Calvert v. Farmers Ins. Co. of Arizona, 17675-PR

Citation144 Ariz. 291,697 P.2d 684
Decision Date13 March 1985
Docket NumberNo. 17675-PR,17675-PR
PartiesJack CALVERT, Plaintiff/Appellant, v. FARMERS INSURANCE COMPANY OF ARIZONA, Defendant/Appellee.
CourtSupreme Court of Arizona

Miller & Pitt by John L. Tully, Tucson, for plaintiff/appellant.

Chandler, Tullar, Udall & Redhair by D.B. Udall, Tucson, for defendant/appellee.

GORDON, Vice Chief Justice:

Farmers Insurance Company of Arizona (defendant) petitioned this Court for review of the decision of the Court of Appeals, Calvert v. Farmers Insurance Company of Arizona, --- Ariz. ---, 707 P.2d 697 (1984) which struck down an "other vehicle" exclusion clause as violative of the public policy underlying Arizona's Uninsured Motorists Act (hereafter referred to as the "Act" or "Statute"), A.R.S. § 20-259.01. We granted review in this case to settle a conflict in the Court of Appeals decisions concerning the validity of "other vehicle" exclusion clauses in uninsured motorist coverage. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and Ariz.R.Civ.App.P. 23.

The facts in this case are not in dispute. On January 3, 1983, Michael Calvert, age 18, while operating a motorcycle was struck and fatally injured by an uninsured motor vehicle. The collision was caused by the negligence of the uninsured motorist. At the time of the accident, Jack Calvert, Michael's father and plaintiff in this case, was the named insured under a motor vehicle liability insurance policy issued by Farmers Insurance Company of Arizona (hereafter referred to as "Farmers").

Subsequent to his son's death, Jack Calvert made a claim upon Farmers for uninsured motorist benefits. Calvert's insurance policy contained $30,000 in uninsured motorist coverage. Part II of the policy states the coverage for uninsured motorist:

"We will pay damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. The bodily injury must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle." (emphasis in original)

Michael Calvert was a resident of his father's household at the time of the accident and consequently an "insured person" under the terms of the Farmers' uninsured motorist coverage:

"As used in this Part:

"1. Insured person means:

"a. You or a family member. 1

"b. Any other person while occupying your insured car.

* * * " (emphasis in original.)

Farmers conceded that Michael was an insured under the policy but denied Jack Calvert's claim for uninsured motorist benefits on the basis of an "other vehicle" exclusion clause contained in the uninsured motorist section of the policy, which reads:

"This coverage does not apply to bodily injury sustained by a person:

"1. While occupying a motor vehicle owned by you or a family member for which insurance is not afforded under this policy or through being struck by that motor vehicle." (emphasis in original)

Farmers took the position that the exclusion applied because Michael Calvert sustained his fatal injuries while driving a motorcycle that was owned by either Michael or his father but that was not insured under the policy.

A short time later, Jack Calvert brought a Declaratory Judgment action against Farmers seeking a declaration that the "other vehicle" exclusion clause contained in the uninsured motorist coverage was invalid and unenforceable. The parties filed cross motions for summary judgment. Concluding that the policy did not provide uninsured motorist coverage for the accident in this case, the trial court granted Farmers' motion for summary judgment and denied plaintiff's. The Court of Appeals reversed, holding that the "other vehicle" exclusion clause in the Farmers' insurance policy violated the public policy underlying Arizona's Uninsured Motorist Statute, A.R.S. § 20-259.01.

We agree with the Court of Appeals that the Farmers' "other vehicle" exclusionary provision contravenes the policy underlying our uninsured motorist statute. We vacate the Court of Appeals' opinion, however, to fully explain our reasoning.

The problems caused by the financially irresponsible and uninsured motorist date back to the advent of the mass produced automobile and ultimately prompted our Legislature to enact the Uninsured Motorist Act, A.R.S. § 20-259.01. See Austin & Risjord, The Problem of the Financially Irresponsible Motorist, 24 U.Kansas City L.Rev. 82 (1955); Ward, The Uninsured Motorist: National and International Protection Presently Available and Comparative Problems in Substantial Similarity, 9 Buffalo L.Rev. 283-320 (1960); Murphy & Netherton, Public Responsibility and Uninsured Motorist, 47 Georgetown L.J. 700 (1959); Collins, Implementation of Public Policy Against the Financially Irresponsible Motorist, 19 Brooklyn L.Rev. 11 (1952); see also A. Widiss, A Guide to Uninsured Motorist Coverage (1969). Consequently, our Uninsured Motorist statute mandates that coverage be provided to insure against bodily injury caused by uninsured motorists:

