Tapley v. Shelter Ins. Co.

• Decision Date: 30 December 2002
• Docket Number: No. 24638.,24638.
• Citation: 91 S.W.3d 755
• Parties: Alfreda TAPLEY, Plaintiff-Respondent, v. SHELTER INSURANCE COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 755

91 S.W.3d 755

Alfreda TAPLEY, Plaintiff-Respondent, v. SHELTER INSURANCE COMPANY, Defendant-Appellant.

No. 24638.

Missouri Court of Appeals, Southern District, Division One.

December 30, 2002.

Samuel P. Spain, Spain, Merrell & Miller, L.L.P., Poplar Bluff, for appellant.

John M. Albright, Moore & Walsh, L.L.P., for respondent.

PHILLIP R. GARRISON, Judge.

Shelter Insurance Company ("Shelter") contends that the trial court erred in awarding Alfreda Tapley ("Plaintiff') benefits under the underinsured motorist provision of an automobile insurance policy it issued to her. Plaintiffs suit against Shelter for those benefits was submitted to the trial court on the following stipulated facts: On November 22, 1999, the car Plaintiff was driving ("Plaintiff's vehicle") was involved in an accident with a truck owned and operated by Phillip W. Poe ("Poe"); that accident was directly caused by Poe's negligence, and as a direct result Plaintiff was injured, with resulting damages of $150,000 or greater; Poe's truck was insured by State Farm Mutual Automobile Insurance Co. ("State Farm"), which paid Plaintiff its policy limits of $100,000 in settlement of all claims against State Farm and Poe; Poe had no further liability insurance covering him for the accident in question; Plaintiff's vehicle was insured under a policy issued by Shelter ("the Shelter policy") that included an endorsement providing for underinsured motorist coverage; Plaintiff made a claim for underinsured motorist benefits under that policy; and Shelter refused to honor Plaintiffs claim, contending that Poe's vehicle was not an "underinsured motor vehicle" under its policy. The parties requested that the trial court determine whether Plaintiff was entitled to benefits under the underinsured motorist coverage of the Shelter policy.

The Shelter policy includes an endorsement for underinsured motorist coverage of $50,000 per person and $100,000 per accident. That endorsement defines an "Underinsured motor vehicle" as:

(a) An insured motor vehicle when the sum of the limits of liability of the auto bodily injury liability insurance coverage and bonds on such vehicle is less than the limits of liability of the uninsured motorist coverage carried on this policy.

The "uninsured motorists" coverage provided under the Shelter policy was $25,000 per person and $50,000 per accident.

In its judgment, the trial court interpreted the policy language to mean that a vehicle would be underinsured only if it carried less than $25,000 in liability coverage. Since the statutory minimum limit for liability coverage in Missouri is $25,000,¹ the trial court found that two possibilities existed if Plaintiff was involved in an accident with another vehicle: (1) the other vehicle would have no insurance, in which event the "uninsured" motorist coverage would apply and the "underinsured" coverage, by definition, would not; or (2) the other vehicle would have at least the statutory minimum $25,000 per person coverage, which would result in the underinsured motorist coverage not applying, since the other vehicle would not have less liability coverage than the uninsured coverage under the Shelter policy. The trial court said, "[t]herefore, it appears that the underinsured coverage would never come into play," even though the "policy promises $50,000.00 in underinsured coverage." The court concluded that "this creates an ambiguity" and found that Plaintiff should receive $50,000 from Shelter under the policy. This appeal followed.

In its sole point on appeal, Shelter contends that Poe's automobile was not an "underinsured motor vehicle" under its policy definition, which it characterizes as clear and unambiguous. Shelter points out that its policy defines an "underinsured motor vehicle" as one that has less liability insurance than the "uninsured" motorist coverage under the Shelter policy. Since the Poe vehicle had $100,000 in liability coverage, while the Shelter policy had $25,000 in "uninsured" motorist coverage, Shelter concludes that the underinsured motorist coverage under its policy is inapplicable.

When a case is tried on stipulated facts, as was this case, the only issue on appeal is whether the court drew the proper legal conclusions from those facts. Goza v. Hartford Underwriters Ins. Co., 972 S.W.2d 371, 373 (Mo.App. E.D.1998). The interpretation of an insurance policy is a question of law. Id. The same is true in determining whether an insurance policy is ambiguous. Ware v. Geico General Ins. Co., 84 S.W.3d 99, 102 (Mo.App. E.D.2002).

