American Family Mutual Insurance Co. v. Martin, No. 2-99-0504
2nd District, 18 April 2000
| AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. BETTY J. MARTIN, as Special Adm'r of the Estate of Timothy E.Martin, Deceased, Defendant-Appellee. | Appeal from the Circuit Court of WinnebagoCounty. No. 98--MR--99 Honorable J. Todd Kennedy, Judge, Presiding. |
JUSTICE INGLIS delivered the opinion of the court:
Plaintiff, American Family Mutual Insurance Company, appeals the trial court's order granting summary judgment todefendant, Betty J. Martin as special administrator of the estate of Timothy E. Martin. The court declared that defendantmay recover underinsured motorist benefits under each of two policies issued by plaintiff. Plaintiff argues that the courterred by failing to apply unambiguous clauses in both policies that prohibit the stacking of underinsured motorist benefits.
Timothy Martin was killed by a car driven by Jason Theisman. Defendant was appointed the special administrator of herson's estate. With plaintiff's approval, she settled with Theisman's insurer for $25,000, the limit of liability underTheisman's policy.
Plaintiff issued two insurance policies to defendant, one covering a Dodge Spirit and one covering a Chrysler LeBaron.Each policy provided $100,000 per person of underinsured motorist coverage. Both policies contain the followingprovision:
"3. Two or More Cars Insured. The total limit of our liability under all policies issued to you by us shall not exceedthe highest limit of liability under any one policy."
The policies also provide that the limit of liability for each person is "the maximum for all damages sustained by all personsas the result of bodily injury to one person in any one accident." Accordingly, plaintiff would not pay "more than thesemaximums no matter how many vehicles are described in the declarations, insured persons, claims, claimants or policies orvehicles are involved in the accident." The policies also contain a clause entitled "Other Insurance" that provides as follows:
"If there is other similar insurance on a loss covered by this endorsement, we will pay our share according to thispolicy's proportion of the total limits of all similar insurance."
After deducting the $25,000 defendant received from Theisman's insurer, plaintiff paid defendant $75,000 pursuant to theunderinsured motorist provisions of the Spirit policy. Plaintiff also paid $20,000 for medical expenses. The latter amountrepresents the combined medical-expense limits of both policies.
Defendant demanded an additional $100,000 of underinsured motorist coverage from the LeBaron policy, claiming that shewas entitled to stack the coverage limits of the two policies. Plaintiff denied this claim and subsequently filed the presentaction. Plaintiff sought a declaration that defendant could not stack the policies' coverages and that its payment of $75,000satisfied its obligations under both policies.
The trial court granted summary judgment to defendant, finding that the "two or more cars insured" clause conflicted withthe "other insurance" clause to create an ambiguity. The court held that $75,000 (allowing an additional setoff for the$25,000 received from Theisman's insurer) under the LeBaron policy was subject to arbitration. The court denied bothparties' motions to reconsider, and plaintiff perfected this appeal.
On appeal, plaintiff argues that its antistacking provision is clear and unambiguous and does not violate public policy.Therefore, the court erred by not enforcing it.
Summary judgment is proper when the pleadings, depositions, and admissions on file, together with the affidavits, if any,reveal that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 735ILCS 5/2--1005(c) (West 1998); American Family Mutual Insurance Co. v. Hinde, 302 Ill. App. 3d 227, 231 (1999). Wereview de novo an order granting summary judgment. Harris Bank v. City of Geneva, 278 Ill. App. 3d 738, 741 (1996).
The construction of an insurance policy is a question of law that this court reviews de novo with the purpose of ascertainingthe parties' intent. Smagala v. Owen, 307 Ill. App. 3d 213, 217 (1999); Kopier v. Harlow, 291 Ill. App. 3d 139, 141 (1997).When determining whether an ambiguity exists, a court must read a provision in its factual context. Pahn v. State FarmMutual Automobile Insurance Co., 291 Ill. App. 3d 343, 345 (1997). If policy language is unambiguous, we must discernthe parties' intent directly from that language without resorting to rules of construction, unless to do so would violate publicpolicy. Kopier, 291 Ill. App. 3d at 141.
