Home / Uncategorized / AMERICAN COUNTRY INSURANCE CO. v. PALUMBO, et al.

AMERICAN COUNTRY INSURANCE CO. v. PALUMBO, et al.



NOTICE: This slip opinion is subject to
revision and may not reflect the final opinion adopted by the
Court.


AMERICAN COUNTRY
INSURANCE CO.

v.

PALUMBO, et al.


Opinion
Missouri Court of Appeals Eastern District

Case Style: American Country Insurance Company, Appellant, v.
Carla A.
Palumbo, et al., Defendants, and Joshua L. Johnson, et al.,
Respondents.

Case Number: ED75872

Handdown Date: 02/15/2000

Appeal From: Circuit Court of Warren County, Hon. Edward D.
Hodge

Counsel for Appellant: Gary P. Paul, Radford R. Raines, III

Counsel for Respondent: Donald T. Taylor

Opinion Summary:

The insurer appeals the circuit court summary judgment,
finding insurer’s
policy endorsement not applicable.
AFFIRMED.
Division One holds:
(1) Illinois law will apply as it is the state with the most
significant
relationship to the action.
(2) The original policy did not include the exclusionary
endorsement, and
subsequent declarations never listed such. Therefore, the
liability limits
remain those stated in the original policy.
(3) The issue of whether an endorsement was in the renewal policy
is a
matter of construction, a question of law, not material fact.

Citation:

Opinion Author: Gary M. Gaertner, Presiding Judge

Opinion Vote: AFFIRMED. Simon and J. Dowd, J.J., concur.


Opinion:

Appellant, American County Insurance Company,
("insurer"), appeals from the
judgment of the Circuit Court of Warren County granting the
respondents’,
Joshua L. Johnson and Kearie L. Johnsons’[1] motion for summary
judgment
finding insurer’s policy endorsement not applicable. We affirm.
On September 14, 1997, Carla A. Palumbo was operating a motor
vehicle owned
by Anita Banas, on Interstate 70 near its intersection with
Springtown,
within the city of Foristell, Missouri. The motor vehicle
collided with a
vehicle driven by Bryan S. Johnson and occupied by Laura A.
Waldman.
Johnson was killed in the collision and his children, Joshua L.
Johnson and
Kearie L. Johnson ("respondents"), are pursuing claims
for wrongful death.
Insurer filed a petition in interpleader and for
declaratory/equitable
relief contending that policy endorsement AC4-210, which insurer
contends
is contained in Anita Banas’ insurance policy, reduces the
liability
coverage to the amount required by the Motor Vehicle Financial
Responsibility Law when the insured vehicle was operated by a
person under
25 years of age. This is a reduction from $250,000 each
person/$500,000
each occurrence to $20,000/$40,000 or $25,000/$50,000 depending
on whether
Illinois or Missouri law, respectively, applies.
The relevant facts regarding Anita Banas’ insurance policy are as
follows:
Anita Banas is the biological mother of Karen A. Banas, who was a
passenger
in the vehicle driven by Carla Palumbo on September 14, 1997.
Anita Banas
owns the 1988 Chevrolet Nova, which was involved in the
collision. On that
day, the vehicle was insured under an insurance policy with
insurer. Carla
Palumbo and Karen A. Banas were insured as defined under the
policy. The
declaration page of the policy provides the maximum limit for
bodily injury
liability under said policy is $250,000 for "each
person" and $500,000 for
"each occurrence."
Anita Banas applied for the policy in September 30, 1996, along
with her
husband, Henry Banas. The application described three vehicles
including
the 1988 Chevrolet Nova. The requested limits of liability were
$250,000
each person and $500,000 each accident. The Banas’ address was
listed as
Chicago, Illinois, with the vehicles being garaged in
Edwardsville,
Illinois. Insurer issued the policy on October 4, 1996, it did
not include
or list exclusionary endorsement AC4-210. On February 21, 1997,
an agent of
insurer, allegedly obtained the signature of Henry Banas on
endorsement
AC4-210. The endorsement signed by Henry Banas provided:
It is agreed with respect to the automobile described as:
1988 Chevy Nova 1YSK5143JZ209237
(Year and Make of Car) (Motor and Serial Number)

or a replacement thereof, there shall be added to the section
of
the policy entitled "Persons Insured" or
"Definitions of
Insured," whichever of the sections appear in the policy to
which
this endorsement is attached, the following provision:

Notwithstanding any contrary provision in the policy or the
limitation of coverage there in, insurance for bodily injury
liability, property damage liability, uninsured and underinsured
motorist coverage shall not be in the amounts stated in the
declaration of the policy when an insured automobile is operated
by a person under the age of 25 but shall be in the amounts
provided in section 7-203 of the Illinois Vehicle Code; except
the exclusion shall not apply to any child of the named insured;
nor shall this exclusion apply as to uninsured or underinsured
motorist coverage when the named insured or any relative of the
named insured are occupants of the automobile described in the
declarations or a temporary substitute automobile.

