Lambi v. American Family Mutual Insurance Company
ORDER granting 12 Defendant's motion for summary judgment. Signed on 6/6/12 by District Judge Greg Kays. (Francis, Alexandra)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
AMERICAN FAMILY MUTUAL
Civil No. 4:11-CV-00906-DGK
ORDER GRANTING DEFENDANT SUMMARY JUDGMENT
This is an insurance coverage dispute concerning what, if any, coverage is available
under a homeowner’s policy issued by Defendant American Family Mutual Insurance Company
(“American Family”) to Plaintiff Brent Lambi (“Lambi”) to defend against a lawsuit filed by
Brian Potter (“Potter”). Lambi was sued by third-party Potter for allegedly infecting Potter with
the Human Immunodeficiency Virus (“HIV”) while the two were engaged in sexual activity.
After Potter sued, Lambi sought defense and indemnification under his homeowner’s policy
(“the Policy”). American Family denied coverage. Lambi then settled Potter’s lawsuit and filed
the present action against American Family for breach of contract, vexatious refusal to defend or
indemnify, and bad faith refusal to defend.
Now before the Court are the parties’ cross-motions for summary judgment.1 Holding
that (1) Lambi’s alleged infection of Potter with HIV is not a “bodily injury” as that term is
Specifically before the Court are Plaintiff’s Motion for Partial Summary Judgment (Doc. 8), Plaintiff’s Suggestions
in Support (Doc. 9), Defendant’s Suggestions in Opposition (Doc. 10), Plaintiff’s Reply (Doc. 15), Defendant’s
Motion for Summary Judgment (Doc. 12), Defendant’s Memorandum in Support (Doc. 13), and Plaintiff’s
Response (Doc. 16).
defined by the Policy; and (2) Potter’s claims are expressly excluded by the Policy, Plaintiff’s
motion is DENIED and Defendant’s motion is GRANTED.
The following facts are undisputed. In the fall of 2000, Plaintiff Brent Lambi purchased
homeowner’s insurance policy number 24-PQ4749-01 (“the Policy”) from Defendant American
Family Mutual Insurance Company. This policy was in effect in September of 2008 when
Lambi engaged in sexual activity with third-party Brian Potter.
On December 2, 2009, Potter filed suit against Lambi in the Circuit Court of Jackson
County, Missouri alleging that Lambi infected him with HIV while the two were engaged in
sexual activity. The complaint brought claims for negligence, negligent misrepresentation and/or
concealment, negligent infliction of emotional distress, and battery.
Lambi answered by
generally denying the allegations.
Lambi notified American Family of the lawsuit on November 12, 2010 and requested
American Family defend him in it. On November 19, 2010, American Family notified Lambi
that it would not defend him because it denied coverage for Potter’s claims. Lambi subsequently
settled the Potter lawsuit by agreeing to pay Potter a confidential amount in exchange for release
of all underlying claims.
On July 1, 2011, Lambi filed the instant case against American Family in Jackson County
Circuit Court. Lambi’s Complaint alleges breach of contract, vexatious refusal to defend or
indemnify, and bad faith refusal to defend or settle. It seeks reimbursement of the settlement
amount, attorneys’ fees, and other damages. Defendant subsequently removed the lawsuit to
federal court by invoking the Court’s diversity jurisdiction.
The Policy contains the following terms and provisions that are relevant to the pending
cross-motions for summary judgment. Under “Coverage D – Personal Liability Coverage,” the
Policy provides that,
We [American Family] will pay, up to our limit, compensatory damages for
which any insured is legally liable because of bodily injury or property damage
caused by an occurrence covered by this policy.
If is a suit is brought against any insured for damages because of bodily injury or
property damage caused by an occurrence to which this policy applies, we will
provide a defense at our expense by counsel of our choice. We will defend any
suit or settle any claim for damages payable under this policy as we think proper.
(Policy at p. 9) (bold in original, some bold omitted). It also contains the following definitions:
1. Bodily injury means bodily harm, sickness, or disease. It includes resulting
loss of services, required care and death. Bodily injury does not include:
a. any of the following which are communicable: disease, bacteria, parasite,
virus, or other organism which are transmitted by any insured to any other
b. the exposure to any such communicable disease, bacteria, parasite, virus,
or other organism; or
c. emotional or mental distress, mental anguish, mental injury, or any similar
injury unless it arises out of actual bodily harm to the person.
