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Johnson v. Safeco Insurance Company of Illinois

United States District Court, W.D. Missouri, Western Division

May 28, 2019




         Pending are Plaintiff's Motion for Summary Judgment (Doc. #26), Plaintiff's Motion to Stay (Doc. #28), and Defendant's Motion for Summary Judgment (Doc. #35). For the following reasons, Plaintiff's Motion for Summary Judgment is denied, Defendant's Motion for Summary Judgment is granted, and Plaintiff's Motion to Stay is denied as moot.

         I. BACKGROUND [1]

         On September 16, 2016, Plaintiff Maureen Johnson was involved in a motor vehicle collision. At the time, Plaintiff was operating a 2005 Ford E150 Econoline Van, which was owned by her employer, TestAmerica Environmental Services, LLC. TestAmerica had automobile insurance coverage on the van through Travelers Insurance Company, which provided $1, 000, 000 in underinsured motorist (“UIM”) coverage. Alma Xiloj, the individual driving the vehicle that collided with the van driven by Plaintiff, was insured by Trader's Insurance Company and her policy had a bodily injury liability limit of $25, 000. In addition, Jeffrey Johnson, Plaintiff's husband, had an automobile insurance policy through Defendant Safeco Insurance Company of Illinois. The policy provided coverage for three vehicles: a 2013 Ford F150, a 2005 Ford Focus, and a 2015 Ford Explorer. These vehicles were not involved in the September 2016 collision. For each insured vehicle, the policy provided $250, 000 for each person in underinsured motorist coverage.

         In January 2018, Plaintiff filed a lawsuit in Missouri state court against Xiloj. On May 22, 2018, Plaintiff entered into a covenant not to execute with Xiloj. Prior to agreeing to the covenant not to execute, Plaintiff sought Defendant's consent for her to accept $25, 000, the applicable limit of Xiloj's policy. In the communication to Defendant, Plaintiff's counsel, in addition to asking for Defendant's consent, stated “I presume you have no issues with this - since Traveler's is holding the primary policy.” Doc. #27-9, at 2.[2] Defendant consented and also specified: “As you mention, you would want to secure Travelers' consent as well as they are handling the UIM claim for [Plaintiff] under their primary policy.” Id. at 1. In May 2018, a bench trial was held in the lawsuit against Xiloj. The state court entered a judgment in the amount of $5, 000, 000. As agreed, Trader's paid Plaintiff $25, 000.

         In June 2018, Plaintiff's counsel sent a letter to Defendant and Travelers demanding $1, 000, 000 from each company. In July 2018, Travelers tendered its UIM coverage limit of $1, 000, 000 to Plaintiff. Defendant determined its UIM coverage would apply on an excess basis because Travelers provided primary coverage. According to Defendant, Plaintiff's recovery of UIM insurance could not exceed the highest applicable UIM coverage limit for any applicable policy. Travelers' UIM coverage limit of $1, 000, 000 was greater than the UIM coverage limit in the policy purchased from Defendant. Therefore, Defendant determined Plaintiff's maximum recovery of UIM insurance was $1, 000, 000. Because Plaintiff had already been paid $1, 000, 000, Defendant denied coverage.

         In August 2018, Plaintiff filed this matter seeking a determination of Defendant's obligations under the policy. Doc. #1. Both parties now move for summary judgment. Docs. #26, 35. Plaintiff also filed a motion to stay. Doc. #28.


         A. Standard

         A moving party is entitled to summary judgment on a claim only if there is a showing that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” See Williams v. City of St. Louis, 783 F.2d 114, 115 (8th Cir. 1986). “[W]hile the materiality determination rests on the substantive law, it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Wierman v. Casey's Gen. Stores, 638 F.3d 984, 993 (8th Cir. 2011) (quotation omitted). In applying this standard, the Court must view the evidence in the light most favorable to the non-moving party, giving that party the benefit of all inferences that may be reasonably drawn from the evidence. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588-89 (1986); Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984). However, a party opposing a motion for summary judgment “may not rest upon the mere allegations or denials of the…pleadings, but…by affidavits or as otherwise provided in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e).

         B. Discussion

         Interpretation of an insurance policy is a question of law. McCormack Baron Mgmt. Servs., Inc. v. Am. Guar. & Liab. Ins. Co., 989 S.W.2d 168, 171 (Mo. banc 1999) (citation omitted). In Missouri, insurance policies and insurance provisions for underinsured motorist coverage are governed by the rules of contract.[3] Daughhetee v. State Farm Mut. Auto. Ins. Co., 743 F.3d 1128, 1132 (8th Cir. 2014) (citation omitted). Am. Fam. Mut. Ins. Co. v. Turner, 824 S.W.2d 19, 21 (Mo.Ct.App. 1991) (citation omitted). “The provisions of an insurance policy are read in context of the policy as a whole, ” and “[t]he language in a policy is given its ordinary meaning unless another meaning is plainly intended.” Columbia Mut. Ins. Co. v. Schauf, 967 S.W.2d 74, 77 (Mo. banc. 1998) (citations omitted). If the language is unambiguous, the Court must interpret the policy as written, but if the language is ambiguous, the Court must interpret the policy in favor of the insured. Daughhetee, 743 F.3d at 1133 (citations omitted). “An ambiguity exists when there is duplicity, indistinctness or uncertainty in the meaning of the policy [and] is reasonably open to different constructions.” Gulf Ins. Co. v. Noble Broad., 936 S.W.3d 810, 814 (Mo. banc 1997). The presence of a broad provision for coverage coupled with subsequent narrowing language does not create an ambiguity. Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 162-63 (Mo. banc 2007).

         Plaintiff argues she is entitled to at least $250, 000 (or as much as $750, 000) in UIM insurance from Defendant pursuant to the policy. She argues Defendant is attempting to claim a coverage setoff based on Travelers' payment, and she also contends the policy is ambiguous and confusing. Doc. #27, at 10-20. Defendant claims it is not seeking a setoff, and the policy unambiguously limits UIM insurance when more than one policy provides UIM coverage.

         The Court must turn first to the policy. The policy's “Additional Coverages” section includes UIM. Doc. #1-1, at 38-41. The relevant provisions are as follows:


A. 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:
1. Sustained by that insured; and
2. 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.
Any judgment for damages arising out of a suit brought without our written consent is not binding on us.
We will pay under this coverage only if 1. or 2. below applies:
1. The limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements; or
2. A tentative settlement has been made between an insured and the insurer of the underinsured ...

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