Long v. St. Paul Fire and Marine Ins. Co.

• Decision Date: 14 December 2009
• Docket Number: No. 07-3285.,07-3285.
• Citation: 589 F.3d 1075
• Parties: Natalie LONG, Individually, as Heir at Law, and as Special Administrator of the Estate of Charles Rhoten, Jr., a Deceased Minor, and as Parent and Natural Guardian of Jennifer Rhoten, a Minor, Plaintiff-Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

589 F.3d 1075

Natalie LONG, Individually, as Heir at Law, and as Special Administrator of the Estate of Charles Rhoten, Jr., a Deceased Minor, and as Parent and Natural Guardian of Jennifer Rhoten, a Minor, Plaintiff-Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee.

No. 07-3285.

United States Court of Appeals, Tenth Circuit.

December 14, 2009.

[589 F.3d 1076]

J. Darin Hayes (Deborah B. McIlhenny with him on the briefs), Hutton & Hutton, Wichita, KS, for Appellant.

Marc A. Powell (Michael L. Baumberger with him on the brief) Powell, Brewer & Reddick, LLP, Wichita, KS, for Appellee.

Before MURPHY, SEYMOUR, and TYMKOVICH, Circuit Judges.

TYMKOVICH, Circuit Judge.

In this diversity action based on Kansas law, Natalie Long seeks uninsured motorist benefits for her children, who were severely injured in a one-car accident. The uninsured teen driver, a friend of Long's children, did not have permission to drive the truck involved in the accident.

After the district court dismissed Long's claims against the vehicle owner's insurance company (St. Paul Fire and Marine Insurance), Long added her own insurance company (American Standard Insurance Company of Wisconsin) as a defendant. American Standard subsequently moved for summary judgment, lost, and decided to settle Long's claims. Despite the settlement, Long continues to seek additional uninsured motorist (UM) benefits from St. Paul.

On appeal, Long challenges the dismissal of her claims against St. Paul. She contends the Kansas uninsured motorist statute, Kan. Stat. Ann. § 40-284(a) (2007), requires the St. Paul policy to provide UM coverage for her children. She also asserts that even if the statute does not require UM coverage, the language of the St. Paul policy itself provides coverage. According to Long, because St. Paul denied liability coverage for the accident under the nonpermissive user provision in its policy, the pickup truck involved in the accident became an "uninsured vehicle," triggering the St. Paul UM coverage.

We conclude the truck was not an uninsured vehicle for purposes of the St. Paul policy, under either the Kansas Statute or the policy's relevant language. Exercising jurisdiction under 28 U.S.C. § 1291, we therefore AFFIRM the district court's entry of judgment in favor of St. Paul.

I. Background

A. The Accident

The accident occurred when a group of underage teenagers were joyriding in a pickup truck. The truck belonged to a construction company owned by the fifteen-year-old driver's father. Even though he was unlicensed, the driver's parents would occasionally allow him to drive the truck to and from school, work, and home. On the day of the accident, however, his parents specifically instructed him not to use the vehicle. St. Paul insured the truck under a general liability insurance policy it issued to the father's construction company.

At the time of the accident, Long's children, Charles Rhoten, Jr. (C.J.) and Jennifer Rhoten, were riding in the truck's bed. The driver lost control of the truck while turning onto a dirt road, and the vehicle swerved into a ditch and rolled, landing on its side. C.J. and Jennifer were ejected from the truck bed and suffered serious injuries. Tragically, C.J. died from his wounds.

B. The St. Paul Policy

The St. Paul policy insured the general liabilities of the construction company owned by the driver's father, including liabilities arising from the use of "covered autos." The policy's coverage limit for a single car accident was $1,000,000. Neither party disputes the truck involved in the accident was a "covered auto" under the policy.

In the "Auto Liability Protection" portion of the policy, under a heading entitled "Who is Protected Under This Agreement," the policy stated:

Any permitted user. Any person or organization to whom you've given permission to use a covered auto you own, rent, lease, hire or borrow is a protected person.

Aplt.App. at 65. Pursuant to this provision, St. Paul denied liability coverage for the driver's operation of the pickup truck on the day of the accident. In its letter to the teen driver's parents denying liability coverage, St. Paul stated, "[the driver] admits to have previously taken the keys to the vehicle he was driving ... without the knowledge or permission of you, as his parents, or anyone associated with [the construction company]." Doc. 29, Amended Compl., Ex. B. Based on these facts, St. Paul concluded the driver "was not a permissive user and therefore no coverage is provided to him under the ... automobile policy." Id.

But St. Paul's denial of liability coverage did not answer whether the policy's UM coverage was triggered by the accident or whether the coverage would be available to C.J. and Jennifer. Indeed, the denial of liability coverage undergirds Long's argument that the UM coverage applies.

