Concrete Services v. US Fidelity & Guar., No. 24773.

• Court: United States State Supreme Court of South Carolina
• Writing for the Court: WALLER, Justice
• Citation: 331 S.C. 506,498 S.E.2d 865
• Parties: CONCRETE SERVICES, INC. and Ann C. Mickle, Plaintiffs, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant.
• Decision Date: 23 March 1998
• Docket Number: No. 24773.

331 S.C. 506
498 S.E.2d 865

CONCRETE SERVICES, INC. and Ann C. Mickle, Plaintiffs,
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant

No. 24773.

Supreme Court of South Carolina.

Heard February 2, 1998.

Decided March 23, 1998.

331 S.C. 507

Robert J. Moran, Murrells Inlet, for plaintiffs

331 S.C. 508

Andrew F. Lindemann, of Ellis, Lawhorne, Davidson and Sims, Columbia, for defendant

WALLER, Justice:

The following questions have been certified to this Court by the United States District Court for the District of South Carolina:

1. Is the spouse of the sole shareholder of a corporation entitled to stack UIM coverage where the corporation is the "named insured" under the policy, and where the spouse was injured while operating a vehicle owned by the corporation and insured under the UIM policy?

2. Where the South Carolina Appellate Courts have required an insured to "have" a vehicle involved in the accident in order to stack UIM coverage, is it required that the insured own the vehicle involved in the accident?

FACTS

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.

I. CORPORATION AS "NAMED INSURED"

Whether the spouse of a sole shareholder of a corporation listed as the "named insured" is entitled to stack UIM benefits

331 S.C. 509

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) (noting majority of jurisdictions analyzing similar policy provisions have found no ambiguity notwithstanding corporation may not have a "family"); Buckner v. Motor Vehicle Accident Indem. Corp., 66 N.Y.2d 211, 495 N.Y.S.2d 952, 486 N.E.2d 810 (1986) (business policy covering corporation could not reasonably be read to provide coverage to family member of officers and sole shareholders of corp); Kaysen v. Federal Ins. Co., 268 N.W.2d 920 (Minn.1978)

331 S.C. 510

(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) (policy terms listing corporation as named insured not ambiguous and does not include corporate officers and spouses); Dixon v. Gunter, 636 S.W.2d 437 (1982) (individual owners of corporation are not, as such, insureds under a policy issued to a corporation); General Ins. Co. of America v. Icelandic Builders Inc., 24 Wash.App. 656, 604 P.2d 966 (1979) (policy unambiguously lists corporation, and no others, as named insured); Lundgren v. Vigilant Ins. Co., 391 N.W.2d 542 (Minn.App. 1986) (UIM coverage not a nullity when issued to a corporation since injured party would be covered had he been injured while occupying an insured vehicle); Meche v. Thibodeaux, 550 So.2d 346 (La.App. 3 Cir.1989) (where corporation is the only named insured, UM coverage applies only to persons while occupying a covered vehicle); Ott v. Firemen's Fund Ins. Co., 936 S.W.2d 165 (Mo.App.1996) (president and sole shareholder of close corp. not "named insured" of policy issued to corp.). 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 (fact that corporation is the only class I insured doesn't render UIM coverage a nullity since individuals are covered as class II insureds); Buckner v....