9. Occurrence means an accident, including exposure to conditions, which results
during the policy period, in:
a. bodily injury; or
b. property damage.
(Policy at p. 1) (bold in original). Finally, under “Coverage D – Personal Liability and Coverage
E – Medical Expenses” the Policy states in relevant part that these coveragesdo not apply to:
1. Abuse. We will not cover bodily injury or property damage arising out of
or resulting from any actual or alleged:
a. sexual molestation or contact;
b. corporal punishment; or
c. physical or mental abuse of a person
5. Communicable Disease. We will not cover bodily injury arising out of the
actual or alleged transmission of a communicable disease.
(Policy at pp. 10-11) (bold in original).
Choice of Law
A federal court exercising its diversity jurisdiction applies the choice of law rules of the
state where it sits. Prudential Ins. Co. of Am. v. Kamrath, 475 F.3d 920, 924 (8th Cir. 2007). In
matters involving disputes related to insurance contracts Missouri follows § 188 of the
Restatement (Second) of Conflict of Laws. Viacom, Inc. v. Transit Cas. Co., 138 S.W.3d 723,
724-25 (Mo. 2004). Pursuant to § 188, where, as here, an insurance policy fails to supply a
choice of law provision “the law of the state with the most significant relationship to the
transaction governs.” Id. at 725. Missouri courts look to the following to determine which state
has the most significant relationship: “(a) the place of contracting, (b) the place of negotiation of
the contract, (c) the place of performance, (d) the location and subject matter of the contract, and
(e) the domicile, residence, nationality, place of incorporation and place of business of the
parties.” Viacom, 138 S.W.3d at 725. In the present case, the Court holds these factors weigh in
favor of finding that Missouri law governs this dispute.
Summary Judgment Standard
A moving party is entitled to summary judgment “if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). A party who moves for summary judgment bears the
burden of showing that there is no genuine issue of material fact. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986).
When considering a motion for summary judgment, a court
must scrutinize the evidence in the light most favorable to the nonmoving party and the
nonmoving party “must be given the benefit of all reasonable inferences.” Mirax Chem. Prods.
Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir. 1991) (citation omitted).
To establish a genuine issue of fact sufficient to warrant trial, the nonmoving party “must
do more than simply show that there is some metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead, the
nonmoving party bears the burden of setting forth specific facts showing there is a genuine issue
for trial. Anderson, 477 U.S. at 248. However, the nonmoving party “cannot create sham issues
of fact in an effort to defeat summary judgment.” RSBI Aerospace, Inc. v. Affiliated FM Ins. Co.,
49 F.3d 399, 402 (8th Cir. 1995) (citation omitted).
Summary judgment is particularly appropriate where, as here, the disputed questions are
legal rather than factual. See Flath v. Garrison Public School Dist. No. 51, 82 F.3d 244, 246 (8th
Cir. 1998) (citations omitted).
The issue in this case is a legal one concerning the scope of the Policy’s personal liability
coverage. American Family contends that by its express terms the policy does not extend
coverage to Lambi for the claims brought by Potter. Lambi claims that the policy language
either covers these claim outright or is ambiguous, and if it is ambiguous, the policy should be
construed in his favor.
The applicable Missouri law is well-settled. As the parties observe,2 insurance coverage
is a question of law. Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. 2002) (en banc). Generally
speaking, a liability insurance policy binds an insurer to two potential obligations; the duty to
This paragraph and the following two paragraphs which summarize the “boilerplate” law on this subject are drawn
almost verbatim from the parties’ briefs.
defend and the duty to indemnify. An insurer’s duty to defend exists when the petition states
some grounds of liability covered by its insurance policy. Woods v. Safeco Ins. Co. of Am., 980
S.W.2d 43, 46 (Mo. App. 1998). The duty to defend is determined by comparing the language of
the insurance contract with the allegations of the petition. Standard Artificial Limb, Inc. v.
Alliance Ins. Co., 895 S.W.2d 205, 210 (Mo. App. 1995). If the petition alleges facts which state
a claim that is potentially within the policy’s coverage, a duty to defend exists. Woods, 980
S.W.2d at 47.
