Larson v. Geico Gen. Ins. Co.
| Decision Date | 21 October 2014 |
| Docket Number | No. CV-14-00924-PHX-DGC,CV-14-00924-PHX-DGC |
| Parties | Gregory Melvin Larson, Plaintiff, v. GEICO General Insurance Company, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Plaintiff Gregory Larson has filed a motion for partial summary judgment regarding the offset Defendant GEICO General Insurance Company (GEICO) may receive in connection with an underinsured motorist (UIM) claim. Doc. 15. The motion is fully briefed and the Court heard oral argument on October 10, 2014. For the reasons that follow, the Court will grant Plaintiff's motion.1
Plaintiff suffered serious and permanent injuries in a motor vehicle accident caused by Barrett Lavon Dempster, an underinsured motorist. Doc. 1-1 at 3. Before the accident, Dempster consumed alcohol at a nearby golf course. Id. While driving intoxicated, Dempster forced Plaintiff's vehicle off the roadway and into a light pole. Id.
Dempster had motor vehicle liability insurance with limits of $25,000 applicable to Plaintiff's claim. Id. Plaintiff had automobile insurance issued by GEICO, which provided UIM coverage of $250,000 per person. Id. The golf course was insured through a general liability insurance policy with a limit of $1,000,000. Id. at 4.
Plaintiff pursued negligence claims against Dempster and the golf course in state court. Id. at 3-4. Plaintiff eventually settled with Dempster for his policy limits of $25,000 (id. at 4) and with the golf course for $60,000 (Doc 18 at 7). After settling the negligence claims, Plaintiff presented his UIM claim to GEICO. Doc. 1-1 at 6. Plaintiff alleges GEICO refused to compensate him for his injuries. Doc. 1-1 at 4.
Plaintiff originally brought this action for declaratory relief in Maricopa County Superior Court. Plaintiff alleged breach of contract and bad faith against GEICO for refusing to pay Plaintiff his entire UIM policy limit of $250,000. Doc. 1. GEICO removed the case to this Court, and Plaintiff now moves for partial summary judgment, arguing that A.R.S. § 20-259.01 and GEICO's UIM policy prevent GEICO from offsetting the golf course settlement against the UIM coverage. Doc. 15.
In diversity cases, state substantive law supplies the rule of decision. See 28 U.S.C. § 1652; Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). A federal court interpreting state law is bound by decisions of the state's highest court. Vernon v. City of Los Angeles, 27 F.3d 1385, 1391 (9th Cir. 1994). Where the state supreme court has not yet ruled on the issues, federal courts must determine how the state supreme court would decide based on lower court opinions, statutes, and treatises. Id.
Arizona has adopted the Uninsured/Underinsured Motorist Act (UMA), A.R.S. § 20-259.01. Under the UMA, every insurer writing motor vehicle liability policies in Arizona must offer UIM coverage and must include such coverage in a policy at the request of the insured. A.R.S. § 20-259.01(B). The parties disagree on the meaning of § 20-259.01(G). Plaintiff asserts that the only reasonable interpretation of this provisionprevents UIM insurers from deducting a non-motorist tortfeasor's insurance policy liability limits or settlement amounts from UIM coverage. Doc. 15 at 3. GEICO argues that it may offset all liability payments Plaintiff has received for injuries and damages related to the accident, including the $60,000 settlement from the golf course. Doc. 17 at 1.
The statutory provision at issue provides this definition:
"Underinsured motorist coverage" includes coverage for a person if the sum of the limits of liability under all bodily injury or death liability bonds and liability insurance policies applicable at the time of the accident is less than the total damages for bodily injury or death resulting from the accident. To the extent that the total damages exceed the total applicable liability limits, the underinsured motorist coverage provided in subsection B of this section is applicable to the difference.
Plaintiff argues that the "limits of . . . liability insurance policies" referred to in this section refers solely to insurance policies of underinsured motorists. Plaintiff argues that the statute is silent as to insurance policies for non-motorist tortfeasors, and that non-motorist insurance policies should therefore not be considered when determining UIM coverage. Doc. 15 at 4. GEICO argues that "the sum of the limits of liability under all . . . liability insurance policies" clearly includes all liability insurance policies at the time of the accident, including policies of non-motorist tortfeasors. Doc. 17 at 3.
