John Gohagan v. The Cincinnati Insurance Co.

United States Court of Appeals
For the Eighth Circuit
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No. 14-3454
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John Gohagan; Jessica Gohagan
lllllllllllllllllllll Plaintiffs - Appellants
v.
The Cincinnati Insurance Company
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Western District of Missouri - Springfield
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Submitted: September 24, 2015
Filed: January 6, 2016
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Before RILEY, Chief Judge, GRUENDER and KELLY, Circuit Judges.
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GRUENDER, Circuit Judge.
John and Jessica Gohagan appeal the district court’s1 grant of summary
judgment to The Cincinnati Insurance Company (“Cincinnati”). The district court
1
The Honorable Sarah W. Hays, Chief Magistrate Judge for the Western
District of Missouri, to whom the case was referred for final disposition by consent
of the parties pursuant to 28 U.S.C. § 636(c).
held that, even if both the Business Owners Package (“BOP”) and Commercial
General Liability (“CGL”) 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. On appeal, the Gohagans argue that they are entitled to coverage
under both the BOP and CGL policies and that the policies’ anti-stacking2 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. For the reasons set forth below, we affirm.
I.
In January 2012, Thomas Campbell attempted to remove a tree from a property
being developed for a residential subdivision. The tree fell on John Gohagan, who
suffered serious injuries as a result. Mr. Gohagan asserted claims against Campbell
for the injuries, and Mrs. Gohagan sought compensation from Campbell for loss of
consortium. 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 policy held by Campbell and his wife. However, the Gohagans reserved
the right to litigate whether Campbell’s BOP policy, which also had a $1,000,000
each-occurrence limit, provided additional coverage.
Although the parties stipulated to the fact that the BOP policy was in effect
when Mr. Gohagan was injured, Cincinnati contended that the BOP policy’s bodily
injury liability coverage did not apply to Mr. Gohagan because the injury did not arise
2
“‘Stacking’ refers to an insured’s ability to obtain multiple insurance coverage
benefits for an injury either from more than one policy . . . or from multiple coverages
provided for within a single policy.” Daughhetee v. State Farm Mut. Auto. Ins. Co.,
743 F.3d 1128, 1131 (8th Cir. 2014) (quoting Niswonger v. Farm Bureau Town &
Country Ins. Co. of Mo., 992 S.W.2d 308, 313 (Mo. App. 1999)).
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out of Campbell’s ownership, maintenance, or use of certain business premises in
Waynesville, Missouri, as the BOP policy required. Cincinnati also argued that, even
if the BOP policy were applicable, the BOP and CGL policies’ anti-stacking
provisions limited coverage to the $1,000,000 already paid by Cincinnati under the
CGL policy.
The Gohagans and Cincinnati submitted a joint complaint for declaratory
judgment to the district court. The stipulation of facts narrowed the issues for
determination to the following: (1) whether coverage under the BOP policy was
limited to bodily injury arising out of the ownership, maintenance, or use of the
specified Waynesville premises and (2) whether the BOP and CGL policies’ anti-
stacking provisions prohibited coverage stacking, thereby limiting the combined total
of the applicable each-occurrence limit of liability to $1,000,000. After filing the
joint stipulation of facts, both parties moved for summary judgment, and the district
court granted Cincinnati’s motion. The district court determined that fact issues as
to the effective date of the BOP policy’s geographic-limitation provision prevented
summary judgment on the first issue. The court instead based its summary-judgment
grant on the second issue, finding that the language of the BOP and CGL policies
prohibited the stacking of coverage when both policies covered the same injury. The
policies thus limited the maximum coverage for any one occurrence to the each-
occurrence limit of $1,000,000. The Gohagans appeal the district court’s findings on
both issues.
II.
We review both the district court’s grant of summary judgment and its
interpretation of the insurance policies de novo. Northland Cas. Co. v. Meeks, 540
F.3d 869, 872 (8th Cir. 2008). Summary judgment is appropriate only when, viewing
the facts in the light most favorable to the nonmoving party, there is no genuine issue
of material fact, and the moving party is entitled to judgment as a matter of law. Fed.
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R. Civ. P. 56(c); Raines v. Safeco Ins. Co. of Am., 637 F.3d 872, 874 (8th Cir. 2011).
