Wolfe Automotive Group, LLC v. Universal Underwriters Insurance , 808 F.3d 729 ( 2015 )


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  •                  United States Court of Appeals
    For the Eighth Circuit
    ___________________________
    No. 14-3411
    ___________________________
    Wolfe Automotive Group, LLC; Jay Wolfe Used Cars of Blue Springs, LLC
    lllllllllllllllllllll Plaintiffs - Appellants
    v.
    Universal Underwriters Insurance Company
    lllllllllllllllllllll Defendant - Appellee
    ____________
    Appeal from United States District Court
    for the Western District of Missouri - Kansas City
    ____________
    Submitted: September 24, 2015
    Filed: December 15, 2015
    ____________
    Before LOKEN, BEAM, and SHEPHERD, Circuit Judges.
    ____________
    BEAM, Circuit Judge.
    Jay Wolfe Used Cars of Blue Springs, LLC, along with its managing company,
    Wolfe Automotive Group, LLC, (Wolfe) appeals the district court's1 adverse grant of
    1
    The Honorable Howard F. Sachs, United States District Judge for the Western
    District of Missouri.
    summary judgment in its suit against Universal Underwriters Insurance Company
    (Universal) seeking coverage. We affirm.
    I.    BACKGROUND
    Wolfe, a Missouri used-car dealership, is insured under two policies issued by
    Universal. One policy provides up to $500,000 for indemnity from and defense
    against suits for damages arising from Wolfe's "wrongful repossession" of an
    automobile, and this is linked under a separate policy to $25 million in umbrella
    coverage (we will refer to these linked coverage provisions together as the "umbrella
    coverage"). One of the policies also separately provides up to $25,000 for costs in
    defending against suits arising from the sale of an automobile (the "customer
    complaint defense" provision), subject to both a $2,500 and a $100,000 deductible.
    Under the policy, Wolfe may be entitled to either the umbrella coverage or coverage
    under the customer complaint defense provision, but not both.
    Wolfe sold a vehicle to Tyrrell and Liane Jackson (the Jacksons), retaining a
    security interest for loaning them the purchase money. Wolfe later repossessed and
    sold the vehicle due to missed payments. After retaking possession but before the
    sale, Wolfe sent a notice informing the Jacksons they could request an accounting for
    a $25 charge, and after the sale it sent a notice charging the Jacksons attorney's and
    legal fees. Wolfe sued for the deficiency balance, and the Jacksons counterclaimed
    on behalf of themselves and similarly situated consumers, alleging Wolfe's pre- and
    post-sale notices violated Missouri's Uniform Commercial Code (U.C.C.) and the
    Missouri Motor Vehicle Time Sales Act (MVTSA). Specifically, the Jacksons alleged
    that the presale notice violated a requirement under the U.C.C. that upon request they
    be provided with one free accounting and that the notice inform them of that
    entitlement. Mo. Rev. Stat. §§ 400.9-210(f), -613(1)(D), -614(1)(A). They alleged
    that the postsale notice violated the U.C.C. by charging them fees and expenses that
    were not actually incurred in connection with the sale of the vehicle, 
    id. §§ 400.9-
    -2-
    615(a)(1), -616(c)(4), and that it violated the MVTSA because the attorney's fees were
    in excess of fifteen percent of the deficiency balance and because the charged
    expenses were unreasonable. 
    Id. §§ 365.100(2),
    (4). The Jacksons did not dispute
    that they were in default and that Wolfe had the right to repossess the vehicle.
    Wolfe tendered the Jacksons' counterclaims to Universal for defense and
    indemnity under the umbrella coverage. Universal refused on the ground that the
    allegedly deficient notices were not wrongful repossessions as that term is meant in
    the policy, stating Wolfe was only entitled to coverage under the customer complaint
    defense provision. Preferring the benefits available under the umbrella coverage,
    Wolfe sued Universal for a declaration of its rights under the policy, as well as for
    breach of contract and vexatious refusal to pay. Universal counterclaimed for
    declaratory judgment in its favor. The district court sided with Universal on cross-
    motions for partial summary judgment and summary judgment. It reasoned the
    umbrella coverage only applied to repossession that is itself wrongful, not to wrongful
    debt-collection practices that may involve but are unrelated to repossession. Wolfe
    now appeals the district court's grant of summary judgment to Universal.
    II.   DISCUSSION
    The central dispute is whether the Jacksons have alleged as injury the wrongful
    repossession of their vehicle as that term is used in the policy. We review de novo
    both a district court's interpretation of an insurance policy as well as its grant of
    summary judgment. Universal Underwriters Ins. Co. v. Lou Fusz Auto. Network,
    Inc., 
    401 F.3d 876
    , 879 (8th Cir. 2005). In interpreting an insurance policy, we are
    bound by state law and thus by the decisions of state courts. Am. Family Mut. Ins.
