Rusher v. Liberty Mutual Insurance Co.
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Defendants motion for summary judgment [Doc. 22] is GRANTED and Plaintiffs motion for partial summary judgment [Doc. 25] is DENIED.An appropriate judgment shall accompany this Memorandum and Order. 22 25 Signed by Magistrate Judge Nannette A. Baker on 2/7/18. (CLA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
LIBERTY MUTUAL INSURANCE
COMPANY, et al.,
Case No. 4:17-CV-1671 NAB
MEMORANDUM AND ORDER
This diversity case involving underinsured motorist (“UIM”) coverage is before the Court
on Plaintiff’s motion for partial summary judgment [Doc. 25], and Defendant’s motion for
summary judgment [Doc. 22], seeking a determination as to whether Plaintiff is entitled to
underinsured motorist coverage under her insurance policy with Defendant. The parties have
consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28
U.S.C. § 636(c). [Doc. 16.] The motions are fully briefed and the matter is ripe for disposition.
For the following reasons, the Court will grant Defendant’s motion and deny Plaintiff’s motion.
The parties have stipulated that the facts recited here are undisputed for the purposes of
summary judgment. Plaintiff Tammy Rusher was injured in a single-vehicle accident while
occupying a 2005 Hyundai Elantra owned by Plaintiff and operated by her daughter. The
December 7, 2013, accident was caused by her daughter’s negligence. LM General Insurance
Company issued personal automobile policy No. AOS-248-469875-40 (the “Policy”) to Tammy
Schumann (Plaintiff’s former name) and Jason Schumann. The policy was in full force and
effect at the time of the accident, and provided Plaintiff and the involved Hyundai with the
insurance coverage set forth in the policy. Defendant tendered to Plaintiff the $25,000 in bodily
injury liability coverage available under the Policy. Plaintiff demanded UIM coverage from
Defendant in the amount of $500,000, which represented the policy limits. Defendant refused
the demand for the stated reason that the vehicle involved in the accident was not an
“underinsured motor vehicle” as defined in the Policy. Plaintiff filed this action in Missouri state
court for declaratory judgment, breach of contract, and vexatious refusal to pay. Defendant
removed the action to this Court based on diversity of citizenship.
II. Summary Judgment Standard
The standards applicable to summary judgment motions are well settled, and they do not
change when both parties have moved for summary judgment. See Wermager v. Cormorant
Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); Tower Rock Stone Co. v. Quarry & Allied
Workers Local No. 830, 918 F. Supp. 2d 902, 905 (E.D. Mo. 2013). Summary judgment is
proper “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Hill v. Walker, 737
F.3d 1209, 1216 (8th Cir. 2013). The movant “bears the initial responsibility of informing the
district court of the basis for its motion” and must identify “those portions of [the record] . . .
which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). If the movant does so, the nonmovant must respond by
submitting evidentiary materials that set out “specific facts showing that there is a genuine issue
for trial.” Id. at 324 (quotation marks omitted). “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, 557 U.S. 557, 586 (2009) (quoting Scott v.
Harris, 550 U.S. 372, 380 (2007) (internal quotation marks omitted)).
Where parties file cross-motions for summary judgment, each summary judgment motion
must be evaluated independently to determine whether a genuine dispute of material fact exists
and whether the movant is entitled to judgment as a matter of law. Husinga v. Federal-Mogul
Ignition Co., 519 F. Supp. 2d 929, 942 (S.D. Iowa 2007). “[T]he filing of cross motions for
summary judgment does not necessarily indicate that there is no dispute as to a material fact, or
have the effect of submitting the cause to a plenary determination on the merits.” Wermager,
716 F.2d at 1214.
State law governs the interpretation of insurance policies when federal jurisdiction is
based on diversity of citizenship. Secura Ins. v. Horizon Plumbing, Inc. 670 F.3d 857, 861 (8th
Cir. 2012). Missouri law governs this insurance contract. This Court is bound by the decisions
of the Missouri Supreme Court regarding issues of substantive state law. Owners Ins. Co. v.
Hughes, 712 F.3d 392, 393 (8th Cir. 2013). Decisions by the Missouri Court of Appeals may be
used as “an indication of how the Missouri Supreme Court may rule,” but the Court is not bound
to follow these decisions. Id.
