FILED
United States Court of Appeals
Tenth Circuit
December 14, 2009
PUBLISH
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
NATALIE LONG, Individually, as
Heir at Law, and as Special
Administrator of the Estate of
CHARLES RHOTEN, JR., a Deceased
Minor, and as Parent and Natural
Guardian of JENNIFER RHOTEN, a
Minor,
Plaintiff-Appellant,
v. No. 07-3285
ST. PAUL FIRE AND MARINE
INSURANCE COMPANY,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D.C. NO. 05-CV-1272-JTM)
J. Darin Hayes (Deborah B. McIlhenny with him on the briefs), Hutton & Hutton,
Wichita, Kansas, for Appellant.
Marc A. Powell (Michael L. Baumberger with him on the brief) Powell, Brewer &
Reddick, LLP, Wichita, Kansas, for Appellee.
Before MURPHY, SEYMOUR, and TYMKOVICH, Circuit Judges.
TYMKOVICH, Circuit Judge.
In this diversity action based on Kansas law, Natalie Long seeks uninsured
motorist benefits for her children, who were severely injured in a one-car
accident. The uninsured teen driver, a friend of Long’s children, did not have
permission to drive the truck involved in the accident.
After the district court dismissed Long’s claims against the vehicle owner’s
insurance company (St. Paul Fire and Marine Insurance), Long added her own
insurance company (American Standard Insurance Company of Wisconsin) as a
defendant. American Standard subsequently moved for summary judgment, lost,
and decided to settle Long’s claims. Despite the settlement, Long continues to
seek additional uninsured motorist (UM) benefits from St. Paul.
On appeal, Long challenges the dismissal of her claims against St. Paul.
She contends the Kansas uninsured motorist statute, Kan. Stat. Ann. § 40-284(a)
(2007), requires the St. Paul policy to provide UM coverage for her children. She
also asserts that even if the statute does not require UM coverage, the language of
the St. Paul policy itself provides coverage. According to Long, because St. Paul
denied liability coverage for the accident under the nonpermissive user provision
in its policy, the pickup truck involved in the accident became an “uninsured
vehicle,” triggering the St. Paul UM coverage.
We conclude the truck was not an uninsured vehicle for purposes of the St.
Paul policy, under either the Kansas Statute or the policy’s relevant language.
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Exercising jurisdiction under 28 U.S.C. § 1291, we therefore AFFIRM the district
court’s entry of judgment in favor of St. Paul.
I. Background
A. The Accident
The accident occurred when a group of underage teenagers were joyriding
in a pickup truck. The truck belonged to a construction company owned by the
fifteen-year-old driver’s father. Even though he was unlicensed, the driver’s
parents would occasionally allow him to drive the truck to and from school, work,
and home. On the day of the accident, however, his parents specifically
instructed him not to use the vehicle. St. Paul insured the truck under a general
liability insurance policy it issued to the father’s construction company.
At the time of the accident, Long’s children, Charles Rhoten, Jr. (C.J.) and
Jennifer Rhoten, were riding in the truck’s bed. The driver lost control of the
truck while turning onto a dirt road, and the vehicle swerved into a ditch and
rolled, landing on its side. C.J. and Jennifer were ejected from the truck bed and
suffered serious injuries. Tragically, C.J. died from his wounds.
B. The St. Paul Policy
The St. Paul policy insured the general liabilities of the construction
company owned by the driver’s father, including liabilities arising from the use of
“covered autos.” The policy’s coverage limit for a single car accident was
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$1,000,000. Neither party disputes the truck involved in the accident was a
“covered auto” under the policy.
In the “Auto Liability Protection” portion of the policy, under a heading
entitled “Who is Protected Under This Agreement,” the policy stated:
Any permitted user. Any person or organization to
whom you’ve given permission to use a covered auto you
own, rent, lease, hire or borrow is a protected person.
