701 F.3d 829
8th Cir.2012Background
- Church-owned bus insured by Argonaut with $1M liability and $1M UIM, plus $1M umbrella for auto accidents.
- Interpleader filed by Argonaut seeking to deposit $2M into court for liability plus $1M under umbrella; claimants assert additional $1M under policy and UIM can be aggregated.
- District court granted summary judgment for claimants to aggregate limits and ordered Argonaut to pay $2M into registry and $1M under umbrella; final judgment 54(b) entered for immediate appeal.
- Argonaut argues policy unambiguously precludes aggregation of liability and UIM coverages; Arkansas law governs construction of policy terms.
- UIM endorsement provides payment after exhaustion of liability limits and defines underinsured vehicle to include vehicle with liability coverage under same policy.
- Key issue: whether policy provisions allow aggregate recovery of liability and UIM coverages, citing Philadelphia Indemnity as controlling under Arkansas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May liability and UIM coverages be aggregated under the policy? | Argonaut: policy limits aggregate or preclude aggregation. | Claimants: aggregate recoveries are permitted by UIM endorsement and related provisions. | Yes; policy unambiguously allows aggregate recovery. |
| Do 'Two or More Coverage Forms' or 'Limit of Insurance' provisions bar aggregation? | Argonaut: these provisions cap at the higher of liability or UIM limits. | Claimants: provisions do not prevent combining liability and UIM across coverages. | No; these provisions do not prevent aggregation of liability and UIM. |
| Does the 'Other Insurance' provision override aggregation of liability and UIM? | Argonaut: clause may force higher limit per vehicle/coverage form. | Claimants: endorsement language does not override aggregate recovery across coverages. | No; 'Other Insurance' provision does not override aggregate recovery. |
Key Cases Cited
- Anglin v. Johnson Reg’l Med. Ctr., 289 S.W.3d 28 (Ark. 2008) (charitable immunity from tort liability discussed)
- Elam v. First Unum Life Ins. Co., 57 S.W.3d 165 (Ark. 2001) (ambiguous policy language versus strict construction)
- Philadelphia Indemnity Ins. Co. v. Austin, 2011 Ark. 283 (Ark. 2011) (control by Philadelphia Indemnity on aggregate recovery interpretation)
- Smith v. S. Farm Bureau Cas. Ins. Co., 114 S.W.3d 205 (Ark. 2003) (read policy parts together; harmonize clauses)