Morgan v. Stonebridge Life Ins. Co.

REBECCA R. MORGAN, Plaintiff, v. STONEBRIDGE LIFE INSURANCE COMPANY,a Vermont Domestic Profit Corporation, Defendant.

Case No. 15-CV-929-SMY-DGW

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

January 20, 2017

MEMORANDUM AND ORDER

Before the Court are Plaintiff Rebecca R. Morgan's and Defendant Stonebridge Life Insurance Company's ("Stonebridge") cross motions for summary judgment (Docs. 39 and 41). For the following reasons, both motions are GRANTED in part and DENIED in part.

Background

The material facts are undisputed in this case. Plaintiff is the daughter and heir of Brian Morgan, who died in a single car accident in the early morning hours of September 15, 2012. At the time of his death, Morgan had an accidental death insurance policy with Stonebridge for $100,000. The policy contained an exclusion for "injury that: . . . Is caused by or results from the Covered Person's blood alcohol level being .10 percent weight by volume or higher." (Doc. 26-1 p. 4).

Pulaski County Coroner Brian Curry responded to the scene of the accident and noted that the vehicle had left the roadway and rolled several times, landing about 170 feet from the road. Curry also noted that Brian Morgan's body was ejected from the vehicle, landing about 50 feet away, indicating that he was not wearing a seatbelt. Curry checked the scene for any illegal substances, including alcohol containers, and found none. Curry concluded that the crash was an accident because no other vehicles were involved. No autopsy or accident reconstruction was performed, but through a visual inspection, Curry determined that the cause of death was blunt force trauma. Brian Morgan's body was taken from the crash scene to a local funeral home, where Curry took a blood sample from the area around Brian Morgan's heart. The sample was sent to a testing facility and the results indicated that Morgan's blood alcohol level was .182.

Stonebridge received written notice of Plaintiff's claim on March 25, 2014. Stonebridge denied the claim in June 2014 and again in May 2015, citing a medical consultant's opinion that Brian Morgan's death was caused by or resulted from his alcohol blood level which exceeded the policy exclusion's .10 limit.¹

Brian Morgan spent the day before the fatal crash at work harvesting corn from 7 am until 9 pm, capping off five straight days of work exceeding 12 hours each day. According to a coworker, Morgan Brian did not consume any alcohol while at work that day. Morgan left work at 9 pm and drove to a friend's house that was approximately 30 minutes away. He socialized and watched his friends play poker for the next several hours. His friends saw him drinking from a Styrofoam cup, but no one knows what was in the cup. Morgan did not appear intoxicated, and no one saw him drinking anything other than what was in the Styrofoam cup. Morgan left his friend's house around 3:00 am and the accident occurred approximately 20 minutes later. Vicki Penney, Brian Morgan's aunt, testified during deposition that he consistently worked long hours and he "couldn't sit down without falling asleep in a chair because he didn't get a lot of sleep." (Doc. 42-2 p. 17).

Discussion

Plaintiff asserts that she is entitled to summary judgment because the language of the policy is ambiguous and must be construed against Stonebridge. Specifically, Plaintiff arguesthat in order for the exclusion to apply, Stonebridge must establish that Morgan's elevated blood alcohol level was "the sole cause" of the injury and Stonebridge has not produced evidence to satisfy that standard. Plaintiff further argues that Stonebridge was aware that the language in their policy would be construed against them and therefore, the claim was denied in bad faith. For its part, Stonebridge argues that its denial of the claim was appropriate because the exclusion applies if the elevated blood alcohol level was a proximate cause of the injury; it need not be the sole cause. Stonebridge further argues that it cannot be held liable for bad faith because it correctly denied Plaintiff's claim.

Summary judgment is appropriate if the "movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Mere speculation cannot be used "to manufacture a genuine issue of fact." Springer v. Durflinger, 518 F.3d 479, 484 (7th Cir. 2008). Moreover, the interpretation of insurance policies is appropriate for summary judgment because it presents solely a question of law. Metro. Cas. Ins. Co. v. Donnelly, 158 F. Supp. 3d 734, 737 (S.D. Ill. 2016).

Count I - Policy Exclusion

"The burden is on the insured to prove that its claim falls within the coverage of an insurance policy. Once the insured has demonstrated coverage, the burden then shifts to the insurer to prove that a limitation or exclusion applies." Addison Ins. Co. v. Fay, 232 Ill. 2d 446, 453-54, 905 N.E.2d 747, 752 (2009). Here, the insurance policy covers "accidental death" (Doc. 26-1 p. 1) and Stonebridge does not dispute that Brian Morgan's death was accidental. Stonebridge's only argument is that the policy excludes coverage for a death which is caused by or results from "drunk driving".

Under Illinois law, when "the terms of the policy are susceptible to more than one meaning, they are considered ambiguous and will be construed strictly against the insurer whodrafted the policy. Additionally, provisions that limit or exclude coverage will be interpreted liberally in favor of the insured and against the insurer." Am. States Ins. Co. v. Koloms, 177 Ill. 2d 473, 479, 687 N.E.2d 72, 75 (1997).

In the context of the exclusion in Stonebridge's policy, the phrase "caused by or results from" is ambiguous and is susceptible to more than one interpretation. What type or degree of cause does the phrase refer to? Does the alcohol level have to be only a contributing cause, a substantial or the sole cause of the injury? The phrase certainly may mean different things to different people, including reasonable insureds. As such, the language must be strictly construed against Stonebridge and for coverage - it must be construed such that the alcohol level must be found to be the sole cause in order to trigger the exclusion.

"It is well established under Illinois law that 'to be totally excluded from coverage under an insurance policy, an injury must have been caused solely by a proximate cause excluded under the policy.'" Cabernoch v. Union Labor Life Ins. Co., No. 06 C 1515, 2009 WL 928998, at 5 (N.D. Ill. Apr. 6, 2009). Further, "[i]f a proximate cause of an injury is within the included coverage of an insurance policy, the included coverage is not voided merely because an additional proximate cause of the injury is a cause which is excluded under the policy. Thus, in order for an injury to be excluded from coverage under an insurance policy, the injury must have been caused solely by a proximate cause which is excluded under the policy. The insurance carrier has the burden of proof as to whether the injury was caused solely by a proximate cause which is excluded under the policy." (emphasis added). U.S. Fidelity and Guaranty Company v. State Farm Mutual Automobile Insurance Company, 152 Ill. App. 3d 46, 48-49, 504 N.E. 2d 123, 125, 105 Ill. Dec. 254, 256 (1987), See also, Smith v. Stonebridge Life Ins., 473 F. Supp. 2d 903 (W.D. Wis. 2007) (examining identical exclusion language to the language in the instant case).

In arguing that, under the "plain language" of the policy, it only needs to establish that Morgan's blood alcohol level was a proximate cause of his death, Stonebridge relies on decisions applying the laws of Nebraska, Louisiana and Kansas. In Lovette v. Stonebridge Life Ins. Co., the Supreme Court of Nebraska held the insurer need only show that the insured's blood alcohol level is causally related to the accident. 272 Neb. 1, 5, 716 N.W.2d 743, 747 (2006). In Murphy v. J.C....