In general, under the UM coverage, St. Paul agreed to "pay all sums any protected person is legally entitled to recover from the owner or driver of an uninsured or underinsured vehicle." Aplt.App. at 79. Both C.J. and Jennifer were potentially "protected persons" under this UM coverage because they were riding in a "covered auto." Id. at 81. But even assuming C.J and Jennifer were protected persons, the question remains whether the truck at issue was "uninsured" at the time of the accident.

The policy defines "uninsured vehicle" as including a vehicle "for which an insurance or bonding company denies coverage." Id. at 80. Thus, Long argues St. Paul's denial of liability coverage for the accident made the truck an uninsured vehicle such that C.J. and Jennifer could recover UM benefits.

C. Legal Proceedings

Several months after the accident, Natalie Long — C.J. and Jennifer's mother — obtained counsel and sent a demand letter to St. Paul. St. Paul denied UM coverage.

In its letter denying UM coverage, St. Paul stated, "We have previously denied coverage responsibility for any claims against the liability of the driver of the vehicle at issue, because that person was not a permitted driver.... However, that denial of coverage did not mean that the vehicle itself was an uninsured vehicle...." Doc. 29, Amended Compl., Ex. H. St. Paul went on to explain that it was "not denying that there is coverage for this vehicle. We have denied coverage for the driver who caused the accident. Kansas law recognizes this difference." Id.

Long disagreed with St. Paul's interpretation of Kansas law, as well as its interpretation of the policy's UM provisions, and filed suit. In due course, Long moved for summary judgment, arguing Kansas law mandated UM coverage for her children on the facts presented, and even if such coverage was not statutorily mandated, the St. Paul policy nevertheless provided it. See Long v. St. Paul Fire & Marine Ins. Co., 423 F.Supp.2d 1219 (D.Kan.2006). The court denied Long's motion in relevant part,¹ stating: "Kansas law does not ... requir[e] uninsured motorist coverage [under the St. Paul policy] in cases such as that presented here. Nor can the court accept plaintiff's argument ... that the language of the policy nevertheless mandates coverage." Id. at 1227. After receiving this favorable ruling, St. Paul moved for judgment on the pleadings and dismissal. The court granted its motions.

Subsequently, Long added her own insurer, American Standard, as a defendant. Long's policy with American Standard included C.J. and Jennifer as insured parties, and Long sought UM coverage under that policy on behalf of her children. American Standard moved for summary judgment, but this time the district court ruled in favor of Long, holding that the American Standard policy did not unambiguously deny coverage under the facts of the case. Long v. Am. Standard Ins. Co. of Wis., 483 F.Supp.2d 1099, 1103 (D.Kan. 2007). In light of this ruling, American Standard opted to settle Long's claim, and paid out the full extent of her policy's UM coverage — $100,000.

Despite this recovery, Long appeals, claiming the district court erred in granting judgment on the pleadings and dismissing her claims against St. Paul.²

II. Analysis

We review the district court's grant of judgment on the pleadings and its dismissal of Long's claims under the same de novo standard. Corder v. Lewis Palmer Sch. Dist. No. 38, 566 F.3d 1219, 1223 (10th Cir.2009). We assume Long's allegations are true and ask whether the pleadings state a claim for relief that is facially plausible, not merely speculative. Id. Because this is a diversity case, we must "ascertain and apply the state law" to determine the plausibility of Long's claims. Rusakiewicz v. Lowe, 556 F.3d 1095, 1103 (10th Cir. 2009) (quoting Wade v. EMCASCO Ins. Co., 483 F.3d 657, 665 (10th Cir.2007)). Here, the relevant state law — the law of Kansas — requires us to analyze the case using a two-stage inquiry.

First, we ask whether the Kansas uninsured motorist statute mandates coverage under the facts presented. If so, the case ends there — "[t]he provisions of the statute are to be considered a part of every automobile policy in this state." State Farm Mut. Auto. Ins. Co. v. Cummings, 13 Kan.App.2d 630, 778 P.2d 370, 373 (1989), abrogated on other grounds, Cashman ex rel. Cashman v. Cherry, 270 Kan. 295, 13 P.3d 1265 (2000). But if the Kansas statute is inapplicable, we must proceed to an analysis of the St. Paul policy itself: "to the extent [the policy] does not conflict with or attempt to diminish or omit the statutorily mandated coverage, it would be controlling as between the parties." Id.; see also Halsey v. Farm Bureau Mut. Ins. Co., 275 Kan. 129, 61 P.3d 691, 695 (2003) (employing the two-stage approach).

A. The Kansas UM Statute

Kansas law requires car insurance to protect against accidents caused by uninsured motorists:

No automobile liability insurance policy ... shall be delivered or issued [in Kansas] ... unless the policy contains ... a provision ... in such automobile...