United States District Court,

E.D. Louisiana.

B & S EQUIPMENT CO., INC.

v.

TRUCKLA SERVICES, INC., et al.

 

Civil Action Nos. 09–3862, 10–0832, 10–1168, 10–4592.

June 20, 2011.

 

Robert Seth Reich, Michael T. Wawrzycki, Reich, Album & Plunkett, LLC, Metairie, LA, for Plaintiff.

 

Kent B. Ryan, Andrew M. Stakelum, Stephen R. Remsberg, Lemle & Kelleher, LLP, New Orleans, LA, Brad M. Boudreaux, Keith L. Richardson, Daniel R. Atkinson, Jr., Perry, Atkinson, Balhoff, Mengis & Burns, LLC, Baton Rouge, LA, Anthony John Staines, Ashley E. Boyd, Corey Patrick Parenton, Craig Wren Brewer, Staines & Eppling, Metairie, LA, for Defendants.

 

ORDER

KAREN WELLS ROBY, United States Magistrate Judge.

Before the Court is a Motion to Compel (R. Doc. 228) filed by the Defendant, Travelers Casualty and Surety Company of America (“Travelers”) seeking an Order compelling the Plaintiff, B & S Equipment Company, Inc. to respond to its discovery requests. B & S filed a response. (R. Doc. 232.) On May 17, 2011, Travelers filed a reply in support of its motion. (R. Doc. 245.) B & S filed a sur-reply. (R. Doc. 264.) This motion was set to be heard with oral argument on Wednesday, May 18, 2011. However, the parties moved for a continuance which was granted by the undersigned. Thereafter, the motion was heard with oral argument on Wednesday, May 25, 2011 .

 

I. Background

The instant action diversity action concerns various contract and insurance coverage disputes arising out of damaged equipment and barges used in a federal floor control project. In March 2009, Truckla Services, Inc. (“Truckla”) was awarded a government contract to build a revetment along the banks of the Upper Mississippi River in Cairo, Illinois. Specifically, the United States Army Corps of Engineers contracted with Truckla to transfer rocks from barges onto the bank of the river in an effort to prevent erosion. Thereafter, Truckla entered into two contracts with B & S to rent equipment and barges. The first contract was an oral bareboat barge charter for the use of two spud barges, the Dove 4 and KS 417. The second contract was a written equipment lease for the use of two B & S excavators, a Caterpillar 375L and a Caterpillar 385CL.

 

The Dove 4 was owned by White Dove Marine, LLC, and the KS 417 was owned by McDonough Marine Service. B & S arranged the oral bareboat barge charter through a vessel broker, T.L.C. Marine Services, Inc.

 

Under the terms of the agreements between B & S and Truckla, Truckla was to pay for any damages to the excavators, return the excavators in good condition, and perform ordinary maintenance during the course of the lease. The lease was to continue on a month-to-month basis until Truckla gave B & S 30 days written notice or until B & S resumed possession of the equipment.

 

In order to fulfill its responsibility to transport the vessels and equipment from New Orleans to St. Louis, Truckla contracted with T & M Boat Rentals, LLC to bring the excavators up the Mississippi on the barges. T & M in turn made arrangements with Adams Towing Corporation for the Master Cad to move the Dove 4 and KS 417 to and from New Orleans. Truckla maintained two policies of insurance, including a commercial inland marine policy issued by Montgomery Insurance company and a commercial general liability policy from Canal Indemnity.

 

After one month, B & S and Truckla began to disagree as to the condition of the equipment and the barges. The barges and the equipment were subsequently returned to B & S. Truckla maintains that the Caterpillar 375 excavator was defective and unsound and that one of the barges required constant pumping and repair to stay afloat. B & S contends that their barges were seaworthy and fit for Truckla’s use and that the excavators were in good condition and working properly. B & S contends that Truckla negligently performed its work, failed to maintain the barges, and breached its contractual obligation to B & S.

