# United States Court of Appeals **For the Eighth Circuit**

___________________________ No. 12-1221

___________________________ Argonaut Great Central Insurance Company
lllllllllllllllllllll Plaintiff - Appellant

v. Jerry Casey, et al.
lllllllllllllllllllll Defendants - Appellees

____________ Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

____________ Submitted: September 19, 2012 Filed: November 13, 2012

____________ Before WOLLMAN, BEAM, and LOKEN, Circuit Judges.

____________ LOKEN, Circuit Judge. A bus owned by the First Baptist Church of Bentonville (the “Church”) was involved in a single-vehicle accident cause d by the driver’s negligence, resulting in two fatalities and scores of serious injuries . At the time of the accident, the Church was insured by two policies issued by Ar gonaut Great Central Insurance Company (“Argonaut”), a Commercial Auto Policy (the “Policy”) providing $1 million liabilityinsurance and $1 million uninsured and underi nsured motorist (“UIM”) insurance -- the subject of this appeal -- and a Commercial Umbrella Policy providing an additional $1 million excess cove rage for auto accidents.
Recognizing that personal injury claims would greatly exceed the policies’ combined coverages, Argonaut commenced th is diversity interpleader action, naming known claimants as defendants and seeking to deposit $2 million into the court’s registry, $1 million for the combined limits under the Policy, and $1 million for the Umbrella Policy’s limit. The claimants asserted counterclaims against Argonaut pursuant to Ark. Code Ann. § 23-79-210, 1 alleging that the Policy limits include an additional $1 million. The district court 2granted summary judgment for the claimants, ordered Argonaut to pay $2 million under the Policy into the court’s registry (plus an additional $1 million under the Umbrella Policy), and directed entry of final judgment pursuant to Fed. R. Civ. P. 54(b), permitting immediate appeal of this issue. Argonaut appeals, arguing the Policy unambiguously precludes aggregating its liability and UIM covera ges. Reviewing the grant of summary judgment and the interp retation of the Policy de novo , and applying Arkansas law, we affirm. See Ark. Power & Light Co. v. HartfordSteam Boiler Inspection & Ins. Co. , 257 F.3d 853, 856 (8th Cir. 2001) (standard of review).
It is undisputed that the Policy provi ded the claimants both liability and UIM coverages -- liability cove rage because they are tort vic tims of the Church’s agent, and UIM coverage because they are insured parties injured by a negligent driver (again, the Church’s agent) whose insurance covera ge was less than the sum of their claims. The district court held that the Policy unamb iguously allows aggregate recovery of the

1 Under Arkansas law, the Church as a ch aritable institution is immune from tort liability. See Anglin v. Johnson Reg’l Med. Ctr. , 289 S.W.3d 28, 31-32 (Ark. 2008).

2 The Honorable Brian S. Miller, United St ates District Judge for the Eastern District of Arkansas.
-2-limits of both coverages. Though the parties have briefe d and argued other issues, we address only the issue decided by the district court.
As is common, the Policy is an amalgam of interrelated documents. The declarations page is captioned Commercial Au to Coverage Part, distinguishing it, for example, from Argonaut’s Commercial Genera l Liability Coverage Part. Within the Commercial Auto Coverage Part, Argonaut offers at leas t four “Coverage Forms” of commercial auto insurance: the Business Au to Coverage Form, the Garage Coverage Form, the Motor Carriers Coverage Form, and the Truckers Coverage Form. The Policy includes a Business Auto Coverage Form, which sets forth liability and physical damage coverages inSections II and III, the Business Auto Conditions in Section IV, Definitions in Section V, a nd a page of Common Policy Conditions that apply to all CoverageParts. The Policy then incl udes attached “endorsements” that add various coverages, exclusions, and provisions mandated by the governing insurance laws of a particular State. At issue here are the liability coverage provided in Section II of the Business Auto Covera ge Form and the UIM coverage provided in the Arkansas Uninsured and Underinsur ed Motorists Coverage endorsement.
Argonaut argues that three provisions limit the claimants’ recovery to the higher of either the liability or the UIM coverage, that is, to $1 million: (1) the “Two or More Coverage Forms or Policies Issued by Us” provision in the Business Auto Coverage Form, (2) the “Limit of Insurance” provisi ons in the Business Auto Coverage Form and the UIM endorsement, and (3) the “Oth er Insurance” provision in the Business Auto Coverage Form as modified by the UIM endorsement. Our task in construing these provisions under Arkansas law is a well-traveled road:
The law regarding construction of an insurance contract is well settled. If the language of the policy is unamb iguous, we will give effect to the plain language of the policy without resorting to the rules of construction. On the other hand, if the language is ambiguous, we will construe the policy liberally in favor of the insured and strictly against

-3-the insurer. Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one reasonable interpretation.

