The MIDWESTERN INDEMNITY COMPANY, Plaintiff-Appellee v. Malissa BROOKS; Bradley Brooks, Defendants-Appellants
No. 14-2016
United States Court of Appeals, Eighth Circuit
March 2, 2015
779 F.3d 540
Submitted: Jan. 13, 2015.
Safeblood Group argues that because the jury had to rely on opinion or discretion to determine the amount of damages, prejudgment interest was inappropriate. We agree. In Sims, the Arkansas Supreme Court affirmed the trial court‘s denial of prejudgment interest when the plaintiff and defendant had agreed to share business expenses and “settle up” at the end of the year, and the plaintiff requested and was awarded $49,095.15. Id. at 519-20. The Arkansas Supreme Court held that the trial court, after a bench trial, “had to use its discretion in determining which expenses [the defendant] was responsible in reimbursing [the plaintiff] for, and whether [the plaintiff‘s] documents and testimony reflected reliable and fair dollar amounts.” Id. Similarly here, the jury had to use its discretion to determine which expenses to reimburse Licensees for—and indeed, the jury did not award Licensees all of the expenses that they requested as damages. The fact that the jury awarded a lesser amount than requested is not necessarily dispositive, but it is unclear here how the jury determined which expenses should be awarded as damages and how the jury arrived at the total damages amount. See Aceva Tech., LLC v. Tyson Foods, Inc., 2013 Ark. App. 495, 429 S.W.3d 355, 366 (2013) (holding that awarding prejudgment interest was appropriate when it was clear that the jury awarded damages for three out of five of the requested expenses).
It is also unclear when the breach of contract occurred. In Sims, the Arkansas Supreme Court reasoned that denying prejudgment interest was appropriate because “there was not a specific occurrence or date of an occurrence that gave rise to this cause of action.” 284 S.W.3d at 520. The plaintiff in Sims pointed to the date that the contract was formed, but the Arkansas Supreme Court held that the agreement itself was not what led to the claim. Id. Here, Licensees argue that it was the last day on which they incurred expenses in reliance on the contract that gave rise to the cause of action. This is not sufficiently definite in time, however, because Licensees could have essentially chosen any day over the course of their dealings with defendants as the date that gave rise to the cause of action. Indeed, although Licensees discovered in May 2010 that they would not be able to register the patent, they claimed damages from as late as May 2011. Because the facts here are indistinguishable from Sims, we conclude that the district court abused its discretion when it awarded Licensees prejudgment interest on their breach-of-contract claim.
VIII. Conclusion
We affirm the jury‘s verdict on the ADTPA and breach-of-contract claims, reverse the dismissal of Licensees’ fraud claim and the district court‘s award of prejudgment interest, and remand the fraud claim to the district court for trial.
Aaron I. Mandel, argued, Saint Louis, MO, (Scott C. Harper, Saint Louis, MO, on the brief), for Plaintiff-Appellee.
Before RILEY, Chief Judge, COLLOTON and KELLY, Circuit Judges.
RILEY, Chief Judge.
Malissa Brooks seeks to “stack”1 her underinsured motorist (UIM) coverage limits after a negligent driver struck Brooks as she rode her bicycle. Her insurer, Midwestern Indemnity Company (Midwestern), moved for summary judgment on the basis that Brooks‘s policy unambiguously prohibits UIM coverage stacking. The district court2 agreed and granted summary judgment in Midwestern‘s favor. Because Brooks‘s policy clearly forbids stacking, we affirm.3
I. BACKGROUND
A. Facts
On September 19, 2011, Brooks was riding her bicycle when Clyde Lawrence negligently struck her with his car. Lawrence afterward passed away of unrelated causes. Brooks and her husband, Bradley Brooks, filed suit in Missouri state court against Lawrence‘s estate (estate), which soon settled for the $50,000 limit of Lawrence‘s auto insurance policy. In this set
The Brookses’ auto insurance policy with Midwestern provides UIM bodily injury coverage for several vehicles. On the declarations page for the UIM endorsement, the policy states, “Insurance is provided where a premium entry is shown for the coverage.” This page lists “Underinsured Motorist Bodily Injury” with liability limits of $100,000 per-person and $300,000 per-accident. Next to this, a premium amount appears for each of five vehicles, indicating the Brookses pay five UIM premiums for UIM coverage, one for each of the five vehicles. After the Brookses settled with the Lawrence estate, Midwestern paid the Brookses $100,000, declaring this per-person limit is the maximum amount for a single application of the policy‘s UIM coverage.
