In American Alternative Insurance Corporation v Williams,Williams was injured while riding as a passenger in an ambulance when it got hit by a city bus. Williams got a $475,000 judgment against the bus company, which paid its limits of $25,000. When he made demand for underinsured motorist coverage, his insurer, American, said there wasn’t any coverage because the policy definition of an underinsured motor vehicle doesn’t include government owned vehicles, like the bus that hit Williams. Under Arkansas law, commercial policies, like the one involved, do not have to offer uninsured or underinsured motorist coverage. And excluding government vehicles from the definition of underinsured motor vehicles was not against Arkansas public policy.
In Nationwide v. Dugger, Tanya Dugger’s daughter was killed when the vehicle she was riding in was struck by a train. Tanya Dugger had an automobile policy with Nationwide that insured two vehicles. The Policy contained anti-stacking language purporting to limit Tanya to a single payment of $25,000 for her UM coverage. The trial court concluded that the anti-stacking language was unenforceable because it violated the public policy of this state established by § 379.203. The appellate court agreed, and affirmed the judgment of the trial court.
Tanya’s policy showed two covered vehicles with a single UM premium. The policy had an anti-stacking clause. When two or more vehicles are provided with UM coverage via a single policy, it is well-settled that the public policy expressed by § 379.203.1 prohibits an insurer from limiting a named insured to recovering only one of the UM coverages, even if the policy contains unambiguous language to that effect. Cameron Mutual Ins. Co. v. Madden, 533 S.W.2d 538, 544-45 (Mo. banc 1976). It didn’t matter if only one premium was charged for the coverage. Public policy requires an insurer to provide UM coverage, but the statute does not condition the mandatory nature of such coverage upon the explicit payment of a premium for it. The court contrasted this case (involving UM — uninsured motorist coverage) with others involving underinsured motorist, liability or med-pay coverages.
In Nationwide Ins. Co. of America v. Thomas, the court found that contradictory policy language entitled Thomas to recover excess damages.
Thomas was injured as a passenger in an automobile accident. Thomas’ damages exceeded $150,000.00. The driver of the vehicle that struck Thomas had automobile liability insurance with a bodily injury liability of $100,000 per person. The driver of Thomas’s vehicle had underinsured motorist coverage (UIM) from Nationwide a $50,000 per person limit. The Nationwide policy stated:
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 an “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.”
The policy defined “[u]nderinsured motor vehicle” as a vehicle whose “limit for bodily injury liability is less than the limit of liability for this coverage.” The underinsured motorist endorsement also contained the following clause:
LIMIT OF LIABILITY
A. The limit of liability shown in the Declarations for each person for Underinsured Motorists Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of “bodily injury” sustained by any one person in any one accident. Subject to this limit for each person, the limit of liability shown in the Declarations for each accident for Underinsured Motorists Coverage is our maximum limit of liability for all damages for “bodily injury” resulting from any one accident. This is the most we will pay regardless of the number of:
2. Claims made;
3. Vehicles shown in the Declarations; or
4. Vehicles involved in the accident. A vehicle and attached “trailer” are considered one vehicle. Therefore, the Limit of Liability will not be increased for an accident involving a vehicle which has an attached “trailer.”
E. Any amount otherwise payable for damages under this coverage shall be reduced by all sums paid because of bodily injury by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A of the policy.
These provisions entitled Thomas to recover in excess damages. This is because the declarations page made an unqualified promise to pay $50,000 per person in underinsured motorist coverage without further limitation, then attempted to limit its liability by off-setting coverage against damages recovered from a tortfeasor. This contradiction meant the entire policy was ambiguous because “any contradictory language anywhere in a policy renders it ambiguous.” Miller v. Ho Kun Yun, 400 S.W.3d 779, 792 (Mo. App. W.D. 2013).
Where an insurance policy is ambiguous, it is read with heightened scrutiny for language suggesting the coverage is excess, as opposed to gap. Here, the contradictory language meant that Thomas was entitled to $50,000 from the policy’s unqualified promise to pay. Furthermore, the Court stated that to limiting Thomas’ recovery rendered the UIM policy illusory despite that fact that the insured paid for it. Illusory insurance policies are disfavored Missouri. Thus, ambiguous policy language will be construed against the insurance company to entitle the insured to coverage.
In Martin v. Auto Owner’s Insurance, summary judgment to the insurance company was reversed by the Missouri Court of Appeals. Dylan, a minor, was struck by Loyd when Dylan was crossing the road to board a school bus. Dylan’s damages exceeded $300,000, and Loyd’s paid $100,000. Dylan’s parents, the Martins, had underinsured motorist coverage (UIM) from Auto Owners with limits of $100,000 per person, $300,000 per accident. The Policy insured three automobiles owned by the Martins. The Policy declaration pages list UIM coverage separately under each vehicle and show a separate premium charged for each vehicle. The Policy declarations pages also list “$100,000 person/$300,000 occurrence” under each vehicle and next to each of the three separate UIM premiums. Everyone agreed that Dylan was entitled to $100,000 UIM, but disputed whether he was entitled to stack the coverage for a total of $300,000.
