Buckeye State Mutual Insurance Company v. Moens et al

Filing 88

Memorandum Opinion and Order - denying 43 the Bailey's Motion for Partial Summary Judgment; and granting 51 Buckeye's Cross Motion for Summary Judgment. Signed by Judge Mark W Bennett on 03/25/2013. (src)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
BUCKEYE STATE MUTUAL
INSURANCE COMPANY,
No. C12-4025-MWB
Plaintiff,
vs.
BRENT MOENS, TANYA DEE
MOENS, ESTATE OF GERALD RALPH
BOGE a/k/a JERALD RALPH BOGE,
DOUGLAS LEE OLDENKAMP,
BRAEDEN JAY BAILEY, DANIEL
BAILEY, TRACEY BAILEY, LEE RAE
GEISINGER, Individually,
CONSERVATORSHIP OF LEE RAE
GEISINGER, ALICE MARIE
GEISINGER, Individually,
CONSERVATORSHIP OF ALLICE
CONDIT a/k/a ALICE MARIE
GEISINGER, WELLMARK, INC.,
UNITED FIRE GROUP, INC., CAN
CLAIMPLUS, INC., and AMERICAN
ZURICH INSURANCE CO.,

MEMORANDUM OPINION AND
ORDER REGARDING CROSS
MOTIONS FOR SUMMARY
JUDGMENT

Defendants.
___________________________
TABLE OF CONTENTS
I. 

INTRODUCTION AND BACKGROUND .............................................. 2 
A. 
Factual Background ............................................................... 2 
B. 
Procedural background ............................................................ 7 

II. 

LEGAL ANALYSIS ........................................................................ 8 
A. 
Summary Judgment Standards ................................................... 8 
B. 
Interpretation Of The Policy ................................................... 11 
1. 
General rules of insurance contract interpretation ................ 11 

2. 
III. 

Is the Policy ambiguous? ............................................... 14 

CONCLUSION ............................................................................ 20 

In this declaratory judgment action, I must decide whether an automotive
passenger, who is a covered person under the terms of an automobile insurance policy
covering the host automobile, and who is injured in an automobile accident, may
recover underinsurance benefits under the insurance policy covering the host
automobile, when that passenger is entitled to receive liability coverage benefits under
that same policy.
I.

INTRODUCTION AND BACKGROUND
A.

Factual Background

The parties have stipulated that the facts recited here are undisputed, at least for
the purposes of summary judgment.

Buckeye State Mutual Insurance Company

(“Buckeye”) issued personal automobile policy #PA080002377 (“the Policy”) to Brent
Moens and Tanya Dee Moens. The Policy’s bodily injury limits are $250,000 for each
person and $500,000 for each accident. The Policy covered the period from September
15, 2009, to September 15, 2010.
The Policy provides underinsured motorist coverage and states:
We will pay compensatory damages which an “insured” is
legally entitled to recover from the owner or operator of an
2

“underinsured motor vehicle” because of “bodily injury”
caused by an accident.
The owner’s or operator’s liability for these damages must
arise out of the ownership, maintenance or use of the
“underinsured motor vehicle”.
Insurance Policy at 10; Defendants’ App. at 15. The Policy contains the following
pertinent definitions:
“Insured” as used in this endorsement means:
1.

You or any “family member”.

2.

Any other person “occupying” “your covered
auto”.

3.

Any person for damages that person is entitled
to recover because of bodily injury to which
this coverage applies sustained by a person
described in 1. or 2. above.

C.
“Underinsured motor vehicle” means a land motor or
trailer of any type to which a bodily injury liability bond or
policy limit applies at the time of the accident but its limit
for bodily injury liability is either:
1.

Not enough to pay the full amount the
“insured” is legally entitled to recover as
damages; or

2.

Reduced by payments to others injured in the
accident to an amount which is not enough to
pay the full amount the “insured” is legally
entitled to recover as damages.

However, “underinsured motor vehicle” does not include
any vehicle or equipment:
1.

To which a bodily injury liability bond or
policy applies at the time of the accident but its
limit for bodily injury liability is less than the
minimum limit for bodily injury liability
3

specified by the financial responsibility laws of
Iowa.
2.

Owned by or furnished or available for the
regular use of you or any “family member”.

3.

