Yates v. Progressive Preferred Ins. Co.

• Citation: 331 S.W.3d 324
• Decision Date: 01 February 2011
• Docket Number: No. WD 71859.,WD 71859.
• Parties: Gregory F. YATES, Appellant,v.PROGRESSIVE PREFERRED INSURANCE COMPANY, Respondent.
• Court: Court of Appeal of Missouri (US)

331 S.W.3d 324

Gregory F. YATES, Appellant,

v.PROGRESSIVE PREFERRED INSURANCE COMPANY, Respondent.

No. WD 71859.

Missouri Court of Appeals, Western District.

Feb. 1, 2011.

Rex V. Gump and Christian L. Faiella, Moberly, MO, for Appellant.Joy I. Ahern, Columbia, MO, for Respondent.Before Division II: JOSEPH M. ELLIS, Presiding Judge, and ALOK AHUJA and KAREN KING MITCHELL, Judges.KAREN KING MITCHELL, Judge.

Gregory F. Yates appeals the Circuit Court of Randolph County, Missouri's (“trial court”) grant of summary judgment in favor of Progressive Preferred Insurance Company (“Progressive”). The trial court held that a named driver exclusion in a policy of liability insurance issued by Progressive barred Yates's recovery on his petition for equitable garnishment. We affirm the judgment of the trial court.

Factual and Procedural Background

The facts are not in dispute in this case. On April 3, 2008, an automobile driven by Roberta L. Pechey (“Roberta”) collided with a motorcycle driven by Yates. Roberta had a valid learner's permit and was operating the motor vehicle with the full knowledge and consent of her husband, Steven Pechey (“Steven”), a licensed adult driver, who occupied the front passenger seat while Roberta drove.

Yates filed suit in Randolph County for recovery of personal injuries sustained in the collision.

Progressive had issued a policy of insurance naming Steven as the named insured on a 1999 Dodge Stratus, the vehicle Roberta was driving at the time of the accident, which is the policy at issue in this case. The coverage period for the policy was March 13, 2008, through September 13, 2008, which included the April 3 date of the accident. The policy contained a named driver exclusion endorsement and a named driver exclusion election. The named driver exclusion named Roberta as an excluded driver. The driver exclusion was signed by Steven but not by Roberta.

The policy had liability limits of $50,000 per person and $100,000 per accident. On April 10, 2008, Progressive notified Yates that the policy did not provide coverage for the accident. On January 13, 2009, Yates obtained a judgment against Roberta in the amount of $100,000 plus costs.

Thereafter, Yates filed a petition in equitable garnishment against Progressive. Progressive filed a motion for summary judgment, which the trial court granted, finding that Roberta was an excluded driver under the policy.

Yates brings three points on appeal. The first two points on appeal are that summary judgment was improperly granted because: (1) Roberta did not sign the driver exclusion request, as Yates claims the policy required, and the driver's exclusion request was vague and ambiguous; and (2) the driver exclusion was ambiguous because such an exclusion cannot waive coverage for a named insured (wife) and because by excluding a person who was operating the vehicle with the express permission of the named insured, the exclusion violates the omnibus insuring requirements of section 303.190.2(2).¹ Yates's third point on appeal is that the trial court erred in granting summary judgment in favor of Progressive because the named driver exclusion in the policy violates public policy and conflicts with the Motor Vehicle Financial Responsibility Law (“MVFRL”), section 303.190.

Because we conclude that Progressive has raised meritorious procedural objections to Yates's first two points, and we further conclude that discussion of those points would have no precedential value, we will affirm as to those points by separate memorandum furnished to the parties pursuant to Rule 84.16(b).² In this opinion, we address only Yates's Point III.

Standard of Review

“The interpretation of an insurance policy, and the determination whether coverage and exclusion provisions are ambiguous, are questions of law that [an appellate court] reviews de novo.” Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010). Similarly, allegations that a particular interpretation of an insurance policy violates the public policy of the state are reviewed de novo. See Am. Standard Ins. Co. v. Hargrave, 34 S.W.3d 88, 89 (Mo. banc 2000); Ingram v. Shelter Mut. Ins. Co., 922 S.W.2d 854, 855–56 (Mo.App. S.D.1996). Where the trial court has granted summary judgment, as in this case, we also review the grant of summary judgment de novo. Burns, 303 S.W.3d at 509. We will affirm the trial court's grant of summary judgment if it can be sustained “ ‘under any theory that is supported by the record.’ ” Id. (quoting Estate of Blodgett v. Mitchell, 95 S.W.3d 79, 81 (Mo. banc 2003)).