The insured bears the burden of proving that a loss and damages he incurred are covered
under an insurance policy. See Am. States Ins. Co. v. Herman C. Kempker Constr. Co., Inc., 71
S.W.3d 232, 235 (Mo. Ct. App. 2002). When an insurer seeks to avoid coverage by invoking a
policy exclusion, it bears the burden of proving the applicability of that exclusion. State Farm
Fire & Cas. v. D.T.S., 867 S.W.2d 642 (Mo. Ct. App. 1993). In the present case, to prove that
Potter’s claim against him is covered by the Policy, Lambi must establish: (1) that he (Lambi) is
an “insured” under the Policy; (2) that any liability to Potter arises out of “bodily injury” or
“property damage” as defined by the Policy; (3) that the bodily injury or property damage was
caused by an occurrence; and (4) that the bodily injury and occurrence are covered by the Policy,
that is, they are not specifically excluded. The parties agree that Lambi is an insured, but
disagree whether the latter three elements are established.
In interpreting an insurance policy, if the language is ambiguous, it will be construed
against the insurer. Peters v. Emp’r Mut. Cas. Co., 853 S.W.2d 300, 302 (Mo. 1993) (en banc)
(citation omitted). “An ambiguity exists when there is duplicity, indistinctness, or uncertainty in
the meaning of the words used in the contract.” Id. (citation omitted). “Clear and unambiguous
language, on the other hand, is to be given its plain meaning notwithstanding the fact that it
appears in restrictive provisions of the policy.” Jasper v. State Farm Mut. Auto. Ins. Co., 875
S.W.2d 954, 956-957 (Mo. Ct. App. 1994) (citation omitted). In construing policy language,
courts apply the meaning attached by “an ordinary person of average understanding….” Seeck v.
Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. 2007) (en banc).
The Policy language does not cover Potter’s claims against Lambi.
Coverage D of the Policy outlines the personal liability coverage provided by the Policy.
After carefully reviewing this language and the parties’ arguments, the Court holds Lambi has
failed to establish that Potter’s alleged exposure to HIV was a “bodily injury” covered by the
Policy. The Court also holds Potter’s claims are expressly excluded by the Policy. Given that
these holdings are dispositive, the Court declines to consider Defendant’s other arguments, such
as whether exposure to HIV is a covered “occurrence” under the Policy, or the applicability of
the intentional act exclusion.
Plaintiff has not shown legal liability resulting from a “bodily injury.”
1. HIV transmitted via sexual contact is a communicable disease which is not
covered by the Policy.
The Policy defines “bodily injury” as, “bodily harm, sickness, or disease…. Bodily
injury does not include: a. any of the following which are communicable: disease, bacteria,
parasite, virus, or other organism which are transmitted by any insured to any other person…”
(bold in original removed, italics added). Thus, the plain language of the Policy excludes
coverage for transmitting communicable diseases, such as infecting a sexual partner with HIV,
but provides coverage where a diseased is caused by an accident, for example, if an insured
exposed another to mesothelioma.
Plaintiff argues the Policy is ambiguous because it purports to cover liability arising from
disease and then disclaims coverage for disease which is communicable.
Plaintiff notes that
under Missouri law, a policy is ambiguous if it “promises the insured something at one point but
then takes it away at another.” Chamness v. Am. Family Mut. Ins. Co., 226 S.W.3d 199, 204
(Mo. App. 2007). Plaintiff reasons that “disease which is communicable” and “disease caused
by accident” are distinctions without a difference. Thus, since the Policy promises to cover
disease caused by accident, but then takes away coverage for disease which is communicable, it
is ambiguous under Chamness.
The Court finds no merit to this argument. There is an actual, tangible difference
between diseases which are transmitted from one person to another and diseases which are
caused by an accident. They are distinct subcategories of diseases. The policy covers the latter
but not the former.
2. The Policy does not provide coverage for sexually transmitted HIV as a
sickness caused by accident.
Plaintiff also argues that the Policy provides coverage for transmission of HIV as a
“sickness caused by accident.” Plaintiff rightly notes the Policy covers sickness as a type of
“bodily injury” and an accident as a type of “occurrence,” and then asserts that because the
Policy excludes coverage for communicable diseases which an insured transmits to another, it is
ambiguous. That is, the Policy takes something away, coverage for transmitting HIV, which it
promises to insure under its “sickness” language.
Similar to the above, this argument fails because there is a difference between a “sickness
caused by accident” and a communicable disease which an insured transmits to another person.