Owned by any governmental unit or agency.

4.

Operated on rails or crawler treads.

5.

Designed mainly for use off public roads while
not upon public roads.

6.

While located for use as a residence or
premises.

7.

Owned or operated by a person qualifying as a
self-insurer under any applicable motor vehicle
law.

8.

To which a bodily injury liability bond or
policy applies at the time of the accident but
the bonding or insuring company:
a.

Denies coverage; or

b.

is or becomes insolvent.

Insurance Policy at 10; Defendants’ App. at 15.
The Policy’s underinsured motorist section also includes the following
“exclusions” provision:
We
do
not
provide
Underinsured Motorist Coverage for “bodily injury”
sustained by an “insured”:
1.

While “occupying”, or when struck by, any motor
vehicle owned by you which is not insured for this
coverage under this policy. This includes a trailer of
any type used with that vehicle.

2.

While “occupying” “your covered auto” when it is
being used as a public or livery conveyance. This
4

Exclusion (A.2.) does not apply to a share-theexpense car pool.
3.

Using a vehicle without a reasonable belief that that
“insured” is entitled to do so. This Exclusion (A.3.)
does not apply to a “family member” using “your
covered auto” which is owned by you.

B.
This coverage shall not apply directly or indirectly to
benefit any insurer or self-insurer under any of the following
or similar law:
1.

Workers’ compensation law; or

2.

Disability benefits law.

C.
We do not provide Underinsured Motorist Coverage
for punitive or exemplary damages.
Insurance Policy at 10-11; Defendants’ App. at 15-16.
The Policy further has a “limit of liability” provision which states:
A.

The limit of liability shown in the Schedule or in the
Declarations for each person for Underinsured
Motorists Coverage is our maximum limit of liability
for all damages, including damages for care, loss of
services or death, arising out of “bodily injury”
sustained by any one person in any one accident.
Subject to this limit for each person, the liability
shown in the Schedule or in the Declarations for each
accident for Underinsured Motorist Coverage is our
maximum limit of liability for all damages for “bodily
injury” resulting from any one accident. This is the
most we will pay regardless of the number of:
1. “Insureds”;
2. Claims made;
3. Vehicles or premiums shown in the Schedule or in
the Declarations; or
4. Vehicles involved in the accident.
5

B.

No one will be entitled to receive duplicate payments
for the same elements of loss under this coverage and
Part A, Part B or Part C of this policy.

C.

We will not make duplicative payment under this
coverage for any element of loss for which payment
has been made by or on behalf of persons or
organizations who may be legally responsible.

D.

We will not pay for any element of loss if a person is
entitled to receive payment for the same element of
loss under any of the following or similar law:
1. Workers’ compensation law; or
2. Disability benefits law.

E.

We will reduce the “insured’s” total damages by any
amount available to that “insured”, under any bodily
injury liability bonds or policies applicable to the
“underinsured motor vehicle”, that such “insured”
did not recover as a result of a settlement between
that “insured” and the insurer of an “underinsured
motor vehicle.” However, any reduction of the
“insured’s” total damages will not reduce the limit of
liability of this coverage.
This Paragraph (E.) shall not apply if we advance
payment to the “insured” in an amount equal to the
tentative settlement with the insurer of the
“underinsured motor vehicle”.

Insurance Policy at 11; Defendants’ App. at 15.
The Policy covered a 2000 Dodge Durango which, on August 11, 2010, was
being driven by Cole Moens, Brent and Tanya’s minor son.

On that date, while

driving the Durango, Cole was involved in a four vehicle accident at the intersection of
Highway 71 and C25 in Buena Vista County, Iowa. Cole received citations for failure
to yield upon entering through a highway and violation of a minor’s school license.
After a trial, Cole was found guilty of both charges.
6

Cole was the sole negligent party and his negligence was the sole substantial
factor resulting in damage to the following:
• Braeden Jay Bailey, a passenger in the Durango, and Daniel Bailey and
Tracey Bailey’s son; Daniel and Tracey’s claims for loss of consortium
(collectively “the Baileys”);
• Gerald Ralph Boge a/k/a Jerald Ralph Boge, n/k/a Estate of Boge, the
driver of a semi-truck owned by Hog Slat, Inc.;
• Douglas Lee Oldenkamp, the driver of a semi-truck owned by GCC
Alliance Concrete, Inc.;
• Lee Rae Geisinger and Alice Marie Geisinger, and their conservatorships,
the driver and passenger, respectively of another vehicle involved in the
accident.
The potential plaintiffs’ demands exceed the liability limits of the Policy. The Baileys
claim that their damages exceed the portion of the Moens’ liability limits they may
receive.

