Gloe v. Iowa Mut. Ins. Co.

• Decision Date: 02 March 2005
• Docket Number: No. 23088, No. 23095.
• Citation: 2005 SD 29,694 N.W.2d 238
• Parties: Scott GLOE, Plaintiff and Appellant, v. IOWA MUTUAL INSURANCE COMPANY, Defendant and Appellee.
• Court: South Dakota Supreme Court

694 N.W.2d 238

2005 SD 29

Scott GLOE, Plaintiff and Appellant, v. IOWA MUTUAL INSURANCE COMPANY, Defendant and Appellee.

Nos. 23088, 23095.

Supreme Court of South Dakota.

Argued August 24, 2004.

Decided March 2, 2005.

Nancy J. Turbak, Watertown, SD, for plaintiff and appellant.

Acie W. Matthews, Sioux Falls, SD, for defendant and appellee.

ZINTER, Justice.

Scott Gloe's parents were struck and killed by an automobile. Gloe's parents did not reside in his household, they were not insured under his auto policy, and neither Gloe nor his covered automobile was involved in the accident. Nevertheless, Gloe asserted a wrongful death claim under the underinsured motorist (UIM) provision of his auto policy with Iowa Mutual. The trial court entered a declaratory judgment determining that there was no UIM coverage for Gloe's claim, and he appeals. We affirm because (1) Iowa Mutual's policy only provided UIM coverage for insureds who suffer bodily injury or death, (2) Gloe suffered no bodily injury or death, (3) his parents were not insureds under his policy, and (4) South Dakota's statutes do not mandate UIM coverage for pecuniary losses insureds may suffer as a result of the death of third parties who have no connection with the insured's policy.

Facts and Procedural History

On September 1, 2001, pedestrians Larry and Verna Mae Gloe were struck and killed in an auto accident. Pursuant to SDCL 21-5-1,¹ Scott Gloe, their son, was appointed as the personal representative to pursue wrongful death claims on behalf of the decedents' statutory beneficiaries.²

Two insurers provided liability coverage for this accident. American Family Insurance Company insured the automobile, with liability limits of $25,000 per person. Farmer's Insurance Group insured the driver, with liability limits of $100,000 per person. Each company paid its limits: $125,000 was paid for the wrongful death claims arising from Larry Gloe's death, and $125,000 was paid for the wrongful death claims arising from the death of Verna Mae Gloe.³ These sums were paid in return for a release of the tortfeasor and the liability carriers. Scott Gloe, his brother Michael Gloe,⁴ and their sister Karen Nelson⁵ received the wrongful death proceeds.

After settling with the liability carriers, Scott Gloe brought this declaratory action seeking to establish UIM coverage under his policy with Iowa Mutual. Gloe's claim was asserted in his individual capacity, and he sought to recover additional uncompensated wrongful death damages. Under South Dakota law, those damages are limited to Gloe's pecuniary loss caused by the death of his parents.

[¶ 5.] Gloe's policy with Iowa Mutual provided UIM benefits, with limits of $250,000 per person and $500,000 per occurrence. Gloe conceded that if Iowa Mutual's policy provided UIM coverage, Iowa Mutual was entitled to set-off the amount that he received from the two liability insurers. However, Iowa Mutual denied that its policy provided any UIM coverage. Iowa Mutual's denial was based upon a policy endorsement that only provided UIM coverage for "bodily injury or death" sustained by an "insured." Because Gloe sustained no bodily injury or death in this accident, and because Gloe's parents were not insureds under his policy, Iowa Mutual contended that its UIM coverage was unavailable.

[¶ 6.] Gloe acknowledged the policy language, but argued that the provision requiring "bodily injury or death" by an "insured" was incompatible with South Dakota's law requiring UIM coverage. The trial court disagreed. Gloe now appeals, raising the following issue:

1. Whether South Dakota statutes preclude an insurer from restricting UIM coverage to bodily injury or death sustained by an insured.

By notice of review, Iowa Mutual raises the following issues:

2. Whether Gloe is a real party in interest with an individual claim for damages after he settled the wrongful death claims on behalf of the wrongful death beneficiaries.

