Beckler v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 22 April 1999
• Docket Number: No. 1 CA-CV 97-0364.,1 CA-CV 97-0364.
• Citation: 195 Ariz. 282,987 P.2d 768
• Parties: Charles BECKLER and Linda Beckler, husband and wife; Matthew Beckler, a single person, Plaintiffs-Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellant.
• Court: Arizona Court of Appeals

987 P.2d 768

195 Ariz. 282

Charles BECKLER and Linda Beckler, husband and wife; Matthew Beckler, a single person, Plaintiffs-Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellant.

No. -0364.

Court of Appeals of Arizona, Division 1, Department A.

April 22, 1999.

Review Denied October 26, 1999.

Jones, Skelton & Hochuli by Ronald W. Collett, David C. Lewis, Phoenix, Attorneys for Defendant-Appellant.

Bruce A. Giles, Esq., Phoenix, Attorney for Plaintiffs-Appellees.

OPINION

PATTERSON, Presiding Judge.

¶ 1 State Farm Mutual Automobile Insurance Company (State Farm) and its insureds (the Becklers) filed cross-motions for summary judgment regarding whether Nebraska or Arizona law applied to stacking of uninsured motorist coverage. The parties stipulated that Arizona law would permit stacking while Nebraska law would not. The trial court ruled that Arizona law applied and State Farm appealed.

FACTS

¶ 2 Plaintiffs Charles and Linda Beckler purchased automobile insurance on multiple vehicles from State Farm. Each vehicle was covered by a separate insurance policy. At issue is the insurance policy covering a 1984 Jeep Cherokee. Although the Becklers lived in Nebraska and purchased the insurance policy in Nebraska, their son, Matthew, brought the Jeep with him to Arizona where he attended college. Charles and Linda Beckler were the named insureds and by the terms of the policy Matthew was an "additional insured" covered by the policy. The Becklers' State Farm agent understood that Matthew and the Jeep would be in Arizona during the school year.

¶ 3 In April 1995, Matthew was walking through a parking lot in Phoenix, Arizona, when he was struck and severely injured by an uninsured Arizona motorist. State Farm paid Matthew $25,000 pursuant to the Becklers' uninsured motorist coverage on another vehicle.¹ Thereafter, Matthew sought an additional payment of $25,000 pursuant to the uninsured motorist coverage on the Jeep.

¶ 4 The insurance policy on the Jeep did not contain a choice of law provision. The parties stipulated that stacking would be allowed if Arizona law applied but not if Nebraska law applied. In cross-motions for summary judgment, the Becklers asserted that Arizona law should apply. State Farm countered that Nebraska law should apply. The trial court granted summary judgment for the Becklers and State Farm appeals.

¶ 5 We have jurisdiction pursuant to Arizona Revised Statutes Annotated (A.R.S.) sections 12-120.21 and 12-2101(B).

DISCUSSION

A. Standard of Review

¶ 6 The trial court may grant summary judgment when no material dispute exists and the movant is entitled to judgment as a matter of law. Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). The parties do not dispute the facts; therefore, our review is a de novo review of the trial court's application of the law. Gonzalez v. Satrustegui, 178 Ariz. 92, 97, 870 P.2d 1188, 1193 (App.1993); Bill Alexander Ford, Lincoln Mercury, Inc. v. Casa Ford, Inc., 187 Ariz. 616, 618, 931 P.2d 1126, 1128 (App.1996) (choice of law is reviewed de novo).

B. The Parties' Stipulation

¶ 7 State Farm first asks us to relieve it of the parties' stipulation concerning Nebraska and Arizona law, alleging that State Farm made a mistake of law. State Farm asserts that, when entering into the stipulation, it mistakenly relied on State Farm Mutual Automobile Insurance Co. v. Lindsey, 182 Ariz. 329, 897 P.2d 631 (1995). In Lindsey, the Arizona Supreme Court addressed a specific State Farm clause, referred to as the "other vehicle" clause, and stated that the clause was not sufficiently specific to prevent stacking of insurance policies under Arizona law. Id. at 331, 897 P.2d at 633. However, State Farm asserts that a recent Division Two case changed the law with respect to stacking in this case. See Farmers Ins. Co. v. Voss, 188 Ariz. 297, 935 P.2d 875 (App.1996)

. In Voss, the court reviewed a policy clause that provided that the total amount payable under all policies could not exceed limits provided by a single policy with the highest liability limits. Id. at 298, 935 P.2d at 876. The Voss court held this clause was sufficient to prevent stacking under Arizona law. Id. The Jeep policy contained a provision similar to the one reviewed in the Voss case.

