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

• Decision Date: 08 March 2004
• Citation: 843 A.2d 24,2004 ME 33
• Parties: Nicole LEVINE v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO.
• Court: Maine Supreme Court

843 A.2d 24

2004 ME 33

Nicole LEVINE v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO.

Supreme Judicial Court of Maine.

Submitted On Briefs: June 26, 2003.

Decided: March 8, 2004.

Sumner H. Lipman, Esq., Gregg D. Bernstein, Esq., Lipman, Katz & McKee, P.A., Augusta, for plaintiff.

William J. Kelleher, Esq., Taylor D. Fawns, Esq., Law Offices of William J. Kelleher, P.A., Augusta, for State Farm.

Paul S. Douglass, Esq., Lewiston, for Prudential.

Panel: SAUFLEY, C.J., and CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS, and LEVY, JJ.

Majority: SAUFLEY, C.J., and CLIFFORD, DANA, ALEXANDER, and LEVY, JJ.

Dissent: RUDMAN and CALKINS, JJ.

SAUFLEY, C.J.

[¶ 1] We are called upon here to determine whether Maine's uninsured/underinsured vehicle coverage laws require underinsured vehicle policies to supplant available tortfeasor insurance coverage that is not timely sought by the injured insured. State Farm Mutual Automobile Insurance Company appeals from a judgment entered in the Superior Court (Kennebec County, Marden, J.) concluding that Nicole Levine, who was injured by the driver of an underinsured vehicle, was entitled to recover from State Farm, the underinsured vehicle insurance carrier of the driver in whose vehicle she was riding, when the coverage held by the tortfeasor became unavailable to Levine because of the passage of time before she filed her claim. It is undisputed that the tortfeasor's coverage was less than the State Farm policy limits and that State Farm is responsible for that amount of underinsurance. Because we conclude that State Farm is only liable for the amount by which the State Farm coverage exceeded the insurance held by the tortfeasor, we vacate the judgment.

I. BACKGROUND

[¶ 2] In August 1992, Nicole Levine, a passenger in a motor vehicle operated by Michael Fisher, was injured when a vehicle negligently operated by William Kruzynski collided head-on with Fisher's automobile, causing Levine damages later determined by a jury to total $100,000.

[¶ 3] At the time that Kruzynski injured Levine, he was insured through a North East Insurance Company policy, which provided liability coverage of $50,000 per person. Fisher and Levine were each insured by Fisher's State Farm policy, which contained a provision for uninsured/underinsured vehicle coverage in the amount of $100,000 per person. Levine was also insured by a Prudential Property and Casualty Insurance Company policy, which provided uninsured/underinsured vehicle coverage in the amount of $100,000 per person. Coverage under that policy is not at issue here.

[¶ 4] Kruzynski died approximately one year after the accident and no probate proceedings were filed concerning his estate until March 1999, nearly six years after his death, when Levine filed a petition for formal adjudication of intestacy and appointment of a personal representative. In her petition, Levine requested that the court appoint her, as a creditor, to serve as personal representative of Kruzynski's estate. The Probate Court dismissed Levine's petition, holding that the three-year limit for commencing probate proceedings had expired, and she was therefore barred from obtaining relief for her injuries from Kruzynski or his estate.¹

[¶ 5] On January 18, 2001, more than eight years after the accident, Levine filed a direct cause of action against State Farm and Prudential, seeking recovery for the damages resulting from the 1992 automobile accident pursuant to each company's underinsured vehicle coverage.² The parties have never disputed that Kruzynski's vehicle qualified as an "uninsured motor vehicle" pursuant to the State Farm policy because the $50,000 bodily injury liability limit contained in his policy with North East was less than the $100,000 uninsured/underinsured vehicle limit Fisher carried in his policy with State Farm.³ Moreover, Kruzynski's negligence undisputedly caused the motor vehicle accident and, as a result, Levine was "legally entitled" to collect damages from him.⁴ Thus, the sole issue presented at the jury trial held in the Superior Court concerned the amount of Levine's total damages resulting from the accident, which the jury calculated to be $100,000. [¶ 6] Following the jury verdict, Levine filed a motion pursuant to M.R. Civ. P. 58 requesting that the court enter judgment in her favor in the amount of the jury verdict (plus costs) against State Farm, and in an amount equal to the prejudgment interest against Prudential.⁵ State Farm opposed Levine's motion, arguing that it only owed her the $50,000 by which the State Farm underinsured vehicle coverage exceeded Kruzynski's bodily injury coverage. State Farm also maintained that a "limits of liability" clause in its policy authorized an offset by the amount of Kruzynski's coverage limit because Kruzynski was "legally liable" for Levine's bodily injury due to his undisputed negligence in causing the accident.⁶

[¶ 7] The Superior Court granted Levine's Rule 58 motion and concluded that State Farm was responsible not only for the undisputed $50,000 by which Kruzynski was underinsured, but also for the $50,000 of Kruzynski's available insurance, which had become unavailable due only to the passage of time. This appeal followed.

