Greengo v. Public Employees Mut. Ins. Co.

• Decision Date: 23 July 1998
• Docket Number: No. 64218-4,64218-4
• Citation: 959 P.2d 657,135 Wn.2d 799
• Parties: Laurie GREENGO, Petitioner, v. PUBLIC EMPLOYEES MUTUAL INSURANCE COMPANY, Respondent.
• Court: Washington Supreme Court

Page 799

135 Wn.2d 799

959 P.2d 657

Laurie GREENGO, Petitioner, v. PUBLIC EMPLOYEES MUTUAL INSURANCE COMPANY, Respondent.

No. 64218-4.

Supreme Court of Washington En Banc.

Argued Feb. 25, 1997.

Decided July 23, 1998.

Alexander Higgins, John Budlong, Seattle, for Petitioner.

Burgess, Fitzer, Leighton & Phillips, Timothy Gosselin, Tacoma, for Respondent.

SANDERS, Justice.

Two questions are posed: first, whether an underinsured motorist (UIM) anti-stacking clause in an insurance policy is valid where it limits an insured's UIM recovery to one recovery per accident from whatever source; and second, whether the serial collision in this case constitutes one accident or two. We agree with the Court of Appeals that the anti-stacking clause at issue is valid. However, we cannot conclude from the record that only one accident occurred and, accordingly, reverse and remand.

FACTS

Twenty-seven-year-old Laurie Greengo was severely injured when the car in which she was riding as a passenger, driven by David Ferulli and owned by Ferulli's fiancee, Carrie Carfrae, rear ended another car on Interstate 5 as the Ferulli vehicle was itself rear ended by a third car driven by Michael Hampshire. While the precise sequence of events is disputed, all agree there were two collisions and, as a result, Ms. Greengo was rendered permanently quadriplegic.

Ms. Greengo recovered $200,000 from Ferulli, the driver of the car in which she was riding. Half this amount was paid under Ferulli's PEMCO liability policy and half was paid under Carfrae's Unigard liability policy on Ferulli's behalf. Further, Unigard paid an additional $100,000 on Ferulli's behalf under Carfrae's UIM coverage. Ms. Greengo also recovered $100,000 from Hampshire's liability insurance carrier.

However, Ms. Greengo's injuries arguably justified a recovery far in excess of the total amount recovered. Accordingly she sought an additional $100,000 from her own insurance carrier, PEMCO, under her policy's UIM coverage which provides:

[Under your underinsured motorist coverage], we'll pay for bodily injury damages you or a family member sustain when those damages are caused by an underinsured motorist. But the damages must result from an accident involving the operation, maintenance, or use of an underinsured motor vehicle. And the damages caused by the underinsured motorist must be those that you or a family member are legally entitled to recover from the underinsured motorist.

Clerk's Papers (CP) at 64 (PEMCO "straight talk" auto policy, Underinsured Motorist Coverages). Ms. Greengo's UIM policy limit is $100,000 per accident.

Her policy defines underinsured motorist as:

One to which a liability policy or bond applies at the time of the accident, but the limit of the liability policy or bond is inadequate to pay the full amount a covered person is legally entitled to recover as damages.

CP at 65. Such is the standard UIM protection whereby the insurer steps into the shoes of a negligent third party to pay the insured the amount, up to policy limits, by which the damage caused to the insured by the negligent third party exceeds the third party's liability coverage. Jain v. State Farm Mut. Auto. Ins. Co., 130 Wash.2d 688, 692, 926 P.2d 923 (1996). Ms. Greengo states the drivers of both vehicles were underinsured because each caused substantially more damage than the limits of each respective liability coverage.

PEMCO, however, defends under the anti-stacking clause in Ms. Greengo's policy, which purports to limit UIM benefits in cases where the insured collects UIM coverage elsewhere for the same accident. The anti-stacking clause at issue provides:

If this policy and any other policy providing underinsured motorist coverage apply to the same loss, the maximum limit of liability under all policies will be the highest limit of liability that applies under any one policy.

CP at 65. PEMCO argues $100,000 represents the highest UIM limit of any applicable policy, Ms. Greengo has already received $100,000 in UIM benefits from Unigard, there was but one loss, and, accordingly, the anti-stacking clause applies to relieve it of any obligation to extend Ms. Greengo any UIM coverage for the one accident suffered.

Ms. Greengo responds that the anti-stacking clause is void as against the statutory text or public policy of our UIM statute. Additionally, she argues she suffered from two separate accidents and is entitled to recover UIM benefits from PEMCO for at least one of the accidents even if the anti-stacking clause is valid.

