Dairyland Ins. Co. v. State Farm Mut. Auto. Ins. Co., 930478

• Citation: 882 P.2d 1143
• Decision Date: 13 October 1994
• Docket Number: No. 930478,930478
• Parties: DAIRYLAND INSURANCE COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellant, and Ed Anopol, Sheila Anopol, Edward Anopol, Jr., and Fetuao T. Kelsall, Defendants and Appellees.
• Court: Supreme Court of Utah

Page 1143

882 P.2d 1143

DAIRYLAND INSURANCE COMPANY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellant and Ed Anopol, Sheila Anopol, Edward Anopol, Jr., and Fetuao T Kelsall, Defendants and Appellees.

No. 930478.

Supreme Court of Utah.

Oct. 13, 1994.

R. Scott Williams, David R. Neilson, Salt Lake City, for Dairyland.

Darwin C. Hansen, John Clyde Hansen, Salt Lake City, for State Farm.

Randall W. Richards, Ogden, for the Anopols.

Robert K. Maez, Salt Lake City, for Kelsall.

ZIMMERMAN, Chief Justice:

Dairyland Insurance Company brought this declaratory judgment action against State Farm Automobile Insurance Company in Utah's Second District Court to determine insurer liability. State Farm appeals the trial court's partial denial of its cross-motion for summary judgment against co-defendants Ed and Sheila Anopol (the "Anopols"), their son Edward Anopol, Jr. ("Edward Jr."), and a third party, Fetuao Kelsall. The sole issue on appeal is whether the trial court erred in deciding that a household relative who has been properly excluded from a primary insured's automobile insurance policy pursuant to Utah Code Ann. § 31A-22-303(7) can nevertheless be a permissive user of the insured automobile and thus entitled to coverage pursuant to Utah Code Ann. § 31A-22-303(1)(b)(i). We reverse.

The facts are as follows: The Anopols owned three automobiles; each was insured by State Farm under a separate policy. On December 9, 1988, the Anopols applied to State Farm for insurance on a 1976 Pontiac Astra. They designated their son who lived in the same household, Edward Jr., as the principal driver of this car.

After receiving the application, State Farm obtained a copy of Edward Jr.'s driving record from the State Department of Motor Vehicles. The record revealed that in the past four years, Edward Jr. had received four citations for speeding and one citation for failing to stop at a traffic signal. He had also been involved in a traffic accident. Based on Edward Jr.'s driving record, State Farm refused to insure him.

State Farm subsequently cancelled the binder that it had issued on the Astra. At the same time, State Farm informed the Anopols that because of their son's poor driving record, State Farm would not renew their other policies unless the Anopols executed a driver-exclusion endorsement for Edward Jr. On February 28, 1989, the Anopols executed the requested endorsement, which provided:

In consideration of the premium charged for your policy it is agreed we shall not be liable and no liability or obligation of any kind shall attach to us for bodily injury, loss, or damage under any of the coverages of the policy while any motor vehicle is operated by: Edward Anopol, Jr.

On February 10, 1992, while driving to work in his mother's Chevrolet Cavalier, Edward Jr. collided with a pedestrian, Fetuao Kelsall. Edward Jr. was driving the Cavalier with his mother's permission because his car, a 1979 Buick Century that he had independently insured with Dairyland, was in the shop for repairs.

State Farm denied liability coverage to Edward Jr. based on the driver-exclusion endorsement contained in the Anopols' policy. The policy Dairyland had issued to Edward Jr. did provide coverage for non-owned and "substitute" cars but contained language specifically excluding "[a] car owned by [the insured] or a resident member of your family."

Dairyland subsequently commenced a declaratory judgment action to determine whether its policy or that of State Farm provided coverage to Edward Jr. On motion for summary judgment, the trial court held that on the basis of language defining substitute car in its policy, Dairyland's policy provided no coverage to Edward Jr. With regard to State Farm's cross-motion for summary judgment, the court held that Edward Jr. qualified as a permissive user under Utah Code Ann. § 31A-22-303(1)(b)(i), notwithstanding the driver-exclusion endorsement. In its memorandum decision, the court stated:

State Farm Mutual Automobile Insurance Company's Cross Motion for Summary Judgment is partially granted and partially denied. Edward Anopol Jr. was a resident of the name[d] insured's household. As such, he was subject to exclusion from household member coverage.

