Naeger v. Farmers Ins. Co.

Decision Date06 May 2014
Docket NumberNo. ED 100012,ED 100012
PartiesVALERIE NAEGER, Plaintiff/Appellant, v. FARMERS INSURANCE COMPANY, INC., Defendant/Respondent,
CourtMissouri Court of Appeals

Appeal from the Circuit Court

of the City of St. Louis

Honorable Robert H. Dierker


Valerie Naeger (Naeger) appeals from the circuit court's entry of summary judgment in favor of Farmers Insurance Company, Inc. (Farmers) on Naeger's petition seeking damages for vexatious refusal to pay, underinsured motorist coverage, and breach of contract. We affirm.

Factual and Procedural Background

On October 3, 2009, Naeger was a passenger in a vehicle owned by Mark Gessford (Gessford) when it was struck by an underinsured motor vehicle negligently operated by David Kupsky (Kupsky), resulting in serious bodily injury to Naeger.

On March 15, 2010, Naeger settled her claim against Kupsky with Progressive Casualty Insurance Company, his liability insurer, for $50,000. At the time of the accident, Gessford's vehicle was insured for underinsured motorist coverage (UIM) withAllstate Insurance Company (Allstate). On November 24, 2010, Naeger settled her claim for UIM coverage with Allstate for $190,000. Naeger has asserted aggregate damages of $700,000.

Also at the time of the accident, Naeger was insured under a policy of automobile insurance (Policy) issued by Farmers. The Policy included UIM coverage for bodily injury with limits of $250,000 per person and $500,000 per occurrence. The Policy insured a 2002 Honda Accord registered to Louis J. Naeger.

The Policy's UIM Endorsement provides in relevant part:

We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an UNDERinsured motor vehicle because of bodily injury sustained by an insured person. The bodily injury must be caused by an accident, and arise out of the ownership, maintenance or use of the UNDERinsured motor vehicle.

Limits of Liability

a. Our liability under the UNDERinsured Motorist Coverage cannot exceed the limits of UNDERinsured Motorist Coverage stated in this policy, and the most we will pay will be the lesser of:

1. The difference between the amount of an insured person's damages for bodily injury, and the amount paid to that insured person by or for any person or organization who is or may be held legally liable for the bodily injury; or

2. The limits of liability of this coverage.

b. Subject to subsections a. and c. -h. in this Limits of Liability section, we will pay up to the limits of liability shown in the schedule below as shown in the Declarations.


f. The amount of UNDERinsured Motorist Coverage we will pay shall be reduced by any amount paid or payable to or for an insured person;

i. by or for any person or organization who is or may be held legally liable for the bodily injury to an injured person; or

ii. for bodily injury under the liability coverage of this policy.


Additional Definitions Used for UNDERinsured Motorist Coverage Only
a. Insured person means:
1. You or a family member

c. Underinsured Motor Vehicle - means a land motor vehicle to which a bodily injury liability bond or policy applies at the time of the accident but its limits for bodily injury liability are less than the limits of liability for this coverage.




This coverage does not apply to bodily injury sustained by a person:


3. If the injured person was occupying a vehicle you do not own which is insured for this coverage under another policy.


Other Insurance


2. We will not provide insurance for a vehicle other than your insured car or your insured motorcycle, unless the owner of that vehicle has no other insurance applicable hereunder.

On September 30, 2011, Naeger filed suit against Farmers for vexatious refusal to pay, underinsured motorist coverage, and breach of contract. In its answer, Farmers asserted numerous affirmative defenses including the Policy's UIM Exclusion 3 excluding coverage if the insured person was injured while occupying a non-owned automobile that is insured for UIM under another policy (the Non-Owned Vehicle Exclusion) and the Policy's UIM Other Insurance clause precluding UIM coverage forvehicles not otherwise covered under the Policy so long as the vehicle has UIM coverage (Other Insurance Clause).

On October 31, 2012, Farmers filed a Motion for Summary Judgment along with a supporting memorandum and statement of undisputed material facts. Naeger filed her response to Farmers' Motion for Summary Judgment arguing the Policy was ambiguous. Farmers filed a timely response.

