Dustin Brazil v. Auto-Owners Insurance Company

United States Court of Appeals
For the Eighth Circuit
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No. 20-2764
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Dustin Brazil, individually; J.B., a minor, by next friend Dustin Brazil; Connie
Weyer
Plaintiffs - Appellees
v.
Auto-Owners Insurance Company, (Mutual)
Defendant - Appellant
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Appeal from United States District Court
for the Western District of Missouri - Jefferson City
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Submitted: April 16, 2021
Filed: July 2, 2021
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Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.
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GRUENDER, Circuit Judge.
After an auto accident that killed Jessica and Malachi Brazil and injured J.B.,
Auto-Owners Insurance Company agreed to cover a maximum of $1 million total in
losses for Jessica, Malachi, and J.B. Jessica’s husband, who is also Malachi’s and
J.B.’s father, and Jessica’s mother (“Plaintiffs”) filed a declaratory-judgment suit
against Auto-Owners alleging that they were entitled to more under the Auto-
Owners’ Policy (“Policy”). Both sides filed motions for summary judgment. The
district court granted in part and denied in part each motion for summary judgment,
disposing of all claims. Auto-Owners appeals, arguing that the district court
erroneously interpreted the Policy to provide $3 million in total coverage. We agree
and therefore reverse, vacate the judgment, and remand for entry of judgment
consistent with this opinion.
I.
In March 2018, Jessica Brazil was driving a vehicle in Camden County,
Missouri with her two children, Malachi Brazil and J.B., as passengers. Another
vehicle, driven by Amber Metcalf, crossed the center lane and struck Jessica’s
vehicle head on, killing Metcalf, Jessica, and Malachi, and injuring J.B. Metcalf
was an uninsured motorist.
The vehicle Jessica was driving at the time of the accident was covered by the
Policy. Jessica, Malachi, and J.B. were occupancy insureds under the Policy, and
the accident was covered by the Policy’s uninsured-motorist section. When Jessica’s
family requested that Auto-Owners cover Jessica’s, Malachi’s, and J.B.’s injuries,
Auto-Owners agreed to pay uninsured-motorist coverage only in the total amount of
$1 million.
Believing that this amount was less than provided for under the Policy’s terms,
Plaintiffs filed a declaratory-judgment suit against Auto-Owners in Missouri state
court alleging that Auto-Owners owed more than $1 million. Auto-Owners removed
the case to federal court on the basis of diversity jurisdiction. See 28 U.S.C.
§ 1332(a)(1). The parties both moved for summary judgment. The district court
granted in part and denied in part each motion and entered a declaratory judgment
that the Policy:
is ambiguous as to whether the “each person” or “each occurrence”
limit applies to uninsured motorist coverage, and therefore the Policy
must be construed as providing up to $1 million in coverage for the
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death of Jessica Brazil, up to $1 million in coverage for the death of
Malachi Brazil, and up to $1 million in coverage for bodily injuries to
J.B[.]
Auto-Owners appeals, arguing that under the Policy, it is liable at most for $1 million
total for Jessica, Malachi, and J.B.
II.
Under Missouri law, which the parties agree governs this diversity case, the
interpretation of an insurance policy is a question of law, which we review de novo.
Capitol Indem. Corp. v. 1405 Assocs., Inc., 340 F.3d 547, 549 (8th Cir. 2003).
“Missouri courts apply general contract-interpretation principles” to the
interpretation of insurance policies. Gohagan v. Cincinnati Ins., 809 F.3d 1012,
1015 (8th Cir. 2016). “In interpreting an insurance contract, we are to read the
contract as a whole and determine the intent of the parties, giving effect to that intent
by enforcing the contract as written.” Stotts v. Progressive Classic Ins., 118 S.W.3d
655, 662 (Mo. Ct. App. 2003); see also Lueckenotte v. Lueckenotte, 34 S.W.3d 387,
395 (Mo. 2001) (per curiam) (applying this rule to contracts generally). “A
construction which attributes a reasonable meaning to all the provisions of [an]
agreement is preferred to one which leaves some of the provisions without function
or sense.” Ringstreet Northcrest, Inc. v. Bisanz, 890 S.W.2d 713, 718 (Mo. Ct. App.
1995); see also Gohagan, 809 F.3d at 1015 (applying this rule to an insurance policy
under Missouri law); Miller v. O’Brien, 168 S.W.3d 109, 116 (Mo. Ct. App. 2005)
(applying the rule that a court will give “every clause some meaning if it is
reasonably able to do so” to an insurance policy). Where policy language is
unambiguous, Missouri courts will enforce the policy as written absent a statute or
public policy requiring coverage. Rodriguez v. Gen. Accident Ins. Co. of Am., 808
S.W.2d 379, 382 (Mo. 1991). Ambiguity exists when a policy is “reasonably open
to different constructions.” Burns v. Smith, 303 S.W.3d 505, 509 (Mo. 2010).
