Williams v. State Farm Mut. Auto. Ins. Co., s. 82-2285

• Decision Date: 13 August 1984
• Docket Number: 82-2310 and 82-2430,Nos. 82-2285,s. 82-2285
• Citation: 737 F.2d 741
• Parties: Darrell R. WILLIAMS, et al., Plaintiffs-Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant. Darrell R. WILLIAMS, et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee. Darrell R. WILLIAMS, et al., Plaintiffs-Appellees, v. Robert F. LANDERS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 741

737 F.2d 741

Darrell R. WILLIAMS, et al., Plaintiffs-Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

Darrell R. WILLIAMS, et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

Darrell R. WILLIAMS, et al., Plaintiffs-Appellees, v. Robert F. LANDERS, Defendant-Appellant.

Nos. 82-2285, 82-2310 and 82-2430.

United States Court of Appeals,

Eighth Circuit.

Submitted May 17, 1984.

Decided June 26, 1984.

Order Added Aug. 13, 1984.

Don A. Smith, Neal Kirkpatrick, Harper, Young, Smith & Maurras, Fort Smith, Ark., for Williams.

Alvin Laser, Beverly A. Rowlett, Laser, Sharp, Haley, Young & Huckabay, P.A., Little Rock, Ark., for State Farm.

Before LAY, Chief Judge, FLOYD R. GIBSON, Senior Circuit Judge, and FAGG, Circuit Judge.

PER CURIAM.

This diversity case principally poses the issue whether, under Louisiana law, an injured occupant of an automobile may cumulate, or "stack", the uninsured motorist coverages for two separate insurance policies issued to the owner of the automobile. This case stems from a two car collision in Arkansas. Candace Gilbert and Helen Williams were passengers in a car driven and owned by Bob Quarles. Quarles' car was struck by a car driven by defendant Robert Landers. As a result of the collision, Williams died and Gilbert sustained serious injuries. Gilbert and her husband filed a personal injury suit against Landers and State Farm Mutual Automobile Insurance Company, Quarles' automobile liability insurer, in federal district court in Arkansas. Both Arkansas and Louisiana law permit an injured party such as Gilbert to maintain a direct cause of action against the insurer issuing the liability policy. ¹ The administrator of Williams' estate and Williams' husband (hereinafter collectively referred to as "Williams") were joined as plaintiffs in the suit.

Landers carried liability insurance of $10,000.00 per person and $20,000.00 per accident. Quarles was covered by two State Farm insurance policies, both issued in Louisiana, one policy providing uninsured motorist coverage of $100,000.00 per person ($300,000.00 per accident) for the car involved in the collision, and the other policy providing identical coverage on a separate car owned by Quarles. The Gilberts requested $350,000.00 in damages against Landers and the $100,000.00 uninsured motorist coverage limit on the State Farm policy issued for the Quarles' car Gilbert occupied at the time of the accident. Williams requested $800,000.00 in damages from Landers and $200,000.00 from State Farm. The $200,000.00 represented the combined total of the $100,000.00 uninsured motorist coverage limits for the two State Farm policies issued to Quarles.

In a pre-trial order, the district court, applying Arkansas' conflicts rules, decided Louisiana law was controlling. The court, applying Louisiana law, first concluded that Landers would be an "uninsured motorist" if the jury determined that the damages suffered by plaintiffs exceeded $20,000.00, the limit of Landers' liability coverage. The court secondly concluded that if Landers were an "uninsured motorist", the uninsured motorist coverages on Quarles' two State Farm policies could be "stacked" to provide a possible coverage of $200,000.00 for each plaintiff injured in Quarles' car. On this appeal, State Farm contends this second conclusion was erroneous.

The jury found Landers 90% at fault and Quarles 10% at fault. Pursuant to a judgment entered after a jury verdict, the plaintiff Gilbert was to recover $20,000.00 from defendants State Farm and Landers. Williams was to recover $192,700.00 against Landers and State Farm jointly, and $10,000.00 against Landers solely. The court awarded State Farm judgment against Landers in the amount of $192,700.00 or the amount required by State Farm to satisfy the judgment, whichever was less.

State Farm appeals from the portion of the judgment in favor of Williams relating to the application of Louisiana law and the "stacking" of the two State Farm insurance policies issued to Quarles. Williams cross appeals seeking recovery of attorneys' fees and expenses against State Farm pursuant to Ark.Stat.Ann. Sec. 66-3238 (1980 Repl.). Williams also seeks costs and expenses resulting from Landers denial of requests for admissions. Fed.R.Civ.P. 37. Landers cross appeals, claiming the district court erred in denying his motion to alter or amend the judgment granted to State Farm against Landers.