“Insurance policies are read as a whole, and the risk insured against is made up of both
the general insuring agreement as well as the exclusions and definitions.” Todd v. Missouri
United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo. 2007) (en banc). In construing the terms of
an insurance policy, Missouri courts apply “the meaning an ordinary person of average
understanding would attach if purchasing insurance, and resolve[ ] ambiguities in favor of the
insured.” Dutton v. Am. Family Mut. Ins. Co., 454 S.W.3d 319, 322 (Mo. 2015). But, “[i]f the
policy's language is unambiguous, it must be enforced as written.” Floyd-Tunnell v. Shelter
Mut., 439 S.W.3d 215, 217 (Mo. 2014). Ambiguities arise when there is “duplicity,
indistinctness, or uncertainty in the meaning of the language in the policy. Language is
ambiguous if it is reasonably open to different constructions.” Burns v. Smith, 303 S.W.3d 505,
509 (Mo. 2010) (citation omitted). Ambiguity also arises where an insurance clause appears to
furnish coverage but other provisions signal that such coverage is not provided. Seeck v. Geico
Gen. Ins. Co., 212 S.W.3d 129, 134 (Mo. 2007) (en banc). However, “[d]efinitions, exclusions,
conditions and endorsements are necessary provisions in insurance policies. If they are clear and
unambiguous within the context of the policy as a whole, they are enforceable.” Todd, 223
S.W.3d at 163. Finally, a court must not “unreasonably distort the language of a policy or
exercise inventive powers for the purpose of creating an ambiguity when none exists.” Todd,
223 S.W.3d at 163; see also Rodriguez v. Gen. Acc. Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo.
1991) (en banc).
The UIM coverage endorsement of the Policy provides in relevant part as follows:
We will pay compensatory damages which an “insured” is legally entitled
to recover from the owner or operator of an “underinsured motor vehicle” because
of “bodily injury”:
sustained by an “insured”; and
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”.
“Underinsured motor vehicle” means a land motor vehicle or trailer of
any type to which a bodily injury liability bond or policy applies at the
time of the accident but its limit for bodily injury is less than the limit of
liability for this coverage.
However, “underinsured motor vehicle” does not include any vehicle or
Owned by or furnished or available for the regular use of you or any
i. Parties’ Arguments
Plaintiff asserts that the plain language of the policy provides UIM coverage, and points
to the stipulated facts offered by the parties, which state that the Policy “was in full force and
effect, providing Tammy Rusher and the involved [vehicle] with the insurance coverage set forth
in the policy, and the Policy contains UIM limits of $500,000.” [Doc. 26 at 6]. Plaintiff, in
further support of her position, relies not on the Policy’s Insuring Agreement that describes
available UIM coverage, but rather on one of the exclusions to UIM coverage. Id. Plaintiff
points to an exclusion in the Policy that states:
We do not provide Underinsured Motorists Coverage for “bodily injury” sustained:
I. By an “insured” while “occupying”, or when struck by, any motor vehicle
owned by that “insured” which is not insured for this coverage under this policy.
In asserting that this coverage exclusion operates to extend UIM coverage to her, Plaintiff
argues in the negative, stating that because the exclusion would deny coverage to an insured if
the vehicle she occupied was not insured for UIM coverage under the Policy, then it must also
stand for the reverse. Finally, Plaintiff argues in the alternative that the Policy is ambiguous as
to whether UIM coverage is available, and because ambiguities must be resolved in an insured’s
favor, she is entitled to summary judgment. Id. at 7. In support of her position, Plaintiff cites to
Naeger v. Farmers Ins. Co., Inc., 436 S.W.3d 654, 660-661 (Mo.App. E.D. 2014), which states
that “[w]here an insurance policy promises the insured something at one point but then takes it
away at another, there is ambiguity.”
Plaintiff asserts that an ordinary person of average
understanding would read the exclusion in the Policy to promise UIM coverage to Plaintiff, and
that to the extent the definition of “underinsured motor vehicle” would deny her that same
coverage, an ambiguity arises. [Doc. 32 at 6].
Meanwhile, Defendant asserts that the Policy “only provides UIM coverage for damages
arising out of the use of an “underinsured motor vehicle,” and that UIM damages are unavailable
to Plaintiff because the Policy explicitly excludes vehicles that are “owned by . . . you” 1 from the
definition of “underinsured motor vehicle.” [Doc. 23 at 7]. Because the Hyundai involved in the
single-vehicle accident was owned by Plaintiff, Defendant argues that it is clearly excluded from
the definition of “underinsured motor vehicle,” in the Policy, and thus, “the UIM coverage
portion of the Policy [was] not triggered by the accident.” Id.
