Concrete Services v. US Fidelity & Guar.
Citation | 331 S.C. 506,498 S.E.2d 865 |
Decision Date | 23 March 1998 |
Docket Number | No. 24773.,24773. |
Court | United States State Supreme Court of South Carolina |
Parties | CONCRETE SERVICES, INC. and Ann C. Mickle, Plaintiffs, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant. |
Robert J. Moran, Murrells Inlet, for plaintiffs.
Andrew F. Lindemann, of Ellis, Lawhorne, Davidson and Sims, Columbia, for defendant.
The following questions have been certified to this Court by the United States District Court for the District of South Carolina:
The plaintiff, Ann Mickle, was involved in an automobile accident while driving a vehicle owned by her husband's company, Concrete Services, Inc. (Concrete).1 Mickle's damages exceeded the $15,000.00 policy limits of the at fault driver. At the time of the accident, the vehicle operated by Mickle was covered by an insurance policy issued by United States Fidelity and Guaranty (USF & G) to its named insured, Concrete. The policy provided $50,000.00 of underinsured motorist coverage (UIM) on several vehicles owned by Concrete. After receiving $50,000.00 in UIM coverage from USF & G under the policy insuring the vehicle which she was driving, Mickle and Concrete commenced this declaratory judgment action seeking a ruling that Mickle was entitled to stack UIM coverages on the other vehicles owned by Concrete. The District Court certified the above questions to this Court.
Whether the spouse of a sole shareholder of a corporation listed as the "named insured" is entitled to stack UIM benefits is a novel issue in this state; the issue turns upon whether Mickle qualifies as a Class I insured.
The critical question in determining whether an insured has the right to stack is whether he is a Class I or Class II insured. American Sec. Ins. Co. v. Howard, 315 S.C. 47, 431 S.E.2d 604 (Ct.App.1993). The two classes of insureds are: (1) the named insured, his spouse and relatives residing in his household; and (2) any person using, with the consent of the named insured, the motor vehicle to which the policy applies and a guest in the motor vehicle. Garris v. Cincinnati, 280 S.C. 149, 311 S.E.2d 723 (1984). The right to stack is available only to a Class I insured. Fireman's Ins. Co. v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988); Ohio Cas. Ins. Co. v. Hill, 323 S.C. 208, 473 S.E.2d 843 (Ct.App.1996).
As Mickle is not the "named insured" in the policy, the question is whether she is a spouse or relative of the "named insured," i.e., the corporation, Concrete Services.2 If not, then she does not qualify as a Class I insured and may not stack benefits. Although the issue is novel in South Carolina, it has been addressed by other courts.
The majority of courts addressing the issue hold that a corporation insured by a business automobile insurance policy cannot have a "family" as that term is used in the definition of "insured." See Grain Dealers Mutual Ins. Co. v. McKee, 943 S.W.2d 455 (Tex.1997)
( ); Buckner v. Motor Vehicle Accident Indem. Corp., 66 N.Y.2d 211, 495 N.Y.S.2d 952, 486 N.E.2d 810 (1986) ( ); Kaysen v. Federal Ins. Co., 268 N.W.2d 920 (Minn.1978) (policy terms listing corporation as named insured unambiguous, does not include corporate officers and their spouses); Sproles v. Greene, 329 N.C. 603, 407 S.E.2d 497 (1991) ( ); Dixon v. Gunter, 636 S.W.2d 437 (1982) ( ); General Ins. Co. of America v. Icelandic Builders Inc., 24 Wash.App. 656, 604 P.2d 966 (1979) ( ); Lundgren v. Vigilant Ins. Co., 391 N.W.2d 542 (Minn.App. 1986) ( ); Meche v. Thibodeaux, 550 So.2d 346 (La.App. 3 Cir.1989) ( ); Ott v. Firemen's Fund Ins. Co., 936 S.W.2d 165 (Mo.App.1996) ( ). See also American States Ins. Co. v. C & G Contracting, Inc., 186 Ariz. 421, 924 P.2d 111 (App.1996); Cutter v. Maine Bonding and Cas., 