American Nat'l Prop. & Cas. Co. v. Checketts

• Decision Date: 21 May 2012
• Docket Number: Civil No. 2:11-CV-250 BSJ
• Parties: AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff, v. CHRIS CHECKETTS and SANDRA CHECKETTS, as individuals and as parents of JACOB CHECKETTS, a minor, Defendants.
• Court: U.S. District Court — District of Utah

AMERICAN NATIONAL PROPERTYAND CASUALTY COMPANY, Plaintiff,

v. CHRIS CHECKETTS and SANDRACHECKETTS, as individuals and asparents of JACOB CHECKETTS, a minor, Defendants.

Civil No. 2:11-CV-250 BSJ

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

Date: May 21, 2012

MEMORANDUM OPINION

& ORDER RE: CROSS-MOTIONS

FOR SUMMARY JUDGMENT

(Fed. R. Civ. P. 56)

On March 16, 2011, plaintiff AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY ("ANPAC"), filed this diversity action seeking declaratory relief pursuant to 28 U.S.C. § 2201(a) (2006 ed.), to which defendants CHRIS CHECKETTS and SANDRA CHECKETTS ("the Checketts") responded by filing an Answer on May 31, 2011 (dkt. no. 4). On September 30, 2011, the Checketts filed a Motion for Summary Judgment (dkt. no. 11), as did ANPAC (dkt. no. 13). These cross-motions were heard on November 9, 2011, at which time the court took both motions under advisement. (See Minute Entry, dated November 9, 2011 (dkt. no. 20).)

Having reviewed and considered the motions, memoranda and exhibits submitted by the parties, and having heard and considered the arguments of counsel, the court now rules as follows:

FACTUAL BACKGROUND

On or about Sept. 6, 1996, Sandra Checketts signed two applications for automobile insurance with ANPAC, requesting insurance coverage for three vehicles: (1) a 1995 Chevrolet Tahoe; (2) a 1992 Dodge D250; and (3) a 1984 Pace motor home. The two applications listed Chris Checketts and Sandra Checketts, husband and wife, as the only drivers on the policy, and requested liability coverage limits of $100,000 per person/$300,000 per incident.¹ One section of the ANPAC application form explained:

UNDERINSURED MOTORIST BODILY INJURY COVERAGE (UIMBI)

UIMBI Coverage provides you with additional insurance benefits if you or someone in your automobile suffers bodily injury because of an automobile accident caused by another party who is primarily at fault, but who does not have enough insurance to compensate for the injuries. Underinsured Motorist Limits must be the same for all vehicles on policy.

Beneath this explanation were printed a series of check boxes. Ms. Checketts checked the box next to the language "I do NOT desire to purchase UIMBI."²

ANPAC issued an automobile insurance policy to the Checketts, Policy No. 43-A-E98-832-9 ("the Policy"), and thereafter sent semi-annual renewal notices to the Checketts, each of which summarized the different types and amounts of insurance coverage provided under the Policy. From the first renewal notice in March 1997 through the notice sent in September 2007, each recited that "UNDERINSURED MOTORIST COV" was "REJECTED," and further statedthat "**THIS POLICY DOES NOT PROVIDE UNDERINSURED MOTORIST COVERAGE**" on a separate line.³ None of the renewal notices ANPAC sent to the Checketts from 1997 through 2007 included any explanation of the purpose of underinsured motorist coverage or the costs associated with increasing such coverage in amounts up to and including the maximum amount available under the Policy.⁴

The Checketts continued to maintain their ANPAC auto insurance coverage under the Policy through the ensuing years, until at least the end of 2007.⁵ In the ten years from ANPAC's issuance of the Policy in 1996 and early 2007, there were several changes made to the Checketts' auto insurance. Specifically, at the time of the first ANPAC renewal notice dated March 16, 1997, ANPAC provided auto insurance coverage for the following two vehicles: (1) a 1995 Chevrolet Tahoe, and (2) a 1992 Dodge D250, and listed only Sandra and Chris Checketts as drivers on the policy.⁶ By 2007, all of the vehicles covered by the Policy had changed: the March 6, 2007 ANPAC renewal notice listed four covered vehicles: (1) a 1999 Chevrolet Suburban; (2) a 1989 Ford F-150; (3) a 1999 Chevrolet Tahoe; and (4) a 2000 Chevrolet Geo. The March 2007 notice also listed an additional driver, the Checketts' oldest daughter Alisha, who had turned sixteen years old on Aug. 28, 2005 and was extended auto insurance coverage by ANPAC at theChecketts' request sometime on or before March 6, 2006. The substitution and addition of these vehicles and a third driver to the coverage under the Policy was necessarily made at the Checketts' request.⁷