On February 23, 1997, Henry Banas died. On March 18, 1997,
insurer received
instructions from Anita Banas, through their agent, to delete
Henry Banas
as an insured, add Tim Banas as an insured, add a 1988 Chevrolet
automobile, add Christopher Banas as an insured, and add a 1987
Toyota
vehicle. On April 4, 1997, insurer renewed the policy and sent
the
declaration of the renewal policy. This declaration did not list
endorsement AC4-210. Insurer contends endorsement AC4-210 did not
appear on
the declarations due to the "computer generated declarations
page not being
equipped to record non-ISO forms on the declarations page of the
renewal
policy." Anita Banas, as named insured with insurer, never
signed, endorsed
or agreed to any exclusionary endorsement that would have reduced
insurance
coverage when her 1988 Chevrolet Nova was operated by a person
under the
age of 25.
At the time of the accident, on September 14, 1997, Palumbo was
under the
age of 25. As a result of the accident, respondents and Deborah
A. Johnson,
along with Kendrick C. Johnson, made claims for either personal
injury or
wrongful death. Insurer claimed the aggregate amount of these
claims
exceeded $50,000 which insurer claimed was the liability amount
under the
policy. Insurer deposited $50,000 with the court and requested
claimants
interplead for the fund. Respondents then filed their summary
judgment
motion alleging insurer was responsible for $250,000 per person
and
$500,000 per occurrence in insurance coverage for the motor
vehicle
collision that occurred on September 14, 1997.
On December 8, 1998, the above motion was heard by the trial
court. On
December 11, 1998, the trial court granted respondent’s motion
for summary
judgment finding the failure of insurer "to include
Endorsement AC4-210 in
its declaration of coverage or in its itemization of applicable
endorsements at the time of the renewal of the policy effectively
removed
said endorsement as a modification of the original policy limits
of
liability." The trial court found no ambiguity in the
written terms of the
insurance contract and ruled the policy limits remain $250,000
per
person/$500,000 per occurrence.
Insurer appealed. This court, sua sponte, dismissed the appeal
because
there was no final judgment disposing of all claims. [2] On March 2, 1999,
the trial court ordered the above judgment as final and under
Rule 74.01(b)
found there was no just reason for delay. Insurer appealed.
Our standard of review when considering appeals from summary
judgments, is
essentially de novo. ITT Commercial Finance Corp. v. Mid-America
Marine
Supply Corp., 854 S.W.2d 371, 376 (Mo.banc 1993). Further, we
review the
record in the light most favorable to the party against whom
judgment was
entered. Id.
Before we address insurer’s points, we must address the issue of
whether to
apply Missouri law or Illinois law. Missouri choice of law rules
follow the
"most significant relationship test" of the Restatement
(Second) of
Conflicts of Laws, Section 188. Superior Equipment Co., Inc. v.
Maryland
Cas. Co., 986 S.W.2d 477, 480 (Mo.App.E.D. 1998). The factors we
examine
when determining which state has the most significant
relationship to the
action include: (a) the place of contracting; (b) the place of
negotiation
of the contract; (c) the place of performance; (d) the location
of the
subject matter of the contract; and (e) the residence of the
parties. Id.
In cases involving surety or casualty insurance, the most
important factor
is the state which the parties contemplated as the principal
location of
the insured risk. Id. The "location of the insured
risk" is defined as "the
state where it will be during at least the major portion of the
insurance
period" and in cases of automobile liability policies,
"it is where the
vehicle will be garaged during most of the period." Id. at
481 (quoting
Restatement (Second) of Conflicts of Laws, Section 193, Comment
b).
In the case at bar, the policy was purchased in Illinois, the
Banases were
Illinois residents, the policy was delivered in Illinois and the
policy
covered vehicles registered and garaged in Illinois. Further,
from the
record, it appears the only connection with Missouri is the
accident. The
latter fact, in of itself, is insufficient to establish the most
significant relationship. See generally Hatzler v. American
Family Mutual
Insurance Company, 881 S.W.2d 653, 655 (Mo.App.W.D. 1994). Based
on the
preceding factors, Illinois is the state with the most
significant