" § 20-259.01. Motor vehicle liability policy; uninsurance required; underinsurance optional; definitions; subrogation

"A. No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state, with respect to any motor vehicle registered or principally garaged in this state, unless coverage is provided in the policy or supplemental to the policy, in limits for bodily injury or death prescribed in subsection B of this section, but not less than the limits prescribed in § 28-1102, under provisions filed with and approved by the director, for the protection of persons insured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. For the purposes of the coverage provided for pursuant to this section, 'uninsured motor vehicles', subject to the terms and conditions of such coverage, includes any insured motor vehicle if the liability insurer of the vehicle is unable to make payment on the liability of its insured, within the limits of the coverage, because of insolvency."

Since § 20-259.01 controls the uninsured motorist protection mandated in Arizona, to resolve this case we must interpret this statute and determine whether it authorizes an "other vehicle" exclusion. This is a matter of statutory construction.

The cardinal rule of statutory interpretation is to determine and give effect to the legislative intent behind the statute. Phoenix Title & Trust Co. v. Burns, 96 Ariz. 332, 395 P.2d 532 (1964); Payne v. Knox, 94 Ariz. 380, 385 P.2d 514 (1963). In determining the Legislature's intent in enacting a statute, this Court will look to the policy behind the statute and the evil which it was designed to remedy. Cohen v. State, 121 Ariz. 6, 588 P.2d 299 (1978); City of Mesa v. Salt River Project Agr. Imp. & Power District, 92 Ariz. 91, 373 P.2d 722 (1962). Additionally, we will look to the words, context, subject matter, and effects and consequences of the statute. State ex rel. Flournoy v. Mangum, 113 Ariz. 151, 548 P.2d 1148 (1976).

Our uninsured motorist statute establishes a public policy that every insured is entitled to recover damages he or she would have been able to recover if the uninsured had maintained a policy of liability insurance in a solvent company. Transportation Ins. Co. v. Wade, 106 Ariz. 269, 475 P.2d 253 (1970); Dairyland Ins. Co. v. Lopez, 22 Ariz.App. 309, 526 P.2d 1264 (1974). The statute is remedial, and should be liberally construed in order to carry out the intent of the Legislature. Williams v. Williams, 23 Ariz.App. 191, 531 P.2d 924 (1975); Reserve Ins. Co. v. Staats, 9 Ariz.App. 410, 453 P.2d 239 (1969). The purpose of the statute is to afford protection to victims of financially irresponsible drivers. Evenchik v. State Farm Ins. Co., 139 Ariz. 453, 679 P.2d 99 (App.1984); see Geyer v. Reserve Ins. Co., 8 Ariz.App. 464, 447 P.2d 556 (1968).

We believe that the exclusion provision in this case contravenes the public policy underlying the Uninsured Motorist Act. The Act mandates that every policy issued have at least the minimum limits for uninsured motorist protection. In Arizona, such coverage is not voluntary as in other jurisdictions. Furthermore, the statute does not contain numerous exceptions to coverage as in the uninsured motorist statutes of other jurisdictions.

The only exception to the mandatory requirement of uninsured motorist protection under the Act is contained in A.R.S. § 20-259.01(D), which expressly excludes vehicles "used as public or livery conveyances or rented to others or which are used in the business primarily to transport property or equipment." If the Legislature had intended to include additional exclusions, such as an "other vehicle" exclusion, it would have expressly done so. Cf. McClellan v. Sentry Indemnity Co., 140 Ariz. 558, 683 P.2d 757 (App.1984) (government owned vehicle exclusion).

Consequently, because of the strong public policy mandating coverage for innocent victims from tragic negligent acts of uninsureds, we will not construe the uninsured motorist statute to reduce coverage when it is silent on "other vehicle" exclusions. This conclusion is in accord with the vast majority of jurisdictions that have dealt with this issue. About twenty-six states have held that an "other vehicle" exclusion clause similar to the one herein violates the public policy underlying their respective uninsured motorist statutes. See Richards v. State Farm Mut. Auto. Ins. Co., 122 Wis.2d 172, 361 N.W.2d 680 (1985); Lindahl v. Howe, 345 N.W.2d 548 (Iowa 1984); Harvey v. Travelers Indem. Co., 188 Conn. 245, 449 A.2d 157 (1982); Jacobson v. Implement...

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