Elam v. First Unum Life Ins. Co. , 57 S.W.3d 165, 169 (Ark. 2001).
Before discussing the three provisions on which Argonaut relie s, we think it is critical to examine the “Cove rage” section of the UIM endorsement, which the parties either ignored or overlooked:
A. Coverage 1. We will pay all sums the “ins ured” is legally entitled to recover as compensatory damages from th e . . . driver of . . . an “underinsured motor vehicle”. . . . 2. With respect to damages resulting from an “accident” with an “underinsured motor vehicle,” we will pay under c overage only if a. or b. below applies:

a. The limit of any applicable liability . . . policies have been exhausted by payment of judgments or settlements; or
b. A tentative settlement has been made . . . . However, this Paragraph b. does not apply if the “underinsured motor vehicle” is insured by us for Liability Coverage.
Two aspects of this provision are significant to the issues before us. First, the first clause confirms what Argonaut has c onceded in this case -- the definition of “underinsured motor vehicle” includes a vehi cle that has liability coverage provided in the same policy as the UIM endorsement . In other words, Argonaut provides UIM coverage, for example, to pa ssengers in the auto of its own insured if the limits of liability coverage provided by Argonaut does not cover their claims. Second,
-4-Argonaut will pay under its UIM coverage only after the “limit of any applicable liability . . . policies have b een exhausted.” In other wo rds, Argonaut’s UIM coverage is explicitly additional or sequentialto any liability coverage that may apply, including its own. With the UI M coverage so clearly statedas an aggregate coverage, it would take a contrary limiting provision of the utmost clarity to render the liability and UIM coverages mutually exclusive.
The first two provisions on which Argonaut relies require little discussion. (1) The “Two or More Cove rage Forms” provision appears in Section IV of the Business Auto Coverage Form:
If this Coverage Form and any other Coverage Fo rm or policy issued to you by us or any company affiliate d with us apply to the same “accident”, the aggregate maximum Limit of Insurance under all the Coverage Forms or policie s shall not exceed the highest applicable Limit of Insurance under any one Coverage Form or policy.
Argonaut argues this provision precludes aggr egating the liability and UIM coverages because they are separate “Coverage Fo rms.” The Supreme Court of Arkansas rejected this contention in construing a po licy issued by an insurer that offered the same commercial auto Coverage Forms o ffered by Argonaut. The Court held that passengers injured while riding in a char ity van could recove r under both the liability and UIM coverages in the charity’s auto policy because “Coverage Form” in this provision referred to the Business Auto C overage Form. The UIM endorsement was a modification of that Coverage Form, not a separate coverage form. Philadelphia Indem. Ins. Co. v. Austin , No. 11-81, -- S.W.3d --, 2011 Ark. 283, at *8-9, 2011 WL 2477219, at *4 (June 23, 2011). On th is issue, Philadelphia Indemnity is controlling.
(2) “Limit of Insurance” provisions app ear in both the Business Auto Coverage Form and the UIM endorsement. The Bu siness Auto Coverage Form provides:

-5-Regardless of the number of cove red “autos”, “insureds”, premiums paid, claims made or vehicles invol ved in the “accide nt”, the most we will pay for the total of all dama ges and “covered pollution cost or expense” combined, resulting from a ny one “accident” is the Limit of Insurance for Liability Coverage shown in the Declarations.
* * * * * No one will be entitled to receive duplicate payments for the same elements of “loss” under this Cove rage Form and any Medical Payments Coverage Endorsement, Uninsured Mo torists Coverage Endorsement or Underinsured Motorists CoverageEndorsement attached to this Coverage Part. Similarly, the UIM endorsement provides: Regardless of the number of covere d “autos”, “insureds”, premiums paid, claims made or vehicles invol ved in the “accident”, the most we will pay for all damages and resulti ng from any one “accident” is the Limit of Insurance for Uninsured a nd Underinsured Motorists Coverage shown in the Declarations. No one will be entitled to receive duplicate payments for the same elements of “loss” under this Cove rage and any Liab ility Coverage Form or Medical Payments Coverage Endor sement attached to this Coverage Part.
Argonaut argues these provisions limit rec overy to the highest limit of any one type of coverage -- in this case, $1 million. The Supreme Court of Arkansas rejected this contention in Philadelphia Indemnity , concluding that the provisions limited recovery under each type of coverage but did “not bear upon the question of whether” claimants may aggregate recoveries across these types of coverage. 2011 WL 2477219, at *6. Argonaut argues that its Po licy provisions, unlike those at issue in Philadelphia Indemnity , unambiguously preclude “duplicate payments” of Business Auto liability and UIM endorsement coverages. We agree with th e district court that

