Barber v. Farmers Ins. Exchange, 860319-CA

• Citation: 751 P.2d 248
• Decision Date: 26 February 1988
• Docket Number: No. 860319-CA,860319-CA
• Parties: Frank M. BARBER, and Mario T. Barber, by and through his guardian ad litem, Ray Harding Ivie, Plaintiffs and Appellants, v. FARMERS INSURANCE EXCHANGE, Defendant and Respondent.
• Court: Utah Court of Appeals

Page 248

751 P.2d 248

Frank M. BARBER, and Mario T. Barber, by and through his guardian ad litem, Ray Harding Ivie, Plaintiffs and Appellants, v. FARMERS INSURANCE EXCHANGE, Defendant and Respondent.

No. 860319-CA.

Court of Appeals of Utah.

Feb. 26, 1988.

Sherman C. Young, Ray Phillips Ivie, Ivie and Young, Provo, for plaintiffs and appellants.

Aaron Alma Nelson, Bayle, Hanson, Nelson & Chipman, Salt Lake City, for defendant and respondent.

Before ORME, BENCH and DAVIDSON, JJ.

OPINION

ORME, Judge:

Plaintiffs Frank Barber and his son, Mario, brought an action against defendant Farmers Insurance Exchange after it refused to provide coverage in connection with an accident involving Mario. The case came before the trial court on cross-motions for summary judgment. The court granted Farmers' motion for summary judgment and denied the Barbers' motion. The Barbers appeal from that disposition. We affirm.

FACTS

On March 21, 1983, Mario Barber, a minor, drove an uninsured motorcycle owned by a classmate into a car owned by Robert Bernards. At the time of the accident, Bernards was insured by Farmers, which paid him $608.34, less a deductible, for the damage to his car. This coverage was pursuant to the "uninsured motorist" provisions of that policy. Farmers then brought suit against Mario Barber under the subrogation provisions of Bernards' policy, to collect the amount it paid out for the damage to Bernards' car.

At the time of the accident, Mario's father, Frank Barber, had his 1974 Honda automobile insured under a policy also issued, coincidentally, by Farmers. Accordingly as a defense to the subrogation lawsuit, the Barbers claimed that Mario was entitled to coverage for the accident under Frank's policy and demanded that Farmers furnish Mario a defense to the lawsuit and indemnity for any judgment entered against him. Farmers denied responsibility, claiming that Frank's policy specifically excluded coverage for use of a non-owned motorcycle. After an extensive exchange of correspondence, Farmers eventually dismissed its suit, without prejudice, as not worth the effort of prosecuting in view of the resistance which was offered.

The Barbers subsequently filed this action against Farmers, claiming that Farmers had breached its contract of insurance by refusing to defend or indemnify Mario and raising an array of related claims, including intentional infliction of emotional distress, violations of insurance department regulations and statutes, breach of fiduciary duty, intentional interference with a property interest, and willful and malicious conduct. Following some discovery, cross-motions for summary judgment were filed.

The Barbers argued that while their Farmers policy defined "motor vehicle" to exclude motorcycles from non-owned vehicle coverage, all insurance policies issued in Utah must comply with the Motor Vehicle Safety Responsibility Act (the "SRA"), then in effect, which defined "motor vehicle" to include motorcycles. Farmers, on the other hand, while conceding the policy's motorcycle exclusion might be ineffective under the SRA as applied to the named insured, argued that the SRA did not require the same coverage for Mario, a "relative" of the named insured.

The trial court took a somewhat different tack, concluding that, to the extent the SRA and the No-Fault Insurance Act are inconsistent in their definitions of "motor vehicle," the No-Fault act governs. Since the term "motor vehicle" under the No-Fault act excludes motorcycles, it was permissible for the policy to do likewise. Therefore, Mario was not covered by the policy and Farmers could not be held responsible for damages caused by Mario's use of the motorcycle. Consequently, the court granted Farmers' motion for summary judgment and dismissed the Barbers' complaint.

Before turning to an evaluation of the correctness of the court's ruling, we pause to review the somewhat convoluted statutory scheme in effect when the accident occurred as well as some ostensibly applicable cases.

STATUTORY BACKGROUND

At the time of the accident, the SRA provided that an automobile driver who did not carry public liability insurance and who was in an accident that caused bodily injury, death, or property damage in excess of $400 had to post security in an amount specified by the Department of Public Safety. Utah Code Ann. § 41-12-5(a) (1981) (repealed 1985 Utah Laws, ch. 242, § 58, effective July 1, 1986). The effect of the SRA was to induce most car owners to acquire public liability insurance. See Malan v. Lewis, 693 P.2d 661, 665 (Utah 1984).

