Floyd v. Nationwide Mut. Ins. Co.

• Decision Date: 28 December 2005
• Docket Number: No. 26088.,26088.
• Citation: 626 S.E.2d 6
• Court: South Carolina Supreme Court
• Parties: Darla R. FLOYD and Dana Nichole Floyd, Plaintiffs, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant.

626 S.E.2d 6

Darla R. FLOYD and Dana Nichole Floyd, Plaintiffs, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant.

No. 26088.

Supreme Court of South Carolina.

Heard November 2, 2005.

Decided December 28, 2005.

Rehearing Denied February 14, 2006.

COPYRIGHT MATERIAL OMITTED

Bryan D. Ramey, of Bryan D. Ramey & Associates, P.A., of Piedmont, and John S. Nichols, of Bluestein & Nichols, of Columbia, for Plaintiffs.

John Robert Murphy and Adam J. Neil, both of Murphy & Grantland, P.A., of Columbia, for Defendant.

Justice BURNETT:

We accepted this certified question regarding the interpretation of a statute addressing the offer of underinsured motorist coverage to insured persons pursuant to Rule 228, SCACR.

FACTUAL AND PROCEDURAL BACKGROUND

The facts are drawn from the district court's certification order and an appendix filed by the parties. Plaintiff Darla R. Floyd (Darla) is the mother of Plaintiff Dana N. Floyd (Dana). Dana suffered serious injuries in an automobile collision on September 19, 2003, when her car was struck by another automobile. The at-fault driver's liability carrier paid its policy limits of $15,000 to Dana in exchange for a covenant not to execute a judgment against the at-fault driver.

Dana filed a claim with Nationwide Mutual Insurance Co. (Nationwide), seeking to recover against underinsured motorist (UIM) coverage. Dana, a Class I insured,¹ sought to stack UIM coverages for each of three vehicles covered by the Nationwide policy purchased by her mother. Dana sued Nationwide after it refused to pay benefits and the case was removed to federal district court on Nationwide's motion.

Darla purchased a Nationwide policy in 1997. A Nationwide agent's employee completed a form titled "Offer of Optional Additional Uninsured and Underinsured Automobile Insurance Coverages." The employee checked the "no" box which followed the question "Do you wish to purchase underinsured motorists coverage?" The employee checked the "yes" box which followed the question "Do you wish to purchase additional uninsured motorists coverage?" and wrote "15/30" and "25,000" on lines for selecting the desired limits.

Darla signed the UIM offer form indicating her rejection of UIM coverage, thereby purchasing only the minimum liability limits and corresponding uninsured motorist (UM) coverage. Darla also signed the "Applicant's Acknowledgment" at the end of the UIM offer form. This paragraph stated:

I hereby acknowledge that I have read, or have had read to me, the above explanations and offers of additional uninsured motorist coverage and underinsured motorist coverage. I have indicated whether or not I wish to purchase each coverage in the spaces provided. I further understand that the above explanations of these coverages are intended only to be brief descriptions of uninsured motorist coverage and underinsured motorist coverage, and that payment of benefits under any of these coverages is subject both to the terms and conditions of my automobile insurance policy and to the State of South Carolina's laws.

Darla did not otherwise personally mark the UIM offer form to select desired coverages and limits.

Darla increased the coverage limits on her policy in 2000. An employee in the Nationwide insurance agent's office completed another UIM offer form, checking the "no" box which followed the question "Do you wish to purchase underinsured motorist coverage?" The agent's employee checked the "yes" box which followed the question "Do you wish to purchase additional uninsured motorist coverage?" and wrote "100/300" and "50,000" on lines for selecting the desired limits.

Darla again signed the form in two places — rejecting UIM coverage and below the "Applicant's Acknowledgment," the same paragraph set forth above. Darla did not otherwise personally mark the UIM offer form to select desired coverages and limits.

At her deposition, Darla testified she signed the offer forms, but did not read the forms or have someone read them to her. No one explained or discussed UIM coverage or the offer form with her, and she did not understand UIM coverage at the time she signed the forms. She did not recall reading the acknowledgment paragraph before signing the forms. "To the best of my rememberance (sic), I was told what I needed and given the paper to sign," Darla testified. "I was given the paper to sign and I signed it. I was not explained that I needed to read it."

Nationwide relies solely on the two UIM offer forms as proof that it made a meaningful offer of UIM coverage to Darla, and not on any verbal discussions or explanations of the coverage. The parties agree both UIM forms are identical to South Carolina Department of Insurance Form 2006 and contain the content required by S.C.Code Ann. § 38-77-350(A) (2002).