    Co. v. Co Fat Le, 
    439 F.3d 436
    , 439 (8th Cir. 2006). Absent ambiguity, Missouri
    courts will interpret the language of a policy according to its plain meaning as
    understood by an ordinary insured of average understanding. Piatt v. Ind.
    Lumbermen's Mut. Ins. Co., 
    461 S.W.3d 788
    , 792 (Mo. banc 2015). Ambiguities,
    -3-
    however, should be resolved in favor of the insured. Scottsdale Ins. Co. v. Ratliff, 
    927 S.W.2d 531
    , 534 (Mo. Ct. App. 1996). "Language is ambiguous if it is reasonably
    open to different constructions . . . ." Krombach v. Mayflower Ins. Co., 
    827 S.W.2d 208
    , 210 (Mo. banc 1992). Under Missouri law, the duty to defend, which is broader
    than the duty to indemnify, is triggered by the possibility of coverage, 
    Piatt, 461 S.W.3d at 792
    , which is ascertained by comparing the allegations to the policy
    language. Kirk King, King Constr., Inc. v. Cont'l W. Ins. Co., 
    123 S.W.3d 259
    , 264
    (Mo. Ct. App. 2003). "Where there is no duty to defend, there is no duty to
    indemnify." 
    Id. (quoting Am.
    States Ins. Co. v. Herman C. Kempker Constr. Co., 
    71 S.W.3d 232
    , 236 (Mo. Ct. App. 2002)). The burden is on the insured to prove
    coverage. Tresner v. State Farm Ins. Co., 
    913 S.W.2d 7
    , 11 n.3 (Mo. banc 1995).
    Where, as here, there is no factual dispute, "[t]he court shall grant summary judgment
    if . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
    Both parties agree "wrongful repossession" is unambiguous, although they
    disagree on what that term unambiguously means to an ordinary insured.2 Wolfe
    contends the phrase includes not only the physical appropriation of a vehicle but also
    the procedures required for its sale. It argues the district court erred in equating
    wrongful repossession to a common law claim for conversion, which led to an overly
    narrow construction of the policy. Universal counters that wrongful repossession
    means Wolfe must not have had the right to take the vehicle at the time of
    repossession, and it argues in response to Wolfe's contrary assertion that the district
    court did not restrict its interpretation to the elements of conversion.
    Wolfe relies primarily on Lou Fusz and Kirk King to support its interpretation.
    In Lou Fusz, we found that an insured's alleged violation of the Telephone Consumer
    2
    We note that under Missouri law, it is not the existence of differing
    interpretations by the parties, but the existence of differing, reasonable interpretations,
    that renders language ambiguous. As we explain, no ambiguity exists here.
    -4-
    Protection Act (TCPA) was a covered injury under a policy providing liability defense
    and indemnity. We determined an ordinary insured would interpret the phrases
    "private nuisance" and "invasion of rights of privacy" to include faxing unsolicited
    advertisements in violation of the 
    TCPA. 401 F.3d at 881-82
    . We came to this
    conclusion in light of the TCPA's legislative history, in which Congress repeatedly
    described telemarketing as "intrusive," a "nuisance," and a "privacy invasion." 
    Id. (quoting 47
    U.S.C. § 227 (Historical and Statutory Notes, re: Section 2 of Pub. L. 102-
    243) (emphasis omitted)). These descriptions offered some evidence of how an
    ordinary insured would interpret the language in the policy, whereas the insurer
    "offer[ed] only technical and restricted legal definitions." 
    Id. at 882.
    Wolfe asserts
    that here, too, the district court relied on a technical and restricted legal definition
    when it looked to the elements of a claim for conversion to determine how an ordinary
    insured would interpret the policy.
    Wolfe relies on Kirk King for the proposition that the retaking of the Jacksons'
    vehicle and the procedure for its sale are part of an integrated process. In Kirk King,
    a general liability policy provided coverage for suits for damages from an "'advertising
    injury' caused by an offense committed in the course of advertising your goods,
    products, or 
    services." 123 S.W.3d at 264
    . "Advertising injury" was defined to
    include copyright infringement. 
    Id. King, the
    insured, constructed a home and was
    sued by a copyright holder, who alleged the house infringed his copyrighted plans.
    
    Id. at 262.
    The Missouri Court of Appeals found that because King had followed the
    standard, construction-industry practice of placing a sign in front of the home as a
    means of advertising his services, the infringement suit was a covered advertising
    injury. 
    Id. at 263-65.
    It reasoned that the act of advertising included the placement
    of the sign in combination with the construction of the home, and thus the
    construction occurred "in the course of advertising." 
