Ritchie v. ALLIED PROPERTY & CAS. INS. CO.

• Decision Date: 17 November 2009
• Docket Number: No. SC 90085.,SC 90085.
• Citation: 307 SW 3d 132
• Parties: Steve RITCHIE and Anita Ritchie, Respondents, v. ALLIED PROPERTY & CASUALTY INSURANCE COMPANY, Appellant.
• Court: Missouri Supreme Court

307 S.W.3d 132

Steve RITCHIE and Anita Ritchie, Respondents, v. ALLIED PROPERTY & CASUALTY INSURANCE COMPANY, Appellant.

No. SC 90085.

Supreme Court of Missouri, En Banc.

November 17, 2009.

Jared Robertson, Brian D. Malkmus, Springfield, MO, for Appellant.

Glen R. Gulick, Jr., Joplin, MO, for Respondents.

Jason L. Call, Carson & Coil, P.C., Jefferson City, MO, for Amicus Curiae Missouri Insurance Coalition.

Leland F. Dempsey, Ashley L. Baird, Dempsey & Kingsland, P.C., Kansas City, MO, for Amicus Curiae Missouri Association of Trial Attorneys.

LAURA DENVIR STITH, Judge.

Steve and Anita Ritchie sued Allied Property and Casualty Insurance Company seeking $300,000 in underinsured motorist coverage under their Allied policy for the wrongful death of their daughter, Kelsey Ritchie. The trial court held that the Ritchies were entitled to recover this amount, finding the anti-stacking and set-off provisions of the policy unenforceable.

This Court affirms, but on different grounds. Allied's other insurance provision states that where the insured was injured while in a non-owned vehicle, then "any coverage we provide ... shall be excess over any other collectible underinsured motorist coverage." This clause reasonably can be interpreted to permit stacking of underinsured motorist coverages where, as here, the insured was injured while in a non-owned vehicle. To the extent that other provisions of the policy could be read in isolation to prohibit such stacking, they at best create an ambiguity that, under settled law, must be resolved in favor of coverage. Similarly, this Court rejects Allied's argument that it is always entitled to a set-off for the amounts received by the insured from third parties. As this Court recently noted in Jones v. Mid-Century Ins. Co., 287 S.W.3d 687 (Mo. banc 2009), such an interpretation in effect would mean that Allied never would pay the full amount of its purported limits of liability and, so, would be in conflict with the policy's coverage provisions. Instead, applying Jones, the set-off provision in the policy is not applicable where, as here, the insureds' damages exceed the amount of coverage even after deduction of amounts previously paid by other parties.

I. FACTUAL AND PROCEDURAL BACKGROUND

Steve and Anita Ritchie are the parents of Kelsey Ritchie.¹ While Kelsey was a passenger in a vehicle driven by Noah Heath, it collided with a vehicle driven by Adam Tomblin. Numerous people were injured in the accident, and Kelsey was killed. Kelsey's parents sued both Mr. Heath and Mr. Tomblin for wrongful death. Following trial, a judgment was entered in favor of the Ritchies and against Mr. Heath and Mr. Tomblin (the tortfeasors) for $1.8 million for the wrongful death of Kelsey. At the time of the accident, Kelsey was insured under a personal automobile policy the Ritchies purchased from Allied. The Allied policy insured three vehicles owned by the Ritchies. The Ritchies paid three separate premiums for these vehicles, including underinsured motorist coverage for each vehicle of $100,000 per person and $300,000 per accident.

Both Mr. Heath and Mr. Tomblin were underinsured. Mr. Heath's insurer, OMNI Hartford, provided liability limits of $25,000 per person and $50,000 per accident. Mr. Tomblin's vehicle was insured by Progressive Insurance Company, with liability limits of $50,000 per person and $100,000 per accident. Because these per accident liability limits had to be shared among the multiple persons injured in the accident, the Ritchies received only $20,000 from Mr. Heath's insurer and $40,000 from Mr. Tomblin's insurer toward their $1.8 million damage award. The Ritchies, therefore, sought recovery from Allied under their underinsured motorist coverage. They asserted that they were entitled to the full $100,000 per person underinsured coverage for each vehicle, for a total of $300,000.

Allied countered that its underinsured motorist policies could not be stacked, thereby permitting only a single recovery of up to $100,000. It further argued that "the maximum per-person recovery under the underinsured motorist coverage policy of $100,000" was not just the most it would pay, but was also the most that the Ritchies were entitled to recover in total from all sources. This meant, it argued, that it was entitled to a set-off of the $60,000 that the Ritchies already had recovered from the tortfeasors' insurers.