Aplt. App. at 65. Pursuant to this provision, St. Paul denied liability coverage for
the driver’s operation of the pickup truck on the day of the accident. In its letter
to the teen driver’s parents denying liability coverage, St. Paul stated, “[the
driver] admits to have previously taken the keys to the vehicle he was driving . . .
without the knowledge or permission of you, as his parents, or anyone associated
with [the construction company].” Doc. 29, Amended Compl., Ex. B. Based on
these facts, St. Paul concluded the driver “was not a permissive user and therefore
no coverage is provided to him under the . . . automobile policy.” Id.
But St. Paul’s denial of liability coverage did not answer whether the
policy’s UM coverage was triggered by the accident or whether the coverage
would be available to C.J. and Jennifer. Indeed, the denial of liability coverage
undergirds Long’s argument that the UM coverage applies.
In general, under the UM coverage, St. Paul agreed to “pay all sums any
protected person is legally entitled to recover from the owner or driver of an
uninsured or underinsured vehicle.” Aplt. App. at 79. Both C.J. and Jennifer
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were potentially “protected persons” under this UM coverage because they were
riding in a “covered auto.” Id. at 81. But even assuming C.J. and Jennifer were
protected persons, the question remains whether the truck at issue was
“uninsured” at the time of the accident.
The policy defines “uninsured vehicle” as including a vehicle “for which an
insurance or bonding company denies coverage.” Id. at 80. Thus, Long argues
St. Paul’s denial of liability coverage for the accident made the truck an uninsured
vehicle such that C.J. and Jennifer could recover UM benefits.
C. Legal Proceedings
Several months after the accident, Natalie Long—C.J. and Jennifer’s
mother—obtained counsel and sent a demand letter to St. Paul. St. Paul denied
UM coverage.
In its letter denying UM coverage, St. Paul stated, “We have previously
denied coverage responsibility for any claims against the liability of the driver of
the vehicle at issue, because that person was not a permitted driver . . . .
However, that denial of coverage did not mean that the vehicle itself was an
uninsured vehicle . . . .” Doc. 29, Amended Compl., Ex. H. St. Paul went on to
explain that it was “not denying that there is coverage for this vehicle. We have
denied coverage for the driver who caused the accident. Kansas law recognizes
this difference.” Id.
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Long disagreed with St. Paul’s interpretation of Kansas law, as well as its
interpretation of the policy’s UM provisions, and filed suit. In due course, Long
moved for summary judgment, arguing Kansas law mandated UM coverage for
her children on the facts presented, and even if such coverage was not statutorily
mandated, the St. Paul policy nevertheless provided it. See Long v. St. Paul Fire
& Marine Ins. Co., 423 F. Supp. 2d 1219 (D. Kan. 2006). The court denied
Long’s motion in relevant part, 1 stating: “Kansas law does not . . . requir[e]
uninsured motorist coverage [under the St. Paul policy] in cases such as that
presented here. Nor can the court accept plaintiff’s argument . . . that the
language of the policy nevertheless mandates coverage.” Id. at 1227. After
receiving this favorable ruling, St. Paul moved for judgment on the pleadings and
dismissal. The court granted its motions.
Subsequently, Long added her own insurer, American Standard, as a
defendant. Long’s policy with American Standard included C.J. and Jennifer as
insured parties, and Long sought UM coverage under that policy on behalf of her
children. American Standard moved for summary judgment, but this time the
district court ruled in favor of Long, holding that the American Standard policy
did not unambiguously deny coverage under the facts of the case. Long v. Am.
1
The district court partially granted Long’s summary judgment motion,
holding that St. Paul could not deny UM coverage based on a separate
“unauthorized use” exclusion in the policy. See Long, 423 F. Supp. 2d at 1225.
Neither party appeals that ruling.
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Standard Ins. Co. of Wis., 483 F. Supp. 2d 1099, 1103 (D. Kan. 2007). In light of
this ruling, American Standard opted to settle Long’s claim, and paid out the full
extent of her policy’s UM coverage—$100,000.
