United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 11-3100

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Joseph B. Wise; Toni M. Wise, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Missouri.

American Standard Insurance Company *

of Wisconsin, * 

*

Appellee. *

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Submitted: March 15, 2012

Filed: May 30, 2012

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Before RILEY, Chief Judge, SMITH and SHEPHERD, Circuit Judges.

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SMITH, Circuit Judge.

Joseph B. Wise and Toni M. Wise, husband and wife, ("the Wises") appeal

from the district court's grant of summary judgment in favor of American Standard

Insurance Company of Wisconsin ("American Standard"). The district court

1

concluded that the Wises were not entitled to recover underinsured motorist (UIM)

coverage benefits under four American Standard policies because the tortfeasor's

The Honorable Audrey G. Fleissig, United States District Judge for the

1

Eastern District of Missouri. 
vehicle was not an "underinsured motor vehicle" under the policies' plain language.

We affirm.

I. Background

On March 19, 2008, Joseph Wise was involved in an automobile accident in

Missouri when Charles Jackson's vehicle negligently collided with Joseph Wise's

vehicle. The automobile accident occurred during the course ofJackson's employment

with Macklin Hauling ("Macklin"). Joseph Wise's son, John Wise, was a passenger

in his father's vehicle at the time of the accident. Both Joseph and John Wise suffered

significant injuries. Empire Fire and Marine Insurance Company ("Empire") insured

Jackson and Macklin, providing $1,000,000 of automobile liability coverage. Empire

settled the Wises' injury claims on behalf of its insureds for the policy limit of

$1,000,000. American Standard and the Wises stipulate that the Wises' damages are

$1,500,000. Wise v. Am. Standard Ins. Co. of Wis., No. 4:10CV00668 AGF, 2011 WL

3880580, at *1 (E.D. Mo. Sept. 2, 2011). 

Both Joseph Wise and Toni Wise were listed on the title as owners of the

wrecked vehicle. The Wises had an American Standard automobile liability policy

covering this vehicle, as well as three additional American Standard automobile

liability policies that each covered a different vehicle. "Each of the four policies

issued to [the Wises] provided for UIM coverage of up to $100,000 per person and

$300,000 per accident." Id. All four policies contain the following provision:

PART VI—GENERAL PROVISIONS

* * *

3. Two or More Cars Insured. The total limit of our liability under

all policies issued to you by us shall not exceed the highest limit

of liability under any one policy. 

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When this policy insures two or more cars, the coverages

apply separately to each car.

All four policies also contain a UIM Coverage Endorsement, which provides,

in relevant part:

We will pay compensatory damages for bodily injury which an insured

is legally entitled to recover from the owner or operator of an

underinsured motor vehicle. The bodily injury must be sustained by an

insured person and must be caused by an accident and arise out of the

use of the underinsured motor vehicle.

* * *

ADDITIONAL DEFINITIONS USED IN THIS ENDORSEMENT

ONLY

* * *

3. Underinsured motor vehicle means a motor vehicle which is

insured by a liability bond or policy at the time of the accident

which provides bodily injury liability limits lessthan the limits of

liability of this Underinsured Motorists coverage.

* * *

LIMITS OF LIABILITY

* * *

We will pay no more than [the $100,000/$300,000] maximums no

matter how many vehicles are described in the declarations, insured

persons, claims, claimants or policies or vehicles are involved in the

accident. 

The limits of liability of this coverage will be reduced by:

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1. A payment made or amount payable by or on behalf of any person

or organization which may be legally liable, or under any

collectible auto liability insurance[,] for loss caused by an

accident with an underinsured motor vehicle.

* * *

OTHER INSURANCE

If there is other similar insurance on a loss covered by this endorsement,

we will pay our share according to this policy's proportion of the total

limits of all similar insurance. But, any insurance provided under this

endorsement for an insured person while occupying a vehicle you do not

own is excess over any other similar insurance.

American Standard issued all four policiesin Illinois, and the Wises are Illinois

residents. All of the policies were in effect on the date of the accident. 

After the Wises settled with Empire, they demanded UIM coverage from

American Standard for $400,000—"the combined UIM coverage in each of the four

polices." Id. American Standard, however, refused the demand. The Wises filed suit

for breach of contract, loss of consortium, and vexatious refusal to pay. American

Standard removed the suit to federal district court based on diversity of citizenship. 

