CORRECTED OPINION

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

AUTO-OWNERS INSURANCE COMPANY, 

a Michigan Corporation,

Plaintiff-Appellant,

v.

DEBBIE RAE SARATA, Personal

Representative of the Estate of  No. 01-2102

Raymond R. Beauparlant,

Defendant-Appellee,

and

JAMES TAYLOR WEATHERFORD,

Defendant. 

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Matthew J. Perry, Jr., Senior District Judge.

(CA-00-2129-3-10)

Argued: February 25, 2002

Decided: April 29, 2002

Before WILKINSON, Chief Judge, MICHAEL, Circuit Judge,

and Raymond A. JACKSON, United States District Judge

for the Eastern District of Virginia, sitting by designation.

Correction made on page 3
Affirmed by unpublished per curiam opinion.

COUNSEL

ARGUED: Sidney Markey Stubbs, BAKER, RAVENEL &

BENDER, L.L.P., Columbia, South Carolina, for Appellant. Eugene

F. Rogers, Katherine Brandt Barroll, ROGERS, TOWNSEND &

THOMAS, P.C., Columbia, South Carolina, for Appellee. ON

BRIEF: Holly L. Palmer, BAKER, RAVENEL & BENDER, L.L.P.,

Columbia, South Carolina, for Appellant. Robert P. Wood, ROGERS,

TOWNSEND & THOMAS, P.C., Columbia, South Carolina, for

Appellee.

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

James E. Weatherford is the named insured in an executive

umbrella policy issued by Auto-Owners Insurance Company. After a

collision involving his son, the insurer brought a declaratory judgment

action, contending that the definition of an insured "relative" in the

umbrella policy unambiguously excluded a relative who did not

reside in the named insured’s household. The district court disagreed

and dismissed the action with prejudice. Because the policy’s definition of "relative" is ambiguous, and because the father had a reasonable expectation of coverage for his son, we affirm. 

I.

Defendant Debbie Rae Sarata is the personal representative of the

estate of Raymond Beauparlant, who was killed in a collision on September 15, 1999 in Lexington County, South Carolina. Defendant

2 AUTO-OWNERS INSURANCE v. SARATA
James T. Weatherford was driving the other vehicle involved in the

accident. He was twenty-four years old at the time. The issue before

us is whether he is a "relative" as that term is defined in the umbrella

policy issued by Auto-Owners to his father. 

The umbrella policy contains the following definitions: 

"Insured" means you and also:

(a) A relative . . . . 

. . . . 

"Relative" means: 

(a) your relative; or 

(b) anyone else, under the age of 21, in your care; 

who resides in your household. 

Auto-Owners contends that the definition of "relative" in the policy

unambiguously excludes a relative who does not live in the named

insured’s household, and that the son did not reside in the father’s

household when the accident took place. Sarata replies that the policy’s definition of "relative" does not unambiguously exclude a relative of the named insured who is identified in and covered by the

underlying automobile liability policy, even if he does not live with

the named insured. 

The umbrella policy required the father to maintain an underlying

policy for automobile bodily injury liability of $500,000. The

umbrella policy provided that "[i]f any underlying insurance is

exhausted by any occurrence, we will assume charge of the settlement

or defense of any claim against the insured resulting from the same

occurrence." The underlying policy listed the father as the named

insured and identified his son as the primary driver of the vehicle

involved in the accident. The father paid the premiums on the underlying policy, and the underlying insurer, State Farm Insurance Company, paid its limits of $500,000. 

On cross-motions for summary judgment, the district court applied

Georgia law and found that the umbrella policy’s definition of "relative" was ambiguous.1

 It then applied Georgia’s rules for construing

1Georgia law is controlling because the umbrella policy was issued in

Georgia to a Georgia resident. A federal court sitting in diversity must

AUTO-OWNERS INSURANCE v. SARATA 3
insurance policies, which require that ambiguities be strictly construed against the insurer, and that the policy be read in accordance

with the reasonable expectations of the insured where possible. Richards v. Hanover Ins. Co., 299 S.E.2d 561, 563 (Ga. 1983). The district court concluded that the father had an objectively reasonable

expectation of coverage for his son, and thus that the son was an

insured under the umbrella policy for purposes of claims arising out

of the collision. Accordingly, the court granted Sarata’s motion for

summary judgment. Auto-Owners appeals. 

II.

