Locey By and Through Locey v. Farmers Ins. Co. of Idaho, 17000

Decision Date18 October 1988
Docket NumberNo. 17000,17000
Citation764 P.2d 101,115 Idaho 24
PartiesSpring LOCEY and Dawn Locey, By and Through Their Conservator and Guardian, Bob LOCEY, Plaintiffs-Appellants, v. FARMERS INSURANCE COMPANY OF IDAHO, Defendant-Respondent.
CourtIdaho Court of Appeals

R. Brad Masingill, Weiser, for plaintiffs-appellants.

William G. Dryden and Robert M. Tyler, Jr. (argued), Boise, for defendant-respondent.

WALTERS, Chief Judge.

Spring and Dawn Locey were injured while riding in an automobile owned by their father. The driver of the auto, a friend of their father, was not insured. Farmers Insurance Company of Idaho, the insurer of the auto, denied the Loceys' claim for either liability or uninsured motorist coverage. The Loceys brought this action. On stipulated facts, both parties moved for summary judgment. The district court granted summary judgment to Farmers. The Loceys' appeal presents the question whether a definition in the Farmers' policy, excluding the insured vehicle from being an uninsured motor vehicle for purposes of uninsured motorist coverage, is void as contrary to Idaho's uninsured motorist statute or public policy. We hold that it is not and, accordingly, affirm the district court's judgment.

The following background is derived from the parties' "stipulation of facts for summary judgment." On March 23, 1984, a friend of Bob Locey was driving Bob Locey's Subaru automobile. Bob's daughters, Spring and Dawn Locey, were among the passengers in the automobile. The driver was not personally insured. A one-car accident resulted from the driver's negligence. Spring, Dawn, and other passengers were seriously injured.

Both the Subaru and another vehicle, a Chevrolet truck owned by Bob Locey, were insured by Farmers Insurance Company of Idaho. Farmers denied liability coverage to Spring and Dawn pursuant to a "household" exclusion. Having failed to recover under the liability provisions of the policy, Spring and Dawn submitted a claim under the uninsured motorist coverage of the Subaru policy. Farmers also denied that claim, citing a definition in the policy excluding the "described automobile" (the Subaru) while being used by the insured or a permittee from being an "uninsured motor vehicle." Farmers apparently referred to an exclusion for "other vehicles owned by the insured" in denying coverage asserted by the Loceys under the Chevrolet policy.

Spring and Dawn filed this action in district court. The parties stipulated to the above facts and filed cross-motions for summary judgment. The Loceys did not dispute Farmers' decision to deny liability coverage. Instead, the Loceys pursued their uninsured motorist coverage claim and they sought to "stack" all of their Farmers Insurance uninsured motorist coverages. The district court concluded that the policy exclusions were unambiguous and not contrary to the public policy reflected by Idaho's uninsured motorist statute, I.C. § 41-2502. Therefore, the court held no recovery could be had under the uninsured motorist coverage of either the Subaru or Chevrolet policies. Relying on Hansen v. State Farm Mut. Auto. Ins. Co., 112 Idaho 663, 735 P.2d 974 (1987), the court also determined that the anti-stacking clauses in the policies would likewise bar any cumulative recovery. Accordingly, the court granted Farmers' motion to dismiss the complaint. The Loceys appeal from that decision.

A motion for summary judgment is governed by I.R.C.P. 56(c). Summary judgment is appropriate where there is no genuine issue of material fact and where the moving party is entitled to judgment as a matter of law. Id. Where the facts are stipulated by the parties, the trial court's task is to determine which party should prevail as a matter of law. See, e.g., Noyes v. Noyes, 106 Idaho 352, 679 P.2d 152 (Ct.App.1984). When reviewing such a determination, we exercise free review. Standards of Appellate Review, IDAHO APPELLATE HANDBOOK § (Idaho Law Foundation 1985).

On appeal, Spring and Dawn assert that the court erred by concluding that Farmers was not liable under the uninsured motorist provisions of their father's policies. They contend that the exclusion for accidents caused by operators of the respective vehicles insured by each insurance contract is contrary to public policy and does not conform to the applicable Idaho statute. In response, Farmers calls our attention to Idaho Supreme Court decisions holding that uninsured motorist coverage may be limited by policy terms. Each party seeks attorney fees on appeal.

We begin by reviewing the unique posture of this case as it comes before us. As mentioned above, this action arose out of an automobile accident on March 23, 1984. The vehicle owner's policy excluded liability coverage for injuries suffered by members of the insured's household such as Spring and Dawn. Prior to December 31, 1984, Farmers had denied the Loceys' liability coverage claim and had instead paid other passengers to the full extent of the liability limits of the policy. A claim under the uninsured motorist provision was submitted by the Loceys on April 30, 1985. That claim was denied on July 2, 1985. This action was filed on November 12, 1985.