“Interpretation of an insurance policy is a matter of state law.” Progressive N. Ins.
Co. v. McDonough, 608 F.3d 388, 390 (8th Cir. 2010) (quoting Stan Koch & Sons
Trucking, Inc. v. Great W. Cas. Co., 517 F.3d 1032, 1039 (8th Cir. 2008)). Here,
Missouri law applies, as Missouri is the forum state, and neither party has raised a
choice-of-law claim. See id.
Because the Gohagans have already received $1,000,000 from Cincinnati under
the CGL policy, their appeal fails if the BOP and CGL policies’ anti-stacking
provisions limit the combined total of coverage for Mr. Gohagan’s injury to
$1,000,000. “The interpretation of an insurance policy is a question of law,”
McCormack Baron Mgmt. Servs., Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d
168, 171 (Mo. 1999), to which Missouri courts apply general contract-interpretation
principles, Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. 2007).
In disputes over the meaning of contract language, “[t]he key is whether the contract
language is ambiguous or unambiguous.” Id. (quoting Peters v. Emp’rs Mut. Cas.
Co., 853 S.W.2d 300, 302 (Mo. 1993)). The exercise of interpreting an insurance
policy requires that we “ascertain the intention of the parties and . . . give effect to
that intention.” Secura Ins. v. Horizon Plumbing, Inc., 670 F.3d 857, 861 (8th Cir.
2012) (quoting J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261,
264 (Mo. banc 1973)). The intention of the parties “is presumptively expressed by
the ‘plain and ordinary meaning’ of the policy’s provisions,” id. (quoting Mo. Emp’rs
Mut. Ins. Co. v. Nichols, 149 S.W.3d 617, 625 (Mo. Ct. App. 2004)), “which [we]
read ‘in the context of the policy as a whole,’” id. (quoting Am. States Ins. Co. v.
Mathis, 974 S.W.2d 647, 649 (Mo. Ct. App. 1998)). “In construing contractual
provisions, this court is to avoid an interpretation that renders other provisions
meaningless.” Nodaway Valley Bank v. E.L. Crawford Constr., Inc., 126 S.W.3d 820,
827 (Mo. Ct. App. 2004).
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In this appeal, the Gohagans raise two arguments in an attempt to establish that
the BOP and CGL policies are ambiguous as to the extent of coverage. Such
ambiguity, the Gohagans argue, would compel the court to construe the disputed
policy language against Cincinnati, the insurer. See Rice v. Shelter Mut. Ins. Co., 301
S.W.3d 43, 47 (Mo. 2009) (“Ambiguous policy language must be construed against
the insurer.”).
The Gohagans first argue that the anti-stacking provisions of the BOP and CGL
policies are ambiguous, particularly with respect to the meaning of “aggregate
maximum limit of insurance.” 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.
(emphasis added). In turn, 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.
(emphasis added). The declarations pages of both the BOP and CGL policies refer
to an “Each Occurrence Limit” of $1,000,000 and a “General Aggregate Limit” of
$2,000,000. However, neither policy provides a definition for “aggregate maximum
limit of insurance.”
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The Gohagans argue that, without a definition expressed in the policy, an
ordinary purchaser would understand “aggregate maximum limit of insurance” to
refer to the $2,000,000 general aggregate limit. Under such a reading, each of the two
policies would afford separately $1,000,000 of coverage for Mr. Gohagan’s injury
pursuant to the each-occurrence limit, for a total of $2,000,000 of coverage.
Cincinnati counters that the “aggregate maximum limit of insurance” is “the sum of
all available coverage . . . , the highest applicable limit of insurance” under any one
Cincinnati-issued policy. Thus, Cincinnati argues, “the highest applicable limit of
insurance is the $1,000,000 that Cincinnati has already paid under the CGL policy.”
While conceding that Cincinnati’s interpretation is “reasonable,” the Gohagans assert
that the existence of two reasonable interpretations evidences a lack of clarity that
obligates us to resolve the ambiguity against Cincinnati.
We see no ambiguity here. “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.” United Fire & Cas.
Co. v. Titan Contractors Serv., Inc., 751 F.3d 880, 883-84 (8th Cir. 2014) (quoting
Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690 (Mo. 2009)). “A contract or
provision . . . is not ambiguous merely because the parties disagree over its meaning.”
