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American National Property and Casualty Co. v. Sear

United States District Court, D. Kansas

September 8, 2017

DANA SEAR, individually and as defendant ad litem for decedent Michael Sear, Defendant.


          John W. Lungstrum, United States District Judge

         This matter comes before the court on the motion by plaintiff American National Property and Casualty Company (“ANPAC”) for summary judgment on its claim for a declaration that it has paid defendant Sear, its insured, the amount due under its policy for underinsured motorist (UIM) benefits (Doc. # 14). For the reasons set forth below, the Court grants the motion and awards judgment in favor of plaintiff ANPAC.

         I. Facts

         For purposes of this motion, the parties have agreed to the following uncontroverted facts. Michael Sear died after his automobile collided with another automobile in Missouri. Dana Sear, decedent's spouse, filed suit in Missouri state court, individually and as plaintiff ad litem for decedent, against the other driver. For the purpose of this motion, the parties have stipulated that the other driver is liable for the alleged damages and that the damages exceed $250, 000. The other driver's insurer paid its policy limit of $100, 000 to settle the Missouri suit.

         Decedent Sear was insured at the time of the accident under a policy issued by ANPAC that included a $250, 000 UIM limit. Defendant Sear demanded payment of the $250, 000 UIM limit from ANPAC, but ANPAC agreed to pay and did pay only $150, 000 in UIM benefits, based on a policy provision that provided an offset for the other driver's $100, 000 liability coverage limit. ANPAC subsequently filed this declaratory judgment action against Ms. Sear (based on diversity jurisdiction), by which it seeks a declaration to the effect that it is entitled to the offset and that therefore it is not liable under the policy for the additional $100, 000 sought by Ms. Sear. By the present motion, ANPAC seeks summary judgment on that claim for declaratory relief.

         II. Analysis

         The parties agree to the relevant facts here. Thus, the Court will grant the motion if ANPAC is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a).

         This Court has previously set out the relevant principles for the interpretation of an insurance policy under Kansas law:[1]

Under Kansas law, the construction and interpretation of an insurance policy is a question of law to be determined by the court. If the relevant facts are undisputed, the court may determine whether they are within the terms of the policy. An insurance contract must be construed in a way that gives effect to the parties' intent. If the language in the insurance policy is unambiguous, the court cannot remake the contract, it must be enforced as made. Unambiguous language is to be taken in its plain, ordinary, and popular sense. If the language in the policy is ambiguous, the policy terms are construed in favor of the insured. In Brumley, the Kansas Supreme Court set out its test for ambiguity explaining:
To be ambiguous, a contract must contain provisions of 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 meaning is the proper meaning.

See Fidelity & Deposit Co. of Md. v. Hartford Cas. Ins. Co., 189 F.Supp.2d 1212, 1215-16 (D. Kan. 2002) (Lungstrum, J.) (footnote and internal citations and quotations omitted) (quoting Brumley v. Lee, 265 Kan. 819 (1998)). Moreover, in construing an insurance policy, a court considers the instrument as a whole, and “[i]nsurance policy language is tested by what a reasonably prudent insured would understand the language to mean.” See Iron Horse Auto, Inc. v. Lititz Mut. Ins. Co., 283 Kan. 834, 839 (2007).

         The policy's offset provision on which ANPAC relies states as follows:

Coverage for losses caused by an underinsured motorist shall be limited to the difference between the Underinsured Motorist Coverage limits provided in this Part and the coverage limits provided in any applicable bodily injury liability bond or policy.

(Emphasis in original.) As applied in this case, UIM coverage would be limited to $150, 000-the difference between the $250, 000 UIM limit in the policy and the $100, 000 coverage limit in the other driver's policy. This provision unambiguously provides for such an offset. Ms. Sear has not offered any alternative interpretation of this provision; indeed, Ms. Sear does not dispute that, if ...

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