QUESTION

Is an offer form in which the blanks were filled in by an insurance agent or his employee in the presence of the named insured, and the form was then signed by the named insured, properly completed and executed pursuant to S.C.Code Ann § 38-77-350(B) (2002), such that the form may be conclusively presumed to constitute a meaningful offer of UIM coverage?²

STANDARD OF REVIEW

In answering a certified question raising a novel question of law, the Court is free to decide the question based on its assessment of which answer and reasoning would best comport with the law and public policies of this state and the Court's sense of law, justice, and right. See I'On, L.L.C. v. Town of Mt. Pleasant, 338 S.C. 406, 411, 526 S.E.2d 716, 719 (2000) (citing S.C. Const. art. V, §§ 5 and 9, S.C.Code Ann. § 14-3-320 and 330 (1976 & Supp. 2004), and — S.C.Code Ann § 14-8-200 (Supp.2004)); Osprey, Inc. v. Cabana Ltd. Partnership, 340 S.C. 367, 372, 532 S.E.2d 269, 272 (2000) (same); Clark v. Cantrell, 339 S.C. 369, 378, 529 S.E.2d 528, 533 (2000) (same); Antley v. New York Life Ins. Co., 139 S.C. 23, 30, 137 S.E. 199, 201 (1927) ("In [a] state of conflict between the decisions, it is up to the court to `choose ye this day whom ye will serve'; and, in the duty of this decision, the court has the right to determine which doctrine best appeals to its sense of law, justice, and right.").

LAW AND ANALYSIS

Plaintiffs argue that, in order for the UIM offer form to be "properly completed and executed by the named insured" pursuant to Section 38-77-350(B), the named insured not only must sign the offer form, but also must personally fill in the blanks to indicate the desired coverages and limits. Plaintiffs point to language in Section 38-77-350(A) requiring the offer form to contain "a space for the insured to mark" whether the insured wishes to accept or reject UIM and additional UM coverages, a "space for the insured to select" the coverage limits desired, and "a space for the insured to sign" the form to acknowledge the coverages have been offered to her. Plaintiffs further contend that imposing such a requirement would compel insurers to require the named insured read the form rather than simply signing a form prepared by an insurance agent or his employee. This practice would better fulfill the Legislature's intent that a meaningful offer actually be made to the insured before an executed form is presumed to constitute such an offer.

Nationwide argues it is entitled to benefit from the statutory presumption that a meaningful offer is made when the named insured signs the form as required, regardless of whether an agent or his employee filled in the blanks to indicate the desired coverages and limits. Darla has not asserted the form was erroneously completed by the agent's employee, but has argued only that the manner in which it was completed is improper under the statute. Consequently, Nationwide contends the interpretation of the statute suggested by Plaintiffs would lead to an absurd result because the Legislature could not have intended to disallow the presumption of a meaningful offer in such circumstances.

The cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the Legislature. Mid-State Auto Auction of Lexington, Inc. v. Altman, 324 S.C. 65, 69, 476 S.E.2d 690, 692 (1996). The true guide to statutory construction is not the phraseology of an isolated section or provision, but the language of the statute as a whole considered in light of its manifest purpose. Jackson v. Charleston County School Dist., 316 S.C. 177, 181, 447 S.E.2d 859, 861 (1994). A statute as a whole must receive practical, reasonable, and fair interpretation consonant with the purpose, design, and policy of lawmakers. The real purpose and intent of the lawmakers will prevail over the literal import of particular words. Browning v. Hartvigsen, 307 S.C. 122, 125, 414 S.E.2d 115, 117 (1992).

The central purpose of the UIM statute is to provide coverage when the injured party's damages exceed the liability limits of the at-fault motorist. Cobb v. Benjamin, 325 S.C. 573, 583, 482 S.E.2d 589, 594 (Ct.App.1997). The UIM and UM statutes are remedial in nature and enacted for the benefit of injured persons; therefore, they should be construed liberally to effect the purpose intended by the Legislature. Cf. Gunnels v. American Liberty Ins. Co., 251 S.C. 242, 247, 161 S.E.2d 822, 824 (1968) (stating this principle with regard to UM coverage).

Automobile insurance carriers are required to offer, at the option of the insured, UIM coverage up to the limits of the insured's liability coverage. S.C.Code Ann. § 38-77-160 (2002). The insurer bears the burden of establishing that it made a meaningful offer of UIM and additional UM coverages. Progressive Cas. Ins. Co. v. Leachman, 362 S.C. 344, 348, 608 S.E.2d 569, 571 (2005); Butler v. Unisun Ins. Co., 323 S.C. 402, 405, 475 S.E.2d 758, 759 (1996). A noncomplying offer has the legal effect of no offer at all. Hanover Ins. Co. v. Horace Mann Ins. Co., 301 S.C. 55, 57, 389 S.E.2d 657, 659 (1990). "If the insurer fails to comply with its statutory duty to make a...