Carter v. Standard Fire Ins. Co.

• Decision Date: 06 February 2014
• Docket Number: No. 27340.,27340.
• Citation: 753 S.E.2d 515,406 S.C. 609
• Parties: Thomas M. CARTER, Debra Carter, and Christopher Michael Carter, Respondents, v. The STANDARD FIRE INSURANCE COMPANY and Frank L. Siau Agency, Inc., Defendants, of whom The Standard Fire Insurance Company is the, Petitioner. Appellate Case No. 2011–193846.
• Court: South Carolina Supreme Court

406 S.C. 609

753 S.E.2d 515

Thomas M. CARTER, Debra Carter, and Christopher Michael Carter, Respondents,

v.The STANDARD FIRE INSURANCE COMPANY and Frank L. Siau Agency, Inc., Defendants,of whom The Standard Fire Insurance Company is the, Petitioner.

Appellate Case No. 2011–193846.

No. 27340.

Supreme Court of South Carolina.

Heard May 2, 2013.

Decided Dec. 11, 2013.

Rehearing Denied Feb. 6, 2014.

William Pearce Davis, of Baker Ravenel & Bender, LLP, of Columbia, for Petitioner.

William P. Hatfield, of Hyman Law Firm, of Florence, and Robert Norris Hill, of Law Offices of Robert Hill, of Newberry, for Respondents.

Chief Justice TOAL.

The Standard Fire Insurance Company (Standard Fire) seeks review of the court of appeals' decision reversing the trial court's grant of summary judgment in favor of Standard Fire, and finding Thomas M. Carter, Debra Carter, and Christopher Michael Carter (collectively Respondents) were entitled to stack underinsured motorist (UIM) coverage despite an exclusion in Standard Fire's policy purporting to limit a Class I insured's ability to stack such coverage when the vehicles insured under the subject policy were not involved in the accident. We affirm the court of appeals.

Facts/Procedural Background

On November 11, 2006, Michael Carter (Michael) was a passenger in his 2006 Dodge Charger, titled in both his and his mother's names and driven by his friend Bernie Collins, when the vehicle was involved in a collision resulting in Michael's paralysis and Collins's death. Respondents brought suit against Collins's estate, alleging that he was driving in a negligent and reckless fashion at the time of the collision, causing the collision and Michael's injuries.

The Dodge Charger was insured by Allstate. Allstate settled with Michael on behalf of Collins's estate, and agreed to pay the available limits of liability coverage, or $250,000, plus another $100,000 in liability coverage under a policy that Allstate issued to Collins, in exchange for a covenant not to execute. In addition, as the insurer of Michael's Dodge Charger, Allstate paid him $500,000 in UIM coverage, comprising $250,000 of coverage on the Dodge Charger, plus $250,000 on another vehicle owned by Michael and insured under his Allstate policy.

Additionally, Michael sought UIM coverage from a Standard Fire insurance policy issued to his parents Thomas and Debra Carter (Thomas and Debra), which was in effect from February 11, 2006, to February 11, 2007, and covered three Chevrolet vehicles owned by them (the Policy). The Policy provided UIM coverage for each vehicle for bodily injury of $250,000 per person and $500,000 per accident. Thus, Respondents sought $750,000 in UIM coverage from Standard Fire.

However, the Policy contains the following exclusion:

EXCLUSIONS

A. We do not provide [UIM] for “bodily injury” or “property damage” sustained by any person:

1. While “occupying” ... any motor vehicle owned by you or any “family member” which is not insured for this coverage under this policy....

The Policy defines “family member” as “a person related to you by blood, marriage or adoption who is a resident of your household.” The Policy also provides that “you” and “your” refer to: “1. [t]he ‘named insured’ shown in the Declarations; and 2. [t]he spouse if a resident of the same household.”

Debra removed Michael as a named insured from the Policy prior to the accident. However, it is undisputed that Michael resided with Thomas and Debra throughout the policy period in question, and therefore, as a resident relative, is a Class I insured under the Policy. It is further undisputed that the Policy did not specifically cover Michael's Dodge Charger.

On October 26, 2007, Respondents brought this action against Standard Fire, alleging, inter alia, that Standard Fire breached the terms of the Policy by failing to provide UIM coverage to Michael “for serious injuries sustained as a result of an automobile accident.” ¹ Respondents alleged that Michael should be permitted to stack UIM coverage under the Policy. In its Answer, Standard Fire denied that UIM coverage was available under the Policy, citing the above policy exclusion.

Each of the parties filed separate motions for summary judgment. In their motion, Respondents argued that the exclusion was void because it conflicts with section 38–77–160 of the South Carolina Code² and, as a result, Michael was entitled to stack UIM coverage. In its motion, Standard Fire maintained, inter alia, that (1) its policy specifically excluded UIM coverage for any person injured while occupying a motor vehicle owned by that person or a family member not insured under the Policy; and (2) such an exclusion had been sanctioned by this Court in Burgess v. Nationwide Mutual Insurance Company, 373 S.C. 37, 644 S.E.2d 40 (2007).

