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PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Appellant, vs. PATRICIA TALBERT, Respondent.

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No. SD32210 Filed: March 27, 2013

APPEAL FROM THE CIRCUIT COURT OF TEXAS COUNTY Honorable Tracy L. Storie, Circuit Judge REVERSED. JUDGMENT ENTERED IN FAVOR OF APPELLANT PROGRESSIVE NORTHWESTERN INSURANCE COMPANY. Progressive Northwestern Insurance Company ("Progressive") brought a declaratory judgment action against Patricia Talbert ("Talbert") to determine the amount of liability coverage available to Talbert following her injuries in a motorcycle accident. The trial court granted Talbert's motion for summary judgment and denied Progressive's motion for summary judgment. We reverse the judgment of the trial court and enter judgment in favor of Progressive on its motion for summary judgment.

Factual and Procedural Background
On November 7, 2009, Talbert sustained bodily injury while riding as a passenger on a 2005 Honda VTX1300 motorcycle ("motorcycle") operated by her husband, Frank Talbert ("Frank").1 Talbert alleged that she incurred approximately $105,000 in medical bills for

injuries sustained in the motorcycle accident. For purposes of summary judgment, Progressive admitted this fact was uncontroverted. At the time of the collision, the motorcycle was insured by a motorcycle policy (the "policy") issued by Progressive to Frank, with liability limits of $100,000 for each person and $300,000 for each accident. At the time of the accident, Frank and Talbert were married and residents of the same household. The policy contained a number of exclusions, including a "household exclusion clause," which reads: Coverage under this Part I, including our duty to defend, will not apply to any insured person for: .... 11. bodily injury to you or a relative; .... If a court with proper jurisdiction determines an exclusion is partly or wholly invalid or unenforceable because it does not satisfy the minimal requirements of the Motor Vehicle Financial Responsibility Law, the exclusion will only apply to the extent that limits of liability of this policy exceeds the limits of liability required by law. On December 8, 2010, Progressive filed a "Petition for Declaratory Judgment" asking the trial court to construe the terms of the policy and determine whether the insurance policy provided $100,000 or $25,000 in liability coverage to Talbert for her injuries. On March 18,

Because a portion of the involved parties share the same surname, for ease of reference we refer to some of the parties by their first names. We mean no familiarity or disrespect.

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2011, Talbert filed her answer to Progressive's Petition for Declaratory Judgment, and asserted that she was "entitled to a declaratory of law that she is entitled to insurance coverage pursuant to the contract provided by [Progressive] of $100,000, for the injuries she sustained in this accident."2 Talbert and Progressive both filed cross-motions for summary judgment, and the issue in both motions was whether the policy's household exclusion clause was valid. Progressive's motion for summary judgment acknowledged that the Missouri Vehicle Financial Responsibility Law ("MVFRL"), sections 303.010-303.370,3 has invalidated exclusion clauses up to the statutory minimum of $25,000, and cited Halpin v. American Family Mut. Ins. Co., 823 S.W.2d 479 (Mo. banc 1992). For that reason, Progressive sought an order declaring that the maximum amount recoverable by Talbert was $25,000, to the minimum amount allowed by MVFRL. Talbert's motion for summary judgment requested the trial court declare the household exclusion clause unenforceable because it is ambiguous, unreasonable under contract principles, and against public policy. On July 9, 2012, the trial court granted Talbert's motion for summary judgment finding "the insurance contract, as a matter of law, is an unconscionable adhesion contract under Missouri law" and overruled Progressive's motion for summary judgment. The trial court also ordered post-judgment interest on the unpaid policy limits of $75,000 to accrue at the legal rate of 5.25% from the date of the judgment. Progressive appeals this judgment. Progressive contends the household exclusion clause is valid and enforceable as to amounts in excess of $25,000 (MVFRL limits), does not violate public policy, and is not

Talbert's prayer for relief also asserted that she was entitled to coverage under the policy in the amount of $100,000.
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All references to statutes are to RSMo 2000, unless otherwise indicated.

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unconscionable or ambiguous. Progressive also argues the trial court erred in awarding damages to Talbert because: (1) Talbert did not have a judgment against Progressive as a basis for damages; (2) Talbert did not file a counterclaim against Progressive; and (3) Talbert did not prove entitlement to an award of damages. Talbert contends the Progressive policy is ambiguous because: (1) of the positioning of the exclusionary language in different parts of the contract; (2) of an indemnification provision requiring the insured to reimburse Progressive for any payment made by Progressive; (3) it incorporates by reference the MVFRL to define and explain coverage in its policy; (4) the policy only states coverage limited to amounts required by MVFRL and does not state the specific amount to which coverage would be limited; and (5) the declarations page does not advise that coverage for a family member is limited to $25,000 per accident. Talbert also contends the exclusion is no longer viable in light of extensive discovery available to litigants, and that it violates public policy.4 As to damages, Talbert argues damages were properly pled and were repeatedly admitted by Progressive. The issue for our determination is whether Progressive's household exclusion clause is valid and enforceable as a matter of law. We find the policy is partially enforceable in

accordance with Halpin, 823 S.W.2d at 479 and the MVFRL. In light of this holding, we need not address the remaining claim of error regarding damages.