Despite this recovery, Long appeals, claiming the district court erred in
granting judgment on the pleadings and dismissing her claims against St. Paul. 2
II. Analysis
We review the district court’s grant of judgment on the pleadings and its
dismissal of Long’s claims under the same de novo standard. Corder v. Lewis
Palmer Sch. Dist. No. 38, 566 F.3d 1219, 1223 (10th Cir. 2009). We assume
Long’s allegations are true and ask whether the pleadings state a claim for relief
that is facially plausible, not merely speculative. Id. Because this is a diversity
case, we must “ascertain and apply the state law” to determine the plausibility of
Long’s claims. Rusakiewicz v. Lowe, 556 F.3d 1095, 1103 (10th Cir. 2009)
(quoting Wade v. EMCASCO Ins. Co., 483 F.3d 657, 665 (10th Cir. 2007)). Here,
2
In addition to appealing the dismissal of her claims against St. Paul, Long
also appeals the district court’s denial of her motion for summary judgment on
those claims. In general, “the denial of a motion for summary judgment is not a
final order and is therefore usually not appealable.” Utah Animal Rights Coal. v.
Salt Lake County, 566 F.3d 1236, 1239 n.1 (10th Cir. 2009). But once the district
court enters a final order, its earlier interlocutory orders merge into the final
judgment and are reviewable on appeal. See McBride v. CITGO Petroleum Corp.,
281 F.3d 1099, 1104 (10th Cir. 2002). Here, the final order at issue granted St.
Paul’s motion for judgment on the pleadings and its motion to dismiss. Because
we conclude this final order correctly applied governing Kansas law, we
necessarily find that the court’s previous order denying summary judgment for
Long was proper, and we decline to review that order separately.
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the relevant state law—the law of Kansas—requires us to analyze the case using a
two-stage inquiry.
First, we ask whether the Kansas uninsured motorist statute mandates
coverage under the facts presented. If so, the case ends there—“[t]he provisions
of the statute are to be considered a part of every automobile policy in this state.”
State Farm Mut. Auto. Ins. Co. v. Cummings, 778 P.2d 370, 373 (Kan. Ct. App.
1989), abrogated on other grounds, Cashman ex rel. Cashman v. Cherry, 13 P.3d
1265 (Kan. 2000). But if the Kansas statute is inapplicable, we must proceed to
an analysis of the St. Paul policy itself: “to the extent [the policy] does not
conflict with or attempt to diminish or omit the statutorily mandated coverage, it
would be controlling as between the parties.” Id.; see also Halsey v. Farm
Bureau Mut. Ins. Co., 61 P.3d 691, 695 (Kan. 2003) (employing the two-stage
approach).
A. The Kansas UM Statute
Kansas law requires car insurance to protect against accidents caused by
uninsured motorists:
No automobile liability insurance policy . . . shall be
delivered or issued [in Kansas] . . . unless the policy
contains . . . a provision . . . in such automobile liability
insurance policy sold to the named insured for payment of
part or all sums which the insured or the insured’s legal
representative shall be legally entitled to recover as
damages from the uninsured owner or operator of a motor
vehicle . . . .
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Kan. Stat. Ann. § 40-284(a) (emphasis added). According to the Kansas Supreme
Court, “[t]he purpose of K.S.A. 40-284 is to provide the individual who is
covered by the standard automobile liability policy with a right against his or her
own insurer equal to that the insured would have against the uninsured . . .
tortfeasor.” O’Donoghue v. Farm Bureau Mut. Ins. Co., 66 P.3d 822, 828 (Kan.
2003) (quoting Rich v. Farm Bureau Mut. Ins. Co., 824 P.2d 955, 959 (Kan.
1992)).
Long argues the statute must be liberally construed in favor of coverage
and should be read to require St. Paul to cover her children’s injuries. Some
Kansas cases appear to support this contention since “the uninsured and
underinsured motorist statutes should be liberally construed to provide broad
protection to the insured.” Jones v. Auto. Club Inter-Ins. Exch., 981 P.2d 767,
769 (Kan. Ct. App. 1999); see also Rich, 824 P.2d at 959 (“The purpose of the
legislation . . . is to fill the gap inherent in motor vehicle financial responsibility
and compulsory insurance legislation. This coverage is intended to provide
recompense to innocent persons . . . .”). But this is a general statement of policy,
and must yield to specific statutory requirements.
