United States Court of Appeals
For the Eighth Circuit
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No. 12-3881
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Kelly Jordan; Robert Jordan
lllllllllllllllllllll Plaintiffs - Appellants
v.
Safeco Insurance Company of Illinois
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: September 26, 2013
Filed: January 15, 2014
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Before MURPHY, MELLOY, and SHEPHERD, Circuit Judges.
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SHEPHERD, Circuit Judge.
Kelly Jordan appeals the district court’s grant of summary judgment in favor
of Safeco Insurance Company of Illinois. Jordan sued Safeco seeking to “stack” the
underinsured motorist coverage from various policies she and her husband, Robert
Jordan, had taken out with Safeco for their five vehicles. The district court
determined that the Missouri Supreme Court’s decision in Ritchie v. Allied Property
& Casualty Insurance Co., 307 S.W.3d 132 (Mo. 2009), which permitted the stacking
of underinsured motorist coverage, was limited to the special situation where the
insured is occupying a vehicle the insured does not own. We disagree with the
district court’s interpretation of Ritchie’s holding, and therefore we reverse the grant
of summary judgment and remand this matter for entry of partial summary judgment
in favor of Jordan and for further consideration consistent with this holding.
I.
In 2009, Kelly Jordan was walking across the street at an intersection when she
was struck by a car. Jordan suffered injuries and lost wages. The driver’s insurance
company paid its limit of $100,000 to Jordan and her husband. At the time of the
accident, Jordan was a named insured on three Safeco Insurance Company policies
covering five different vehicles she owned with her husband. The policies provided
for $100,000 in underinsured motorist coverage (UIM) for each of the five vehicles.
Jordan sought payment of $500,000 from Safeco under a claim that the driver who
struck her was underinsured. Safeco paid Jordan $100,000 as UIM coverage but
refused additional payments, claiming the policies contained language that prohibited
the “stacking,” or combining, of the policies’ UIM coverage.
The three policies contain identical language that forms the basis of the
disagreement between the parties. The clause of the policies most relevant to this
case is paragraph two of the “Underinsured Motorist Coverage: Other Insurance”
section (hereinafter, the “Other Insurance clause”). It provides:
2. Any underinsured motorist insurance we provide with respect to a
vehicle you do not own shall be excess over any collectible
underinsured motorist insurance.
(J.A. 119.)
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Jordan brought suit in state court seeking payment of $500,000 in UIM
coverage, claiming that she should be able to recover $100,000 in UIM coverage for
each of the five vehicles she insured with Safeco. Jordan also sought the award of
state statutory penalties and attorneys’ fees for Safeco’s alleged unreasonable refusal
to pay under the described policies. Safeco removed the action to federal court on the
basis of diversity jurisdiction. Safeco moved for summary judgment, arguing the
UIM coverage could not be stacked and therefore Jordan was not entitled to
additional payments nor did Safeco unreasonably refuse to pay under the policies.
Jordan moved for partial summary judgment, seeking a declaration that the UIM
coverages under the relevant policies were subject to stacking. The district court
denied Jordan’s motion for partial summary judgment, granted Safeco’s motion for
summary judgment, and dismissed Jordan’s claims, holding that the Ritchie decision,
which permitted the stacking of UIM coverage under a similar Other Insurance
clause, only applies to situations where the insured is occupying a non-owned vehicle
and thus the Other Insurance clause in the Safeco policies was not applicable to
Jordan because she was a pedestrian. The district court further held that, absent the
applicability of the Other Insurance clause, the policies unambiguously prohibit the
“stacking” of UIM coverage. Jordan now appeals, arguing the district court
misapplied Ritchie.
II.
