Cannon et al v. State Farm Mutual Automobile Insurance Company

Filing 19

MEMORANDUM DECISION AND ORDER granting 12 Motion for Summary Judgment; denying 13 Motion for Summary Judgment. Signed by Judge David Nuffer on 10/7/13 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
WILLIAM CANNON and BARBARA
CANNON,

MEMORANDUM DECISION AND
ORDER GRANTING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT

Plaintiffs,
v.

Case No.: 2:13-cv-186 DN

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

District Judge David Nuffer

Defendant.
This case is a dispute between an insurer and an insured. Plaintiffs’ William and Barbara
Cannon claim Defendant State Farm Mutual Automobile Insurance Company failed to fulfill its
obligations under the policy.
STANDARD FOR SUMMARY JUDGMENT
“The court shall grant summary judgment 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.” 1 “The standard for cross-motions for summary judgments is the same as for individual
motions for summary judgment.” 2 Thus, “[t]he court handles cross-motions as if they were two
distinct, independent motions . . . [and] in evaluating each motion, the court must consider the
facts and inferences in the light most favorable to the non-moving party.” 3 Having reviewed the
submissions,4 the court GRANTS Defendant State Farm’s Motion for Summary Judgment.

1

Fed. R. Civ. P. 56(a).

2

Arnold Pontiac-GMC, Inc. v. Gen. Motors Corp., 700 F.Supp 838, 840 (1988) (internal citations omitted).

3

Id.

4

Defendant’s Cross-Motion for Summary Judgment and Supporting Memorandum, docket no.12, filed May, 24,
2013; Plaintiffs’ Cross-Motion for Summary Judgment and Supporting Memorandum, docket no. 13, filed May, 24,
2013; Plaintiff’s Memorandum in Opposition to Defendant’s Cross-Motion for Summary Judgment, docket no. 14,
filed June 7, 2013; Defendant’s Reply Memorandum in Support of Cross-Motion for Summary Judgment, docket

UNDISPUTED MATERIAL FACTS
The following material facts are mostly undisputed in the briefing, but where facts
offered were disputed, those disputes have been removed by editing and the undisputed portions
remain.
1.

On June 1, 2012, in Roy, Utah, Mr. Hood collided with Mrs. Cannon in an

automobile and motor scooter accident. 5
2.

Mrs. Cannon was driving a motorcycle at the time of the collision. 6

3.

At the time of the collision, Mr. and Mrs. Cannon were married and have

continued as such. 7
4.

As a result of the collision, Mrs. Cannon sustained injuries including the loss of

her leg. 8
5.

Mr. Hood was determined to be at fault in the collision. 9

6.

At the time of the collision, Mr. Hood was insured by Progressive Insurance with

liability limits of $300,000. 10
7.

At the time of the collision, Mr. and Mrs. Cannon were insured by State Farm

Mutual Automobile Insurance Company. 11

no. 15, filed, June 24, 2013; Defendant’s Memorandum in Opposition to Plaintiffs’ Cross-Motion for Summary
Judgment, docket no. 16, filed June 25, 2013; Plaintiffs’ Reply Memorandum in Opposition to Defendant’s CrossMotion for Summary Judgment, docket no. 17, filed June 27, 2013.
5

Defendant’s Memorandum in Opposition to Plaintiffs’ Cross-Motion for Summary Judgment at 2.

6

Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum at 2.

7

Id. at 3.

8

Plaintiffs’ Cross-Motion for Summary Judgment and Supporting Memorandum at 3.

9

Id.

10

Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum at 3.

11

Id.

2

8.

Mr. and Mrs. Cannon submitted claims to State Farm Mutual Automobile

Insurance Company for their Underinsured Motorist (“UIM”) policy limits. 12
9.

On October 5, 2012, State Farm Mutual Automobile Insurance Company paid

$50,000 under the underinsured motorist policy, plus $1,000,000 under an umbrella/personal
liability umbrella policy. 13
10.

On October 22, 2012, Mr. and Mrs. Cannon, through counsel, sent a letter to State

Farm responding to State Farm’s denial of coverage for Mr. Cannon’s loss of consortium claim
as stated in State Farm’s letter dated October 5, 2012. 14
11.

