Lindfors v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 30 September 2021
• Docket Number: Case No. 3:20-cv-00178-SLG
• Citation: 562 F.Supp.3d 5
• Parties: Corinne LINDFORS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Alaska

562 F.Supp.3d 5

Corinne LINDFORS, Plaintiff,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

Case No. 3:20-cv-00178-SLG

United States District Court, D. Alaska.

Signed September 30, 2021

Joshua F. Fannon, Law Offices of Joshua Fannon, Palmer, AK, Myron E. Angstman, Angstman Law Office, Bethel, AK, for Plaintiff.

Kimberlee A. Colbo, Hughes White Colbo & Tervooren, LLC, Anchorage, AK, for Defendant.

ORDER RE MOTIONS FOR PARTIAL SUMMARY JUDGMENT ON PLAINTIFF'S SECOND CAUSE OF ACTION & PLAINTIFF'S CLAIM FOR ATTORNEY'S FEES AS CONSEQUENTIAL DAMAGES

Sharon L. Gleason, UNITED STATES DISTRICT JUDGE

This order addresses two pending motions: (1) Defendant State Farm Mutual Automobile Insurance Company's ("State Farm") Motion for Partial Summary Judgment on Plaintiff's Second Cause of Action Alleging Breach of Contract Under Med Pay Coverage and for Ruling of Law that the Medical Payments Coverage and Underinsured Motorist Coverage in Plaintiff's Three State Farm Automobile Liability Insurance Policies Does Not Stack at Docket 33;¹ and (2) State Farm's Motion for Partial Summary Judgment on Plaintiff's Claim for "Attorney's Fees" as Consequential Damages at Docket 46.² Oral argument was not requested on either motion and was not necessary to the Court's determination.

BACKGROUND

This litigation stems from a dispute between Ms. Lindfors and State Farm regarding insurance coverage for injuries Ms. Lindfors sustained in a January 2019 motor vehicle collision.³ At the time, Ms. Lindfors had three automobile insurance policies from State Farm insuring three different vehicles,⁴ each of which included underinsured motorist (UIM) coverage with limits of $250,000/person or $500,000/accident and "med pay" coverage in the amount of $25,000/person.⁵ Ms. Lindfors asserts that she should be able to "stack" her coverage, recovering up to the limit for med pay and UIM coverage under each policy,⁶ but State Farm maintains that Ms. Lindfors is limited to recovering only under one policy due to "anti-stacking" provisions in the written policies.⁷ In her complaint, Ms. Lindfors alleges breach of contract under both the med pay and UIM coverage, as well as several "first-party bad faith" claims.⁸ Among other requested relief, she seeks to recover "actual reasonable attorneys' fees" as consequential damages for her breach-of-contract claims.⁹

The med pay anti-stacking provision in each policy states that:

If Medical Payments Coverage provided by this policy and one or more other vehicle policies issued to you or any resident relative by the State Farm Companies apply to the same bodily injury , then:

a. the Medical Payments Coverage limits of such policies shall not be added together to determine the most that may be paid; and

b. the maximum amount that may be paid from all such policies combined is the single highest applicable limit provided by any one of the policies. We may choose one or more policies from which to make payment.¹⁰

Similarly, the UIM anti-stacking provision in each policy states that:

If Uninsured and Underinsured Motor Vehicle Coverage provided by this policy and one or more other vehicle policies issued to you as a named insured by the State Farm Companies applies to the same bodily injury sustained by you , then:

a. the Uninsured and Underinsured Motor Vehicle Coverage limits of such policies will not be added together to determine the most that may be paid; and

b. the maximum amount that may be paid from all such policies combined in the single highest applicable limit provided by any one of the policies. We may choose one or more policies from which to make payment.¹¹

Each policy also contains "Amendatory Endorsement 6128CV," which does not change the med pay anti-stacking provision¹² but alters the beginning of the UIM anti-stacking provision slightly to read:

If Uninsured and Underinsured Motor Vehicle Coverage provided by this policy and one or more other vehicle policies issued to you or a resident relative by us applies to the same bodily injury sustained by you , then:

a. the Uninsured and Underinsured Motor Vehicle Coverage limits of such policies will not be added together to determine the most that may be paid; and

b. the maximum amount that may be paid from all such policies combined in the single highest applicable limit provided by any one of the policies. We may choose one or more policies from which to make payment.¹³

The above facts are undisputed, and Ms. Lindfors does not appear to dispute that State Farm paid the available med pay limit under Policy No. 085-0433-D09-02D—the policy covering the vehicle involved in the collision—exhausting that policy's med pay coverage.¹⁴