In Grzeszczak v. Illinois Farmers Insurance Co., 168 Ill. 2d 216 (1995), the supreme court held that an antistackingprovision nearly identical to the one at issue was unambiguous and did not violate public policy. The clause there provided:
" 'With respect to any accident or occurrence to which this and any other auto policy issued to you by any membercompany of the Farmers Insurance Group of Companies applies, the total limit of liability under all the policies shallnot exceed the highest applicable limit of liability under any one policy.' " Grzeszczak, 168 Ill. 2d at 220-21.
The court held that this language unambiguously provided that the insured could not stack underinsured motorist coveragesof multiple policies. Grzeszczak, 168 Ill. 2d at 229; see also Bruder v. Country Mutual Insurance Co., 156 Ill. 2d 179, 186(1993) (holding similar provision unambiguous); Menke v. Country Mutual Insurance Co., 78 Ill. 2d 420, 424 (1980)(same).
Defendant argues that Grzeszczak is distinguishable because the relevant policy language in that case "specificallyidentified the policies to which it referred." The relevant policy language in Grzeszczak referred to "this and any other autopolicy issued to you by any member company of the Farmers Insurance Group of Companies." The policy at issue hererefers to "all policies issued to you by us." We fail to see a relevant distinction between these phrases. Defendant does notdispute that "you" refers to the policyholder and "us" refers to American Family. That the policy language in Grzeszczakreferred to the insurance company by name does not render that case inapplicable.
Defendant's primary contention appears to be that the "other insurance" clause in plaintiff's policy renders the policy as awhole ambiguous. According to defendant, the other insurance clause does not define "other insurance" and it couldconceivably be read as referring to another policy issued by plaintiff. Under this construction, the total limits of allinsurance available in this case would be $200,000, the combined limits of the two underinsured motorist coverages.Because both policies were issued by plaintiff, its proportional share would be 100%, or $200,000.
We cannot accept defendant's construction of the policy. The "two or more cars insured" provision clearly covers situationswhere two or more cars belonging to the same insured are covered by policies issued by plaintiff. It unambiguouslyprovides that in that case plaintiff's total liability will not exceed the highest liability limit under any one policy. Read inthis context, the other insurance clause refers only to a situation where a different policy issued by a different companyapplies. If this provision were intended to refer to other policies issued by plaintiff, there would be no need to refer to aproportionate share; plaintiff's proportionate share of liability would always be 100%. Moreover, reading the otherinsurance clause in this fashion would render the antistacking provision meaningless. The other insurance clause wouldalways "trump" the antistacking provision, rendering it nugatory. Each clause applies to a different situation, and theantistacking clause is simply not ambiguous.
Defendant argues that plaintiff is estopped from contesting coverage because it paid defendant the limits of medical expensecoverage under both policies. We disagree. A payment under one coverage does not waive the right to contest liabilityunder a separate coverage. Universal Underwriters Insurance Co. v. State Farm Automobile Insurance Co., 128 Ill. App. 3d696, 699 (1984).
Defendant also contends that the "premium rule" mandates that she should be allowed a double recovery. The premium rulein essence assumes that the parties did not intend that the insured would pay multiple premiums for identical coverage.Defendant argues that because she paid separate premiums for the two policies, she should be able to stack the coveragelimits.
Grzeszczak rejected this argument. The court explained that the premium rule is a rule of construction to aid in construingambiguous provisions. It may not be used, however, to create an ambiguity where none exists. Grzeszczak, 168 Ill. 2d at229; see also Bruder, 156 Ill. 2d at 185. Because the provision at issue here is not ambiguous, the premium rule does not aiddefendant.
The judgment of the circuit court of Winnebago County is reversed, and the cause is remanded with directions to enterjudgment for plaintiff.
Reversed and remanded with directions.
McLAREN and HUTCHINSON, JJ., concur.