Safeco Insurance Company of America v. Robey

• Decision Date: 13 August 1968
• Docket Number: No. 19042,19043.,19042
• Citation: 399 F.2d 330
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, a Corporation, Appellant, v. Dale L. ROBEY, Appellee. Dale L. ROBEY, Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

399 F.2d 330 (1968)

SAFECO INSURANCE COMPANY OF AMERICA, a Corporation, Appellant, v. Dale L. ROBEY, Appellee.

Dale L. ROBEY, Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA, a Corporation, Appellee.

Nos. 19042, 19043.

United States Court of Appeals Eighth Circuit.

August 13, 1968.

Sidney P. Davis, Jr., of Putman, Davis & Bassett, Fayetteville, Ark., for Safeco Ins. Co. of America.

James W. Gallman, Fayetteville, Ark., for Dale L. Robey; E. J. Ball, Fayetteville, Ark., on the brief.

Before BLACKMUN, GIBSON and LAY, Circuit Judges.

GIBSON, Circuit Judge.

These cross-appeals are concerned with the question of whether the uninsured motorist coverage of a liability insurance policy affords multiple coverage to a person qualifying as an insured under more than one policy. In No. 19,042 Safeco Insurance Company of America is the appellant and Dale L. Robey is the appellee, and in No. 19,043 the parties' positions are reversed. This is a diversity case, Robey being a citizen of Arkansas, Safeco a corporation having its principal place of business in the State of Washington, and the substantive law of Arkansas applies. The District Court opinion by the Honorable John E. Miller is reported at 270 F.Supp. 473 (W.D. Ark.1967).

On October 29, 1965 Robey was a co-passenger with Clarence E. Wilson in a 1956 Chevrolet Station Wagon owned and operated by Robert E. O'Connell in Washington County, Arkansas, when the O'Connell vehicle collided with a 1961 Chevrolet truck operated by Marvin Lee Dobbs. It is admitted that the collision was proximately caused by Dobbs' negligence. Dobbs carried no liability insurance, bringing into play the Uninsured Motorists coverage on a liability policy issued to O'Connell by Northwestern Security Insurance Company and two liability policies issued to Robey by Safeco on separate vehicles. O'Connell and Wilson were killed in the collision and Robey suffered severe personal injuries.

All three policies provided Uninsured Motorists and Medical Expenses coverage. Robey qualified as an insured under all three policies. All policies were written in an attempted compliance with Ark.Stat.Ann. § 66-4003 (1966 Repl.) and were subject to terms and conditions stated in the policies. The Uninsured Motorists coverage in each of the three policies is limited to $10,000 for one person and $20,000 for multiple parties.

Robey was paid $1,000 medical expenses under the Northwestern policy and sued to recover from Northwestern $10,000 additional under the Uninsured Motorists coverage. This state suit of Robey against Northwestern was removed to the United States District Court and Northwestern, after impleading the personal representatives of O'Connell and Wilson, successfully maintained that its liability was limited to $17,000 to all parties concerned, it having previously paid $1,000 to each of the three parties under the Medical Expenses section of the policy. (The Court's opinion in Robey v. Northwestern Security Insurance Company is reported at 270 F.Supp. 466 (W.D.Ark. 1967)). In that suit the District Court held Northwestern was entitled to deduct the amounts paid for medical expenses against the Uninsured Motorists coverage and apportioned the remaining coverage of $17,000 among the parties, so that Robey received $3,000 in addition to the $1,000 previously received under the Medical Expenses coverage. The insured had contended in that case that the Medical Expenses — Coverage B was separate and distinct from the Uninsured Motorists — Coverage C, which was issued for a separate premium, in accordance with the requirements of Ark.Stat.Ann. § 66-4003 (1966 Repl.). No appeal was taken in the Northwestern case.

Under the Arkansas statute¹ any insurance company offering liability coverage must also afford uninsured motorist coverage not less in amount than the limits prescribed in the Motor Vehicle Safety Responsibility Act of 1953, § 75-1427 (1965 Supp.), as amended, which calls for a minimum amount of $10,000 for one person and $20,000 total coverage. Under the statute, the insured has an option to reject the uninsured motorist coverage.

