No. WD 57296.
Opinion Filed: April 11, 2000.
APPEAL FROM THE CIRCUIT COURT OF HENRY COUNTY, THE HONORABLE WILLIAM J. ROBERTS, JUDGE.
Michael Eugene McCausland, Kansas City, for appellant.
Andrew Jay Gelbach, Warrensburg, John Edmund Turner, Kansas City (Co-Counsel), for respondent Jeanette Hargrave.
Robert E. Harris, Warrensburg, for respondents Rodney and James Hargrave.
Before Spinden, P.J., Lowenstein, J. and Ulrich, J.
American Standard Insurance Company (American Standard) appeals the summary judgment entered by the trial court in favor of Jeanette Hargrave and James Hargrave, by and through his guardian ad litem Rodney Hargrave, (Respondents) on its second amended petition for declaratory judgment. American Standard contends that the trial court erred in finding the household exclusion clause in the automobile liability insurance policy issued by it was partially invalid in the amount of $25,000, the minimum coverage required by the Motor Vehicle Financial Responsibility Law (MVFRL), sections 303.010 through 303.370, RSMo 1994. The judgment of the trial court is reversed, and summary judgment is granted in favor of American Standard.
The trial court denied American Standard's motion for summary judgment and granted Respondents' motions.
On April 17, 1993, James Hargrave, age 6, was a passenger in a 1991 Ford Escort owned by James Teegarden when it collided with another vehicle. Jeanette Hargrave, James's mother, was driving the Escort with Mr. Teegarden's permission at the time of the accident. James sustained serious physical injuries as a result of the collision. On August 27, 1993, James, by and through his natural father and next friend Rodney Hargrave, filed a personal injury action against Jeanette to recover damages for the injuries he suffered. A judgment in the amount of $750,000 was entered in the case in favor of James.
Two automobile liability insurance policies were in effect on the day of the accident. Policy number 526 2357-A23-25C issued by State Farm Mutual Automobile Insurance Company (State Farm) named Mr. Teegarden as the insured and identified the Escort involved in the collision as the described vehicle. The policy carried bodily injury liability coverage limits of $50,000 per person, $100,000 per accident. Jeanette was an insured under the State Farm policy because she was operating the Escort with the permission of Mr. Teegarden. Policy number 0168-5410-01-54-SPPA-MO issued by American Standard named Rodney Hargrave as the insured and identified a 1992 Ford F150 as the described vehicle. The American Standard policy carried bodily injury liability coverage limits of $25,000 per person, $50,000 per occurrence. Jeanette was also an insured person under the American Standard policy because she was the spouse of the named insured. Both policies contained household exclusion clauses excluding from liability coverage any bodily injury to the insured or any member of the insured's family residing in the insured's household.
Pursuant to a settlement agreement, State Farm paid James $25,000 as required by the Missouri Supreme Court case, Haplin v. American Family Mutual Insurance Company , 823 S.W.2d 479, 483 (Mo. banc 1992), which held that the MVFRL partially invalidates a household exclusion clause in the amount of the statutorily required minimum coverage. Thereafter, Respondents sought an additional $25,000 in liability coverage under the American Standard policy. American Standard, however, denied coverage based on the household exclusion clause in its policy and filed a petition for declaratory judgment seeking a determination that the policy did not provide coverage. All parties filed motions for summary judgment. Citing a recent Western District case, Kellar v. American Family Mutual Insurance Company , 987 S.W.2d 452 (Mo.App.W.D. 1999), the trial court entered summary judgment in favor of Respondents. It found that James suffered additional damages in excess of those paid by State Farm and that those additional damages were recoverable under an excess insurance clause contained in the American Standard policy up to the $25,000 limit required by the MVFRL. This appeal by American Standard followed.
Appellate review of the grant of summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp. , 854 S.W.2d 371, 376 (Mo.banc 1993). The record is reviewed in the light most favorable to the party against whom judgment was entered, according that party all reasonable inferences that may be drawn from the record. Id.
