Bengtson v. USAA Property & Cas. Ins.

• Decision Date: 11 May 2000
• Docket Number: No. 99CA0163.,99CA0163.
• Citation: 3 P.3d 1233
• Parties: Marian P. BENGTSON, Petitioner-Appellant and Cross-Appellee, v. USAA PROPERTY AND CASUALTY INSURANCE, Respondent-Appellee and Cross-Appellant.
• Court: Colorado Court of Appeals

3 P.3d 1233

Marian P. BENGTSON, Petitioner-Appellant and Cross-Appellee, v. USAA PROPERTY AND CASUALTY INSURANCE, Respondent-Appellee and Cross-Appellant.

No. 99CA0163.

Colorado Court of Appeals, Div. V.

May 11, 2000.

Gerald C. Sloat, P.C., Gerald C. Sloat, Boulder, Colorado; Pearson, Milligan & Horowitz, P.C., Jane G. Ebisch, Denver, Colorado, for Plaintiff-Appellant and Cross-Appellee.

Walberg & Dagner, P.C., Wendelyn K. Walberg, Englewood, Colorado, for Defendant-Appellee and Cross-Appellant. Opinion by Judge ROTHENBERG.

In this declaratory judgment action, plaintiff, Marian P. Bengtson, appeals the summary judgment entered in favor of the defendant, USAA Property and Casualty Insurance (USAA). We affirm.

I.

The facts are undisputed. Bengtson's husband was killed in an automobile accident while driving his daughter's car in Weld County. Because the other driver (tortfeasor) was at fault, the tortfeasor's insurer paid Bengtson its $100,000 policy limit.

Bengtson and her husband were residents of Oklahoma at the time of the accident, and were insured under two separate State Farm policies for uninsured/underinsured motorist protection (UM/UIM) with policy limits of $100,000 each. Oklahoma law did not prevent intra-company stacking of the policies and did not allow State Farm to offset the amount paid by the tortfeasor. Accordingly, State Farm paid Bengtson its combined per person limit of $200,000.

The daughter's car was insured under a Colorado policy issued by USAA, with UM/ UIM limits of $25,000 per person. Bengtson demanded that USAA pay her its policy limit, and USAA refused. Bengtson then filed this declaratory judgment action seeking a determination of the coverage available under USAA's policy.

The policy defines an underinsured motor vehicle as one whose policy limit for bodily injury liability is less than insurer's limit of liability for UM/UIM coverage. Based on this provision, USAA moved for summary judgment, contending that because the tortfeasor was insured for four times the UM/ UIM limit of liability in USAA's policy, he was not an underinsured motorist under the plain language of the policy.

The trial court denied the motion, and ruled that § 10-4-609(2) and (4), C.R.S.1999, permitted Bengtson to stack the limits of her UM/UIM coverage to determine whether the tortfeasor was underinsured. Because Bengtson's total UM/UIM coverage after stacking was $225,000, the trial court concluded the tortfeasor was underinsured and that USAA was potentially liable under its policy. However, the trial court did not treat this denial as a final determination on the merits.

USAA then filed a second motion for summary judgment, contending that its policy required USAA's limit of liability to be offset by the tortfeasor's liability payment, which would reduce USAA's liability to zero. Bengtson filed a cross motion for summary judgment. The trial court granted USAA's motion.

II.

Bengtson contends the trial court erred in determining that the offset for the tortfeasor's liability payment reduced USAA's liability to zero. We disagree.

Insurance policies are contracts and must be construed to carry out the intent of the parties. Whenever possible, the parties' intent must be ascertained from the policy language alone. In construing a policy, a court should give words their plain meaning according to common usage, and avoid strained constructions. Compton v. State Farm Mutual Automobile Insurance Co., 870 P.2d 545 (Colo.App.1993).

Unless there is an ambiguity in the terms of a policy, a court should avoid strained interpretations and should enforce an insurance contract as written. A provision is ambiguous when it is reasonably susceptible to more than one meaning. Compton v. State Farm Mutual Automobile Insurance Co., supra. Any ambiguities are to be construed against the drafter and in favor of the insured. Farmers Insurance Exchange v. Walther, 902 P.2d 930 (Colo. App.1995). The interpretation of an insurance contract is a question of law that we review de novo. Farmers Insurance Exchange v. Walther, supra.

As pertinent here, the USAA policy provides as follows:

LIMIT OF LIABILITY

. . . .

The limit of liability shall be reduced by all sums paid because of bodily injury or property damage by or on behalf of persons or organizations who may be legally responsible.

. . . .

OTHER INSURANCE

If there is other applicable similar insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you do not own shall be excess over any other collectible insurance.

(original emphasis).

The trial court held that the language in USAA's "limit of liability" provision was unambiguous and required that USAA's liability be reduced by the $100,000 paid on behalf of the tortfeasor. Bengtson contends this ruling is contrary to the holding in Compton v. State Farm Mutual Automobile Insurance Co., supra, and must be reversed. We agree that Compton is controlling, but we nevertheless conclude, under the facts of this case, that the trial court reached the correct result. See Rosa v. Warner Electrical Contracting, 870 P.2d 1210 (Colo.1994)(appellate court will uphold decision by trial court that has reached correct result, albeit using different reasoning than our own).

In Compton, the insured was a pedestrian who was struck by a car. The insured was covered by three UM/UIM policies: a State Farm policy with a $100,000 limit, and two other policies with limits of $25,000 each. After the accident, the tortfeasor's insurer paid its policy limit of $25,000. The insured's own $25,000 policies each paid $20,833.33. State Farm then contended that its limit of liability should be reduced by the amounts the insured had already received.

The State Farm policy contained a "limit of liability" provision which provided in relevant part that:

The most we will pay under this coverage will be ... the difference between the limits of liability of this coverage and the amount paid to the insured by or for any person or organization who may be held legally liable for the bodily injury ....

(original emphasis).

The policy also contained an "other insurance" provision which provided that:

If the insured sustains bodily injury as a pedestrian and other uninsured motor vehicle coverage applies:

a. the total limits of liability under all coverages shall not exceed that of the coverage with the highest limit of liability; and

b. we are liable only for our share. Our share is the per cent of the damages that the limit of liability of this coverage bears to the total of all uninsured motor vehicle coverage applicable to the accident.

(original emphasis).

State Farm contended, as USAA does here, that under its policy's "limit of liability" provision, the full amount contributed by the tortfeasor's insurer had to be offset against State Farm's liability. The Compton panel disagreed. That panel specifically declared only sections (a) and (b) of the "other insurance" provision to be in conflict, thus making the policy ambiguous. However, the Compton panel went on to state that, "[f]or similar reasons," the "limit of liability" provision had to be construed together with the "other insurance" provision. Compton v. State Farm Mutual Automobile Insurance Co., supra, 870 P.2d at 548.

The Compton panel held that the two provisions, when construed together, required the offset for the tortfeasor's payment to be proportionally shared among the three carriers of UM/UIM coverage. Otherwise, the panel concluded, the offset could be applied to each policy individually, defeating the plaintiff's reasonable expectations of obtaining coverage when she paid her premiums. Compton v. State Farm Mutual Automobile Insurance Co., supra.

In Kline v. American States Insurance Co., 924 P.2d 1150 (Colo.App.199...