Talbert filed a "Motion to Dismiss Appeal and to Award Frivolous Appeal Damages," which was taken with the case. In her motion, Talbert argues that Progressive's statement of facts, points relied on, and argument contain deficiencies. While it is within our discretion to dismiss an appeal for failure to comply with Rule 84.04, `"[w]e will not exercise our discretion to dismiss an appeal for technical deficiency under Rule 84.04 unless the deficiency impedes disposition on the merits. Gray v. White, 26 S.W.3d 806, 816 (Mo.App. E.D. 1999). We can clearly discern the essence of Progressive's complaints of trial court error and, therefore, deny Talbert's motion to dismiss and address Progressive's complaints on their merits. Talbert also alleges she is entitled to an award of frivolous appeal damages. "An appeal is frivolous if it presents no justifiable question and is so readily recognizable as devoid of merit on the face of the record that there is little prospect that it can ever succeed." Dennis v. H&K Mach. Serv. Co., 186 S.W.3d 484, 487 (Mo.App. E.D. 2006). "This court awards damages under Rule 84.19 with great caution[.]" Stiens v. Stiens, 231 S.W.3d 195, 200 (Mo.App. W.D. 2007). We do not find Progressive's appeal to be frivolous and, therefore, Talbert's motion is denied. All rule references are to Missouri Court Rules (2012).

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Standard of Review
Appellate review of a grant of summary judgment is de novo. Kinnaman-Carson v. Westport Ins. Corp., 283 S.W.3d 761, 764 (Mo. banc 2009). "The Court reviews the record in the light most favorable to the party against whom summary judgment was entered." Id. Summary judgment will be upheld on appeal if there is no genuine issue of material fact and movant is entitled to judgment as a matter of law. ITT Commercial Finance Corp. v. MidAmerica Marine Supply Corp., 854 S.W.2d 371, 380 (Mo. banc 1993). "The key to summary judgment is the undisputed right to judgment as a matter of law, not simply the absence of a fact question." Zerebco v. Lolli Bros. Livestock Market, 918 S.W.2d 931, 934 (Mo.App. W.D. 1996). "The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially." ITT Commercial Finance Corp., 854 S.W.2d at 376. "As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment." Id. If the trial court fails to specify the grounds for granting summary judgment, this Court can affirm if it is proper under any theory supported by the record and presented on appeal. Conway v. St. Louis County, 254 S.W.3d 159, 164 (Mo.App. E.D. 2008). The interpretation of an insurance policy is a question of law that this Court also determines de novo. Ritchie v. Allied Property & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. banc 2009). `"In construing the terms of an insurance policy, this Court applies the meaning which would be attached by an ordinary person of average understanding if purchasing insurance, and resolves ambiguities in favor of the insured."' Id. (quoting Seeck v. Geico General Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007)). "To determine the ordinary meaning, this Court consults

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standard English language dictionaries." Shahan v. Shahan, 988 S.W.2d 529, 535 (Mo. banc 1999) (White, J., dissenting). However, applying rules of construction is unnecessary when a contract provision is clear and unambiguous. Id.

Analysis
Talbert urges this Court to declare the household exclusion clause invalid per se.5 We decline to do so. A brief review of the recent history of the clause is appropriate. "Household Exclusion Clause" in Missouri While generally disfavored, [household exclusion] clauses are permissible `to exempt the insurer from being required to cover claims by those persons to whom the insured, on account of close family ties, would be apt to be partial in the case of injury; the exclusion serves to protect the insurer against collusive or cozy claims.' Shahan, 988 S.W.2d at 539-40 (quoting "8 Couch on Insurance 3d 114:25-26"). Beginning with Halpin, 823 S.W.2d at 479, Missouri courts have repeatedly found household exclusion clauses are valid as to any coverage exceeding the amounts mandated by the MVFRL.6 In Halpin, the Supreme Court of Missouri reviewed the MVFRL,7 and found the purpose served by the MVFRL "is to make sure that people who are injured on the highways may collect damage awards, within limits, against negligent motor vehicle operators. This protection extends to occupants of the insured vehicles[.]" Halpin, 823 S.W.2d at 482. The MVFRL added the requirement that owners of a motor vehicle maintain "financial responsibility."

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