KANSAS CITY – A federal judge said Safeco doesn’t have to pay money to a car crash victim who collected $1 million under another carrier’s policy.
In an opinion issued May 28, Judge Ortrie Smith of the U.S. District Court for the Western District of Missouri granted Safeco's motion for summary judgment.
Smith explained in the ruling that the precipitating incident was a September 2016 car crash involving plaintiff Maureen Johnson, who was driving an employer-owned Ford van. The employer’s insurer, Travelers Insurance, provided $1 million in underinsured motorist coverage. Alma Xiloj, the driver of the car that hit the van, was insured by Trader’s Insurance with a bodily injury liability limit of $25,000. Johnson’s husband, Jeffrey Johnson, had a policy with Safeco Insurance of Illinois for three vehicles, each with $250,000 per person in underinsured motorist coverage.
Maureen Johnson sued Xiloj in Missouri state court in January 2018, ultimately winning a $5 million judgment, of which Trader’s paid $25,000. That June, Johnson’s lawyers demanded $1 million from both Travelers and Safeco. Travelers paid in July, and Safeco said its underinsured motorist “coverage would apply on an excess basis because Travelers provided primary coverage,” according to Smith. And since Travelers had a greater limit than Safeco, Safeco determined maximum coverage had been obtained and declined to make additional payment.
In August, Johnson filed the action in federal court seeking determination of Safeco’s obligations. Both parties moved for summary judgment, and Johnson filed a motion to stay proceedings. Smith wrote the matter comes down to whether the Safeco policy was ambiguous or confusing, ultimately finding it was neither.
“The policy explicitly and unequivocally declares how (underinsured motorist) coverage applies to (Johnson’s) situation and the amount to which she may (be) entitled in (underinsured motorist) benefits,” Smith wrote, explaining any obligation Safeco had to Johnson would only arise after the Travelers policy was exhausted by payment.
Further, Johnson was driving a van she didn’t own and Travelers provided underinsured motorist coverage on a primary basis, meaning any coverage Safeco provided her would by definition be excess to the Travelers policy. Smith also said the most Safeco would pay under any circumstances was $250,000, as was contracted under its policy, and agreed the clause limiting damages to an amount that “may equal but not exceed the highest applicable limit for any one vehicle under” any policy points to sticking with the $1 million cap on the Travelers policy.
Smith said if the Travelers policy were capped at $50,000, then Johnson could collect the underinsured motorist benefits under the Safeco policy, but it would be capped at $200,000 since that would result in a total payment equal to the “highest applicable limit” of either policy.
The Safeco policy stated “the maximum limit of our liability shall not exceed the highest limit applicable to any one auto,” Smith wrote, adding, “This statement could not be clearer. … Tellingly, (Johnson) provides no argument as to how the statement could be reasonably open to different conclusions.”
Smith granted Safeco summary judgment, and wrote that so doing made it unnecessary to consider the other issues. However, he did address Johnson’s request to stack the coverage for three vehicles for a total payment of $750,000. Even if the policy could be read as to permit the stacking, Smith wrote, it still wouldn’t change the payout limit the Travelers policy established.
Johnson’s motion to stay pending an U.S. Court of Appeals for the 8th Circuit opinion in Strain v. Safeco was denied as moot, as Smith explained her summary judgment was granted without consideration to intra-policy stacking.