We review the district court’s interpretation of an insurance policy and its grant
of summary judgment de novo. See Secura Ins. v. Horizon Plumbing, Inc., 670 F.3d
857, 861 (8th Cir. 2012). A district court properly grants summary judgment “if there
is no genuine issue of material fact and the insurers are entitled to judgment as a
matter of law.” Id. “State law governs the interpretation of insurance policies when
federal jurisdiction is based on diversity of citizenship.” Id. Both parties agree that
Missouri law applies to the policies in question.
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A.
Missouri courts have held that there are public policy reasons for requiring
uninsured motorist coverage, and thus attempts by insurance companies to prohibit
the stacking of uninsured motorist coverage have been invalidated. Hall v. Allstate
Ins. Co., 407 S.W.3d 603, 607 (Mo. Ct. App. 2012). Because similar public policy
reasons are not present for UIM coverage in Missouri, however, policies can be
drafted in a manner that prohibits the “stacking,” or combining, of UIM coverage
from multiple policies. See Long v. Shelter Ins. Cos., 351 S.W.3d 692, 696-97 (Mo.
Ct. App. 2011); Lynch v. Shelter Mut. Ins. Co., 325 S.W.3d 531, 539 (Mo. Ct. App.
2010). When the language prohibiting “stacking” is clear and unambiguous, insureds
may recover UIM benefits from only a single policy as a matter of contractual right.
Long, 351 S.W.3d at 697.
Although courts should evaluate insurance policies as a whole, Seeck v. Geico
Gen. Ins. Co., 212 S.W.3d 129, 133 (Mo. 2007), issues arise in contract disputes
when policies contain clauses that claim to prohibit “stacking” and also contain
clauses that appear to authorize “stacking.” When this happens, an ambiguity occurs,
and courts are obligated to resolve the ambiguity in favor of the insured. See Manner
v. Schiermeier, 393 S.W.3d 58, 65 (Mo. 2013) (“Conflicts and inconsistencies
between different policy provisions, with one seeming to deny coverage but the other
seeming to grant it, will render a policy ambiguous, and such an ambiguity will be
interpreted in favor of the insured.”). Questions of contract interpretation are very
specific to the policies interpreted, and thus courts must exercise care in applying case
holdings that have interpreted policies not identical to the policy at issue.
B.
The relevant policy language from the Other Insurance clause in this case and
in Ritchie are essentially identical. Because the Missouri Supreme Court held that the
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Other Insurance provision in Ritchie created an ambiguity that permitted the stacking
of UIM coverage, Safeco argues that the Other Insurance clause in this policy only
applies to situations where, as in Ritchie, the insured is occupying a non-owned
vehicle. Safeco admitted at oral argument that if Jordan had been injured while
occupying a non-owned vehicle, Ritchie’s holding would apply and Safeco would be
obligated to pay the UIM coverage on all of the policies. Safeco argues, however,
that because Jordan was a pedestrian at the time of the accident, the Other Insurance
clause does not apply because it contains a non-owned vehicle occupancy
requirement. Safeco makes this occupancy argument on two grounds:1 (1) the Other
Insurance clause in the policies references “a vehicle you do not own” and courts
should thus read into this language an occupancy requirement, and (2) the Missouri
Supreme Court in Ritchie specifically limited its holding to situations where the
insured was occupying a non-owned vehicle. Safeco also argues that the Missouri
Court of Appeals has determined in Kennedy v. Safeco Insurance Co. of Illinois, 413
S.W.3d 14 (Mo. Ct. App. 2013), a case involving the same Safeco policy language
and comparable facts, that an ambiguity does not exist and thus the UIM coverage
may not be “stacked.” As explained below, none of these bases can withstand
scrutiny.
First, Safeco argues that we should read the Other Insurance clause’s reference
to “vehicle you do not own” as requiring the insured to be occupying a non-owned
vehicle at the time of the accident. Safeco concedes that UIM coverage was personal
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Safeco also argues that there are multiple, overlapping clauses in the policy
that clearly prohibit stacking. This argument does not prevail for Safeco because, as
illustrated by Ritchie, where even one clause can be reasonably interpreted to provide
for the stacking of UIM coverage in certain circumstances despite repeated, general
references in the policy stating otherwise, an ambiguity is created. See Ritchie, 307
S.W.3d at 138 (“Any conflict between [the limit of liability provision and the other
insurance provision] creates an ambiguity that is resolved in favor of the insureds.”).