The circuit court heard the motions on December 18, 2008. On February 18, 2009, the circuit court granted Standard Fire's motion for summary judgment on the grounds that (1) UIM coverage was not available to Respondents by virtue of a valid exclusion of coverage of a vehicle not insured under the Policy; (2) Respondents were not entitled to stack coverages under the Policy because coverage was not available under the exclusion; (3) Respondents were bound by the plain language of the exclusion; and (4) the “Other Insurance” clause in the Policy did not provide for UIM coverage.³

Respondents filed a timely Notice of Appeal in the court of appeals on February 27, 2009. In an unpublished opinion, the court of appeals reversed and remanded the trial court's order granting Standard Fire's summary judgment motion. See Carter v. Standard Fire Ins. Co., Op. No. 2011–UP–175 (S.C. Ct.App. filed April 18, 2011). Relying on Nakatsu v. Encompass Indemnity Company, 390 S.C. 172, 178, 700 S.E.2d 283, 287 (Ct.App.2010), the court of appeals held that the case must be reversed because the exclusion was inconsistent with statutory provisions allowing Class I insureds to stack UIM. Id. The court of appeals refused to reach the remaining issues on appeal because the stacking issue was dispositive. Id.

Standard Fire sought review, and this Court granted the petition for writ of certiorari.

Issue

Whether section 38–77–160 of the South Carolina Code permits an insurance company to exclude UIM coverage to a Class I insured when he is occupying a vehicle he owns but does not insure under the subject policy?

Standard of Review

Summary judgment should be granted when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), SCRCP; Lanham v. Blue Cross & Blue Shield of S.C., Inc., 349 S.C. 356, 361, 563 S.E.2d 331, 333 (2002) (“An appellate court reviews a grant of summary judgment under the same standard applied by the trial court pursuant to Rule 56, SCRCP.”) (citation omitted).

Analysis

This case presents the question of whether an insurer may limit a Class I insured's ability to stack UIM coverage through an exclusion purporting to limit stacking only to those vehicles owned by the insured, and insured under the subject policy. Standard Fire argues the court of appeals erred in reversing summary judgment because the policy exclusion at issue is permitted under section 38–77–160 of the South Carolina Code. Under Standard Fire's formulation of that provision, the insurer is required to offer UIM coverage to an insured, but is not required to provide coverage unless the insured purchases such coverage, and because the Policy contained a valid exclusion, that coverage was not purchased by Respondents. On the other hand, Respondents argue that the plain language of section 38–77–160, the purpose behind the provision, and the traditional construction of the provision suggest that insurers may not eliminate a resident relative's ability to stack UIM coverage under his parents' policy.

Section 38–77–160 governs stacking,⁴ and provides, in relevant part:

Automobile insurance carriers shall offer,.... at the option of the insured, [UIM] motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at-fault insured or underinsured motorist or in excess of any damages cap or limitation imposed by statute. If, however, an insured or named insured is protected by ... [UIM] coverage in excess of the basic limits, the policy shall provide that the insured or named insured is protected only to the extent of the coverage he has on the vehicle involved in the accident. If none of the insured's or named insured's vehicles is involved in the accident, coverage is available only to the extent of coverage on any one of the vehicles with the excess or [UIM] coverage.

S.C.Code Ann. § 38–77–160 (Supp.2012) (emphasis added).

“The cardinal rule of statutory construction is a court must ascertain and give effect to the intent of the legislature.” State v. Scott, 351 S.C. 584, 588, 571 S.E.2d 700, 702 (2002) (citing Charleston Cnty. Sch. Dist. v. State Budget & Control Bd., 313 S.C. 1, 437 S.E.2d 6 (1993)). “The central purpose of the UIM statute is to provide coverage when the injured party's damages exceed the liability limits of the at-fault motorist,” and therefore, “[t]he UIM and UM statutes are remedial in nature and enacted for the benefit of injured persons” and “should be construed liberally to effect the purpose intended by the Legislature.” Floyd v. Nationwide Mut. Ins. Co., 367 S.C. 253, 260, 626 S.E.2d 6, 10 (2005) (citations omitted).

In the context of interpreting an insurance contract, “[s]tatutory provisions relating to an insurance contract are part of the contract as a matter of law.” State Farm Mut. Auto. Ins. Co. v. Calcutt, 340 S.C. 231, 234, 530 S.E.2d 896, 897 (Ct.App.2000) (citation omitted). To this end, “[UIM] coverage is controlled by and subject to our [UIM] act, and any insurance policy provisions inconsistent therewith...