arising from daughter's personal injuries. In Count III, parents sought a declaratory judgment determining that they were entitled to policy coverage for their derivative claims arising from their daughter's personal injuries, free from any exclusionary provision of the policy.

                insurance policy (the policy). 1  The suit was brought by Plaintiff Earl Lee Kearbey, Jr., as next friend of Kara Kearbey, a minor (daughter), and Plaintiff Earl Lee Kearbey, Jr., together with Plaintiff Karen Kearbey (parents) to recover damages from Defendant Valerie Kinder and Mr. Kearbey's insurance carrier, Progressive Insurance Company (Insurer), arising from an automobile accident. 2
                

The trial court entered an interlocutory judgment on Count I of the amended petition, determining that daughter had been damaged in the amount of $25,000.00. Subsequently, the trial court authorized settlement of daughter's personal injury claim.

The remaining counts of parents' petition were tried upon stipulated facts, and the trial court subsequently entered its judgment in favor of parents and against Defendant Kinder in the amount of $25,000.00 in connection with parents' derivative claims in Count II of their amended petition. However, as to Count III, the trial court determined that after payment was made to daughter in the amount of $25,000.00, as mandated by the Missouri Motor Vehicle Financial Responsibility Law (MVFRL), the policy's household exclusion provision precluded parents' recovery under the policy. ³ § 303.190.2(2) RSMo 1994; see Halpin v. American Family Mut. Ins. Co., 823 S.W.2d 479 (Mo. banc 1992). Thus, judgment was entered in favor of Insurer on Count III of parents' petition for declaratory judgment. This appeal followed.

The policy's pertinent provisions provide the following:

PART I LIABILITY TO OTHERS

Coverage A--Bodily Injury

Limits of Liability

The limits of liability shown on the Declarations apply subject to the following:

The bodily injury liability limit for "each person" is the maximum for bodily injury sustained by one person in any one accident, and includes all derivative claims which include, but are not limited to, loss of society, loss of companionship, loss of services, loss of consortium, and wrongful death.

* * *

[DECLARATION PAGE]

COVERAGES--LIMITS OF LIABILITY

Injury $50,000 EACH PERSON--$100,000 EACH ACCIDENT

* * *

MISSOURI AMENDATORY ENDORSEMENT

PART I LIABILITY TO OTHERS

EXCLUSIONS:

11. Bodily injury to any person related to an insured person by blood, marriage or adoption and residing in that person's household. This exclusion applies only to the extent that the limit of liability for this coverage exceeds the minimum limit of liability required by the financial responsibility law of Missouri.

* * *

In their appeal relating to Count III of their petition, parents raise two similar points of trial court error. Both points involve the construction of the policy's "household exclusion" clause, supra, and will be considered conjunctively.

In Point One, parents maintain that the plain language of the "Limits of Liability" clause affords coverage for daughter's liability claims arising from her bodily injuries as well as parents' derivative claims per the declaration page of the policy providing $50,000.00 coverage for bodily injury to each person.

In Point Two, parents aver that the Halpin exclusionary clause (contained in the household exclusion provision of paragraph 11 of the Amendatory Endorsement to the policy) is not found in the "Limits of Liability" clause (Part I of the policy). Parents thus argue that this constitutes an ambiguity because one part of the policy, i.e., the "Limits of Liability" clause, provides coverage for bodily injuries, and derivative claims arising from these bodily injuries, while another part of the policy, i.e., the household exclusion clause containing the Halpin language, limits these recoveries. Parents maintain that this ambiguity requires a resolution adverse to Insurer, thereby affording coverage to parents on their derivative claims in the amount of $25,000.00, in addition to daughter's bodily injury coverage in the amount of $25,000.00.

"In reviewing a declaratory judgment, we will sustain the lower court's decision unless it is not supported by substantial evidence, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law." State Farm Mut. Auto. Ins. Co. v. Butler, 904 S.W.2d 350, 351 (Mo.App.1995)(citing Harold S. Schwartz & Associates, Inc. v. Continental Cas. Co., 705 S.W.2d 494, 497 (Mo.App.1985)).

"The law of contracts applies to an insurance policy, and any claim or suit by either party must be based on the policy issued." Gabriel, 897 S.W.2d at 120. "The policy should be construed as a whole." Id. (citing Dieckman v. Moran, 414 S.W.2d 320, 321 (Mo.1967)). "To determine the intention of the parties to an insurance contract, the entire policy and not detached provisions or clauses must be considered." Id. (citing Doty v. American Nat'l Ins. Co., 350 Mo. 192, 165 S.W.2d 862, 869 (1942)); see also Rice v. Fire Ins. Exchange, 946 S.W.2d 40, 42 (Mo.App.1997).

"If the language of an insurance contract is clear and unambiguous, the court does not have the power to rewrite the contract for the parties and must construe the contract as written." Gabriel, 897 S.W.2d at 120-21 (citing Madison Block Pharmacy, Inc. v. U.S. Fidelity and Guar. Co., 620 S.W.2d 343, 346 (Mo. banc 1981)). An ambiguity exists in an insurance policy when there is duplicity, indistinctness or uncertainty in the meaning of the language used in the policy. Rice, 946 S.W.2d at 42. The determination of whether an insurance contract is ambiguous is a question of law. Id. "Existing and valid statutory provisions enter into and form a part of all contracts of insurance to which they are pertinent and applicable as fully as if such provisions were written into them." Gabriel, 897 S.W.2d at 121 (citing Ward v. Allstate Ins. Co., 514 S.W.2d 576, 578 (Mo. banc 1974)). In the absence of ambiguity and in the absence of a statute or public policy to the contrary, we are to enforce the policy as written. Butler, 904 S.W.2d at 352.

Exclusionary clauses in insurance contracts are strictly construed against the insurer. Rice, 946 S.W.2d at 42. If an exclusionary clause is ambiguous, we must adopt a construction favorable to the insured. Id.

In review of parents' allegations of trial court error, we first note that "[a]n insurance company may include a derivative claim in the single limits or treat the derivative claim as a separate injury entitled to separate limits by the language of its policy." Remspecher v. Jacobi, 941 S.W.2d 701, 702 (Mo.App.1997). Under insurance policies fixing a maximum recovery for "bodily injury" to one person, it has been held that the limitation is applicable to all claims of damage flowing from such bodily injury. Id. (emphasis added); see also Eaves v. Boswell, 852 S.W.2d 353, 358-59 (Mo.App.1993). It is therefore immaterial that some part of the damages may be claimed by a person other than the one suffering the bodily injuries. Id.

In Eaves, this Court interpreted a similar "limits of liability" provision as in the instant case. Eaves, 852 S.W.2d at 354. It read as follows:

(1) The bodily injury liability limit for each person is the maximum for all damages, including damages for care and loss of services arising out of bodily injury ... suffered by any one person in any one accident.

Id.

We concluded in Eaves that the "bodily injury liability" coverage of $25,000.00, as shown in the declaration page of the policy, unambiguously placed a $25,000.00 cap on insurer's liability "for all damages, in the aggregate, arising out of the bodily injury suffered by [the injured party], including [the injured party's] claim and Plaintiffs' derivative claim...." Id. at 358.

Were we to read the instant policy's "Limit of Liability" clause in isolation, parents thesis would have merit. The plain language of the "Limits of Liability" clause affords coverage both for their daughter's bodily injuries, as well as Parents' derivative claims. ⁴ This is because the policy's declaration page provides for $50,000.00 in coverage arising from injury to one person and "bodily injury liability" for "each person" is described...