Progressive Preferred Ins. Co. v. Reece

• Decision Date: 07 June 2016
• Docket Number: WD 78915
• Citation: 498 S.W.3d 498
• Parties: Progressive Preferred Ins. Co., Respondent, v. Russanne Reece and Jeff L. Reece, Appellants.
• Court: Missouri Court of Appeals

498 S.W.3d 498

Progressive Preferred Ins. Co., Respondent,

v.Russanne Reece and Jeff L. Reece, Appellants.

WD 78915

Missouri Court of Appeals, Western District.

Opinion filed: June 7, 2016

Motion for Rehearing and/or Transfer to Supreme Court Denied July 5, 2016.

Application for Transfer Denied September 20, 2016

Suzanne R. Bruss, Kansas City, for Respondent.

Dale R. Funk, Saint Louis, for Appellants.

Before Division Two: Victor C. Howard, Presiding Judge, Thomas H. Newton, Judge and Karen King Mitchell, Judge

VICTOR C. HOWARD, JUDGE

Jeff and Russanne Reece appeal the trial court's summary judgment in favor of Progressive Preferred Insurance Company (“Progressive”) on its petition for declaratory judgment finding no underinsured motorist coverage available to the Reeces under a policy issued to Mrs. Reece for injuries Mr. Reece sustained in a collision with another motorist while operating his John Deere Gator. The judgment is affirmed.

Factual and Procedural Background

The parties stipulated to the relevant facts in this case. On January 26, 2012, Jeff Reece was the owner and operator of a 2012 John Deere 855–D cross utility vehicle (“the Gator”). On that day, while Mr. Reece was driving the Gator on Missouri Highway 33, he hand-signaled a left turn then attempted a left turn into a private driveway. A 2000 Chrysler Sebring driven by Francis Askren attempted to pass Mr. Reece as he was executing the left turn. The Askren vehicle collided with the left rear corner of the Gator, causing bodily injury to Mr. Reece. Francis Askren was 100% at fault for the accident.

Mr. Reece received an offer in the amount of $50,000, the liability limit on the Askren motor vehicle liability policy with Farmers Insurance. Mr. Reece's damages from the accident were in excess of $150,000.

Mr. Reece asserted a claim against his automobile insurer, Progressive, for underinsured motorist benefits for the injuries he sustained in the January 26, 2012 accident. Progressive had issued Policy No. 25111326–7 (“the Policy”) to Mrs. Reece with effective dates of September 21, 2011, through March 21, 2012. The Policy insures a 1996 Saturn SL2, a 1999 Ford Explorer 4x4, and a 1983 Chevrolet K–20 pick-up. The Policy declaration page does not identify the Gator as a covered vehicle. The Reeces did not notify Progressive that they had purchased the Gator prior to January 26, 2012. There was no other insurance policy in place to cover Mr. Reece's operation of the Gator on January 26, 2012.

The Policy includes Underinsured Motorist (“UIM”) Coverage of $100,000 per person and $300,000 per accident for each insured vehicle. An exclusion is contained in the UIM provision, which provides:

EXCLUSIONS—READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART III(B).

Coverage under this Part III(B) will not apply:

1. to bodily injury sustained by any person while using or occupying:

...

b. a motor vehicle that is owned by or available for the regular use of you or a relative. This exclusion does not apply to a covered auto that is insured under this Part III(B);

The Policy does not define “motor vehicle.”

The Gator is not an “auto,” a “covered auto,” an “additional auto,” or a “replacement auto” as those terms are defined in the Policy. The Gator is not a land motor vehicle of the private passenger, pick up body, or cargo van type. The Gator is a utility vehicle powered by a diesel engine. It is equipped with seatbelts and is not equipped with electric turn signals.

The Gator is not designed for operation principally upon public roads. After purchasing the Gator, Mr. Reed phoned the Missouri Highway Patrol and inquired what would be required to be allowed to drive the Gator on public roads. He was told to equip the rear of the Gator with a reflective orange triangle for slow moving vehicles and with an orange flag that extended above the Gator. Mr. Reece added a reflective orange triangle and an orange flag to his Gator. The Gator was available for Mr. Reece's regular use at the time of the accident on January 26, 2012.

