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American Family Mutual Insurance Co. v. Wilkins

March 28, 2008

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, PLAINTIFF,
v.
STACY WILKINS, ET AL., DEFENDANTS.



On certification of questions of law from the United States District Court for the District of Kansas, Monti L. Belot, judge.

SYLLABUS BY THE COURT

1. Various courts have applied three tests for defining the term "occurrence." In determining whether there is a single or multiple occurrences under the policy limits, most courts consider the cause of the injury. A minority of courts consider the term "occurrence" to refer to the effects. A third category of courts consider the event that triggered liability to determine whether there are single or multiple occurrences under the policy limits.

2. The language of an insurance policy, like any other contract, must, if possible, be construed in such way as to give effect to the intention of the parties.

3. Because the insurer prepares its own contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage under the policy, it must use clear and unambiguous language; otherwise, the policy will be liberally construed in favor of the insured.

4. To be ambiguous, a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.

5. Because the policy at issue in this case does not define the term "occurrence" and the cases from various courts demonstrate that the term "occurrence" is susceptible to conflicting meanings, the term is ambiguous.

6. The number of occurrences is determined by the cause of the injury.

7. The cause used for determining an occurrence is the most immediate cause rather than an antecedent cause.

8. When multiple vehicles are involved in multiple collisions, the number of occurrences is based on the time-space continuum between the collisions and the insured driver's level of control over the vehicle. Collisions with multiple vehicles constitute one occurrence when the collisions are nearly simultaneous or separated by a very short period of time and the insured does not maintain or regain control over his or her vehicle between collisions. When collisions between multiple vehicles are separated by a period of time or the insured maintains or regains control of the vehicle before a subsequent collision, there are multiple occurrences.

9. When multiple collisions involving several vehicles and injured persons occur, each collision may be an occurrence under an automobile liability insurance policy.

The opinion of the court was delivered by: Rosen, J.

The certified questions are determined.

This case presents four certified questions from the United States District Court for the District of Kansas regarding the liability limits of an automobile insurance policy. The four certified questions are as follows:

1. When "occurrence" is not defined in an automobile liability policy, what test should be applied under Kansas law in determining whether there are multiple "occurrences" and, if so, the number of "occurrences"?

2. When multiple collisions involving several vehicles and injured persons result from the actions of the insured driver, is each collision an "occurrence"?

3. If the answer to question number 2 is "yes," how many occurrences were there under the facts? and

4. What is the maximum amount of American Family's liability under the policy?

UNDISPUTED FACTS

The undisputed facts as set forth by the Federal District Court are as follows:

"Plaintiff American Family Mutual Insurance Company ('American Family') issued an automobile policy to Laverne Roy, effective February 23, 2005 to April 11, 2005. The policy contained a per person limit of $100,000 and a per occurrence limit of $300,000. The policy contained the following section:

"LIMITS OF LIABILITY

"The limits of liability shown in the declarations apply, subject to the following:

"1. The bodily injury liability limit for 'each person' is the maximum for all damages sustained by all persons as a result of bodily injury to one person in any one occurrence.

"2. Subject to the bodily injury liability limit for 'each person,' the bodily injury liability limit for 'each occurrence' is the maximum for bodily injury sustained by two or more persons in any one occurrence.

"3. The property damage liability limit for 'each occurrence' is the maximum for all damages to all ...


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