May v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania

• Decision Date: 09 April 1996
• Docket Number: No. 86573,86573
• Citation: 918 P.2d 43,1996 OK 52
• Parties: Cathy T. MAY, individually and as administratrix of the estate of Timothy L. May, deceased, and as parent and next of kin to Erin L. May, Caroline E. May and Luke J. May, minor children; Jesse Worsham, husband; and Shanda Worsham, wife, Plaintiffs-Appellants and Cross-Appellees, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Defendant-Appellee and Cross-Appellant, Nationwide Mutual Insurance Company, Defendant.
• Court: Oklahoma Supreme Court

Page 43

918 P.2d 43

1996 OK 52

Cathy T. MAY, individually and as administratrix of the estate of Timothy L. May, deceased, and as parent and next of kin to Erin L. May, Caroline E. May and Luke J. May minor children; Jesse Worsham, husband; and Shanda Worsham, wife, Plaintiffs-Appellants and Cross-Appellees, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH PENNSYLVANIA, Defendant-Appellee and Cross-Appellant Nationwide Mutual Insurance Company, Defendant.

No. 86573.

Supreme Court of Oklahoma.

April 9, 1996.

Rehearing Denied June 19, 1996.

Jeffrey A. Glendening, Ann Makela Schneider & Steven W. Simcoe, Barkley, Rodolf & McCarthy, Tulsa, for Plaintiffs-Appellants.

William D. Perrine, Michael F. Smith & Benton T. Wheatley, Rhodes, Hieronymus, Jones, Tucker & Gable, Tulsa, for Defendant-Appellee.

OPINION

WATT, Justice:

The United States Court of Appeals for the Tenth Circuit has certified the following question of state law to this Court pursuant to the Oklahoma Uniform Certification of Questions of State Law Act, 20 O.S.1991 § 1601, et seq.:

Given that uninsured motorist coverage is imputed to the policy at issue as a matter of law according to the facts presented below, what are the limits of the imputed coverage under Okla. Stat. tit. 36 § 3636 as amended September 1990?

FACTS

The following facts are provided by the federal court. In September of 1991, an automobile operated by an intoxicated driver struck an automobile occupied by Timothy May and Jesse Worsham, killing May and seriously injuring Worsham. ¹ At the time of the accident, May and Worsham worked for Gold Bond Building Products and were acting in the scope of their employment for Gold Bond. Gold Bond owned or leased the automobile in which they were traveling. Gold Bond was a division of National Gypsum Company, making it legally the same entity as National Gypsum.

Effective January 1, 1988, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, issued to National Gypsum a business automobile liability policy providing $5,000,000.00 in liability coverage. In March of 1988, National Gypsum's Director of Risk Insurance executed a valid written rejection of uninsured or underinsured motorist (UM) coverage for the company's vehicles in all jurisdictions permitting such a rejection, including Oklahoma. This rejection corresponded with National Gypsum's and National Union's intent throughout the time period relevant to this case that the policy not include UM coverage.

From 1988 through 1991, National Union annually reissued the policy to National Gypsum. At National Gypsum's request, the policy as effective January 1, 1989, lowered the liability coverage to $3,000,000.00, where it stood at the time of May's and Worsham's accident. After this material change in or departure from the provisions of the policy, see Beauchamp v. Southwestern Nat'l Ins. Co., 746 P.2d 673, 676 (Okla.1987), National Union did not re-offer National Gypsum UM coverage, nor did it obtain a written rejection from National Gypsum declining such coverage. Therefore, by operation of Oklahoma law, UM coverage was imputed to the policy as of January 1, 1989. ² Id. At no time after the January 1989 renewal and up through the 1991 accident did National Union offer National Gypsum UM coverage or obtain from National Gypsum a rejection of UM coverage. The policy was last renewed on January 1, 1991.

The Mays and Worshams sued as beneficiaries of the policy, claiming the imputed UM coverage in effect at the time of the accident equaled the amount of the policy's liability coverage, $3,000,000.00. National Union contends the imputed coverage equaled the statutory minimum for UM coverage, $10,000.00 per person and $20,000.00 per occurrence. See 36 O.S.1991 § 3636; 47 O.S.1991 § 7-204. The district court ruled in favor of National Union. The case is now on appeal to the United States Court of Appeals for the Tenth Circuit.