Atlas Reserve Temps., Inc. v. Vanliner Ins. Co., 51 S.W.3d 83, 87 (Mo. Ct. App.
2001).
Here, the anti-stacking provisions viewed in their entirety are unambiguous.
By focusing solely on “aggregate maximum limit of insurance,” the Gohagans ignore
the stipulation that the aggregate maximum limit “shall not exceed the highest
applicable limit of insurance under any one policy.” In this case, the tree-falling
incident that resulted in Mr. Gohagan’s injury represents the “occurrence” from which
our interpretation of the policies flows. Both policies have an each-occurrence limit
of $1,000,000. For the occurrence at issue, then, the “highest applicable limit of
insurance” under either individual policy is equivalent to the each-occurrence limit.
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Thus, the aggregate maximum limit of insurance under both policies combined may
not exceed the each-occurrence limit under either policy—in this case, $1,000,000.
See Smith v. Wausau Underwriters Ins. Co., 977 S.W.2d 291, 294 (Mo. Ct. App.
1998) (applying an anti-stacking clause nearly identical to those at issue here to limit
the “aggregate maximum limit of liability” under two policies issued by the insurance
company or affiliate to an amount “not exceed[ing] the highest applicable limit of
liability” under either policy). Reading the anti-stacking provisions as a whole, see
Secura Ins., 670 F.3d at 861, the Gohagans therefore received the full amount of
coverage owed to them under the BOP and CGL policies when Cincinnati paid them
$1,000,000 pursuant to the CGL policy.
The Gohagans next contend that, even if the anti-stacking provisions are not
ambiguous, the BOP and CGL policies still are ambiguous because the “Other
Insurance” provision in each policy establishes coverage that the anti-stacking
provision rescinds. These “Other Insurance” provisions read as follows:
This insurance is primary except [in circumstances not relevant here].
If this insurance is primary, our obligations are not affected unless any
of the other insurance is also primary. Then, we will share with all that
other insurance by the method described in c. below.
Section c., in turn, sets forth the following “Method of Sharing”:
If all of the other insurance permits contribution by equal shares, we will
follow this method also. Under this approach each insurer contributes
equal amounts until it has paid its applicable limit of insurance or none
of the loss remains, whichever comes first.
(emphasis added). These “Other Insurance” clauses, the Gohagans argue,
affirmatively provide primary coverage under each policy, such that each policy
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provides for payment in shares equal to those paid under any other policy. In other
words, the Gohagans submit that the BOP and CGL policies individually provide
“primary coverage” that the anti-stacking provisions impermissibly limit. See Seeck
v. Geico Gen. Ins. Co., 212 S.W.3d 129, 134 (Mo. 2007) (“Where, as here, an other
insurance clause appears to provide coverage but other clauses indicate that such
coverage is not provided, then the policy is ambiguous, and the ambiguity will be
resolved in favor of coverage for the insured.”).
The Gohagans’ interpretation, however, again mistakenly relies on reading an
individual provision in isolation from the rest of the policy, an approach that would
leave the anti-stacking provisions meaningless. The district court correctly
determined that the “Other Insurance” provisions apply when policies covering the
same injury are issued by Cincinnati and another insurance company, not when two
policies are issued by Cincinnati. Instead, the “Two or More Policies Issued by Us”
provisions apply when policies covering the same injury are issued by Cincinnati
alone. The Gohagans’ interpretation, the district court continued, would render the
“Two or More Policies Issued by Us” provisions meaningless, an outcome courts seek
to avoid when interpreting contracts. Nodaway, 126 S.W.3d at 827. We agree. The
Gohagans’ attempts to create ambiguity where none exists have failed.
III.
For the reasons set forth above, the district court did not err in finding that the
BOP and CGL policies prohibit stacking where both policies cover the same injury,
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such that the maximum coverage for Mr. Gohagan’s injury is $1,000,000.3 We thus
affirm the district court’s grant of summary judgment to Cincinnati.
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3
As our conclusion prevents the Gohagans from receiving more than the
$1,000,000 in coverage Cincinnati has already paid them under the CGL policy, we
need not reach the issue of whether coverage under the BOP policy was limited to
bodily injury arising out of Campbell’s ownership, maintenance, or use of the
Waynesville premises designated in the policy.
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