Hawn v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 15 May 1991
• Docket Number: No. CY-90-3063-AAM.,CY-90-3063-AAM.
• Citation: 768 F. Supp. 293
• Parties: Karen L. HAWN, as Personal Representative of the Estate of Raymond L. Hawn, deceased, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., a foreign insurance corporation, Defendant.
• Court: U.S. District Court — District of Washington

768 F. Supp. 293

Karen L. HAWN, as Personal Representative of the Estate of Raymond L. Hawn, deceased, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., a foreign insurance corporation, Defendant.

No. CY-90-3063-AAM.

United States District Court, E.D. Washington.

May 15, 1991.

Richard R. Johnson, Velikanje, Moore & Shore, Inc., P.S., Yakima, Wash., for plaintiff.

Philip W. Wagner, Bogle & Gates, Yakima, Wash., for defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

McDONALD, District Judge.

On April 10, 1991, the plaintiff's motion for summary judgment, and the defendant's cross-motion for summary judgment, came on for hearing with oral argument. The plaintiff was represented by Richard Johnson. Philip Wagner appeared on behalf of the defendant.

FACTS

The plaintiff, Karen Hawn is the widow of Raymond Hawn who, as a pedestrian, was struck by a motor vehicle driven by Jan Spencer, an underinsured motorist, and killed. Karen Hawn has settled all claims with Jan Spencer and her insurance company in exchange for payment of the $25,000 liability policy limits. The plaintiff was not made whole by this payment. The Hawns had underinsured motorist insurance coverage in three separate policies on three separate vehicles through State Farm Mutual Insurance Company (SF):

1) Policy No. 2485 766 B22-47 — insuring a 1982 VW Rabbit — coverage limit of $50,000.

2) Policy No. 1339 277 F17 47D—insuring a 1972 Ford Pickup Truck — coverage limit of $50,000.

3) Policy No. 2266 322 C24-47 — insuring a 1975 Dodge Pickup — coverage limit of $30,000.

State Farm has paid the plaintiff $50,000, the underinsured motorist coverage limit on one of the policies, (V.W. Rabbit) but has declined to pay Karen Hawn anything under the other two insurance policies. State Farm argues that Hawn is precluded from collecting under these two policies by the "other insurance" limitation in the insurance policies and other provisions regarding limits of liability (See Ct.Rec. 35; Exh. B).

The applicable provisions are as follows:

"3. Coverage U — Underinsured Motor Vehicle — Bodily Injury

b. Limits of Liability

5. The limits of liability are not increased because:

a. an insured has coverage for more than one vehicle under this or any other policy; or

b. more than one person is insured at the time of the accident; or

c. more than one underinsured motor vehicle is involved in the same accident.

d. If There Is Other Coverage

The limit of liability under this policy is 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 declarations page, or premiums paid, or vehicles involved in an accident.

Subject to the above:

1. If the insured sustains bodily injury as a pedestrian and other underinsured motor vehicle coverage applies:

a. the total limits of liability under all such coverages shall not exceed that of the coverage with the highest limit of liability; and

b. we are liable only for our share. Our share is that percent of the damages that the limit of liability of this coverage bears to the total of all underinsured motor vehicle coverage applicable to the accident."¹

The parties seek only a declaratory judgment on the issue of whether the plaintiff is entitled to or is precluded from stacking the underinsured motorist coverage on the three policies. The parties have agreed that there is no genuine issue as to any material, outcome-determinative fact in this case before this court. Any disputed liability or damages issues are to be determined through arbitration per the agreement in the insurance policies. Both parties agree that the determination of this coverage issue is a question of law for the court to decide and that the sole issue before this court is the threshold issue of coverage. (Ct.Rec. 22, Exh. A); Kraus v. Grange Ins. Assn., 48 Wash.App. 883, 740 P.2d 918 (1987).

Upon consideration of the record and the arguments presented by counsel, and for the reasons below, and those set forth more fully by the court at the hearing,

IT IS HEREBY ORDERED:

1. The defendant's motion to strike (Ct. Rec. 22) is DENIED.

2. The plaintiff's motion for summary judgment (Ct.Rec. 9) is GRANTED.

3. The defendant's cross-motion for summary judgment (Ct.Rec. 26) is DENIED.

DISCUSSION

Anti-stacking provisions as they relate to underinsured motorist coverage based on "other coverage" are explicitly authorized by statute in Washington. RCW 48.22.030(6) provides:

"(6) 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."