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In general, courts applying Missouri law must “resolve[] ambiguities in favor
of the insured.” Seeck v. Geico Gen. Ins., 212 S.W.3d 129, 132 (Mo. 2007). But
insureds are entitled only “to a resolution of [an] ambiguity consistent with their
objective and reasonable expectations as to what coverage would be provided.”
Burns, 303 S.W.3d at 512; see also Mendota Ins. v. Ware, 348 S.W.3d 68, 74 (Mo.
Ct. App. 2011) (declining to read an insurance policy to impose no liability limits
despite an alleged ambiguity because this was inconsistent with the “objective and
reasonable expectations as to what coverage would be provided”); Estrin Constr.
Co. v. Aetna Cas. & Sur. Co., 612 S.W.2d 413, 420 (Mo. Ct. App. 1981) (“[N]ot
every ambiguity in an insurance policy is resolved favorably to the insured, but only
where a reasonable person in the position of the adherent would have expected
coverage.”).
The Policy’s Declarations state that the Policy’s Uninsured Motorist limits are
“$1,000,000 each person / $1,000,000 each occurrence.” The “Uninsured Motorist
Coverage” section of the Policy defines coverage and limits of insurance as follows:
2. COVERAGE
a. We will pay compensatory damages, . . . that any person
is legally entitled to recover from the owner or operator of
an uninsured auto for bodily injury sustained while
occupying an auto that is covered by SECTION II –
LIABILITY COVERAGE of the policy.
[. . .]
4. LIMIT OF INSURANCE
We will pay compensatory damages, . . . for bodily injury up to
the Limit of Insurance shown in the Declarations for Uninsured
Motorist Coverage as follows:
a. The limit shown for “each person” is the amount of
coverage and the most we will pay, subject to 4.b. below,
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for all compensatory damages, . . . because of or arising
out of bodily injury to one person in any one occurrence.
b. The limit shown for “each occurrence” is the total amount
of coverage and the most we will pay, subject to 4.a.
above, for all compensatory damages, . . . because of or
arising out of bodily injury to two or more persons in any
one occurrence.
Auto-Owners argues that the district court erred by finding that this language
is ambiguous, enforcing only the “each person” limitation, and consequently holding
that, because there were three people injured in the crash, the insurance limit in this
case was $3 million. Auto-Owners claims that this erroneously reads the “each
occurrence” limitation out of the contract entirely. Plaintiffs counter that Auto-
Owners’ proposed interpretation cannot be correct because it creates superfluity.
Plaintiffs also argue that the district court correctly held that the insurance limit was
$3 million because the Policy is ambiguous for multiple reasons. According to the
Plaintiffs, because the Policy is ambiguous, it should be interpreted in favor of the
insureds as providing $3 million in coverage.
Auto-Owners is correct. Section 4.a provides a limit if “bodily injury”
happens to “one person in any one occurrence.” See Brown v. Donham, 900 S.W.2d
630, 633 (Mo. 1995) (interpreting a similar provision). That person may recover, at
“most,” $1 million. Section 4.a states that it is “subject to” section 4.b, meaning that
it may “be overridden by” the limit in section 4.b. See Bryan A. Garner, Garner’s
Dictionary of Legal Usage 616, 852 (3d ed. 2011). Section 4.b provides a second
limit that applies to incidents causing “bodily injury to two or more persons in any
one occurrence.” Those persons together may recover, at “most,” $1 million total.
See Brown, 900 S.W.2d at 633 (interpreting how provisions similar to 4.a and 4.b
work together to provide two limits that both apply to a claim). Section 4.b is also
“subject to” section 4.a, meaning that it may “be overridden by” the limit in section
4.a. Here, because three persons—Jessica, Malachi, and J.B.—suffered injuries, the
limits in sections 4.a and 4.b both apply. Each person in the crash is limited by
section 4.a to a recovery of, at most, $1 million. And because the crash resulted in
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injuries to two or more people, their combined recovery is also limited by section
4.b to, at most, $1 million total. See id.
Plaintiffs argue that this interpretation is incorrect because it renders 4.b’s
“subject to” language and the entirety of 4.a superfluous, and because 4.a and 4.b
could have been written as one provision instead of two. These arguments are
unavailing. The canon against surplusage does not require courts to read a contract
in a way that contains no surplusage. See Miller, 168 S.W.3d at 116 (noting that a
court should give “every clause some meaning if it is reasonably able to do so”);
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts
176-77 (2012) (noting that the canon against surplusage is not always “dispositive
because . . . [s]ometimes drafters do repeat themselves and do include words that
add nothing of substance, either out of a flawed sense of style or to engage in the ill-
conceived but lamentably common belt-and-suspenders approach”). It merely
counsels courts presented with two reasonable interpretations—one that contains
surplusage and one that does not—to choose the one without. See Ringstreet, 890
S.W.2d at 718.