¶ 8 We do not relieve State Farm of the stipulation for several reasons. First, we do not agree with its characterization of this as a mistake of law. Second, the Voss decision was issued several months before State Farm filed its motion for summary judgment, yet State Farm did not present the Voss decision or seek relief from the stipulation from the trial court. Third, the State Farm policy does not contain language identical to that reviewed in Voss; thus, it is not conclusive that the interpretation would be the same. Finally, State Farm could have asserted, at any time, that language in its policy prevented stacking whether or not the Voss decision existed. We decline to review these issues because an appellate court does not address issues presented for the first time on appeal. MacCollum v. Perkinson, 185 Ariz. 179, 189, 913 P.2d 1097, 1107 (App.1996).

C. Choice of Law

¶ 9 State Farm argues that Division Two's decision in Government Employees Insurance Co. v. Fenton, 164 Ariz. 440, 793 P.2d 1107 (App.1989), is controlling. In Fenton, Division Two held that Arizona's underinsured motorist statute had no applicability to a policy issued in Texas, to a Texas resident, covering a vehicle registered and principally garaged in Texas. Id. at 442, 793 P.2d 1107, 793 P.2d at 1109. State Farm further argues that even if Fenton is not controlling, Nebraska law should apply under the Restatement (Second) of Conflict of Laws § 193 (1971) (Restatement). The Becklers argue that, under both Fenton and the Restatement § 193, Arizona law should apply because the parties understood Arizona to be the principal location of the insured risk.

1. Fenton

¶ 10 State Farm alleges that the trial court erred when it determined that Arizona law applied, arguing that Fenton is controlling authority. The Becklers argue that Fenton is persuasive, but it supports their position, not State Farm's.

¶ 11 In Fenton, the plaintiff and her husband were involved in an auto accident in Tucson, Arizona. 164 Ariz. at 440, 793 P.2d at 1107. They were in a car owned by plaintiff, but not insured by defendant. Id. at 440-41, 793 P.2d at 1107-08. Plaintiff settled her claim against the driver of the other vehicle. Id. at 441, 793 P.2d at 1108. She then sought additional coverage under her underinsured motorist coverage on the uninvolved car which remained in Texas. Id. The insurance company denied coverage arguing that under Texas law, the underinsured motorist coverage is "reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle." Id. (quoting Tex. Ins.Code Ann. art. 5.06-1(5)). Thus, under Texas law, plaintiff was not entitled to coverage because she "recovered more than her underinsured policy limits from the driver of the other vehicle." Id. Plaintiff argued that Arizona law should apply and that Arizona law does not permit this type of offset. Id. She further argued that the vehicle involved in the accident was principally garaged in Arizona, since she had moved to Arizona the day before. Although plaintiff's move was a disputed fact, the court presumed the claim true for purposes of review. Id.

¶ 12 The Fenton court held that Texas law applied because Arizona's under/uninsured motorist statute limits application of the statute to policies "delivered or issued" in Arizona for vehicles registered or "principally garaged" in Arizona. Id. Further, the Fenton court found that Texas law should apply because the policy was issued for a vehicle that was registered in Texas and principally garaged in Texas. Id. The language limiting applicability to policies issued or delivered in Arizona has since been deleted from the statute. See A.R.S. § 20-259.01 (1995). Therefore, we find Fenton distinguishable.² Instead, we apply Restatement § 193.

2. Restatement § 193

¶ 13 In the absence of a choice of law provision, we apply our own choice of law rules to determine which law to apply to substantive issues such as stacking of insurance. See Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 206, 841 P.2d 198, 201 (1992)

(issue relating to deficiency of the judgment was substantive and, therefore, determined by Arizona's choice of law). See also Frost v. Liberty Mut. Ins. Co., 828 S.W.2d 915, 920 (1992) (stacking of uninsured motorist coverage is a substantive issue).

The Jeep policy contains no express provision for the governing law; therefore, Arizona's choice of law rules apply.

¶ 14 The dissent argues that we have ignored the choice of law issues raised and the settled law, while making quantum leaps to apparently achieve result-oriented determinations. While relying upon Rhody v. State Farm Mutual Insurance Co., 771 F.2d 1416 (10th Cir.1985), the dissent overlooks the distinction between our matter and Rhody. See op. at ¶ 42.

¶ 15 In Rhody, an Oklahoma statute required the use of Texas' anti-stacking provision because the insurance policy contained no choice of law provision. The court found that the Oklahoma statute restricts application of choice of law principles, stating: "Absent any such specific manifestation of intent to be bound by the laws of a particular jurisdiction, the law of the place where the contract was made governs interpretation of the contract." 771 F.2d at 1420. We have no similar statutory provision in Arizona restricting our choice of law rules.

¶ 16 Arizona follows the Restatement for its choice of law. Cardon, 173 Ariz. at 207, 841 P.2d at 202. We start with a review of § 193:

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