Melendez v. Hallmark Ins. Co.

• Decision Date: 11 June 2013
• Docket Number: No. 1 CA–CV 12–0141.,1 CA–CV 12–0141.
• Citation: 305 P.3d 392,232 Ariz. 327,662 Ariz. Adv. Rep. 10
• Parties: Martina Ramos MELENDEZ, Plaintiff/Appellant, v. HALLMARK INSURANCE COMPANY, a foreign corporation, Defendant/Appellee.
• Court: Arizona Court of Appeals

232 Ariz. 327

305 P.3d 392

662 Ariz. Adv. Rep. 10

Martina Ramos MELENDEZ, Plaintiff/Appellant,

v.HALLMARK INSURANCE COMPANY, a foreign corporation, Defendant/Appellee.

No. 1 CA–CV 12–0141.

Court of Appeals of Arizona, Division 1, Department D.

June 11, 2013.

As Amended June 11, 2013.

Warnock, MacKinlay & Carman, P.L.L.C. By Brian R. Warnock and Krista M. Carman, Prescott, Attorneys for Plaintiff/Appellant.

Lewis Law Firm, P.L.C. By Robert K. Lewis and Terry Wayne Straughn, Phoenix, Attorneys for Defendant/Appellee.

OPINION

KESSLER, Judge.

[232 Ariz. 328]¶ 1 Plaintiff/Appellant Martina Ramos Melendez (“Melendez”) appeals the superior court's grant of summary judgment in favor of Defendant/ Appellee Hallmark Insurance Company (“Hallmark”). The court held that the form Hallmark used to offer Melendez uninsured and underinsured motorists coverage (“UM” and “UIM”) complied with Arizona Revised Statutes (“A.R.S.”) section 20–259.01 (Supp. 2012).¹ We hold that the offer did not comply with the statute because it did not include any information about any premium for UM and UIM coverage and thus could not create a binding contract if Melendez had accepted such coverage. Accordingly, we reverse the judgment and remand this case to the superior court with instructions to enter summary judgment in favor of Melendez.

FACTUAL AND PROCEDURAL HISTORY

¶ 2 The material facts are not in dispute. Melendez owned a vehicle insured by Hallmark when she and two passengers (C.G. and L.C.) were involved in a collision. As a result of the collision, Melendez sustained injuries resulting in nearly $36,000 in medical expenses. L.C.'s medical bills totaled about $5500, and C.G.'s medical bills were more than $95,000. The motorist at fault for the collision carried insurance liability with limits of $50,000/$100,000, and compensation was allocated as follows: Melendez ($50,000); L.C. ($10,000); and C.G. ($40,000).

¶ 3 Melendez filed a UIM claim with Hallmark. Hallmark denied compensation on the basis that Melendez had executed a form rejecting UM/UIM coverage. Melendez then filed a complaint against Hallmark asserting that she is entitled to UIM coverage.² After Hallmark answered and denied the allegations, Melendez filed a motion for partial summary judgment maintaining that she was not offered UM/UIM coverage because the form did not provide adequate information to accept or reject the offer of coverage. Melendez argued that “[t]he bare UIM/UM Selection Rejection Form with no premium quotes ... does not adequately offer insurance pursuant to [ A.R.S. § 20–259.01], and does not comport with the [Arizona] Department of Insurance' [s] own directive (see [ A.R.S. §§ ] 20–398 [ (Supp.2012) ] and 20–1111 [ (2010) ] ) and Regulatory Bulletin 2003–3.” Relying on Tallent v. National General Insurance Company, 185 Ariz. 266, 915 P.2d 665 (1996), Melendez asserted that “[a]n offer must contain ‘definite terms,’ including terms that enable the offered to assent to such definite terms” and that “[t]he absence of the definite term of the ‘offer’ (i.e. the premium) preclude[d] the Selection Rejection Form from constituting an ‘offer’ pursuant to [ A.R.S. § 20–259.01].”

¶ 4 In support of her motion, Melendez attached the declarations page of her Hallmark insurance policy reflecting her premium and coverages including the rejection of UM/UIM coverage, as well as the UM/UIM selection/rejection form she signed in 2009. That form generally described UM/UIM coverage, but did not include any coverage amounts or premiums, and expressly provided that “no coverage is provided by this document.” It then suggests the insured contact Hallmark “or your agent” if the insured has any questions about UM/UIM coverage and/or the amount of coverage available. Hallmark's form specifies that Hallmark “will provide Uninsured/Underinsured Motorist coverage in the same amount as the policy's Bodily Injury Liability Limit” unless the insured rejects coverage or selects a lower amount of coverage. Melendez also attached a 2010 letter from the Arizona Department of Insurance (“ADOI”) informing Hallmark that the UM/UIM selection/rejection form submitted to ADOI failed to conform to the sample forms in ADOI's Regulatory Bulletin 2003–03. The letter informed Hallmark that ADOI was giving it an opportunity to cure deficiencies or withdraw the filing. Citing A.R.S. §§ 20–398(A) and –1111, ADOI warned that if Hallmark did not comply, it would “disapprove the filing as ambiguous, misleading or deceptive or otherwise failing to comply with Arizona law.” According to ADOI, the UM/UIM form was deficient, in part, because:

The submitted forms do not comply with Arizona statutes ... The UNINSURED AND UNDERINSURED MOTORIST COVERAGE SELECTION FORM fails to conform to the forms included in our Regulatory Bulletin 2003–03. The form must include the company name and essentially the same information as the form included with the [Regulatory Bulletin 2003–3] (including Bodily Injury Limit on the policy and a place to show the premium for [UM and UIM] Coverages).