Believing that such a set-off was improper and that the language of their particular policy entitled them to stack the three underinsured motorist coverages, the Ritchies filed the instant suit. The trial court found that the anti-stacking and set-off provisions in the policy were "confusing, duplicitous, vague, ambiguous and inconsistent" and unenforceable and that the Ritchies were entitled to recover the full $300,000 of underinsured motorist coverage. Allied appeals. Following a decision by the court of appeals, this Court granted transfer. Mo. Const. art. V, sec. 10.

II. STANDARD OF REVIEW

Interpretation of an insurance policy is a question of law that this Court determines de novo. Seeck v. Geico General 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.; Martin v. United States Fid. & Guar. Co., 996 S.W.2d 506, 508 (Mo. banc 1999). Such "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, 212 S.W.3d at 132; Gulf Ins. Co. v. Noble Broadcast, 936 S.W.2d 810, 814 (Mo. banc 1997). Courts should not interpret policy provisions in isolation but rather evaluate policies as a whole. Seeck, 212 S.W.3d at 133.

III. DISCUSSION

A. The Right to Stack Underinsured Motorist Coverage Is Determined by the Language of the Policy

"`Stacking' refers to an insured's ability to obtain multiple insurance coverage benefits for an injury either from more than one policy, as where the insured has two or more separate vehicles under separate policies, or from multiple coverages provided for within a single policy, as when an insured has one policy which covers more than one vehicle." Niswonger v. Farm Bureau Town & Country Ins. Co. of Missouri, 992 S.W.2d 308, 313 (Mo.App.1999). Missouri law requires that all automobile insurance policies issued in this state provide uninsured motorist coverage of at least the statutory minimum amount of $25,000. § 379.203, RSMo 2000. Flowing from this statutory requirement, this Court has recognized that where multiple policies or multiple uninsured motorist coverages are in place, insurers are prohibited from including policy language precluding stacking of the coverage provided under multiple policies or coverage provisions. Niswonger, 992 S.W.2d at 313.

By contrast, and unlike many other states, Missouri statutes do not also mandate underinsured motorist coverage. See 16 WILLISTON ON CONTRACTS, § 49.35 (4th ed. 2009) (contrasting the requirements of various states in regard to underinsured motorist coverage). Consequently, "the existence of the underinsured motorist coverage and its ability to be stacked are determined by the contract entered between the insured and the insurer." Rodriguez v. Gen. Acc. Ins. Co. of Am., 808 S.W.2d 379, 383 (Mo. banc 1991). This means that if the policy language is unambiguous in disallowing stacking, the anti-stacking provisions are enforceable. Seeck, 212 S.W.3d at 132. "If, however, policy language is ambiguous as to stacking, it must be construed against the insurer," and stacking will be allowed. Id.; Gulf Ins. Co., 936 S.W.2d at 814.

Here, all agree that the Ritchies suffered damages of $1.8 million, that they recovered $60,000 from the tortfeasors, and that each of the Ritchies had underinsured motorist coverage with Allied for the three vehicles in the amounts of $100,000 per person and $300,000 per accident. All agree that Kelsey died as a result of an accident while riding in a non-owned vehicle. All also agree this means that the Ritchies' damages exceed the $60,000 in damages they have been paid under the tortfeasors' insurance policies and that the Ritchies are entitled to recover some additional damages under their underinsured motorist coverage with Allied, which states in part:

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.

. . . .

B. Ambiguities in Other Insurance and Limit of Liability Clause

The issue before this Court is the amount the Ritchies are owed and how that amount relates to possible conflicts within the other insurance provision and between the other insurance provision and the limit of liability provision. Allied argues that the limit of liability provision prohibits stacking of underinsured motorist coverages, so that the total potential limit of its liability is $100,000. Allied further argues that the policy provisions entitle it to a $60,000 set-off from this total because the Ritchies already have recovered $60,000 from the tortfeasors' insurers. Therefore, Allied says, it owes the Ritchies only $40,000.

The Ritchies argue that even if the limit of liability provision could be so interpreted, the other insurance provision creates an exception and permits stacking where, as here, the insured was injured while riding in a non-owned vehicle. To the extent these policy provisions are inconsistent, they create...