Campbell v. Farmers Ins. Co. of Arizona

Decision Date06 August 1987
Docket NumberCA-CIV,No. 1,1
Citation745 P.2d 160,155 Ariz. 102
PartiesDeborah CAMPBELL, surviving widow of Kenneth Campbell, individually and on behalf of Jason Leslie Campbell and Adam Michael Campbell, surviving minor children of Kenneth Campbell, Plaintiffs-Appellants, v. FARMERS INSURANCE COMPANY OF ARIZONA, an Arizona corporation, Defendant-Appellee. 9048.
CourtArizona Court of Appeals

Langerman, Begam, Lewis and Marks by Samuel Langerman, Mitchell E. Cohen and Richard W. Langerman, Phoenix, for plaintiffs-appellants.

Holloway & Thomas, P.C. by Paul W. Holloway and Thomas P. Burke II, Phoenix, for defendant-appellee.

HAIRE, Chief Judge.

The sole issue raised in this appeal concerns the interpretation of the each person/each accident limitations of underinsured motorist coverage in a policy issued by the appellee, Farmers Insurance Company of Arizona.

The facts are undisputed. Kenneth Campbell was killed in an automobile accident on January 28, 1984. At that time, he was insured by an automobile liability policy issued by Farmers Insurance Company of Arizona ("Farmers"). The policy provided underinsured motorist coverage with limits of $100,000 for each person and $300,000 for each accident.

Kenneth Campbell was survived by his wife, Deborah Campbell, and two minor sons ("Campbells"). None of the survivors was involved in or witnessed the accident. The surviving Campbells filed a wrongful death action against the adverse driver and settled for his full policy limit of $25,000. The Campbells then sued Farmers seeking a declaratory judgment that each of them was entitled to the "each person" limit of the policy's underinsured motorist coverage, for the total $300,000 "per accident" coverage. Farmers contends that the "each person" limit of liability is the maximum coverage available for all damage claims arising from the injury or death of a single victim 1 and that its maximum liability is therefore $100,000. The parties have stipulated that each of the three surviving Campbells suffered damages in excess of $100,000 by reason of Kenneth Campbell's death, that a minimum of $100,000 was due and owing, and that Farmers has already paid $100,000.

Pursuant to the parties' cross-motions for summary judgment, the trial court granted summary judgment in favor of Farmers, holding that the each person underinsured liability limit ($100,000) applies.

The policy issued to Kenneth Campbell provided underinsured motorist coverage of $100,000 for each person suffering bodily injuries, including death, in a single accident and $300,000 per accident. Part II of the policy, pertaining to uninsured motorist coverage, applies to underinsured motorist coverage as well. It provides:

"The limits of liability shown in the Declarations apply subject to the following:

"1. The limit for 'each person' is the maximum for bodily injury sustained by any person in any one accident. Any claim for loss of consortium or injury to the relationship arising from this injury shall be included in this limit.

"2. Subject to the limit for 'each person,' the limit for 'each accident' is the maximum for bodily injury sustained by "Bodily injury" is defined in another part of the policy as "bodily injury to or sickness, disease or death of any person."

[155 Ariz. 104] two or more persons in any one accident."

The Campbells argue that the Farmers policy is ambiguous and therefore must be construed against the insurer. See Mid-Century Ins. Co. v. Samaniego, 140 Ariz. 324, 326, 681 P.2d 476, 478 (App.1984). They maintain that the underinsured endorsement does not explain when the $100,000 limit applies or when the $300,000 limit applies. "Bodily injury," they contend, is not adequately defined because it is unclear whether "bodily injury" is limited to physical trauma or also includes psychiatric or psychological trauma. They further urge that under the limits of liability applicable to the underinsured coverage, the word "death" is not mentioned and it is unclear how the stated limits apply when a death is involved. Lastly, they point out that "loss of consortium" is not defined in the policy and that it is a term not commonly understood by persons untrained in law or insurance. Similarly, they suggest that "injury to the relationship" is equally unclear to someone unversed in the law.