B. Procedure
In March 2013, Midwestern filed suit against the Brookses in federal court, seeking a judicial declaration that its UIM coverage limits for multiple vehicles do not stack to multiply the per-person limit. The Brookses moved to dismiss the federal case, contending their state suit against the estate (which had already been settled, but not dismissed from the state court‘s docket) was a “pending, parallel state proceeding encompass[ing] the same dispute at issue in” Midwestern‘s federal case.
In May 2013, before the district court ruled on this motion, the Brookses amended their state court complaint to add Midwestern as a defendant. Midwestern removed that suit to federal court, asserting diversity jurisdiction—both Brookses are Missouri citizens, and the parties all agree Midwestern is not. Midwestern contended that, although the estate was a named defendant, the court could ignore its Missouri citizenship and lack of consent to removal, because the settlement agreement between the Brookses and the estate extinguished all claims against the estate and Lawrence‘s heirs, leaving the estate with no real interest in the lawsuit. Although the Brookses contested the removal, the district court agreed with Midwestern, concluding that when the estate is ignored, complete diversity exists and removal was proper. The district court thereafter consolidated the two cases into the present action.
In this consolidated suit, Midwestern and the Brookses filed cross-motions for summary judgment on the stacking issue. Granting summary judgment in Midwestern‘s favor, the district court determined the plain language of the policy makes it “quite clear” intra-policy stacking is prohibited and the per-person limit for any one accident is $100,000.
II. DISCUSSION
A. Diversity Jurisdiction and Removal
The Brookses’ initial argument rests on two facts: first, the estate, also a defendant, did not consent to removal; second, both the Brookses and the estate, by virtue of Lawrence‘s citizenship, are citizens of Missouri for purposes of diversity, see
The Brookses maintain “the Estate ... was not a nominal party ... because the [UIM endorsement] required The Estate‘s presence in the litigation.” The Brookses’ only basis for this assertion is policy language requiring them to “exhaust[]” the underinsured motorist‘s liability coverage and prove they are “legally entitled” to recover from the motorist. Neither policy condition demands the estate‘s presence in the lawsuit, nor would the requirement of such a procedural formality give the estate any real interest in the dispute between the Brookses and Midwestern.
In Bradley, we addressed whether removal was proper despite the absence of consent from two third-party defendants when the parties to the third-party action all stipulated “as to the compromise and settlement of the third-party action.” Bradley, 382 F.2d at 419. As then-Judge Blackmun wrote for the panel, the third-party defendants, “[f]or all practical purposes, ... went out of the lawsuit when that stipulation was executed.” Id. “Their interest in the suit from that point on was a fragile one,” and were therefore ignored “for removal purposes.” Id.; see also R.C. Wegman Constr. Co. v. Admiral Ins. Co., 629 F.3d 724, 726 (7th Cir.2011) (“[A] party isn‘t permitted to destroy federal diversity jurisdiction by naming as a defendant someone against whom he does not seek relief.” (citing Walden v. Skinner, 101 U.S. 577, 589, 25 L.Ed. 963 (1879))). The situation here is precisely the same: through the settlement, the Brookses waived all their claims against the estate and its insurer. We agree with the district court that “once the claims against [the estate] were settled the continuation of the suit against [it] was a nullity; the addition of Midwestern Indemnity was the equivalent of taking a new dispute against a new party and placing it in the shell that was the original suit against [the estate].” Thus, diversity jurisdiction exists and removal was proper.
B. Stacking
The Brookses argue the district court erred in reading their policy to limit their UIM coverage to $100,000, and the Brookses assert they should be permitted to stack the UIM coverage for their five covered vehicles. We review the district court‘s grant of summary judgment de novo, viewing the record in the light most favorable to the non-moving party—here, the Brookses. See Moody v. Vozel, 771 F.3d 1093, 1096 (8th Cir.2014). “The parties and the district court agree Missouri law applies to this diversity action.”
As a matter of public policy, Missouri courts have invalidated “attempts by insurance companies to prohibit the stacking of uninsured motorist coverage.” Jordan v. Safeco Ins. Co. of Ill., 741 F.3d 882, 884 (8th Cir.2014) (emphasis added). But “[b]ecause Missouri does not require UIM coverage, ‘the existence of the coverage and its ability to be stacked are determined by the contract entered between the insured and the insurer.‘” Daughhetee v. State Farm Mut. Auto. Ins. Co., 743 F.3d 1128, 1131 (8th Cir.2014) (quoting Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 383 (Mo.1991) (en banc)). Consequently, “general rules of contract construction apply,” and the “key” question is whether the policy unambiguously prohibits stacking or “is reasonably open to different constructions” as to the permissibility of stacking. Id. at 1131-32 (quotations omitted). If the former is true, we must enforce the contract to prohibit stacking; if the latter is true, the policy is ambiguous and we must construe the policy to permit stacking. See id. at 1132.
