Upshaw v. Trinity Companies

• Decision Date: 30 September 1992
• Docket Number: No. D-1451,D-1451
• Citation: 842 S.W.2d 631
• Court: Texas Supreme Court
• Parties: Amy UPSHAW and Greg Upshaw, Individually and as Independent Executor of the Estate of George Upshaw, Petitioners, v. The TRINITY COMPANIES, Respondents.

Page 631

842 S.W.2d 631

Amy UPSHAW and Greg Upshaw, Individually and as Independent Executor of the Estate of George Upshaw, Petitioners, v. The TRINITY COMPANIES, Respondents.

No. D-1451.

Supreme Court of Texas.

Sept. 30, 1992.

Rehearing Overruled Dec. 9, 1992.

Thomas C. Hall, San Antonio, for petitioners.

William J. Gamble, San Antonio, for respondents.

OPINION

CORNYN, Justice.

We consider in this appeal whether stacking ¹ of policy limits for underinsured motorist coverage in a single multi-vehicle insurance policy should be compelled, first, because of alleged ambiguities in a standard Texas Personal Auto Policy, and second, because the contractual limitation on the insurer's liability under these circumstances violates public policy. Because the stacking prohibition contained in the policy is neither ambiguous nor violative of public policy, we affirm the judgment of the court of appeals.

I.

On June 25, 1989, George Upshaw was killed when his car collided with a vehicle owned by Brett Field and driven by John Pleasant. At the time of the accident, Upshaw had a single multi-vehicle insurance policy issued by the Trinity Companies ("Trinity") covering three automobiles. Under the terms of the policy, Upshaw paid three separate premiums for uninsured/underinsured motorist coverage, one for each car. Coverage under the policy for uninsured/underinsured motorist protection is limited to $20,000 per person and $40,000 per accident. Following Upshaw's fatal accident, his surviving son and daughter ("the Upshaws") sued Field and Pleasant for negligence and Trinity under its policy. The Upshaws' claims against Trinity were subsequently severed from those against Field and Pleasant. At some point, the Upshaws rejected a tender by Trinity of $20,000, which Trinity claimed discharged its liability for uninsured/underinsured motorist coverages under the policy.

In their suit, the Upshaws seek a declaration that the uninsured/underinsured provisions of the policy can be stacked to allow a maximum recovery of $40,000, arguing that the separate premiums paid on each vehicle entitled them to such coverage. The trial court rendered judgment for Trinity, holding that the underinsured motorist coverage for the multiple vehicles insured under the policy could not be stacked, and the court of appeals affirmed. 812 S.W.2d 353.

The Upshaws contend that the policy is ambiguous and, as such, should be construed to maximize coverage. Alternatively, they argue that public policy considerations require the intrapolicy stacking of underinsured motorist coverage.

II.

In addressing the Upshaws' claim of ambiguity, we turn to our recent writing on this subject in National Union Fire Insurance Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.1991), stating that:

Generally, a contract of insurance is subject to the same rules of construction as other contracts. Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987). If the written instrument is worded so that it can be given only one construction, it will be enforced as written. Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984).

We may not resort to rules of contract construction if the policy is unambiguous, that is, if it is susceptible of only one reasonable interpretation. Barnett, 723 S.W.2d at 665.

Part C of the policy, entitled "UNINSURED/UNDERINSURED MOTORISTS COVERAGE," under "Limit of Liability," provides:

[i]f separate limits of liability for bodily injury and property damage liability are shown in the Declarations for this coverage the limit of liability for "each person" for bodily injury liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one accident. Subject to this limit for "each person", the limit of liability shown in the Declarations for "each accident" for bodily injury liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident. (emphasis added).

We hold that this language is certain and not reasonably susceptible to more than one interpretation. The contract provides that for any one person the limits of coverage are $20,000 per accident. It also limits the total recovery, when more than one person suffers a loss in a single accident, to $40,000. Thus, we hold that the policy unambiguously limits coverage to prohibit intrapolicy stacking. ²

This holding is consistent with prior Texas caselaw recognizing that payment of supplementary premiums for coverage of an additional vehicle by itself does not require intrapolicy stacking. See Hartford Acc. and Indem. Co. v. Turner, 512 S.W.2d 687, 688 (Tex.1974); Westchester Fire Ins. Co. v. Tucker, 512 S.W.2d 679, 684 (Tex.1974); American Liberty Ins. Co. v. Ranzau, 481 S.W.2d 793, 797-98 (Tex.1972). In Westchester Fire Insurance Co., when faced with the same contentions that the Upshaws urge here, we held that "the stated limits of the uninsured motorist coverage are not subject to stacking or pyramiding." 512 S.W.2d at 684. There, the insured's policy covered two vehicles with limits for uninsured motorist coverage of $10,000 per accident and $20,000 per occurrence. The insured paid a premium of $4.00 for the coverage on his first car and $3.00 for his second car. When the insured suffered a $15,000 loss as a result of injuries in an accident with an uninsured motorist, he sought to stack the uninsured motorist coverage for the two vehicles insured under the policy. Just as in this case, the insured was driving one of his own cars when the injury occurred.