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and thus followed Jordan as she was a pedestrian. Accordingly, Safeco paid out
$100,000 in UIM coverage to Jordan. But, then Safeco inconsistently contends that
the “excess” provision of the Other Insurance clause is meant to provide insurance
coverage to the insured only in circumstances when the insured is involved in the
“occasional and sporadic use of vehicles not owned by the insured.” Safeco
emphasizes that “the Safeco policies only insured the vehicles scheduled on the
policies’ Declarations and any non-owned vehicle that an insured under the policies
might use or occupy.” Safeco maintains that to interpret the policy otherwise would
be an unauthorized rewriting of the policies and a distortion of the policies’ intent to
only insure Jordan while she was occupying a vehicle she owns or a vehicle she does
not own. In support of its argument, Safeco relies on Ritchie and Clark v. American
Family Mutual Insurance Co., 92 S.W.3d 198 (Mo. Ct. App. 2002).
The Other Insurance clause in the Safeco policies states, “Any underinsured
motorist insurance we provide with respect to a vehicle you do not own shall be
excess over any collectible underinsured motorist insurance.” While it may be that
most situations in which the insured is able to collect under this provision involve
cases where the insured is occupying an uninsured vehicle, nothing in the plain
language of the clause mandates the occupancy of a non-owned vehicle. The clause,
as written, is silent as to occupancy. This silence speaks volumes when one considers
that the policies specifically define “occupying” but then exclude this defined term
from the Other Insurance clause. Further, Safeco does not dispute that it provided
UIM coverage to Jordan with respect to the injuries she suffered from being struck
by the underinsured motorist. In light of this ambiguity, we are obligated to read the
policy against Safeco and in favor of Jordan. Ritchie, 307 S.W.3d at 135.
Safeco cites Clark as supportive of its argument that the Other Insurance clause
language necessarily requires that Jordan have occupied a non-owned vehicle. Clark,
however, demonstrates why the policy language here is ambiguous. In Clark, the
relevant clause provided, “But, any insurance provided under this endorsement for
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an insured person while occupying a vehicle you do not own is excess over any
similar insurance.” 92 S.W.3d at 201 (emphasis in original). Thus, the Clark policy
did contain a specific occupancy requirement. Whatever Safeco intended when it
included the phrase “to a vehicle you do not own,” we simply do not read an
occupancy requirement into the plain language of that clause. As explained below,
we also find unpersuasive Safeco’s attempt to rely on language from Ritchie in
support of an occupancy requirement.
Safeco maintains that the Missouri Supreme Court in Ritchie limited its
holding to situations in which the insured is occupying a non-owned vehicle. The
Other Insurance provision at issue in Ritchie stated, “Any coverage we provide with
respect to a vehicle you do not own shall be excess over any other collectible
underinsured motorist coverage.” 307 S.W.3d at 137. The Missouri Supreme Court
then interpreted the policy to mean “underinsured coverage under the policy ‘shall be
excess over any other collectible underinsured motorist coverage’ when, as in this
case, the insured is injured while riding in a non-owned vehicle.” Id. While this
language arguably supports Safeco’s argument that the Other Insurance clause only
applies to circumstances where the insured is occupying a non-owned vehicle, the
occupancy question was not at issue in Ritchie. Accordingly, whether the policy in
Ritchie required occupancy of a non-owned vehicle was not specifically decided by
the Missouri Supreme Court. See Blunkall v. Heavy & Specialized Haulers, Inc., 398
S.W.3d 534, 544 (Mo. Ct. App. 2013) (explaining that expressions of opinion by the
court that are not necessary for deciding the case are “obiter dicta” and not binding
precedent). Thus, it would not be appropriate to read into the Ritchie holding a
judicially-created occupancy requirement.
