Gaddis v. Safeco Ins. Co. of America

Citation794 P.2d 533,58 Wn.App. 537
Decision Date23 July 1990
Docket NumberNo. 19169-1-I,19169-1-I
PartiesStephen M. GADDIS, as General Guardian of Carolyn Marie Gaddis and Cynthia Jan Gaddis, Minors, Respondents, v. SAFECO INSURANCE COMPANY OF AMERICA, Appellant.
CourtWashington Court of Appeals

Gary W. House, Seattle, for appellant.

Fiore J. Pignataro, Seattle, for respondents.

BAKER, Judge.

This case is on remand from the Washington State Supreme Court, following its decision in Safeco Ins. Co. v. Barcom, 112 Wash.2d 575, 773 P.2d 56 (1989). Two issues remain for resolution: (1) whether the trial court erred in finding that a Safeco Insurance Company (Safeco) policy held by Stephen Gaddis, the former husband of the decedent, provides coverage under its uninsured motorist provision for the loss of consortium damages suffered by his two insured minor daughters from the death of their mother, who was not insured under the policy; and (2) if coverage is available, what the policy limits are for each child.

I.

The facts pertaining to this appeal have been set forth in Safeco v. Barcom. We quote the relevant portions here:

Barbara Bell Bowers was struck and killed by an uninsured motorcyclist on July 8, 1980. Bowers was the mother of two children, whose ages at that time were 10 and 8, and whose legal custodian was Bowers' former husband, Stephen Gaddis. At the time of the accident, Gaddis was insured under a Safeco automobile liability insurance policy providing UIM coverage on each of Gaddis's two automobiles. While Bowers was not a named insured under Gaddis's policy, their two children resided with Gaddis.

Safeco v. Barcom, 112 Wash.2d at 578, 773 P.2d 56. Gaddis filed an uninsured motorist claim under his policy on behalf of the two children. The policy provides that Safeco will

pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person and caused by accident.

The policy covered two cars and provided uninsured motorist coverage of $100,000 per person and $300,000 per accident. It is not disputed that stacking was available at the time, which would result in limits of $200,000 per person and $600,000 per accident.

The trial court entered a judgment in Gaddis' favor in the amount of $175,000 for each child for a total of $350,000, confirming an arbitration award for that amount or the policy limits, whichever was less. 1

II.

Safeco contends that the policy does not provide coverage to the Gaddis daughters since neither Safeco nor Gaddis contemplated at the time of entering into the insurance contract that it would provide coverage for the losses he now claims on their behalf. Gaddis responds that if the contract does not provide such coverage, it is a void attempt to provide less coverage than that required by a former version of the uninsured motorist statute, RCW 48.22.030.

The particular policy provision at issue here is the limitation on the scope of the uninsured motorist clause coverage to damages "because of bodily injury sustained by a covered person".

An insurance contract is to be read as the average insurance purchaser would read it, giving it a practical and reasonable interpretation, rather than a strained or forced one that would lead to absurd results. Eurick v. Pemco Ins. Co., 108 Wash.2d 338, 341, 738 P.2d 251 (1987); Farmers Ins. Co. v. Clure, 41 Wash. App. 212, 216-17, 702 P.2d 1247 (1985). 2

It is conceded here that the individual sustaining bodily injury in this case, Barbara Bowers, was not a "covered person". Moreover, the language of the insurance contract was clear and unambiguous. No serious argument can be made that these contracting parties believed, or that any average person would believe, that uninsured motorist coverage would be triggered by injury to or death of an uninsured, nonresident former spouse. The precise issue, then, is whether this provision violates the public policy considerations underlying RCW 48.22.030.

The version of RCW 48.22.030 in effect at the time of this accident mandated uninsured motorist's coverage in every automobile liability policy unless such coverage was rejected by the insured. The statute provided that all automobile liability policies shall offer coverage

for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles ... because of bodily injury, sickness or disease, including death, resulting therefrom[.]

Laws of 1967, ch. 150, § 27. The Washington courts have developed a sizeable body of law interpreting the public policy expressed by the legislature in this statute. That public policy was well summarized in Britton v. Safeco Ins. Co. of Am., 104 Wash.2d 518, 522-23, 707 P.2d 125 (1985):

We have previously held [the uninsured motorist statute] is to be liberally construed in order to provide broad protection against financially irresponsible motorists. Touchette v. Northwestern Mut. Ins. Co., 80 Wash.2d 327, 494 P.2d 479 (1972). The purpose of the statute is to allow an injured party to recover those damages which would have been received had the responsible party maintained liability insurance. Touchette v. Northwestern Mut. Ins. Co., supra.

The insurance carrier which issued the policy stands, therefore, in the shoes of the uninsured motorist to the extent of the carrier's policy limits.