Summary judgment will be upheld on appeal if the movant is entitled to judgment as a matter of law and no genuine issues of material fact exist. Id. at 377. Facts contained in affidavits or otherwise in support of a party's motion are accepted as true unless contradicted by the non-moving party's response to the summary judgment motion. Id. at 376.
Once the movant has established a right to judgment as a matter of law, the non-movant must demonstrate that one or more of the material facts asserted by the movant as not in dispute is, in fact, genuinely disputed. Id. The non-moving party may not rely on mere allegations and denials of the pleadings, but must use affidavits, depositions, answers to interrogatories, or admissions on file to demonstrate the existence of a genuine issue for trial. Id. ; Reeves v. Keesler , 921 S.W.2d 16, 19 (Mo.App.W.D. 1996).
In its sole point on appeal, American Standard contends that the trial court erred in finding that its policy provides liability coverage in the amount of $25,000. It argues that the household exclusion clause contained in the policy was fully valid and enforceable because the minimum liability coverage requirement of the MVFRL was satisfied by State Farm's payment of $25,000. American Standard claims that the Kellar case, which the trial court cited in its judgment, conflicts with a 1992 Southern District case, Shelter Mutual Insurance Company v. Haney , 824 S.W.2d 949 (Mo.App.S.D. 1992), and is inconsistent with Halpin .
The household exclusion clause contained in the American Standard policy provided the following:
This coverage does not apply to:
10. Bodily injury to:
a. Any person injured while operating your insured car;
b. You or any person related to the operator and residing in your household;
c. Any person related to the operator and residing in this household of the operator.
The purpose of a household exclusion clause is to prohibit recovery by relatives of the insured who reside in the insured's household when the insured is the negligent party. Kellar , 987 S.W.2d at 454 . With the abrogation of the spousal or intra-family immunity doctrine, many insurers include a household exclusion clause in their insurance contracts. Id.
The MVFRL, however, "effects a partial invalidity" of such household exclusion clauses. Haplin v. American Family Mutual Insurance Company , 823 S.W.2d 479, 480 (Mo.banc 1992); Shelter Mut. Ins. Co. v. Haney , 824 S.W.2d 949, 952 (Mo.App.S.D. 1992). The MVFRL requires owners of motor vehicles to maintain financial responsibility and, absent owner's coverage, requires operators to maintain financial responsibility when operating a vehicle owned by another. § 303.025, RSMo Cum. Supp. 1998; First Nat'l Ins. Co. of Am. v. Clark , 899 S.W.2d 520, 522 (Mo.banc 1995). Section 303.025 provides in pertinent part:
1. No owner of a motor vehicle registered in this state, or required to be registered in this state, shall operate the vehicle, or authorize any other person to operate the vehicle, unless the owner maintains the financial responsibility as required in this section. Furthermore, no person shall operate a motor vehicle owned by another with the knowledge that the owner has not maintained financial responsibility unless such person has financial responsibility which covers the person's operation of the other's vehicle. Any person who violates this section is guilty of a class C misdemeanor.
2. A motor vehicle owner shall maintain the owner's financial responsibility in a manner provided for in section 303.160, or with a motor vehicle liability policy which conforms to the requirements of the laws of this state.
§ 303.025, RSMo Cum. Supp. 1998. Most owners and operators of motor vehicles endeavor to satisfy the requirement of section 303.025 by purchasing a motor vehicle liability policy. Clark , 899 S.W.2d at 522 . A "motor vehicle liability policy" is an owner's or an operator's policy of liability insurance. § 303.190.1, RSMo 1994; Clark , 899 S.W.2d at 522 . Section 303.190 further describes and sets out the minimum limits of liability of such policies as follows:
2. Such owner's policy of liability insurance:
(1) Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and
(2) Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles within the United States of America or the Dominion of Canada, subject to limits, exclusive of interest and costs, with respect to each such motor vehicle, as follows: twenty-five thousand dollars because of bodily injury to or death of one person in any one accident and, subject to said limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and ten thousand dollars because of injury to or destruction of property of others in any one accident.