DISCUSSION

I. Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) directs a court to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The burden of showing the absence of a genuine dispute of material fact lies with the moving party.¹⁵ If the moving party meets this burden, the non-moving party must present specific factual evidence demonstrating the existence of a genuine issue of fact.¹⁶

II. Stacking

State Farm asks this Court to (1) grant partial summary judgment on Ms. Lindfors' second cause of action alleging breach of contract under her med pay coverage; and (2) issue a ruling of law that Ms. Lindfors' med pay and UIM coverage does not stack.¹⁷ Summary judgment on a matter of contract interpretation is "appropriate when the contract terms are clear and unambiguous, even if the parties disagree as to their meaning," because "[i]interpretation of a contract is a matter of law, including whether the contract is ambiguous."¹⁸ There are no genuine issues of material fact relevant to the instant motion.

Because this is a diversity action, Alaska's substantive law applies.¹⁹ Two state statutes, AS 28.20.445(c) and AS 28.22.221, permit the use of anti-stacking provisions in auto insurance policies. But such provisions are valid only if there is "no circularity in language" and they are "clear in limiting coverage to the highest limit applicable to any of the insured vehicles."²⁰

Generally, Alaska courts construe insurance contracts "so as to provide that coverage which a layperson would have reasonably expected from a lay interpretation of the policy terms."²¹ An insured's expectation of coverage must be "objectively reasonable."²² To determine the reasonable expectations of the parties, Alaska courts look to: "1) the language of the disputed policy provisions; 2) the language of other policy provisions; 3) relevant extrinsic evidence; and 4) case law interpreting similar provisions."²³ Alaska law also provides that courts should construe ambiguous clauses in favor of the insured.²⁴ However, "[t]he mere fact that the parties disagree about the proper interpretation of the contract does not mean the contract is ambiguous."²⁵ Rather, an ambiguity exists only when "inconsistent, but reasonable, interpretations of the contract are possible."²⁶

State Farm contends that a reasonable insured would not expect UIM and med pay coverage to stack based on the language in each of Ms. Lindfors' policies.²⁷ It asserts that the policy language "unambiguously precludes an insured from stacking multiple [med pay or UIM] limits for injuries arising out of a single motor vehicle accident, no matter how many policies under which the insured may qualify" for coverage.²⁸ Thus, the insurer contends it is entitled to summary judgment on Ms. Lindfors' second cause of action because Ms. Lindfors does not dispute that State Farm paid her a total of $25,000 in med pay, exhausting the med pay limit of one policy.²⁹ If the med pay coverage in the three policies does not stack, this payment satisfied its med pay obligations to Ms. Lindfors.

In response, Ms. Lindfors suggests that the instant motion is "too flawed to justify any relief for the insurer" for several reasons.³⁰ First, she asserts that State Farm erroneously relies on "superseded policy language" because Policy Form 9802A was partially modified by Amendatory Endorsement 6128CV.³¹ Second, she appears to maintain that State Farm should not be entitled to summary judgment on her breach-of-contract claim because the insurer's conduct violated the covenant of good faith and fair dealing even if State Farm ultimately exhausted her available med pay.³² Third, Ms. Lindfors contends that it was objectively reasonable to expect her med pay and UIM coverage limits to stack—based on both extrinsic evidence and the policy language. She notes that "[h]istorically, Alaska recognized an insured's ability to ‘stack’ first-party coverage," citing Kackman v. Continental Ins. Co. , 319 F. Supp. 540, 541–42 (D. Alaska 1970), and Werley v. United Services Automobile Association , 498 P.2d 112, 113–14, 119 (Alaska 1972).³³ Regarding her specific policies, she asserts that "the reasonable expectation as to the different premium amounts State Farm charged under each policy was that the premiums were purchasing additional coverage" because "UIM is ‘personal’ to the insured" and thus "not coverage which depends on the vehicle the insured is occupying."³⁴

Ms. Lindfors also maintains that the anti-stacking provisions in the policies are ambiguous because they use the term "the same bodily injury," which she interprets to refer to an injury to a single body part rather than all injuries sustained in one motor vehicle accident.³⁵ As a result of this language, she contends, "[a] reasonable insured would not understand that medical expenses relating to different bodily injuries cannot trigger additional med pay benefits."³⁶ Moreover, Ms. Lindfors asserts that State Farm adjusters' use of the plural word "injuries" when communicating with her regarding her claim bolsters her interpretation of "the same bodily injury."³⁷

In reply, State Farm maintains that "[t]he only reasonable expectation plaintiff could have...