Clements v. Travelers Indem. Co.

• Decision Date: 15 April 1993
• Docket Number: No. 58912-7,58912-7
• Citation: 121 Wn.2d 243,850 P.2d 1298
• Court: Washington Supreme Court
• Parties: Robert CLEMENTS, Petitioner, v. The TRAVELERS INDEMNITY COMPANY, Respondent. En Banc

Page 243

121 Wn.2d 243

850 P.2d 1298

Robert CLEMENTS, Petitioner, v. The TRAVELERS INDEMNITY COMPANY, Respondent.

No. 58912-7.

Supreme Court of Washington,

En Banc.

April 15, 1993.

Treece, Richdale, Malone, Corning & Abbott, P.S., Gary Krohn, Seattle, for petitioner

Ogden, Murphy & Wallace, Steven A. Reisler, Seattle, for respondent.

Bryan P. Harnetiaux, Gary N. Bloom, Spokane, amicus curiae for petitioner on behalf of Washington State Trial Lawyers Ass'n SMITH, Judge.

Petitioner Robert Clements seeks review of a decision by the Court of Appeals, Division One, which reversed a King County Superior Court summary judgment order in petitioner's favor upon his claim for underinsured motorist coverage under his employer's insurance policy following his injury in an automobile collision while driving a company automobile within the scope of his employment. We reverse the Court of Appeals and uphold the judgment of the Superior Court.

STATEMENT OF FACTS

Petitioner Robert Clements (Petitioner) was injured on September 4, 1986, when his vehicle collided with one driven by Ms. Bertha Ann Jones. ¹ Ms. Jones was cited by the Everett Police Department for failing to yield the right of way. In November 1987, petitioner filed a lawsuit for personal injuries against Ms. Jones. She was insured by Safeco Insurance Company (Safeco). Safeco paid its policy limit of $100,000.00 and the lawsuit was dismissed. ²

Petitioner subsequently made an underinsured motorist (UIM) claim under his employer's insurance policy. The claim was denied. ³ At the time of the accident, Petitioner was employed by C.R. Bard, Inc. (Bard). ⁴ He was driving a vehicle leased by Bard and was acting within the scope of his employment. ⁵ Bard is a national account insured by Travelers Indemnity Company (Travelers). Bard's insurance broker was Seattle-based Marsh & McLennan, Inc. ⁶ From January 1 The insurance policy listed C.R. Bard as the named insured and contained a Schedule of Coverages and Covered Autos in chart form. ⁸ The number "6" is indicated in the "Uninsured Motorist" section. Under Description of Covered Auto Designation Symbols the description for number 6 reads:

1986, to January 1, 1987, Travelers provided insurance coverage to Bard under master policy number TRCAP-196T136-8-86 (Bard policy). ⁷

OWNED AUTOS SUBJECT TO A COMPULSORY UNINSURED MOTORISTS LAW. Only those autos you own which, because of the law in the state where they are licensed or principally garaged, are required to have and cannot reject uninsured motorists insurance. This includes those autos whose ownership you acquire after the policy begins provided they are subject to the same state uninsured motorists requirement. ⁹

The "Uninsured Motorists" section also refers to Endorsement CA 81. That endorsement states that "[t]his insurance applies only in the states indicated below" and lists 15 states (State of Principal Garaging) in which the policy provides uninsured motorist coverage and lists the limits of liability for the states. ¹⁰ At the top of the endorsement is printed in all capitals the words "THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY" and "UNINSURED MOTORISTS INSURANCE--VARYING LIMITS." Washington is not included in the list. ¹¹

Travelers acknowledges that no specific written waiver rejecting UIM coverage for vehicles registered in Washington was signed by representatives of Bard. ¹² It maintains, however, that Bard did not intend to purchase UIM coverage in any of the states covered by the policy unless it was specifically required to provide such coverage under state law. ¹³ Travelers submitted the affidavit of Stuart Storch, the corporate risk manager for Bard, which included the following statements:

2. [I]n my discussions with our broker the question of uninsured motorist insurance came up, but I have no recollection of our specific discussion, nor do I know specifically when we talked about it. I do know our intent has been to have uninsured motorist insurance on our automobile fleet only to the extent any particular state made it compulsory. If we had the option not to have uninsured motorist insurance, we did not want it nor did we want to pay for it.

