Russell v. American States Ins. Co.

• Decision Date: 05 March 1987
• Docket Number: No. 84-2749,84-2749
• Citation: 813 F.2d 306
• Parties: Gerry RUSSELL, Administratrix of the Estate of Billy Russell, deceased, and Oklahoma Farmers Union Mutual Insurance Company, Plaintiffs-Appellants, v. AMERICAN STATES INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 306

813 F.2d 306

Gerry RUSSELL, Administratrix of the Estate of Billy

Russell, deceased, and Oklahoma Farmers Union

Mutual Insurance Company, Plaintiffs-Appellants, v. AMERICAN STATES INSURANCE COMPANY, Defendant-Appellee.

No. 84-2749.

United States Court of Appeals, Tenth Circuit.

March 5, 1987.

Bruce V. Winston of Stewart & Elder, Oklahoma City, Okl. (A.T. Elder, Jr., of Stewart & Elder, Oklahoma City, Okl., and Richard E. Butner of Butner & Butner, Wewoka, Okl., on the briefs), for plaintiffs-appellants.

Henry F. Featherly of Lamun Mock Featherly Baer & Timberlake, Oklahoma City, Okl., for defendant-appellee.

Before LOGAN and MOORE, Circuit Judges, and JOHNSON, District Judge. ^*

PER CURIAM.

This appeal presents the question whether under Oklahoma law, the estate of a passenger fatally injured in an automobile accident is entitled to recover under the uninsured motorist provisions of insurance policies issued to the vehicle's driver and to the owner where the decedent's injuries exceed the limits of liability coverage under the policies. The driver and the owner were insured under separate policies by appellee American States Insurance Company (American States). We conclude that under the uninsured motorist provisions of both policies, the decedent qualified as an insured, and the vehicle in which the decedent was injured was an "uninsured motor vehicle" within the meaning of Oklahoma's uninsured motorist statute, Okla.Stat. tit. 36, Sec. 3636 (1981). Therefore, the estate is entitled to benefits under the uninsured motorist provisions of both policies. Accordingly, we reverse the district court's order granting summary judgment in favor of the appellee and remand with instructions to enter summary judgment in favor of the appellants.

On March 30, 1982, a single vehicle accident resulted in the death of Billy Russell, who was insured by appellant Oklahoma Farmers Union Mutual Insurance Company (Farmers Union) under a policy issued to his father, Bobby Russell. Appellant Gerry Russell is the administrator of Billy Russell's estate. The automobile involved in the accident was owned by Tina Sipes and was driven by Louis Glover.

Gerry Russell filed a wrongful death action against Mr. Glover in Oklahoma state court. That action culminated in a settlement agreement between Mrs. Russell, Farmers Union, and American States. According to the terms of the agreement, Farmers Union paid the estate $30,000 under the uninsured motorist coverage provided by the policy insuring Billy Russell. American States paid the estate $10,000 under the Sipes policy and $10,000 under the Glover policy, representing the maximum liability coverage under each policy. The parties agreed that damages due the estate exceeded the amounts paid.

Appellants filed for declaratory relief in the United States District Court for the Western District of Oklahoma to determine the rights of the estate under the uninsured motorist provisions of the Sipes and Glover policies. Both appellants and appellee filed motions for summary judgment. The district court determined that decedent was not covered under the uninsured motorist provision of the Sipes policy because the policy specifically provided that an "uninsured highway vehicle" does not include an insured vehicle. The court further held that while the decedent was covered by the uninsured motorist provision of the Glover policy, the estate could not proceed against that provision where the entire liability coverage was available to the injured party and the coverage was as extensive as the uninsured motorist coverage. Accordingly, the district court concluded there were no material issues of fact in dispute and granted appellee's motion for summary judgment. Gerry Russell and Farmers Union appealed, contending the district court's conclusions were contrary to law.

I.

An appellate court must consider a summary judgment motion in the same manner as did the district court because the trial court has no real discretion in deciding whether to grant summary judgment. United States v. Gammache, 713 F.2d 588, 594 (10th Cir.1983). We therefore apply the strict standard of Fed.R.Civ.P. 56(c). Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1377 (10th Cir.1980). After examining the Sipes and Glover policies in conjunction with Oklahoma's uninsured motorist statute, Okla.Stat. tit. 36, Sec. 3636, we conclude the district court erred in determining that appellant Gerry Russell could not proceed against the uninsured motorist provisions in the Glover and Sipes policies. Because appellants have established their right to summary judgment as a matter of law, we reverse. See Mustang Fuel Corp. v. Youngstown Sheet and Tube Co., 516 F.2d 33, 36 (10th Cir.1975).