DISCUSSION

The issue in this case derives from 36 O.S. § 3636, the statute governing UM coverage in the State of Oklahoma. In 1990, the Oklahoma Legislature amended this statute. See Laws 1990, c. 297, § 4, eff. Sept. 1, 1990. Neither the pre-1990 version nor the amended version of § 3636 prescribe how much coverage should be imputed in the event an insurer does not satisfy the statute's requirements. The district court held, and National Union urges, that the statutory minimum is the proper imputed amount of coverage. The plaintiffs assert that the imputed coverage should equal the liability limits of the policy. This case presents us with the first opportunity to address the intent of the Legislature as expressed in the 1990 amendments to § 3636 and to explicitly delineate the limits of UM coverage where such coverage has been imputed to an insurance policy as a matter of law. ³

As a preliminary issue, we must determine whether § 3636 as amended in 1990, rather than the pre-1990 version, governs the insurance policy in this case. National Gypsum's policy was issued in 1988 and was renewed annually. The last renewal prior to the September 1991 accident occurred on January 1, 1991. Title 36 O.S.Supp.1990 § 3636, which embraced the 1990 amendments, took effect on September 1, 1990. In Cofer v. Morton, 784 P.2d 67, 70 (Okla.1989), this Court held that "[r]ights of recovery under the Uninsured Motorist Act [§ 3636] are governed by the statute in effect on the date of issuance or last renewal of the policy against which an uninsured motorist claim is made." Accord McSorley v. Hertz Corp., 885 P.2d 1343, 1344 n. 1 (Okla.1994); Uptegraft v. Home Ins. Co., 662 P.2d 681, 684 n. 2 (Okla.1983). As previously set forth, UM coverage was imputed to National Gypsum's policy before the 1990 changes to § 3636. However, the plaintiffs' rights of recovery are governed by the statute in effect on the date of the last renewal of that policy. The version of § 3636 in effect on the date of the policy's last renewal on January 1, 1991, was 36 O.S.Supp.1990 § 3636. Thus, the amount of UM benefits the plaintiffs may recover under the policy is governed by the amended version of the statute.

Prior to its amendment in 1990, § 3636 provided inter alia that every automobile liability insurance policy issued in Oklahoma must include provisions for UM coverage; that UM coverage must be in an amount not less than $10,000 per person and $20,000 per accident; that insurers must offer increased limits of UM coverage not to exceed the policy's liability limits; and that insureds had the right to reject UM coverage in writing. ⁴ This statute was interpreted in Moser v. Liberty Mut. Ins. Co., 731 P.2d 406 (Okla.1986), as follows:

This Court has stated that the intent of the uninsured motorist legislation is to afford to one insured under his own liability insurance policy the same protection in the event he is injured by an uninsured motorist as he would have had if the negligent motorist had carried liability insurance. In subsection (B) of section 3636, it is provided that the uninsured motorist coverage provided as a part of a liability policy shall not be less than that required under 47 O.S.1981 § 7-204, with the insured to have the option to purchase increased limits of liability not to exceed the limits provided for bodily injury liability under the policy. Section 7-204 sets the minimum limits of liability coverage required to be carried by all owners of vehicles registered in the State of Oklahoma.

The purpose of the uninsured motorist provision, when viewed in light of the requirement that it provide minimum standards of protection, is that it place the insured in the same position he would have been in if the negligent uninsured motorist had complied with Oklahoma laws concerning financial responsibility.

Id. at 408 (footnotes omitted). Accord McSorley v. Hertz Corp., 885 P.2d 1343, 1348 (Okla.1994); Mann v. Farmers Ins. Co., 761 P.2d 460 (Okla.1988). Similarly, in Cofer v. Morton, 784 P.2d 67, 71 (Okla.1989), we stated, "The intent of the legislature as mandated in § 3636(F) is to have a statutory minimum of uninsured motorist coverage in all automobile liability insurance policies unless these minimum amounts are rejected in writing...."

The 1990 amendments to § 3636 made minor changes to subsections (B) and (F) in ways not relevant here and added subsections (G), (H) and (I). Subsections (G) and (I) are not at issue in this case. The plaintiffs rely on the language of subsection (H) for their argument that imputed UM coverage should be equal to liability limits. Subsection (H) states in relevant part:

H. The offer of the coverage required by subsection B of this section shall be in the following form which shall be filed with and approved by the Insurance Commissioner. The form shall be provided to the proposed insured in writing separately from the application and shall read as follows:

OKLAHOMA UNINSURED MOTORIST COVERAGE LAW

Oklahoma law gives you the right to buy Uninsured Motorist coverage in the same amount as your bodily injury liability coverage. THE LAW REQUIRES US TO ADVISE YOU OF THIS VALUABLE RIGHT FOR THE PROTECTION OF YOU, MEMBERS OF YOUR FAMILY, AND OTHER PEOPLE WHO MAY BE HURT WHILE RIDING IN YOUR INSURED VEHICLE. YOU SHOULD SERIOUSLY CONSIDER BUYING THIS COVERAGE IN THE SAME AMOUNT AS YOUR LIABILITY INSURANCE COVERAGE LIMIT.... THE COST OF THIS COVERAGE IS SMALL COMPARED WITH THE BENEFITS!

36 O.S.Supp.1990 § 3636(H) (emphasis in original).

Plaintiffs assert that the language in subsection (H) which urges insureds to purchase UM coverage in the same amount as their liability coverage indicates a change in the legislative intent ascribed to § 3636 by our pre-1990 cases. We disagree. The fundamental rule of statutory construction is to ascertain and, if possible, give effect to the intention and purpose of the Legislature as expressed in a statute. Ledbetter v. Oklahoma Alcoholic Bev. Laws Enforcement Comm'n, 764 P.2d 172, 179 (Okla.1...