Ritchie relies heavily on Niswonger v. Farm Bureau Town & Country
Insurance Co. of Missouri, 992 S.W.2d 308 (Mo. Ct. App. 1999), in support of its
decision. In Niswonger, the Other Insurance provision provided, “any insurance
provided under this endorsement for a person insured while occupying a non-owned
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vehicle is excess of any other similar insurance.” 992 S.W.2d at 315. Because of this
policy language, which explicitly requires occupancy, the Niswonger court held,
“[w]hile the UIM ‘anti-stacking’ provisions of the policy here in question might
perhaps have to be deemed unambiguous in nearly any other factual situation, that
does not necessarily mean they are unambiguous in the particular factual situation
now before us, where the accident occurred while [the insured] was occupying a non-
owned vehicle.” Id. Thus, it is obvious the Missouri Supreme Court when deciding
Ritchie simply took the language from the Niswonger decision which contained
reference to occupancy only because the policy at issue in Niswonger also contained
an occupancy requirement. Accordingly, we reject Safeco’s argument that the
Missouri Supreme Court in Ritchie limited its holding to situations where the insured
is occupying a non-owned vehicle at the time the injury is suffered.
Finally, Safeco argues that Kennedy, a Missouri Court of Appeals decision that
is squarely on point—factually, legally, and contractually—with this case, controls.
In Kennedy, the Missouri Court of Appeals held that stacking of Safeco UIM policies
is not permitted, reasoning that no matter what the Other Insurance clause stated, no
reasonable layperson could believe it overrides the other multiple provisions in the
policy prohibiting stacking. Kennedy, 413 S.W.3d at 17-18. To be certain, this
reasoning is appealing; however, we are unable to follow it because the Missouri
Court of Appeals fails to distinguish the Safeco policies considered in Kennedy from
the policy at issue in Ritchie, which also contained express clauses that barred
stacking of UIM coverage. We note the Safeco policy contains more “no-stacking”
clauses than were contained in the policy at issue in Ritchie, but we fail to see how
that fact alone negates the rule, emphasized in Ritchie, that where “excess coverage
was promised at one point and taken away at another” an ambiguity is created and the
courts should allow for stacking of the policies. 307 S.W.3d at 138 (citing Seeck, 212
S.W.3d at 133). Despite the “no-stacking” provisions found in the Ritchie policy, the
Missouri Supreme Court held that the policy could be reasonably interpreted to allow
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stacking when the accident falls under the Other Insurance provision which fails to
include the “no-stacking” provisions found elsewhere in the policy.
When the Missouri Court of Appeals decided Kennedy, it based its decision on
the fact that the Safeco policies contained several “no-stacking” clauses throughout
the policy and thus concluded that no reasonable policyholder could interpret the
Other Insurance clause as overcoming the “no-stacking” restrictions. This reasoning,
however, was not persuasive to the Missouri Supreme Court in Ritchie, and therefore
we cannot adopt it in this case. See Blankenship v. USA Truck, Inc., 601 F.3d 852,
856 (8th Cir. 2010) (holding that when a federal court sits in diversity, it must apply
the governing precedent from the state’s highest court, and when there is no case
directly on point, the federal court must predict how the state supreme court would
rule if faced with the same question). The Missouri Supreme Court declined to
transfer Kennedy. Thus, we must predict what outcome we believe the Missouri
Supreme Court would reach in this situation, and from its holding in Ritchie, we
believe it would reject the Missouri Court of Appeals decision in Kennedy.
III.
Accordingly, we reverse the district court’s grant of summary judgment in
favor of Safeco. We remand this matter to the district court with instructions to grant
Jordan’s motion for partial summary judgment and to conduct further proceedings
consistent with this decision.
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