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Allied Property and Casualty Insurance Co. v. Bourisaw

United States District Court, E.D. Missouri, Eastern Division

November 16, 2017

ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
KARIN BOURISAW, Defendant. KARIN BOURISAW, Third Party Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Third Party Defendant.

          MEMORANDUM AND ORDER

          SHIRLEY PADMORE MENSAH UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on the Motion for Summary Judgment filed by Third-Party Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). (Doc. 31). State Farm seeks summary judgment on the claim for a declaratory judgment brought against it by Third-Party Plaintiff Karin Bourisaw (“Bourisaw”) and on State Farm's own counterclaim for a declaratory judgment against Bourisaw. Bourisaw has not filed any response.[1] The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc. 24). For the reasons stated below, the Court will grant State Farm's motion for summary judgment.

         I. Factual Background[2]

         The facts are not in dispute. On July 17, 2014, Bourisaw was injured in a car accident while a passenger in a vehicle operated by Penny Carlyon. The vehicle in which Bourisaw was a passenger was rear-ended by a vehicle operated by a driver (the “tortfeasor”), who is alleged to be at fault for the accident. At the time of the accident, the tortfeasor had liability insurance with a limit in the amount of $100, 000 per person. Bourisaw recovered the full limit of the tortfeasor's insurance policy. Two other insurance policies are also relevant. Carlyon had a policy of insurance on her vehicle with Allied Property and Casualty Insurance Company (the “Allied Policy”), with a limit for Underinsured Motorist Coverage in the amount of $100, 000 per person. In addition, Bourisaw had a policy of insurance with State Farm, Policy Number 407 0142-D01-13C (the “State Farm Policy”), with a limit for Underinsured Motor Vehicle Coverage in the amount of $100, 000 per person.

         The instant lawsuit began as a dispute between Allied and Bourisaw over whether Bourisaw was entitled to underinsured motor vehicle coverage under the Allied Policy. The Court has already granted summary judgment in Allied's favor on the claims relevant to that dispute, finding that Bourisaw was not entitled to coverage under the Allied Policy because the tortfeasor's vehicle was not an “underinsured motor vehicle” as defined in the Allied Policy. (Doc. 30).

         On October 16, 2016, Bourisaw filed a third-party complaint against State Farm, seeking a declaratory judgment that she is entitled to underinsured motor vehicle coverage under the State Farm Policy. On March 27, 2017, State Farm filed a counterclaim, seeking a declaratory judgment stating that Bourisaw is not entitled to underinsured motor vehicle coverage under the State Farm Policy. State Farm now moves for summary judgment on Bourisaw's third-party complaint and on its counterclaim against Bourisaw.

         II. Legal Standard

         The standards applicable to summary judgment motions are well settled. 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). See also 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.'” Progressive Cas. Ins. Co. v. Morton, 140 F.Supp.3d 856, 860 (E.D. Mo. 2015) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the movant meets its burden, then the burden shifts to the nonmovant to submit evidentiary materials that “designate specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (quotation marks omitted).

         III. Discussion

         In its motion for summary judgment, State Farm argues that Bourisaw is not entitled to underinsured motorist coverage under the State Farm Policy because the tortfeasor's vehicle is not an “underinsured motor vehicle” under the terms of the State Farm Policy or the applicable law.

         A. Choice of Law

         The Court begins with a discussion of what state's law applies to this dispute. State Farm argues that Illinois law applies, and Bourisaw has filed nothing to indicate that the law of any other state applies. The Court agrees that Illinois law applies.

         The Court's review of the State Farm Policy reveals that it contains a choice-of-law provision stating, “Illinois will control in the event of any disagreement as to the interpretation and application of any provision in the policy . . .” State Farm Policy Booklet, General Terms ¶ 14(a), Doc. 22-3, at 20.[3] However, State Farm does not mention that choice-of-law provision or rely on that provision in making its argument that Illinois law applies; instead, State Farm relies on the choice-of-law principles that apply in the absence of a choice-of-law provision. It is unclear whether State Farm's decision not to mention this provision was merely an oversight, or whether there is some reason why that provision does not apply (or would not be enforceable) in this case. Regardless, even assuming arguendo that the Illinois choice-of-law provision in the State Farm Policy does not require the application of Illinois law, the Court agrees with State Farm that the relevant choice-of-law principles would require the application of Illinois law.

         Where, as here, federal jurisdiction is based on diversity of citizenship, the district court applies the choice of law rules of the state in which it sits. Winter v. Novartis Pharms. Corp., 739 F.3d 405, 410 (8th Cir. 2014); Heating & Air Specialists, Inc. v. Jones, 180 F.3d 923, 928 (8th Cir. 1999). “Missouri has adopted sections 188 and 193 of the Restatement (Second) Conflict of Laws (1971) for determining choice of law issues as they relate to insurance contracts.” Accurso v. Amco Ins. Co., 295 S.W.3d 548, 551 (Mo.Ct.App. 2009) (citing Hartzler v. Am. Fam. Mut. Ins. Co., 881 S.W.2d 653, 655 (Mo.Ct.App. 1994)). Section 188 provides that in the absence of an effective choice of law by the parties, the law that applies is that of the state that “has the most significant relationship to the transaction and the parties under the principles stated in § 6.[4]” Restatement (Second) of Conflict of Laws, § 188(1). “[T]he contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties.” Id. § 188(2). Section 193 provides that the rights created by an insurance contract “are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the transaction and the parties, in which event the local law of the other state will be applied.” Id. § 193. Comment b to Section 193 also states that “[t]he location of the insured risk will be given greater weight than any other single contact in determining the state of the applicable law provided that the risk can be located, at least principally, in a single state” and that “in the case of an automobile liability policy, the parties will usually know beforehand where the automobile will be garaged at least during most of the period in question.” Id. § 193, cmt. b.

         Missouri courts applying the above principles have found that where the parties to a vehicle insurance contract understood that the principal location of the vehicle during the term of the policy would be in a particular state, the law of that state governs a dispute about that insurance contract, at least where other factors do not show that another state has a more significant relationship to the parties and the transaction. See Hartzler, 881 S.W.2d at 655-67 (relying on § 193 and holding that Kansas law applied to a dispute between insureds and insurer where although the automobile accident at issue occurred in Missouri, the insureds were Kansas residents at the time the insurance policy was issued, the policy was denominated “Kansas Family Car Policy” and contained several references to Kansas and Kansas law, and the insured vehicles were registered and principally garaged in Kansas; noting that Kansas was “the principal location of the insured risk” and finding that Kansas had the most significant relationship to the parties and transaction); Accurso, 295 S.W.3d at 552-54 (relying on § 193 and holding that Missouri law applied to an insurance dispute where the motor vehicles at issue were primarily located in Missouri; noting that “the location of the insured risk is given greater weight than any other single contact” and finding that other factors did not show that some other state had a more significant relationship to the parties and the policies at issue).

         Here, the State Farm Policy was issued to a resident of Illinois, living at an Illinois address, suggesting that the parties understood that the vehicle would be located primarily in Illinois. See State Farm Policy Declarations Page, Doc. 22-1, at 1. Bourisaw provides no basis for any contrary finding. Moreover, other factors show that Illinois has a significant relationship to the State Farm Policy: the Policy was issued by an agent with an Illinois address, the policy explicitly references the Illinois Insurance Code and Illinois Department of Insurance, and the ...


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