 

On June 15, 2009, B & S sued Truckla contending that Truckla breached its obligations under the lease by failing to provide 30 days written notice of its intent to terminate the lease. It further complains that Truckla was negligent which resulted in the loss of equipment. In an amended complaint, B & S added Montgomery Insurance as a defendant, asserting that Montgomery issued a policy to Truckla that covered the damaged equipment. B & S filed a second a third amended complaint adding T & M Boat Rentals and Adams Towing asserting that as owner and operator or charterer of the towing barge, the M/V Master Cade, negligently transported the barges to and from the project causing damage. In a fourth amended complaint, B & S sued Canal Indemnity, as Truckla’s liability insurer. Various cross claims and counterclaims resulted.

 

B & S subsequently initiated another lawsuit against Travelers Casualty and Surety Company of America on April 22, 2010, pursuant to the Miller Act, 40 U.S.C. § 3131. B & S asserts that Travelers and Truckla executed a payment bond in which they bound themselves to secure prompt payment of all persons supplying labor and material to the Corps’ project such that Travelers, as Truckla’s surety, is responsible to pay B & S all monies due under the contract and for damage to the equipment and barges. The case was transferred and consolidated with the master case.

 

As to the instant motion, on February 1, 2011, Travelers propounded its discovery requests on B & S. B & S did not provide their responses until May 10, 2011, after the instant motion was filed in the Court. Travelers contends that B & S’s responses are deficient, and that any objections to the requests have been waived pursuant to Rule 37 of the Federal Rules of Civil Procedure. B & S opposes the motion.

 

II. Standard of Review

Rule 26(b)(1) provides that “[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense.” Fed.R.Civ.P. 26(b)(1). The Rule specifies that “[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1). The discovery rules are accorded a broad and liberal treatment to achieve their purpose of adequately informing litigants in civil trials. Herbert v. Lando, 441 U.S. 153, 176 (1979). Nevertheless, discovery does have “ultimate and necessary boundaries.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947)). Furthermore, “it is well established that the scope of discovery is within the sound discretion of the trial court.” Coleman v. American Red Cross, 23 F.3d 1091, 1096 (6th Cir.1994).

 

Under Rule 26(b)(2)(c), discovery may be limited if: (1) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from another, more convenient, less burdensome, or less expensive source; (2) the party seeking discovery has had ample opportunity to obtain the information sought; or (3) the burden or expense of the proposed discovery outweighs its likely benefit. Fed .R.Civ.P. 26(b)(2)(c). In assessing whether the burden of the discovery and outweighs the benefit, a court must account for: (1) the needs of the case; (2) the amount in controversy; (3) the parties’ resources; (4) the importance of the issues at stake in the litigation; and (5) the importance of the proposed discovery in resolving the issues. Id.

 

III. Analysis

Initially, Travelers sought to compel responses from B & S. However, after the instant motion was filed, B & S provided responses to the propounded discovery requests. Travelers thereafter filed a memorandum in support of its motion to compel contending that B & S’s discovery responses were deficient and that their objections asserted were waived pursuant to the Federal Rules of Civil Procedure. Specifically, Travelers contested Interrogatories 5, 11, and 13 and Request for Production 4, and 7. At the hearing, Travelers represented that B & S provided supplemental responses the night before the hearing. Travelers further represented that although it maintains that some of the responses are still deficient, it is only concerned with Interrogatory 13.

 

Interrogatory 13 requested that B & S

 

state[ ] whether you have rented the excavator since the project in issue. If so, provide the following: (a) the number of times the excavators have been rented; (b) the dates the excavators were rented; (c)the amount for which the excavators were rented; and (d) the identify of the individual or companies that rented the excavators.

 

(R. Doc. 228–2, p. 6.) In response, B & S stated, “B & S objects to Interrogatory No. 13 insofar and to the extent that it seeks information not related to the subject matter of this lawsuit and is not reasonably calculated to lead to the discovery of admissible evidence.” (R. Doc. 245–2, pp. 11–12.)

 

Travelers initially contends that B & S’s objection has been waived due to its failure to respond to the discovery requests within thirty (30) under Rule 33(b)(4) of the Federal Rules of Civil Procedure. Travelers contends that B & S has not demonstrated good cause for their delay and therefore their objections are waived as a matter of law.