These changes significantly increased the premiums under the Policy. The addition of Alisha to the policy resulted in a premium increase on the family's 1999 Chevrolet Suburban from $195.00 to $396.00 every six months, an overall increase of $402.00/year to the family's automobile insurance expense. At some time between Sept. 6, 2006 and Mar. 6, 2007, the Checketts added a fourth vehicle to their coverage under the Policy, namely a 2000 Chevrolet Metro. The combination of adding their teenage daughter as a driver and the Chevrolet Metro as a vehicle effectively increased their semi-annual insurance expense from $655.00 to $1,190.00, a premium increase of over eighty percent.⁸

On June 18, 2007, Sandra Checketts and her seven-year-old son Jacob Checketts were involved in a collision on U.S. Highway 89 when Michael Hedden, a 16-year-old driver, swerved into Ms. Checkett's lane and hit Ms. Checkett's car head-on at full highway speed. Both Ms. Checketts and her son sustained serious injuries.

After exhausting Mr. Hedden's minimal insurance coverage, the Checketts made an Underinsured Motorist coverage demand on ANPAC, which was denied by ANPAC.

ANALYSIS

Both sides assert that no material facts are genuinely in dispute and that summary judgment is appropriate on all issues as a matter of law. See, e.g., Valdez v. Squier, 676 F.3d 935, 943 (10th Cir. 2012) ("Summary judgment is appropriate when 'there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" (quoting Fed. R. Civ. P. 56(a))).

The parties posit that the question now before the court is whether Utah Code Ann. § 31A-22-305, as amended in 2000, required ANPAC (1) to send the Checketts an additional explanation of the purpose of Underinsured Motorist Coverage ("UIM") and the cost of increasing that coverage up to the same policy limits as their existing liability coverage, or (2) to provide maximum UIM coverage under the Checketts policy at some time after January 1, 2001, unless ANPAC obtained an additional waiver from the Checketts that complied with the requirements of the 2000 amendment, or both.

As amended by the Utah Legislature in 2000, the Utah Underinsured Motorist statute read in pertinent part:

(9) (a) Underinsured motorist coverage under Subsection 31A-22-302(1)(c) provides coverage for covered persons who are legally entitled to recover damages from owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease, or death.

(b) For new policies written on or after January 1, 2001, the limits of underinsured motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle liability coverage or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a lesser amount by signing an acknowledgment form provided by the insurer that:

(i) waives the higher coverage;(ii) reasonably explains the purpose of underinsured motorist coverage; and

(iii) discloses the additional premiums required to purchase underinsured motorist coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability coverage or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy.

* * * *

(f) (i) A named insured may reject underinsured motorist coverage by an express writing to the insurer that provides liability coverage under Subsection 31A-22-302(1)(a).

(ii) This written rejection shall be on a form provided by the insurer that includes a reasonable explanation of the purpose of underinsured motorist coverage and when it would be applicable.

(iii) This rejection continues for that issuer of the liability coverage until the insured in writing requests underinsured motorist coverage from that liability insurer.

(g)(i) In conjunction with the first two renewal notices sent after January 1, 2001, for policies existing on that date, the insurer shall disclose in the same medium as the premium renewal notice, an explanation of the purpose of underinsured motorist coverage and the costs associated with increasing the coverage in amounts up to and including the maximum amount available by the insurer under the insured's motor vehicle policy.

(ii) The disclosure shall be sent to all insureds that carry underinsured motorist coverage limits in an amount less than the insured's motor vehicle liability policy limits or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy.

Utah Code Ann. § 31A-22-305(9)(a)-(b), (f), (g) (Supp. 2001) (effective May 1, 2000). As the Checketts correctly point out, automobile insurance policies already existing on January 1, 2001 trigger different UIM coverage notification requirements than do new policies written on or after that date. Utah Code Ann. § 31A-22-305(9)(b) (Supp. 2001) governed "new policies written on or after January 1, 2001," and Utah Code Ann.§ 31A-22-305(9)(g) (Supp. 2001) governs policies that already existed on that date.

Under section 9(b), new policies written on or after January 1, 2001 must provide UIM coverage with limits equal to the lesser of (1) the limits of the insured's motor vehicle liability coverage or (2) the maximum UIM coverage available under the insured's motor vehicle policy,⁹ "unless the insured purchases coverage in a lesser amount by signing an acknowledgment form . . . that waives the higher coverage." Utah Code Ann. § 31A-22-305(9)(b)(i) (Supp. 2001). That acknowledgment form, in turn, must reasonably explain the purpose of UIM coverage and disclose the additional...