Appeals from the United States District Court for the Southern District of Mississippi. D.C. DOCKET NUBMER CA-J90-0575(B). JUDGE William H. Barbour, Jr.
Before Wisdom, Davis, and Smith, Circuit Judges.
This case raises two principal issues: (1) Whether Mississippi insurance law requires uninsured motorist coverage stacking when an uninsured motorist insurance policy contains an express anti-stacking provision*fn1 and (2) whether charging a higher premium for multiple car coverage than for single car coverage constitutes charging two separate premiums.
The plaintiff/appellant, Allstate Insurance Company ("Allstate"), issued an automobile insurance policy to Luther Ashley, one of the defendants/appellees, providing uninsured motorist coverage for four automobiles. Allstate charged Ashley a flat premium based on the fact that the policy covered multiple vehicles. Allstate charges a lower premium for single car coverage. The policy contained an express anti-stacking provision.
When four passengers in a vehicle insured under this policy were injured in an accident involving an uninsured motorist, Allstate filed a declaratory judgment action in federal court seeking to limit its liability to one full coverage, rather than four stacked coverages. The district court concluded that Allstate, by charging a higher premium for multiple car coverage, had charged two separate premiums and was, therefore, liable under the policy for two stacked coverages.
On appeal, Allstate argues that it charged only one premium and is, therefore, liable for only one full coverage. The defendants/appellees argue that they are entitled to stacking for each vehicle insured under the policy, or four full coverages. Relying on a Mississippi Supreme Court ruling entered after the district court decided the instant case, we hold that even if Allstate charged a separate premium for each of the vehicles insured under the policy, it is liable only for the greater of one full coverage or four stacked statutory minimum coverages. Because we decide the instant case based on this issue, we do not reach the issue of whether Allstate's higher premium for multiple car coverage constitutes two separate premiums.
While driving in one of the four vehicles insured under Luther Ashley's Allstate policy, Jennifer Ashley, Nell Ashley, Ronald Rainer, and Ernest Couch were injured by an uninsured motorist. At that time, the policy provided coverage of up to $50,000 per accident if one person was injured and up to $100,000 per accident if two or more persons were injured. The parties do not dispute that more than one person was injured or that their damages/injuries exceed $400,000.
Under the original policy issued to Luther Ashley, Allstate charged a separate premium of $49.70 for uninsured motorist coverage for each of the cars insured under the policy. In 1989, Allstate altered its rate structure. Under the new plan, Allstate charged a single uninsured motorist premium. Allstate set this premium at two different rates: one rate for single-car coverage and a higher rate for coverage of more than one car. This higher rate was a flat fee of $91.90 that remained the same regardless of the number of vehicles covered. Thus, a two car insured would be charged the same premium as a three or four car insured.
After submitting its plan to the Mississippi Insurance Commissioner for approval, Allstate sent notice of these changes to all of its policyholders, including Luther Ashley. The notice explicitly stated that no "stacking" would be allowed in the future under this new plan. In the past, under the old plan, if an insured was injured, although the coverage limits were set at $100,000 per accident, if the insured paid separate premiums for each of its cars, the coverage on each vehicle would be stacked. Thus, if the policy provided uninsured motorist coverage for four vehicles, the policyholder could collect up to $400,000 by stacking the coverage on the four cars.
When the defendants/appellees filed their claim with Allstate, they requested that their coverage be stacked. At the time of the accident, they had four cars insured under the policy. By stacking the full coverage limit for each insured vehicle, they claimed $400,000 in coverage. In response, in November 1990, Allstate filed a declaratory judgment action in the United States District Court for the Southern District of Mississippi against the Ashleys, Rainer, and Couch seeking a determination that it had no obligation to stack uninsured motorist bodily injury coverage. Allstate tendered $100,000, one full coverage amount, to the court with the request that it be divided among the claimants by the court. Allstate maintained that the policy explicitly prohibited stacking.
The defendants/appellees answered, admitting Allstate's factual allegations but seeking to stack four coverages. In addition, Rainer counterclaimed for damages caused by Allstate's "bad faith" in failing to pay their claim fully and immediately. Allstate then moved for summary judgment on the coverage issue. The district court entered an order on November 15, 1991 concluding that stacking was required in spite of the anti-stacking provision in the policy. The court reasoned that because Allstate charged a higher premium for multiple car coverage, it had in effect charged two separate premiums. In accordance with the Mississippi law at that time, the court stacked two full coverages, awarding the defendants/appellees $200,000.
Allstate requested leave to file an interlocutory appeal from this order. Instead of granting this request, the district court asked the parties to brief it on the remaining issues to enable it to resolve the entire case. After doing so, the parties again moved for summary judgment. On July 31, 1992, the court entered its final order, 795 F. Supp. 809. The court found that two premiums had been charged; thus, two coverages were to be stacked ($200,000). Further the court held that as a matter of law, Allstate had not acted in bad faith. On a motion to reconsider, the court clarified its earlier order, granting the defendants/appellees $200,000, $100,000 to be awarded from the amount placed with the court by Allstate and the rest to be provided by Allstate directly. Later in an Amended Judgment, the court stated that Allstate was to be credited with the amount paid into the registry, but not with the ...