The U.S. Court of Appeals for the Eighth Circuit has rejected a couple's contention that their auto insurer had committed fraud by selling them three policies with underinsured motorist coverage that was not stackable.
The Case
Christopher Lee suffered serious injuries in a November 2016 car accident. The at-fault driver's insurance company paid Mr. Lee $100,000, the full amount of that driver's policy.
Because Mr. Lee had accrued more than $400,000 in medical bills, he turned to Country Preferred Insurance Company, from which he and his wife, Sandra Lee, had purchased three auto insurance policies, one for each of their three vehicles.
The Lees sought $300,000 from Country Preferred, as each of their three policies included $100,000 in underinsured motorist (“UIM”) coverage.
Country Preferred refused to pay, pointing to the policies' anti-stacking provision, which provided that an insured's UIM coverage limit was “the highest applicable limit of liability under any one policy,” which in the Lees' case was $100,000.
Country Preferred filed suit against the Lees, seeking a declaratory judgment as to its obligations.
The Lees brought counterclaims against Country Preferred for fraudulent misrepresentation and unjust enrichment under Missouri law.
The U.S. District Court for the Eastern District of Missouri granted Country Preferred's motion for judgment on the pleadings.
The Lees appealed, challenging the dismissal of their fraudulent misrepresentation and unjust enrichment counterclaims. They contended that Country Preferred had committed fraud and had been unjustly enriched by collecting three separate premiums for UIM coverage, when the anti-stacking provision rendered the UIM coverage in the Lees' second and third policies “worthless in every circumstance” or “illusory.”
The Eighth Circuit's Decision
The Eighth Circuit affirmed.
In its decision, the circuit court explained that the parties agreed that the anti-stacking provision in the Country Preferred policy barred the Lees from recovering any money from Country Preferred for the November 2016 car accident.
It then ruled that the anti-stacking provisions did not render UIM coverage in the Lees' multiple policies illusory because the premium paid for coverage under each policy “correspond[ed] with an increase in coverage.”
The Eighth Circuit reasoned that the Lees' UIM coverage extended to “anyone occupying an insured vehicle,” defined as, among other things, “the vehicle described on the declarations page.”
Thus, the circuit court concluded, payment for UIM coverage under the Lees' second and third insurance policies bought coverage for non-named, non-family passengers and drivers of the Lees' second and third vehicles. The UIM coverage in the Lees' second and third policies, the Eighth Circuit concluded, was not illusory.
The case is Country Preferred Ins. Co. v. Lee, No. 18-2096 (8th Cir. March 14, 2019). Attorneys involved include: For Country Preferred Insurance Company, Plaintiff – Appellee: David T. Butsch, Butsch & Simeri, Clayton, MO; Christopher W. Byron, Brian R. Kalb, Christopher J. Petri, Byron & Carlson, Edwardsville, IL; Sessions Ault Hootsell III, Butler & Snow, New Orleans, LA; James Scott Lewis, Butler & Snow, Wilmington, NC; Erin Palmer Polly, Butler & Snow, Nashville, TN; Christopher E. Roberts, Butsch & Roberts, Clayton, MO. For Christopher Lee, Sandra Lee, Defendants – Appellants: Reno R. Cova III, Talmage E. Newton, Newton & Barth, Saint Louis, MO; James J. Rosemergy, Carey & Danis, Saint Louis, MO.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].