The No-Fault Insurance Act, Utah Code Ann. §§ 31-41-1 to 31-41-13.4 (1985), enacted later, 1973 Utah Laws, ch. 55, adopted an entirely different approach. See Malan v. Lewis, 693 P.2d at 666. It provided a limited remedy for all persons injured in an automobile accident by requiring every automobile owner to purchase a no-fault insurance policy as a condition of registering his or her automobile. Id. However, sections 31-41-4 and 31-41-5 of the No-Fault act additionally required every automobile owner either to purchase public liability insurance that qualified under the SRA or to provide alternative security. The combined effect of the No-Fault act and the SRA was to require all owners of Utah-registered automobiles, other than those few able and inclined to post security, to carry liability insurance as consistent with the SRA. See Malan v. Lewis, 693 P.2d at 666; Allstate Ins. Co. v. United States Fidelity & Guar. Co., 619 P.2d 329, 331-33 (Utah 1980).

The term "motor vehicle" was defined under the SRA as follows:

"Motor vehicle" means every self-propelled vehicle which is designed for use upon a highway, including trailers and semitrailers designed for use with such vehicles (except traction engines, road rollers, farm tractors, tractor cranes, power shovels, and well-drillers) and every vehicle which is propelled by electric power obtained from overhead wires but not operated upon rails.

Utah Code Ann. § 41-12-1(e) (1981).

Under the No-Fault act, "motor vehicle" meant "any vehicle of a kind required to be registered under Title 41, but excluding, however motorcycles." Utah Code Ann. § 31-41-33(1) (1985).

While the SRA and the No-Fault act were both repealed by the Legislature incident to recodification of the state's insurance laws, 1985 Utah Laws, ch. 242, § 58, effective July 1, 1986, their concepts have been carried forward. "References to the former 'Safety Responsibility Act' under former Chapter 12, Title 41, are considered to refer to the corresponding provisions" of the "Financial Responsibility of Motor Vehicle Owners and Operators Act," now in Chapter 12a of Title 41. Utah Code Ann. § 41-12a-102 (1987). Comparable provisions of the No-Fault Insurance Act, formerly under Title 31, are now codified in Utah Code Ann. § 31A-22-301 to 31A-22-310 (1986). However, the new insurance code has adopted the same definition of motor vehicle as the former SRA, which does not exclude motorcycles, for purposes of motor vehicle insurance. Utah Code Ann. § 31A-22-301(1) (1987) (incorporating by reference Utah Code Ann. § 41-12a-103(4) (1987); compare Utah Code Ann. § 41-12-1(e) (1981)).

PRIOR CASE LAW

There has been a flurry of cases involving the peculiarities of motorcycle insurance coverage. We find none of these cases directly applicable, however, to the instant case. In particular, we agree with the trial court that Coates v. American Economy Ins. Co., 627 P.2d 92 (Utah 1981), is not dispositive of any issue raised by the parties in this case, despite the Barbers' repeated claim that it is somehow controlling.

Coates involved a personal injury action brought by the parents of an insured decedent who was killed when the motorcycle he was operating collided with a truck. The No-Fault Insurance Act provided insurance coverage for "personal injuries" sustained by the insured when injured in an accident in this state involving any "motor vehicle." Utah Code Ann. § 31-41-7(1)(a) (1985). The defendant insurance company argued that since the decedent was riding a motorcycle not listed in its policy and was neither driving nor occupying a "motor vehicle" as defined by the No-Fault act, he was specifically excluded from coverage. 627 P.2d at 93. The Utah Supreme Court rejected that argument, finding there was no requirement that the insured be operating or occupying the "motor vehicle"--he or she must only be in an accident involving a motor vehicle. Id. at 93-94. Since the decedent's motorcycle collided with a truck, there was no question that the accident involved a motor vehicle, namely the truck. Id. at 94. The Coates case dealt only with the No-Fault act's "motor vehicle" definition as it relates to insurance coverage for personal injuries, an entirely different issue from the one presented in this case, which involves a policy's motorcycle exclusion as it relates to property damage.

The most recent Utah Supreme Court case dealing with insurance coverage and motorcycles, Hind v. Quilles, 745 P.2d 1239 (Utah 1987) (per curiam), simply followed Clark v. State Farm Mut. Auto. Ins. Co., 743 P.2d 1227 (Utah 1987), which is likewise not applicable to the issues in this case. In Clark, the plaintiffs' son was killed when an uninsured motorist negligently hit the motorcycle the son was operating, which was owned by the son but not insured. His parents tried to recover under an uninsured motorist clause of an insurance policy issued on their car. The uninsured motorist clause, however, did not apply if the insured was driving a vehicle owned by him, unless the vehicle was specifically described in the declarations of the policy or properly characterized as either a temporary substitute or a newly acquired vehicle. The Clarks conceded that the motorcycle was none of the above and was therefore excluded from coverage under the policy's terms, but argued that the exclusion was nonetheless against the...