Welch v. Armer
| Decision Date | 27 June 1989 |
| Docket Number | No. 68427,68427 |
| Citation | 1989 OK 117,776 P.2d 847 |
| Parties | Addeller O. WELCH, Appellee, v. Larry Don ARMER, Appellee, v. UNION MUTUAL INSURANCE COMPANY OF PROVIDENCE, Appellant. |
| Court | Oklahoma Supreme Court |
Appeal from the District Court of Sequoyah County; A.J. Henshaw, Jr., Trial Judge.
Insurance carrier appeals from an order dismissing its cross-claim for indemnification against an allegedly negligent driver of a motor vehicle, his insolvent liability insurance carrier, and the Oklahoma Insurance Guaranty Association.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Paul Antonio Lacy, Oklahoma City, for appellee.
Best, Sharp, Thomas, Glass & Atkinson by Joseph A. Sharp and John H.T. Sheridan, Tulsa, for appellant.
The issues presented in this case are ones of first impression. First, must a claimant's uninsured motorist coverage be exhausted before a claim can be made against the Oklahoma Guaranty Association? Second, can the uninsured motorist carrier maintain a claim of indemnity against the tort-feasor?
We hold 36 O.S.1981 §§ 3636 and 2012 prior to amendment are controlling and require claimants to first exhaust claims against their own uninsured motorist carrier before they can recover against the Guaranty Association. Further, the uninsured motorist carrier may maintain a claim against the tort-feasor, but only for amounts above the limits of tort-feasor's policy with the insolvent insurer.
On November 30, 1984, a vehicle driven by Larry Don Armer (Tort-feasor) collided with a vehicle driven by Addeller O. Welch (Welch). Tort-feasor's liability insurer was insolvent. Union Mutual Insurance Company of Providence (Union Mutual) provides uninsured motorist coverage to Welch.
On December 10, 1985, Welch filed a Petition against tort-feasor for negligence and against Union Mutual for coverage of the accident. Union Mutual filed an Answer, and a Cross-Claim against Armer for indemnification pursuant to The Oklahoma Property and Casualty Insurance Guaranty Association Act (Guaranty Act). 36 O.S.1981 § 2001, et seq.
Tort-feasor then filed a motion to dismiss the cross-claim asserting Union Mutual's claim was barred by 36 O.S.1981, § 3636(E) because he was an uninsured motorist pursuant to 36 O.S.1981 § 3636(C). Tort-feasor also moved to strike defenses in Union Mutual's answer which denied he was uninsured or under-insured at the time of the accident.
In addition, tort-feasor filed a motion for declaratory judgment. He asked the court to declare that a judgment for Welch must first be satisfied by Union Mutual before any recovery against him or the Guaranty Association. Tort-feasor further requested the court to declare that the statutory amendments to § 2012 of the Guaranty Act could not be retroactively applied.
Union Mutual responded to tort-feasor's motions claiming: 1) the Guaranty Association's obligation is primary to that of the uninsured motorist carrier, 2) Union Mutual, as the uninsured motorist carrier, can maintain an action against tort-feasor, and 3) the amendments to § 2012 of the Guaranty Act must be applied retroactively.
The District Court issued an Order dismissing Union Mutual's cross-claim, and its defenses relating to tort-feasor being an uninsured motorist. The Order also overruled tort-feasor's motion for declaratory judgment as being moot.
Union Mutual appeals.
To establish primary liability, we first turn to 36 O.S.1981 § 3636. This section provides that liability insurers of motor vehicles are to provide uninsured motorist coverage to their policy holders. The purpose of this coverage is to provide insured persons who are are legally entitled to recover damages from owners or operators of an uninsured or under-insured vehicle with a means of recovery. Section 3636 is relevant to this case because it defines the term uninsured motor vehicle to include "... an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency."
Union Mutual, as the liability insurer of claimant Welch, provides uninsured motorist coverage to be used in the event Welch has a claim against an uninsured or under-insured motorist. Tort-feasor argues he is an uninsured driver in accordance with this provision because his liability insurer is unable to make payment due to the insurer's insolvency. Thus, tort-feasor asserts, this section places an obligation upon Union Mutual, as the uninsured motorist carrier, to pay Welch's claim.
While this statute appears controlling, it must be read in conjunction with the Insurance Guaranty Association Act which was also passed to avoid financial loss to claimants due to the insolvency of an insurer. 36 O.S.1981 § 2002.