relationship to the action, therefore we will apply Illinois law
to the
case at bar.
Insurer raised two points on appeal. In point one, insurer
alleged the
trial court erred in granting respondents’ motion for summary
judgment in
that under Illinois law, the general rule is when a policy
renewal is made,
unless provided otherwise, the terms of the original policy
become part of
the renewal contract. Insurer contends the terms of endorsement
AC4-210
became part of the renewal policy so that the liability limits
were the
amounts stated in the Motor Vehicle Financial Responsibility Law
and not
$250,000/$500,000. We disagree.
"In construing insurance contracts, the court’s primary
purpose is to give
effect to the intention of the parties as expressed
therein." Elson v.
State Farm Fire and Casualty Co., 691 N.E.2d 807, 811 (Ill.App.1
Dist.
1998).
Insurer cites Messerly v. State Farm Mut. Auto. Ins., 662 N.E.2d
148
(Ill.App.4 Dist. 1996) for the proposition the endorsement in
question
should apply because although Henry Banas, now deceased, signed
the
endorsement, Henry’s actions bound his wife Anita under the
policy. In
Messerly, the court reasoned, "[r]equiring every potential
‘insured’ or
‘additional insured,’ or ‘household member’ who may be covered
under a
policy to visit or speak with an insurance agent in order to be
given an
offer of additional UM/UDIM coverage would be impractical."
Id. at 151.
"Furthermore, it would be inconsistent to find plaintiff is
covered under
the terms of a policy which benefit her but is not bound by the
terms which
do not benefit her. Plaintiff relied on her spouse to make
decisions on her
behalf in procuring automobile insurance, thus, she should be
bound by
those decisions." Id. at 151-52. In Messerly, husband had
procured
automobile insurance for himself and his wife. Id. at 148-49.
Under
Illinois law, the insurer is required to offer additional
uninsured
motorist (UM) coverage to all named insureds under a policy. When
husband
met with insurer’s agent, such an offer was made and husband
declined the
additional coverage for himself and his wife. Id. at 149. Wife
was later
involved in an accident with an uninsured motorist and incurred
medical
bills in excess of the limits her husband had selected. Id. Wife
brought a
declaratory action, asking the court to determine whether a
legally
sufficient offer of UM coverage to one named insured satisfied
the offer
requirement under the Illinois law. Id. The court found for
insurer,
finding "[a]n offer of UM coverage was made as required by
the statute and,
as the applicant and a named insured, [husband] rejected the
offer, thereby
binding all insureds under the policy. Id. at 152.
Messerly is distinguishable from the case at bar. Primarily,
Messerly dealt
with the sufficiency of an offer for additional coverage that the
insured,
by Illinois law was required to make. The offer was made at the
time the
parties’ applied for the policy. The case at bar deals with an
endorsement
that reduces coverage. Further, and factually most compelling,
the
endorsement was signed almost five months after the parties
applied for the
original policy.
Insurer further argues the endorsement was part of the original
policy and
therefore when Anita Banas "renewed" her policy after
her husband’s death,
she was bound by the terms in the original policy including the
endorsement. Insurer cites Dungey v. Haines & Britton, Ltd.,
614 N.E.2d
1205, 1208 (Ill. 1993) for the general rule that, unless
otherwise
provided, when a policy renewal is made the terms of the original
policy
become part of the renewal contract of insurance. In Dungey, wife
obtained
an insurance policy to cover her 1980 vehicle. Her husband had
received a
reckless driving ticket in 1979 and therefore, as part of wife’s
policy,
she signed a named drivers exclusion endorsement excluding her
husband from
coverage. Id. at 1207. The endorsement was labeled CE-180. Id.
When wife
renewed her policy one year later she again signed a named
drivers
exclusion endorsement excluding her husband from coverage. Id.
The
endorsement was labeled CE-303. Id. The policy was thereafter
renewed
numerous times. Id. Wife was not asked to sign another
endorsement but
received a declaration statement each time the policy was
renewed. The
declaration statements included endorsement CE-303. Id. In 1983
wife
obtained a second policy from insurer, listing her son as the
primary
driver. Id. The policy periods were shorter and premiums were
higher on
this second policy than on the first policy. There was no
