Hartline v. Hartline

• Court: Oklahoma Supreme Court
• Writing for the Court: OPALA, J.
• Citation: Hartline v. Hartline, 2001 OK 15, 39 P.3d 765 (Okla. 2001)
• Decision Date: 13 February 2001
• Docket Number: No. 87046.,87046.
• Parties: Glinda HARTLINE, Plaintiff-Garnishor-Appellee, v. James HARTLINE, Defendant, v. Mid-Century Insurance Company, Defendant-Garnishee-Appellant.

39 P.3d 765

2001 OK 15

Glinda HARTLINE, Plaintiff-Garnishor-Appellee, v. James HARTLINE, Defendant, v. Mid-Century Insurance Company, Defendant-Garnishee-Appellant.

No. 87046.

Supreme Court of Oklahoma.

February 13, 2001.

Joe Farnan, Law Office of Joe Farnan, Purcell, Oklahoma, for Appellee.

Paul B. Middleton, Dobbs, Schroeder & Middleton, Oklahoma City, Oklahoma, for Appellant.

OPALA, J.

¶ 1 The dispositive question tendered on certiorari is whether an automobile liability policy exclusion, which operates to deny all coverage to a named insured who is injured while riding as a passenger in the insured vehicle, violates the legislative policy underlying Oklahoma's compulsory insurance law. We answer in the affirmative, but only insofar as the injured person is left sans the minimum mandated coverage.

I ANATOMY OF LITIGATION

¶ 2 On 22 September 1993 Glinda Hartline ("Glinda"), a passenger in a 1975 Ford driven by her husband, James Hartline ("James"), sustained bodily injuries in an automobile accident caused by the latter's negligence. Glinda brought an action for damages against James. The trial court entered judgment for Glinda in the amount of $7,000 to be satisfied solely from the proceeds of a liability insurance policy issued by Mid-Century Insurance Company ("Mid-Century"). The policy provided coverage in the minimum amount required by Oklahoma's compulsory insurance law.¹ At the time of the accident, Glinda and James were married to each other and residing in the same household.

¶ 3 The insurance policy in question was issued on 20 September 1993. Glinda, who was not present when James applied for the policy, did not sign the application form. James alone rejected uninsured motorist coverage. Although the declarations page of the policy lists both James and Glinda as named insureds and billing statements were subsequently sent in both their names, the insurer's internal data sheet identifies James alone as the named insured. Title to the 1975 Ford (and its registration) was in James's name. Neither the title to, nor the registration of, any other motor vehicle stood in Glinda's name.

¶ 4 Glinda brought a postjudgment garnishment proceeding against Mid-Century, which denied liability. The insurer then moved for summary judgment. Citing as controlling authority this court's pronouncement in Looney v. Farmers Insurance Group,² the insurer argued that Glinda, as a named insured under the policy, was validly excluded from liability coverage. In response, Glinda argued that Looney no longer controlled the validity of the exclusion in question. Instead, she urged that the insurance proceeds were available to her because our more recent decision in Nation v. State Farm Insurance Company³ had invalidated the policy exclusion relied on by Mid-Century. While awaiting a ruling on the summary judgment motion, the parties prepared a stipulation of facts and submitted the case for a bench trial. Judgment was entered for Glinda; Mid-Century appealed. The Court of Civil Appeals, Div. IV, (COCA) reversed. Agreeing with Mid-Century that Looney was the controlling authority, COCA held that Mid-Century's policy exclusion for bodily injury to an insured was valid and relieved the insurer of liability for Glinda's injuries. Having granted Glinda's certiorari petition, we now vacate COCA's opinion and affirm the nisi prius judgment.

II STANDARD OF REVIEW

¶ 5 The facts in this cause are undisputed, having been submitted to the trial court by stipulation. The issue before us is one of law in which we must determine the validity of an exclusion contained in a policy of automobile liability insurance. Review of contested issues of law is governed by a de novo standard. In its reexamination of a trial court's legal rulings an appellate court exercises plenary, independent and nondeferential authority.⁴

III THE "INSURED PERSON" EXCLUSION IN MID-CENTURY'S POLICY

¶ 6 The Mid-Century policy here under review provides in pertinent part:

PART I — LIABILITY

Coverage A — Bodily Injury

Coverage B — Property Damage

We will pay damages for which any insured person is legally liable because of bodily injury to any person and property damage arising out of the ownership, maintenance or use of a private passenger car, a utility car, or a utility trailer. (emphasis in original denoting defined terms)

* * * * * *

Exclusions

This coverage does not apply to:

* * * * * *

11.a. Liability for bodily injury to an insured person. (emphasis in original denoting defined terms)