There is no genuine issue of material fact in dispute.
Rather, the parties’ dispute
concerns whether the Policy provides UIM coverage under the circumstances surrounding the
December 7, 2013, accident. Plaintiff asserts that the plain language of the Policy provides UIM
coverage, as indicated by the parties’ stipulated facts, which state that the Policy “was in full
force and effect, providing Tammy Rusher and the involved [vehicle] with the insurance
coverage set forth in the policy, and the Policy contains UIM limits of $500,000.”
argument sidesteps the issue before the Court. No one disputes that the Policy was in effect, that
Plaintiff and her vehicle were covered by the Policy, or that the Policy contains a UIM
endorsement. The mere fact that Plaintiff purchased UIM coverage does not automatically mean
that she is entitled to UIM coverage in every conceivable circumstance. The question is whether
the Policy’s UIM coverage is available to Plaintiff under the circumstances surrounding this
“You” is defined in the Policy as a named insured, and Plaintiff is listed as a named insured on the Declarations
page of the Policy. [Doc. 27 at 3].
In further support for her position that the plain language of the Policy provides UIM
coverage, Plaintiff asserts that one of the exclusions to UIM coverage in the Policy can actually
be read to extend coverage to her for the accident. Plaintiff relies on an exclusion which states
that Defendant “will not provide Underinsured Motorists Coverage for ‘bodily injury’ sustained
by an ‘insured’ while ‘occupying’ . . . any motor vehicle owned by that ‘insured’ which is not
insured for this coverage under this policy.”
When asserting that this coverage exclusion
demonstrates that UIM coverage is available to her, Plaintiff draws a negative inference, stating
that because the exclusion would deny coverage to an insured if the vehicle she occupied was
not insured for UIM coverage under the Policy, then it must also stand for the reverse.
Specifically, Plaintiff states that, “[s]aid another way, the Policy does provide UIM coverage
where the vehicle is insured for UIM coverage . . . which it is in this instance.”
Where the language of an insurance policy is unambiguous, it should be enforced as
written. See Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo. 1993) (en banc).
The language should be accorded its plain meaning. In asserting her negative reading of the
exclusion at issue, Plaintiff is inviting the Court to distort the language of an unambiguous
provision, and that is precisely what the Court cannot do.
Todd, 223 S.W.3d at 163.
Furthermore, Plaintiff is ignoring the Insuring Agreement of the UIM endorsement, which
explains in what circumstances UIM coverage is granted under the Policy.
Agreement states that UIM coverage will be available to an insured who is injured in an accident
involving an “underinsured motor vehicle.” Plaintiff does not make any argument or provide
any explanation as to how her vehicle could be considered an “underinsured motor vehicle” as
defined in the Policy. Her argument focuses on one exclusion clause in the UIM endorsement,
and essentially reads the definition of “underinsured motor vehicle” entirely out of the
agreement. However, well-settled Missouri law requires a court to evaluate the policy as a
whole and not to interpret policy provisions in isolation.
See Seeck, 212 S.W.3d at 133.
“[C]ourts must also endeavor to give each provision a reasonable meaning and to avoid an
interpretation that renders some provisions useless.” Munroe v. Continental Western Ins. Co.,
735 F.3d 783, 787 (8th Cir. 2013).
Plaintiff’s argument would demote the definition of
“underinsured motor vehicle,” from a central policy provision to mere surplusage, and the Court
cannot agree with her interpretation.
Furthermore, the Court does not agree that the exclusion clause Plaintiff relies on can be
read or interpreted to provide UIM coverage. The clause does not grant coverage, but restricts it,
and Plaintiff fails to explain how a policy exclusion can somehow operate to grant coverage to an
insured. Additionally, a policy exclusion would seem irrelevant to a coverage dispute unless and
until the insured first demonstrates that the accident falls within a policy’s pertinent coverage
grant so as to trigger coverage. See Hawkeye-Security Ins.c Co. v. Davis, 6 S.W.3d 419, 427
(Mo.App. S.D. 1999) (court will not analyze applicability of a coverage exclusion without first
considering whether there was an insured event). Under the terms of the Policy, an accident does
not trigger UIM coverage unless it involved an “underinsured motor vehicle,” and Plaintiff does
not explain how that prerequisite to coverage is met in this situation. Finally, though the
undersigned has been unable to find any cases where a court was confronted with reasoning
similar to Plaintiff’s negative inference argument, Missouri courts have repeatedly interpreted
similar “owned but not insured” exclusions in other contexts, and have found them to be
unambiguous and enforceable as written. See, e.g., Bush v. Shelter Mut. Ins. Co., 412 S.W.3d
336, 340 (Mo.App. W.D. 2013).
