Allstate Ins. Co. v. Ostenson

• Decision Date: 06 February 1986
• Docket Number: No. 51232-9
• Citation: Allstate Ins. Co. v. Ostenson, 713 P.2d 733, 105 Wn.2d 244 (Wash. 1986)
• Parties: ALLSTATE INSURANCE COMPANY, a foreign insurance company, Plaintiff, v. Julian OSTENSON, Lynn Marie Ostenson, et al., Respondents, Barry Rae Buckmaster, Appellant. En Banc
• Court: Washington Supreme Court

Page 244

105 Wn.2d 244

713 P.2d 733

ALLSTATE INSURANCE COMPANY, a foreign insurance company, Plaintiff, v.Julian OSTENSON, Lynn Marie Ostenson, et al., RespondentsBarry Rae Buckmaster, Appellant.

No. 51232-9.

Supreme Court of Washington,

En Banc.

Feb. 6, 1986.

Monte E. Hester, Richard J. Milham, Tacoma, for appellant.

Donald Kelley, Tacoma, for respondents.

GOODLOE, Justice.

In this casewe review a trial court's order which distributed an interpleaded underinsured motorist policy fund without regard to the policy's "per person" limitation.We find the policy's "per person" limitation applies and reverse the trial court.

On August 1, 1982, Jason and Jayme Ostenson, respondents, and Barry Buckmaster, appellant, were passengers in a car owned by Bruce Williams, which was involved in a 2-car accident.AIU Insurance Company insured the Williams car.The policy provided underinsured motorist coverage of $25,000 "per person" and $50,000 "per accident".

The Ostensons and Buckmaster are entitled to and made claims to the underinsured motorist fund.AIU Insurance Company filed an interpleader action, deposited $50,000 into the registry of the Clerk of Pierce County Superior Court, and was dismissed from the suit.The court has established two funds: a liability fund and an underinsured motorist fund.This appeal involves only the underinsured motorist fund.

The Ostensons, through their guardian ad litem, moved the court for an order declaring that the policy limitations would not apply when dividing the fund, and that the $50,000 would be available for distribution upon "such terms as may hereafter be determined."Clerk's Papers, at 8.The trial court granted the motion and ordered that the fund be distributed without regard to the policy's "per person" limitation.

Barry Buckmaster sought and was granted direct review by this court.

The parties have stipulated to the damages involved and to alternative distributions of the fund.The stipulated damages of the parties are as follows: Jayme Ostenson, $2,000,000; Barry Buckmaster, $150,000; and Jason Ostenson, $30,000.The parties stipulated to alternative distributions of the fund depending on our determination of whether the policy limitation applies.If the trial court's decision is upheld and the policy limitation is not applied, the stipulation provides for distribution as follows: Jayme Ostenson, $46,000; Barry Buckmaster, $3,500; and Jason Ostenson, $500.If the trial court decision is reversed and the policy limitation is applied, the stipulation provides for distribution as follows: Jayme Ostenson, $25,000; Barry Buckmaster, $20,000; and Jason Ostenson, $5,000.

We must determine whether the trial court erred in determining that the interpleaded underinsured motorist policy fund could be distributed among the claimants without regard to the policy's "per person" limitation.

The issue implicates the second stage of the interpleader remedy which "involves the determination of the respective rights of the claimants to the stake, which in this case are the policy proceeds."Federal Old Line Ins. Co. v. McClintick, 18 Wash.App. 510, 513, 569 P.2d 1206(1977);citing7 C. Wright & A. Miller, Federal Practice and Procedure§ 1714(1972).

The general rule provides that where several claims arising from one incident are asserted in one suit or interpleader against an insurer whose maximum liability under its policy is insufficient to pay the claims in full, the proceeds are to be distributed on a pro rata basis in accordance with the amount of damage suffered by each claimant.See, e.g., Sheehan v. Liberty Mut. Fire Ins. Co., 288 Ala. 137, 258 So.2d 719(1972);State Farm Mut. Auto. Ins. Co. v. Sampson, 324 So.2d 739, 742(Miss.1975);Christlieb v. Luten, 633 S.W.2d 139, 140(Mo.App.1982).See also15A G.Couch, Insurance§ 56:35 (2d ed. 1983); Annot., Basis and Manner of Distribution Among Multiple Claimants of Proceeds of Liability Insurance Policy Inadequate to Pay All Claims in Full, 70 A.L.R.2d 416, 417(1960).

However, this general rule does not answer the question before us, which is whether the distribution will be made on a pro rata basis where a claimant's pro rata share exceeds the policy's "per person" limitation amount.In Sheehan, the policy did not have a "per person" limitation.In Christlieb and Sampson, the pro rata distribution did not result in any one claimant receiving more than the "per person" limited amount.The Sampson court in dicta noted, however, that but for the applicable "per person" limitation, one of the five claimants was entitled to much more of an award under a pro rata distribution.Sampson, at 742.

One case was found which directly dealt with a claimant seeking to receive more than the insurance policy's "per person" limitation allowed.Standard Acc. Ins. Co. v. Winget, 197 F.2d 97(9th Cir.1952).In Winget, the insurance policy provided $10,000 coverage per person with a maximum $20,000...