 

Alternatively, Travelers contends that the objection should be overruled. Travelers asserts that the interrogatory is relevant to B & S’s claim for loss of profits. Travelers contends that if the excavators were rented from May 22, 2009, through August 29, 2009 , this information is relevant to determine whether Travelers are seeking double recovery.

 

This time frame represents the date in which the excavators were returned, May 22, 2009, through the end of the project, August 29, 2009.

 

In response, B & S acknowledged at the hearing that Rule 33 provides a waiver if interrogatories are not responded to within thirty (30) days. However, it contends that courts have found that if a party can demonstrate good cause for its failure to timely respond, the Court need not find a waiver.

 

B & S contends that it has good cause to excuse its failure to timely respond because on February 1, 2011, it received the discovery requests from Travelers. However, some of the requests required information which was not in B & S’s possession and was instead in possession of White Dove. On February 2, 2011, it propounded discovery on White Dove which included questions relating to the damages of the barges. B & S contends that this information was only in the possession of White Dove, and therefore B & S was waiting on White Dove’s responses to its discovery requests before it planned to respond to Travelers so that it could respond to all of the questions posed by Travelers. Responses were not forthcoming from White Dove until April 19, 2011.

 

B & S acknowledges that on April 18, 2011, Travelers contacted B & S and indicated that it was going to file a motion to compel if responses to discovery were not received. B & S agreed to provide discovery responses by April 27, 2011. However, counsel for B & S represented at the hearing that it “just didn’t happen.” Counsel for B & S contended at the hearing that Travelers filed a Motion for Summary Judgment in May which required counsel to focus his attention on the reply rather than the discovery requests. Further, counsel for B & S was involved in an unrelated trial during the same time frame. Therefore, he was unable to respond until May 10, 2011, and therefore had good cause for his failure. Counsel for B & S further represented at the hearing that he “had no reason to believe that if [discovery] wasn’t answered on day 30 that some party [was] going to come in and demand that all of [B & S’s] objections, including privilege [were] waived.”

 

Federal Rule of Civil Procedure 33 provides in relevant part “[t]he responding party must serve its answers and any objections within 30 days after being served with the interrogatories. A shorter or longer time may be stipulated to under Rule 29 or be ordered by the Court.” Fed.R.Civ.P. 33(b)(2). “Any ground not stated in a timely objection is waived unless the court, for good cause, excuses the failure.” Fed.R.Civ.P. 33(b)(4); see also In re United States, 864 f.2d 1153, 1156 (5th Cir.1989)(“[A]s a general rule, when a party fails to object timely to interrogatories, production requests, or other discovery efforts, objections thereto are waived.”).

 

The Court first notes that the discovery requests were served on February 1, 2011. Therefore, B & S’s responses were due no later than March 3, 2011. B & S did not respond to the discovery requests until May 10, 2011, two (2) months and one (1) week after the deadline. Therefore, B & S’s objections were waived pursuant to Rule 33(b)(4) unless good cause is shown.

 

The Court is not persuaded by B & S’s assertion of good cause. First, B & S asserted that it delayed its response while it waited for Dove’s responses to B & S’s discovery requests. However, B & S conceded that he was aware that he could have responded to Traveler’s discovery responses indicating that they were not in possession of information responsive to the requests and reserve the right to supplement upon receipt of responses from Dove. However, counsel for B & S failed to do so, simply because he assumed that Traveler’s would not use the force of Rule 33(b)(4) against him. B & S also conceded that he could have requested an extension with the undersigned, but failed to do so.

 

Secondly, B & S contends that it had good cause for its delay because Traveler’s filed a Motion for Summary Judgment in May to which Traveler’s had to respond. B & S contends that it had to choose which task to focus on, and clearly chose to work on the Motion for Summary Judgment. Further, counsel for B & S was also involved in another trial during this time frame. However, B & S concedes that during this time frame he did not seek an extension with the undersigned. Therefore, this contention is not persuasive.

