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Austin v. Oregon Mutual Ins. Co.

United States District Court, D. Idaho

March 31, 2014

TIMOTHY AUSTIN, et al., Plaintiffs,


RONALD E. BUSH, Magistrate Judge.

Pending before the Court are the parties' cross-motions for summary judgment. (Dkts. 20 & 27). Having carefully considered the record, participated in oral argument, and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:


This case arises from a family tragedy for Plaintiffs Timothy and Paula Austin (the "Austins"). Their son, Devon Austin ("Devon"), was killed in a car collision in September of 2010. Talbutt Aff., Ex. B (Dkt. 23). Ryan Reinhardt ("Reinhardt"), the driver of the vehicle in which Devon was riding, also was killed when his car collided with a vehicle driven by Kade Laughlin ("Laughlin"). Reinhardt's automobile was insured through an insurance policy issued by Viking Insurance Company ("Viking"). Talbutt Aff., Ex. D (Dkt. 23). Viking settled the Austins' insurance claim, and paid its $50, 000 policy limits, for Devon's injury/death. Laughlin's Farm Bureau policy similarly paid the Austins $25, 000, an amount equal to its bodily injury liability limit.

There is no dispute that both the Laughlin and Reinhardt vehicles are considered "underinsured motor vehicles" as defined in the Austins' Oregon Mutual Insurance Policy. See Def.'s Mem., pp.2-3 (Dkt. 22); Talbutt Aff., Ex. A (Dkt. 23). Before making payment on the $100, 000 limits of underinsured motorist coverage in the policy it had issued to the Austins, Defendant Oregon Mutual ("Oregon Mutual") subtracted two amounts paid from other sources: the $75, 000 the Austins recovered under the Reinhardt and Laughlin policies, and the $5, 000 Oregon Mutual previously paid to the Austins for medical expenses under the policy's medical payment coverage. As a result, Oregon Mutual paid $20, 000 to the Austins under the underinsured motorist coverage in the policy. There appears to be no dispute that the Austin's damages exceed $100, 000.

Oregon Mutual admits that the Austins' policy includes an endorsement for underinsured motorist coverage that was implicated by the accident involving Devon. But, Oregon Mutual contends that the $20, 000 previously paid to the Austins is that total of any amount owed under the policy's $100, 000 underinsured motorist coverage because the limits of such coverage were appropriately offset by the payments made to the Austins by the other insurance companies, and by Oregon Mutual's payment for $5, 000 in medical expenses. This lawsuit ensued because the Austins allege that Oregon Mutual owes them the full $100, 000 UIM coverage limit, without offset, relying upon endorsement language in the policy providing that "any insurance we provide with respect to a vehicle you do not own is excess over any other collectible insurance." Compl., ¶ 4 (Dkt. 4-2). Plaintiffs sued for declaratory judgment against Oregon Mutual in Idaho state district court. Oregon Mutual then removed the case to this Court. (Dkt. 4-2).

The Austins describe the dispute as whether their Oregon Mutual policy coverage is excess to, or subject to an offset for, what they recovered from the drivers of the vehicles involved in the accident under those drivers' respective policies. Compl., ¶ 12. The Austins request an award of attorneys' fees and ask that the Court declare Oregon Mutual liable for the full limits of the underinsured motorist policy, i.e., $100, 000, without offset. Id. at p. 3. Oregon Mutual requests that the Court "confirm" that it is "only required" to pay the $20, 000 amount already paid, as the remaining limits of its underinsured motorist coverage with the Austins after appropriate offsets. Answer, p. 5.


A. Standards of Law

1. Summary Judgment: The Standard

Summary judgment is used "to isolate and dispose of factually unsupported claims...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut, " but rather is "the principal tool[ ] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

The standards generally applicable to motions for summary judgment do not change where the parties file cross motions. See, e.g., Cady v. Hartford Life & Accidental Ins. Co., 930 F.Supp.2d 1216, 2013 WL 1001073 (D.Idaho 2013); Western Watersheds Project v. Bureau of Land Management, 2010 WL 3735710 at * 3, n. 5 (D.Idaho 2010). However, "[e]ach motion must be considered on its own merits." Fair Housing Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (quoting William W. Schwarzer, et al., The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441, 499 (Feb. 1992)). Further, the filing of cross-motions - where both parties argue there are no material factual disputes - does not eliminate the court's responsibility to determine whether disputes as to material fact are present. Fair Housing Council of Riverside County, 249 F.3d at 1136. Rather, the Court must independently search the record for factual disputes.

2. Interpreting Insurance Contracts

Insurance policies are contracts between the insurer and the insured. See Mortensen v. Stewart Title Guar. Co., 235 P.3d 387, 392 (Idaho 2010) (citing Hall v. Farmers Alliance Mut. Ins. Co., 179 P.3d 276, 280 (Idaho 2008)). Whether language in an insurance policy contract is ambiguous is a question of law. See Armstrong v. Farmers Ins. Co. of Idaho, 205 P.3d 1203, 1205 (Idaho 2009) (citing Purvis v. Progressive Cas. Ins. Co., 127 P.3d 116, 119 (Idaho 2005)) (citation omitted). If the policy language is unambiguous, the court construes the policy as written, "and the [c]ourt by construction cannot create a liability not assumed by the insurer nor make a new contract for the parties, or one different from that plainly intended, nor add words to the contract of insurance to either create or avoid liability." Id. "Unless contrary intent is shown, common, non-technical words are given the meaning applied by laymen in daily usage - as opposed to the meaning derived from legal usage - in order to effectuate the intent of the parties." Id. (quoting Howard v. Ore. Mut. Ins. Co., 46 P.3d 510, 513 (Idaho 2002)).

However, where there is an ambiguity in an insurance contract, special rules of construction apply to protect the insured. See id. at 1206 (citing Hall, 179 P.3d at 281). In determining whether there is ambiguity, the particular provision must be read within the context in which it occurs in the policy. See Armstrong, 205 P.3d at 1206 (citing Purvis, 127 P.3d at 119). An insurance policy provision is ambiguous if "it is reasonably subject to conflicting interpretations." North P. Ins. Co. v. Mai, 939 P.2d 570, 572 (Idaho 1997). Insurance contracts are adhesion contracts, typically not subject to negotiation between the parties. Hence, any ambiguity that exists in the contract is construed most strongly against the insurer and in favor of the insured. See Armstrong, 205 P.3d at 1206 (citing Arreguin v. Farmers Ins. Co., 180 P.3d 498, 500 (Idaho 2008)). Further, insurance contracts are to be construed to "provide full coverage for the indicated risks rather than to narrow its protection." Smith v. O/P Transp., 918 P.2d 281, 284 (Idaho 1996). Sensibly then, "the burden is on the insurer to use clear and precise language if it wishes to restrict the scope of its coverage." ...

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