On October 26, 2012, State Farm responded to the letter from Mr. and Mrs.

Cannon, through counsel, dated October 22, 2012. 15
12.

On November 7, 2012, Mr. and Mrs. Cannon, through counsel, responded to State

Farm’s letter dated October 26, 2012. 16
13.

In December 2012, Progressive Insurance paid its policy limit in the sum of

$300,000 in return for a release executed by Mr. and Mrs. Cannon. 17

12

Plaintiffs’ Cross-Motion for Summary Judgment and Supporting Memorandum at 3.

13

Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum at 3. See also Letter from Brian
Milne, Claim Representative from State Farm, to Joseph W. Steele (Oct. 5, 2012), docket no. 12-1, attached as
Exhibit B to Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum.
14

Letter from Joseph W. Steele, Plaintiffs’ Counsel, to Brian Milne, Claim Representative from State Farm (Oct. 22,
2012), docket no.14-1attached as Exhibit A to Plaintiffs’ Memorandum in Opposition to Defendant’s Cross-Motion
for Summary Judgment.
15

Letter from Brian Milne, Claim Representative from State Farm, to Joseph W. Steele, Plaintiffs’ Counsel (Oct. 26,
2012), docket no. 14-2 attached as Exhibit B to Plaintiffs’ Memorandum in Opposition to Defendant’s Cross-Motion
for Summary Judgment.
16

Letter from Kenneth D. Lougee and Joseph W. Steele, Plaintiffs’ Counsel, to Brian Milne, Claim Representative
from State Farm (Nov. 7, 2012), docket no. 14-3 attached as Exhibit C to Plaintiffs’ Memorandum in Opposition to
Defendant’s Cross-Motion for Summary Judgment.
17

Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum, at 3; Utah Code Ann. § 30-211(1)(a).

3

14.

Mrs. Cannon’s loss of a leg constitutes a significant permanent injury as set forth

in the Utah loss of consortium statute, Utah Code Ann. § 30-2-11(1)(a). 18
15.

Mr. Cannon is listed as a named insured on the Declarations Page of the

Underinsured Motorist policy. 19
16.

Mrs. Cannon is an insured as defined in State Farm Mutual Automobile Insurance

Company Underinsured Motorist policy because she is, and at all relevant times was, the resident
relative of the named insured, Mr. Cannon, and she was injured while operating the insured
vehicle. 20
17.

Mr. and Mrs. Cannon’s insurance policy defines “bodily injury” as “bodily injury

to a human being and sickness, disease or death that results from it.” 21
OVERVIEW OF ISSUES
Plaintiffs William Cannon and Barbara Cannon (the Cannons) moved for summary
judgment claiming Defendant State Farm breached its contract by refusing to pay Plaintiff
William Cannon’s claim of loss of consortium. In support of their claim, the Cannons assert
State Farm’s UIM policy is ambiguous. The Cannons compare the UIM sections under the
headings “Insurance Agreement” and “Limits” to support their claim the policy is ambiguous.
The Cannons also assert the policy language is inconsistent with Utah law which provides for
loss of consortium as a separate and distinct personal claim and that the policy ignores a
distinction between “claims” and “damages.”

18

Plaintiffs’ Cross-Motion for Summary Judgment and Supporting Memorandum at 3.

19

Declarations Page, docket no. 13-3 attached as Exhibit C to Plaintiffs’ Cross-Motion for Summary Judgment and
Supporting Memorandum.
20

Plaintiffs’ Cross-Motion for Summary Judgment and Supporting Memorandum at 4.

21

Defendant’s Memorandum in Opposition to Plaintiffs’ Cross-Motion for Summary Judgment at 4.