II. DISCUSSION

[¶ 8] Underinsured and uninsured vehicle coverage is intended to provide financial compensation in instances where the tortfeasor "`is uninsured'" or "`is financially unable to furnish adequate compensation for the injuries caused in the accident.'" Braley v. Berkshire Mut. Ins. Co., 440 A.2d 359, 362 (Me.1982) (quoting Wescott v. Allstate Ins., 397 A.2d 156, 166 (Me.1979)). It was not intended to supplant the tortfeasor's coverage. Consistent with that purpose, the State Farm underinsured vehicle policy at issue expressly provides that it does not cover any amounts covered by "the total of the bodily injury limits of all other vehicle liability policies . . . that apply to any person . . . legally liable for such bodily injury." (Emphasis omitted.) Thus, the plain language of Levine's coverage precludes recovery from State Farm for the amount by which Kruzynski was actually insured.

[¶ 9] Levine argues, nonetheless, that the policy contravenes Maine's uninsured/underinsured vehicle statute, 24-A M.R.S.A. § 2902 (2000 & Supp.2003). Therefore, the question presented is whether the statute mandates coverage by the underinsured vehicle coverage carrier of the amount that would have been paid by the tortfeasor, but for the injured party's failure to seek recovery.

[¶ 10] Contrary to Levine's contentions, section 2902(4) does not require that the underinsured vehicle coverage carrier make all payments due from any insurer and then seek recovery from the tortfeasor's insurer. 24-A M.R.S.A. § 2902(4) (2000). It merely allows recovery from other responsible parties "[i]n the event" that the underinsured vehicle coverage carrier has made payment to the insured. Id. The underinsured vehicle coverage carrier has the right pursuant to statute to pay its insured and then seek recovery from any "legally responsible" party.⁷Id. Nothing in the statutes, however, mandates that approach.⁸

[¶ 11] Moreover, the entire statutory scheme makes it evident that underinsured vehicle coverage is in the nature of gap coverage, not a substitute for primary coverage. In mandating uninsured vehicle coverage in Maine, the Legislature intended to ensure coverage when an injured party is "legally entitled to recover damages from owners or operators of uninsured, underinsured or hit-and-run motor vehicles." 24-A M.R.S.A. § 2902(1) (2000) (emphasis added). There exists no indication of legislative intent to ensure coverage when and to the extent that the tortfeasor, in fact, has insurance. Because Kruzynski was only covered to a maximum of $50,000 per person, and Levine's damages totaled $100,000, Kruzynski was "underinsured" in the amount of $50,000. He was not, however, underinsured by the full $100,000. To the contrary, that $50,000 coverage was available to Levine. See Greenvall v. Me. Mut. Fire Ins. Co., 1998 ME 204, ¶ 8, 715 A.2d 949, 952-53

(joining jurisdictions that hold an insured may be "legally entitled to recover" without first obtaining a judgment against an uninsured motorist). Accordingly, the $50,000 available from Kruzynski's carrier cannot be considered an amount by which Kruzynski's vehicle was underinsured. See 24-A M.R.S.A. § 2902(1) (stating that an underinsured vehicle is one that has less coverage than the injured party's uninsured vehicle coverage).

[¶ 12] Other states have reached similar conclusions. "Generally, [an underinsured vehicle coverage] carrier is entitled to offset the amount of the tortfeasor's liability limits." Farmers Ins. Co. of Wash. v. Lautenbach, 93 Wash.App. 671, 963 P.2d 965, 967 (1998)

(emphasis added). This is consistent with our conclusion that underinsured vehicle coverage "fills the gap left by an underinsured tortfeasor" and is designed to "`permit the insured injured person the same recovery which would have been available to him had the tortfeasor been insured to the same extent as the injured party.'" Tibbetts v. Me. Bonding & Cas. Co., 618 A.2d 731, 734 (Me.1992) (emphasis added) (quoting Connolly v. Royal Globe Ins. Co., 455 A.2d 932, 935 (Me.1983)).

[¶ 13] We conclude, therefore, that State Farm is not responsible for the amount Levine could have obtained pursuant to Kruzynski's policy; rather, State Farm is responsible for paying $50,000—the extent to which Kruzynski's vehicle was underinsured.⁹ See 24-A M.R.S.A. § 2902(1); Tibbetts, 618 A.2d at 734. Nothing in the statute requires a contrary result.

[¶ 14] Finally, if we were to accept Levine's argument that the underinsured vehicle coverage carrier may not offset from its responsibility the amount of insurance held by the tortfeasor, the economic risks of injury in motor vehicle accidents would shift entirely to the underinsured vehicle coverage carrier. The...