B.

Procedural background

After investigating the accident, Buckeye found that the injuries sustained were

likely to exceed what it considered to be the Policy’s aggregate limit of $500,000.
Realizing that individuals’ claims would be in competition with each other, Buckeye
found itself trapped between the proverbial rock and a hard place. Attempting to
extricate itself from this difficult position, Buckeye brought the present interpleader
action on July 24, 2012, pursuant to 28 U.S.C. § 1335 and Federal Rule of Civil
procedure 22, by which it seeks to serve as a mere stakeholder, depositing $500,000
with the Clerk of Court to permit the resolution of the competing claims, and requesting
a declaratory judgment of the rights of each claimant against the Policy. The Baileys
7

moved for partial summary judgment, contending that the Policy provides both liability
and underinsured motorist coverage to Braeden, based on his status as a passenger in
the Durango.

Buckeye resisted the Baileys’ motion and filed a cross motion for

summary judgment in which it contends that underinsured motorist coverage is not
available to Braeden under the Policy for the accident. Specifically, Buckeye argues
that Braeden is not entitled to underinsured motorist coverage because the Durango is
expressly excluded from the Policy’s definition of an “underinsured motor vehicle.”
Buckeye, alternatively, argues that the Policy clearly prohibits intra-policy stacking and
therefore its liability under the Policy is limited to the $500,000 per accident cap.
The Baileys resisted Buckeye’s motion. They argue that the Policy’s exclusion
is ambiguous and, therefore, unenforceable. The Baileys also contend that the Policy’s
anti-stacking provision is not at issue because there will be no duplication of benefits.
Buckeye filed a timely reply in which it argues that the Policy’s underinsured motorist
provision unambiguously excluded the Durango from coverage. Buckeye also argues
that the Policy’s anti-stacking provision is applicable to Braeden’s claim.
II.
A.

LEGAL ANALYSIS

Summary Judgment Standards

Motions for summary judgment essentially “define disputed facts and issues
and . . . dispose of unmeritorious claims [or defenses].”

Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 585 (2007) (internal quotation marks and citation omitted); see
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986) (“One of the principal purposes
of the summary judgment rule is to isolate and dispose of factually unsupported claims
or defenses. . . .”). Summary judgment is only appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on file, together with affidavits,
if any, show that there is no genuine issue of material fact and that the moving party is
8

entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c) (emphasis added);
see Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (“Summary
judgment is appropriate if viewing the record in the light most favorable to the
nonmoving party, there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law.”).
A fact is material when it “‘might affect the outcome of the suit under the
governing law.’” Johnson v. Crooks, 326 F.3d 995, 1005 (8th Cir. 2003) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Thus, “the substantive
law will identify which facts are material.” Anderson, 477 U.S. at 248. An issue of
material fact is genuine if it has a real basis in the record, Hartnagel v. Norman, 953
F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a reasonable jury could return a
verdict for the nonmoving party’ on the question,” Woods, 409 F.3d at 990 (quoting
Anderson, 477 U.S. at 248); see Diesel Machinery, Inc. v. B.R. Lee Indus., Inc., 418
F.3d 820, 832 (8th Cir. 2005) (stating genuineness depends on “whether a reasonable
jury could return a verdict for the non-moving party based on the evidence”).
Procedurally, the moving party bears “the initial responsibility of informing the
district court of the basis for its motion and identifying those portions of the record
which show a lack of a genuine issue,” Hartnagel, 953 F.2d at 395 (citing Celotex, 477
U.S. at 323), and demonstrating that it is entitled to judgment according to law. See
Celotex, 477 U.S. at 323 (“[T]he motion may, and should, be granted so long as
whatever is before the district court demonstrates that the standard for the entry of
summary judgment, as set forth in Rule 56(c), is satisfied.”). Once the moving party
has successfully carried its burden under Rule 56(c), the nonmoving party has an
affirmative burden to go beyond the pleadings and by depositions, affidavits, or
otherwise, designate “specific facts showing that there is a genuine issue for trial.”
9

