Dairyland Ins. Co. v. Fox, 28481.

Citation209 W.Va. 598,550 S.E.2d 388
Decision Date28 June 2001
Docket NumberNo. 28481.,28481.
CourtWest Virginia Supreme Court
PartiesDAIRYLAND INSURANCE CO., Plaintiff below, v. Joyce FOX, Administratrix of the Estate of Ivan Fox, Jr.; the Estate of Anthony Adkins; the Estate of Stephen Adkins; William Haga and Stephen Lowry, Defendants below, The Estate of Anthony Adkins, Defendant below, Appellee, State Farm Mutual Automobile Insurance Company, Intervenor below, Appellant.

Catherine D. Munster, Esq., Tiffany R. Durst, Esq., McNeer, Highland, McMunn & Varner, L.C., Clarksburg, West Virginia, Attorneys for Appellant State Farm Mutual Automobile Insurance Company.

Frank P. Bush, Jr., Esq., Bush & Bush, Elkins, West Virginia, Attorney for the Estate of Anthony Adkins.

PER CURIAM.

In this appeal from the Circuit Court of Summers County, we are asked to determine the enforceability of an exclusion prohibiting the "stacking" of underinsured motorist coverage in two separate insurance policies issued by an insurance company upon two vehicles. The circuit court concluded that because the insurance company issued two separate policies to the policyholders, such an exclusion could not be enforced and the underinsured motorist coverage in each policy could be stacked.

As set forth below, we reverse the circuit court's ruling. We hold that because the policyholders received a multi-car premium discount on both policies as consideration for the "anti-stacking" exclusion, the coverage cannot be stacked.

I.

On October 1, 1998, Anthony Adkins was riding as a passenger in a vehicle with several friends. The driver of the vehicle lost control and went left of the center of the road. The vehicle collided head-on with another car, and Mr. Adkins was ejected from the vehicle along with two of his friends, resulting in his death.

The insurance carrier for the driver filed a declaratory judgment action in the circuit court seeking to deposit the limits of the driver's liability insurance policy with the circuit court.1 Because the limits of the driver's liability insurance policy were clearly less than the damages caused to the Adkins' family, the appellees, Danny and Brenda Adkins, made a claim against their own underinsured motorist insurance carrier, appellant State Farm Mutual Automobile Insurance Company ("State Farm").

The appellees owned two vehicles, and each vehicle was insured with a separate policy from State Farm. The parties agree that Anthony Adkins was covered by both policies. Each policy contained an endorsement for $20,000.00 in coverage against underinsured motorists.

The appellees made a claim to State Farm for underinsured motorist coverage, arguing they were entitled to stack the coverage available under both policies, for a total of $40,000.00 in coverage. State Farm paid the appellees only $20,000.00, and argued that both policies contained an "anti-stacking" exclusion which limited the coverage available under both policies to a maximum of $20,000.00. The exclusion stated:

If other underinsured motor vehicle coverage issued by us to you, your spouse, or any relative applies, the total limits of liability under all such policies shall not exceed that of the policy with the highest limit of liability.

State Farm further argued that the appellees had received a multi-car discount for insuring both cars through State Farm, and that the discount—which was noted on the declarations page of both policies—served as consideration for enforcing the exclusion.

To resolve this dispute, State Farm intervened in the underlying circuit court action and initiated a declaratory judgment action against the appellees to resolve the amount of underinsured motorist coverage available to the appellees through the two policies. The appellees subsequently filed a motion for summary judgment asking the circuit court to declare that they could stack the coverage available under the two policies, for a total of $40,000.00 in coverage.

In an order dated December 7, 1999, the circuit court granted a declaratory judgment to the appellees. The circuit court concluded that State Farm had issued two separate policies to the appellees, and that anti-stacking language is void when a policyholder is covered by two or more underinsured motorist policy endorsements. The circuit court therefore allowed the appellees to stack their two policies together.

State Farm now appeals the circuit court's order.

II.