The policy said
When Underinsured Motorist Coverage applies to two or more automobiles, the limit of liability stated for “each person” shall not be stacked to provide higher limits of liability than would apply if coverage applied to only one automobile.
But the other insurance clause said
The Underinsured Motorist Coverage provided by this endorsement to persons occupying your automobile shall be primary, and with regard to persons occupying any other automobile, such coverage shall be excess over all other applicable underinsured motorists coverage. However, if there is other underinsured motorist coverage which applies on a primary basis to your automobile, we shall pay only our share of the damages. Our share shall be the ratio of our limit of liability to the total limits of all underinsured motorist coverage which applies. Total damages payable shall be considered not to exceed the limit of the applicable policy which has the highest limit of liability for underinsured motorist coverage.
The trial court granted summary judgment in favor of Owners, reasoning that the Policy “leaves no question as to the limits of liability regardless of how the premiums were charged. The policy clearly and unequivocally reads that the charging of multiple premiums does not operate to permit stacking. The anti-stacking language in the UIM endorsement reinforces that conclusion. At the time of the purchase of the policy, the insured could not have reasonably had any other understanding.”
The appellate court reversed, finding the two clauses ambiguous, because the other insurance clause allowed stacking while the limits of liability clause did not.
Stacking is defined as an insured’s ability to obtain benefits either from more than one insurance policy, as when the insured has two or more separate vehicles under separate policies, or from multiple coverages within a single policy, as when an insured has one policy that covers more than one vehicle. Niswonger, 992 S.W.2d at 313. “UIM coverage [is] in the nature of floating, personal accident insurance rather than insurance on a particular vehicle, and thus follow[s] the insured individual wherever he goes.” Id. The appellate court cited Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132 (Mo. banc 2009) which found a similar policy ambiguous: The Ritchie court found that when the policy was read as a whole, the policy’s anti-stacking provisions, which might normally and otherwise apply, could be reasonably interpreted as not applying in the special situation where the insured is injured while occupying a non-owned vehicle and there are multiple underinsured motorist coverages.
* * * * *
Just as in Ritchie, a reasonable reading of the provisions in the instant Policy “suggest that the policy’s anti-stacking provisions, which might normally and otherwise apply, do not apply in the special situation where the insured is injured while occupying a non-owned vehicle. Rather, an ordinary person of average understanding reasonably could interpret this other insurance provision to mean that when an injured insured is occupying a non-owned vehicle and there are multiple underinsured motorist coverages, as it is conceded there are here, then each of the underinsured motorist coverages are excess to the other, and, therefore, may be stacked.”
307 S.W.3d at 137-38 (internal quotations omitted). We find the rule articulated in Ritchie and Manner applicable to the present case: the promise of excess coverage in the other insurance provision read in conjunction with the anti-stacking provision and disclaimer purporting to take away such coverage create an ambiguity to be resolved in favor of the insured, who, without contest, was a person “occupying any other automobile” at the time of his injury. Stacking of the Martins’ underinsured motorist coverage for each of their three vehicles insured by the Policy is permitted.
The trial court erred in granting summary judgment in favor of the insurance company.
In Gohagan v. Cincinnati Ins. Co., Gohagan was hurt when a tree fell on him. Campbell was trying to remove the tree when it fell. The Gohagans reached a settlement with Campbell, which included Cincinnati’s payment of the $1,000,000 per-occurrence limit under the Cincinnati issued
CGL (Commercial General Liability) policy held by Campbell and his wife. However, the Gohagans reserved the right to litigate whether Campbell’s BOP (Business Owners Package) policy, which also had a $1,000,000 each-occurrence limit, provided additional coverage. The Gohagans claimed coverage under both the BOP and CGL policies and that the policies’ anti-stacking provisions are ambiguous and therefore must be construed to allow coverage up to the $1,000,000 each-occurrence limit of both policies, for a total of $2,000,000 of coverage. On summary judgment, the trial court found that, even if both policies issued by Cincinnati covered Mr. Gohagan’s injury, the terms of those policies prohibited a single injury from giving rise to more than the $1,000,000 in coverage benefits the Gohagans had already received under the CGL policy. The Eighth Circuit affirmed.