As an initial matter, § 40-284(a) does not require that a tortfeasor’s
insurance policy protect an innocent accident victim—it only requires that the
injured person’s policy provide UM coverage. Indeed, the language of § 40-
284(a) mandates UM coverage only “in such automobile insurance policy sold to
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the named insured.” (emphasis added). We therefore look not to the St. Paul
policy covering the pickup truck, but to the American Standard policy that insured
Long and her children from injuries caused by uninsured motorists. The district
court concluded that unlike the St. Paul Policy—which, under the facts of this
case, clearly “excluded coverage for non-permissive users”—the American
Standard policy did not unambiguously deny coverage for Long’s children. See
Long, 483 F. Supp. 2d at 1102–03. Of course, whether the Kansas UM statute or
the relevant policy language mandated coverage under the American Standard
policy is a legal question not before us—that issue has been settled by the parties.
But at the very least, Long’s children recovered benefits from their own insurer to
bridge the gap in coverage left by the St. Paul permissive user exclusion. The
purpose of § 40-284(a) therefore appears to have been satisfied in this case.
Moreover, Kansas courts have not construed the statute to mandate that a
vehicle owner’s insurance policy provide UM coverage for nonpermissive users
of the owner’s insured vehicles or passengers of nonpermissive users. 3 The
3
Again, this says nothing regarding the coverage potentially provided by
the passenger’s automobile insurance policy. As one treatise has noted,
“[p]ersons who are either named insureds or family members residing with a
named insured . . . are afforded relatively comprehensive protection by the
provisions used in most uninsured motorist insurance coverages.” 1 Alan I.
Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance
§ 4.2 at 69 (Rev. 3d ed. 2005). Thus, UM coverage is generally available when
named insureds are “operating or are passengers in a motor vehicle, as well as
when they are engaged in any other activity such as walking, riding a bicycle,
(continued...)
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Kansas Supreme Court faced an insurance dispute similar to this one in Farmers
Insurance Co. v. Schiller, 597 P.2d 238 (Kan. 1979). In that case, the owner of a
pickup truck, who was arranging to sell the truck, lent the vehicle to a potential
buyer for the evening, instructing that only the buyer was allowed to drive. That
night, the buyer—without the owner’s permission—turned the keys over to
Schiller and a friend.
It is unclear who drove the truck that night—Schiller or the friend—but
someone wrecked it, and Schiller sustained personal injuries. The owner’s
insurer, Farmers, filed an action for declaratory judgment to determine whether it
was required to cover Schiller, though neither he nor his friend had permission to
drive the truck.
Schiller argued that because Farmers denied him personal injury benefits,
§ 40-284(a) mandated that he receive UM coverage. The Kansas Supreme Court
disagreed. It held, “[t]he uninsured motorist statute was not enacted to provide
coverage for everyone. . . . [A] guest passenger of [an] unauthorized user, which
passenger does not fall within the definition of ‘insured’ contained in the [vehicle
owner’s] policy, is not within the coverage mandated by the uninsured motorist
statute . . . .” Schiller, 597 P.2d at 243.
3
(...continued)
driving a hay wagon, or even sitting on a front porch.” Id. at 70.
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In a later case, Hilyard v. Clearwater, 729 P.2d 1195 (Kan. 1986), the
Kansas Supreme Court reaffirmed that the mere denial of general insurance
coverage does not trigger the UM statute. There, an insurance company denied
liability benefits for the family members of several insured parties pursuant to a
policy’s household exclusion. The plaintiffs argued this denial of coverage
triggered statutorily-required UM benefits. But the Kansas Supreme Court held
that § 40-284(a) did not mandate UM coverage under those facts: “The statute
does not contemplate a situation where the ‘uninsured owner or operator’ is the
owner of an automobile liability insurance policy.” Hilyard, 729 P.2d at 1200.