Mr. Anopol was properly excluded from coverage as a household member. Mr. Anopol was, however, covered under the policy as a [permissive] user. On this occasion, he had the express permission of the named insured to drive the 1986 Chevrolet Cavalier.

(Emphasis added.) In other words, the trial court reasoned that State Farm had "properly excluded" Edward Jr. from coverage under his parents' policy, but because he had obtained his mother's permission to drive the vehicle, he was a permissive user and therefore entitled to coverage under Code section 31A-22-303(1)(b)(i). State Farm appeals from that part of the judgment declaring that Edward Jr. was a permissive user and thus covered under the Anopols' policy.

The sole issue on appeal is whether the trial court erred in denying State Farm's cross-motion for summary judgment on the basis of the court's determination that a household member who has been specifically excluded from coverage can nevertheless be a permissive user under section 31A-22-303(1)(b)(i). ¹ Summary judgment is appropriate when there is no issue as to any material fact and the moving party is entitled to judgment as a matter of law. Utah R.Civ.P. 56(c); Higgins v. Salt Lake County, 855 P.2d 231, 235 (Utah 1993). The issue of whether a properly excluded driver may be a permissive user is a question of law, which we review for correctness. See Higgins, 855 P.2d at 235.

When faced with a question of statutory construction, we first examine the plain language of the statute. State v. Larsen, 865 P.2d 1355, 1357 (Utah 1993); Schurtz v. BMW of N. Am., Inc., 814 P.2d 1108, 1112 (Utah 1991); Bonham v. Morgan, 788 P.2d 497, 500 (Utah 1989) (per curiam). Section 31A-22-303 provides in relevant part:

(1) In addition to complying with the requirements of Chapter 21 and Part II of Chapter 22, a policy of motor vehicle coverage under Subsection 31A-22-302(1)(a) shall:

(a) name the motor vehicle owner or operator in whose name the policy was purchased, state that named insured's address, the coverage afforded, the premium charged, the policy period, and the limits of liability;

(b)(i) if it is an owner's policy, designate by appropriate reference all the motor vehicles on which coverage is granted, insure the person named in the policy, insure any other person using any named motor vehicle with the express or implied permission of the named insured, and, except as provided in Subsection (7), insure any person included in Subsection 1(c) against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States and Canada, subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not less than the minimum limits specified under Section 31A-22-304;

...;

(c) except as provided in Subsection (7), insure persons related to the named insured by blood, marriage, adoption or guardianship who are residents of the named insured's household, including those who usually make their home in the same household but temporarily live elsewhere, to the same extent as the named insured.

....

(7) A policy of motor vehicle liability coverage under Subsection 31A-22-302(1) may specifically exclude from coverage a person who is a resident of the named insured's household ... if each person excluded from coverage satisfies the owner's or operator's security requirement of Section 41-12a-301, independently of the named insured's proof of owner's or operator's security. ²

This statute sets minimum requirements for all automobile insurance policies in Utah. Among other things, it requires policies to "insure persons related to the named insured by blood, marriage, adoption or guardianship who are residents of the named insured's household." Utah Code Ann. § 31A-22-303(1)(c). The statute further mandates that policies cover permissive users of the insured vehicle. ³ Nevertheless, a policy "may specifically exclude from coverage a person who is a resident of the named insured's household ... if each person excluded from coverage satisfies the owner's or operator's security requirement of Section 41-12a-301, independently of the named insured's proof of owner's or operator's security." Id. § 31A-22-303(7).

The Anopols argue that this exclusion provision applies only to household relatives of the insured, not to permissive users. The Anopols, in effect, argue that Edward Jr. was simultaneously a relative of Ms. Anopol who lived in her household and a permissive user. In short, they assert that State Farm's driver-exclusion endorsement did not operate to exclude Edward Jr. because he was a permissive user. We disagree.

The Anopols' analysis finds no support in the language of section 31A-22-303 and is contrary to established principles of statutory interpretation. Nothing in the language of the statute suggests that the endorsement does not apply to a household relative who is using the vehicle with the...