Chenard v. Commerce Ins. Co.

• Decision Date: 25 November 2002
• Docket Number: No. 01-P-27.,01-P-27.
• Parties: Danielle L. CHENARD v. COMMERCE INSURANCE COMPANY & another.<SMALL><SUP>1</SUP></SMALL>
• Court: Appeals Court of Massachusetts

Page 1031

778 N.E.2d 1031

56 Mass. App. Ct. 576

Danielle L. CHENARD v. COMMERCE INSURANCE COMPANY & another.¹

No. 01-P-27.

Appeals Court of Massachusetts, Essex.

Argued June 5, 2002.

Decided November 25, 2002.

John P. Graceffa for CNA Insurance Companies.

Peter M. Goldberg, Hyannis, for the plaintiff.

John G. Ryan, Boston, for Commerce Insurance Company.

Present: BROWN, RAPOZA, & COHEN, JJ.

COHEN, J.

In this appeal, we are called upon to examine the relationship between the scope of uninsured motorist coverage provided by the Sixth Edition standard Massachusetts Automobile Policy to household members of the named insured, and the statute that mandates such coverage, G.L. c. 175, § 113L. The issue arises in the context of a declaratory judgment action brought by Danielle Chenard to establish which of two companies providing automobile insurance to her mother is responsible for the payment of uninsured motorist benefits on account of injuries sustained by Danielle when the vehicle she was driving, which belonged to her mother, was struck by an uninsured auto.

Both insurers, Commerce Insurance Company (Commerce) and CNA Insurance Companies (CNA), asserted counterclaims and cross-claims denying coverage and pointing to each other as the responsible carrier. A Superior Court judge heard the parties' cross-motions for summary judgment on a statement of agreed facts, and ruled that coverage obtained under CNA's policy. We reach a different conclusion, holding that, pursuant to the anti-stacking amendment to G.L. c. 175, § 113L, enacted by the Automobile Insurance Reform Act of 1988, St.1988, c. 273, § 47, Commerce is the designated provider of uninsured motorist benefits to Danielle in the circumstances of this case.

The parties' statement of agreed facts established that on the date of the accident, November 16, 1994, Danielle lived in the household of her mother, Eunice Chenard. At that time, Eunice owned two motor vehicles: a pick-up truck insured under a policy issued by Commerce and having limits under Part 3 — Bodily Injury Caused by an Uninsured Auto — of $250,000 per person and $500,000 per accident; and a sedan insured under a policy issued by CNA and having Part 3 limits of $100,000 per person and $300,000 per accident. Both policies were standard Massachusetts automobile insurance policies in the Sixth Edition form promulgated effective January, 1993. Danielle was driving the sedan insured by CNA when it was struck by an uninsured vehicle.

Part 3 of the Sixth Edition policy designates four categories of individuals to whom the insurer will provide uninsured motorist benefits: the named insured; household members of the named insured (but with restrictions discussed below); any other occupant of the insured vehicle, but only if the occupant lacks recourse to a policy of his own or of a household member; and individuals entitled to recover because of injuries to one of the foregoing covered persons. In this instance, Danielle's entitlement to Part 3 benefits derives from her status as a member of a named insured's household. Thus, the specific Part 3 language in play is the insurer's agreement to pay damages to:

"Any household member, while occupying your auto, while occupying an auto not owned by you or if injured as a pedestrian. If there are two or more policies which provide coverage at the same limits, we will only pay our proportionate share. We will not pay damages to or for any household member who has a Massachusetts auto policy of his or her own or who is covered by any Massachusetts auto policy of another household member providing uninsured auto insurance with higher limits." (Emphasis supplied.)

When read together with the definitions section of the policy, the coverage for household members is not unqualified. It is restricted to situations where the claimant is either (1) occupying "your auto" — defined as the vehicle designated on the Coverage Selections Page; (2) occupying an auto not owned by "you," the named insured; or (3) injured as a pedestrian. In reliance upon these limitations, Commerce contends that Danielle is not entitled to uninsured motorist benefits under its policy, because, at the time of the accident, she was not occupying the designated insured vehicle under the Commerce policy (Eunice's pick-up truck); was not occupying "an auto not owned by" the named insured, Eunice, because the sedan driven by Danielle at the time of the accident also belonged to Eunice; and was not a pedestrian.

