Owners Ins. Co. v. Hughes

• Decision Date: 03 April 2013
• Docket Number: No. 12–2198.,12–2198.
• Citation: 712 F.3d 392
• Parties: OWNERS INSURANCE COMPANY, Plaintiff–Appellee v. Betty Lu HUGHES, Defendant–Appellant. Owners Insurance Company, Defendants–Appellees v. Betty Lu Hughes, Plaintiff–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

712 F.3d 392

OWNERS INSURANCE COMPANY, Plaintiff–Appellee

v.Betty Lu HUGHES, Defendant–Appellant.

Owners Insurance Company, Defendants–Appellees

v.Betty Lu Hughes, Plaintiff–Appellant.

No. 12–2198.

United States Court of Appeals, Eighth Circuit.

Submitted: Jan. 17, 2013.

Filed: April 3, 2013.

Brian L. Harvell, argued, St. Louis, MO, for appellant.

Russell F. Watters, argued, Patrick A. Bousquet, on the brief, St. Louis, MO, for appellee.

Before WOLLMAN, GRUENDER, and SHEPHERD, Circuit Judges.

GRUENDER, Circuit Judge.

Betty Lu Hughes appeals the district court's ¹ grant of summary judgment declaring that defendant Owners Insurance Company (“Owners”) is not obligated to cover her claim for damages caused by an underinsured motorist. For the reasons stated below, we affirm.

Hughes was a passenger in a vehicle driven by Lilburn Mash when she was injured in a collision with another vehicle. Hughes's medical treatment costs exceeded $200,000. After collecting from Mash's vehicle liability insurance up to its bodily injury limit of $100,000 per person, Hughes sought additional coverage under an “underinsured motorist” provision in her own insurance policy issued by Owners. Owners sued for a declaration that it owed no coverage on each of two alternative grounds: (1) Mash's insurance coverage did not satisfy the Owners policy definition of “underinsured,” and (2) even if Mash qualified as “underinsured,” the Owners policy set-off provision reduced the amount available under the Owners policy to zero in light of the $100,000 Hughes received from Mash's policy. After the parties submitted a stipulation of facts and cross-moved for summary judgment, the district court granted summary judgment to Owners on each of the two alternative grounds.

We review a grant of summary judgment de novo, viewing the facts and making reasonable inferences in the light most favorable to the nonmoving party. Merriam v. Nat'l Union Fire Ins. Co. of Pittsburgh, 572 F.3d 579, 583 (8th Cir.2009). In this diversity action, “we are bound by the decisions of the Missouri Supreme Court regarding issues of substantive state law.” Bockelman v. MCI Worldcom, Inc., 403 F.3d 528, 531 (8th Cir.2005). “Decisions by the Missouri Court of Appeals may be used as an indication of how the Missouri Supreme Court may rule, but we are not bound to follow these decisions.” Aerotronics, Inc. v. Pneumo Abex Corp., 62 F.3d 1053, 1068 (8th Cir.1995).

The relevant provisions of the Owners policy “underinsured motorist” coverage provision are as follows:

2. COVERAGE

* * *

b. If the first named insured in the Declarations is an individual, this coverage is extended as follows:

(1) We will pay compensatory damages you are legally entitled to recover from the owner or operator of any underinsured automobile for bodily injury you sustain:

a. When you are not occupying an automobile that is covered by SECTION II—LIABILITY COVERAGE of the policy; or

b. When occupying an automobile you do not own which is not covered by SECTION II—LIABILITY COVERAGE of the policy.

Thus, if the vehicle satisfies the definition of “underinsured automobile,” Owners must cover “compensatory damages [Hughes is] legally entitled to recover” from the driver. The Owners policy definition of “underinsured automobile” is as follows:

1. DEFINITIONS

* * *

b. Underinsured automobile means an automobile to which a bodily injury liability bond or liability insured policy applies at the time of the occurrence:

(1) with limits of liability at least equal to or greater than the limits required by the Motor Vehicle Financial Responsibility Law of Missouri; and

(2) such limits of liability are less than those stated in the Declarations for Underinsured Motorist Coverage.

The limit required by Missouri law, as referenced in subsection (1), is $25,000. SeeMo.Rev.Stat. § 303.190.2(2). The limit stated in the Declarations for the Owners policy, as referenced in subsection (2), is $100,000. Thus, an underinsured automobile is one with bodily injury liability coverage of at least $25,000 but less than $100,000. As stated above, Mash's liability insurance bodily injury limit was exactly $100,000, not “less than” $100,000. Therefore, by its plain language, the Owners policy definition of “underinsured automobile” would appear not to apply to Mash's vehicle, resulting in no coverage for Hughes's claim.