4

Defendant State Farm moved for summary judgment claiming it had fulfilled its
obligations under the policy. State Farm asserts the policy precludes UIM coverage for claims of
loss of consortium where there is no bodily injury to the insured making the claim. Further, State
Farm asserts that Utah case law precludes loss of consortium claimants from receiving a separate
policy limit and that the policy language limits derivative claims to the per person policy limit
that State Farm has already paid to the Cannons.
For the reasons set forth below, the Court finds that (1) the policy language limits
derivative claims to the per person limit provided in the policy, (2) the policy language itself
does not include loss of consortium as a bodily injury, and (3) Utah case law precludes loss of
consortium claimants from receiving a separate policy limit.
Construction of Insurance Policies
“An insurance policy is a contract between the insurer and the insured and, accordingly,
is subject to the general rules of contract construction.” 22 “Courts interpret words in insurance
policies according to their usually accepted meanings and in light of the insurance policy as a
whole.” 23 Further, “an insured is entitled to the broadest protection reasonably understood to be
provided by the policy.” 24
State Farm’s Policy Language Limits Derivative Claims
to the Per Person Limit Provided in the Policy
The relevant section of the policy providing the limits on UIM payments states:
a. The most we will pay for all damages resulting from bodily injury to
any one insured injured in any one accident, including all damages
sustained by other insureds as a result of that bodily injury is the
lessor of:
22

S.W. Energy Corp. v. Continental Ins. Co., 1999 UT 23, ¶ 12, 974 P.2d 1239.

23

Utah Farm Bureau Ins. Co. v. Crook, 1999 UT 47, ¶ 5, 980 P.2d 685.

24

State Farm Mutual Auto. Ins. Co. v. Green, 2003 UT 48, ¶ 23, 89 P.3d 97, 103 (internal citation omitted).

5

(1) the amount of all damages resulting from that bodily injury
reduced by the sum of all payments for damages resulting from
that bodily injury made by or on behalf of any person or
organization who is or may be held legally liable for that bodily
injury; or
(2) the limit shown under “Each Person”. 25
Mr. Cannon’s claim for loss of consortium is a derivative claim as defined by Utah Code
30-2-11(5)(a) 26 and is based on Mrs. Cannon’s bodily injury. The claim for loss of
consortium by Mr. Cannon is “a result of [Mrs. Cannon’s] bodily injury.” 27 Because Mr.
Cannon’s claim for loss of consortium is based on Mrs. Cannon’s bodily injury, the
policy states “[t]he most we will pay for all damages resulting from bodily injury” 28 is
the UIM policy limit. The UIM policy limit in the policy is $50,000 and State Farm has
tendered a check in the amount of $50,000 to the Cannons. 29
The Cannons contend ambiguity arises when the UIM Limits are read together
with the UIM Insuring Agreement. The Cannons maintain that these sections, when read
together, effectively deny a separate payment for the per person injury claims and
derivative claims. The Cannons assert that this interpretation of the contract creates a
conflict between the UIM Insuring Agreement section and UIM Limit section and “[f]or

25

State Farm Policy, docket no. 13-1 at 11, attached as Exhibit A to Plaintiffs’ Cross-Motion for Summary Judgment
and Supporting Memorandum.
26

Utah Code Ann. § 30-2-11(5)(a) states a “spouse’s action for loss of consortium shall be derivative from the cause
of action existing in behalf of the injured person.”
27

State Farm Policy, docket no. 13-1 at 11, attached as Exhibit A to Plaintiffs’ Cross-Motion for Summary Judgment
and Supporting Memorandum.
28

Id. (emphasis in original).

29

Letter from Brian Milne, Claim Representative from State Farm, to Joseph W. Steele (Oct. 5, 2012), docket no. 121, attached as Exhibit B to Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum; see
also Plaintiffs’ Memorandum in Opposition to Defendant’s Cross-Motion for Summary Judgment at 3 (plaintiffs
admitting that defendant tendered a check in the amount of $50,000 but denying implication that Plaintiffs
“somehow acquiesced to Defendant’s explanation for the denial of Mr. Cannon’s loss of consortium claim.”).

