Anti-Stacking Provisions Reviewed
February 1, 2016
The injured pedestrian and his wife filed a joint complaint with the insurer seeking a declaration as to whether anti-stacking provisions in a BOP and a CGL form limited recovery to $1,000,000 each occurrence limit that the insurer had already paid. This case is Gohagan v. The Cincinnati Insurance Company, 2016 WL 66944.
Campbell attempted to remove a tree from a property being developed when the tree fell on Gohagan. Gohagan was severely injured and he sued Campbell; Gohagan's wife also sued for loss of consortium. The insurer, Cincinnati Insurance Company, paid the Gohagans the CGL policy limits of $1,000,000.
The Gohagans and the insurer then filed a joint complaint seeking to determine whether Campbell's BOP (also issued by Cincinnati Insurance) was applicable to the claim. The BOP had a $1,000,000 each occurrence limit like the CGL form. The trial court ruled that the anti-stacking language in the two policies limited recovery to the $1,000,000 already paid by the insurer under the CGL form. The Gohagans appealed.
The Gohagans argued that the BOP and the CGL form are ambiguous as to the extent of coverage, particularly with respect to the meaning of “aggregate maximum limit of insurance”, language found in the anti-stacking provisions of the two policies. The United States Court of Appeals, Eighth Circuit, noted that in disputes over the meaning of contract language, the key is whether the contract language is ambiguous. In this instance, the court found that neither policy provided a definition of “aggregate maximum limit of insurance”. However, the court saw no ambiguity.
The court said that an ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions. Here, the anti-stacking provisions viewed in their entirety are unambiguous, said the court. By focusing solely on aggregate maximum limit of insurance, the Gohagans ignored the stipulation that the aggregate maximum limit shall not exceed the highest applicable limit of insurance under any one policy. The court ruled that for the occurrence at issue, the highest applicable limit of insurance under either policy is equivalent to the each occurrence limit. Thus, the aggregate maximum limit of insurance under both policies combined may not exceed the each occurrence limit under either policy, and that limit is $1,000,000.
The court found that, reading the anti-stacking provisions as a whole, the Gohagans received the full amount of coverage owed to them under the BOP and the CGL form when Cincinnati paid them $1,000,000 pursuant to the CGL form.
The Gohagans also argued that even if the anti-stacking provisions are not ambiguous, the policies are still ambiguous because the other insurance clauses establish coverage that the anti-stacking provisions rescind. The Gohagans claimed that the other insurance clauses affirmatively provided primary coverage under each policy, such that each policy provides for payment in shares equal to those paid under any other policy. In other words, the Gohagans submit that the BOP and CGL policy individually provide primary coverage that the anti-stacking provisions impermissibly limit. The court said that this interpretation mistakenly relies on reading an individual provision in isolation from the rest of the policy.
The court ruled that the other insurance provisions apply when policies covering the same injury are issued by different companies, not when two policies are issued by the same insurer. In this instance, Cincinnati Insurance issued both the CGL form and the BOP and so, no ambiguity exists.
The ruling of the district court was affirmed.
Editor's Note: The Eighth Circuit Court of Appeals reviews the anti-stacking provisions in a BOP and a CGL form issued by the same insurer and rules that the anti-stacking provisions limited recovery to the amount already paid by the insurer under the CGL form.