    Id. at 265-66.
    Wolfe argues that
    the requirements of the U.C.C. and the MVTSA are similarly integral components of
    a lawful repossession.
    -5-
    To begin with, it is clear from the order that the district court did not restrict its
    interpretation of wrongful repossession to the elements of conversion. Although the
    district court acknowledged that under Missouri law a claim for wrongful repossession
    is characterized as a claim for conversion, see Scott v. Twin City State Bank, 
    537 S.W.2d 641
    , 642 (Mo. Ct. App. 1976), it "accept[ed] plaintiff's contention that the
    wrongful conduct in repossessions does not necessarily exactly conform to common
    law definitions, which are not likely known to prospective insureds." The district
    court's reasoning was not focused on the precise contours of the term "wrongful" but
    rather on the fact that it modified the term "repossession." In this regard, Universal's
    contention that a wrongful repossession necessarily means the debtor must not have
    had the right to take possession is beside the point.3 The issue is whether the meaning
    of "repossession" to an ordinary insured sweeps in the procedures required by statute
    for disposition of the collateral.
    We agree with the district court that it does not. The New Oxford American
    Dictionary (3d ed. 2010) defines repossess as to "retake possession of (something)
    when a buyer defaults on payments" and possession as "the state of having, owning,
    or controlling something." Wolfe has the burden of proving that an ordinary insured
    would think a repossession extends beyond the retaking of possession of the property
    yet offers only a bare assertion in support of its position. Given that the term
    "repossess" and its ordinary definition center on possession, it is difficult to see why
    an ordinary insured would not understand the repossession to be complete once it
    regained control of the vehicle. That the repossession of a vehicle and its subsequent
    disposition are constituent parts of collecting on the Jacksons' debt does not, without
    more, provide a sufficient basis for concluding an ordinary insured would interpret
    wrongful repossession in a manner that strays so far from its meaning in common
    3
    Nor is it clear this argument is correct. As pointed out during oral argument,
    a creditor who was within her rights to take possession may very well commit a
    "wrongful" repossession by breaching the peace while doing so.
    -6-
    usage.4 Further, Lou Fusz and Kirk King are distinguishable. In Lou Fusz, Congress's
    descriptions of the occurrence at issue provided at least some indication as to how an
    ordinary insured would interpret the policy. Wolfe, by contrast, does not offer any
    evidence indicating an expansive interpretation of wrongful repossession is
    appropriate. Wolfe relies on Lou Fusz to suggest the district court relied on an overly
    technical and restrictive legal definition when it limited the meaning of wrongful
    repossession to the elements of a conversion claim. But as we have explained this is
    not what the district court did. In Kirk King, the act of advertising King's services
    necessarily involved the construction of a home, otherwise there would have been
    nothing to advertise. Here, by contrast, the pre- and post-sale notices were not part
    of the repossession; they occurred after the repossession was complete and in
    connection with the sale, a separate event.
    Under the plain language of the policy, the umbrella coverage is not available
    for the injuries alleged in the Jacksons' complaint. Thus Universal is entitled to
    judgment as a matter of law that it is not under a duty to defend Wolfe from the
    Jacksons' suit except to the extent such a duty may be provided for in the customer
    complaint defense provision, and consequently that Universal is not under a duty to
    indemnify Wolfe should the Jacksons be awarded damages. (That suit is still
    pending.) Because Wolfe's claims for breach of contract and vexatious refusal to pay
    4
    Although an ordinary insured, it should be presumed, is not intimately familiar
    with the U.C.C., it is telling that the U.C.C. treats repossession and disposition as
    distinct events. Compare Mo. Rev. Stat. § 400.9-609 ("After default, a secured
    party . . . [m]ay take possession of the collateral . . . [w]ithout judicial process, if it
    proceeds without breach of the peace."), with 
    id. § 400.9-610
    ("After default, a
    secured party may sell . . . the collateral . . . ."). Moreover, a creditor may dispose of
    the collateral, but it is not required to do so. See 
    id. Thus, under
    the U.C.C.
    repossession does not necessarily entail the notice procedures that Wolfe claims form
    part of the same integrated process.
    -7-
    rest on the success of its declaratory judgment action, we need not address them, nor
    Universal's remaining arguments, here.5
    III.     CONCLUSION
    Accordingly, for the reasons stated herein, we affirm the decision of the district
    court.
    ______________________________
    5
    Wolfe also contends that Universal anticipatorily repudiated the policy by
    stating to the district court it would not indemnify Wolfe should judgment be entered
    for the Jacksons on their counterclaim. Wolfe provides no citation to the record to
    support this contention, and in any event this argument fails because we find
    Universal is not under a duty to indemnify Wolfe.
    -8-