Barth v. Allstate Ins. Co.

• Decision Date: 12 April 1999
• Docket Number: No. 42735-1-I,42735-1-I
• Citation: 95 Wn.App. 552,977 P.2d 6
• Court: Washington Court of Appeals
• Parties: Harrison V. BARTH, a single man, Appellant, v. ALLSTATE INSURANCE COMPANY, a corporation, Respondent.

Page 6

95 Wn.App. 552

977 P.2d 6

Harrison V. BARTH, a single man, Appellant, v. ALLSTATE INSURANCE COMPANY, a corporation, Respondent.

No. 42735-1-I.

Court of Appeals of Washington Division 1.

April 12, 1999.

Publication Ordered May 17, 1999.

Todd C. Nichols, Cogdill & Carter, Everett, for Appellant(s).

Irene M. Hecht, Keller Rohrback, Seattle, for Respondent(s).

WEBSTER, J.

Appellant Harrison Barth's mother purchased automobile insurance coverage for her Mitsubishi and Subaru vehicles from Allstate. After transferring title on the Mitsubishi to her son, Ms. Barth renewed her policy, neglecting to inform Allstate that she no longer owned the Mitsubishi. Barth did not obtain his own insurance on the Mitsubishi. While a passenger in the vehicle, Barth was seriously injured in an accident caused by the driver of his car. He sought to recover as a resident relative under the underinsured motorist (UIM) and personal injury protection (PIP) portions of his mother's policy. The trial court granted Allstate's motion for summary judgment.

We affirm because (1) the policy is not enforceable with respect to the Mitsubishi, in which Barth's mother had no insurable interest, (2) UIM coverage for Barth's accident is barred by a statutorily authorized and valid clause that excludes a vehicle owned by a resident relative and not insured under the policy, and (3) PIP coverage is barred by an exclusionary clause which is valid as applied here where the vehicle was owned by a resident relative.

BACKGROUND

Prior to October 1992, Barth's mother owned two automobiles, a 1991 Subaru and a 1988 Mitsubishi. She transferred title to the 1988 Mitsubishi to Barth, her adult son. The certificate of title for the Mitsubishi issued to Barth has an application date of October 5, 1992. There is no dispute that Barth owned the Mitsubishi on the date of the accident, February 7, 1993.

Allstate issued an automobile insurance policy to Ms. Barth, effective from October 22, 1992, to April 22, 1993. ¹ The declarations page of the policy lists both the 1991 Subaru and the 1988 Mitsubishi.

On February 7, 1993, Barth was a passenger in the Mitsubishi, which was being driven by Andrea Beem Maxwell, when the automobile was involved in an accident. Barth sustained serious injuries resulting in a diagnosis of incomplete quadriplegia. The accident occurred in Florida.

Barth sued Maxwell, but she has not been located for service. Barth has no insurance of his own and has received no recovery for the accident from any source.

After Allstate denied his claims under the UIM and PIP provisions of his mother's policy, Barth filed this action. The trial court granted summary judgment in favor of Allstate.

STANDARD OF REVIEW

This Court performs a de novo review of a summary judgment. See Gossett v. Farmers Ins. Co. of Wash., 133 Wash.2d 954, 962-63, 948 P.2d 1264 (1997). Facts and inferences are viewed in the light most favorable to the nonmoving party. See id. at 963, 948 P.2d 1264. Summary judgment is proper "when there are no material issues of disputed fact and the moving party is entitled to judgment as a matter of law." Id.; CR 56(c).

ANALYSIS

A. Ms. Barth Did Not Have an Insurable Interest in the Mitsubishi at the Time of the Accident, and the Policy Is Void with Respect to that Automobile

Preliminarily, we find that Ms. Barth did not have an insurable interest in the Mitsubishi at the time of the accident because she had transferred title to her son. Washington law requires that an individual have an insurable interest in property insured:

(1) No contract of insurance on property or of any interest therein or arising therefrom shall be enforceable except for the benefit of persons having an insurable interest in the things insured.

(2) "Insurable interest" as used in this section means any lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage.

RCW 48.18.040.