Robey's medical expenses totaled $2,464.84 as of May 1, 1966. He was in the hospital from October 29, 1965 to January 29, 1966. Safeco admits liability to him of the balance of his medical expenses as of May 1, 1966 in the amount of $1,464.84, deducting the $1,000 received from Northwestern from the original amount. Safeco contends that it has no further liability under the two policies issued to Robey for the reason that the Other Insurance provision of the policies relieves it of any obligation to pay Robey. That provision under the Limits of Liability section relating to Coverage G — Uninsured Motorists, reads:

"Other Insurance: With respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under Uninsured Motorists shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

"Except as provided in the foregoing paragraph, if the insured has other similar insurance available to him and applicable to the accident, the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and SAFECO shall not be liable for a greater proportion of any loss to which this coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of liability of this insurance and such other insurance."

Since the limits of each Safeco policy are identical to the limits of the Northwestern policy, Safeco maintains its liability is zero. The excess clause placing it as an excess insurer over the primary insurer, Northwestern, does not operate to reduce its liability, but the "excess-escape" clause limiting its excess liability to the amount its stated limits exceed those of Northwestern would — its paper coverage does not exceed the paper coverage of Northwestern.²

The Uninsured Motorists coverage of all three policies contains substantially identical provisions relating to limits of liability as affected by medical expenses paid or payable under the Medical Expenses coverage of the policies. The Safeco provision, paragraph (d) of the Limits of Liability under the Uninsured Motorists section coverage, reads:

"(d) SAFECO shall not be obligated to pay under this coverage that part of the damages which the insured may be entitled to recover from the owner or operator of an uninsured automobile which represents expenses for medical services paid or payable under the Medical Expenses Section."

One of the Safeco policies provides a Medical Expenses coverage of a per person limit of $2,000, while the other one provides only $1,000; both policies contain an Other Insurance provision applicable to the Medical Expenses coverage, which reads as follows:

"Other Insurance: If there is other automobile medical payments insurance against a loss covered by Medical Expenses Section of this policy SAFECO shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible automobile medical payments insurance; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible automobile medical payments insurance."

This provision would relieve Safeco of the first $1,000 of medical expenses received from Northwestern, but would cover the excess medical expenses within the policy limits.

Robey filed this present action against Safeco in the United States District Court seeking recovery of $10,000 on each policy under the Uninsured Motorists coverage and $2,464.84 under the combined Medical Expenses coverage of the two policies.

While denying any liability to Robey except for $1464.84 of the medical expense, Safeco maintains that if any amount were recoverable by Robey under the Uninsured Motorists section of the policies, such amount should be reduced by the $1464.84 Medical Expenses coverage and the $4,000 received from Northwestern.

Both parties moved for summary judgment. The District Court granted Robey's motion for summary judgment in the amount of $16,000 and denied the motion of Safeco. The District Court held that the Other Insurance clause under the Uninsured Motorists section was valid under Arkansas law as to the Northwestern policy, but inapplicable as to the other Safeco policy; that the Motor Vehicle Safety Responsibility Act only set a minimum coverage requirement; that policies could be written in excess of the minimum, and separate policies issued by an insurance company could aggregate above the minimum requirement; that the insured could recover under the Uninsured Motorists coverage of both policies, but the recovery would be reduced by the amount received from the Northwestern policy issued to O'Connell; that the Medical Expenses coverage of decedent O'Connell's policy and of the Safeco policies would reduce the amount of coverage available on the Uninsured Motorists coverage; and that Robey was not entitled to recover attorney's fees or penalties since the full amount sued for had not been allowed. The District Court therefore, deducted the $4,000 received by Robey from Northwestern (which amount included the $1,000 medical expense payment) from the $10,000 amount in one of the Safeco policies and allowed a full recovery of the $10,000 amount under the Uninsured Motorists coverage of the other policy, treating any amounts owing for medical expense to be includable within the limits of the coverage of the...