The Court turns now to Defendant’s argument. In its motion for summary judgment,
Defendant argues that Plaintiff is not entitled to UIM coverage under the provisions of the Policy
because the Hyundai does not meet the policy definition of an underinsured motor vehicle. The
Policy clearly excludes from the definition of “underinsured motor vehicle” any vehicle owned
by the insured. Because Plaintiff owned the vehicle involved in this single-car crash, Defendant
asserts UIM coverage is unavailable to her for this accident. Defendant contends that the Policy
definition should be enforced as written because it is clear and unambiguous and because there is
no other policy provision that injects ambiguity into the meaning of what is a covered
“underinsured motor vehicle.”
There is no dispute that the Hyundai in which Plaintiff was a passenger is owned by
Plaintiff, is available for her regular use, and is insured under the Policy. The Policy
unambiguously states that UIM coverage is only available for damages arising out of the use of
an “underinsured motor vehicle,” and the policy clearly excludes from the definition of
“underinsured motor vehicle” any vehicle owned by the insured. 2 Thus, the Policy’s terms
exclude the Hyundai from the Policy’s definition of an “underinsured motor vehicle.” This
exclusion precludes coverage where, as here, a passenger is injured in a single-vehicle accident
while riding in the insured vehicle. There is nothing ambiguous about the provision. And, as
Defendant points out, the Missouri Court of Appeals has concluded that a similar household
exclusion is unambiguous and enforceable. See Ezell v. Columbia Ins. Co., 942 S.W.2d 913, 914
(Mo.App.S.D. 1996); see also Eaton v. State Farm Mut. Auto. Ins. Co., 849 S.W.3d, 189, 193-94
(Mo.App. E.D. 1993). Plaintiff asserts that Ezell is inapposite because it involved uninsured
motorist coverage rather than UIM coverage. It is true that both Ezell and Eaton involved
This type of exclusion is commonly found in insurance policies when describing the terms of uninsured motorist
and UIM coverage, and is sometimes referred to as the “household exclusion.” See Eaton v. State Farm Mut. Auto.
Ins. Co., 849 S.W.2d 189, 192 (Mo.App. E.D. 1993).
uninsured motorist coverage, rather than UIM coverage, but that distinction would seem to make
it even more likely that Missouri courts would uphold the exclusion in the UIM context.
Missouri statutorily requires uninsured motorist coverage, yet there is no corresponding statutory
requirement for UIM coverage. See Mo. Ann. Stat. § 379.203; see also State Farm Mut. Auto.
Ins. Co. v. Shahan, 141 F.3d 819, 823 (8th Cir. 1998) (citing Eaton and upholding UIM
household exclusion similar to the one at issue here because “[w]e may assume that Missouri
courts would be even less receptive to exclusions on uninsured coverage, which is mandated by
statute, than to those on underinsured coverage, which is purely optional.”).3 Because the
language in the UIM endorsement of the Policy is unambiguous and unequivocally excludes
UIM coverage to Plaintiff for the accident at issue here, summary judgment for Defendant is
appropriate unless some other provision in the Policy serves to render the Policy ambiguous. See
Munroe, 735 F.3d at 786.
Plaintiff claims that an ambiguity arises from the same “owned but not insured”
exclusion clause discussed supra, which states in pertinent part, “We do not provide
Underinsured Motorists Coverage for ‘bodily injury’ sustained [b]y an ‘insured’ while
‘occupying’ . . . any motor vehicle owned by that ‘insured’ which is not insured for this coverage
under this policy.” She asserts that an “indistinctness and/or uncertainty lies in the fact that the
exclusion utilizes the term and concept of ‘coverage’ without clearly and unambiguously setting
forth just exactly when the exclusion applies.” [Doc. 26 at 8]. The Court disagrees that the
provision is indistinct or uncertain. Indeed, and as Defendant points out, when Plaintiff relies on
The Court notes that a survey of caselaw from around the country revealed that several state courts have found
identical exclusions of family owned vehicles from the definition of “underinsured motor vehicle” to be clear,
unambiguous, and enforceable. See, e.g., Rivera v. American Family Ins. Group, 292 P.3d 1181, 1183
(Colo.Ct.App. 2012); Burton v. Kentucky Farm Bureau Mut. Ins. Co., 326 S.W.3d 474, 476 (Ky.Ct.App. 2010);
Fleet Nat’l Bank v. Aetna Ins. Co., 45 Conn.Supp. 355, 358 (Conn.Super.Ct. 1997); Newkirk v. United Servs. Auto.