The parties filed cross-motions for summary judgment. Before the district

court, the Wises asserted that Missouri law governed the dispute. Applying Missouri

law, they contended that "the policies are ambiguous." Id. at *2. Specifically, they

argued that "the second sentence in the 'Other Insurance' provision appearsto provide

UIM coverage, while the anti-stacking and set-off provisions indicate that such

coverage is not provided." Id. at *2 (footnote omitted). They further argued that the

second sentence in the "Other Insurance" provision was ambiguous regarding "the

term 'a vehicle you do not own' as applied to co-owners of a vehicle." Id. According

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to the Wises, "because they were co-owners of the [wrecked vehicle], neither owned

it." Id. As a result, "Joseph Wise was in a vehicle [that] he did not own." Id. The

Wises contended that the district court had to resolve all ambiguities in their favor,

"precluding American Standard from denying them UIM coverage under the set-off

provision and entitling them to stack the UIM coverage provided in their four

insurance policies." Id. 

In response, American Standard argued that it was entitled to summary

judgment under either Illinois or Missouri law because the tortfeasor's car was not an

underinsured motor vehicle. American Standard noted that the tortfeasor's liability

limit exceeds the Wises' UIM limit even when the four policies are stacked.

Additionally, American Standard maintained "that under the unambiguous policy

language [it was] entitled to a set-off in the amount[the Wises] received fromEmpire,

and that [the Wises were] prohibited from stacking the UIM coverage provided in

their four insurance polices." Id. 

The district court granted summary judgment in favor of American Standard.

First, the district court, applying Missouri law, concluded that "the accident did not

arise out of the use of an 'underinsured motor vehicle'" under the plain language of

the UIM Coverage Endorsement because "the tor[t]feasor's vehicle carried liability

insurance of $1,000,000. Such amount is both greater than [the Wises'] UIM coverage

of $100,000 for each policy, and greater than the aggregate UIM coverage of all four

policies, if [the Wises] were permitted to stack them." Id. at *4. Second, the district

court, reading the policy as a whole, concluded "that the phrase 'a vehicle you do not

own' in the second sentence of the Other Insurance provision of the policies" was not

ambiguous based on the Missouri Supreme Court's prior holding "that [a] plaintiff

. . . injured in a motor vehicle accident owned the car in question" even though he

"owned the car 'jointly with his father.'" Id. (quoting Lair v. Am. Family Mut. Ins. Co.,

789 S.W.2d 30, 32 (Mo. 1990)). Therefore, the court concluded that "the second

sentence of the Other Insurance provision does not apply to [Joseph Wise], and the

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anti-stacking and set-off provisions in the policies are not rendered ambiguous as to

[the Wises'] claims." Id. at *5. 

II. Discussion

On appeal, the Wises argue that the district court erroneously found that (1) the

tortfeasor's vehicle was not an "underinsured motorist vehicle," leaving the Wises

without benefits under the UIM policies; (2) the Wises could not "stack" their four

UIM policies; and (3) American Standard may "set-off" liability payments made to

the Wises from the four UIM policies. 

"We review de novo the district court's grant of summary judgment based on

its interpretation of insurance policy provisions." Secura Ins. v. Horizon Plumbing,

Inc., 670 F.3d 857, 861 (8th Cir. 2012). A district court properly grants summary

judgment "if there is no genuine issue of material fact and the insurer[] [is] entitled

to judgment as a matter of law." Id. "State law governs the interpretation of insurance

policies when federal jurisdiction is based on diversity of citizenship." Id. For the

purposes of this appeal, we will assume, without deciding, that Missouri law governs

the dispute, as the Wises claim. 

The four policies at issue define an "underinsured motor vehicle" as "a motor

vehicle which isinsured by a liability bond or policy at the time of the accident which

provides bodily injury liability limits less than the limits of liability of this

Underinsured Motorists coverage." "Under [this] type of policy . . . , if the other

motorist pays as much or more to the insured for bodily injury as the insured has

underinsured coverage, then the insured is not permitted to recover under the

underinsured coverage." Melton v. Country Mut. Ins. Co., 75 S.W.3d 321, 325 (Mo.

Ct. App. 2002). 

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The Missouri Court of Appeals has noted that

[d]etermining whether the definition of an underinsured motor vehicle

is met is not a threshold issue to determine whether the insured is

entitled to underinsured motorist coverage. [Goza v. Hartford

Underwriters Inc. Co., 972 S.W.2d 371,] 375 [(Mo. Ct. App. 1998)].

"Where the definition of underinsured was identical to the one in the

[insurer's] policy and was found to be unambiguous . . . the insured can

still be entitled to [underinsured motor vehicle] benefits even though

that definition is not met if the policy's [underinsured motor vehicle]

provisions when read together give rise to such an ambiguity." Id.

Am. Family Mut. Ins. Co. v. Ragsdale, 213 S.W.3d 51, 54 (Mo. Ct. App. 2006)

(fourth, fifth, sixth, and seventh alterations in original). 

In Ragsdale, the tortfeasor's automobile insurance policy provided $100,000

coverage. Id. at 53. The plaintiffs had insurance for their personal vehicles under two

policies, "each having underinsured motorist coverage in the amount of $100,000."