 

Finally, the Court is not persuaded that B & S had “no reason to believe” that Traveler’s would invoke the Rule 33(b)(4) waiver. According to B & S’s testimony, Traveler’s contacted B & S on April 18, 2011, and informed B & S that it intended to file a motion to compel if discovery responses were not received. B & S promised to provide responses by April 27, 2011, and failed to do so. Therefore, B & S was on notice of Traveler’s intent to enforce the Federal Rules of Civil Procedure.

 

Although the Court finds that B & S waived its objections, the Court will only enforce this waiver insofar as B & S waived its relevancy objection to Interrogatory 13. However, the Court finds that the interrogatory is over broad because it is not limited to any period of time. The Court finds that it would be unduly burdensome to require B & S to respond to the interrogatory which does not limit the time frame of the request in any fashion. Therefore, the Court orders B & S to supplement its response to Interrogatory 13, but will limit its response from May 22, 2009 through August 29, 2009.

 

IV. Conclusion

Accordingly,

 

IT IS ORDERED that Traveler’s Casualty and Surety Company of America’s Motion to Compel (R. Doc. 228) is hereby GRANTED IN PART and DENIED IN PART:

 

• IT IS GRANTED insofar as the Court finds that B & S Equipment Company, Inc. has waived its objections to Traveler’s discovery requests by its failure to respond within thirty (30) days pursuant to Fed.R.Civ.P. 33(b)(4). B & S therefore is ORDERED to supplement its discovery requests within ten (10) days from the signing of this Order.

 

• IT IS DENIED insofar as the Court declines to require B & S to respond to Interrogatory 13 as it is not limited in temporal scope. B & S is required to respond only as applicable for the time frame of May 22, 2009 through August 29, 2009.

 

Supreme Court of Arkansas.

PHILADELPHIA INDEMNITY INSURANCE COMPANY, as Insurer for Focus, Inc., a Nonprofit and Charitable Entity, Appellant

v.

Luther AUSTIN, Melissa and Christopher Brown, Terria Daviso N, Steve Farmer Dorothy James, Patricia and Terrance Kimble, Sarah and Jonathan Vaughn, Mary Williams, and Kennan Wilson, Appellees.

 

No. 11–81.

June 23, 2011.

 

Appeal from the Craighead County Circuit Court, [No. CV–2009–662]; John N. Fogleman, Judge.

 

COURTNEY HUDSON HENRY, Justice.

Appellant Philadelphia Indemnity Insurance Company, Inc., as insurer for Focus, Inc. (“Focus”), appeals an order of the Craighead County Circuit Court denying appellant’s motion for declaratory judgment and motion to dismiss and ruling that the language of its insurance policy is ambiguous. Appellees include Luther Austin, as administrator of Angela Austin’s estate; Melissa and Christopher Brown, as administrators of G.B.’s estate; Terria Davison, as administrator of M.L.’s estate; Steve Farmer; Dorothy James, as guardian of R.J.; Patricia and Terrance Kimble, as guardians of B.P.; Sarah and Jonathan Vaughn, as administrators of A .V.’s estate; Mary Williams, as guardian of R.R.; and Kennan Wilson. For reversal, appellant argues that the circuit court erred in ruling that the insurance policy at issue was ambiguous. We have jurisdiction pursuant to Arkansas Supreme Court Rule 1–2(b)(5), as this appeal presents a significant issue needing clarification. We affirm.

 

I. Facts

On May 27, 2009, Heath T. Bakken, driving a maroon Chrysler PT Cruiser, traveled southbound in the northbound-inside lane of Highway 63 in Craighead County. At that same time, Angela F. Austin, who drove a white Ford F450 bus, traveled northbound on Highway 63 in the inside lane of traffic. Austin drove the bus as a transport vehicle for Focus, a nonprofit entity formed for children and adults with disabilities. The two vehicles collided, causing several passengers’ deaths and serious injuries to others. Following an investigation, an Arkansas State Police officer concluded that fault of the accident rested with Bakken because he drove his vehicle the wrong way on a one-way roadway at an excessive speed.

 

Bakken was insured by a policy of liability insurance with 21st Century Insurance. The policy had a property-damage limit of $25,000 per accident and bodily-injury coverage that provided a limit of $50,000 in the aggregate. Because most of the subsequent claims exceeded Bakken’s policy limits, the Bakken vehicle was underinsured for the damages caused by its driver. At the time of the accident, Focus was insured by appellant for underinsured-motorist coverage with an alleged damage limit of $1 million.

