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Warden v. Shelter Mut. Ins. Co.

Court of Appeals of Missouri, Western District, Fourth Division

November 17, 2015

CODY WARDEN, Appellant,

         Decided February 2, 2016.

         Editorial Note:

         Not Final until expiration of the rehearing period. See MO R RCP Rule 84.16 regarding unpublished opinions.

          As Modified.

         Appeal from the Circuit Court of Pettis County, Missouri. Honorable Robert Lawrence Koffman, Judge.

         For Appellant: Mark Kempton, Sedalia, MO.

         For Respondent: William Crawford, Kansas City, MO.

         Before Division Four: Alok Ahuja, Chief Judge Presiding, Thomas H. Newton, Judge, and Charles H. McKenzie, Special Judge. Ahuja, C.J., and McKenzie, Sp.J. concur.


Page 404

         Thomas H. Newton, Judge.

          Mr. Cody Warden appeals from the trial court's summary judgment in favor of Shelter Mutual Insurance Company allowing Shelter to reduce the Underinsured Motorist (UIM) coverage limit by the amount Mr. Warden received from an underinsured motorist's liability insurer via the set-off language, and prohibiting Mr. Warden from stacking and collecting under

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three additional Shelter policies providing UIM coverage.

         This appeal arises from Mr. Warden's suit to recover UIM benefits for injuries he sustained when he was struck by a car as a pedestrian. Mr. Warden sued Shelter, seeking $400,000.00 in UIM coverage under his four Shelter policies. The parties filed cross-motions for summary judgment, stipulating to the following material facts: (1) Mr. Warden was insured for the purposes of UIM coverages under four Shelter policies, each of which provided UIM coverage of $100,000.00 per person and $300,000.00 per accident; (2) Mr. Warden was struck by an " underinsured motor vehicle" operated by Jesse Anglen; (3) Mr. Warden recovered $25,000.00 from Mr. Anglen's liability insurer, and (4) Mr. Warden demanded that Shelter pay $400,000.00 in UIM coverage available under his four policies. In response, Shelter paid Mr. Warden $75,000.00, equaling the $100,000.00 less the $25,000.00 he recovered from Progressive Insurance, Mr. Anglen's insurer. The trial court ruled that Progressive's $25,000.00 payment reduced (set-off) Shelter's $100,000.00 UIM limit and that the four Shelter policies did not stack. This appeal followed.

          Insurance policy interpretations are questions of law that appellate courts review de novo. Seeck v. Geico General Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). Where the trial court granted summary judgment, we also apply a de novo standard of review. Long v. Shelter Ins. Companies, 351 S.W.3d 692, 695-96 (Mo. App. W.D. 2011). " In construing the terms of an insurance policy, this Court applies the meaning which would be attached by an ordinary person of average understanding if purchasing insurance, and resolves ambiguities in favor of the insured." Seeck., 212 S.W.3d at 132 (Mo. banc 2007). " Language is ambiguous if it is reasonably open to different constructions." Id.

         Legal Analysis

          " The purpose of underinsured motorist coverage is to provide insurance coverage for insureds who have been bodily injured by a negligent motorist whose own automobile liability insurance coverage is insufficient to pay for the insured person's actual damages." Wasson v. Shelter Mut. Ins. Co., 358 S.W.3d 113, 117 (Mo. App. W.D. 2011). " To determine whether an insurance policy provides coverage, we look to the insurance contract itself." Long, 351 S.W.3d at 701. " Courts are not to interpret the provisions of an insurance policy in isolation but rather are to examine the policy as a whole." Wasson, 358 S.W.3d at 121.

          " If the language in an insurance contract is clear and unambiguous, this [c]ourt must construe the contract as written. Gavan v. Bituminous Cas. Corp., 242 S.W.3d 718, 720 (Mo. banc 2008). " The policy 'must be given effect according to the plain terms of the agreement, consonant with the reasonable expectations, objective, and intent of the parties." Wasson, 358 S.W.3d at 120 (citing Long, 351 S.W.3d at 701). " We look to definitions in insurance policies to guide our interpretation, but when words or phrases are not defined in the policy, we look to the plain meaning of words and phrases as it would have been understood by an ordinary person of average understanding when buying the policy." Id. (citing Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690 (Mo. banc 2009)). " While ambiguity exists if the term is 'reasonably open to different constructions,'... an unreasonable alternative construction will not render the term ambiguous." Gavan, 242 S.W.3d at 720 (quoting Seeck, 212 S.W.3d at 132). " Courts will not distort the language of an

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unambiguous insurance policy in order [to] create an ambiguity where none exists." Wasson, 358 S.W.3d at 121. " If an insurance policy is unambiguous, we enforce the policy as written." Long, 351 S.W.3d at 701. However, if " the policy is ambiguous, ... the ambiguity will be resolved in favor of the coverage for the insured." Seeck, 212 S.W.3d at 134.

         I. Set-Off Language

         In his first point, Mr. Warden argues that the trial court erred in finding that the set-off language reduced the UIM coverage limit by the amount Mr. Warden received from Progressive because the set-off language is ambiguous. He contends the language is ambiguous because any ordinary person of average understanding would interpret the UIM endorsement to mean that Shelter will reduce the uncompensated damages payable to an insured by any payment from a liability insurer rather than reduce such a payment from the UIM coverage limit.

          " [T]he existence of UIM coverage and the ability of an insurer to set off stated coverage '" are determined by the contract entered between the insured and the insurer." '" Long, 351 S.W.3d at 702 (quoting Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. banc 2009) (quoting Rodriguez v. Gen. Acc. Ins. Co. of Am., 808 S.W.2d 379, 383 (Mo. banc 1991))). Thus, we begin our analysis with Shelter's policy language.

This coverage provides a monetary benefit that supplements the amount paid to an insured when he or she sustains a covered bodily injury. It does not cover claims based on property damage. It is important to note that the sections headed: " LIMITS OF OUR LIABILITY" and " INSURANCE WITH OTHER COMPANIES" reduce the total limits provided under this endorsement by the amount paid to an insured by the person(s) who caused the injury, or paid under another insurance policy.. You should, therefore, purchase this coverage with a monetary limit in the amount you want to ensure is ...

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