Assoc., 388 Pa.Super. 54, 57 (Pa.Super.Ct. 1989); Myers v. State Farm Mut. Auto. Ins. Co., 336 N.W.2d 288, 291
this same exclusion to assert that it extends UIM coverage to her for the accident, she describes
quite clearly when the exclusion applies, stating, “[p]ursuant to this policy provision, when the
insured is injured while occupying a vehicle owned by the insured, coverage would not be
afforded if that vehicle was not insured for UIM coverage under the policy.” Id. at 3 (emphasis
in the original). This is precisely how the provision operates, and it is not ambiguous in the least.
Moreover, Missouri courts have repeatedly held that similar “owned but not insured” UIM
exclusions are unambiguous and enforceable. See, e.g. Bush, 412 S.W.3d at 340; Loyd v. State
Auto. Prop. & Cas. Co., 265 S.W.3d 901, 902 (Mo.App.W.D. 2008); O’Driscoll v. Mutapcic,
210 S.W.3d 368, 373 (Mo.App.E.D. 2006); Vega v. Shelter Mut. Ins. Co., 162 S.W.3d 144, 150
(Mo.App.W.D. 2005). Finally, and perhaps more importantly, this exclusion provision is simply
not applicable to the accident in this case. The exclusion at issue is only triggered where the
vehicle occupied is not insured for UIM coverage under the policy, and it is undisputed that the
vehicle involved in the accident was insured for UIM coverage. See Clark v. Am. Family Mut.
Ins. Co., 92 S.W.3d 198, 203 (Mo.App. E.D. 2002) (an insurance provision that does not apply
cannot be used to create an ambiguity).
Plaintiff also asserts that an ordinary person of average understanding would read the
exclusion in the Policy to promise UIM coverage to Plaintiff, and to the extent the definition of
“underinsured motor vehicle” operates to deny her that same coverage, an ambiguity arises.
[Doc. 32 at 6]. In support of this assertion, Plaintiff cites to Naeger, which states that “[w]here
an insurance policy promises the insured something at one point but then takes it away at
another, there is an ambiguity.” 436 S.W.3d at 660-61. This language from Naeger represents a
well-settled precept of Missouri law as it pertains to the interpretation of insurance policies.
However, as the Missouri Supreme Court explained when examining this principle:
Taken out of context, [this language] may be confusing. Insurance policies
customarily include definitions that limit words used in granting coverage as well
as exclusions that exclude from coverage otherwise covered risks. While a broad
grant of coverage in one provision that is taken away by a more limited grant in
another may be contradictory and inconsistent, the use of definitions and
exclusions is not necessarily contradictory or inconsistent. The principle . . . is
more accurately stated as follows: “Though it is the duty of the court to reconcile
conflicting clauses in a policy so far as their language reasonably permits, when
reconciliation fails, inconsistent provisions will be construed most favorably to
the insured” . . . Definitions, exclusions, conditions and endorsements are
necessary provisions in insurance policies. If they are clear and unambiguous
within the context of the policy as a whole, they are enforceable.
Todd, 223 S.W.3d at 162-63 (internal citations omitted).
Reading the Policy as a whole, the Court finds that the exclusion clause at issue is not at
odds with other provisions of the Policy. It is merely one of the many “[d]efinitions, exclusions,
conditions and endorsements [that] are necessary provisions in insurance policies,” and it does
not give rise to an ambiguity requiring coverage to be construed in favor of the insured.
For the reasons discussed above, the Court finds that the Plaintiff was not injured by an
“underinsured motor vehicle,” as clearly and unambiguously defined in the Policy. The Court
further finds that there is no other policy provision that injects ambiguity into the meaning of
what is a covered “underinsured motor vehicle.” Plaintiff is therefore not entitled to coverage
under the UIM provision of the Policy.
IT IS HEREBY ORDERED that Defendant’s motion for summary judgment [Doc. 22]
is GRANTED and Plaintiff’s motion for partial summary judgment [Doc. 25] is DENIED.
An appropriate judgment shall accompany this Memorandum and Order.
Dated this 7th day of February, 2018.
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