According to Commerce, the purpose of these restrictions on coverage for household members is to prevent "manipulation" by policyholders. Commerce claims that it is unfair to the insurer if an owner can "grant access to the highest limits under any policy in the household to resident relatives occupying a vehicle that [the] owner has intentionally insured at lesser limits than those purchased on the vehicle the insured habitually occupies." Commerce acknowledges, however, that, under the terms of the policy, if the pick-up truck had been insured by a member of the Chenard household other than Eunice or herself, Danielle would have been entitled to obtain the higher coverage of the policy insuring the pick-up truck, notwithstanding her operation of the sedan, because she would have been a household member without a policy of her own, who was occupying an auto not owned by Commerce's named insured. Thus, Part 3 plainly contemplates that families may protect household members who are not named insureds from the risk of being injured by an uninsured motorist by purchasing, at an appropriate premium, higher limits of uninsured motorist coverage on only one of multiple family vehicles.

Regardless of the soundness of the rationale offered by Commerce for the policy limitations in question, the policy language is not the only consideration. The entitlement of a household member who is not a named insured to uninsured motorist benefits when there are multiple household auto policies also is specifically addressed by statute. Paragraph (5) of G.L. c. 175, § 113L, the anti-stacking amendment added by Section 47 of the Automobile Insurance Reform Act of 1988, St.1988, c. 273, states in pertinent part:

"Uninsured motorist coverage shall provide that regardless of the number of vehicles involved, whether insured or not, persons covered, claims made, premiums paid or the number of premiums shown on the policy, in no event shall the limit of liability for two or more vehicles or two or more policies be added together[,] combined or stacked to determine the limits of insurance coverage available to injured persons. An insured who is not a named insured on any policy providing uninsured motorist coverage may recover only from the policy of a resident relative providing the highest limits of such coverage whether or not such vehicle was involved in the accident; provided, however, if there are two or more such policies which provide such coverage at the same limits a pro rata contribution will be made."² (Emphasis supplied.)

Danielle and CNA contend that paragraph (5) reflects the Legislature's intention that any claimant who does not have his or her own auto policy, but who resides with one or more relatives who have such policies, is to obtain uninsured motorist benefits from whatever household policy has the highest limits of coverage, without regard to whether that policy was issued for the vehicle involved in the accident. They further contend that, to the extent that Part 3 of the standard policy purports to dictate a different result in the circumstances of this case, the policy impermissibly conflicts with the statute.

Commerce rejoins by maintaining that the statute speaks only of the entitlement of an "insured," and that whether a claimant is an "insured" must be determined with reference to the applicable insurance policy. According to Commerce, because of the Part 3 qualifications on coverage for household members, Danielle is not an "insured," and the Commerce policy is not one "providing uninsured motorist coverage" to her. We think, however, that Commerce's argument that the word "insured" as used in the statute derives its meaning from the terms of the policy begs the question whether the policy is inconsistent with the intent of the statute.

Particularly when the anti-stacking provision is viewed in its historical context and "in light of the aim of the Legislature," see Sullivan v. Brookline, 435 Mass. 353, 360, 758 N.E.2d 110 (2001), a sounder reading of paragraph (5) is that the term "insured" simply refers to any individual within the class of persons intended by the Legislature to have the benefit of uninsured motorist coverage, including persons like Danielle, who are household members of a named insured.³ See Vaiarella v. Hanover Ins. Co., 409 Mass. 523, 526, 567 N.E.2d 916 (1991) ("it is clear that the Legislature intended to include members of the insured party's household under this coverage when it passed G.L. c. 175, § 113L"). Construed in this fashion, paragraph (5) applies to Danielle and directs that she obtain the higher coverage of the Commerce policy.

This interpretation is in keeping with the purpose of this provision. Paragraph (5) was enacted in reaction to the byzantine rules relating to the "stacking" of uninsured and underinsured motorist benefits that evolved in the wake of Cardin v. Royal Ins....