Progressive brought a declaratory judgment action seeking a declaration that the Policy does not provide coverage for bodily injury caused by an underinsured motor vehicle as a result of the January 26, 2012 collision. It alleged that UTM coverage is barred under the Exclusion 1.b. because the Gator that Mr. Reece was operating at the time of the collision with the underinsured motor vehicle is considered a motor vehicle owned by Mr. Reece that is available for his regular use and that is not also a covered auto under the Policy. The Reeces answered and counterclaimed against Progressive seeking damages for breach of contract and vexatious refusal to pay under sections 375.296 and 375.420.¹

The parties each filed motions for summary judgment based on the stipulated facts and terms of the Policy. Progressive argued that the Gator falls within the unambiguous definition of “motor vehicle” as it is used in the Policy's regular use exclusion, therefore, there is no coverage for the Reeces' UIM claim, and the counterclaim for breach of contract and vexatious refusal to pay should be dismissed. The Reeces argued in their motion for summary judgment that the term “motor vehicle” as used in the Policy is ambiguous, therefore, the construction most favorable to the insured and coverage must be adopted, and the exclusion does not apply. They also argued that a reasonable person of ordinary intelligence would infer the meaning of “motor vehicle” to be the same as that of “auto” as defined in the Policy as a “land motor vehicle of the private passenger type, pickup body, or cargo van type, designed for operation principally upon public roads” and because the Gator is not those things, it is not a motor vehicle, and coverage is not excluded.

Following argument on the motions, the trial court granted Progressive's motion for summary judgment and declared that there is no underinsured motorist coverage available to the Reeces under the Policy. It concluded that the policy is not ambiguous, and the regular use exclusion excludes underinsured motorist coverage. It further found that having modified the Gator with the addition of a reflective orange triangle and an orange flag for use on public roadways, Mr. Reece intended the Gator to be a “motor vehicle” under the Policy. The trial court denied the Reeces' motion for summary judgment and dismissed their counterclaim with prejudice. This appeal by the Reeces followed.

Appellate review of the grant of summary judgment is de novo. Allen v. Cont'l W. Ins. Co., 436 S.W.3d 548, 551 (Mo. banc 2014). The reviewing court applies the same criteria as the trial court in determining whether summary judgment was proper. Id. Summary judgment is only proper if the movant is entitled to judgment as a matter of law and no genuine issues of material fact exist. Id. at 551–52. Facts set forth by affidavit or otherwise in support of a motion for summary judgment are accepted as true unless contradicted by the non-moving party's response to the motion. Id. at 552. On appeal, the record is reviewed in the light most favorable to the party against whom judgment was entered, and that party is afforded the benefit of all reasonable inferences. Id.

UIM Coverage Exclusion

In their first and second points on appeal, the Reeces challenge the trial court's ruling that the Gator is a motor vehicle under the UIM coverage exclusion. The interpretation of an insurance policy is an issue of law that is reviewed de novo. Id. at 553. In construing the terms of an insurance policy, the reviewing court applies the meaning that would be attached by an ordinary person of average understanding if purchasing insurance. Id. at 553–54. “The general rule in interpreting insurance contracts is to give the language of the policy its plain meaning.” Id. at 554. If the language of an insurance policy is ambiguous, the court resolves the ambiguity in favor of the insured. Seeck v. Geico General Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007).

“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.” Id. (internal quotes and citation omitted). A court may not “unreasonably distort the language of a policy or exercise inventive powers for the purpose of creating an ambiguity where none exists.” Allen, 436 S.W.3d at 554 (internal quotes and citation omitted).

“The burden of showing that an exclusion to coverage applies is on the insurer.” Manner v. Schiermeier, 393 S.W.3d 58, 62 (Mo. banc 2013). “Policy provisions designed to cut down, restrict, or limit insurance coverage already granted, or introducing exceptions or exemptions must be strictly construed against the insurer.” Bush v. Shelter Mut. Ins. Co., 412 S.W.3d 336, 339 (Mo.App.W.D.2013) (internal quotes and citation omitted). Absent an ambiguity, however, an insurance policy must be enforced according to its terms. Id. “Definitions, exclusions, conditions, and endorsements are necessary provisions in insurance policies. If they are clear and unambiguous within the context of the policy as a whole, they are enforceable.” Allen, 436 S.W.3d at 554 (internal quotes and citation omitted).

In their first point on appeal, the Reeces contend that the trial court erred in ruling that the term “motor vehicle,” as used in the UIM exclusion of the Policy, unambiguously includes the Gator. They assert that the term is reasonably susceptible to more than one construction in the context of the entire agreement, therefore, the term is ambiguous and should have been construed in favor of the insured and coverage.

“Well-established law holds that, when a policy does not define a term, a court is free to give the term a reasonable construction.” Wilson v. Am. Family Mut. Ins. Co., 472 S.W.3d 579, 588 (Mo.App.W.D.2015). To ascertain the common meaning of...