Lowing v. Allstate Ins. Co.

• Decision Date: 14 September 1993
• Docket Number: Nos. CV-92-0259-P,CV-92-0381-PR,s. CV-92-0259-P
• Citation: 859 P.2d 724,176 Ariz. 101
• Parties: Paula and Scott LOWING, wife and husband, Plaintiffs/Appellants, v. ALLSTATE INSURANCE COMPANY, INC., Defendant/Appellee. Lewis HORVATH and Coletta Horvath, Plaintiffs-Appellants, v. CONTINENTAL CASUALTY, a foreign insurance company, individually in its name and d/b/a CNA Insurance Companies, Defendant-Appellee.
• Court: Arizona Supreme Court

Page 724

859 P.2d 724

176 Ariz. 101

Paula and Scott LOWING, wife and husband, Plaintiffs/Appellants, v. ALLSTATE INSURANCE COMPANY, INC., Defendant/Appellee.

Lewis HORVATH and Coletta Horvath, Plaintiffs-Appellants, v. CONTINENTAL CASUALTY, a foreign insurance company, individually in its name and d/b/a CNA Insurance Companies, Defendant-Appellee.

Nos. CV-92-0259-PR, CV-92-0381-PR.

Supreme Court of Arizona, In Banc.

Sept. 14, 1993.

Reconsideration Denied Nov. 30, 1993.

[176 Ariz. 102] Michael E. Larkin, Tucson, for Paula and Scott Lowing.

Kimble, Gothreau & Nelson by William Kimble, David F. Toone and Stephen E. Kimble, Tucson, for Allstate Ins. Co.

Danny L. Cowser, Flagstaff, for Lewis and Coletta Horvath.

Gallagher & Kennedy by Don D. Skypeck and W. Charles Thomson, III, Phoenix, for Continental Cas.

OPINION

MARTONE, Justice.

We are asked to decide whether an unidentified accident-causing motorist is "uninsured" within the meaning of the Uninsured Motorist Act, A.R.S. § 20-259.01, and thus whether an insurance policy that does not provide coverage for bodily injury caused by such motorists, unless physical contact occurred between the motorist and the insured, fails to comply with the statute. We answer both of these questions in the affirmative and therefore overrule our previous rulings to the contrary in Balestrieri v. Hartford Accident & Indem. Ins. Co., 112 Ariz. 160, 540 P.2d 126 (1975) and State Farm Mut. Auto. Ins. Co. v. Brudnock, 151 Ariz. 268, 727 P.2d 321 (1986).

I. BACKGROUND

A. Horvath v. Continental Casualty

Lewis Horvath and three of his children sustained injuries when Horvath swerved his car to avoid another car attempting to pass a truck in a no-passing zone on a curve. Though Horvath's action prevented a head-on collision, he was forced off the road. The driver of the other car, whose identity remains unknown, did not stop.

Because Horvath's uninsured motorist insurance covers only those accidents caused by unknown motorists who actually "hit" the insured's vehicle, his insurance carrier, Continental Casualty, refused to cover Horvath's losses. ¹ Horvath sued, seeking a declaration that the policy limitation is contrary to the requirements of A.R.S. § 20-259.01, Arizona's Uninsured Motorist Act, and thus void. The trial court granted Continental's motion to dismiss, and the court of appeals affirmed based on this court's holding in Balestrieri v. Hartford Accident & Indem. Ins. Co., 112 Ariz. 160, 540 P.2d 126 (1975), that such provisions are valid. We granted Horvath's petition for review.

B. Lowing v. Allstate Ins. Co.

Paula Lowing sustained injuries when Salvatore Gentile, the owner and driver of the vehicle in which she was a passenger, swerved to avoid colliding with a vehicle that ran a stop sign. Gentile's car missed the other vehicle, but left the roadway and overturned. The other vehicle did not stop, and its driver was never identified. Gentile's uninsured motorist insurance carrier, Allstate, refused to cover Lowing's damages because its policy limits coverage to cases in which there is actual physical contact with the unknown accident-causing vehicle. ² Gentile sued, seeking a declaration that the policy limitation is void under A.R.S. § 20-259.01. The trial court granted Allstate's motion for summary judgment and the court of appeals affirmed based on the Balestrieri line of cases. We granted Lowing's petition for review and consolidated it with the Horvath case.