 

On August 13, 2009, appellant filed a complaint for interpleader indicating its willingness to pay the insurance-policy proceeds in the total amount of $1 million into the registry of the court. Appellant stated that, upon deposit of the insurance-policy proceeds into the registry, it requested to be discharged from further liability with respect to those proceeds. In its prayer for relief, appellant sought to enjoin appellees from filing any claim relating to the insurance-policy proceeds; to declare that appellant had no further liability beyond the insurance proceeds of $1 million as a result of the accident; to dismiss appellant from further attendance in the action; to declare appellant as discharged and free from liability for any insurance proceeds; and to grant appellant its attorney’s fees, costs, and other relief. On September 30, 2009, the circuit court entered an order interpleading appellant’s funds, and appellant tendered funds totaling $1 million to the circuit clerk.

 

Appellees, the injured passengers and the administrators of the deceased passengers’ estates, filed answers to appellant’s complaint for interpleader. Appellees also filed counterclaims against appellant, as the insurer for the charitably immune Focus, and alleged, inter alia, that Focus negligently failed to restrict its driver, Austin, from using her cell phone while driving the bus. Appellees argued that they were entitled to a judgment against appellant for a share of the interpleaded funds.

 

In response, appellant filed a motion for declaratory judgment and motion to dismiss the counterclaims, alleging that the insurance policy was a combined-single-limit (“CSL”) policy that provided coverage for the maximum amount of $1 million, regardless of whether the liability coverage or the underinsured-motorist coverage applied. Appellant stated that it had already paid the full amount and requested a dismissal of appellees’ counterclaims. Appellant also requested that the court grant its motion for declaratory judgment and motion to dismiss and that the court issue an order ruling that appellant could not be liable for any funds beyond the $1 million previously tendered to the circuit clerk.

 

Appellees responded, arguing that the interpleaded $1 million was specifically limited to the underinsured-motorist coverage that appellant had with Focus, its insured. However, appellees contended that appellant specifically provided for an additional $1 million in liability coverage in the business-auto declarations of its liability policy. They contended Focus paid a separate premium of $2502 under the business-auto provision, a separate premium of $82 for an auto-medical-pay limit of $5000, and a separate premium of $96 for the underinsured-motorist coverage of $1 million. Appellees requested that the circuit court deny appellant’s motion for declaratory judgment and motion to dismiss, as appellant’s policy provides specific, separate coverage for both liability and underinsurance.

 

On August 26, 2010, the circuit court held a hearing and subsequently entered an order denying appellant’s motion for declaratory judgment and motion to dismiss. In its order, the circuit court ruled that the language of the policy was ambiguous. Specifically, the court noted that the Declarations Page of the policy clearly showed coverage limits of $1 million for both liability and underinsured-motorist coverage followed by the letters “CSL.” The court ruled that “nothing before the court … indicate[d] that Focus, Inc., the insured, was familiar with the abbreviation ‘CSL’ and its meaning” and that nothing clearly confirmed that the policy was a “CSL” policy. First, in response to appellant’s arguments, the court ruled that a limitation provision entitled, “Liability Coverage,” clearly limited the amount it would pay under its liability coverage and that “the only part of this provision that goes beyond ‘Liability’ coverage is the prohibition against duplicate payments.” The court found that “duplicate payments” indicated being paid twice for the same damages. Next, the court examined a limitation provision entitled “Business Auto Conditions” and ruled that the provision did not apply because the case involved a single insurance policy with one coverage form. Further, the court ruled that underinsured-motorist coverage requires the company to pay what an insured would be entitled to recover, while liability coverage requires the company to pay what an insured would be legally required to pay. The court found that this particular limit of insurance appears to apply only to claims for underinsured-motorist coverage. The circuit court concluded that, in viewing the language of the insurance contract as a whole, the language of the policy was “ambiguous at best” and denied appellant’s motion for declaratory judgment and motion to dismiss. Appellant requested certification for an immediate appeal, pursuant to Rule 54(b) of the Arkansas Rules of Civil Procedure, and the circuit court issued a certificate in compliance with Rule 54(b). Appellant timely filed its notice of appeal.