3. I have reviewed policy number TRCAP-196T1368 and its endorsements. It provided uninsured motorist insurance only for certain states where, as the policy states, uninsured motorist insurance was required and could not be waived. The state of Washington is not included on the endorsement listing the states for which the policy provided uninsured motorist insurance.

4. Policy number TRCAP-196T1368 and its endorsements provided the liability and uninsured motorist insurance we wanted to have. By its own language, the scope of the insurance policy provided exactly what we wanted, and we got exactly what we paid for. ¹⁴

On May 9, 1990, Petitioner Clements filed in the King County Superior Court a declaratory judgment action asking the court to rule that the Bard policy provided UIM coverage. ¹⁵ He contended that public policy requiring mandatory coverage is established under Washington law and that Bard did not affirmatively reject UIM coverage in Washington. Travelers filed a motion for summary judgment on On December 20, 1991, the Court of Appeals, Division One, reversed the trial court's denial of summary judgment to Travelers. ¹⁹ The court agreed with Travelers' position that the Bard policy, including its declarations, served as a functional equivalent of the written waiver required by statute. Observing that a court's duty in construing an insurance contract is to determine the intent of the parties at the time of the contract, the court stated:

                October 12, 1990. 16  On November 7, 1990, the trial court denied the motion and ruled that petitioner was covered under the UIM section of the Bard policy. 17  Travelers filed its appeal on December 6, 1990, contending that Bard had rejected UIM coverage. 18
                

Here, as indicated in the record before the trial court, Bard's intent is clear. The company did not intend to provide UM coverage in those states where coverage could be declined. Further, Bard did not pay a premium for UM coverage in Washington.

... There is no evidence indicating Bard intended any UM coverage in Washington. It is plain that Travelers intended to provide coverage to Bard if, and only if, Bard was required to purchase coverage in Washington. We hold the policy as a whole is a sufficient written waiver. ²⁰

On January 17, 1992, Petitioner Clements filed a petition for review in this court. We granted review on April 1, 1992.

ISSUES

This case involves two principal issues: (1) whether UIM coverage may be rejected in the state of Washington; and (2) whether the insured in this case, C.R. Bard, Inc., rejected UIM coverage under its policy with Travelers Indemnity Company in a manner sufficient to meet the statutory requirement for written waivers under RCW 48.22.030(4).

DISCUSSION

On review of summary judgment, an appellate court engages in the same inquiry as the trial court. ²¹ Summary judgment is appropriate "if the pleadings, depositions, ... together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ²² A material fact is one upon which the outcome of the litigation depends. ²³ The court must consider the facts submitted and all reasonable inferences from those facts in the light most favorable to the nonmoving party. The motion should be granted only if, from all the evidence, reasonable persons could reach but one conclusion. ²⁴

Petitioner Clements argues that RCW 48.22.030 (the UIM statute) mandates UIM coverage. To support his argument, he relies on RCW 48.22.030(2) and public policy.

RCW 48.22.030(2) states, in part, that:

No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles.... ²⁵

Petitioner argues that the statute mandates UIM coverage and that any agreement between Bard and Travelers to modify that requirement is void. Petitioner cites Britton v. Safeco Ins. Co. of Am. ²⁶ for the proposition that an insurer cannot The UIM statute provides that an insured may reject underinsured coverage in writing. RCW 48.22.030(4) states:

                avoid a statutorily mandated obligation.   In Britton, the policy contained a UIM endorsement and the insurer sought to set off disability benefits which the insured received against the UIM coverage limits.   In that case the insurance contract contained a UIM coverage endorsement 27 and limitation of liability was void.   In this case, Bard did not contract for UIM coverage, but did not specifically decline it in writing or otherwise. 28
                

A named insured or spouse may reject, in writing, underinsured coverage for bodily injury or death, or property damage, and the requirements of subsections (2) and (3) of this section shall not apply. If a named insured or spouse has rejected underinsured coverage, such coverage shall not be included in any supplemental or renewal policy unless a named insured or spouse subsequently requests such coverage in writing. The requirement of a written rejection under this subsection shall apply only to the original issuance of policies issued after July 24, 1983, and not to any renewal or replacement policy. ²⁹

The UIM statute does not mandate UIM coverage, but requires all insurers to make UIM coverage available to Washington policyholders. ³⁰ Once the coverage is offered, the...