The BOP policy’s anti-stacking provision, labeled “Two or More Policies Issued by Us,” provides:
If this policy and any other policy issued to you by us or any company affiliated with us apply to the same “occurrence” or “personal and advertising injury” offense, the aggregate maximum limit of insurance under all the policies shall not exceed the highest applicable limit of insurance under any one policy.
The anti-stacking provision of the CGL policy, also labeled “Two or More Coverage Forms or Policies Issued by Us,” provides:
If this Coverage Part and any other Coverage Form, Coverage Part or policy issued to you by us or any company affiliated with us apply to the same “occurrence” or “personal and advertising injury” offense, the aggregate maximum limit of insurance under all the Coverage Forms, Coverage Parts or policies shall not exceed the highest applicable limit of insurance under any one Coverage Form, Coverage Part or policy.
The Gohagans claimed the undefined term aggregate maximum limit of insurance made the clause ambiguous, as it could mean that $1 M from each policy was the aggregate. But this ignored the other language which said that the coverage would not exceed the highest limit of any one policy.
Moreover, the other insurance clause applied when there were policies issued by different insurers, not policies issued by the same insurer.
Summary judgment to the insurer was affirmed.
In Grinnell Mutual Reinsurance Company v. Rambo, Rambo and Reynolds were sued for nuisance and other harms caused by their poultry and swine farms. The trial court granted summary judgment to the insurer because the pollution liability exclusion and the business activities and custom feeding exclusions were unambiguous and precluded coverage for the claims against them. The Eighth Circuit affirmed.
In Roller v. American Modern Home Ins. Co., American refused to pay for property fire damage to Roller’s garage where the fire was started by Mr. Roller in a suicide attempt. Some investigation was done, and the insured was advised more investigation was necessary. The insured was told there was a possibility that American would make a partial payment on the loss. A reservation of rights letter was sent, informing the insureds of their duty to cooperate with the investigation.
Despite repeated requests, the Rollers did not submit to the requested examinations under oath. The Rollers did not produce all documents requested by American. The Rollers requested documents from American, but not all documents were produced. The Rollers then filed a declaratory judgment action seeking coverage. The trial court ruled against the insureds and in favor of the insurer, American, on all claims.
The Rollers claimed that American had “promised to pay” the loss and forfeited its right to deny coverage. But the alleged promise to pay had no consideration, and thus was not binding. Further, there was no “promise” – the agent had said there was a possibility of payment, not that there would be a payment. The statement was too indefinite to support an oral contract. There was no waiver, and waiver may not be used to create coverage where it does not exist.
The Rollers claimed American’s demands regarding their examinations under oath were unreasonable, and that therefore, the Rollers did not have to submit to examinations under oath.
The Rollers assert that American acted unreasonably by making overly broad demands for production of documents and refusing to provide documents that contained Mr. and Mrs. Roller’s statements. In addition, they argue that the trial court ruling was in error because American failed to make another request for an examination after the trial court declared and limited the scope of American’s document request and because American failed to establish prejudice.
The failure to submit to an examination under oath was a material breach of the cooperation clause. Depositions and lawsuit discovery is no substitute for the insured’s original cooperation. The Rollers attorney refused to allow the Rollers to attend their examinations under oath until document discovery was resolved – despite repeated requests. “Compliance with an examination request is not generally contingent on disputes over the scope of document requests.”
American established the Roller’s material breach of the cooperation clause with respect to their obligation to submit to an examination. American exercised reasonable diligence in attempting to secure the Rollers’ cooperation through multiple attempts at scheduling an examination. The Rollers instead deflected all examination requests, relying on a document dispute and later providing a deposition in conjunction with the claim’s litigation. American has clearly demonstrated prejudice. “By commencing this action on the Policy without submitting to an examination under oath, Plaintiff denied Defendant the opportunity to both complete its investigation and to issue a ruling on the claim.”
The Unfair Claims Settlement Practices Act does not create an implied covenant of good faith and fair dealing. It does not create a private right of action.
The Rollers claimed the insurance should cover the loss because Mr. Roller was insane at the time he set fire to the garage, claiming Missouri law provides that an intentional act committed while insane is an accident. The burden of proof for the claim of insanity was on the Rollers. It was undisputed that Roller under stood he was setting a fire and he intended to do so. Thus, there was no coverage under the policy. Wiles, 215 F. Supp. 2d at 1032. Therefore, the trial court properly entered judgment in favor of American on this point. Point two is denied.