3. Such operator's policy of liability insurance shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him, within the said territorial limits and subject to the same limits of liability as are set forth about with respect to any owner's policy of liability insurance.
§§ 303.190.2 and 303.190.3, RSMo 1994.
The plain purpose of the MVFRL is to ensure that people injured on the highways may collect damage awards, within limits, against negligent motor vehicle operators. Halpin , 823 S.W.2d at 482; Haney , 824 S.W.2d at 952 . This protection extends to occupants of the insured vehicle. Id. If a household exclusion clause were fully enforced, such purpose would be incompletely fulfilled. Id. A household exclusion clause in a motor vehicle liability policy will, therefore, be held invalid insofar as it purports to deny coverage up to the amounts required by section 303.190.2. Halpin , 823 S.W.2d at 482; Haney , 824 S.W.2d at 956 .
In this case, both the owner's policy issued by State Farm and the operator's policy issued by American Standard contained household exclusion clauses. Despite its household exclusion clause, however, the State Farm policy provided $25,000 in liability coverage for James's injuries as required by the MVFRL and Halpin . Respondents argued, and the trial court agreed, that the American Standard policy provided an additional $25,000 in liability coverage despite its household exclusion clause and the State Farm payment because it contained an excess insurance clause, which provided that any operator's liability coverage provided under the policy is excess over any other collectible auto liability insurance. This argument, however, was inconsistent with Halpin .
As indicated in Halpin , Missouri Supreme Court cases recognize freedom of contract in liability insurance. Halpin , 823 S.W.2d at 483 . Where insurance contract language is clear, "exceptions based on public policy must usually find support in necessary implication from statutory provisions." Id. The MVFRL manifests to insureds that they have no basis for expecting coverage in excess of the requirements of section 303.190.2. Id. (citing section 303.190.7). Section 303.190.7, RSMo 1994, provides:
Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy and such excess or additional coverage shall not be subject to the provisions of this chapter. With respect to a policy which grants such excess or additional coverage the term "motor vehicle liability policy" shall apply only to that part of the coverage which is required by this section.
§ 303.190.7, RSMo 1994. Because section 303.190.2 requires liability insurance policies to provide coverage in only the amounts specified therein, insurers and their policyholders are free to make insurance contracts containing household exclusion clauses affecting coverage in excess of the requirements the MVFRL limits. Halpin , 823 S.W.2d at 482-483; State Farm Mut. Auto. Ins. Co. v. Zumwalt , 825 S.W.2d 906, 909 (Mo.App.S.D. 1992). Although the American Standard policy contained an excess insurance clause providing that its coverage shall be in excess over other collectible insurance, it also contained a clear, unambiguous household exclusion clause precluding any liability coverage for bodily injury to any person related to the insured and residing in the insured household. The household exclusion clause in the American Standard policy was enforceable to the extent that the financial responsibility requirement of the MVFRL was satisfied. Halpin , 823 S.W.2d at 482-483 . Because neither the MVFRL nor Halpin require liability coverage exceeding the amounts specified in section 303.190.2, the public policy of this state as expressed by the legislature in the MVFRL was satisfied in this case by the $25,000 coverage provided by the State Farm policy. Haney , 824 S.W.2d at 956; Clark , 899 S.W.2d at 523 (discussing non-owned automobile provision and public policy of the MVFRL). The household exclusion clause in the American Standard policy was, therefore, fully enforceable and valid. To hold otherwise would result in twice the coverage required by the MVFRL by disregarding an unambiguous contractual provision. American Standard was entitled to judgment as a matter of law.
To the extent that Kellar is inconsistent with this opinion, it is overruled.
The judgment of the trial court is reversed, and summary judgment is granted in favor of American Standard.