FED. R. CIV. P. 56(e); Mosley v. City of Northwoods, Mo., 415 F.3d 908, 910 (8th Cir.
2005) (“The nonmoving party may not ‘rest on mere allegations or denials, but must
demonstrate on the record the existence of specific facts which create a genuine issue
for trial.’” (quoting Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995))).
As the Eighth Circuit Court of Appeals has explained,
“On a motion for summary judgment, ‘facts must be viewed
in the light most favorable to the nonmoving party only if
there is a genuine dispute as to those facts.’” Ricci v.
DeStefano, –––U.S. ––––, 129 S. Ct. 2658, 2677, 174 L.
Ed. 2d 490 (2009) quoting Scott v. Harris, 550 U.S. 372,
380, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007) (internal
quotations omitted).
“Credibility determinations, the
weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge.” Reeves v. Sanderson Plumbing Prods., Inc., 530
U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000),
quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The
nonmovant “must do more than simply show that there is
some metaphysical doubt as to the material facts,” and must
come forward with “specific facts showing that there is a
genuine issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S. Ct.
1348, 89 L. Ed. 2d 538 (1986). “‘Where the record taken
as a whole could not lead a rational trier of fact to find for
the nonmoving party, there is no genuine issue for trial.’”
Ricci, 129 S. Ct. at 2677, quoting Matsushita, 475 U.S. at
587, 106 S. Ct. 1348.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042-43 (8th Cir. 2011) (en banc).
Summary judgment is particularly appropriate when only questions of law are
involved, rather than factual issues that may or may not be subject to genuine dispute.
See, e.g., Cremona v. R.S. Bacon Veneer Co., 433 F.3d 617, 620 (8th Cir. 2006).

10

Consequently, I turn to consider the parties’ arguments for and against summary
judgment.
B.
1.

Interpretation Of The Policy

General rules of insurance contract interpretation

The crux of the disagreement centers on the appropriate construction and
interpretation of the Policy.

There is no dispute that Iowa law governs my

interpretation of the Policy. Therefore, I begin my analysis by setting out some wellestablished rules of insurance contract interpretation. Under Iowa law,
“The construction of an insurance policy is the process of
determining the policy's legal effect; interpretation is the
process of determining the meaning of the words used in the
policy. ‘When the parties offer no extrinsic evidence on the
meaning of policy language, the interpretation and
construction of an insurance policy are questions of law for
the court.’”
Nationwide Agri-Business Ins. Co. v. Goodwin, 782 N.W.2d 465, 470 (Iowa 2010)
(quoting Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678, 681 (Iowa 2008)
(quoting in turn Lee v. Grinnell Mut. Reinsurance Co., 646 N.W.2d 403, 406 (Iowa
2002)).
“The cardinal rule of construing insurance policies is that except in cases of
ambiguity, the intent of the parties must control, and the court determines the intent of
the parties by looking at what the policy itself says.”

Boelman v. Grinnell Mut.

Reinsurance Co., ___N.W.2d___, 2013 WL 387877, at *4 (Iowa Feb. 1, 2013); see
Nationwide Agri-Business Ins. Co. v. Goodwin, 782 N.W.2d 465, 470 (Iowa 2010);
Thomas, 749 N.W.2d at 682; A.Y. McDonald Indus., Inc. v. Insurance Co. of N. Am.,
475 N.W.2d 607, 618 (Iowa 1991). If the policy does not define a term, it is given “its
ordinary meaning.” Postell v. American Family Mut. Ins. Co., 823 N.W.2d 35, 41
11