On April 17, 2013, the circuit court entered a Memorandum, Order and Judgment granting Farmers' Motion for Summary Judgment and dismissing with prejudice all of Naeger's claims against Farmers. After reviewing the Policy language, concluded the Non-Owned Vehicle Exclusion was unambiguous and Naeger was plainly excluded from coverage under the UIM endorsement. The court further found that the Other Insurance provision of the UIM endorsement, even if ambiguous in and of itself, does not serve to create an ambiguity as to the Non-Owned Vehicle Exclusion. This appeal follows.

Standard of Review

We review the circuit court's grant of summary judgment de novo. ITT Comm. Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Whether to grant summary judgment is purely an issue of law. Ashford Condo., Inc. v. Horner & Shifrin, Inc., 328 S.W.3d 714, 717 (Mo. App. E.D. 2010). We will uphold summary judgment on appeal only where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. ITT Comm. Fin. Corp., 854 S.W.2d at 376; Rule 74.04(c).1 The record is viewed in the light most favorable to the party against whom judgment was entered. Citibrook II, L.L.C. v. Morgan's Foods of Missouri, Inc., 239 S.W.3d 631, 634 (Mo. App. E.D. 2007).


A defendant, as the movant, can establish a prima facie case for summary judgment by showing any of the following: (1) facts that negate any one of the elements of a claimant's cause of action; (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements; or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support movant's properly pleaded affirmative defense. Sloss v. Gerstner, 98 S.W.3d 893, 896 (Mo. App. W.D. 2003). We will affirm the trial court's judgment if it is sustainable on any theory. Citibrook, 239 S.W.3d at 634.

The interpretation of an insurance policy is a question of law. McCormack Baron Mgt. Services, Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 171 (Mo. banc 1999). The rules of contract construction apply to the construction of insurance policies. Capitol Indem. Corp. v. Callis, 963 S.W.2d 247, 249 (Mo. App. W.D. 1997). Unless the policy is ambiguous, it must be enforced as written. Id. "An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions." Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). "In construing the terms of an insurance policy, this Court applies the meaning which would be attached by an ordinary person of average understanding if purchasing insurance, and resolves ambiguities in favor of the insured." Id. The words and phrases in a contract must be interpreted in the context of the policy as a whole and should not be considered in isolation. Long v. Shelter Ins. Companies, 351 S.W.3d 692, 696 (Mo. App. W.D. 2011).Exclusionary clauses are strictly construed against the drafter, who also bears the burden of showing the exclusion applies. Burns v. Smith, 303 S.W.3d 505, 509-10 (Mo. banc 2010).

Naeger presents a single point on appeal, arguing the circuit court erred in granting summary judgment to Farmers because the Policy is confusing and ambiguous and therefore coverage must be interpreted in her favor. Naeger contends the Policy is ambiguous because the Policy's declaration page lists UIM coverage of $250,000 per person and $500,000 per occurrence but does not identify any exclusions or limitations for this coverage or put an insured on notice that the UIM coverage is subject to any limitations, conditions or exclusions; the limits of liability provisions are ambiguous both in and of themselves and when read in conjunction with the other terms of the Policy; the Non-Owned Vehicle Exclusion when read in isolation completely eliminates UIM coverage for Naeger; and the Other Insurance Clause is internally ambiguous and, under Farmers' interpretation and when read in isolation, also eliminates UIM coverage for Naeger.

Alleged Ambiguity in the Other Insurance Clause

First, we address Naeger's contention that the Other Insurance Clause is ambiguous in and of itself.

The Other Insurance Clause provides as follows: "We will not provide insurance for a vehicle other than your insured car or your insured motorcycle, unless the owner of that vehicle has no other insurance applicable hereunder." Naeger contends the Other Insurance Clause is ambiguous because it fails to define certain terms and is inconsistent with the general language of the UIM Endorsement providing coverage. We disagree.

Naeger's assertion that the Policy's failure to define the phrases "that vehicle" and "no other insurance applicable hereunder" renders the clause and the Policy ambiguous is without merit. "The failure of a policy to define a term does not, in and of itself, render it ambiguous." Trainwreck West Inc. v. Burlington Ins. Co., 235 S.W.3d 33, 40 (Mo. App. E.D. 2007). In this case, the reasonable interpretation of the clause is that it refers to other UIM coverage, as the endorsement in which it is included pertains only to UIM coverage and its...

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