On November 26, 1985, the Idaho Supreme Court held that such household liability exclusion clauses violate Idaho's compulsory liability insurance law, I.C. § 49-233, and are therefore void--but that liability recovery is limited to the extent of the policy. Farmers Insurance Group v. Reed, 109 Idaho 849, 712 P.2d 550 (1985). The Court announced that Reed would be prospective in effect, applying to that action, to all actions pending as of December 31, 1984, and to all actions arising subsequent to that date. Id. Having understandably failed to anticipate the Supreme Court's holding in Reed and having seen the full limits of the liability coverage already paid out to others, the Loceys now seek the only relief still available--under the uninsured motorist coverage of their policy. Farmers contends that recovery is barred under an express provision of the policy.

An insurer must use clear and precise language if it wishes to restrict the scope of its coverage. Meckert v. Transamerica Ins. Co., 108 Idaho 597, 701 P.2d 217 (1985); Moss v. Mid-America Fire and Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982). On appeal, the Loceys do not contend that the terms of this policy are ambiguous. They assert only that the policy's exclusion of "the insured vehicle" from uninsured motorist coverage contravenes public policy and Idaho's uninsured motorist statute, 1 I.C. § 41-2502. 2 Although apparently a question of first impression in Idaho, the courts of many other states have addressed this issue.

Irvin Schermer's treatise, Automobile Liability Insurance, summarizes as follows:

The most common situation in which the "insured automobile" exclusion is proffered as a defense to UM [uninsured motorist] coverage under the policy covering the occupied vehicle is that in which the household exclusion renders the liability coverage of the accident vehicle's policy inapplicable to injuries sustained by the named insured or resident relatives. A majority of the courts have held that, absent a statutory prohibition, the exclusion of the insured motor vehicle from classification as an uninsured motor vehicle does not create an invalid restriction on UM coverage. A substantial minority, contrarily, has held that the absence of an express authorization for its use, such a definition, since it restricts coverage in a manner inconsistent with the purposes of the legislation, is invalid.

It has also been raised with conflicting results as a defense to uninsured motorist claims where cooperation and notice of accident provisions have been breached and where co-employee and underaged driver exclusions apply. It has likewise been asserted defensively, and with conflicting results, as to underinsured motorist claims under liability policies applicable to a host's vehicle. It has been held inapplicable to passenger-host situations where the claim is addressed to the passenger's own UM coverage.

The exclusionary definition does not prevent coverage for the insured where his injuries result from the operation of the insured's vehicle without his consent.

2 I. SCHERMER, AUTOMOBILE LIABILITY INSURANCE § 29.10 (2d ed. 1981, rev. 1984) (footnotes omitted).

Our research indicates that, for a variety of reasons, a majority of states permit such an exclusion. See Ex Parte O'Hare, 432 So.2d 1300 (Ala.1983); State Farm Mut. Auto. Ins. Co. v. Gibbs, 139 Ariz. 274, 678 P.2d 459 (1983) (but cf. Darner Motor Sales v. Universal Underwriters, 140 Ariz. 383, 682 P.2d 388, 396 n. 6 (1984)); Reid v. State Farm Fire and Casualty Co., 352 So.2d 1172 (Fla.1977) (but cf. Jernigan v. Progressive America Ins. Co., 501 So.2d 748 (Fla.Dist.Ct.App.) (distinguishing Reid ), rev. denied, 513 So.2d 1062 (Fla.1987)); Barras v. State Farm Mutual Automobile Ins. Co., 118 Ga.App. 348, 163 S.E.2d 759 (1968); Hilyard v. Estate of Clearwater, 240 Kan. 362, 729 P.2d 1195 (1986); Smith v. Allstate Ins. Co., 483 A.2d 344 (Me.1984); Turcotte v. Foremost Ins. Co., 460 A.2d 1369 (Me.1983); Frye v. Frye, 305 Md. 542, 505 A.2d 826 (1986); Harrison v. MFA Mut. Ins. Co., 607 S.W.2d 137 (Mo.1980); Willey v. Farmers Insurance Group, 86 N.M. 325, 523 P.2d 1351 (1974); Dairyland Insurance Company v. Finch, 32 Ohio St.3d 360, 513 N.E.2d 1324 (1987); Parsons v. State Farm Mut. Auto. Ins. Co., 335 Pa.Super. 394, 484 A.2d 192 (1984); Jeffers v. Stanley, 486 S.W.2d 737 (Tenn.1972); Kay v. Kay, 30 Utah 2d 94, 513 P.2d 1372 (1973) (overruled as to liability-related household exclusion, Farmers Ins. Exchange v. Call, 712 P.2d 231 (Utah 1985)). See also Davis v. Bean, 804 F.2d 1018 (8th Cir.1986) (applying Arkansas law).

However, even in the face of this flood of decisions, a few states have reached the opposite...

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