The issue before this court is whether the language used in the State Farm Insurance policies issued to the Hawns clearly and unambiguously preclude Karen Hawn from collecting on all three insurance policies in the instant case where the deceased was killed by an underinsured motorist.

The plaintiff argues that the "other coverage" provision is, on its face, fairly susceptible to two different interpretations, both of which are reasonable. "Other underinsured motor vehicle coverage" could refer to either: 1) insurance on the same loss issued by another insurer, or 2) another policy issued to the insured by State Farm on another of her vehicles.

The defendant argues that when read together with the limits of liability paragraph (b.5) and the "maximum limits" paragraph (d), the "other insurance" clause (d.1.a.) clearly and unambiguously prohibits an insured from stacking policies from the same company. The defendant maintains that "other underinsured vehicle coverage" means "different than the item at hand."

The law regarding the construction of insurance contracts is well established. Policy language is to be interpreted in accordance with the way it would be understood by the average person. Dairyland Ins. Co. v. Ward, 83 Wash.2d 353, 358, 517 P.2d 966 (1974). A clause in a policy is ambiguous when, on its face, it is fairly susceptible to two different interpretations, both of which are reasonable. Morgan v. Prudential Ins. Co. of Am., 86 Wash.2d 432, 435, 545 P.2d 1193 (1976). If a clause is ambiguous the court must apply a construction that is most favorable to the insured, even though the insurer may have intended another meaning. Vadheim v. Continental Ins. Co., 107 Wash.2d 836, 840-41, 734 P.2d 17 (1987). Haney v. State Farm Insurance, 52 Wash.App. 395, 397, 760 P.2d 950 (1988) rev. den. 111 Wash.2d 1033 (1989).

Contracts of insurance are to be construed in favor of the insured and most strongly against the insurer. Kraus v. Grange Ins. Assn., 48 Wash.App. 883, 740 P.2d 918 (1987). This is especially true with respect to exclusionary clauses. Vadheim v. Continental Insurance Co., 107 Wash.2d 836, 734 P.2d 17 (1987). However, the court must look to the insurance policy as a whole and where language in an insurance policy is clear and unambiguous, a court may not modify or strike that language or read ambiguity into the policy. Progressive Cas. Ins. Co. v. Jester, 102 Wash.2d 78, 79, 683 P.2d 180 (1984); Furlong v. Farmers Insurance, 44 Wash.App. 458, 461, 721 P.2d 1010 (1986). An insurance policy is not rendered structurally ambiguous merely because pertinent language is not contained on a single page or in the same clause. Safeco Corp. v. Kuhlman, 47 Wash.App. 662, 737 P.2d 274 (1987).

The defendant cites Vadheim for the proposition that if the "other insurance" clause in the policy follows the provisions of RCW 48.22.030(6) then it is enforceable. The defendants stress that their clause is very similar to the language in the statute (See Ct.Rec. 27). The court agrees that it is. However, Vadheim requires an "other insurance" clause to follow the provisions of the statute and be unambiguous. Id., 107 Wash.2d at 844, 734 P.2d 17.

When read as a whole, within the factual context of this case, the court finds that the "other insurance" clause in the policy at bar is ambiguous. It is reasonably susceptible to the two different interpretations suggested by the plaintiff. Given this ambiguity it must be construed in favor of the insured. A reasonable interpretation of the clause is that "other underinsured motor vehicle coverage" means other insurance provided by another insurance company. This is particularly true when read with the proration paragraph.

The defendant argues that the proration clause is not even applicable here because when State Farm made its payment on the highest limit, the prorating clause was satisfied. The court disagrees. This clause is relevant because when read along with the "other insurance clause", the meaning of the entire section regarding other insurance and injuries sustained by the insured as a pedestrian is unclear. The court cannot ignore that the "other insurance" paragraph (d.1.a.) and the proration paragraph (d.1.b.) are joined by the word "and". The proration clause provides, "We are only liable for our share." To the average purchaser this would mean State Farm's share as apportioned between State Farm and another insurance company.²

The fact that the "other insurance" section and the "proration" section are made subject to the paragraph immediately preceding does not clarify matters. This paragraph only determines the maximum limit under each specific policy. It specifically refers to "this policy". This section would seem to have no relevance to stacking of separate insurance policies. It precludes the stacking of coverage under one policy (internal stacking).

The "limits of liability" section (3.b.5) provides that the limits of liability for each policy will not be increased for various contingencies. This section does not prohibit stacking of different policies. It only provides that the limits of each policy will not be increased. When read with...