II.

A.

With respect to the policy of the driver, Mr. Glover, the district court relied on Heavner v. Farmers Insurance Co., 663 P.2d 730 (Okla.1983), in determining that while the decedent qualified as an insured under the Glover policy, his estate was not entitled to proceed against the driver's uninsured motorist coverage. In Heavner, an injured passenger received only $4,500 under the driver's $10,000 per person liability coverage. Although the passenger's damages exceeded that amount, the payment represented the insurer's maximum legal obligation under the driver's liability coverage due to distributions to other injured parties. After determining that the vehicle in which the passenger was injured was an "uninsured motor vehicle" under Sec. 3636, the Heavner court permitted the passenger to recover $5,500, the difference between the $4,500 payment and the policy's liability limit. The policy's uninsured motorist coverage also included a $10,000 per person limit.

The district court in the instant case interpreted Heavner to require that "where the whole of the liability coverage is available to the injured party and is as large as the uninsured motorist coverage, the injured party cannot proceed against both provisions." Because American States paid the estate the maximum liability coverage under the Glover policy, the district court reasoned that under Heavner, the uninsured motorist coverage was not available. While we do not quarrel with the district court's interpretation of the Heavner holding, that case is inapposite.

The task before the Heavner court was the application of the 1976 amendment to Sec. 3636 (Okla.Stat. tit. 36, Sec. 3636 (Supp.1976)), which defined "uninsured motor vehicle" to include an insured vehicle where the liability insurer either cannot or is not legally required to accord the injured party the per person limit of the liability coverage. ¹ In a 1979 amendment to the statute, the Oklahoma legislature significantly expanded the uninsured motorist provision to include underinsured motorist coverage. MFA Insurance Co. v. Hankins, 610 P.2d 785, 787 (Okla.1980). The amended statute provides:

For the purposes of this coverage the term "uninsured motor vehicle" shall include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency. For the purposes of this coverage the term "uninsured motor vehicle" shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other.

(Emphasis added). Because both the Glover and Sipes policies were renewed after the 1979 amendment, that statute governs the rights of the Russell estate under the uninsured motorist provisions of the policies. Uptegraft v. Home Insurance Co., 662 P.2d 681, 684 n. 2 (Okla.1983).

Okla.Stat tit. 36, Sec. 3636(A) (Supp.1979), requires that all automobile insurance policies issued, delivered, or renewed within the state include uninsured motorist coverage as described in subsection (B) of the statute. ² The latter subsection provides, in pertinent part:

The policy ... shall provide coverage therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles ... because of bodily injury, sickness or disease, including death resulting therefrom.

Subsection (C) defines "uninsured motor vehicle." The last sentence of the 1979 amendment to Sec. 3636(C) expanded the definition to include an insured vehicle for which the liability limits of the policy when fully available to the injured party were less than the injured party's claim. In the instant case, the parties agree that Billy Russell's damages far exceed the $10,000 liability limits set out in the Glover and Sipes policies. ³ Therefore, Sec. 3636 requires that the uninsured motorist coverage provided in the Glover policy be available to the decedent's estate regardless of the insurer's payment of the liability limits under the policy, as long as the decedent qualifies as an insured under the policy.

B.

The terms of the insurance contract determine whether Billy Russell was insured under the Glover policy. Babcock v. Adkins, 695 P.2d 1340, 1342 (Okla.1984); Shepard v. Farmers Insurance Co., Inc. 678 P.2d 250, 252 (Okla.1983). The "Protection Against Uninsured Motorist Insurance" portion of the Glover policy provides:

Each of the following is an insured under this insurance to the extent set forth below:

(a) the named insured and any designated insured and, while residents of the same household, the spouse and relatives of either;

(b) any person while occupying an insured highway vehicle....

American States contends that Billy Russell did not qualify as an insured under the policy because he was neither a named nor designated insured nor was he occupying an "insured highway vehicle" within the terms of the policy. An examination of the policy reveals that this contention is...