Argonaut Great Central Insurance Company v. Casey et al
ORDER that 117 Argonaut's Motion for Summary Judgment is denied; separate defts' motions for summary judgment 5 43 50 53 63 86 are granted; separate defts' motions to prevent an award of attorneys' fees 7 44 [48 ] 54 61 88 are granted; Argonaut is hereby directed to pay the sum of $1,000,000 into the registry of the Court; the funds are to be deposited along with Argonaut's previous deposit of $2,000,000 146 in an interest-bearing account; Argonaut shall be discharged from any further liability to the extent of the $3,000,000 paid into the registry. Signed by Judge Brian S. Miller on 12/8/11. (vjt)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF ARKANSAS
LITTLE ROCK DIVISION
ARGONAUT GREAT CENTRAL INSURANCE COMPANY
CASE NO. 4:11CV00206 BSM
JERRY CASEY et al.
Plaintiff Argonaut Great Central Insurance Company’s (“Argonaut”) motion for
summary judgment [Doc. No. 117] is denied. Separate defendants’ counterclaims for
declaratory judgment [Doc. Nos. 5, 43, 50, 53, 63, 86], which have been construed as
motions for summary judgment, are granted. Separate defendants’ motions to prevent
attorney’s fees [Doc. Nos. 7, 44, 48, 54, 61, 88] are granted.
On April 24, 2010, a bus owned and operated by First Baptist Church of Bentonville
was involved in a single-vehicle accident near London, Arkansas. Numerous passengers
were severely injured, and several died of their injuries. The church had two insurance
policies with Argonaut: a business auto policy and a commercial umbrella policy.
Because the church is a charitable entity immune from suit under Arkansas law, the
injured passengers and the estates of the deceased passengers have brought a direct action
against Argonaut. Furthermore, all parties agree that the damages likely exceed the
maximum coverage available under the insurance policies. Accordingly, Argonaut filed a
complaint in interpleader naming the persons and entities who may have claims under the
policies as defendants. Defendants have answered, and separate defendants Wendy Reyna,
Daisy Villedas, Renee Armando Rosales, Jorge Daniel Cerda, Aminta Ortez, and Sonia
Martinez have filed counterclaims for declaratory judgment. On March 18, 2011, the parties
were notified that all counterclaims would be construed as motions for summary judgment.
[Doc. No. 58].
It is undisputed that defendants’ damages exceed the amount of all policies. It is also
undisputed that the commercial umbrella policy provides a maximum benefit of $1,000,000.
The only issue is whether the business auto policy provides maximum coverage of
$1,000,000 or $2,000,000. Therefore, on July 5, 2011, the parties agreed that Argonaut
would deposit $2,000,000, the minimum amount to which all parties agree Argonaut owes
under both policies, into the court’s registry. [Doc. No. 146].
Argonaut moves for summary judgment arguing that it has paid the maximum benefit
based on anti-stacking provisions in the business auto policy. Defendants contend that the
anti-stacking provisions do not apply because there is only one policy and coverage form at
issue. In the alternative, defendants assert that the policy language is ambiguous and that
statements made by Argonaut’s agent bind the company in either contract or promissory
estoppel. Additionally, several defendants move to prevent an award of attorneys’ fees.
II. LEGAL STANDARD
Summary judgment is proper if, after viewing the evidence in the light most favorable
to the nonmoving party, no genuine issues of material fact exist and the moving party is
entitled to judgment as a matter of law. Nelson v. Corr. Med. Servs., 533 F.3d 958, 961 (8th
Cir. 2008). Insurance contract interpretation is a question of law particularly suited for
summary judgment. Kroeplin Farms Gen. P’ship v. Heartland Crop Ins., Inc., 430 F.3d 906,
909 (8th Cir. 2005).
Defendants’ motions for summary judgment are granted and Argonaut’s motion for
summary judgment is denied because the plain language of the policy allows defendants to
recover both the maximum liability and underinsured motorist benefits.
Although the business auto policy protects against several different risks of loss, only
two coverages are relevant here: liability coverage and coverage for uninsured or
underinsured motorists (UIM). Each coverage pays a maximum benefit of $1,000,000. The
liability coverage is set forth in the business auto coverage form, and the UIM coverage is
set forth in an attached endorsement. The central dispute is whether defendants may recover
under both the liability and UIM coverages.