State Farm Mut. Auto. Ins. Co. v. Bafus, 77 Wash.2d 720, 724, 466 P.2d 159 (1970).

... Where an insurance policy does not provide the protection mandated by [the uninsured motorist statute], the offending portion of the policy is void and unenforceable. Touchette v. Northwestern Mut. Ins. Co., supra; Federated Am. Ins. Co. v. Raynes, 88 Wash.2d 439, 563 P.2d 815 (1977); Grange Ins. Ass'n v. Great Am. Ins. Co., 89 Wash.2d 710, 575 P.2d 235 (1978).

The statute does not contemplate a piecemeal whittling away of liability for injuries caused by uninsured motorists. First Nat'l Ins. Co. of America v. Devine, 211 So.2d 587, 589 (Fla.Dist.Ct.App.1968); Touchette v. Northwestern Mut. Ins. Co., supra.

Britton v. Safeco Ins. Co. of Am., 104 Wash.2d at 522-23, 707 P.2d 125 (quoting Finney v. Farmers Ins. Co., 92 Wash.2d 748, 751-52, 600 P.2d 1272 (1979), modified on other grounds in Glover v. Tacoma Gen. Hosp., 98 Wash.2d 708, 724, 658 P.2d 1230 (1983)). 3

A number of recent cases have considered the relationship of policy exclusions to RCW 48.22.030. Gaddis relies primarily on Grange Ins. Ass'n v. Hubbard, 35 Wash.App. 407, 667 P.2d 121, review denied, 100 Wash.2d 1023 (1983). There, the court held that the mother of a minor who had been killed while a passenger in a stolen vehicle had coverage for her loss of consortium claim under the uninsured motorist provision in her own policy. Although the son had been knowingly riding in the stolen vehicle at the time of the accident, and was thus excluded from coverage according to the terms of the policy, the court held that "[a]ny provisions in the policy must yield to the public law. Since she has the right of action against someone whose negligence caused the death of her son, it makes no difference whether her son is insured under that policy or not." Hubbard, 35 Wash.App. at 413, 667 P.2d 121.

The viability of Hubbard is in serious doubt. In the year following that decision, the Supreme Court construed RCW 48.22.030 to allow an insurance policy exclusion of parents' claims based on a child's motorcycle injuries. Sowa v. National Indem. Co., 102 Wash.2d 571, 577-80, 688 P.2d 865 (1984). In the more recent decisions of Eurick v. Pemco Ins. Co., 108 Wash.2d 338, 738 P.2d 251 (1987), and Eddy v. Fidelity & Guar. Ins. Underwriters, 113 Wash.2d 168, 776 P.2d 966 (1989), insureds made claims under their uninsured motorist clauses for loss of consortium due to the death or bodily injury of a noninsured person. As in Hubbard, the injured persons' claims were barred due to policy exclusions. See Eddy, 113 Wash.2d at 170, 776 P.2d 966 (exclusion due to operation of company vehicle made available for "regular use"); Eurick, 108 Wash.2d at 340, 738 P.2d 251 (exclusion pertaining to use of motorcycle by insured).

Both cases rest on a contract analysis, citing the principle that the court's duty is to determine and give effect to the intention of the parties at the time of contracting. See Eddy, 113 Wash.2d at 177, 776 P.2d 966; Eurick, 108 Wash.2d at 340-41, 738 P.2d 251. Following that analysis, the Supreme Court found in each case that a reasonable person would have believed that the relevant contract provisions excluded all claims arising from accidents involving excluded vehicles. Eddy, 113 Wash.2d at 177, 776 P.2d 966; Eurick, 108 Wash.2d at 342, 738 P.2d 251.

The exclusions upheld in Eurick and Eddy were determined by the court to be specifically authorized by the uninsured motorist statute. See also MacKenzie v. Empire Ins. Cos., 113 Wash.2d 754, 782 P.2d 1063 (1989) (automobile liability endorsement in multiperil policy is exempt from UIM statute). However, specific statutory authorization is not a requirement for legal validity of an exclusion under UIM coverage. "As a private contractor, the insurer is ordinarily permitted to limit its liability unless inconsistentwith public policy or some statutory provision." Mutual of Enumclaw v. Wiscomb, 97 Wash.2d 203, 210, 643 P.2d 441 (1982) (citing Trinity Universal Ins. Co. v. Willrich, 13 Wash.2d 263, 272, 124 P.2d 950, 142 A.L.R. 1 (1942)).

An insurer is free to limit its risks by excluding coverage when the nature of its risk is altered by factors not contemplated by it in computing premiums[.]

Wiscomb, 97 Wash.2d at 209, 643 P.2d 441.

Moreover, exclusions that have been held violative of public policy generally have been those manifesting no relation to any increased risk faced by the insurer, or when innocent victims have been denied coverage for no good reason.

...

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