We review de novo the circuit court's declaratory judgment order interpreting the State Farm insurance policy. We have previously stated that a circuit court's entry of a declaratory judgment is reviewed de novo, since the principal purpose of a declaratory judgment action is to resolve legal questions. Syllabus Point 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995). When a declaratory judgment proceeding involves the determination of an issue of fact, that issue may be tried and determined by a judge or jury in the same manner as issues of fact are tried and determined in other civil actions. W.Va.Code, 55-13-9 [1941]. Any determinations of fact made by the circuit court or jury in reaching its ultimate resolution are reviewed pursuant to a clearly erroneous standard. Cox, 195 W.Va. at 612,466 S.E.2d at 463.

In this case we are asked to review the circuit court's interpretation of an insurance contract. In Payne v. Weston, 195 W.Va. 502, 506-7, 466 S.E.2d 161, 165-66 (1995), we discussed the applicable standard of review in such cases, stating that "[t]he interpretation of an insurance contract, including the question of whether the contract is ambiguous, is a legal determination which, like the court's summary judgment, is reviewed de novo on appeal." "Determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law." Murray v. State Farm Fire & Cas. Co., 203 W.Va. 477, 483, 509 S.E.2d 1, 7 (1998), quoting Pacific Indemnity Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985)

.

III.

In W.Va.Code, 33-6-31(b) [1998], the Legislature requires insurance companies to offer an individual buying an automobile insurance policy the option to purchase insurance against underinsured motorists. However, the Legislature also, in W.Va.Code, 33-6-31(k), authorizes insurance companies to include in each policy "exclusions as may be consistent with the premium charged."2

In Deel v. Sweeney, 181 W.Va. 460, 383 S.E.2d 92 (1989), we recognized the Legislature's enactment of W.Va.Code, 33-6-31(k), and the effect of the enactment on underinsured motorist insurance policies. We stated, in Syllabus Point 3, that as a result of W.Va.Code, 33-6-31(k):

Insurers may incorporate such terms, conditions and exclusions in an automobile insurance policy as may be consistent with the premium charged, so long as any such exclusions do not conflict with the spirit and intent of the uninsured and underinsured motorists statutes.

Relying upon this authorization, insurance companies began including exclusions in automobile insurance policies to prevent the "stacking" of underinsured motorist coverages on multiple vehicles.

We considered the effect of an "anti-stacking" exclusion on underinsured motorist coverage contained in a policy covering multiple cars in Russell v. State Automobile Mutual Insurance Co., 188 W.Va. 81, 422 S.E.2d 803 (1992). In Russell, the exclusion was contained within a single insurance policy that covered two separate vehicles. As in the instant case, the policy in Russell provided underinsured motorist coverage for both vehicles of $20,000.00 per person, and the premium for the coverage reflected a multi-car discount for underinsured motorist coverage. The policy also contained anti-stacking language that limited the policy's underinsured motorist coverage to the highest limit applicable for any one vehicle covered by the policy.

This Court examined the anti-stacking exclusion and ruled that, when a multicar discount has been given to a policyholder, the underinsured motorist coverage in a policy cannot be stacked. The Court stated, in Syllabus Point 5 of Russell:

West Virginia Code § 33-6-31 (1992) does not forbid the inclusion and application of an anti-stacking provision in an automobile insurance policy where a single insurance policy is issued by a single insurer and contains an underinsured endorsement even though the policy covers two or more vehicles. Under the terms of such a policy, the insured is not entitled to stack the coverages of the multiple vehicles and may only recover up to the policy limits set forth in the single policy endorsement.

The Court concluded that because the policyholder had received the benefit of their bargain—a multi-car discount—that the policyholder was not entitled to stack multiple insurance coverages in light of a clear exclusion prohibiting stacking.

In the instant case, State Farm argues that, like in Russell, the appellee-policyholders received the benefit of their bargain—a multi-car discount—and that clear anti-stacking language contained in both State Farm policies should be enforced to prevent the stacking of the underinsured motorist coverages.

The appellees, however, argue that Russell applies only to instances where the policyholder buys one insurance policy that covers multiple vehicles, and receives a multi-car discount. The appellees point out that, in the instant case, State Farm sold the policyholders two separate policies for their two vehicles. The policies have different policy numbers and different renewal dates. However, the declarations pages for both policies have a notation that a multi-car discount has been given and that the discount applies to underinsured motorist coverage. Still, the appellees argue that Russell is inapplicable.

State Farm counters that in 1995, the Legislature revised the underinsured motorist insurance statutes to expand the...

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