Argonaut argues that they cannot because several provisions in the policy prevent the
“stacking” of coverages and double payments. Defendants contend that Argonaut is
misconstruing the terms of the policy and that they are entitled to the maximum benefit of
each coverage. The relevant provisions are found in both the business auto coverage form
and the UIM endorsement.
1. Duplicate Payments
Both the business auto coverage form and the UIM endorsement contain provisions
that prevent the recovery of “duplicate payments.” Section II.C of the business auto coverage
form is entitled “Limit of Insurance” and provides in relevant part
Regardless of the number of covered “autos”, “insureds”, premiums paid,
claims made or vehicles involved in the “accident”, the most we will pay for
the total of all damages and “covered pollution cost or expense” combined,
resulting form any one “accident” in the Limit of Insurance for Liability
Coverage shown in the Declarations.
No one will be entitled to receive duplicate payments for the same elements
of “loss” under this Coverage Form and any Medical Payments Coverage
Endorsement, Uninsured Motorists Coverage Endorsement or Underinsured
Motorists Coverage Endorsement attached to this Coverage Part.
Ex. 1 to Compl., at 15. Section D.2 of the UIM endorsement is also entitled “Limit of
Insurance” and similarly provides
No one will be entitled to receive duplicate payments for the same elements
of “loss” under this Coverage and any Liability Coverage Form or Medical
Payments Coverage Endorsement attached to this Coverage Part.
Id. at 33.
These provisions prevent an insured from receiving two payments for the same loss
simply because two separate coverages exist. Based on the pleadings and the evidentiary
record, however, no defendant seeks to “double dip” or recover duplicate damages. Instead,
each defendant seeks her specific damages, which, in the aggregate, exceed the liability limit
of the business auto policy. Therefore, the “Limit of Insurance” provisions are not triggered
by the present claims.
2. Other Insurance
The UIM endorsement modifies several of the general conditions in the business auto
coverage form. Id. Specifically, the terms set forth in the “Other Insurance” section, which
is located in section IV.B.5 of the business auto coverage form, are entirely replaced by new
terms set forth in the UIM endorsement. Therefore, the “Other Insurance” provision reads
If there is other applicable insurance available under one or more policies or
provisions of coverage:
a. The maximum recovery under all coverage forms or policies combined may
equal but not exceed the highest applicable limit for any one vehicle under any
coverage form or policy providing coverage on either a primary or excess
c. If the coverage under this coverage form is provided:
(1) On a primary basis, we will pay only our share of the loss that must be paid
under insurance providing coverage on a primary basis. Our share is the
proportion that our limit of liability bears to the total of all applicable limits
of liability for coverage on a primary basis.
Argonaut asserts that these provisions cap benefits at the liability limit of $1,000,000.
This interpretation, however, ignores the fact that the UIM coverage is not a separate
coverage form or policy, but is rather an endorsement or amendment to the business auto
policy itself. The UIM rider, therefore, is not really “other insurance.” Furthermore, the other
sections in the UIM endorsement that interact with or modify provisions in the business auto
policy strongly suggest that an insured may recover under both the liability and UIM
coverages. See, e.g., UIM Section D.2; E.2.c; E.3.a.
3. Other Coverage Forms
Section IV.B.8 of the business auto coverage form is entitled “Two or More
Coverage Forms or Policies Issued By Us” and provides in relevant part
If this Coverage Form and any other Coverage Form or policy issued to you
by us . . . apply to same “accident”, the aggregate maximum Limit of
Insurance under all the Coverage Forms or policies shall not exceed the
highest applicable Limit of Insurance under any one Coverage Form or
Id. at 18. As noted above, the business auto policy is one policy with one coverage form and
numerous endorsements. The policy plainly provides $1,000,000 in liability insurance and
$1,000,000 in uninsured or underinsured motorist insurance.
Although Argonaut’s anti-stacking argument fits well in other contexts, it is
inapplicable here. Indeed, the cited cases involve plaintiffs attempting to “stack” the
uninsured and underinsured motorist (UIM) coverage from four separate policies in order
to recover a larger benefit for a single accident. For example, in Couch v. Farmers Ins. Co.,
the estate of a woman killed in a single-vehicle accident appealed the trial court’s adverse
grant of summary judgment. 289 S.W.3d 909, 911-12 (Ark. 2008). Importantly, the decedent
in Couch was a named insured on four different automobile insurance policies. Id. at 912.