II. ANALYSIS

A. Does A.R.S. § 20-259.01 require coverage of unidentified motorists?

The first question we must answer is one of statutory interpretation: does A.R.S. § 20-259.01 require coverage of unidentified motorists in addition to known motorists who are demonstrably uninsured? "The primary principle of statutory interpretation is to determine and give effect to legislative intent." Wyatt v. Wehmueller, 167 Ariz. 281, 284, 806 P.2d 870, 873 (1991). See also State v. Korzep, 165 Ariz. 490, 493, 799 P.2d 831, 834 (1990). The best and most reliable index of a statute's meaning is its language. That language, where clear and unequivocal, controls the statute's meaning unless it leads to absurd or impossible results. Matter of Pima County Juvenile Appeal No. 74802-2, 164 Ariz. 25, 33, 790 P.2d 723, 731 (1990); State v. Wagstaff, 164 Ariz. 485, 490, 794 P.2d 118, 123 (1990). Where, instead, the statute's language is subject to different interpretations, the court is free to consult other sources of legislative intent such as the statute's context, historical background, consequences, spirit and purpose. Arizona Newspapers Ass'n. v. Superior Court, 143 Ariz. 560, 562, 694 P.2d 1174, 1176 (1985). Section 20-259.01(A) states:

No automobile liability or motor vehicle liability policy ... shall be delivered or issued for delivery in this state ... unless coverage is provided in the policy ... for the protection of persons insured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury....

In Balestrieri, we upheld a physical contact requirement against a public policy challenge based on what the court perceived to be the "plain language" of § 20-259.01. We reasoned that the statute requires coverage of injuries caused by "uninsured motorists" and that "uninsured" means those motorists we know are uninsured, not unidentified motorists who may or may not be uninsured. 112 Ariz. at 163, 540 P.2d at 129. Therefore, the statute does not require coverage of damages caused by any unidentified accident-causing motorist, whether "hit and run" or "miss and run." Id.

In reality, however, we cannot apply the "plain language" of the statute because we cannot know which unidentified motorists are uninsured and which are not. We must instead presume either that unidentified motorists are insured or that they are uninsured. If we presume the former, some persons injured by uninsured motorists will go uncompensated. If we presume the latter, some persons injured by insured motorists will recover from their uninsured motorist insurance carrier. Neither situation is contemplated by the literal language of the statute. The statute does not address the unidentified motorist issue. It is therefore ambiguous, and we must consult other sources to determine which of the two interpretations is more in line with legislative intent. Compare Wiley v. The Indus. Comm'n. of Arizona, 174 Ariz. 94, 99, 847 P.2d 595, 600 (1993) (finding worker's compensation statute ambiguous as to an issue not explicitly addressed by the statute).

The purpose of § 20-259.01 is, broadly speaking, to "close the gap in protection under the Safety Responsibility Act, A.R.S. § 28-1101 et seq.", Calvert v. Farmers Ins. Co. of Arizona, 144 Ariz. 291, 294, 697 P.2d 684, 687 (1985), and protect people who are injured by financially irresponsible motorists, id. at 295, 697 P.2d at 688. Section 20-259.01 is remedial in nature and should be liberally construed in order to effectuate its purpose. Id. at 294, 697 P.2d at 687. Exclusions and limitations on coverage are generally invalid unless contemplated by the statute. Id.; see also Rashid v. State Farm Mut. Auto. Ins. Co., 163 Ariz. 270, 275, 787 P.2d 1066, 1071 (1990).

Interpreting the statute to require coverage of damages caused by unidentified motorists advances its protective goal; interpreting it in a way that does not require such coverage frustrates that goal. It is unlikely that the legislature intended to protect the injured person from an uninsured motorist responsible enough to stop and be identified but not from a motorist, insured or not, irresponsible enough to cause an accident and then flee.

In Porter v. Empire Fire and Marine Ins. Co., 106 Ariz. 274, 475 P.2d 258 (1970), we held that an insured who recovers less than the statutory minimum amount of coverage from a negligent motorist because the negligent driver's liability insurance is split among multiple claimants may recover the balance (i.e., up to the statutory minimum) from his or her uninsured motorist coverage. The rationale of the case was that, although the negligent motorist purchased some liability insurance, he or she is functionally uninsured as to the injured person because insurance is not available up to the minimum amount required by statute. Because the Uninsured Motorist Act was designed to make available to all persons injured by negligent motorists a certain minimum amount of compensation, the motorist was uninsured within the meaning of the act.

Likewise, unidentified motorists are functionally uninsured as to the persons they injure because they have no insurance that is in fact available and collectible. In Balestrieri, we attempted to reconcile our holding with Porter by noting that "in both [cases] the injured party maintains the burden of establishing the fact that the negligent motorist was uninsured." 112 Ariz. at 163-64, 540 P.2d at 129-30. But an insured will never know, and can never prove, whether an unidentified negligent motorist is insured. What is important in the two cases is not which party has the burden of proof, but who is considered uninsured. In Porter an insured motorist with too little insurance to compensate an injured party up to the minimum statutory limits is considered uninsured. When we held in Balestrieri that an unidentified motorist is presumed to be insured until the plaintiff proves otherwise, we departed from the spirit of the earlier case. ³

Thus, interpreting "owners or operators of uninsured motor vehicles" to include unidentified motorists is consistent with the general purpose of the statute, and with this court's construction of the statute. But there is more. We conclude that the legislature specifically intended the statute to include the unidentified motorist.

The act by which A.R.S. § 20-259.01 was introduced was entitled "An Act Relating to Insurance; Prescribing an Uninsured Motorist and Unknown...