Granted, a communicable disease which an insured transmits to another is a sickness, but it is a
kind of sickness which the Policy excludes from coverage. While Lambi may have accidentally
exposed Lambi to HIV, that does not change the fact that the plain language of the Policy does
not provide coverage for a communicable disease which an insured transmits to another person.
The Policy’s abuse and communicable disease exclusions clearly apply and
1. The abuse exclusion applies.
Even if Potter’s lawsuit against Lambi was covered under the Policy’s “bodily injury”
language, two exclusions in the Policy operate to deny coverage. “[A]n exclusion is a policy
provision which declares that certain causes of loss, or certain consequences of an insured event
are not covered by the policy.” Hawkeye-Sec. Ins. Co. v. Davis, 6 S.W.3d 419, 427 (Mo. Ct.
App. 1999). “[A]n exclusion provision has no function to endow coverage but serves only to
limit the obligation of indemnity undertaken by the policy.” Id.
The Policy’s exclusions are clearly set out on page 10 under the heading “Exclusions –
Section II.” The first exclusion, titled “Abuse,” states: “We will not cover bodily injury…arising
out of or resulting from any actual or alleged: a. sexual molestation or contact….” (emphasis
added). The plain meaning of this exclusion is that Defendant will not cover bodily injury
arising out of any actual or alleged sexual contact.
Plaintiff’s response is that the sexual contact alleged in the underlying complaint was
consensual and not “the sort of non-consensual assault, i.e., abuse, for which [Defendant]
obviously meant to disclaim coverage.” Plaintiff’s Response (Doc. 16) at p. 11. The plain
meaning of the abuse exclusion, however, disclaims coverage for any bodily injury arising out of
sexual contact, regardless of the nature of the contact. Because all of Potter’s claims in the
underlying suit against Lambi, including his claim for “medically diagnosable mental distress,”
arose out of sexual contact between them, the Court holds the abuse exclusion applies to exclude
2. The communicable disease exclusion applies.
The Policy’s communicable disease exclusion states: “We will not cover bodily injury
arising out of the actual or alleged transmission of a communicable disease.” Policy at pp. 10-11
(bold in original removed). Again, the plain language of the exclusion applies to deny Plaintiff
Plaintiff does not challenge the applicability of the exclusion itself, which Plaintiff admits
is neither ambiguous nor unduly broad.
Again relying on the language in Chamness that
“[w]here an insurance policy promises the insured something at one point but then takes it away
at another, there is an ambiguity,” Chamness, 26 S.W.3d at 204, Lambi contends the exclusion
creates ambiguity in the Policy as a whole by purporting to cover liability for disease, then
excluding liability for communicable disease. Plaintiff’s reliance on Chamness, however, is
misplaced here because this language applies only to “excess” or “other insurance” clauses of a
policy. See id. (noting this holding applies when “an other insurance clause appears to provide
coverage but other clauses indicate that such coverage is not provided….”); Seeck, 212 S.W.3d at
132 (citing same language in evaluating ambiguity of an excess or other insurance clause). If
Chamness had the broad application Plaintiff repeatedly claims, it would, as Defendant observes,
“essentially render each and every exclusion within any policy of insurance meaningless.” Def.
Sugg. In Opp’n (Doc. 10) at p. 14.
Although this exclusion is arguably redundant because the definition of “bodily injury”
already excludes communicable disease transmitted by an insured to any other person, that does
not mean the Policy is ambiguous. “[R]edundancy is not the same as ambiguity.” Lynch v.
Shelter Mut. Ins. Co., 325 S.W.3d 531, 541 (Mo. Ct. App. 2010) (citing Purdy v. Farmers Inc.
Co. of Idaho, 65 P.3d 184, 188 (Idaho 2003) (“Although redundancy may be considered when
interpreting an ambiguous provision in an insurance policy, redundancy does not by itself make
an insurance policy ambiguous.”)). Given that the Policy’s communicable disease exclusion is
ambiguous, the Court holds the exclusion applies and denies Plaintiff coverage in this case.
Because Plaintiff has not established coverage existed under the Policy, and because
Defendant has established the applicability of two exclusions specifically denying coverage to
Plaintiff, Defendant’s motion for summary judgment is GRANTED.
IT IS SO ORDERED.
/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT
Date: June 6, 2012
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