Nationwide Agribusiness Ins. Co. v. Dugan

• Decision Date: 21 July 2015
• Docket Number: No. 14–1913.,14–1913.
• Citation: 810 F.3d 446
• Parties: NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, Plaintiff–Appellee, v. Toni L. DUGAN and James R. Dugan, Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

810 F.3d 446

NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, Plaintiff–Appellee,
v.
Toni L. DUGAN and James R. Dugan, Defendants–Appellants.

No. 14–1913.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 5, 2014.
Decided July 21, 2015.

810 F.3d 448

Glen E. Amundsen, Michael L. Resis, Smithamundsen, LLC, Chicago, IL, for Plaintiff–Appellee.

Stanley J. Goodkin, Stanley Goodkin, LLC, Clayton, MO, for Defendants–Appellants.

Before BAUER, ROVNER, and TINDER, Circuit Judges.

BAUER, Circuit Judge.

At the heart of this diversity action is an automobile insurance policy that plaintiff-appellee, Nationwide Agribusiness Insurance Company, issued to defendants-appellants, Toni L. Dugan and James R. Dugan. The parties filed cross-motions for summary judgment to resolve a dispute as to Nationwide's underinsured motorist coverage obligations under the policy. The district court granted Nationwide's motion for summary judgment and denied the Dugans' cross-motion, holding that Nationwide did not owe the Dugans underinsured motorist coverage. The Dugans appeal. For the reasons that follow, we affirm.

I. BACKGROUND

The facts are not in dispute. In late December 2010, Toni Dugan was involved in an automobile accident with a vehicle owned by Chelsea Rainey. The Dugans claimed upwards of $200,000 in damages as a result of the collision. Rainey's insurer, American Family Mutual Insurance Company, offered $100,000 (the limit under Rainey's policy) to Toni Dugan and her husband James Dugan, who claimed loss of consortium due to his wife's injuries, to settle their claims. The Dugans accepted the settlement.

The Dugans then sought additional recovery from Nationwide pursuant to the underinsured motorist provisions of their Nationwide policy. That policy insured four vehicles, including the vehicle Toni Dugan was driving at the time of the accident, and provided underinsured motorist

810 F.3d 449

coverage limits of $100,000 per person and $300,000 per accident for each of the four covered vehicles. The policy declarations page, reproduced below, lists each of the four covered vehicles separately along with the separate underinsured motorist limit applicable to each vehicle and the separate premium charged for each vehicle.

COVERAGE AND LIMITS OF LIABILITY (In Dollars)

Coverage is provided where a premium or limit of liability is shown for coverage.

VEHICLE BODILY INJURY PROPERTY DAMAGE UNDERINSURED MOTORISTS

EACH	EACH	EACH		EACH	EACH
PERSON	ACCIDENT	ACCIDENT	* * *	PERSON	ACCIDENT

2	100 000	300 000	100 000	*	100 000	300 000
5	100 000	300 000	100 000	*	100 000	300 000
6	100 000	300 000	100 000	*	100 000	300 000
4	100 000	300 000	100 000	*	100 000	300 000

PREMIUMS (In Dollars)

BODILY	PROPERTY	MEDICAL		UNDERINSURED
VEHICLE	INJURY	DAMAGE	PAYMENTS	* * *	MOTORISTS

2	297 28	198 78	27 06	*	19 72
5	234 16	169 54	40 50	*	19 72
5	234 16	169 54	40 50	*	19 72
4	274 34	176 42	39 06	*	19 72

The Dugans made a demand on Nationwide for the payment of $400,000, the aggregate limit of the four underinsured motorist coverage limits listed on the declarations page. Nationwide denied payment on the ground that express language in the Dugans' policy limited their recovery to $100,000, less the $100,000 payment that they received from American Family.

In January 2013, Nationwide commenced this action, seeking a declaratory judgment that it owed no underinsured motorist coverage to the Dugans. The Dugans counterclaimed, seeking a declaratory judgment as to Nationwide's underinsured motorist coverage obligations. The parties stipulated to the pertinent facts and filed cross-motions for summary judgment.

Nationwide argued that anti-stacking language in the policy, which we set forth in our discussion, unambiguously limited the Dugans' recovery to $100,000—the limit of liability for a single vehicle. So, after setting off the $100,000 American Family payment from this limit, Nationwide claimed that it did not owe the Dugans underinsured motorist coverage. Nationwide also argued that, even if the policy permitted stacking, Illinois precedent calls for the $100,000 American Family payment to be setoff against each $100,000 limit of liability prior to stacking, resulting in no underinsured motorist coverage.

The Dugans contended that, because the policy's anti-stacking language was ambiguous, they were entitled to aggregate, or "stack," the underinsured motorist limits applicable to each of their four covered vehicles, for an aggregate coverage limit

810 F.3d 450

of $400,000. The Dugans conceded that the policy's provisions and Illinois law permit Nationwide to setoff the $100,000 American Family payment from its underinsured motorist coverage obligation, but argued that Nationwide was entitled to apply this setoff only a single time against the policy's aggregate limit, post-stacking. Accordingly, the Dugans claimed that Nationwide owed them $300,000 in underinsured motorist coverage—the aggregate, or "stacked," limit ($400,000) less the setoff amount ($100,000).

The district court determined it could dispose of the parties' cross-motions without deciding whether the anti-stacking language in the policy permits or prohibits stacking. The court treated each of the four coverage limits listed on the policy declarations page as a "separate, stackable policy," and held that, even if the policy permitted stacking, Illinois law entitles Nationwide to apply its setoff—the $100,000 payment that the Dugans received from American Family—four times, once against each "separate, stackable policy" limit, thereby exhausting Nationwide's underinsured motorist coverage obligation. Accordingly, the district court granted Nationwide's motion for summary judgment and denied the Dugans' cross-motion. This appeal followed.

II. DISCUSSION

We review a district court's grant of summary judgment de novo. As a federal court sitting in diversity jurisdiction, our task is to predict how the Illinois Supreme Court would decide the issues presented here.¹ Knight v. Enbridge Pipelines (FSP) L.L.C., 759 F.3d 675, 677 (7th Cir.2014). Where the Illinois Supreme Court has not ruled on an issue, decisions of the Illinois Appellate Courts control, unless there are persuasive indications that the Illinois Supreme Court would decide the issue differently. Allen v. Transamerica Ins. Co., 128 F.3d 462, 466 (7th Cir.1997).

On appeal, the Dugans...