Lincoln Gen. Ins. Co. v. Progressive N. Ins. Co.

• Decision Date: 02 January 2013
• Docket Number: No. 5070.,5070.
• Citation: 406 S.C. 534,753 S.E.2d 437
• Parties: LINCOLN GENERAL INSURANCE COMPANY, individually and as subrogee of Jose Salgado, Blanca Acosta, Miguel S. (age 14), Ofelia S. (age 10), and Cathy Alafaro, Respondents, v. PROGRESSIVE NORTHERN INSURANCE COMPANY, Avery Strickland, and Jennifer Strickland, Defendants, Of whom, Progressive Northern Insurance Company is the Appellant. Appellate Case No. 2011–196347.
• Court: South Carolina Court of Appeals

406 S.C. 534
753 S.E.2d 437

LINCOLN GENERAL INSURANCE COMPANY, individually and as subrogee of Jose Salgado, Blanca Acosta, Miguel S. (age 14), Ofelia S. (age 10), and Cathy Alafaro, Respondents,
v.
PROGRESSIVE NORTHERN INSURANCE COMPANY, Avery Strickland, and Jennifer Strickland, Defendants,
Of whom, Progressive Northern Insurance Company is the Appellant.
Appellate Case No. 2011–196347.

No. 5070.

Court of Appeals of South Carolina.

Heard Dec. 12, 2012.
Decided Jan. 2, 2013.

[753 S.E.2d 438]

Adam J. Neil, of Murphy & Grantland PA, of Columbia, for Appellant.

Jeffrey J. Wiseman, Stephen Lynwood, and Russell G. Hines, all of Young Clement Rivers LLP, of Charleston, for Respondents.

THOMAS, J.

After a car accident, Lincoln General Insurance Company, individually and as subrogee of Jose Salgado, Blanca Acosta, Miguel S., Ofelia S. and Cathy Alafaro (collectively, Respondents) sued Progressive Northern Insurance Company, Avery Strickland, and Jennifer Strickland. Lincoln General sought a declaratory judgment that Jennifer Strickland's policy with Progressive covered the accident, pursuant to the South Carolina Motor Vehicle Financial Responsibility Act (the MVFRA), for the mandatory minimum policy limits, even though the driver was disqualified from coverage under Jennifer Strickland's policy. The trial court granted summary judgment to Lincoln General. Progressive appeals. We reverse.

FACTS & PROCEDURAL HISTORY

The facts are not disputed. Jennifer Strickland and Avery Strickland were married. Jennifer took out an insurance policy with Progressive on a motor vehicle she owned. The record does not contain the entire insurance policy. The record contains an endorsement that provides the following:

You have named the following person as excluded drivers under this policy:

Avery Strickland
Date of Birth: March 25, 1978

[753 S.E.2d 439]

No coverage is provided for any claim arising from an accident or loss involving a motorized vehicle being operated by an excluded person. This includes any claim for damages made against any named insured, resident relative, or any other person or organization that is vicariously liable for an accident or loss arising out of the operation of a motorized vehicle by the excluded driver.

....

I declare that either the driver's license of the excluded persons named in this Named Driver Exclusion election has been turned into the Department of Motor Vehicles, or that an appropriate policy of liability insurance or other security as may be authorized by law has been properly executed in the name of the person to be excluded.

The named driver endorsement was signed by Jennifer and indicated that Avery surrendered his license to the Department of Motor Vehicles. No party disputes the accuracy of this representation.

In March 2009, Jennifer entrusted the vehicle to Avery. While operating the car, he was involved in an accident with a vehicle owned by Jose Salgado. Avery was at-fault, but Progressive refused coverage, contending Jennifer's policy was inapplicable while he was driving. Lincoln General paid uninsured motorist benefits to the occupants of Salgado's car under his policy.

Respondents brought suit against Progressive, Jennifer, and Avery. Among other claims and prayers for relief, Respondents sought declaratory judgment that Jennifer's policy with Progressive covered the minimum limits mandated by the MVFRA.

Respondents and Progressive both moved for summary judgment. The trial court granted summary judgment to Lincoln General. It found the MVFRA required Progressive to cover the claim up to the mandatory minimum limits of liability, despite the named driver endorsement in Jennifer's policy. The court reasoned the MVFRA provides that an owner's liability policy is “absolute” when injury occurs and South Carolina case law requires liability carriers to cover losses up to the statutory limits regardless of the endorsement. This appeal followed.

ISSUE ON APPEAL

Did the trial court err in granting Lincoln General summary judgment based upon a finding that Progressive must afford automobile liability insurance coverage up to the minimum limits despite the named driver endorsement?