At the trial court level PEMCO sought summary judgment, but only on the anti-stacking issue, arguing that pursuant to the anti-stacking provision Ms. Greengo is precluded from any UIM recovery from PEMCO because she already recovered one UIM recovery for the accident. The trial court agreed, granting summary judgment of dismissal in PEMCO's favor. The Court of Appeals affirmed. Greengo v. Public Employees Mut. Ins. Co., 81 Wash.App. 482, 914 P.2d 786 (1996). We granted review. Greengo v. Public Employees Mut. Ins. Co., 130 Wash.2d 1015, 928 P.2d 416 (1996).

We agree with the analysis of the Court of Appeals insofar as it concludes the anti-stacking clause is valid; however, we disagree that the analysis is a valid basis to deny coverage to Greengo. If there were two accidents, then Ms. Greengo is entitled to UIM recovery from PEMCO for the second accident. Here, there is an unresolved factual question as to how many "accidents" occurred. Accordingly, summary judgment dismissal of Ms. Greengo's UIM claim against PEMCO on coverage grounds is error. See Gossett v. Farmers Ins. Co., 133 Wash.2d 954, 963, 948 P.2d 1264 (1997) (summary judgment only appropriate where no material facts in dispute). We therefore reverse dismissal on the coverage question and remand for a factual determination whether there were two accidents or one. Whether such determination requires a trial or may be resolved on summary judgment or should be submitted to arbitration is not before us.

Validity of Anti-Stacking Clause

We first address the validity of the anti-stacking clause in Ms. Greengo's PEMCO policy. Resolution of this issue is necessary regardless of the number of accidents because the clause limits on a per-accident basis. Ms. Greengo argues that such a per-accident limitation is invalid because (1) it is not authorized by the UIM statute and (2) it undermines the public policy underlying our UIM statute.

We have recognized the Legislature intended broad UIM coverage when it enacted our UIM statute. Mid-Century Ins. Co. v. Henault, 128 Wash.2d 207, 212, 905 P.2d 379, 59 A.L.R.5th 789 (1995) (citing Clements v. Travelers Indem. Co., 121 Wash.2d 243, 251, 850 P.2d 1298 (1993)). This court has averred it will liberally construe the statute to uphold this legislative mandate and will scrutinize exclusionary clauses to ensure the mandate for broad coverage is neither whittled away nor eroded. Mid-Century, 128 Wash.2d at 212, 905 P.2d 379 (quoting Clements, 121 Wash.2d at 251, 850 P.2d 1298).

In determining the validity of a UIM exclusionary clause the court applies a two-part test which asks: "Does the proposed exclusion conflict with the express language of the UIM statute? If not, is the exclusion contrary to the UIM statute's declared public policy?" Bohme v. PEMCO Mut. Ins. Co., 127 Wash.2d 409, 412, 899 P.2d 787 (1995) (citing Kyrkos v. State Farm Mut. Auto. Ins. Co., 121 Wash.2d 669, 674, 852 P.2d 1078 (1993)). A UIM exclusionary clause will be upheld only if we can answer both inquiries in the negative. Bohme, 127 Wash.2d at 412, 899 P.2d 787.

Turning to the first inquiry, we ask whether the exclusion violates the express language of the UIM statute. Ms. Greengo does not reference any express language of the UIM statute which might be violated by the exclusion at issue. After independently reviewing the statute, we are satisfied the exclusion at issue does not violate the express statutory text. On the contrary, we find the UIM statute explicitly permits anti-stacking clauses of the type at issue here.

The UIM statute authorizes insurers to prohibit "external stacking," which is the practice of adding together different policy coverages to increase available coverage limits:

The policy may provide that if an injured person has other similar insurance available to him under other policies, the total limits of liability of all coverages shall not exceed the higher of the applicable limits of the respective coverages.

RCW 48.22.030(6). In the UIM context, "[t]he term 'similar insurance' is appropriately understood to be other underinsured motorist insurance coverages." 3 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 40.1, at 238 (2d ed.1995). Therefore, the exclusion at issue is statutorily authorized by RCW 48.22.030(6) to the extent it limits the total UIM liability per accident to the single highest UIM liability limit when an insured is covered under more than one UIM policy.

Ms. Greengo argues that there is no "other similar insurance available" to her (RCW 48.22.030(6)), reasoning that even if there is but one accident, her UIM recovery to date represents compensation for only one of the two underinsured motorists. However, RCW 48.22.030(5) unambiguously authorizes insurers to set liability limits on a per accident basis regardless of the number of vehicles involved in the accident:

The limit of liability under the policy coverage may be defined as the maximum limits of liability for all damages resulting from any one accident regardless of the number of covered persons, claims made, or vehicles or premiums shown on the policy, or premiums paid, or vehicles involved in an accident.

RCW 48.22.030(5).

Ms. Greengo suggests this subsection authorizes per-accident limitations only in the "internal stacking" context, which is the adding together of various coverages within a single policy in order to increase coverage limits....