¶ 5 Hallmark simultaneously responded to Melendez's motion for partial summary judgment and filed a cross-motion for partial summary judgment. Although Hallmark expressly agreed with Melendez's statement of material facts, it maintained that A.R.S. § 20–259.01(B) does not specify anything other than that a “written offer” must be made to the insured and noted that the statute does not define what constitutes an “offer.” Relying primarily on Tallent, 185 Ariz. at 267–68, 915 P.2d at 666–67, and Garcia v. Farmers Insurance Company of Arizona, 191 Ariz. 410, 411–12, 956 P.2d 537, 538–39 (App.1998), Hallmark maintained that its selection/rejection form was a valid offer of UM/UIM coverage. Hallmark argued that common-law contract principles do not govern what constitutes a valid offer and that its offer was valid because a premium quote is not necessary to offer UM/UIM coverage under A.R.S. § 20–259.01. Hallmark did not dispute Melendez's assertion that ADOI disapproved of Hallmark's UM/UIM form, but rather argued that under A.R.S. § 20–259.01 it was not required to make an offer on an ADOI approved form. Hallmark maintained that the use of an ADOI approved form was an acceptable, but not mandatory, method of offering UM/UIM coverage.

¶ 6 The superior court determined that under Garcia, Hallmark's selection/rejection form was sufficient enough for an offer because it stated that Melendez had the right to get UM/UIM coverage in an amount equal to her liability limits, permitted the selection of lower limits, and permitted rejection of the coverage. The court did not think that the determination in Garcia was inconsistent with the statute and stated that “if I were writing [on] a blank page, I am not sure that that is how I would do it, but I think I am bound by Garcia.” Accordingly, the court granted Hallmark's motion and denied Melendez's motion. Melendez filed a notice of appeal. Thereafter, the superior court entered a final signed judgment. Melendez filed an amended notice of appeal from the final signed judgment. We have jurisdiction pursuant to A.R.S. § 12–2101(A)(1) (Supp.2012).

ISSUE ON APPEAL

¶ 7 Melendez contends that the selection/rejection form for UM/UIM insurance coverage did not constitute an “offer” for purposes of A.R.S. § 20–259.01 because it failed to quote a premium price for the coverage and therefore lacked a certain and definite term necessary for a valid “offer” as that term has been defined by the Arizona Supreme Court. Melendez argues that because a premium was not quoted in the selection/rejection form she did not have adequate information to accept or reject the offer of UM/UIM coverage.

¶ 8 Hallmark maintains that the selection/rejection form provided sufficient information to hold out UM/UIM coverage such that a reasonable person would have understood the coverage was being offered for purchase and to trigger Melendez to ask questions such as the premium amount.

DISCUSSION

¶ 9 We review de novo whether summary judgment is warranted including whether any genuine issues of material fact exist and whether the superior court properly applied the law. Eller Media Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4, 7 P.3d 136, 139 (App.2000). We construe all facts in favor of the nonmoving party. Yollin v. City of Glendale, 219 Ariz. 24, 27, ¶ 6, 191 P.3d 1040, 1043 (App. 2008). We will affirm the superior court if its determination “is correct for any reason, even if that reason was not considered” by the court. Hill v. Safford Unified Sch. Dist., 191 Ariz. 110, 112, 952 P.2d 754, 756 (App.1997); accord Gary Outdoor Adver. Co. v. Sun Lodge, Inc., 133 Ariz. 240, 242, 650 P.2d 1222, 1224 (1982) (stating “trial court will be affirmed when it reaches the correct conclusion even if it does so for an incorrect reason”).

¶ 10 We review issues of statutory construction de novo. Blevins v. Gov't Emps. Ins. Co., 227 Ariz. 456, 459, ¶ 13, 258 P.3d 274, 277 (App.2011). In construing a statute, we attempt to give effect to the legislative intent and, if the statutory language is clear and unambiguous, we should not look beyond that language but simply apply it on the assumption that the legislature meant what it said. Id. In construing statutory language, we use the common meanings of terms that are not defined by statute. Id. Section 20–259.01 is a remedial statute meant to encourage drivers to obtain UM and UIM insurance and is thus read liberally to “guarantee that responsible drivers will have an opportunity to protect themselves and their loved ones as they would others.” Id. at ¶ 14 (citations and internal quotation marks omitted). Accordingly, we require strict compliance with A.R.S. § 20–259.01. Id. at 460, ¶ 14, 258 P.3d at 278. In construing and applying a statute dealing with offers of insurance, we can and should incorporate contract principles since an insurance policy is a contract. A.R.S. §§ 20–103(A) (Supp...