The Arkansas Supreme Court held that the “other insurance” provisions prevented the estate
from combining the UIM coverages from each of the separate policies. Id. at 913-16.
Likewise, in Whitney v. Shelter Mutual Ins. Co., the court held that the plaintiff could not
combine the UIM coverage from four separate automobile insurance policies and could only
recover UIM benefits under one policy. 383 F. Supp. 2d 1112, 1119 (W.D. Ark. 2004).
Moreover, the Arkansas Supreme Court recently affirmed a similar interpretation of
identical language. In Philadelphia Indem. Ins. Co. v. Austin, several passengers traveling
in a bus owned and operated by nonprofit entity were severely injured or killed when the bus
hit another vehicle. 2011 Ark. 283, at 2, ___ S.W.3d ___, ___. Like the church here, the
nonprofit in Austin carried automobile liability and UIM insurance in a single policy. Id. at
2-3, ___ S.W.3d at ___. That policy contained a provision that is identical to the one set
forth in section IV.B.8 of the business auto policy. Id. at 8-9, ___ S.W.3d at ___. The trial
court held, and the Arkansas Supreme Court affirmed, that the provision did not operate to
limit recovery to either the liability or the UIM coverage because those coverages were part
of one single coverage form. Id. at 9, ___ S.W.3d at ___. Like Couch and Whitney, Austin
affirms the principle that the anti-stacking language at issue applies only to multiple-policy
or multiple-coverage-form contexts. See id.
Having found in their favor as to policy interpretation, defendants’ ambiguity,
modification, and promissory estoppel arguments need not be addressed.
IV. ATTORNEYS’ FEES
Defendants’ motions to prevent an award of attorney fees to Argonaut are granted.
Defendants contend that an award of attorneys’ fees is inappropriate because
Argonaut is not a disinterested stakeholder but is in fact acting out self-interest. It further
argues that a discretionary award of fees pursurant to Federal Rule of Civil Procedure 22
would be inequitable. Argonaut agrees that a fee award is entirely discretionary and
governed by equitable considerations.
Defendants’ position is well taken. Unlike the traditional interpleader context in
which a disinterested party holds a stake to which there are competing claims, Argonaut is
actually an adverse party in this litigation. As noted above, because the church enjoys
charitable immunity, the injured passengers and their estates have brought suit directly
against Argonaut. As demonstrated by its pleadings and filings, Argonaut certainly has more
than a mere stake in the proceeds; indeed, the ultimate question raised by the pending
motions was whether it was liable for $2,000,000 or $3,000,000.
Furthermore, the equities do not weigh in favor of awarding Argonaut its attorneys’
fees. This dispute arose out what appears to have been a gruesome accident. Even after
accounting for the extra $1,000,000 in UIM proceeds, all parties concede that the
defendants’ damages exceed the available funds. To deplete this amount further by carving
out attorneys’ fees would create an additional and unnecessary hardship for the injured
passengers and their estates. Accordingly, separate defendants’ motions to prevent an award
of attorneys’ fees are granted.
It is therefore ordered that Argonaut’s motion for summary judgment [Doc. No. 117]
is denied; separate defendants’ motions for summary judgment [Doc. Nos. 5, 43, 50, 53, 63,
86] are granted; and separate defendants’ motions to prevent an award of attorneys’ fees
[Doc. Nos. 7, 44, 48, 54, 61, 88] are granted.
Accordingly, Argonaut Great Central Insurance Company is hereby directed to pay
the sum of $1,000,000 into the registry of the United States District Court for the Eastern
District of Arkansas. The funds are to be deposited along with Argonaut’s previous deposit
of $2,000,000 [Doc. No. 146] in an interest-bearing account to be divided by the injured
passengers and their estates upon the ultimate disposition by further order. The clerk’s office
may deduct ten percent of the income earned on the investment as a fee pursuant to local
rule. Argonaut Great Central Insurance Company shall be discharged from any further
liability to the extent of the $3,000,000 paid into the registry.
IT IS SO ORDERED this 8th day of December 2011.
UNITED STATES DISTRICT JUDGE
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