(Iowa 2012); see Interstate Power Co. v. Insurance Co. of N. Am., 603 N.W.2d 751,
754 (Iowa 1999). When doing so, the court must “construe the policy as a whole.”
Postell, 823 N.W.2d at 41; see Greenfield v. Cincinnati Ins. Co., 737 N.W.2d 112,
118 (Iowa 2007). Where a policy is ambiguous, a court must adopt “the construction
most favorable to the insured.” Boelman, ___N.W.2d___, 2013 WL 387877, at *5; see
Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 778 (Iowa 2000). A court applies the
same rule where an exclusion is ambiguous, because “‘[a]n insurer assumes a duty to
define any limitations or exclusionary clauses in clear and explicit terms.’” Boelman,
___N.W.2d___, 2013 WL 387877, at *5 (quoting Thomas, 749 N.W.2d at 682)
(quoting in turn Hornick v. Owners Ins. Co., 511 N.W.2d 370, 374 (Iowa 1993)
(internal quotation marks omitted)); see Postell, 823 N.W.2d at 41. Thus, exclusions
are strictly construed against the insurer, see Boelman, ___N.W.2d___, 2013 WL
387877, at *5; Ferguson v. Allied Mut. Ins. Co., 512 N.W.2d 296, 299 (Iowa 1994),
“because insurance policies constitute adhesion contracts.” Boelman, ___N.W.2d___,
2013 WL 387877, at *5; see Postell, 823 N.W.2d at 41-42; Allied Mut. Ins. Co. v.
Costello, 557 N.W.2d 284, 286 (Iowa 1996). Finally, the Iowa Supreme Court has
instructed that:
When we construe the underinsured motorist provisions of
an insurance policy, section 516A.2 forms a basic part of the
policy and we treat section 516A.2 as if the parties had
actually written it into the policy. Rodish v. State Farm
Mut. Auto. Ins. Co., 501 N.W.2d 514, 515 (Iowa 1993);
Veach, 460 N.W.2d at 847; Tri–State Ins. Co. v. De
Gooyer, 379 N.W.2d 16, 17 (Iowa 1985). We construe the
insurance policy in light of the purposes and intent of section
516A.2. Veach, 460 N.W.2d at 847; Tri–State, 379
N.W.2d at 17.
Mewes v. State Farm Auto. Ins. Co., 530 N.W.2d 718, 722 (Iowa 1995); see Thomas,
749 N.W.2d at 682; Farm Bureau Mut. Ins. Co. v. Ries, 551 N.W.2d 316, 318 (Iowa
12

1996).1 With these general rules of insurance contract interpretation in mind, I turn to
the parties’ arguments.

1

Section 516A.2 provides in relevant part:
1. a. Except with respect to a policy containing both
underinsured motor vehicle coverage and uninsured or hitand-run motor vehicle coverage, nothing contained in this
chapter shall be construed as requiring forms of coverage
provided pursuant hereto, whether alone or in combination
with similar coverage afforded under other automobile
liability or motor vehicle liability policies, to afford limits in
excess of those that would be afforded had the insured
thereunder been involved in an accident with a motorist who
was insured under a policy of liability insurance with the
minimum limits for bodily injury or death prescribed in
subsection 11 of section 321A.1. Such forms of coverage
may include terms, exclusions, limitations, conditions, and
offsets which are designed to avoid duplication of insurance
or other benefits.
b. To the extent that Hernandez v. Farmers Insurance
Company, 460 N.W.2d 842 (Iowa 1990), provided for
interpolicy stacking of uninsured or underinsured coverages
in contravention of specific contract or policy language, the
general assembly declares such decision abrogated and
declares that the enforcement of the antistacking provisions
contained in a motor vehicle insurance policy does not
frustrate the protection given to an insured under section
516A.1.
....
3. It is the intent of the general assembly that when
more than one motor vehicle insurance policy is purchased
by or on behalf of an injured insured and which provides
uninsured, underinsured, or hit-and-run motor vehicle
coverage to an insured injured in an accident, the injured
insured is entitled to recover up to an amount equal to the
highest single limit for uninsured, underinsured, or hit-and13

2.

Is the Policy ambiguous?