The starting point here is the UIM endorsement‘s Limit of Liability provision, which states:
A. The Limit Of Liability shown in the Schedule or in the Declarations for each person for Underinsured Motorists Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of “bodily injury” sustained by any one person in any one accident. Subject to this limit for each person, the Limit Of Liability shown in the Schedule or in the Declarations for each accident for Underinsured Motorists Coverage is our maximum limit of liability for all damages for “bodily injury” resulting from any one accident.
This is the most we will pay regardless of the number of:
- “Insureds“;
- Claims made;
- Vehicles or premiums shown in the Schedule or in the Declarations; or
- Vehicles involved in the accident.
(Emphasis added). This language emphasizes that the $100,000 per-person limit shown on the declarations page is the most Midwestern covers for “bodily injury’ sustained by any one person in any one accident.” (Emphasis added). In plain terms, the provision prohibits any attempt to stack these limits “regardless of the number of ... Vehicles or premiums shown ... in the Declarations.”
Although this anti-stacking limitation is unambiguous, we have also said that “if a policy has ‘clauses that claim to prohibit stacking and also contain[s] clauses that appear to authorize stacking,’ coverage is ambiguous and must be resolved in favor of the insured.” Daughhetee, 743 F.3d at 1132 (emphasis added) (quoting Jordan, 741 F.3d at 885). We understand the Brookses to argue that elements of the UIM endorsement‘s declarations page “appear to authorize stacking,” id., making the policy ambiguous on this point.
The declarations page reads, “Insurance is provided where a premium entry is shown for the coverage.” Because a premium entry is shown for each of five vehicles, the Brookses maintain they were promised a stack of five UIM coverage limits for any single accident. In their view, the payment of an additional premium for each additional vehicle must signify an increase in the coverage limit; otherwise, the Brookses believe, Midwestern is improperly charging them more in premiums despite providing no more coverage. As part of this argument, the Brookses
In Missouri, “[i]nsurance policies are read as a whole, and the risk insured against is made up of both the general insuring agreement as well as the exclusions and definitions.” Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo.2007) (en banc). “The declarations state the policy‘s essential terms in an abbreviated form, and when the policy is read as a whole, it is clear that a reader must look elsewhere to determine the scope of coverage.” Floyd-Tunnell v. Shelter Mut. Ins. Co., 439 S.W.3d 215, 221 (Mo.2014) (en banc). “The ‘declarations’ are introductory only and subject to refinement and definition in the body of the policy.”4 Peters v. Farmers Ins. Co., 726 S.W.2d 749, 751 (Mo.1987) (en banc).
In this case, the declarations page only indicates the vehicles for which “[i]n-surance is provided,” giving readers no hint whether the indicated limits can be combined for a single accident. This is not enough, in view of the clear Limit of Liability provision, to create an ambiguity. The plain language of that anti-stacking provision must be offset by another provision “appear[ing] to authorize stacking,” Daughhetee, 743 F.3d at 1132 (emphasis added), not simply failing to prohibit it. In Missouri, a policy is not ambiguous just because its broad statement of coverage is later cabined by policy definitions or exclusions, see Floyd-Tunnell, 439 S.W.3d at 221, and that is all the Limit of Liability provision does here. Seeing nothing on the declarations page which can be reasonably read to counter the Limit of Liability provision‘s anti-stacking mandate, we find no ambiguity.5
Nor is our conclusion altered by the Brookses’ proposition that their additional premiums signify Midwestern is either overcharging them or implicitly promising a higher coverage limit. Our research has revealed no Missouri case al
Contrary to the Brookses’ assumptions, each premium does correspond with an increase in coverage. First, although UIM coverage generally “follows the insured,” Fanning, 412 S.W.3d at 365, the Brookses’ policy contains an owned vehicle exclusion, which restricts coverage from “following” Brooks when she drives a vehicle she owns but did not choose to cover with the UIM endorsement. The added premiums thus correspond with more owned cars in which Brooks‘s injuries are covered. Second, in addition to covering the named insureds and their family members, the UIM endorsement also covers bodily injury sustained by “[a]ny other person ‘occupying’ ‘your covered auto.‘” (Emphasis added). Payment for each additional “covered auto” buys coverage by the UIM endorsement for non-named, non-family passengers and drivers in that vehicle.
III. CONCLUSION
The Brookses’ UIM coverage in the Midwestern policy makes plain that stacking is prohibited. We affirm the district court‘s well-reasoned opinion and judgment.