6

this reason alone, the Court should construe this policy language in favor of coverage.” 30
Additionally, the Cannons assert the policy is ambiguous because these two provisions
“when read together, give rise to different or inconsistent meanings, even though each
provision is clear when read alone.” 31
The UIM Insuring Agreement provides that compensatory damages will be paid
for bodily injury. 32 The UIM Insuring Agreement continues with two further conditions:
(1) the bodily injury must be sustained by an insured; and (2) the bodily injury must be
caused by an accident that involves the operation, maintenance, or use of an underinsured
motor vehicle as a motor vehicle. 33 The Cannons assert Mr. Cannon’s loss of consortium
fits within the conditions of the UIM Insuring Agreement because: (1) Mr. Cannon is
seeking compensatory damages for loss of consortium and is legally entitled to collect
these damages from an underinsured motorist who injured Mrs. Cannon; (2) the damages
arise out of a bodily injury sustained by an insured because the bodily injury was
sustained by Mrs. Cannon; and (3) the accident involved the operation or use of an
underinsured motor vehicle as a motor vehicle. 34
The Cannons further assert that the UIM Limits section makes the UIM Insuring
Agreement section ambiguous when read together because the UIM Limits section
“operates to exclude Mr. Cannon from a separate policy limit for his loss of consortium
claim—an interpretation that, if correct, produces a different result than the language [of

30

Plaintiffs’ Cross-Motion for Summary Judgment and Memorandum in Support at 8.

31

Id. at 6 (quoting Farmers Ins. Exch. v. Versaw, 99 P.3d 796 (Utah 2004) (internal citations omitted)).

32

State Farm Policy, docket no. 13-1 at 10, attached as Exhibit A to Plaintiffs’ Cross-Motion for Summary
Judgment and Supporting Memorandum.
33

Id.

34

See Plaintiffs’ Cross-Motion for Summary Judgment and Memorandum in Support at 7.

7

the UIM Insuring Agreement].” 35 Further, the Cannons assert the policy is ambiguous
because State Farm “will pay one ‘Each Person’ limit for all categories or types of
damages, including those of other insureds, due to bodily injury sustained by one
insured.” 36 They say the ambiguity arises because the policy uses the word ‘damages’ as
opposed to ‘claim’. This is a strained reading of the policy.
Thus, State Farm has fulfilled its contractual obligations to the Cannons by
payment of $50,000 as the per person UIM policy limit.37
State Farm’s Policy Language Provides UIM Coverage for Damages
for Bodily Injury and Loss of Consortium is not a Bodily Injury
The relevant section of the policy providing the insuring agreement for UIM coverage
states:
We will pay compensatory damages for bodily injury an insured is legally
entitled to recover from the owner or driver of an underinsured motor
vehicle. The bodily injury must be:
1. sustained by an insured; and
2. caused by an accident that involves the operation, maintenance,
or use of an underinsured motor vehicle as a motor vehicle. 38
Mr. and Mrs. Cannon’s policy provides a definitions section which is located
immediately following the table of contents and description of the policy terms including the
UIM section. 39 The definitions section provides that “certain words and phrases [should be

35

Id. at 8.

36

Id.

37

See Letter from Brian Milne, Claim Representative from State Farm, to Joseph W. Steele (Oct. 5, 2012), docket
no. 12-1, attached as Exhibit B to Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum.
38

State Farm Policy, docket no. 13-1 at 10, attached as Exhibit A to Plaintiffs’ Cross Motion for Summary Judgment
and Supporting Memorandum.
39

See State Farm Policy, docket no. 13-1 at 4, attached as Exhibit A to Plaintiffs’ Cross Motion for Summary
Judgment and Supporting Memorandum.

8

used] throughout the policy,” 40 which would be consistent with basic contract interpretation. The
definition section defines bodily injury: “Bodily Injury means bodily injury to a person and
sickness, disease, or death that results from it.” 41 Neither the Cannons nor State Farm argue that
Mr. Cannon was involved in any way in the collision. Further, neither party disputes that Mr.
Cannon’s claim to State Farm is for loss of consortium. The language of the policy states “[w]e
will pay compensatory damages for bodily injury” 42 and when read together with the definition
as provided in the definition section of the policy would read “we will pay compensatory
damages for bodily injury [meaning] bodily injury to a person and sickness, disease, or death that
results from it.” According to the definitions provided by the policy, Mr. Cannon did not have a
bodily injury and thus did not suffer sickness, disease, or death resulting from his loss of
consortium. Thus, Mr. Cannon did not suffer a bodily injury as defined in the policy and thus is
not entitled to compensatory damages.
This result is further supported by language in Progressive Casualty Ins. Co. v. Ewart in
which the Utah Supreme Court held “that where a loss of consortium claim is not a claim for
bodily injury, it is not subject to the minimum liability limits imposed upon insurers for bodily
injury claims.” 43 Although the issue in Ewart is “whether Utah law imposes an obligation on
insurers to provide a separate liability limit for loss of consortium claims,” 44 the Utah Supreme
Court’s discussion of whether loss of consortium is a bodily injury is instructive: “‘Bodily
injury’ should not be construed broadly enough to encompass a loss of consortium claim as the
40