In interpreting the language of an insurance policy, we give the language its plain meaning, which is the meaning that would ordinarily be understood by a layperson who bought the policy. Id. An ambiguity arises when there is duplicity, indistinctness or uncertainty in the meaning of the words used in the insurance policy. Id. If an ambiguity exists in an insurance policy, it is construed against the insurer because insurance is designed to furnish, not defeat, protection to the insured and the insurance company is in the best position to remove ambiguity from a contract. Id. A court is not, however, permitted to create an ambiguity in order to distort the language of an unambiguous policy, or enforce a particular construction which it might feel is more appropriate. Rodriguez v. General Ace. Ins. Co. of America, 808 S.W.2d 379, 382 (Mo. banc 1991). Absent an ambiguity, an insurance policy must be enforced according to its terms. Robin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695, 698 (Mo. banc 1982).

Several Missouri appellate decisions lead us to the conclusion that the trial court erred in holding as it did. Our analysis begins with Rodriguez. There, the plaintiffs' policy defined an underinsured motor vehicle as one having insurance coverage "less than the limit of liability for this coverage." The plaintiffs had underinsured motorist coverage of $50,000, and the tortfeasor had $50,000 in liability coverage, which was paid to the injured plaintiff. The Missouri Supreme Court held that the policy was not ambiguous, and that the plaintiffs were not entitled to any underinsured motorist coverage. Id. at 383. In doing so, the court held that the policy clearly stated that an underinsured motor vehicle is one whose limit for bodily injury liability is less than the limit of liability for the underinsured motorist coverage. Id. at 382. "Since [the tortfeasor's] coverage is equal to the limit of liability under the [plaintiffs'] policy, [the tortfeasor] was not an underinsured motorist as defined by the [plaintiffs'] policy." Id. The court concluded by saying that "[c]onsidering the clarity with which the underinsured motorist coverage is defined in the policy, we hold that it is neither ambiguous nor misleading." Id.

Hinshaw v. Farmers and Merchants Ins. Co., 912 S.W.2d 70 (Mo.App. E.D. 1995), involved identical pertinent facts as Rodriguez, and reached the same result. There, the court held that the insured was not entitled, to collect underinsured motorist benefits because the tortfeasor's vehicle did not meet the policy definition of an underinsured motor vehicle. Id. at 72-73. The court also made a point of the fact that had the insured bargained for higher underinsured motorist coverage, benefits from that coverage would have been available. Id. at 73.

Rodriguez and Hinshaw did not involve policies defining an underinsured motor vehicle as one with less than $25,000 liability coverage and thus did not present exactly the same factual scenario, as here, where underinsured coverage would never be available because the other vehicle would not be both insured (thereby meeting the first requirement of the "underinsured motor vehicle" definition), and have less than $25,000 in liability coverage (the statutory minimum in Missouri), unless it were a vehicle from another state with lower mandatory minimum coverage. That situation did occur, however, in Trapf v. Commercial Union Ins. Co., 886 S.W.2d 144 (Mo.App. E.D.1994). There, the plaintiffs were paid the tortfeasor's liability insurance limits of $50,000. They then made a claim under the underinsured motorist coverage provided by their own policy, the limits for which were $25,000 per person and $50,000 per collision. Id. at 145. The plaintiffs' policy defined an underinsured motor vehicle as one having liability insurance "less than the limit of liability for this coverage." Id. at 146.

On appeal, the Trapf court held that the tortfeasor's vehicle was not an underinsured motor vehicle as "clearly and unambiguously" defined under the plaintiffs' policy because the tortfeasor's policy provided more coverage than the underinsured limits in the plaintiffs' policy. Id. at 147. In language particular appropo to this case, the court said:

[the tortfeasor] had coverage of $50,000 per person. This exceeded the limits of the [plaintiffs'] claimed underinsured motorist coverage, $25,000 per person. The [tortfeasor] vehicle was not an underinsured vehicle, as alleged. The true complaint about the underinsured motorist coverage in the [plaintiffs] policy is that the limits of coverage are too low in relation to [the tortfeasor's] coverage to prove a benefit. But that is the policy the [plaintiffs] purchased. They have agreed to provisions, as written, which would be unambiguous if they had purchased underinsured coverage in an amount greater than in the tortfeasor ... policy (emphasis added).

Id. Finally, the court said, "The fact that there is no actual underinsured motorist coverage in the [plaintiffs] policy does not make it ambiguous." (emphasis added). See also Melton v. Country Mut. Ins. Co., 75 S.W.3d 321, 327 (Mo.App. E.D.2002).

The facts in Trapf are analogous to the instant case. In both cases, the applicable limit of the underinsured motorist coverage was $25,000, and in order for the tortfeasor's vehicle to be an underinsured motor vehicle under the...