 

II. Policy as Ambiguous

For its first point on appeal, appellant argues that the circuit court erred in ruling that the policy was ambiguous. Specifically, appellant contends that the policy language is unambiguous and that it intended to limit a maximum payment of $1 million for any damage. Appellant asserts that the policy’s language indicates that it is a CSL policy. Appellant further argues that the CSL notations, plus certain limiting language of the policy, unambiguously created a CSL policy with a limit of $1 million.

 

As a second point on appeal, appellant again focuses on the “limiting language” of the policy and argues that the circuit court based its ruling upon “three unreasonable assumptions” when interpreting the policy’s “Limit of Insurance” subsections. Specifically, appellants dispute the following specific rulings: (1) that the circuit court improperly construed the provision under the “Liability Coverage” section instead of the “General Conditions” section; (2) that the circuit court misconstrued the phrase, “duplicate payment,” by viewing it in isolation; and (3) that the circuit court misinterpreted a provision regarding damages. Essentially, appellant reasserts that the circuit court did not read the two “Limit of Insurance” subsections harmoniously in arriving at its ruling that the policy was ambiguous. Appellees respond that the circuit court properly found that, when viewing the language of the insurance policy as a whole, the limiting language cited by appellant was ambiguous and that the circuit court’s denial of appellant’s motion for declaratory judgment and to dismiss was not clearly erroneous.

 

Because both arguments advanced by appellant involve the interpretation of the insurance policy, we consider them in tandem. The law regarding the interpretation and construction of an insurance policy is well settled in this state. The language in an insurance policy is to be construed in its plain, ordinary, and popular sense. Norris v. State Farm Fire & Cas. Co., 341 Ark. 360, 16 S.W.3d 242 (2000). If the language is unambiguous, this court will give effect to the plain language of the policy without resorting to the rules of construction. Elam v. First Unum Life Ins. Co., 346 Ark. 291, 57 S.W.3d 165 (2001). “In considering the phraseology of an insurance policy the common use of terms should prevail when interpretation is required.” Continental Cas. Co. v. Davidson, 250 Ark. 35, 42, 463 S.W.2d 652, 655 (1971). On the other hand, if the language is ambiguous, this court will construe the policy liberally in favor of the insured and strictly against the insurer. Id. Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one reasonable interpretation. Id.

 

Different clauses of an insurance contract must be read together and the contract construed so that all of its parts harmonize, if that is at all possible, and, giving effect to one clause to the exclusion of another on the same subject where the two are reconcilable, is error. Davidson, supra. A construction that neutralizes any provision of a contract should never be adopted, if the contract can be construed to give effect to all provisions. Id . (citing Fowler v. Unionaid Life Ins. Co., 180 Ark. 140, 145, 20 S.W.2d 611, 613 (1929) (“Every word in the agreement must be taken to have been used for a purpose, and no word should be rejected as mere surplusage if the court can discover any reasonable purpose thereof which can be gathered from the whole instrument.”)).

 

Here, the issue is whether the insurance policy, which reflects liability coverage of “$1 million CSL” and underinsured-motorist coverage of “$1 million CSL,” provides an aggregate coverage of $2 million or a coverage limited solely to $1 million. On the Declarations Page, the policy contains a “Schedule of Coverages and Covered Autos” in a table format. That schedule of coverage provides that the liability coverage contains a limit of $1 million while the underinsured-motorist coverage also contains a limit of $1 million. The initials “CSL” are designated beside each $1 million amount in the limit columns for both liability and underinsured-motorist coverage.

 

Noting the various provisions of the policy before us, we agree with the circuit court’s ruling that the policy is ambiguous. First, the CSL term is not defined in the 248–page policy, nor is it found anywhere else in the policy other than the “Schedule of Coverages and Covered Autos.” Appellant points to the affidavit of Coleman F. Henry, senior vice president for appellant, who stated that the policy was a CSL policy and referenced a dictionary of insurance terms that defined CSL as combining the limits of bodily injury liability and property-damage liability. However, this definition did not include an underinsured-motoristcoverage provision, which is applicable in the present case, and the circuit court was free to reject Henry’s definition of CSL.