Id.

41

Id.

42

State Farm Policy, docket no. 13-1 at 10, attached as Exhibit A to Plaintiffs’ Cross Motion for Summary Judgment
and Supporting Memorandum.
43

2007 UT 52, ¶ 1, 167 P.3d 1011.

44

Id. at ¶ 12. In Ewart, the parties stipulated that the policy language was unambiguous so the issue before the court
was to determine what coverage was statutorily mandated, not what the policy provided.

9

[policy holder] would have us conclude. First, ‘bodily’ is commonly understood to refer to,
simply, the ‘body,’ and . . .[a] loss of consortium claim in no way involves a bodily injury to [the
policy holder’s spouse].” 45
Thus, Mr. Cannon’s claim for loss of consortium is not a bodily injury and therefore not
covered within the policy’s UIM Insuring Agreement.
Loss of Consortium Claimants May Not Receive a Separate Policy Limit
In Ewart, Mr. Ewart sustained an injury in an accident caused by another driver and made
a claim for his injury to the tortfeasor’s insurer. 46 Mrs. Ewart was not in the car at the time of the
accident but made a separate claim to the tortfeasor’s insurer for loss of consortium. 47 The
insurer offered to settle with Mr. Ewart for the single person policy limit, but refused to cover the
loss of consortium claim by Mrs. Ewart. 48 The insurer argued the total limit of liability coverage
for Mr. and Mrs. Ewarts’ claims should be the per person limit because both claims arose out of
a single bodily injury sustained only by Mr. Ewart. 49 The Ewarts’ maintained the insurer was
required to provide separate limits to Mr. Ewart for his bodily injury claim and Mrs. Ewart for
her loss of consortium claim. 50 The Court concluded that Mrs. Ewart’s loss of consortium claim
did not have its own liability limit separate from the limit applicable to her husband’s bodily
injury claim because “Utah’s minimum mandatory limits for liability coverage are tied to the
number of bodily injuries or deaths sustained in a motor vehicle accident, not the number of

45

Id. at ¶ 19.

46

Id. at ¶ 3.

47

Id. at ¶ 4.

48

Id. at ¶ 5.

49

Id. at ¶ 6.

50

Id.

10

claims that arise from it.” 51 Because Mr. Cannon’s claim for loss of consortium arises out of a
single bodily injury to Mrs. Cannon, Mr. Cannon is not entitled to a separate UIM policy limit.
Thus, Mr. Cannon is not entitled to a separate policy limit for Mrs. Cannon’s bodily
injury.
CONCLUSION AND ORDER
IT IS THEREFORE ORDERED that Defendant State Farm Mutual Automobile
Insurance Company’s Cross-Motion for Summary Judgment 52 is GRANTED.
IT IS FURTHER ORDERED that Plaintiffs’ William Cannon and Barbara Cannon’s
Cross-Motion for Summary Judgment 53 is DENIED.
IT IS FURTHER ORDERED that SUMMARY JUDGMENT is ENTERED in favor of
Defendant State Farm Mutual Automobile Insurance Company in this case.
IT IS FURTHER ORDERED that the clerk of the court close this case.
Dated October 7, 2013.
BY THE COURT:
____________________________
David Nuffer
United States District Judge

51

Id. at Heading II prior to ¶ 16.

52

Defendants’ Cross-Motion for Summary Judgment and Supporting Memorandum.

53

Plaintiffs’ Cross-Motion for Summary Judgment and Memorandum in Support.

11