Ritchie v. Allied Property & Casualty Insurance Company, No. SD 28902 (Mo. App. 3/10/2009)

• Decision Date: 10 March 2009
• Docket Number: No. SD 28902.,SD 28902.
• Court: Missouri Court of Appeals
• Parties: STEVE RITCHIE and ANITA RITCHIE, Plaintiffs-Respondents, v. ALLIED PROPERTY & CASUALTY INSURANCE COMPANY, Defendant-Appellant.

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STEVE RITCHIE and ANITA RITCHIE, Plaintiffs-Respondents, v. ALLIED PROPERTY & CASUALTY INSURANCE COMPANY, Defendant-Appellant.

No. SD 28902.

Court of Appeals of Missouri, Southern District, Division Two.

March 10, 2009.

APPEAL FROM THE CIRCUIT COURT OF JASPER COUNTY, Honorable David B. Mouton, Circuit Judge.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED

Brian D. Malkmus and Jared Robertson, Springfield, Mo, Attorneys for Appellants.

Glenn R. Gulick, Jr., Joplin, Mo, Attorneys for Respondent.

Gary W. Lynch, Chief Judge.

Steve Ritchie and Anita Ritchie ("Respondents") are the parents of Kelsey Ritchie. Kelsey Ritchie was a passenger in a vehicle driven by Noah Heath; she was tragically killed when Heath's vehicle collided with a vehicle driven by Adam Tomblin. Both Heath and Tomblin were at fault for the accident. A judgment was entered against Heath and Tomblin for the wrongful death of Kelsey Ritchie. The judgment ordered Heath and Tomblin to pay $1,800,000. Both Heath's and Tomblin's vehicles were insured. Heath's insurance had liability limits of $25,000 per person and $50,000 per accident. Tomblin's insurance had liability limits of $50,000 per person and $100,000 per accident. The accident resulted in multiple injured parties; therefore, Respondents received only $20,000 from Heath's insurer and $40,000 from Tomblin's insurer. These payments totaled $60,000, and did not cover the total amount of damages.

Kelsey Ritchie was insured under a personal auto policy purchased by Respondents from Allied Property and Casualty Insurance ("Allied"), Appellant. The Allied policy insured three vehicles. Each of the three vehicles had underinsured motorist ("UIM") coverage in the amount of $100,000 per person and $300,000 per accident. Respondents paid three separate premiums for the UIM coverage. Respondents sued Allied to collect under their own insurance policy. Allied tendered to Respondents $40,000, which they calculated by subtracting the $60,000 paid by the tortfeasors from what it considered to be "the maximum per-person recovery under the [UIM] coverage policy [of] $100,000."

The trial court ruled that the anti-stacking and set-off provisions in the policy, relied upon by Allied in its calculation of the maximum per-person recovery, were "confusing, duplicitous, vague, ambiguous, and inconsistent" and were unenforceable. Therefore, Allied was ordered to pay $260,000, which represents the difference between $100,000 for the coverage on each of the three vehicles minus the $40,000 that Allied had paid to Respondents before this lawsuit. Allied contends the trial court erred because "it was required to enforce the unambiguous anti-stacking and set[-]off language in the subject policy's [UIM] endorsement."¹

Standard of Review

Because this judgment was entered by the trial court on stipulated facts, we review the judgment to determine whether the trial court drew the proper legal conclusions. Citizens For Preservation of Buehler Park v. City of Rolla, 230 S.W.3d 635, 637 (Mo. App. S.D. 2007). Insurance policy ambiguity is a question of law. Niswonger v. Farm Bureau Town & Country Ins. Co. of Missouri, 992 S.W.2d 308, 316 (Mo. App. E.D. 1999). If an insurance contract is ambiguous, it must be construed against the insurer; otherwise, it must be enforced according to its terms. Seeck v. Geico Gen. 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. (quoting Gulf Ins. Co. v. Noble Broadcast, 936 S.W.2d 810, 814 (Mo. banc 1997)). "Ambiguous language is viewed in the meaning that would ordinarily be understood by the layperson that bought and paid for the policy." American Family Mut. Ins. Co. v. Ragsdale, 213 S.W.3d 51, 55 (Mo. App. W.D. 2006).

Discussion

Our discussion commences with the policy language, which states in three relevant sections:

INSURING AGREEMENT

A. We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "underinsured motor vehicle" because of "bodily injury:"

1. Sustained by an "insured;" and

2. Caused by an accident.

. . . . We will pay under this coverage only if the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.

