United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 05-2401

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RLI Insurance Company, Inc., *

*

Appellant, *

*

v. *

*

Farmers Insurance Company, Inc.; *

Nationwide Mutual Insurance Company;*

*

Appellees, *

* Appeals from the United States

Darren O’Quinn, as Personal * District Court for the

Representative of the Estate of * Eastern District of Arkansas.

Daniel J. Baker; Jennifer Selle, as *

Personal Representative of the * [UNPUBLISHED]

Estate of Lila Ruffolo, *

*

Defendants. *

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No. 05-2450

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RLI Insurance Company, Inc., *

*

Plaintiff, *

*

v. *

*

Farmers Insurance Company, Inc.; *

Nationwide Mutual Insurance Company;*

*
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Appellees, *

*

Darren O’Quinn, as Personal *

Representative of the Estate of *

Daniel J. Baker; *

*

Appellant, *

*

Jennifer Selle, as Personal *

Representative of the Estate of *

Lila Ruffolo, *

*

Defendant. *

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No. 05-2557

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RLI Insurance Company, Inc., *

*

Plaintiff, *

*

v. *

*

Farmers Insurance Company, Inc.; *

Nationwide Mutual Insurance Company;*

*

Appellees, *

*

Darren O’Quinn, as Personal *

Representative of the Estate of *

Daniel J. Baker; *

*

Defendant, *

*

Jennifer Selle, as Personal *

Representative of the Estate of *
1

The Honorable James M. Moody, United States District Judge for the Eastern

District of Arkansas. 

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Lila Ruffolo, *

*

Appellant. *

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Submitted: August 3, 2006

Filed: August 9, 2006 

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Before MURPHY, BYE, and MELLOY, Circuit Judges.

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PER CURIAM.

These appeals involve a declaratory judgment action filed by RLI Insurance

Company (RLI) against Farmers Insurance Company (Farmers), Nationwide Mutual

Insurance Company (Nationwide), Darren O’Quinn as personal representative of the

Estate of Daniel J. Baker (O’Quinn), and Jennifer Selle as personal representative of

the Estate of Lila M. Ruffolo (Selle). At the time of his death, Baker held insurance

policies with each of the three insurance companies; RLI sought a declaration of the

companies’ respective duties on a wrongful-death claim Selle had brought against

O’Quinn. The district court1

 granted Farmers and Nationwide summary judgment,

concluding that their policies extended no coverage for the accident. RLI, O’Quinn,

and Selle appeal. We affirm.

Briefly, the relevant facts are as follows. Baker and Ruffolo lived together as

boyfriend and girlfriend. Baker owned a Chevrolet Yukon which was insured by

Farmers, and on November 1, 2002, he purchased a Dodge Viper to replace the

Yukon. Later that day, Baker obtained insurance on the Viper from Nationwide, and
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he called Farmers to cancel the policy on the Yukon. Around 10 p.m. that evening,

he lost control while driving the Viper; Baker and Ruffolo both died in the accident.

In addition to the Farmers and Nationwide policies, Baker had an umbrella

policy with RLI. When Selle brought the wrongful-death action, O’Quinn requested

coverage from Farmers, Nationwide, and RLI. Farmers and Nationwide denied

coverage, and RLI filed this action seeking a declaration that there is coverage under

the Farmers and Nationwide policies. Selle and O’Quinn filed cross-claims against

Farmers and Nationwide. 

As to the Farmers policy, we agree with the district court that Baker effectively

canceled the policy before the November 1, 2002 accident. The undisputed evidence

showed that Baker telephoned his Farmers agent on the afternoon of November 1 and

asked that his policy on the Yukon be cancelled. The agent notified Farmers, and

Farmers cancelled the policy on November 1, effective 12:00 p.m. Farmers issued a

notice of cancellation dated November 1, which acknowledged that Farmers did not

have a “signed authorization” from Baker, and stated that Baker was issued a premium

refund. We disagree with appellants that a policy provision--stating that the insured

“may cancel this policy by advising us in writing when at a future date the

cancellation is to be effective”--prohibited Farmers from cancelling the policy upon

Baker’s oral notification. Farmers was free to choose not to insist upon compliance

with the writing requirement, and did so by processing the cancellation request

without a writing from Baker. Cf. St. Paul Fire & Marine Ins. Co. v. First Bank, 20

S.W.3d 372, 374-75 (Ark. 2000) (where agent’s letter demonstrated that insurance

company expressed willingness to terminate coverage but insisted upon insurer’s

providing cancellation and release form before cancellation would be processed, it

was “clear” insurance company insisted upon compliance with policy’s written notice

provisions and did not enter into termination by mutual agreement before written

notice and release were received). We also disagree with appellants that Farmers

impermissibly made the cancellation retroactive by making it effective at noon on
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November 1, even though Baker made his phone call later that afternoon. Cf. id. at

375 (cancellation operates prospectively only; rescission of policy retroactively to

earlier date may only be accomplished with consent of insured policy owner and any

third parties in whom rights may have vested). The effective cancellation time was

determined for the purpose of calculating a refund, but coverage under the policy

ended when Farmers accepted Baker’s oral cancellation on the afternoon of November

1, before the accident occurred. 

As for the Nationwide policy, we conclude that the policy’s “bodily-injury

exclusion” excludes coverage for Ruffolo. It is undisputed that Baker was the

“policyholder” and “named insured,” and that both Baker and Ruffolo were “insured

drivers” under the policy. The bodily-injury exclusion provided that “coverage does

not apply to . . . [b]odily injury to any insured.” Thus, the important determination is

whether Ruffolo qualified as an “insured” under the policy. An “insured” was defined

as “one who is described as entitled to protection under each coverage.” We agree

with the district court that Ruffolo met the policy’s definition of an “insured” because

she was entitled to coverage under some policy provisions. We disagree with

appellants’ argument that the exclusion applied to Ruffolo only when she was driving:

Arkansas has upheld substantially similar exclusions and has not limited such

exclusions to insureds who were driving. See Cook v. Wausau Underwriters Ins. Co.,

772 S.W.2d 614, 614-16 (Ark. 1989) (exclusion under automobile policy for bodily

injury to any family member applied to passenger wife’s claim against driver husband

and did not violate substantive law or public policy); State Farm Mut. Auto. Ins. Co.

v. Cartmel, 463 S.W.2d 648, 649-50 (Ark. 1971) (automobile policy excluded insured

passenger’s claim against insured permissive driver; noting such exclusionary clauses

were designed and are approved to protect insurance companies from collusive claims,

although they are “quite far reaching and at times appear to have unfortunate effects”).

Accordingly, we affirm the judgment of the district court. 

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