Owners Insurance Co. v. Craig , 2017 Mo. LEXIS 99 ( 2017 )

Zel M. Fischer, Judge

Owners Insurance Company appeals a summary judgment entered in favor of its policyholders Vicki Craig and Chris Craig that denied Owners the right to reduce the amount paid pursuant to its underinsured motorist (“UIM”) coverage by the amount paid by the at-fault motorist’s liability insurer. Because the policy at issue unambiguously provides for such set-off, the circuit court’s judgment is reversed and the case is remanded.

Factual and Procedural History

Owners issued the Craigs a policy with UIM coverage.¹ The policy’s declarations list “$250,000 per person” as the UIM “limit,” but the “Limit of Liability” section in the UIM endorsement states:

4. LIMIT OF LIABILITY

a. The Limits of Liability stated in the Declarations for Underinsured Motorist Coverage are for reference purposes only. Under no circumstances do we have a duty to pay you or any person entitled to Un-derinsured Motorist Coverage under this policy the entire Limits of Liability stated in the Declarations for this coverage.

The policy then contains “set-off’ provisions:

b. Subject to the Limits of Liability stated in the Declarations for Un-derinsured Motorist Coverage and paragraph 4.a. above, our payment for Underinsured Motorist Coverage shall not exceed the lowest of:

(1) the amount by which the Un-derinsured Motorist Coverage Limits of Liability stated in the Declarations exceed the total limits of all bodily injury liability bonds and liability insurance policies available to the owner or operator of the under-insured automobile; or

(2) the amount by which compensatory damages, including but not limited to loss of consortium, because of bodily injury exceed the total limits of all bodily injury liability bonds and liability insurance policies available to the owner or operator of the underinsured automobile.

This language clearly provides that Owners will pay the declarations’ listed limit amount minus what is paid by the underin-sured motorist’s policy if damages exceed the declarations’ listed limit amount, or damages minus what is paid by the under-insured motorist’s policy if damages do not exceed the declarations’ listed limit amount. As such, these provisions ensure Owners will never be obligated to pay the full amount the declarations list as the UIM “limit.”²

With this policy in place, Vicki was injured in an accident when her vehicle was struck by one driven by another motorist; she incurred damages exceeding $300,000. Because the at-fault motorist was insured under a Shelter Insurance policy with a liability limit of $50,000, Shelter Insurance paid the Craigs $50,000. The Craigs then turned to Owners, seeking $250,000, the declarations’ listed UIM limit amount. Instead, Owners paid the Craigs $200,000, citing the set-off provisions that allowed them to deduct the $50,000 Shelter Insurance paid on behalf of the at-fault motorist. Owners then sought a declaratory judgment over the disputed $50,000, and both sides moved for summary judgment with a joint stipulation of facts. The circuit court ruled the policy was ambiguous and entered summary judgment in favor of the Craigs. Owners appealed and, pursuant to article V, § 10 of the Missouri Constitution, the case was transferred to this Court by certification of a dissenting judge after opinion by the court of appeals.

Standard of Review

“Whether to grant summary judgment is an issue of law that this Court determines de novo.” Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). “The interpretation of an insurance policy is a question of law that this Court also determines de novo.” Id.

Analysis

Owners argues that the policy unambiguously provides for the $50,000 set-off, that the policy never promises to pay up to the full amount listed in the declarations but expressly states in the UIM endorsement that such amount is for reference purposes only, and that the declarations alone do not promise coverage. The Craigs argue the policy is ambiguous because, despite the language in the UIM endorsement, the declarations list $250,000 as the UIM limit and other portions of the policy reference the declarations as containing or describing the policy’s limits of liability.³

“An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions.” Seeck, 212 S.W.3d at 132 (internal quotations omitted). Additionally, “it is well-settled that where one section of an insurance policy promises coverage and another takes it away, the contract is ambiguous.” Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 140-41 (Mo. banc 2009). An insured cannot create an ambiguity by reading only a part of the policy and claiming that, read in isolation, that portion of the policy suggests a level of coverage greater than the policy actually provides when read as a whole. Such a request for a “truncated consideration of portions of the ... policy is unavailing. ‘Insurance policies are read as a whole, and the risk insured against is made up of both the general insuring agreement as well as the exclusions and definitions.’” Dutton v. Am. Family Mut. Ins. Co., 454 S.W.3d 319, 323-24 (Mo. banc 2015); accord Ritchie, 307 S.W.3d at 135 (When determining whether an ambiguity exists, “[cjourts should not interpret policy provisions in isolation but rather evaluate policies as a whole;”). Any ambiguity is resolved in favor of the insured. Id. But “[ajbsent an ambiguity, an insurance policy must be enforced according to its terms.” Seeck, 212 S.W.3d at 132.