Public Policy

As noted, Yates's third point on appeal is that the trial court erred in granting summary judgment in favor of Progressive because the named driver exclusion in the policy violates public policy and conflicts with the MVFRL, section 303.190. The MVFRL requires all automobile liability insurance policies to:

insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle ... subject to limits, exclusive of interest and costs, with respect to each such motor vehicle, as follows: twenty-five thousand dollars because of bodily injury to or death of one person in any one accident and, subject to said limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and ten thousand dollars because of injury to or destruction of property of others in any one accident.

§ 303.190.2(2). In 1992, our Supreme Court noted that “[t]he purpose of the MVFRL is to ensure that persons injured on Missouri's highways, whether they be owners, operators, occupants of the insured's vehicle, occupants of other vehicles, or pedestrians, may collect at least minimal damage awards against negligent motor vehicle operators.” Hargrave, 34 S.W.3d at 90 (citing Halpin v. Am. Family Mut. Ins. Co., 823 S.W.2d 479, 482 (Mo. banc 1992)). An insurance policy violates public policy to the extent that it is at odds with the MVFRL. Tinch v. State Farm Ins. Co., 16 S.W.3d 747, 752 (Mo.App. E.D.2000) (citing Halpin, 823 S.W.2d at 482–83). Chapter 303 also seeks to ensure that the purpose of the MVFRL is met by requiring all drivers to maintain liability coverage that meets or exceeds the statutory minimums standards set out in section 303.190.2(2). § 303.025.

In Ingram, 922 S.W.2d at 857, a named driver exclusion similar to the one present in the policy at issue in this case was held to be invalid as against public policy up to the minimum coverage limits found in section 303.190.2(2). The insurer in Ingram was therefore held to be liable for the damages sustained by the parties injured by the specifically excluded driver operating a vehicle otherwise covered by the liability policy. Id.

After Ingram, in 1999, the MVFRL was amended to add section 303.190.2(3). That subsection states that liability insurance policies “[m]ay exclude coverage against loss from liability imposed by law for damages arising out of the use of such motor vehicles by a member of the named insured's household who is a specifically excluded driver in the policy.” The issue in this case is how section 303.190.2(3) is to be interpreted and applied. Progressive claims that section 303.190.2(3) creates an exception to the general rule, set out in section 303.190.2(2), that all automobile liability insurance policies insure any person using a covered vehicle with the permission of the named insured against loss from liability imposed by law up to the statutory minimums. In addition, Progressive claims that this added subsection, although coming three years after the Ingram decision, was an attempt by the legislature to abrogate Ingram.³ Yates, on the other hand, argues that the added subsection was merely an attempt to codify what are known as “step down” provisions in insurance policies that limit liability coverage to the statutory minimum when the vehicle is operated by someone other than the named insured.

A. Statutory Interpretation

Section 303.190.2(2), which requires every liability policy to cover any driver of a covered vehicle having the permission of the named insured, and section 303.190.2(3), which allows a named insured to exclude a named driver from coverage under a policy, are seemingly in tension. “Where two statutory provisions covering the same subject matter are unambiguous when read separately but conflict when read together, the reviewing court must attempt to harmonize them and give effect to both.” Anderson v. Ken Kauffman & Sons Excavating, 248 S.W.3d 101, 107 (Mo.App. W.D.2008) (citing City of Clinton v. Terra Found., Inc., 139 S.W.3d 186, 189 (Mo.App. W.D.2004)). Moreover, courts “must use rules of statutory construction that ‘subserve rather than subvert legislative intent.’ ” Anderson, 248 S.W.3d at 108 (quoting Elrod v. Treasurer of Mo., 138 S.W.3d 714, 716 (Mo. banc 2004)). As stated above, the Missouri Supreme Court found, in a case decided after the legislature amended section 303.190.2, but applying section 303.190.2 as it existed prior to the amendment, that the purpose of section 303.190.2(2) was to ensure that injured persons were able to recover at least minimum damage awards from negligent drivers. Hargrave, 34 S.W.3d at 90. This case is instructive as to the original purpose of section 303.190.2(2), but because it was decided before section 303.190.2(3) became effective, it does not resolve the issue presented in this case.

The statutory named driver exclusion states simply that a policy “[m]ay exclude coverage against loss from liability imposed by law for damages arising out of the use of such motor vehicles by a member of the insured's household who is a specifically excluded driver in the policy.” § 303.190.2(3). This language is...