-6-the differences in policy language are immate rial because the decision in Philadelphia Indemnity turned on the Court’s conclusion that the reference to “duplicate payments” meant “being paid twice for the same damages.” 2011 WL 2477219, at *5. That conclusion is consistent with the plain meaning of the word “duplicate.” See New Oxford Am. Dictionary 539 (3d ed. 2010). Thus, both Policy provisions only prohibit double payments, from any coverage source, for the same claimant injuries. Here, no claimant seeks to recover morethan his or her damages in curred in the accident. It is the claimants’ discrete claims in the aggregate that exceedthe combined limits of all coverages in the two Argonaut policies. Thus, on this issue, too, Philadelphia Indemnity is controlling.
(3) The third provision on which Argonaut relies -- the “Other Insurance” provision in the Business Auto Coverage Form as modified by the UIM endorsement -- was not at issue in Philadelphia Indemnity . The UIM endorsement provides:

1. Other Insurancein the Business Auto a nd Garage Coverage Forms . . . are replaced by the following: If there is other applicable insuran ce available under one or more policies or provisions of coverage: a. The maximum recovery under all coverage forms or policies combined may equal but not exceedthe highest applicable limit for any one vehicle under any cove rage form or policy providing coverage on either a primary or excess basis. b. Any insurance we provide withrespect to a vehicle the Named Insured does not own shall be excess over any other collectible uninsured or underinsured motorists insurance providing coverage on a primary basis. c. If the coverage under this cove rage form is provided: (1) On a primary basis, we will pay only our share of the loss that must be paid under insurance providing cove rage on a primary basis. Our
-7-share is the proportion that our lim it of liability bears to the total of all applicable limits of liability for coverage on a primary basis.

. . . Argonaut argues that “coverage form” in cl ause 1.a. means “type of insurance.” Because liability and UIM insurance provide c overage against distinct risks -- the risk of liability for one’s own negligence, and th e risk of being injured by an underinsured negligent driver -- they are different “c overage forms.” Therefore, the combined claims are subject to the higher applicable limit, in this case $1 million. The claimants argue that “coverage form” in this provi sion refers to the four commercial auto Coverage Forms Argonaut offers. As the UIM endorsement is part of the Business Auto Coverage Form, this provision does not preclude recovery of both coverage limits.
Argonaut’s contention that “coverage fo rm” simply means “type of coverage” might be plausible in other contexts, but it is inconsistent with use of the term “Coverage Form” elsewhere in the Policy. Most tellingly, the UIM endorsement begins by stating that it “modifies insu rance provided under” four named “Coverage Forms,” including the “Business Auto Covera ge Form.” In addition, the schedule of uninsured and underinsured motorist limits a nd premiums is set forth in the Policy’s Business Auto Declarations, along with schedules of limits and premiums for the liability, comprehensive, collision, and auto medical payments coverages (which, like the UIM coverage, is provided by an endorsement). This Po licy format is inconsistent with the argument that the coverage provi ded by the UIM endorsement is a separate “Coverage Form,” rather than an additional coverage that is part of the Business Auto Coverage Form. In construi ng an insurance contract, “the different clauses . . . must be read together . . . so that all parts harmonize.” Smith v. S. Farm Bureau Cas. Ins. Co. , 114 S.W.3d 205, 207 (Ark. 2003). Thus, the “Other Insurance” provision does not come close to overriding the plain meani ng of the UIM coverage provision. The district court correctly read the provisions of the UIM endorsement and the Business

-8-Auto Coverage Form as unambiguously pr oviding “that an insured may recover under both the liability and UIM coverages.”
We are not persuaded by a contrary decision, on whic h Argonaut heavily relies, of federal courts construing Maryland law . Bhd. Mut. Ins. Co. v. Carter , No. 11-cv01326, 2012 WL 254018, at *4 (D. Md. Jan. 26, 2012), aff’d , No. 12-1291, 2012 WL 3105150, at *1 (4th Cir. Aug. 1, 2012). Of course, we may not follow this decision to the extent it is inconsistent with Arkansas law as construed in Philadelphia Indemnity . Moreover, we do not agree with th e district court in Brotherhood Mutual that “allowing uninsured motorist coverage . . . to ‘spring forth’ any time claimants exhausted their liability insurance coverage” is an “absur d result” because it provides more liability insurance than was bargained for. The dual- coverage issue in this case only arises if a claimant is both covered by the negligent driver’s liability insurance policy and is an “insured” for purposes of the same policy’s UIM endorsement. Thus, this decision will not result in a wholesale expansion of liability insurance coverage. Moreover, this case illustrates why organizations whose members or employees frequently travel in covered autos (partic ularly charities) need this type of aggregate commercial auto coverages so that they insure against the organization’s risk of liability and provide UIM protection for pa ssengers who may be injured due to the negligence of the organization’s driver as we ll as negligent drivers of other vehicles.
For these reasons, the district court’ s Orders dated D ecember 8, 2011, and January 11, 2012, are affirmed.

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