The Court finds the statute ambiguous. On one hand, the provision at issue defines "underinsured motorist" coverage, suggesting that the provision concerns the insurance - or, more precisely, the underinsurance - of "motorists," not other tortfeasors. On the other hand, the statue states that UIM coverage applies only if the sum of liability limits under "all" liability insurance policies applicable at the time of the accident is less than the total damages.
When interpreting statutes under Arizona law, the Court must determine and give effect to legislative intent. Calvert v. Farmers Ins. Co. of Ariz, 697 P.2d 684, 687 (Ariz.1985); see also Phoenix Title & Trust Co. v. Burns, 395 P.2d 532, 533 (Ariz. 1964). The Court must consider the policy behind the statute. Cohen v. State, 588 P.2d 299, 302 (Ariz. 1978). The Court must also consider the words, context, subject matter, and effects and consequences of the statute. Calvert, 144 Ariz. at 294.
But this is not all. The Court must also consider other Arizona statutes that bear on the subject. State ex rel. Larson v. Farley, 471 P.2d 731, 734 (Ariz. 1970). The UMA is not the only relevant statute in this case.
Arizona has also adopted A.R.S. § 12-2506, which abolishes joint and several liability in most tort cases, requires fact finders to allocate fault among all tortfeasors responsible for the loss, and limits a plaintiff's recovery against a particular tortfeasor to that tortfeasor's allocated share of the damages.2 The relevant provision of § 12-2506 states:
In an action for personal injury, property damage or wrongful death, the liability of each defendant for damages is several only and is not joint, except as otherwise provided in this section. Each defendant is liable only for the amount of damages allocated to that defendant in direct proportion to that defendant's percentage of fault, and a separate judgment shall be entered against the defendant for that amount. To determine the amount of judgment to be entered against each defendant, the trier of fact shall multiply the total amount of damages recoverable by the plaintiff by the percentage of each defendant's fault, and that amount is the maximum recoverable against the defendant.
A.R.S. § 12-2506(A). Thus, under current Arizona law, one tortfeasor cannot be required to pay for damages allocated to another tortfeasor. Nor can a tortfeasor reduce itsliability by payments made by other tortfeasors. See Jamerson v. Quintero, 313 P.3d 532, 534 (Ariz. Ct. App. 2013) (); Roland v. Bernstein, 828 P.2d 1237, 1239 (Ariz. Ct. App. 1991) ().3
The Court begins its analysis by examining the language of the statute at issue - in this case, § 20-259.01(G) of the UMA. That provision defines "underinsured motorist coverage," making clear that the concern is with "underinsured motorists," not "underinsured tortfeasors." If the rest of the provision is read with this focus in mind, the phrase "limits of liability under all bodily injury or death liability bonds and liability insurance policies" can be read to mean bonds and policies of underinsured motorists.
As noted above, it is possible to read § 20-259.01(G) as applying more broadly to all insurance policies that might be at issue after an accident, including the policies of tortfeasors other than the underinsured motorist, but the Court finds the narrower reading to be more consistent with the focus and intent of the UMA. Further, the narrower reading becomes particularly compelling when the effects of § 12-2506 are considered.
A hypothetical situation will help explain the Court's reasoning. If Plaintiff's damages in this case totaled $300,000 and Plaintiff sought recovery of his losses against Dempster and the golf course, § 12-2506 would require the fact finder to apportion fault between Dempster and the golf course. If, hypothetically, the fact finder allocated 90% of the fault to Dempster and 10% of the fault to the golf course, Plaintiff could recover a maximum of $270,000 from Dempster (90% of Plaintiff's injuries) and $30,000 from thegolf course (10% of Plaintiff's injuries). Because joint and several liability has been abolished by § 12-2506, Plaintiff could not recover any portion of the $270,000 attributed to Dempster from the golf course. A.R.S. § 12-2506(A); State Farm Ins. Cos. v. Premier Manufactured Sys., Inc., 172 P.3d 410 (Ariz. 2007) () (quoting Dietz v. Gen. Elec. Co., 821 P.2d 166, 171 (Ariz. 1991)) (emphasis in original). Nor could Dempster reduce his liability by any amounts paid by the golf course, even if the golf course paid amounts in excess of its...
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