3. Whether the personal representative's release of the tortfeasor, precludes Gloe's individual claim.

Analysis and Decision

[¶ 7.] "We review declaratory judgments as we would any other judgment or order." Nelson v. Farmers Mutual Insurance Co. of Nebraska, 2004 SD 86, ¶ 5, 684 N.W.2d 74, 76 (citing SDCL 21-24-13; Parks v. Cooper, 2004 SD 27, ¶ 20, 676 N.W.2d 823, 828-29). In this case, our review involves a question of law regarding the interpretation of statutes and their application to insurance contracts. That review is de novo. See Id. (citing Roden v. General Casualty, 2003 SD 130, ¶ 6, 671 N.W.2d 622, 625); Jones v. AIU Ins. Co., 51 P.3d 1044, 1045 (Colo.Ct.App.2001) (stating that whether a statute mandates coverage is a matter of statutory interpretation subject to de novo review).

South Dakota's Statutes Do Not Mandate UIM Coverage for Wrongful Death Damages Arising Out Of the Death of a Third Party Who Has No Relationship With the Insurance Policy.

[¶ 8.] "In South Dakota, automobile insurance providers must provide underinsured motorist coverage in their policies." Nelson, 2004 SD 86, ¶ 8,684 N.W.2d at 77 (citing SDCL 58-11-9.4). In Nelson, we noted that "courts in other jurisdictions are split on the propriety of allowing an insured, pursuant to statutorily required underinsured motorist policy provision[s], to recover damages arising from bodily injury or death of a third person." Id. ¶ 7. However, we did not "address the wisdom or public policy of allowing such suits" under our statutes because the insurer in that case conceded coverage. Id.

[¶ 9.] The policy language at issue here provides coverage for damages an insured is "legally entitled to recover"⁶ from the owner or operator of an underinsured motor vehicle because of "bodily injury or death" sustained by "an insured." The policy provides:

We will pay compensatory damages which an `insured' is legally entitled to recover from the owner or operator of an `underinsured motor vehicle' because of `bodily injury:'

1. Sustained by an `insured,' and

2. Caused by an accident.

The policy defines `bodily injury' as bodily harm, sickness or disease, including death, that results. It defines insureds as:

1. You or any `family member.'

2. Any other person `occupying' `your covered auto.'

3. Any person for damages that person is entitled to recover because of `bodily injury' to which this coverage applies sustained by a person described in 1. or 2. above.

`Family member' means a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.

[¶ 10.] Because Gloe's parents were not residents of Gloe's household and were not occupants of a covered auto, they were not insureds under this policy language. Furthermore, the insured, Scott Gloe, suffered no bodily injury or death in the accident. Therefore, no UIM coverage was available under the policy. Gloe, however, contends that this policy provision violates the public policy of the UIM and uninsured (UM) statutes of this State.

[¶ 11.] "Since statutes must be construed according to their intent, the intent must be determined from the statute as a whole, as well as enactments relating to the same subject." Martinmaas v. Engelmann, 2000 SD 85, ¶ 49, 612 N.W.2d 600, 611. Furthermore, because of the similarity of subject and purpose of UM and UIM statutes and coverage, most of the decisions considering this issue construe UM and UIM claims, policies, and statutory language interchangeably. This is understandable because, as was noted in Jones, 51 P.3d at 1045, construing UM and UIM statutes separately "would create the anomalous situation where benefits for the wrongful death of an uninsured person were not required if the motorist causing death was uninsured, but required if the motorist was underinsured." Therefore, we construe our UM and UIM statutes together.⁷ We also apply the case law considering UM and UIM coverage interchangeably. [¶ 12.] Although the essence of the South Dakota statutes is quite similar, the UM provision is the most specific in declaring who is intended to be protected by the mandated coverage. It provides that coverage is required for the protection of persons insured under the policy. It also suggests that coverage was intended for the bodily injury or death of the insured:

No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state ... unless coverage is provided therein or supplemental thereto in limits for bodily injury or death equal to the coverage provided by such policy for bodily injury and death, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom. However, the coverage required by this section may not exceed the limits of one hundred thousand dollars because of bodily injury to or death of one person in any one accident and, subject to the limit for one person, three hundred thousand dollars because of bodily injury to or death of two or more persons in any one accident, unless additional coverage is requested by the insured....

SDCL 58-11-9 (emphasis added).

[¶ 13.] The complementary UIM statutes fail to as specifically address the question of who is intended to be protected by the mandated coverage and whether bodily injury or death of an insured was contemplated. Instead, they simply refer to coverage for "bodily injury to or death of [a] person" and "damages as its insured may recover on account of bodily injury or death arising out of an automobile accident...."

No motor vehicle liability policy of insurance may be issued or

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