The Baileys contend that the Policy’s underinsured motorist provision is
ambiguous. Specifically, the Baileys argue that the Policy’s exclusion of any vehicle
“[o]wned by or furnished or available for the regular use of you or any ‘family
member’” conflicts with the Policy’s definition of an “underinsured motor vehicle”
thereby creating an ambiguity that must be resolved in their favor. Buckeye counters
that the Policy’s underinsured motorist provision is clear and unambiguous.
Under Iowa law,
“The test for ambiguity is an objective one: ‘Is the language
fairly susceptible to two interpretations?’” Iowa Fuel &
Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d
859, 863 (Iowa 1991). “Only when the policy language is
susceptible to two reasonable interpretations do we find an
ambiguity.” Kibbee v. State Farm Fire & Cas. Co., 525
N.W.2d 866, 868 (Iowa 1994).
Goodwin, 782 N.W.2d at 470. A mere disagreement between parties will not establish
ambiguity. Kibbee v. State Farm Fire & Cas. Co., 525 N.W.2d 866, 868 (Iowa 1994).
“Ambiguity exists if, after the application of pertinent rules of interpretation to the face
of the instrument, a genuine uncertainty results as to which one of two or more
meanings is a proper one.” Cairns v. Grinnell Mut. Reins. Co., 398 N.W.2d 821, 824
(Iowa 1987) (citations and internal quotation omitted).

run motor vehicle coverage under any one of the above
described motor vehicle insurance policies insuring the
injured person which amount shall be paid by the insurers
according to any priority of coverage provisions contained in
the policies insuring the injured person.
IOWA CODE § 516A.2.
14

[The Iowa Supreme Court] has held that an insurer
assumes a duty to define any limitations or exclusionary
clauses in clear and explicit terms. Thus, when an
exclusionary provision is fairly susceptible to two reasonable
constructions, the construction most favorable to the insured
will be adopted. Nonetheless, if there is no ambiguity, the
court will not write a new contract of insurance for the
parties. If exclusionary language is not defined in the policy,
we give the words their ordinary meaning. An exclusion that
is clear and unambiguous must be given effect.
Goodwin, 782 N.W.2d at 470 (internal citations and quotations omitted).
The Policy defines “Underinsured motor vehicle” to mean:
a land motor or trailer of any type to which a bodily injury
liability bond or policy limit applies at the time of the
accident but its limit for bodily injury liability is either:
1.

Not enough to pay the full amount the
“insured” is legally entitled to recover as
damages; or

2.

Reduced by payments to others injured in the
accident to an amount which is not enough to
pay the full amount the “insured” is legally
entitled to recover as damages.

However, “underinsured motor vehicle” does not include
any vehicle or equipment:
...
2.

Owned by or furnished or available for the
regular use of you or any “family member”.

Insurance Policy at 10; Defendants’ App. at 15.
There is no dispute that the Durango in which Braeden was a passenger is owned
by the Moens and was available for Cole’s use. Thus, the Policy’s terms exclude the
Durango from the Policy’s definition of an “underinsured motor vehicle.” There is
nothing ambiguous about this provision.

The Baileys argue that “‘[i]f a contract
15

promises something in one point and takes it away in another, there is a resultant
ambiguity, and any ambiguity or doubt as to meaning is construed against the insurance
company.’” Baileys’ Response at 4 (quoting Murray v. American Family Mut. Ins.
Co., 429 F.3d 757, 764 (8th Cir. 2005) (in turn quoting Maxon v. Farmers Ins. Co.,
791 S.W.2d 437, 438 (Mo. Ct. App. 1990) (internal quotation marks omitted)). The
Baileys contend that the Policy meets this definition of ambiguity because it promises
underinsured motorist coverage to passengers of vehicles insured under the Policy but
then carves out an exception to that coverage for those vehicles “[o]wned by or
furnished or available for the regular use of you or any “family member.”
Baileys’ reliance on Murray is misplaced.

The

Murray involved an interpretation of

Missouri law rather than Iowa law. Murray, 429 F.3d at 761. The Baileys have not
directed my attention to any Iowa court decision adopting this Missouri standard, and
my own research has revealed none. Although the Baileys have posited their own
contrary interpretation of the Policy, an ambiguity does not arise merely because the
parties advance conflicting interpretations of an insurance policy provision.