In the UIM context, this Court has previously held that an ambiguity exists when the policy contains both: (1) express language indicating the insurer will indeed pay up to the declarations’ listed limit amount; and (2) set-off provisions ensuring the insurer will never be obligated to pay such amount. See Manner, 393 S.W.3d at 66; Ritchie, 307 S.W.3d at 140-41; Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690-93 (Mo. banc 2009). The ambiguity arises from the fact that both statements cannot be true; either' the insurer will sometimes pay up to the declarations listed limit, or the amount it will pay always will be limited by the amount paid by the underinsured motorist. Here, there is no such internal inconsistency or contradiction as, unlike in cases such as Jones, the policy contains no express language indicating the insurer will pay up to the declarations’ listed limit amount. In fact, the “Limit of Liability” section in the UIM endorsement contains the opposite, stating the declarations’ listed limit amount is “for reference purposes only” and “[ujnder no circumstances” will Owners have a duty to pay that entire amount. Essentially, this policy takes a form that this Court previously suggested would be enforceable:

A policy that plainly states it only will pay the difference between the amount recovered from the underinsured motorist and the [declarations’ listed limit amount] is enforceable. In such a case, the mere fact that [the declarations’ listed limit amount] will never be paid out is not misleading, for the policy never suggests that this is its liability limit and never implies that it may pay out that amount.

Ritchie, 307 S.W.3d at 141 n.10.

While the Craigs point to the declarations’ listed limit amount and other portions of the policy that make bare, general references to the declarations containing the limit of liability, the declarations “are introductory only and subject to refinement and definition in the body of the policy,” Peters v. Farmers Ins. Co., 726 S.W.2d 749, 751 (Mo. banc 1987). The declarations “do not grant any coverage. The declarations state the policy’s essential terms in an abbreviated form, and when the policy is read as a whole, it is clear that a reader must look elsewhere to determine the scope of coverage.” Floyd-Tunnell v. Shelter Mut. Ins. Co., 439 S.W.3d 215, 221 (Mo. banc 2014). Evaluating the policy as a whole, it unambiguously provides that the declarations’ listed limit amount serves only as a reference point for use with the set-off provisions, which are likewise unambiguous.⁴

Conclusion

The circuit court’s judgment is reversed and the case is remanded.

Breckenridge, C.J., Stith, Wilson and Russell, JJ., concur; Draper, J., dissents in separate opinion filed.

1 . "The purpose of underinsured motorist coverage is to provide insurance coverage for insureds who have been bodily injured by a negligent motorist whose own automobile liability insurance coverage is insufficient to pay for the injured person's actual damages.” Wasson v. Shelter Mut. Ins. Co., 358 S.W.3d 113, 117 (Mo. App. W.D. 2011).

2 . Because the coverage relates to undeñn-sured motorists, rather than uninsured motorists, the amount paid on behalf of the at-fault motorist will always be greater than zero. See Manner v. Schiermeier, 393 S.W.3d 58, 66 n.8 (Mo. banc 2013).

3 . The Craigs point to an introductory section titled "A Quick Guide to Your Policy” on the policy’s cover sheet that states, "The DECLARATIONS contain: ... LIMITS OF LIABILITY,” as well as a statement on the first page of the policy that says, "The attached Declarations describe the automobile(s) we insure and the Coverages and Limits of Liability for which you have paid a premium.” The Craigs also argue Owners failed to provide the full policy when it was purchased and went into effect, but that allegation was not part of the stipulated facts before the circuit court. "Where the trial court’s decision was based on stipulated facts, the only question for this Court is whether the trial court drew the proper legal conclusions from the facts stipulated.” Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo. banc 1988).

4 . The glaring weakness in the dissent is that, while purporting to condemn reading policy provisions in isolation, it is based on nothing more than the cherry-picking of an isolated provision and presenting it without context in an effort to create an ambiguity. The "Other Insurance” provision relied on by the dissent applies only to the "Liability Coverage” section of the policy. The UIM endorsement, which provides separate coverage, has its own "Other Insurance” provision expressly stating that it "shall not be construed to increase the Limit of Liability for Underinsured Motorist Coverage described in 4. LIMIT OF LIABILITY immediately above for Underin-sured Motorist Coverage.” This Court will not "create an ambiguity under the policy language where none exists so as to construe the imaginary ambiguity in such a way to reach a result which some might consider desirable but which is not otherwise permissible under the policy or the law.” Harrison v. MFA Mut. Ins. Co., 607 S.W.2d 137, 142 (Mo. banc 1980).