 

Next, contrary to appellant’s assertions, the insurance policy does not appear to be limited by the language of two separate sections found in the “Business Auto Coverage Form.” Appellant asserts that these two sections apply by limiting the total coverage under its liability coverage and its underinsured coverage to $1 million. In support of its argument, appellant cites Section IV in the “Business Auto Conditions”:

 

SECTION IV. BUSINESS AUTO CONDITIONS

 

…

B. GENERAL CONDITIONS

 

…

8. Two Or More Coverage Forms Or Policies Issued By Us

 

If this Coverage Form and any other Coverage Form or policy issued to you by us or any company affiliated with us apply to the same “accident,” the aggregate maximum Limit of Insurance under all the Coverage Forms or policies shall not exceed the highest applicable Limit of Insurance under any one Coverage Form or policy.

 

In our review, we agree with the circuit court that this provision is inapplicable to the case at bar and does not serve to limit the language of the policy to $1 million. Here, the plain language of this provision, Section IV(B)(8), indicates that it applies to multiple-policy situations where more than one policy is issued by appellant. While the policy itself refers to four separate coverage forms (i.e., Business Auto Coverage Form, Garage Coverage Form, Motor Carrier Coverage Form, and Truckers Coverage Form), the liability coverage and underinsured-motorist coverage are nevertheless under the same coverage form. Additionally, the single policy number was listed as PHPK350593, and the language of the policy references the policy in the singular by stating, “This policy consists of the following coverage parts for which a premium is indicated.” This evidence supports the circuit court’s finding that only one insurance policy—not multiple policies—was involved. Because this section is inapplicable to a single-policy situation, the language concerning “the aggregate maximum Limit of Insurance under all the Coverage Forms or policies” is also inapplicable. Therefore, we hold that the circuit court correctly determined that this provision did not apply in these circumstances because appellant issued only one insurance policy to Focus.

 

Finally, appellant cites to the “Limit of Insurance” language of “Liability Coverage” of the “Business Auto Coverage Form” in support of its argument that the policy unambiguously creates a CSL policy with a $1 million limit of its total coverage. That section provides as follows:

 

Section II. Liability Coverage.

 

…

C. Limit of Insurance

 

Regardless of the number of covered “autos,” “insureds,” premiums paid, claims made or vehicles involved in the “accident,” the most we will pay for the total of all damages and “covered pollution cost or expense” combined, resulting from any one “accident” is the Limit of Insurance for Liability Coverage shown in the Declarations.

 

…

No one will be entitled to receive duplicate payments for the same elements of “loss” under this Coverage Form.

 

In determining the term, “damages,” the circuit court also referenced the section’s “Coverage” paragraph:

 

A. Coverage

 

We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto.”

 

The circuit court ruled that, with this language, appellant clearly limits the amount that it will pay under its liability coverage and that duplicate payments beyond liability coverage are prohibited.

 

Appellant maintains that the circuit court misconstrued the phrase, “duplicate payments” in the “Limit of Insurance” subsections by ruling that it meant “being paid twice for the same damages.” Appellant claims that the court read this phrase in isolation and that the court should have interpreted “duplicate payments” as referring to payments arising out of the same accident under “Liability Coverage” and “Arkansas Underinsured Motorists Coverage.” However, we disagree. In that regard, appellant’s proposed definition would take the phrase, “duplicate payments,” out of its appropriate context. Nothing in the language of “Liability Coverage” suggests that “duplicate payments” applies to other various subsections of the policy. Thus, we hold that the circuit court properly reviewed the phrase under Section II’s “Liability Coverage.”

 

Appellant also asserts that the circuit court incorrectly found that the limiting language of Section II fits entirely under the “Liability Coverage” section and that “[i]f this provision was placed under the ‘General Conditions’ section rather than the ‘Liability Coverage’ section, the issue would be entirely different.” In its brief, appellant theorizes that the limiting language would apply if it had been construed under the “General Conditions” subsection, but we note that the circuit court did not construe this language under “General Conditions.” We hold that the circuit court properly construed the limiting language of Section II under “Liability Coverage” to limit only liability coverage and nothing else.