STANDARD OF REVIEW

“The purpose of summary judgment is to expedite the disposition of cases not requiring the services of a fact finder. When reviewing the grant of a summary judgment motion, this court applies the same standard that governs the trial court under Rule 56(c), SCRCP.” Nakatsu v. Encompass Indem. Co., 390 S.C. 172, 177, 700 S.E.2d 283, 286 (Ct.App.2010). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), SCRCP.

LAW & ANALYSIS

Progressive argues the trial court erred in awarding minimum limits liability coverage because the named driver endorsement in Jennifer's policy was statutorily authorized and therefore is not inconsistent with the public policy established by the MVFRA. We agree.

The cardinal rule of statutory construction is to ascertain and effectuate the intent of the Legislature. Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000). “All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, and that language must be construed in light of the intended purpose of the statute.” Broadhurst v. City of Myrtle Beach Election Comm'n, 342 S.C. 373, 380, 537 S.E.2d 543, 546 (2000). The court should give words their plain and ordinary meaning, without resort to subtle or forced construction to limit or expand the statute's operation. Auto Owners Ins. Co. v. Rollison, 378 S.C. 600, 609, 663 S.E.2d 484, 488 (2008). However, statutes relating to an insurance contract are generally part of the contract as a matter of law.

[753 S.E.2d 440]

Nakatsu, 390 S.C. at 178, 700 S.E.2d at 287. To the extent a policy conflicts with an applicable statute, the statute prevails. Id.

Under the MVFRA, an insurance carrier's liability for “insurance required by this chapter” is “absolute whenever injury or damage covered by the motor vehicle liability policy occurs.” S.C.Code Ann. § 56–9–20(5)(b)(1) (2006). Automobile insurance policies may not be issued unless they “contain[ ] a provision insuring the persons defined as the insured” in liability coverage at a minimum of $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 per accident for injury to property. S.C.Code Ann. § 38–77–140(A) (Supp.2011). An “insured” is statutorily defined to include the named insured and resident relative. S.C.Code Ann. § 38–77–30(7) (2002). As a result, resident relatives of the named insured are generally covered as an “insured” under the named insured's policy regardless of whether the named insured gave them permission to operate the covered vehicle. SeeS.C.Code Ann. § 38–77–140(A) (Supp.2011) (providing that automobile insurance policies must provide coverage to “the persons defined as the insured”); § 38–77–30(7) ( “ ‘Insured’ means the named insured and, while resident of the same household, the spouse of any named insured and relatives of either....”).

The purpose of the MVFRA is to give greater protection to those injured through the negligent operation of automobiles. Penn. Nat'l Mut. Cas. Ins. Co. v. Parker, 282 S.C. 546, 551, 320 S.E.2d 458, 461 (Ct.App.1984). The legislation requires insurance for the benefit of the public, and an insurer may not “nullify its purposes through engrafting exceptions from liability as to uses which it was the evident purpose of the statute to cover.” Id. Therefore, our courts will strike down policy provisions that have “the effect of limiting the coverage requirements of the statute[s].” See id. (striking an omnibus provision purporting to provide coverage to certain automobiles “not used for business or commercial purposes other than farming” because it had the effect of limiting an insured's coverage in contravention of the mandatory minimum limits).

Nevertheless, our courts have consistently cautioned that “[r]easonable exclusionary clauses which do not conflict with the legislative expression of the public policy of the State as revealed in the various motor vehicle insurance statutes are permitted.” Id. In fact, our Code specifies certain exclusions that may be included in automobile insurance policies. For example:

The automobile policy need not insure any liability under the Workers' Compensation Law nor any liability on account of bodily injury to an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance, or repair of the motor vehicle nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.

S.C.Code Ann. § 38–77–220 (2002). Section 56–9–20(5)(c) of the MVFRA contains similar language. SeeS.C.Code Ann. § 56–9–20(5)(c) (2006) (“The motor vehicle liability policy need not insure any liability under the Workers' Compensation Law nor any liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance, or repair of the motor vehicle, nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.”).

Further, under section 38–77–340 of our Code, the named insured may agree with the insurer that the named insured's policy “shall not apply” while certain persons operate the motor vehicle:

Notwithstanding the definition of “insured” in Section 38–77–30, the insurer and any named insured must, by the terms of a written amendatory endorsement, the form of which has been approved by the director or his designee, agree that coverage under such a policy of liability insurance shall not apply while the motor vehicle is being operated by a natural...