The precise question presented is one of first impression in Arizona. But see Herring v. Lumbermen's Mut. Cas. Co., 144 Ariz. 254, 697 P.2d 337 (1985) (concerning uninsured motorist coverage). Despite the many jurisdictions that have considered similar questions concerning the applicability of each person/each accident limitations, we have found none that have considered it in the context of underinsured motorist coverage. See, e.g., Williams v. Standard Acc. Ins. Co., 188 F.2d 206 (5th Cir.1951) (automobile liability coverage); Montgomery v. Farmers Ins. Group, 585 F.Supp. 618 (S.D.Ind.1984) (automobile liability coverage); Smith v. State Farm Mut. Auto. Ins. Co., 252 Ark. 57, 477 S.W.2d 186 (1972) (automobile liability coverage); Abellon v. Hartford Ins. Co., 167 Cal.App.3d 21, 212 Cal.Rptr. 852 (1985) (automobile liability coverage); State Farm Mut. Auto. Ins. Co. v. Ball, 127 Cal.App.3d 568, 179 Cal.Rptr. 644 (1981) (automobile liability coverage); United Services Auto. Assoc. v. Warner, 64 Cal.App.3d 957, 135 Cal.Rptr. 34 (1976) (automobile liability coverage); Thompson v. St. Paul Fire & Marine Ins. Co., 108 Idaho 802, 702 P.2d 840 (1985) (medical malpractice insurance); Travelers Indem. Co. v. Cornelsen, 272 Md. 48, 321 A.2d 149 (App.1974) (automobile liability coverage); Bilodeau v. Lumbermens Mutual Cas. Co., 392 Mass. 537, 467 N.E.2d 137 (1984) (automobile liability coverage); Auto Club Ins. Assoc. v. Lanyon, 142 Mich.App. 108, 369 N.W.2d 269 (1985) (automobile liability coverage); New Hampshire Ins. Co. v. Bisson, 122 N.H. 747, 449 A.2d 1226 (1982) (uninsured motorist coverage); City of Austin v. Cooksey, 570 S.W.2d 386 (Tex.1978) (liability under Texas Tort Claims Act); see generally Annot., Construction and Application of Provision in Liability Policy Limiting the Amount of Insurer's Liability to One Person, 13 A.L.R.3d 1228 (1967); 8A Appleman, Insurance Law and Practice § 4893 (1981). The majority of these cases have held that claims for loss of consortium and similar type claims are included within the "each person" limitation.

For example, in Montgomery v. Farmers Ins. Group, the United States District Court interpreted an "each person" provision that limited the insurer's liability for bodily injury to "all damages arising out of bodily injury sustained by one person in any one occurrence." 585 F.Supp. at 619. The policy defined "damages" as "includ[ing] damages for care and loss of services." Id. It defined "bodily injury" as "bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by a person." Id. The court noted that only the husband had sustained bodily injury in the accident and that the wife's claim for loss of consortium was encompassed within the "damages" arising out of her husband's bodily injury. Id. Thus, the "each person" limit on bodily injury liability, covering all damages stemming from the injury of one person in one accident, applied to the wife's claim as well. Id.

Similarly, in Williams v. Standard Acc. Ins. Co., the Fifth Circuit Court of Appeals

                [155 Ariz. 105] concluded that the policy unambiguously limited its "each person" liability coverage to the person injured or killed in the accident rather than persons who suffer damages as a result of those injuries.  188 F.2d at 208.   The "each person" limitation in the policy expressly included "damages for care and loss of services, arising out of bodily injury, including death at any time resulting therefrom, sustained by one person in any one accident."  Id. at 207, n. 1

Several California cases have also considered the applicability of each person/each accident liability limitations, with conflicting results. In United Services Auto. Assoc. v. Warner, the court held that the "each person" limit precluded a separate claim for loss of consortium. 64 Cal.App.3d at 965, 135 Cal.Rptr. at 38. The policy provided that "[t]he limit of bodily injury liability ... as applicable to 'each person' is the limit of the company's liability for all damages, including damages for care and loss of services, arising out of bodily injury sustained by one person...." Id., 64 Cal.App.3d at 961, 135 Cal.Rptr. at 36 (emphasis added). The court concluded that loss of consortium was not equivalent to bodily injury. Id., 64 Cal.App.3d at 965, 135 Cal.Rptr. at 38. Another court reached a similar result in State Farm Mut. Auto. Ins. Co. v. Ball, in which the policy stated " 'bodily injury sustained by one person' as used herein, shall be deemed to include all injury and damages sustained by others as a consequence of such bodily injury." 127 Cal.App.3d at 572, 179 Cal.Rptr. at 646 (emphasis added).

In Abellon v. Hartford Ins. Co., the court held that Warner and Ball were not controlling because the policies in those cases contained language qualifying provisions similar to the provisions used in the Hartford policy before it. 167 Cal.App.3d at 30-31, 212 Cal.Rptr. at 858-859. The Hartford policy merely stated that "[t]he most we will pay for all damages resulting from bodily injury to any one person caused by any one accident is the limit of Bodily Injury Liability shown in this endorsement for 'each person.' " 2 Id., 167 Cal.App.3d at 24-25, 212 Cal.Rptr. at 853. Unlike the policies in Warner and Ball, the Hartford policy never specifically defined "all damages" as including loss of "services." Id., 167 Cal.App.3d at 31, 212 Cal.Rptr. at 858. The court suggested that an insurer seeking to limit its "per person" liability to include loss of consortium claims should do so expressly. Id., 167...

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