 

In its review of the “Limit of Insurance” language in “Liability Coverage,” the circuit court contrasted it with the “Limit of Insurance” language found in the “Arkansas Underinsured Motorists Coverage” provision of the policy, which states as follows:

 

D. Limit of Insurance

 

1. Regardless of the number of covered “autos,” “insureds,” premiums paid, claims made or vehicles involved in the “accident,” the most we will pay for all damages resulting from any one “accident” is the Limit of Insurance for Underinsured Motorists Coverage shown in the Declarations.

 

2. No one will be entitled to receive duplicate payments for the same elements of “loss” under this Coverage.

 

The definition of damages under this “Arkansas Uninsured Motorists Coverage” endorsement provided:

 

A. Coverage

 

1. We will pay all sums the “insured” is legally entitled to recover as compensatory damages from the owner or driver of any “underinsured motor vehicle.” After reviewing the two “Limits of Insurance” side-by-side, the circuit court ruled that

 

“underinsured coverage requires the company to pay what an insured would be entitled to recover where liability coverage requires the company to pay what an insured would be legally required to pay (as opposed to recover).” (Emphasis added.) The court further found that the “Limit of Insurance” in the underinsured-motorist provision applied only to those claims for underinsured-motorist coverage.

 

Appellant claims that the circuit court misinterpreted “damages” relating to liability coverage and underinsured-motorist coverage and that one definition of damages should have applied to the separate subsections. However, the circuit court found a difference in the term “damages,” defined in both Section II of “Liability Coverage” and Section A of “Arkansas Underinsured Motorists Coverage.” The court found that damages under the liability coverage referred to damages an insured must legally pay while damages under the underinsured-motorist coverage defined damages as those that the insured would be entitled to recover. Contrary to appellant’s assertion that the circuit court failed to read the different definitions in a harmonious manner, the circuit court properly found that damages can apply in two distinct ways. Thus, we conclude that these two definitions of “damages” do not bear upon the question of whether the policy is a CSL policy with a $1 million limit.

 

For the same reasons articulated by the circuit court, we hold that the CSL notation plus any alleged limiting language of the policy does not automatically create a CSL policy. The term CSL was not adequately defined in the policy, and any limiting language emphasized by appellant as setting a $1 million limit is inapplicable. Section IV applies only to multiple-policy situations, and the “Limits of Insurance” presented in Section II of the “Business Auto Coverage Form” references what an insured would be legally required to pay as opposed to Paragraph D of the “Arkansas Underinsured Motorists Coverage,” which references what an insured would be entitled to recover. Thus, the question remains unclear whether a $1 million limit exists for liability coverage or underinsured-motorist coverage or both. We repeatedly have stated that if the language of a policy is susceptible to two interpretations—one favorable to the insured and one favorable to the insurer—then the interpretation most favorable to the insured must be adopted. Smith v. Prudential Prop. & Cas. Ins. Co., 340 Ark. 335, 10 S.W.3d 846 (2000). For the reasons articulated by the circuit court, we conclude that the policy is ambiguous and affirm the circuit court’s denial of appellant’s motion for declaratory judgment and motion to dismiss.

 

III. Appellees’ Arguments

For its third point on appeal, appellant argues that the circuit court properly disregarded two arguments made by appellees at the trial level. First, appellees argued below that appellant’s interpretation of the policy would create insurance coverage that violates public policy. Second, appellees argued that appellant’s prior payments to certain passengers from the policy’s no-fault medical-payments coverage conflicted with appellant’s proposed interpretation of the policy’s coverage limits. However, the circuit court did not rule upon these arguments proposed by appellees. It is well settled that this court will not address an argument on appeal if a party fails to obtain a ruling from the circuit court. Simpson Hous. Solutions, LLC v. Hernandez, 2009 Ark. 480, ––– S.W.3d ––––. For these reasons, we are precluded from reaching the merits of this particular argument advanced by appellant.

 

Affirmed.