In Soseeah v. Sentry Insurance, a plaintiff class action certification was reversed and remanded for further consideration. The issue was UM rejections. The New Mexico Supreme Court had ruled that UM rejections below the liability limits had to meet certain requirements and the duty to meet those requirements were on the insurance company. After these rulings, plaintiffs sued Sentry, claiming there was no valid rejection of coverage and the notices from the insurance company were inadequate.
certification of the proposed class was “desirable and proper because there [we]re questions of law and fact . . . common to all members of the Class,” including whether Sentry’s “acts and practices” amounted to “a breach of its contractual obligations with respect to its New Mexico policyholders,” “breached the implied covenant of good faith and fair dealing with respect to the policies issued to New Mexicans,” and “constitute[d] unfair or deceptive trade practices or unconscionable trade practices.”
The 10th Circuit looked at whether the insurer (Sentry) had had violated any recognized legal duty. It found that there was no violation to the extent of breaches occurring after the sale; but found there was a violation in relation to the sale of the policies. On remand, the trial court was free to consider this. As to the bad faith claim, the trial court found there was no injury for failing to notify insureds of the change in UM law where no claim was made. There was no mention of insureds who failed to make a claim because they thought they had rejected UM coverage.
There were several sub-classes certified. Despite the conclusion that the general class certified by the district court fails to meet the commonality requirement of Rule 23, the sub-classes might independently satisfy those requirements. On remand, the trial court is to apply the Rule 23 factors to the sub-classes.
In Kentucky Bluegrass Contracting, LLC v. Cincinnati Insurance Co., 2015 OK CIV APP 100, the trial court erred in finding that Kentucky law applied to the claim — but the error was harmless since the result was the same under either Oklahoma or Kentucky law. Kentucky Bluegrass Contracting (KBC) did some electrical work at a barracks in Ft. Sill. KBC hired workers from CLP. But the work was rejected, so KBC didn’t pay CLP. Lawsuits, claims, cross claims, counterclaims ensued. There was a breach of contract claim filed in federal court against KBC. When Cincinnati didn’t defend KBC, KBC sued Cincinnati in state court for bad faith and breach of contract. Cincinnati filed a motion for summary judgment, claiming that Kentucky law applied and that faulty workmanship was not an occurrence under its CGL policy. The trial court agreed. The Court of Civil Appeals affirmed on other grounds.
The trial court erred in applying Kentucky law. Cincinnati “failed to demonstrate an actual conflict of law between that state and Oklahoma at the time relevant for deciding this case, i.e., when Insurer denied KBC’s request for a defense to the cross-claim asserted against it in the federal case and for coverage of its claim.”
Next, the Court of Civil Appeals noted there was a conflict of authority as to whether faulty workmanship claims were an occurrence under a CGL (commercial general liability) policy. So, the court avoided that issue by finding that the contractual liability exclusion applied to preclude coverage.
Assuming arguendo the alleged “property damage” in this case was caused by an “occurrence” as defined by the Policy,12 any coverage provided by the CGL Policy’s Insuring Agreement is excluded by the Policy’s “Contractual Liability” exclusion. In relevant part, the Policy provides “[t]his insurance does not apply to:”
b. Contractual liability
“Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) That the insured would have in the absence of the contract or agreement; or
(2) Assumed in a contract that is an “insured contract”, provided the bodily injury or property damage occurs subsequent to the execution of the contract or agreement. When a claim for such bodily injury or property damage is made, we will defend that claim provided the insured has assumed the obligation to defend such claim in the insured contract. Such defense payment will not reduce the limits of insurance. (Italics added.)
The COCA cited Dodson v. St. Paul Ins. Co., 1991 OK 24, ¶ 5, 812 P.2d 372, 374, as finding a contractual liability exclusion “removes from coverage any cause of action grounded upon a liability arising ‘under contract or agreement . . .'” The COCA also cited Alfalfa Electric Cooperative, Inc. v. Mid-Continent Casualty Company, 2015 OK CIV APP 53. There are no claims of negligence which would take the claim outside the contractual exclusion. Summary judgment to the insurer was affirmed.
In Wolfe Automotive v. Universal Underwriters, Wolfe repossessed the Jacksons’ car when they missed payments. The Jacksons sued, claiming that Wolfe violated state law by requiring the Jacksons to pay $25 for an accounting, when they were entitled to a free accounting under Missouri law. Wolfe had an insurance policy with Universal which covered wrongful repossession. But the Jacksons admitted they were behind on their payments, and did not sue for wrongful repossession – Wolfe was sued for violation of Missouri laws related to the sale of the collateral.
Universal said the claim wasn’t covered – the allegedly deficient notices were not wrongful repossessions as that term is meant in the policy. The trial court agreed and the Eighth Circuit affirmed.
The issue is whether the meaning of “repossession” to an ordinary insured sweeps in the procedures required by statute for disposition of the collateral.
Like the trial court, the Eighth Circuit said no. Summary judgment in favor of the insurance company was affirmed. The policy wasn’t ambiguous, and there was no duty to defend or to indemnify the insured.