See

LeMars Mut. Ins. Co. v. Joffer, 574 N.W.2d 303, 307 (Iowa 1998); A.Y. McDonald
Indus., Inc., 475 N.W.2d at 619. Rather, an insurance provision is ambiguous only if
both interpretations are reasonable. See Boelman, ___N.W.2d___, 2013 WL 387877,
at *5; Goodwin, 782 N.W.2d at 470; Thomas, 749 N.W.2d at 681. The Baileys’
interpretation is unreasonable because it requires reading the restriction on what is an
underinsured motor vehicle entirely out of the Policy.
Several state courts have found identical exclusions of family owned vehicles
from the definition of underinsured motor vehicle to be clear and unambiguous. See
Rivera v. American Family Ins. Group, 292 P.3d 1181, 1183 (Colo. Ct. App. 2012)
(holding identical provision unambiguous); Burton v. Kentucky Farm Bureau Mut. Ins.
Co., 326 S.W.2d 474, 476 (Ky. Ct. App. 2010) (holding identical provision
16

unambiguous); Murphy v. Kentucky Farm Bureau Mut. Ins. Co. , 116 S.W.3d 500, 502
(Ky. Ct. App. 2003) (same); Fleet Nat’l Bank v. Aetna Ins. Co.,717 A.2d 861, 864
(Conn. Super. Ct. 1997) (identical exclusion held to contain “plain language” which
“makes it clear” to what the exclusion applied); Newkirk v. United Servs. Auto. Assoc.,
564 A.2d 1263, 1266 (Pa. Super. Ct. 1989) (holding that identical exclusion of “family
cars from the definition of underinsured vehicles in Mr. Newkirk's policy is clear,
unambiguous and conspicuous.”); Myers v. State Farm Mut. Auto. Ins. Co., 336
N.W.2d 288, 291 (Minn. 1983) (finding identical exclusion is “unambiguous”);Willey
v. Farmers Ins. Group, 523 P.2d 1351, 1352 (N.M. 1974) (holding identical exclusion
“is quite clear and unambiguous in its meaning in that it specifically excludes the
plaintiff's automobile from the uninsured motorist coverage.”), overruled on other
grounds by Foundation Reserve Ins. Co., Inc. v. Marin, 797 P.2d 452, 454 (N.M.
1990); cf. Valentine v. Farmers Ins. Exchange, 141 P.2d 618, (Utah 2006) (finding
unambiguous exclusion for vehicle “which is owned by or furnished or available for the
regular use by you or a family member.”). The Baileys have not cited any contrary
authority and my own research has revealed none. I agree with these decisions and find
the Policy’s exclusion of family owned vehicles from the Policy’s definition of
underinsured motor vehicle to be clear and unambiguous.
The Iowa Supreme Court and other state appellate courts have upheld the
validity of identical or analogous contractual provisions excluding family owned
vehicles from the definition of underinsured motor vehicle. See Jones v. American Star
Ins. Co., 501 N.W.2d 536, 538 (Iowa 1983) (holding exclusion of family-owned
vehicles from the definition of underinsured vehicles was not void on public policy
grounds); Rickerd v. Iowa Mut. Ins. Co., 666 N.W.2d 621 (Iowa Ct. App. May 14,
2003) (table decision) (finding identical exclusionary provision did not violate public
policy); Dilly v. Grinnell Sect Ins. Co., 563 N.W.2d 197, 199 (Iowa Ct. App. 1997)
17