¶ 7 The policy defines an insured person — for purposes of both the liability coverage and exclusionary clause provisions — as (1) the named insured listed on the declarations page, (2) that person's spouse if a resident of the same household, and (3) relatives of either residing in the same household.⁵

¶ 8 Mid-Century argues the quoted policy exclusion relieves it of liability to Glinda. This is so because she falls within the excluded class as a named insured on the declarations page of the policy. The insurer contends that this court's pronouncement in Looney, which affirmed the validity of an exclusionary provision barring recovery by a named insured, compels today a decision in its favor. Glinda, on the other hand, contends that Looney is no longer the controlling authority on the validity of named insured/household exclusionary clauses, having been supplanted by this court's more recent pronouncement in Nation. The latter decision, she urges, teaches that named insured/household exclusionary clauses are void as contrary to the public policy that underlies compulsory liability insurance.

IV NEITHER LOONEY NOR NATION ADEQUATELY ADDRESSES THE OVERBROAD EXCLUSION CLAUSE IN MID-CENTURY'S POLICY

¶ 9 In Looney we were presented with facts quite similar to those in the case at hand. Nita Looney was injured while riding as a passenger in a car owned and driven by her husband, with whom she was then living. The accident was Mr. Looney's fault, and Mrs. Looney obtained a judgment against him. She then brought a postjudgment garnishment proceeding against the vehicle's insurer, Farmers Insurance Group (Farmers), which denied liability based upon a policy exclusion for bodily injury to (1) any member of the insured's household except a servant, or (2) the named insured. The policy defined a named insured as the insured named on the policy's declarations page and that individual's spouse if a resident of the same household. Mrs. Looney was arguably excludable both as a named insured and as a member of the insured's household.

¶ 10 Mrs. Looney argued that Farmers' exclusionary provision was unenforceable because it violated the public policy of the state expressed in Oklahoma's Financial Responsibility Act (the Act).⁶

Considering for the first time the requirements of the then newly enacted Article VI of the Act, which mandated liability insurance,⁷ the court held that its provisions were silent on the matter of policy exclusions.⁸ Instead, the opinion turned to § 7-324(e),⁹ a provision found in Article III of the Act, and treated it as determinative of an exclusion's validity for an Article VI-mandated policy.¹⁰ After examining that provision in detail,¹¹ the court concluded that it did not prevent Farmers from excluding Mrs. Looney who, it was noted, was a named insured under the policy and not just a member of Mr. Looney's household.¹²

¶ 11 Despite the factual similarities between Looney and the instant litigation, we decline to rest today's decision on the earlier case. There are times when it becomes necessary to reassess our commitment to the binding force of a prior holding.¹³ This is such a time. Since its enactment in 1976, the compulsory insurance law has undergone numerous amendments and enhancements.¹⁴ This metamorphosis, together with the judiciary's gradual unfolding of the public policy that underlies the law's enactment,¹⁵ has largely robbed Looney of its rationale and justification. Moreover, in Young v. Mid-Continent Casualty Company,¹⁶ this court expressly disapproved of Looney's reliance on an Article III provision to determine the validity of an exclusion in an Article VI-mandated insurance policy.¹⁷ Because (a) the court has departed from the reasoning on which Looney was based, and (b) the compulsory liability insurance law has since its Looney-era infancy stage developed into a more comprehensive regime of law-mandated insurance coverage, the rule in Looney can no longer be regarded as a complete expression of Oklahoma law's current stance toward permissible exclusions from mandatory liability insurance coverage. In short, Looney is to be treated as overruled.

¶ 12 We also reject Glinda's contention that Nation v. State Farm Insurance Company¹⁸ controls the issue before us. The policy under review in that case provided no coverage for bodily injuries to an insured or any resident family member of an insured. It defined an insured to include resident relatives of the named insured or of the named insured's spouse. The person whose exclusion was sought by the insurer was the insured's five-year old son, who fell within the exclusion both as an insured and as a resident family member of an insured. We held the exclusionary clause unenforceable "insofar as it attempts to defeat the legislature's mandate of a minimum amount of liability insurance coverage available for persons in the position of the deceased passenger here." (emphasis added)¹⁹ This indeterminate language did no more than invalidate the exclusionary clause there in contest without providing any gauge for determining invalidity in future cases. Nation does not support Glinda's expansive view of public policy that would favor broad exclusion invalidation flowing from our compulsory insurance law.

¶ 13 In sum, neither Looney nor Nation adequately addresses overbroad exclusion clauses in automobile policies that adversely affect the "named insured" or "members of the...