Long argues Hilyard has little precedential value because the Kansas Court
of Appeals purported to limit Hilyard to its particular facts. See Cummings, 778
P.2d at 375. Long’s argument is incorrect for several reasons. First, as a federal
court sitting in diversity, we apply the law as set forth by the relevant state’s
highest court. The decisions of lower state courts, while persuasive, are not
dispositive. See Wade, 483 F.3d at 665–66.
Second, although Cummings revisited the holding of Hilyard, it ultimately
arrived at a similar conclusion: “[A]n offending vehicle is not to be considered as
‘uninsured’ when the driver [or owner] of that vehicle is covered by the requisite
minimum liability coverage.” Cummings, 778 P.2d at 376; see also id. at 374 (if
“either the owner or driver” of an automobile has purchased minimum coverage,
the “vehicle . . . is not ‘uninsured’”). And Cummings never suggested Hilyard
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was incorrectly decided. Unlike Cummings, Hilyard concerned the operation of a
valid insurance policy exclusion; the Kansas Supreme Court denied UM coverage
in Hilyard because to do otherwise would have “emasculate[d] the . . . exclusion
clause in the policy.” Cummings, 778 P.2d at 375. In contrast, no policy
exclusions were implicated in Cummings—the only question was the definition of
an “uninsured” vehicle. For precisely this reason, the court in Cummings found
Hilyard did not apply to the facts of that case. 4
Schiller and Hilyard thus establish that the Kansas statute does not mandate
UM coverage for Long’s children under the St. Paul policy. The teen driver here,
like the driver in Schiller, was not permitted to drive the truck at the time of the
accident, and Long does not argue otherwise. Consequently, as “guest
passenger[s] of the unauthorized user,” Long’s children are not entitled to UM
benefits from St. Paul under § 40-284(a). Schiller, 597 P.2d at 243.
Moreover, as in Hilyard, the mere fact that St. Paul denied liability
coverage to the driver does not mean it is simultaneously required to provide UM
coverage for passengers. The teen driver—but for the nonpermissive user
provision in the St. Paul policy—was insured under that same policy. As the
4
A more recent case from the Kansas Court of Appeals cited Hilyard for
the same proposition of law we apply here: “The [uninsured motorist] statute
does not cover a situation where the uninsured owner or operator owns an
automobile liability policy.” Loveless v. Am. Family Mut. Ins. Co., 24 P.3d 198,
199 (Kan. Ct. App. 2001). Clearly, the Kansas Court of Appeals does not
consider Hilyard to be bad law, however particular its facts may be.
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Kansas Supreme Court stated, the UM statute “does not contemplate” the situation
at hand—where the driver is insured but, because of a legitimate policy exclusion,
the claimant characterizes him as uninsured to gain access to statutory UM
benefits. Hilyard, 729 P.2d at 1200.
The Kansas legislature has not modified the UM statute to abrogate the
Schiller and Hilyard decisions, and we must presume it agrees with their
holdings. Halsey, 61 P.3d at 697 (quoting In re Adoption of B.M.W., 2 P.3d 159,
166 (Kan. 2000)). We therefore conclude that § 40-284(a) does not mandate St.
Paul to provide UM benefits to C.J. and Jennifer
B. The Policy Language
Because we conclude § 40-284(a) does not mandate UM coverage under the
facts presented, we must advance to the second stage of the two-part UM analysis:
an examination of the St. Paul policy itself.
Long asserts that even if the Kansas UM statute is inapplicable, “the St.
Paul policy afforded coverage greater than the statutorily mandated minimum
coverage.” Aplt. Br. at 16–17. This argument proceeds in three parts: (1) St.
Paul, an insurance company, denied coverage for the accident under the
nonpermissive user exclusion, (2) the policy broadly defines “uninsured vehicle”
as one “for which an insurance or bonding company denies coverage,” and (3)
therefore, the St. Paul UM coverage is applicable to this case. The crux of the
argument is part two—St. Paul’s definition of “uninsured vehicle.”
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Under Kansas law, we must interpret the St. Paul policy to “give effect to
the intention of the parties.” Brumley v. Lee, 963 P.2d 1224, 1226 (Kan. 1998).
