43 F. Supp. 3d 1093
D. Mont.2014Background
- On Sept. 15, 2012, Carlene and her husband Larry were riding their 2005 Yamaha motorcycle when another driver negligently collided with them; Larry died and Carlene was injured.
- The O’Connells held an auto insurance policy with Liberty Mutual listing three automobiles but not the motorcycle; the policy provided UIM coverage ($50,000/$100,000) and med-pay ($5,000).
- Carlene exhausted the tortfeasor’s liability limits and then sought UIM benefits under the Liberty Mutual policy; Liberty Mutual denied UIM benefits relying on an ‘‘owned vehicle’’ exclusion.
- The exclusion precludes UIM coverage for bodily injury sustained by an insured while "occupying" or when struck by any motor vehicle the insured owns that is not insured for UIM under the policy.
- Carlene sued for a declaratory judgment, arguing the term "motor vehicle" is ambiguous (arguing a motorcycle might be excluded from that term); the parties filed cross-motions for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "motor vehicle" in the UIM exclusion is ambiguous | "Motor vehicle" can reasonably be read not to include motorcycles, so the exclusion is ambiguous and should be construed to afford coverage | The ordinary meaning of "motor vehicle" includes motorcycles; policy language is consistent and unambiguous | Term is not ambiguous; includes motorcycles |
| Whether med-pay exclusion wording creates ambiguity about "motor vehicle" | The med-pay exclusion ("having fewer than four wheels") suggests "motor vehicle" elsewhere might exclude two- or three-wheeled vehicles | The med-pay language actually implies motor vehicles can have fewer than four wheels and is consistent with including motorcycles | No ambiguity; med-pay clause consistent with inclusion of motorcycles |
| Whether omission of "motorcycle" from the "your covered auto" list creates ambiguity | The laundry-list omission indicates motorcycles are not intended as "motor vehicles" under the policy | A list is not exhaustive; broad terms can include items not listed; omission does not create ambiguity | Omission does not render "motor vehicle" ambiguous |
| Whether the owned-vehicle exclusion violates insureds’ reasonable expectations or public policy | The exclusion frustrates reasonable expectations and is contrary to public policy | The exclusion is valid, narrowly construed, and not against public policy | Exclusion does not defeat reasonable expectations and is not against public policy |
Key Cases Cited
- Newman v. Scottsdale Ins. Co., 301 P.3d 348 (Mont. 2013) (insurance-contract interpretation principles)
- Newbury v. State Farm Fire & Cas. Ins. Co., 184 P.3d 1021 (Mont. 2008) (policy read as whole; reconcile provisions)
- Allstate Ins. Co. v. Wagner-Ellsworth, 188 P.3d 1042 (Mont. 2008) (court enforces clear policy language)
- Farmers Alliance Mut. Ins. Co. v. Holeman, 961 P.2d 114 (Mont. 1998) (ambiguities construed for coverage)
- Maurice v. State Farm Mut. Auto. Ins. Co., 235 F.3d 7 (1st Cir. 2000) (owned-vehicle exclusion applied where the insured occupied his motorcycle)
- Hall v. Patriot Mut. Ins. Co., 942 A.2d 663 (Me. 2007) (owned-vehicle exclusion unambiguously applied to motorcycle)