(holding that identical exclusion was “valid under Iowa law.”); see also Hutchinson v.
Liberty Mut. Fire Ins. Co., 624 N.W.2d 929 (Wis. Ct. App. Nov. 27, 2012) (table
decision) (holding identical exclusion did not violate state’s underinsured motorist law);
Rivera, 292 P.3d at 1185 (holding policy’s similar exclusion did not violate public
policy); Burton, 326 S.W.2d at 476 (holding identical provision did not violate public
policy); Murphy, 116 S.W.3d at 500 (same); Fleet Nat’l Bank, 717 A.2d at 865 (same
law); Jones v. State Farm Mut. Auto. Ins. Co., 635 N.E.2d 200, 203 (Ind. Ct. App.
1994) (holding underinsured motorist provision that excluded an insured’s vehicle from
the definition of underinsured motor vehicle did not render policy illusory or void
against public policy); State Farm Mut. Ins. Co. v. Conn, 842 S.W.2d 350, 351 (Tex.
App. 1992) (holding similar policy language consistent with Texas law); Kang v. State
Farm Mut. Auto. Ins. Co., 815 P.2d 1020, 1022 (Hawaii 1991) (holding similar
exclusion did not violate public policy); Newkirk, 564 A.2d at 1266 (holding that
similar limitation did not violate public policy); Wolgemuth v. Harleysville Mut. Ins.
Co., 535 A.2d 1145, 1149 (Pa. Super. Ct. 1988) (holding estate of a passenger killed in
a single-vehicle accident that had already recovered the limits of the driver's liability
insurance could not seek underinsured motorist benefits under the same policy when
that policy contained exclusion of family-owned vehicles from the definition of
underinsured vehicles); Holz v. North Pac. Ins. Co. 765 P.2d 1306, 1308 (Wash. Ct.
App. 1988) (holding that the “clear language” of insurance policy provision which
excluded the insured vehicle from the definition of an underinsured vehicle did “not
violate public policy or the underinsured motorist statute.”); Sullivan v. State Farm
Mut. Auto Ins. Co., 513 So.2d 992 (Ala. 1987) (holding that similar exclusionary
provision was valid and did not violate public policy); Millers Casualty Ins. Co. v.
Briggs, 665 P.2d 891, 895 (Wash. 1983) (holding that the exclusion of the insured
automobile from the definition of an underinsured vehicle was valid); Myers, 336
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N.W.2d at 291 (holding that exclusion of a car owned by the named insured from the
definition of “underinsured motor vehicle” did not violate Minnesota’s No–Fault
Automobile Insurance Act). But see State Farm Mut. Auto. Ins. Co. v. Duran, 785
P.2d 570, 573 (Ariz. 1989) (finding the “furnished for regular use” exclusion void
against public policy); Marin, 797 P.2d at 454 (holding exclusionary provision void as
violative of public policy); Bratcher v. National Grange Mu. Ins. Co., 356 S.E.2d 151,
152 (S.C. Ct. App. 1987) (holding invalid “family car exclusion” because legislature
had not authorized such a limitation).
One treatise offers the following rationale permitting such exclusions:
One persuasive reason for sustaining this limitation on
coverage is to preclude transforming underinsured motorist
insurance into liability insurance for the operators of a motor
vehicle covered by the applicable motor vehicle policy
which includes both coverages.
3 ALAN I. WIDISS & JEFFREY E. THOMAS, UNINSURED AND UNDERINSURED MOTORIST
INSURANCE § 35.7 (3rd ed. 2005).2 In Jones, the Iowa Supreme Court “embrace[d]”

2

Similarly, the Washington Supreme Court offered the following rationale:
Our conclusion is also dictated by common sense and
the consuming public's general understanding of coverage
under these circumstances. The owner of a vehicle
purchases liability insurance to, among other things, protect
passengers in the vehicle from his, or another driver's,
negligent driving. He purchases underinsured motorist
coverage to protect himself and others from damages caused
by another vehicle which is underinsured. An insured
wishing to avoid personal liability, and protect his
passengers, may simply increase the liability insurance. The
result of dual recovery in the instant case would transform
underinsured motorist coverage into liability insurance. This
result would cause insurance companies to charge
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this reasoning. Jones, 501 N.W.2d at 538 (quoting earlier edition of Widiss treatise).
Accordingly, there is every indication that Iowa courts will continue to approve such a
restriction on underinsured motorist coverage.
In summary, I find the Policy contains a plain and unambiguous exclusion
excepting from the contractual definition of underinsured motor vehicle the Moens’
own automobile, and that the exclusionary language is not inconsistent with Iowa’s
underinsured motorist statute. Thus, I deny the Baileys’ Motion For Partial Summary
Judgment and grant Buckeye’s Cross Motion For Summary Judgment.3
III.

CONCLUSION

For the reasons discussed above, I deny the Baileys’ Motion For Partial
Summary Judgment and grant Buckeye’s Cross Motion For Summary Judgment.
Accordingly, I find that the Moens’ underinsured motorist coverage is unavailable to
pay Braeden Bailey’s claim for damages.

substantially more for underinsured motorist coverage in
order to match the cost of that coverage with the presently
more expensive liability coverage. This increase in cost
would discourage consumers from purchasing underinsured
coverage, an important protection presently available for a
minimal cost.
Briggs, 665 P.2d at 895.
Having granted Buckeye’s motion on the Policy’s exclusion of the Moens’s own
automobile from the definition of an underinsured motor vehicle, I need not consider
Buckeye’s alternative anti-stacking argument.
3

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IT IS SO ORDERED.
DATED this 25th day of March, 2013.

______________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

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