Though we construe ambiguous terms against St. Paul as the drafter of the policy,
id., we must not find an ambiguity if a “reasonable construction” of the
policy—i.e., “one that makes the contract fair, customary, and such as prudent
persons would intend”—leads us to a single interpretation. Marquis v. State Farm
Fire & Cas. Co., 961 P.2d 1213, 1219 (Kan. 1998). Moreover, a reasonable
construction of the policy must be based on a reading of all pertinent policy
provisions; we must avoid a critical analysis of a single, isolated provision. Id.
(citing Arnold v. S.J.L. of Kan. Corp., 822 P.2d 64, 67 (Kan. 1991)). Ultimately,
our task is to determine “what a reasonably prudent insured would understand the
language to mean.” Universal Underwriters Ins. Co. v. Hill, 955 P.2d 1333,
1337–38 (Kan. Ct. App. 1998); see also Am. Family Mut. Ins. Co. v. Wilkins, 179
P.3d 1104, 1109–10 (Kan. 2008).
Here, a reasonably prudent insured—i.e., someone standing in the shoes of
the pickup truck owner insured by St. Paul—would not understand the policy to
cover passengers of a nonpermissive driver.
First and foremost, the policy’s Auto Liability Protection section explicitly
contained a nonpermissive user exclusion. Only those with “permission to use a
covered auto” were protected under the policy. No one disputes the driver had
been forbidden to drive the truck on the day of the accident, and a reasonably
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prudent insured would not expect to pay premiums to cover injuries sustained by
a joyrider and his friends. Furthermore, because the purpose of UM coverage is
to provide an innocent victim a “right against his or her own insurer,” a
reasonable insured would not expect St. Paul to foot the bill for a stranger to the
insurance policy. See O’Donoghue, 66 P.3d at 828 (emphasis added). To
construe the policy to provide such coverage “would effectively nullify” the
nonpermissive user clause in the St. Paul policy, Hilyard, 729 P.2d at 1200, and
unnaturally elevate the provision defining “uninsured vehicle” to override the
policy’s other relevant language, see Marquis, 961 P.2d at 1219.
Second, Long’s construction is at odds with the internal logic of the policy.
In the policy, St. Paul defines itself as “us” or “we.” Thus, in the UM portion of
the policy, St. Paul acknowledges, “[w]e’ll pay all sums any protected person is
legally entitled to recover.” Aplt. App. at 79 (emphasis added). Yet the single
provision upon which Long rests her argument defines an uninsured vehicle as
one “for which an insurance or bonding company denies coverage.” Id. at 80
(emphasis added). No doubt, St. Paul is an insurance company. But the defined
use of the term “we” throughout the policy suggests that an uninsured vehicle is
one for which an insurance company other than St. Paul denies coverage.
Third, Long’s argument contradicts itself. She asserts that the pickup truck
was a “covered auto” under the St. Paul policy—allowing her to recover UM
benefits for her children’s injuries—and yet was also an uninsured vehicle within
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the meaning of the same policy, such that its UM provisions were triggered. As
one court noted in construing similar terms under Kansas law, “[i]t seems
anomalous that an ‘insured’ automobile could at the same time be an ‘uninsured’
automobile under that same policy.” Chance v. Farm Bureau Mut. Ins. Co., 756
F. Supp. 1440, 1444 (D. Kan. 1991) (emphasis added).
To avoid this contradiction, Long relies on Richert v. McHone, 135 P.3d
767 (Kan. Ct. App. 2006), a recent case from the Kansas Court of Appeals. She
argues the case requires UM coverage to be available to an injured person any
time liability benefits are unavailable. She claims Richert “is a clear message that
insurance carriers should be wary if they deny coverage to tort victims.” Aplt.
Br. at 23. But Long’s reliance on that case is misplaced for two reasons. First,
the facts and outcome of Richert actually support St. Paul’s position, not Long’s.
Second, the Kansas Supreme Court’s decision in Schiller suggests Long’s
interpretation of Richert is overbroad.
