RLI Ins. Co. v. Drollinger

• Decision Date: 01 October 1996
• Docket Number: No. 96-1122,96-1122
• Citation: RLI Ins. Co. v. Drollinger, 97 F.3d 230 (8th Cir. 1996)
• Parties: RLI INSURANCE COMPANY, Appellant, v. Julia DROLLINGER, Personal Representative of the Estate of Richard E. Brown, Deceased; and Janet K. Brown, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 230

97 F.3d 230

RLI INSURANCE COMPANY, Appellant, v. Julia DROLLINGER, Personal Representative of the Estate of Richard E. Brown, Deceased; and Janet K. Brown, Appellees.

No. 96-1122.

United States Court of Appeals Eighth Circuit.

Submitted June 13, 1996.

Decided Oct. 1, 1996.

Paul V. Herbers, Kansas City, MO, argued (Susan E. McKeon, on the brief), for Appellant.

Dennis P. Wilson, Dexter, MO, argued (C.H. Parson, Jr., on the brief), for Appellees.

Before RICHARD S. ARNOLD, Chief Judge, FLOYD R. GIBSON, Senior Circuit Judge, and KORNMANN, ^* District Judge.

KORNMANN, District Judge.

RLI Insurance Company ("RLI"), plaintiff, brought a declaratory judgment action pursuant to 28 U.S.C. § 2201 to determine the coverage provided under an insurance contract issued by RLI to Richard E. Brown ("Richard"). Having concluded the policy language was ambiguous and liability coverage existed, the District Court ¹ granted summary judgment in favor of Julia Drollinger ("Drollinger"), the personal representative of the estate of Richard, and in favor of Janet K. Brown ("Brown"), widow of Richard. RLI appeals, claiming no liability coverage is provided by the policy because the policy language is unambiguous and it clearly excludes coverage for Brown.

I. Factual Background

The facts are essentially undisputed. Brown was a passenger in an aircraft piloted by her husband, Richard, on September 20, 1992, when the aircraft crashed, causing injuries to Brown and fatal injuries to Richard. RLI had issued an insurance policy to Richard on the involved aircraft. The policy was in effect at the time of the crash.

Brown brought an action in state court against Drollinger, as personal representative of Richard's estate, seeking the policy limits for her injuries. RLI then brought this declaratory judgment action to determine whether liability coverage, including the duty to defend, existed under the policy.

II. Decision

We review the District Court's grant of summary judgment de novo and will affirm only if the record, viewed in the light most favorable to RLI, shows there is no genuine issue of material fact and the defendants are entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Allen v. United Transp. Union, 964 F.2d 818, 820 (8th Cir.1992). The question of whether an insurance policy is ambiguous is a matter of state law. Sargent Const. Co., Inc. v. State Auto. Ins. Co., 23 F.3d 1324, 1326 (8th Cir.1994).

Under Missouri law, if an exclusionary clause is ambiguous, the court must adopt a construction favorable to the insured. Southern General Ins. Co. v. WEB Associates/Electronics, Inc., et al., 879 S.W.2d 780, 782 (Mo.App. E.D.1994). An insurance policy is ambiguous when there is "duplicity, indistinctness, or uncertainty in the meaning of words used in the policy". State Farm Fire & Cas. Co. v. Berra, 891 S.W.2d 150, 152 (Mo.App. E.D.1995). Missouri law further provides that an ambiguity exists in an insurance policy when "it is fairly susceptible of multiple interpretations." Southern General, 879 S.W.2d at 782. The court must view the instrument as a whole in determining whether it is ambiguous. Id. Missouri law further provides that "policy provisions designed to cut down, restrict or limit insurance, or imposing exceptions or exemptions, will be strictly construed against the insurer." Universal Underwriters Ins. Co. v. Dean Johnson Ford, Inc., 905 S.W.2d 529, 533 (Mo.App. W.D.1995). "In reviewing insurance policies, the policies will be given a reasonable construction and interpreted so as to afford coverage rather than defeat coverage. Nixon v. Life Investors Ins. Co., 675 S.W.2d 676, 679 (Mo.App.1984)." Id.

The "INTRODUCTION" section of the policy states, inter alia: "We have attempted to make this policy as clear as possible and to avoid the use of words and phrases that do not have everyday meaning ... we have to be certain that the meaning of certain words and phrases are clearly defined." Although the insured is then referenced to the section called "DEFINITIONS", a reader might be surprised to learn that the definitions section defines the word "you" to include a resident spouse. Few words would have a more everyday and commonly understood meaning than "you."

The "INTRODUCTION" section of the policy further assures the insured: "The Endorsements change the basic insurance agreement to more appropriately insure your risk." The insured is thus told that the endorsements are very important. Paragraph 9 of Section 6 of the policy deals with changes and states: "The only way that this policy can be changed is to have an endorsement changing the policy issued by us."

Endorsement No. SLL-1-1000 as issued by RLI recites that the endorsement applies to the policy only if the endorsement number is shown in item 4 of the insurance coverage schedule. It is so shown in item 4 of both the original and the amended insurance coverage schedules. Before further discussion of the endorsement, we note that item 4 in both the original and the amended coverage schedules includes "liability protection" (Section 1) and this section refers to Endorsement No. SLL-1-1000. The liability protection section also contains the printed language "cluding passengers," preceded by the typed insert "IN ". It is thus obvious that the insured had the choice of including or excluding passengers and chose to include passengers.

Returning to Endorsement No. SLL-1-1000, the insured was told that the endorsement "changes your policy only as stated below." The insured was then told: "The most we will pay for all bodily injury for any one person (including any passenger) who is injured in any one accident is: $100,000." Obviously, the words "any passenger" are all inclusive and could easily be construed as changing the policy to cover all passengers, including Brown. The words "any passenger" are not defined in the policy but "passenger" is defined as "any person in the aircraft, including crew, while they are in, on or getting into or out of the aircraft." The endorsement document is without limiting language and makes no reference to "you" or to a resident spouse.

Section 1 of the policy is entitled "LIABILITY PROTECTION." It contains the following language immediately after the section heading: "(This Section provides you with protection for claims made against you by other persons.)". In section 1, under a subsection entitled "TYPES OF DAMAGES," the policy states, "C. Passenger--This coverage protects you or any permissive user for your or their legal responsibility for bodily injury to passengers in the insured aircraft." In section 1, under a subsection entitled "WHAT IS NOT INSURED IN THIS SECTION," the policy states, "4. The policy does...