. . . .

LIMIT OF LIABILITY

A. The limit of liability shown in the Declarations for each person for Underinsured Motorists Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of "bodily injury" sustained by any one person in any one accident. Subject to this limit for each person, the limit of liability shown in the Schedule or in the Declarations for each accident for Underinsured Motorists Coverage is our maximum limit of liability for all damages for "bodily injury" resulting from any one accident. This is the most we will pay regardless of the number of:

1. "Insureds;"

2. Claims made;

3. Vehicles or premiums shown in the Declarations; or

4. Vehicles involved in the accident.

B. The limit of liability shall be reduced by all sums:

1. Paid because of "bodily injury" by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A of this policy;

2. Paid or payable because of "bodily injury" under any workers' compensation act or similar act;

3. Paid or payable because of "bodily injury" under any disability benefits law; and

4. Paid or payable under any auto medical payments, no-fault or personal injury protection insurance.

C. We will not make a duplicate payment under this coverage for any element of loss for which payment has been made by or on behalf of persons or organizations who may be legally responsible.

D. Any payment under this coverage will reduce any amount that person is entitled to recover under Part A of this policy.

. . . .

OTHER INSURANCE

If there is other applicable underinsured motorists coverage available under one or more policies or provisions of coverage:

1. Any recovery for damages may equal but not exceed the highest applicable limit for any one vehicle under this insurance or other insurance providing coverage on either a primary or excess basis. In addition, if any such coverage is provided on the same basis, either primary or excess, as the coverage we provide under this endorsement, we will pay only our share. Our share is the proportion that our limit of liability bears to the total of all applicable limits for coverage provided on the same basis.

2. Any coverage we provide with respect to a vehicle you do not own shall be excess over any other collectible underinsured motorist coverage.

There is no dispute that Respondents are entitled to UIM coverage benefits under the INSURING AGREEMENT section of the policy. There were damages that the insured was legally entitled to recover because of bodily injury caused by an accident. The limits of liability under "any" applicable bodily injury liability bonds or policies had been exhausted. The issues in this appeal concern the interplay between the provisions in the LIMITS OF LIABILITY section and the OTHER INSURANCE section as they relate to the stacking, if any, of coverage and the set-off, if any, for payments made to Respondents on behalf of the tortfeasors. Because these two issues involve different policy provisions, they are discussed separately.

I. Stacking

Although each party directs us to cases where stacking was or was not allowed, we find Niswonger to be persuasive. In Niswonger, the court invalidated the antistacking clause in the UIM coverage because it conflicted with the "other insurance" clause. Niswonger, 992 S.W.2d at 315-316. In Niswonger, a police officer was driving a police motorcycle while escorting a group of runners participating in a race on the city streets. Id. at 310. He was struck by a van and suffered serious injuries. Id. The officer had three separate auto insurance policies, each on a separate vehicle he owned. Id. Each policy contained a separate endorsement for UIM coverage, with liability limits of $100,000 per person and $300,000 per occurrence. Id. The van's driver had a policy limit of $50,000. Id. The police officer suffered damages exceeding $350,000. Id. After exhausting the policy limit of the van's driver, the police officer demanded his own insurance company pay him $300,000, the aggregate individual limits of the UIM coverage in his three auto insurance policies. Id.

The policy in Niswonger had a provision that stated the following:

5. OTHER AUTOMOBILE INSURANCE IN THE COMPANY — With respect to any occurrence, accident, death or loss to which this or any other automobile insurance policy issued to the named insured or spouse by the company also applies, the total limit of the company's liability under all such policies shall not exceed the highest applicable limit of liability or benefit under any one such policy.

Id. at 314-15. The policy also contained an "Other Insurance" provision, which read as follows:

In the event there is other like or similar insurance applicable to a loss covered by this endorsement, this company shall not be liable for more than the proportion which this endorsement bears to the total of all applicable limits. However, any insurance provided under this endorsement for a person insured while occupying a non-owned vehicle is excess of any other similar insurance.

Id. at 315.

The Niswonger court ruled the "Other Insurance" provision made the antistacking provision ambiguous because "a reasonable [layperson] could interpret the sentence to specifically allow stacking of UIM coverages provided in their separate vehicle policies, for which separate UIM premiums have been paid, in the special situation where an...