endorsement
CE-303 on the second policy. Id. In 1985, husband and wife
purchased a new
van. Id. Wife added the van to the first policy, the declaration
statement
included endorsement CE-303. On that same day, wife obtained a
third policy
from insurer. Husband and wife were listed as drivers and this
policy
covered a 1984 vehicle previously insured under wife’s first
policy. Id.
This third policy had shorter policy periods and higher premiums
than the
first policy. Id. In 1986, husband destroyed the van insured
under wife’s
first policy. Insurer denied coverage on the basis that husband
was
excluded under the first policy through endorsement CE-303. Id.
The
Illinois Supreme Court found husband was excluded from coverage
because,
"[e]ach renewal, including the renewal covering the date of
the accident,
was a new contract that incorporated the terms of the original
insurance
contract. One of these terms, indicated on the declaration
statement as
CE-303 was the named drivers exclusion endorsement." Id. at
1208.
The case at bar is factually distinguishable from Dungey. In our
case, the
original policy was issued on October 4, 1996, and did not
include
endorsement AC4-210, unlike in Dungey, wherein wife executed the
endorsement with the original issued policy and with the renewal
policy the
second year. In our case, the endorsement was signed by Henry
Banas on
February 21, 1997, over four months after the original policy was
issued.
Henry Banas died on February 23, 1997, two days after he signed
the
endorsement. On March 18, 1997, Anita deleted Henry as insured
and added
two people and two cars to the policy. On April 4, 1997, insurer
renewed
the policy. Insurer sent the declaration of said policy. The
declaration
did not list endorsement AC4-210, unlike in the Dungey case
wherein the
declaration statement listed endorsement CE-303 on every
subsequent renewal
of the first policy. In the case at bar, Anita Banas, the named
insured
never signed, endorsed or agreed to any exclusionary endorsement
that would
have reduced insurance coverage when her vehicle was operated by
a person
under the age of 25. Further, no subsequent declarations page
listed
endorsement AC4-210.
Therefore, we conclude the original policy did not include
exclusionary
endorsement AC4-210, husband’s subsequent signature on the
exclusionary
endorsement, four months after the original policy was issued,
did not bind
wife on subsequent renewal because the declaration page never
listed
endorsement AC4-210 as part of policy and therefore, the
liability limits
remain the amount stated in the original policy,
$250,000/$500,000.
In point two, insurer alleges the trial court erred in granting
respondent’s motion for summary judgment in that there was a
genuine issue
as to a material fact regarding whether endorsement AC4-210 was
part of the
renewal policy. Insurer argues the affidavits of its former
Divisional
Manager of Personal and Special Lines and its Personal Lines
Underwriter,
which both state endorsement AC4-210 was contained in the renewal
policy
creates a genuine issue of fact because it contradicts Anita
Banas’
affidavit that she never signed, endorsed, or agreed to any
insurance
endorsement that would reduce her coverage and that the
endorsement was not
included on her insurance policy.
"Construction of an insurance contract presents only a
question of law; it
is not submissible to a jury. Thus, it is an issue which is
appropriate for
determination upon summary judgment." Rivota v. Kaplan, 364
N.E.2d 337, 341
(Ill.App. 5 Dist. 1977).
Insurer does not contend endorsement AC4-210 was physically
attached to the
original policy or listed on the subsequent declarations pages,
as this
would be contrary to the record wherein they supply the original
policy
issued on April 4, 1997, and state in the same affidavits
referenced above
that endorsement AC4-210 did not appear on the declarations due
to the
"computer generated declarations page not being equipped to
record non-ISO
forms on the declarations page of the renewal policy."
Therefore, the issue
as to whether endorsement AC4-210 was contained in the renewal
policy is a
matter of construction, a question of law, not an issue of
material fact.
Point denied.
Based on the foregoing, the judgment of the trial court is
affirmed.

Separate Opinion:
None

 

FOOTNOTES:

[1] Laura R. Waldman adopted the motion, Carla A.
Palumbo did not.

[2] See American Country Insurance Company v.
Palumbo, No. ED75659
(Mo.App.E.D. 1999).

Scroll To Top