Progressive Northwestern Insurance Co. v. Handshumaker
662 F. App'x 630
| 10th Cir. | 2016Background
- Plaintiff Brenda Handshumaker was injured when Gary Vangilder struck her while driving a Budget Rental box truck; she obtained a $225,000 consent judgment against Vangilder.
- Budget Rental paid its $25,000 policy limit; Handshumaker sued Progressive Northwestern Insurance Company under a policy issued to Angie Vangilder (and derivatively Gary) to recover the balance.
- Progressive had earlier declined to defend Vangilder in the tort suit and brought a declaratory judgment action in federal court seeking a ruling it owed no coverage.
- Progressive’s policy provided liability coverage only for accidents involving an "auto" as defined by the policy; the policy explicitly excluded "cargo cutaway vans or other vans with cabs separate from the cargo area."
- The Budget Rental box truck fell within that exclusion, so the district court held Vangilder was not an insured under Part I (liability) of the Progressive policy.
- Handshumaker argued an "Other Insurance" clause and the use of the undefined term "vehicle" created either an independent excess-coverage obligation or an ambiguity; the district court and the panel rejected those contentions and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Progressive’s policy covers liability for the Budget Rental box truck | Handshumaker: Progressive’s policy (including the Other Insurance clause referring to "vehicle") either provides excess coverage or is ambiguous and should be construed for coverage | Progressive: The policy’s operative coverage depends on the defined term "auto," which excludes the box truck, so no coverage exists | Court: No coverage — the truck is excluded as a non-"auto," so Vangilder was not an insured under Part I |
| Whether the "Other Insurance" clause creates an independent basis for coverage | Handshumaker: The clause shows Progressive assumed excess liability for vehicles not meeting the "auto" definition | Progressive: The clause only allocates priority when more than one policy actually provides coverage; it does not create coverage where none exists | Court: The clause governs priority between overlapping policies and does not create coverage when the policy otherwise disclaims coverage |
| Whether use of the undefined term "vehicle" in the Other Insurance clause creates ambiguity | Handshumaker: The undefined term "vehicle" makes the policy ambiguous and should be construed in favor of the insured | Progressive: Read in context with the defined term "auto," there is no ambiguity about coverage | Court: No ambiguity — the defined term "auto" controls coverage, and the Other Insurance clause does not render it ambiguous |
| Whether cited precedent compels a different result | Handshumaker: Relies on cases construing ambiguous policy language in favor of insureds | Progressive: Distinguishes those cases as involving different provisions or factual contexts where coverage existed | Court: Prior cases cited by Handshumaker are inapposite; they illustrate ambiguity principles but do not change the outcome here |
Key Cases Cited
- Thomas v. Berry Plastics Corp., 803 F.3d 510 (10th Cir. 2015) (standard of de novo appellate review applied)
- Bussman v. Safeco Ins. Co. of Am., 317 P.3d 70 (Kan. 2014) (ambiguities in insurance policies construed for insured)
- Bendis v. Fed. Ins. Co., 958 F.2d 960 (10th Cir. 1991) (apply state law principles to construing insurance policies)
- Catholic Diocese of Dodge City v. Raymer, 840 P.2d 456 (Kan. 1992) (interaction of exclusion and separate-application clause produced ambiguity)
- Narron v. Cincinnati Insurance Co., 97 P.3d 1042 (Kan. 2004) (undefined "collectible insurance" phrase held ambiguous and construed for insured)
- Farm Bureau Mutual Ins. Co. v. Enterprise Leasing Co., 58 P.3d 751 (Kan. Ct. App. 2002) (dispute over priority/excess treatment where the policy at issue did provide coverage)