Specifically, the Guaranty Act establishes a Guaranty Association to, inter alia, pay the claims of policy holders and other claimants of an insolvent member insurer. 36 O.S.1981 §§ 2002, 2005, and 2007.
The act would appear to require the Guaranty Association pay the claims against tort-feasor, up to the limits set out in tort-feasor's policy, due to the insolvency of his insurer. However, § 2012 contains an exhaustion of claims provision which, as amended, provides:
Any person having a claim against an insurer under any provision of an insurance policy other than a policy of the insolvent insurer which is also a covered claim shall be required to first exhaust his rights under such policy. Any amount payable on a covered claim under this act shall be reduced by the amount of any recovery under such other insurance policy. The provision of this subsection shall not apply to uninsured motorist coverage. (Emphasis added.)
The last sentence of this provision is an amendment added subsequent to the accident. Union Mutual maintains that prior to amendment, the statute is ambiguous and unclear. It then concludes that the amendment is merely a clarification of the statute and, citing Magnolia Pipeline Co. v. Okla. Tax. Comm., 196 Okl. 633, 167 P.2d 884 (1946), should therefore be applied retroactively.
We cannot agree. The provision, prior to amendment, is very clear and unambiguous. It requires claimants to exhaust all other covered claims against insurers, under insurance policies, before they can make a claim against the Guaranty Association.
This view has been adopted by numerous other states with similar statutes. 1 In addition, this interpretation is consistent with § 3636 as discussed above, in holding the uninsured motorist carrier primarily liable.
Union Mutual's reliance upon Hickerson v. Protective National Insurance Company of Omaha, 2 is misplaced. In Hickerson, the Louisiana court did hold that the Guaranty Fund was primarily liable. However, the court pointed out that this interpretation was adopted because Louisiana, at that time, did not have a provision prohibiting the claimant's uninsured motorist carrier from recovering against the tort-feasor should the carrier be held primarily liable.
The court reasoned that if the uninsured motorist carrier was held primarily liable it would simply recover from the tort-feasor on its subrogated claim. In essence, a Louisiana tort-feasor would be treated as though he did not have liability insurance.
Oklahoma, on the other hand, has such a non-recourse provision which prevents the uninsured carrier from recovering against the tort-feasor, at least up the amount of the tort-feasor's liability coverage. 3 Therefore, we decline to follow the Louisiana rule.
Thus, the statute prior to amendment requires a claimant against an insolvent insurer to exhaust all other covered claims he may have against insurer, under an insurance policy, before he may recover against the Guaranty Association. Therefore, prior to the amendment, Welch must exhaust her claim against Union Mutual before she can recover against the Guaranty Association. Any amount payable to Welch under the Guaranty Act will be reduced by the amount recovered by her under her uninsured motorist coverage.
We now turn to the interpretation of the amendment. Tort-feasor argues that the amendment is to be read as saying that a person making a claim under the uninsured motorist coverage provided by an insolvent insurer is not required to exhaust any other insurance claims he might have before recovering against the Guaranty Association.
We believe the better view is to interpret the amendment literally as excluding uninsured motorist coverage from the types of claims that must be exhausted. That is, persons having a claim against an insolvent insurer must exhaust all claims they may have against insurers, except those against their uninsured motorist carrier, before filing a claim against the Guaranty Association.
This interpretation does not contradict § 3636 or render it useless. The uninsured motorist carrier would still be primarily liable if the tort-feasor is truly uninsured, or if the tort-feasor's insolvent liability carrier does not belong to the Guaranty Association.
Simply put, prior to the amendment Welch must exhaust her claim against Union Mutual before she can recover against the Guaranty Association. After the effective date of the amendment she does not have to do so.
Since we have established that the application of the amendment alters the outcome of this issue we must now turn to the question of whether the amendment is applicable.
The general rule in Oklahoma is that statutes, and amendments, are to be construed to operate only prospectively unless the Legislature clearly expresses a contrary intent. 4 However, as Union Mutual points out, remedial or procedural statutes which do not create, enlarge, diminish, or destroy vested rights are generally held to operate retrospectively. 5 Union Mutual argues that the amendment falls within this exemption. We cannot agree.
The amendment does not clarify the provisions of § 2012, but rather alters it to...
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