Reviewing the district court’s grant of summary judgment de novo,

see Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167

(4th Cir. 1988), we agree that the policy language at issue is ambiguous. In view of the non-standard and confusing use of semi-colons

and, more importantly, the misplacement of the final clause, "who

resides in your household," the definition of the term "relative" does

not unambiguously limit coverage to only those relatives who reside

in the insured’s household.2 Specifically, the reader could reasonably

conclude that the clause "who resides in your household" modifies

only line (b) and not the phrase "your relative" in line (a). The words

"your relative" appear to stand alone. Because there is no way to

clearly determine through parsing what the clause "who resides in

your household" modifies, it is far from unreasonable for the insured

to expect that any relative specifically insured by an underlying policy

is also an insured in the umbrella policy. 

apply the choice of law rules of the forum state. Klaxon Co. v. Stentor

Elec. Mfg. Co., 313 U.S. 487, 496 (1941). And in insurance coverage disputes, South Carolina courts apply "the law of the state in which application for insurance was made, the policy delivered, and the contract

formed." Unisun Ins. Co. v. Hertz Rental Corp., 436 S.E.2d 182, 184

(S.C. Ct. App. 1993). 

2Semi-colons act either as weak periods or as strong commas. Sidney

Greenbaum, The Oxford English Grammar § 11.17 (1996). In standard

usage, they are not employed to indicate a continuation of the items to

be modified by a final clause. 

4 AUTO-OWNERS INSURANCE v. SARATA
As the district court observed, qualifying clauses typically modify

only the immediately preceding words and phrases. This basic rule of

both grammar and interpretation is commonly known as the last antecedent rule. See, e.g., Bakery & Confectionery Union & Indus. Int’l

Pension Fund v. Ralph’s Grocery Co., 118 F.3d 1018, 1026 (4th Cir.

1997); Virginia v. Browner, 80 F.3d 869, 877 (4th Cir. 1996). The

phrase "your relative" is too far removed from the final clause, "who

resides in your household," for the lay reader to unambiguously

understand that a relative covered in an underlying policy is excluded

in the umbrella policy. 

Contrary to Auto-Owners’ assertion, the district court correctly

concluded that the use of semi-colons in the definition of "relative"

does not create an exception to the last antecedent rule because they

are employed incorrectly and superfluously. Laypersons cannot be

expected to glean that the insurer’s non-standard use of semi-colons

indicates a continuation of the items to be modified by the final

clause. Instead, they may reasonably disregard improper punctuation

in attempting to discern the meaning of contractual language. And

when reading the definition without the incorrect punctuation, they

may rely on the standard rule of grammar that a clause qualifies only

the language which immediately precedes it. Here, only line (b)

comes just before the clause "who resides in your household." The

"(b)" and "or" separate "your relative" from the remainder of the sentence. 

In any event, the district court also astutely determined that the

ambiguity here is created not by the non-standard use of punctuation,

but rather by the word order. And Auto-Owners’ contentions notwithstanding, the semi-colons do nothing to resolve the confusion. On the

contrary, the insurer’s use of them in a non-standard and confusing

fashion only makes matters worse. 

As the drafter of this insurance contract, Auto-Owners could have

been so clear so easily, thereby avoiding the problem of interpretation

that has generated this litigation. For example, the definition of "relative" would have unambiguously limited relatives to residents of the

named insured’s household, even with the same punctuation, if it had

stated: 

AUTO-OWNERS INSURANCE v. SARATA 5
"Relative" means someone who resides in your household

and is: (a) your relative; or (b) anyone else, under the age

of 21, in your care. 

Auto-Owners has not met its "burden of drafting clear and precise

language" indicating that the phrase "your relative" excludes nonresident relatives covered by the underlying policy. See Richards, 299

S.E.2d at 564. 

Auto-Owners further argues that its format and punctuation pattern

in other policy definitions require the clause "who resides in your

household" to be read as qualifying the phrase "your relative." Again,

we agree with the district court that neither the indentations and line

spacing nor the punctuation pattern eliminate the ambiguity. The differences in vertical line spacing are not readily apparent, nor can lay

readers be expected to understand or even notice a pattern of superfluous punctuation. 

Finally, Auto-Owners submits that it not only is unreasonable but

also "defies logic" for the father to expect coverage for any remote

relative no matter where located. As seductive as this argument may

at first appear, such an implication simply does not follow from an

interpretation that does not qualify the phrase "your relative" with the

final clause, "who resides in your household." As the district court

observed, "it is unlikely that a named insured would purchase the

required $500,000 of underlying coverage for such a remote relative

or designate a remote relative as the primary driver." And in view of

the way this contract was drafted, as well as the fact that by design

umbrella and underlying policies often have the same scope, it is certainly reasonable for the father to expect that a relative identified in

and insured by the underlying policy is also an insured in the umbrella

policy. 

In short, it is very difficult for the average person to read this policy and understand what is going on. For the foregoing reasons, the

judgment of the district court is 

AFFIRMED.

6 AUTO-OWNERS INSURANCE v. SARATA