Hughes argues that the plain language of the policy's definition of “underinsured” cannot be given effect because, if it were, the promised $100,000 limit of liability for underinsured motorist coverage would never be available to the insured.² “[I]f a contract promises something at one point and takes it away at another, there is an ambiguity ... [and if] policy language is ambiguous, it must be construed against the insurer.” Jones v. Mid–Century Ins. Co., 287 S.W.3d 687, 690 (Mo. banc 2009) (quoting Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007)). Like the district court, we recognize a Missouri Supreme Court decision that is directly on point. In Rodriguez v. General Accident Insurance Co. of America, 808 S.W.2d 379 (Mo. banc 1991), involving a policy with a similar definition of an underinsured automobile, the appellant likewise argued that an ambiguity existed because “an insured would never reach the limits of liability set out” for underinsured vehicles on the declarations page. Id. at 382. The Missouri Supreme Court rejected that argument and applied the definition of “underinsured” automobile as written:

The contract between General Accident and the Rodriguezes clearly states that an underinsured motor vehicle is a vehicle whose limits for bodily injury liability are “less than the limit of liability for this coverage.” By their own admission, the Rodriguezes acknowledge that Fruehwirth's liability insurance coverage was $50,000. Since Fruehwirth's coverage is equal to the limit of liability under the Rodriguezes' policy, Fruehwirth was not an underinsured motorist as defined by the Rodriguezes' policy.

Id.

Hughes contends that this aspect of Rodriguez has been declared to be dicta in a footnote of a more recent Missouri case. See Jones, 287 S.W.3d at 692 n. 3 (“[T]here was no underinsurance in [Rodriguez ], and its subsequent discussion of how to interpret underinsured motorist coverage was mere dicta.”). However, the “subsequent discussion” in Rodriguez merely involved a set-off provision that would have applied had the definition for an “underinsured” motor vehicle been satisfied. See Rodriguez, 808 S.W.2d at 382 (“A set-off provision of the Rodriguezes' policy reinforces this definition of underinsured motorist.”). By noting the nature of that subsequent discussion as dicta, the footnote in Jones actually confirms that the operative holding of Rodriguez is “[t]here was no underinsurance.” Jones, 287 S.W.3d at 692 n. 3. In other words, because the unambiguous definition of “underinsured motor vehicle” was not satisfied, the coverage did not apply regardless of potential ambiguities in the description of the amount of underinsured coverage.

At oral argument, Hughes directed us to another recent case from the Supreme Court of Missouri, Manner v. Schiermeier, 393 S.W.3d 58, No. SC92408, 2013 WL 85606 (Mo. Jan. 8, 2013), to support her argument that Rodriguez is no longer controlling. In Manner, as here, the plaintiff was injured by a vehicle and collected the $100,000 limit of liability from a policy covering that vehicle. 393 S.W.3d at 60, 2013 WL 85606, at *1. However, Manner differs from the instant case in that the plaintiff had underinsured motor vehicle coverage under four separate insurance policies, each with a $100,000 limit of liability. Id. at 60–61, 2013 WL 85606 at *1–2. The four insurers argued that, because the four policies under which the plaintiff claimed coverage each defined “underinsured” as “less than” the policyholder's limit of liability, the tortfeasor's vehicle failed to meet the definition of “underinsured” under each of the four policies considered separately. See id. at 63, 2013 WL 85606 at *4. The court rejected this argument because the plaintiff's four policies permitted “stacking” of their limits of liability, resulting in a definition of “underinsured” as having a limit less than $400,000. See id. at 64, 2013 WL 85606 at *5 (“[T]he coverage provided by the policies is their stacked amount, not the amount each would provide if considered separately, and it is the stacked amount that must be compared against the insurance coverage of the tortfeasor.”). Thus, in Manner, the vehicle that caused the injury satisfied the definition of “underinsured” under the four “stacked” policies. Here, in contrast, Hughes is making a claim under a single policy, and the policy definition of “underinsured motor vehicle” is not satisfied, just as in Rodriguez. Nothing in the holding of Manner indicates that Rodriguez does not still apply in cases where the definition of “underinsured motor vehicle” is not satisfied.

Finally, Hughes also submitted a letter under Rule 28(j) of the Federal Rules of Appellate Procedure directing us to Miller v. Ho Kun Yun, –––S.W.3d ––––, No. WD74890, 2013 WL 427355 (Mo.Ct.App. Feb. 5, 2013), issued after the instant case was submitted. In Miller, the Missouri Court of Appeals held that language in the set-off and coverage provisions of an underinsured motor vehicle endorsement rendered a policy ambiguous despite the fact that an unambiguous definition of “underinsured motor vehicle,” read in isolation, was not satisfied. 400 S.W.3d at...