In Richert, the plaintiff was involved in a two-car accident. The other
driver, McHone, carried an insurance policy that covered the accident, but the car
he was driving was owned by his mother, who had failed to purchase car
insurance. Though McHone’s insurance company paid out its per-person limit for
the accident, Richert sued his own insurance company to recover additional
benefits under his policy’s UM provisions. He claimed McHone’s car was
“uninsured” because its owner—McHone’s mother—did not carry car insurance.
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Richert’s claim was not based upon § 40-284(a); rather, he argued his insurance
policy “provided broader coverage than the minimum required by Kansas
statutes.” Richert, 135 P.3d at 768.
The court held that UM coverage was unavailable under Richert’s policy
because McHone, the driver of the purportedly uninsured vehicle, was insured. In
doing so, the court refused to draw an artificial distinction between an insured
driver and an insured vehicle: “bodily injury liability coverage protects the living,
breathing persons whose negligence caused the vehicle to injure another. It is
inaccurate to say that a vehicle is insured or uninsured; the negligent person is
either insured or uninsured.” Id. at 771.
Long ignores that the outcome in Richert was to deny coverage because the
plaintiff’s definition of “uninsured vehicle” in that case was too clever by half.
She instead focuses on a passage in the opinion which states, “where there is no
bodily injury liability coverage available to pay for the insured’s injuries, the
insured may claim uninsured motorists benefits.” Id. (emphasis added). Long
claims that, because there was no bodily injury coverage “available” to C.J. and
Jennifer, the St. Paul policy must provide UM coverage.
But this reading of Richert conflicts with the holding in Schiller, where
liability benefits would have been available to the claimant if the driver had
permission to use the vehicle at the time of the accident. Yet the Kansas Supreme
Court upheld the insurance company’s denial of coverage under the relevant
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policy language. The court explained that under the policy at issue, “[i]nsurance
coverage is not present . . . when the vehicle is being operated by a third party
without the express or implied permission of the insured.” Schiller, 597 P.2d at
243.
In Schiller, as here, coverage was “available,” but was denied pursuant to a
valid clause in the relevant insurance policy. 5 Richert thus does not affect
Schiller, nor does it change our conclusion that a reasonable insured would not
expect UM coverage to be available to Long under the St. Paul policy. 6
5
As noted above, C.J. and Jennifer were at least potentially covered by
their own insurer as a matter of law. After the district court determined that the
specific language of the American Standard policy did not unambiguously deny
UM coverage for Long’s children, Long, 483 F. Supp. 2d at 1103, Long obtained
recovery from American Standard through settlement. Like the plaintiff in
Richert, Long is seeking additional recovery from an insurance policy that
contains a legitimate coverage limitation.
6
Two leading treatises support our interpretation of the St. Paul policy and
the relevant Kansas case law. One concludes that nonpermissive user clauses are
often “upheld as [] reasonable coverage restriction[s],” and are often enforced
when applied to a policy’s UM coverage, absent “unusual situations” such as car
jackings and other violent behavior by the nonpermissive user. 1 Uninsured and
Underinsured Motorist Insurance § 5.6 at 311–12, § 4.18 at 171–72 & n.35.
Another commentator states a general rule that, when an insurance policy contains
a nonpermissive user exception, “a passenger in an automobile being operated
without the permission of the owner is not an occupant of an insured automobile
and cannot recover uninsured motorist coverage benefits under the owner’s
policy.” 2 Irvin E. Schermer & William Schermer, Automobile Liability
Insurance 4th § 22:3 (2008).
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As a final note, our interpretation of the St. Paul policy makes sense from
the standpoint of the bargain a reasonable insured would make in purchasing car
insurance. A reasonable insured would likely refuse to pay additional policy
premiums to protect nonpermissive users and their passengers. And if a
reasonable insured would not make such a bargain, then the insurer has not been
paid to bear the additional risk. As the Kansas Supreme Court stated, “to impose
further liability would impose a risk upon the insurers that had not been bargained
for and for which the insurer had not been compensated.” Halsey, 61 P.3d at 696.
III. Conclusion
For the foregoing reasons, we AFFIRM the decision of the district court
dismissing Long’s claims and granting judgment on the pleadings for St. Paul.
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