133 N.H. 569, 579 A.2d 804 (1990); Hogan v. Mayor & Aldermen of Savannah, 171 Ga.App. 671, 320 S.E.2d 555 (1984); Busby v. Simmons, 103 N.C.App. 592, 406 S.E.2d 628 (1990); Meyer v. Amer. Economy Ins. Co., 103 Or.App. 160, 796 P.2d 1223 (1990); Sears v. Wilson, 10 Kan.App.2d 494, 704 P.2d 389 (1985); Jacobs v. USF & G, 417 Mass. 75, 627 N.E.2d 463 (1994). These courts are unpersuaded by claims that since a corporation is incapable of suffering personal injuries or having family members, a policy using "family member" terminology is ambiguous such that coverage should be afforded; on the contrary, these courts find the policy effectual since it provides coverage to Class II insureds, i.e., persons using a vehicle which is covered under the terms of a policy. Sproles v. Greene, supra ( ); Buckner v. Motor Vehicle Accident Indem. Corp., supra ( ); Lundgren v. Vigilant Ins. Co., supra ( ).
A minority of jurisdictions, however, hold that, since a business corporation cannot have relatives, a policy issued to a corporation which defines the insured to include such persons creates an ambiguity, thereby affording coverage. See e.g., Hager v. American W. Ins. Co., 732 F.Supp. 1072 (D.Mont. 1989)
( ); Hawkeye-Security Ins. Co. v. Lambrecht, 852 P.2d 1317 (Colo. Ct.App.1993) ( ); King v. Nationwide Ins. Co., 35 Ohio St.3d 208, 519 N.E.2d 1380 (1988). Under this view, when "family member" language is used in a policy issued to a corporation, it creates an ambiguity which is to be resolved against the insurer and in favor of the insured. Ceci v. National Indem. Co., 225 Conn. 165, 622 A.2d 545 (1993). See also Hansen v. Ohio Casualty Ins. Co., 239 Conn. 537, 687 A.2d 1262 (1996); Lunge v. Nat'l Casualty Co., 977 F.Supp. 672 (D.Vt.1997).
We decline to adopt the minority view. We agree with the majority view that a corporation, as such, cannot have a spouse or family members. Further, as noted in the District Court's certification order, the policy in question defines "insured" as "You," and "If you are an individual, any `family member.'" This language clearly demonstrates that it applies to family members only of individuals and not to corporations such that there is no ambiguity. Accord Kitts v. Utica Nat'l Ins. Group, 106 Ohio App.3d 692, 667 N.E.2d 30 (1995) ( ). Moreover, it is clear that Steve Mickle was aware the policy did not cover either himself, his spouse or his family, as he purchased separate coverage under an endorsement adding "Broadened Coverage for Named Individuals." See American States Ins. Co. v. C & G Contracting, Inc., supra
(. ) Had the policy covered family members, there would have been no need for this endorsement adding Steve Mickle as a named insured.3 Accordingly, we follow the majority view and hold that Mickle was not a spouse or family member of the named insured, Concrete Services. It follows that if she is not the spouse of a named insured, then she is not a Class I insured and may not stack coverage under the policy issued to Concrete.
In light of our holding that Mickle is not a Class I insured, she may not stack UIM coverage in this case, and the answer to the second certified question is purely academic. However, since we accepted certification on this issue, we address the matter to clarify apparent confusion concerning whether, in order to stack UIM coverage, an insured must own the vehicle involved in the accident? We hold that, so long as an individual otherwise qualifies as a Class I insured, he or she need not "own" the vehicle in order to stack.
The statute controlling the right to stack UIM benefits is S.C.Code Ann. § 38-77-160 (Supp.1997) which provides, in pertinent part:
If, however, an insured or named insured is protected by uninsured or underinsured motorist coverage in excess of the basic...
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