Here, there is no reasonable interpretation of the Policy that avoids surplusage.
Plaintiffs are correct that the Policy contains surplusage because there is no need for
it to clarify that 4.b is “subject to” 4.a when there is no instance in which a person
could recover more under the 4.b “each occurrence” limit than the 4.a “each person”
limit. That is, the Policy’s effect would be the same if the “subject to” language in
4.b was omitted. But Plaintiffs’ proposed alternative is unreasonable, as it requires
us to write out the “each occurrence” limit entirely.1 This results in more surplusage,
not less, and it materially changes the parties’ bargain. By contrast, Auto-Owners’
reading does no violence to the Policy’s language. Because 4.a and 4.b specify at
“most” how much an insured may recover, those sections are properly read as
limitations to coverage, not promises to provide a certain amount of coverage.
1
Plaintiffs’ reading also results in the same “subject to” surplusage that
Plaintiffs claim to be trying to avoid. If we use Plaintiffs’ reading, we create that
surplusage in both 4.a and 4.b, not just in 4.b.
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Section 4.a applies when only one person is injured in one occurrence, and both 4.a
and 4.b apply when two or more persons are injured in one occurrence. Thus, Auto-
Owners’ reading does not render section 4.a superfluous. Finally, Plaintiffs’
argument that 4.a and 4.b could have been written as one provision also fails to show
surplusage because, as we have discussed, both 4.a and 4.b are doing some work.
Certainly, the Policy could have been written more succinctly, but that is not our
query here. Because Plaintiffs’ reading results in more surplusage than Auto-
Owners’ reading, and because Auto-Owners’ reading is the only one that applies
both limitations, Plaintiffs’ surplusage argument fails. Cf. Barton v. Barr, 590 U.S.
---, 140 S. Ct. 1442, 1453 (2020) (holding that redundancy in one portion of a statute
is not a license to rewrite or eviscerate another portion of the statute contrary to the
text).
Next, we address Plaintiffs’ ambiguity argument. Plaintiffs claim that the
Policy is ambiguous because “subject to” has several dictionary definitions—
“affected by or possibly affected by,” “dependent on something else to happen or be
true,” and “contingent.” Plaintiffs also argue that the Policy is ambiguous because
the “subject to” language in both 4.a and 4.b makes those provisions circular and
conflicting. Plaintiffs are correct that, when there is an ambiguity in the policy,
Missouri law generally requires us to adopt the interpretation more favorable to the
insured. See Seeck, 212 S.W.3d at 132. But an ambiguity only exists when there
are two or more reasonable interpretations of a policy. Id. Despite Plaintiffs’ claim
that “subject to” can have multiple meanings, they have not demonstrated an
ambiguity in the Policy because they have not pointed to a second reasonable
interpretation of the language in sections 4.a and 4.b. Plaintiffs’ only proffered
reading is not reasonable because it results in an interpretation that causes the “each
occurrence” limit—for which the parties bargained—never to apply. Cf. Mendota,
348 S.W.3d at 74 (declining to read an insurance policy to impose no liability limits
despite an alleged ambiguity because this was inconsistent with the “objective and
reasonable expectations as to what coverage would be provided” (internal quotation
marks and brackets omitted)). Additionally, the “subject to” language does not make
4.a and 4.b circular and conflicting because 4.a and 4.b are written as two limits to
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coverage, which can both apply to the same claim, not two promises of coverage,
which could not. Thus, both 4.a and 4.b can apply to a single claim without
conflicting with each other. Because there is only one reasonable interpretation of
the Policy and because 4.a and 4.b do not conflict with each other, the Policy is not
ambiguous.
Plaintiffs’ cited cases, Jones v. Mid-Century Insurance, 287 S.W.3d 687 (Mo.
2009), and Ritchie v. Allied Property & Casualty Insurance, 307 S.W.3d 132 (Mo.
2009), are inapposite. Both cases addressed underinsured motorist policies that
prevented the insured from ever recovering the full amount of the policy limits. See
Jones, 287 S.W.3d at 690-92; Ritchie, 307 S.W.3d at 139-41. The insurance
companies in those cases argued that they had to pay only the policy limit minus the
amount the underinsured’s insurance paid. Jones, 287 S.W.3d at 689; Ritchie, 307
S.W.3d at 136. Thus, the insurance companies’ interpretations of the policies made
them misleading because their limits could never be paid in full. Jones, 287 S.W.3d
at 691; Ritchie, 307 S.W.3d at 140. In such cases, the Missouri Supreme Court has
held that the insurance company must pay damages minus the amount the
underinsured’s insurance paid, up to the full amount of the policy. Jones, 287
S.W.3d at 692-93; Ritchie, 307 S.W.3d at 141. Because this is not a case in which
the Policy will never provide its stated coverage limits, Jones and Ritchie do not
apply.
III.
Therefore, we reverse the district court, vacate the judgment, and remand for
an entry of judgment consistent with this opinion.
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