Kuda v. American Family Mut. Ins. Co., 72226

• Decision Date: 19 June 1990
• Docket Number: No. 72226,72226
• Citation: 790 S.W.2d 464
• Parties: Cynthia KUDA, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Respondent.
• Court: Missouri Supreme Court

Page 464

790 S.W.2d 464

Cynthia KUDA, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Respondent.

No. 72226.

Supreme Court of Missouri En Banc.

June 19, 1990.

Kenneth K. Vuylsteke, Bernard D. Reams, St. Louis, for appellant.

Robert J. Wulff, St. Louis, for respondent.

Arthur J. Kase, Julie L. Prewitt, Ronald R. Holliger, Kansas City, amicus curiae Mo. Associate of Trial Attys.

COVINGTON, Judge.

The issue in this case is the enforceability of a limitation of liability clause in the medical expense coverage of an automobile insurance policy issued to Adolph Kuda, father of Cynthia Kuda, by American Family Mutual Insurance Company ("American Family"). Each party filed a motion for summary judgment. The trial court entered summary judgment for American Family and against Cynthia Kuda. The Missouri Court of Appeals, Eastern District, affirmed the judgment of the trial court then transferred the case to this Court pursuant to Rule 83.02 believing the issue to be one of general interest and importance. The judgment of the trial court is reversed and remanded in part and affirmed in part.

Adolph Kuda paid American Family for automobile insurance for himself and his family members, including Cynthia. The policy of insurance contained provisions for injuries incurred as a result of negligence of an uninsured motorist. The policy also included medical expense coverage for Cynthia up to the amount of $2,000.00.

Cynthia was injured in an automobile collision with an uninsured motorist. As a direct result of the accident, Cynthia incurred medical expenses of $1,706.00. Cynthia and American Family entered into a release agreement in the amount of $5,500.00 under the uninsured motorist coverage. By handwritten provision, Cynthia's counsel included upon the release and trust agreement: "This release specifically excludes any claim for payments under the medical pay provision of the above policy." Cynthia and her attorney endorsed the draft and returned the release and trust agreement to American Family. American Family denies having agreed to Cynthia's language of exclusion.

Cynthia filed a petition seeking recovery of her medical expenses under the medical payments coverage of the policy and a penalty for vexatious refusal to pay under § 375.296, RSMo 1986. American Family moved for summary judgment based primarily on a limitation of liability provision in the medical payments coverage. Cynthia countered with her summary judgment motion in which she contended the limitation on medical payments was invalid. The trial court granted American Family's motion, denied Cynthia's motion, and rendered judgment for American Family.

The issue before this Court turns in part on the language of limitation contained in American Family's medical expense coverage:

Part II--Medical Expense Coverage--Limits of Liability

Regardless of the number of vehicles described in the declarations, insured persons, claims or policies, or vehicles involved in the accident, we will pay no more than the limit of liability shown for this coverage in the declarations for each person injured in any one accident.

Any amount paid or payable for medical expenses under the Liability or Uninsured Motorists coverages of this policy shall be deducted from the amounts payable under this Part.

The limitation clause upon which American Family relies to deny medical pay coverage is ambiguous. Under one interpretation, the amount paid or payable as medical expenses under the uninsured motorist provision would be deducted from the total of the insured's medical expenses and she would receive any excess of those medical expenses up to the $2,000.00 limit. Under this interpretation, where the insured's medical expenses have been fully reimbursed under uninsured motorist coverage, the insured is owed nothing further. Another interpretation is possible: "... the amounts payable under this Part" means $2,000.00, the maximum amount of available coverage for medical expenses. Under this interpretation, any amount of medical expenses paid or payable under the uninsured motorist provision would be deducted from the maximum coverage available under the medical expense provision. In the situation in which an insured's medical expenses exceed her medical payment coverage and her total damages exceed the combined limits of the medical payments and uninsured motorist coverages, the language is again ambiguous. The limitation of liability provision may be read to limit the plaintiff to the maximum amount payable under the uninsured motorist coverage. To construe more favorably to the insured, the limitation may be read to mean that the insured would first be compensated with the limits of uninsured motorist coverage and, if damages exceed the applicable limits and medical bills remain uncompensated through payment of uninsured motorist coverage, the insurer would then be required to honor its medical expense coverage. American Family urges this interpretation to support its contention that, at least in rare circumstances, the insured will receive the...