Id. The plaintiffs "made a $200,000 demand upon [their insurer]." Id. The Missouri

Court of Appeals found that "an isolated reading of the definition of 'underinsured

motor vehicle' forbids coverage." Id. at 55–56. However, reading the insurance

provisions together, the court concluded that the "Other Insurance clause" of the

policies was ambiguous. Id. at 56. After determining that "the excess clause of the

Other Insurance provision [was] ambiguous," the court held that it "must allow

stacking of policies in consideration of the ambiguity the Other Insurance clause

creates with respect to the anti-stacking provision." Id. at 57. The court also found

that "the same ambiguity prohibits [the insurer] from setting-off monies received by

the [insureds] from[the tortfeasor's] liability policy orworkers' compensation benefits

against the underinsured motorist coverage in light of the ambiguity the Other

Insurance clause creates with respect to the set-off provisions of the policies." Id. 

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Similarly, in Chamness v. American Family Mutual Insurance. Co., the

tortfeasor "had bodily injury liability insurance coverage in the amount of

$100,000.00 per person and $300,000.00 per occurrence." 226 S.W.3d 199, 201 (Mo.

Ct. App. 2007). At the time of the accident, the plaintiff and her husband were not

living together, but theywere "both insured under two automobile insurance policies"

that covered different vehicles. Id. "Both policies provid[ed] for underinsured

motorist insurance coverage for bodily injury in the amount of $100,000.00 per

person and $300,000.00 per accident." Id. The insurer argued that the plaintiff could

not recover "under the unerinsured motorist coverage endorsement of either policy

because her collision with [the tortfeasor] did not occur with an underinsured motor

vehicle, as[the tortfeasor's] bodily injury liability coverage equaled the underinsured

motorist coverage of each of [the] [p]laintiff's insurance policies." Id. at 202. In

response, the plaintiff asserted that an ambiguity in the policies "entitled [her] to

underinsured motorist coverage under both policies"; permitted her "to stack the

$100,000.00 of underinsured motorist coverage provided by each policy"; and

prevented the insurer from "set[ting]-off the amount recovered from [the tortfeasor's]

insurance company." Id. 

On appeal, the Missouri Court of Appeals addressed the stacking issue first. Id.

Analyzing "the other insurance clause," the court determined that "the policies'

language is ambiguous asto whether the accident occurred while [the] [p]laintiff was

occupying a vehicle 'you do not own.' Construing this language in favor of [the]

[p]laintiff, [the court] f[ound] [that] the second sentence of the other insurance clause

applied to her." Id. at 204. Then, the court applied Ragsdale and held that "[b]ecause

the second sentence of the other insurance clause appears to provide coverage over

and above any other applicable coverage but the anti-stacking and set-off language

indicates that such coverage is not provided, the insurance policies' language is

ambiguous." Id. at 207. The court construed this ambiguity in the plaintiff's favor. Id.

"Because [the court] . . . determined that the second sentence of the other insurance

provision create[d] an ambiguity with respect to the anti-stacking provisions, [the

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court] . . . allow[ed] [the] [p]laintiff to stack the $100,000.00 of underinsured motorist

coverage provided by each policy." Id. at 208. Finding that the "[p]laintiff's second

point on appeal [was] dispositive, [the court] f[ound] it unnecessary to address [the]

[p]laintiff's first point on appeal"—i.e., whether the plaintiff was entitled to

underinsured motorist coverage under both policies. Id. (emphasis added). 

In the present case, the Wises are not entitled to recover under the UIM policies

even if they are stacked, thereby distinguishing the present case from Ragsdale and

Chamness. The amount of the tortfeasor's liability insurance—$1,000,000—is both

greater than the Wises' UIM coverage of $100,000 for each policy and greater than

the aggregate—or stacked—UIM coverage for all four policies—$400,000. Thus, the

district court correctly concluded that the Wises are not entitled to recover under the

UIM policies because stacking them still does not result in an amount exceeding the

tortfeasor's liability insurance.2

III. Conclusion

Accordingly, we affirm the judgment of the district court.

______________________________

As the district court noted, "American Standard's UIMCoverageEndorsement

2

clearly states that a vehicle will be considered underinsured when its liability

coverage is less than the insured's UIM coverage." Wise, 2011 WL 3880580, at *4.

In the present case, "the tor[t]feasor's vehicle carried liability insurance of

$1,000,000. Such amount is both greater than Plaintiffs' UIM coverage of $100,000

for each policy, and greater than the aggregate UIM coverage of all four policies, if

Plaintiffs were permitted to stack them." Id. As a result, "the accident did not arise out

of the use of an 'underinsured motor vehicle.'" Id.

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