In declining to adopt a construction of the policy that would require stacking of intrapolicy coverages, we held that the underinsured motorist coverage limits were controlled by the limit of liability stated in the policy. Id. As part of our rationale, we stated: "it is clear that the additional charge was not made for the purpose of increasing the policy limits." Id. We reached this conclusion on the basis that the payment of the additional premium expanded the uninsured motorist coverage to include additional-owned vehicles. Id. at 684-85. Such coverage, under a family policy like that purchased by Upshaw, covers more than one person. Additional covered cars, occupied concurrently by additional insureds, means an increased risk of loss for which the insurer is entitled to additional premium. See, e.g., Ranzau, 481 S.W.2d at 798; Holyfield v. Members Mut. Ins. Co., 566 S.W.2d 28, 29 (Tex.Civ.App.--Dallas 1978), writ ref'd n.r.e. per curiam, 572 S.W.2d 672, 673 (Tex.1978).

Our holding today is also consistent with those of other states, whose courts have also recognized that the additional payment of premiums alone does not result in stacking. See Nationwide Mut. Ins. Co. v. Scarlett, 116 Idaho 820, 780 P.2d 142, 143 (1989); Hillman v. Nationwide Mut. Fire Ins. Co., 758 P.2d 1248, 1254-55 (Alaska 1988); LeCuyer v. Metropolitan Property & Liab. Ins. Co., 401 Mass. 709, 519 N.E.2d 263, 265 (1988); Sanders v. St. Paul Mercury Ins. Co., 148 Vt. 496, 536 A.2d 914, 921 (1987); Charley v. Farmers Mut. Ins. Co., 219 Neb. 765, 366 N.W.2d 417, 422 (1985); Dufour v. Metropolitan Property & Liab. Ins. Co., 438 A.2d 1290, 1293 (Me.1982); Hampton v. Allstate Ins. Co., 126 Ariz. 403, 616 P.2d 78, 80-81 (1980, review denied); Janet Boeth Jones, Annotation, Combining or "Stacking" Uninsured Motorist Coverages Provided in Single Policy Applicable to Different Vehicles of Individual Insured, 23 A.L.R.4th 12, 21-22 (1983 & Supp.1991) (section 3(a) lists states which allow stacking and section 3(b) lists states where "payment of multiple premiums was not determinative of an insured's right to multiple uninsured motorist coverages in a policy covering more than one vehicle;" neither list appears to be exhaustive). Where, as here, no ambiguity exists as to the extent of coverage, the additional premium payments are presumed to have been intended to provide coverage only for additional persons or use of other vehicles by the person already insured.

III.

The Upshaws also contend that public policy mandates the intrapolicy stacking of limits because additional premiums were charged and paid for underinsured motorist coverage for each vehicle listed on the policy. The Upshaws argue that coverage for additional vehicles did not increase the insurer's risk and that the additional premiums should be deemed to afford the insured a right to stack coverage.

Article 5.06-1 of the Insurance Code, entitled "Uninsured or Underinsured Motorist Coverage," which mandates the minimum coverages of automobile liability insurance policies in this state, provides in pertinent part:

The portion of a policy form adopted under Article 5.06 of this code to provide coverage under this article [uninsured or underinsured motorist coverage] shall include provisions that, regardless of the number of persons insured, policies or bonds applicable, vehicles involved, or claims made, the total aggregate limit of liability to any one person who sustains bodily injury or property damage as the result of any one occurrence shall not exceed the limit of liability for these coverages as stated in the policy ....

Tex.Ins.Code art. 5.06-1(2)(d) (emphasis added). When first enacted in 1967, article 5.06-1 required insurers to offer, subject only to written refusal by the insured, uninsured motorist coverage in standard automobile insurance policies. Act of Oct. 1, 1967, 60th Leg., R.S., ch. 202, § 3, 1967 Tex.Gen.Laws 448, 449. In 1977 the legislature amended the statute to require, for the first time, that insurance carriers likewise offer underinsured motorist coverage in standard personal automobile policies. Act of Aug. 29, 1977, 65th Leg., R.S., ch. 182, § 1, 1977 Tex.Gen.Laws 370, 370-71; see also Stracener v. United Serv Auto. Ass'n., 777 S.W.2d 378, 382 (Tex.1989) (the same policy considerations apply equally to uninsured and underinsured motorist coverage). This ...