Initially we do not believe the district court erred in concluding that, under Arkansas' conflict of law rules, Louisiana insurance law was controlling. "We give great weight to the interpretation of state law [including conflict of law rules] by a federal district judge of that state." Ramsey v. Mutual of Omaha, 652 F.2d 764, 766 (8th Cir.1981). Under Arkansas' conflict rules, an Arkansas court is free to apply the substantive law of a sister state where it finds that such state has the "most significant relationship" to the outcome of the issues involved. Williams v. Carr, 263 Ark. 326, 565 S.W.2d 400, 403-04 (1978). The district court properly found that Louisiana had a significant interest because it was the state where: (1) the contracts of insurance in question were negotiated; (2) the insurance premiums were paid; (3) both parties (Quarles and State Farm) to the contracts reside and/or do business. The court also pointed out that if the contracting parties had a dispute regarding the policy provision, the matter would be litigated in Louisiana.

Under Louisiana law, there is really no dispute that Landers would be considered an "uninsured motorist" since the damages to Williams far exceeded the liability coverage on Landers' vehicle. La.R.S. 22:1406(D)(2)(b). The principal dispute here centers on whether, under Louisiana law, the uninsured motorist coverages on the two State Farm policies issued to Quarles could be "stacked" to provide greater recovery to Williams, since the deceased Helen Williams was an occupant of Quarles' automobile. The district court concluded that the two policies could be stacked for a total coverage to Williams of $200,000.00.

The Louisiana Uninsured Motorist Statute, La.R.S. 22:1406, requires that insurance policies provide uninsured motorist coverage for a person who qualifies as an "insured" under the policy. ² Malbrough v. Wheat, 428 So.2d 1110, 1113 (La.App. 1 Cir.1983). Thus, as the Louisiana Supreme Court clarified in Seaton v. Kelly, 339 So.2d 731, 733 (La.1976), "[t]he question of 'stacking' [uninsured motorist coverages] only arises once it is determined that the person seeking to cumulate benefits on two or more uninsured motorist coverages is an insured under the terms of those policies." Accord, Block v. Reliance Insurance Co., 433 So.2d 1040, 1045 (La.1983) ("The question of stacking only arises when it is determined that the person seeking to accumulate benefits is an insured under the terms of the policies he is seeking to stack." Citing Seaton v. Kelly); Suhor v. Gusse, 403 So.2d 83, 94 (La.App.1981) (on application for rehearing per curiam).

The two Quarles' policies define "insured" for the purposes of uninsured motorist coverage as follows:

"Insured" means:

(a) the named insured and any relative;

(b) any other person while occupying an insured automobile; and

(c) any person, with respect to damages he is entitled to recover because of bodily injury to which this part applies, sustained by an insured under (a) or (b) above.

Williams, neither a named insured nor a relative of the named insured, could qualify as an "insured" only under paragraph (b)--i.e., as a "person while occupying an insured automobile." "Insured automobile" is defined by both policies as "an automobile described in the policy for which a specific premium charge indicates that coverage is afforded". Thus, Williams qualified as an "insured" only under the policy covering the Quarles' vehicle she was occupying at the time of the accident. She did not qualify as an insured under the policy covering Quarles' other automobile and thus she was not entitled to the uninsured motorist coverage under that policy.

Our holding here is in line with Seaton v. Kelly, 339 So.2d 731 (La.1976), a Louisiana Supreme Court case "on all fours" with this case. In Seaton v. Kelly, an owner had two separate State Farm policies, one policy covering his Ford truck and the other covering his Volkswagen automobile. Each policy provided uninsured motorist coverage and contained definitions of "insured" and "insured automobile" identical to the definitions in the Quarles' policies here. The plaintiff Seaton was a passenger in the Ford pick-up truck when it collided with a car driven by an uninsured motorist. Seaton sustained injuries from the collison and sought to recover the uninsured motorist limits under both the policy insuring the Ford and the policy insuring the Volkswagen. In other words, Seaton, like Williams here, sought to "stack" the uninsured motorist coverages under the owner's two policies. The court permitted recovery under the policy insuring the Ford, but not the policy insuring the Volkswagen. The Seaton court reasoned:

The issue is not whether plaintiff can "stack" the uninsured motorist coverages on the two policies issued to Kelly. The question of "stacking" only arises once it is determined that the person seeking to cumulate benefits on two or more uninsured motorist coverages is an insured under the terms of those policies ....

... Since by the clear terms of the policy in this case ..., the plaintiff was not occupying the automobile "described in the policy for which a specific premium charge indicates that coverage is afforded ..." (the Volkswagen), he was not occupying the "insured automobile." As such he was not an "insured" under the Volkswagen policy and is, therefore not entitled to the benefits contained therein.

Id., 339 So.2d at 733, 735.

...