A person may obtain liability insurance despite having no financial interest in property if he or she may be held liable to third persons arising out of the ownership, maintenance or use of the property. See Truck Ins. Exchange v. Hanson, 42 Wash.2d 256, 257-59, 254 P.2d 494 (1953). But "[w]here the ownership of the property belongs elsewhere, payment of insurance premiums on the property does not give rise to an insurable interest." Gossett, 133 Wash.2d at 969, 948 P.2d 1264 (1997)(citing 3 LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE sec. 41:11, at 41-26 (3d ed.1995)).

In the present case, because the Mitsubishi was owned by Barth, his mother had no financial interest in it and may not be held legally liable for its use. Thus, Ms. Barth had no insurable interest in the Mitsubishi, and her policy is unenforceable with respect to the Mitsubishi. We may now turn to Barth's attempts to recover under his mother's policy as a resident relative.

B. Allstate's Exclusion Barring UIM Coverage for a Vehicle that Is Owned by a Resident Relative and Not Insured Under the Policy Does Not Conflict with the UIM Statute and Is Not Contrary to Public Policy

In his attempt to recover as a resident relative, Barth argues that Allstate's exclusion from underinsured coverage of a vehicle owned by a resident relative and not insured under the policy is void because the exclusion's language is overbroad and it is against public policy. A two-part test is applied to determine whether an underinsured exclusionary clause is valid: " 'Does the proposed exclusion conflict with the express language of the UIM statute? If not, is the exclusion contrary to the UIM statute's declared public policy?' " Greengo v. Pub. Employees Mut. Ins. Co., 135 Wash.2d 799, 806, 959 P.2d 657 (1998)(quoting Bohme v. PEMCO Mut. Ins. Co., 127 Wash.2d 409, 412, 899 P.2d 787 (1995)). An exclusionary clause is valid only if both questions are answered in the negative. See Greengo, 135 Wash.2d at 806, 959 P.2d 657.

Ms. Barth's policy provides underinsured coverage for herself and any resident relative. "Resident", as defined by the policy, "means the physical presence in your household with the intention to continue living there. Unmarried dependent children, while temporarily away from home will be considered residents if they intend to continue to live in your household." For the purposes of its summary judgment motion only, Allstate assumes that Barth was a "resident relative" of his mother as that term is defined in her policy.

The policy provides that underinsured coverage "does not apply to ... an insured person while in, on, getting into or out of, or while operating a motor vehicle which is not an insured motor vehicle but is owned by you or a resident relative." An "insured motor vehicle" is defined as "a motor vehicle ... described on the declarations page." Allstate argues that this exclusion bars coverage of Barth for the accident in the Mitsubishi because he is a resident relative and the coverage of the Mitsubishi was void.

Washington law provides that automobile liability policies must include underinsured coverage but allows for the exclusion of coverage for an automobile owned by a family member that is not insured under the liability portion of the policy. See RCW 48.22.030(2). The statute states:

No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles because of bodily injury, death, or property damage, resulting therefrom, except while operating or occupying a motorcycle or motor-driven cycle, and except while operating or occupying a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy.

RCW 48.22.030(2)(emphasis supplied).

1. Allstate's Exclusion Does Not Conflict with the Express Language of the Authorizing Statute

Barth argues that Allstate's exclusion does not comply with the authorizing statute and is overbroad. The statute allows for exclusion of a vehicle owned by a family member that is not insured under the liability portion of the policy, whereas Allstate's provision excludes a vehicle owned by a family member that is not an insured motor vehicle, that is, one not listed on the declarations page. To demonstrate the overbreadth that he argues, Barth provides an example: "Obviously, a vehicle can be described on a declarations page of a policy without having liability insurance apply, for example, under comprehensive coverage."

First, the distinction that Barth points to between the statutory language and that provided in Allstate's exclusion is insignificant, and the example he uses has little or no practical application. Any liability policy issued must include underinsured coverage. See RCW 48.22.030(2). Washington statute also allows insurers to eliminate the stacking of underinsured coverages:

The UIM statute authorizes insurers to prohibit "external stacking," which is the practice of adding together different policy coverages to increase available coverage limits: "The policy may provide that if an injured person has other similar insurance available to him under other policies, the total limits of liability of all coverages shall not exceed the higher of the applicable limits of the respective coverages." RCW 48.22.030(6). In the UIM context, "[t]he term 'similar insurance' is appropriately understood to be other underinsured motorist...