Mga Ins. Co., Inc. v. Goodsell

• Citation: 2005 SD 118,707 N.W.2d 483
• Decision Date: 30 November 2005
• Docket Number: No. 23610.,23610.
• Parties: MGA INSURANCE COMPANY, INC. A Texas Insurance Company, Plaintiff and Appellant, v. Marshall GOODSELL, and Donita Goodsell, individually and as special administrator, parents or guardian of Jared Goodsell, a minor child, Derald W. Wiehl, as special administrator for the Estate of Gwen Dumarce, deceased, Infinity Insurance Company, an Alabama Insurance Company, Farm and City Insurance Company, Inc., an Iowa Insurance Company and Dakota Sioux Propane, Defendants. and Sandra White, as special administrator or guardian of Daniel Dumarce, a minor child, Defendant and Appellee.
• Court: Supreme Court of South Dakota

Page 483

707 N.W.2d 483

2005 SD 118

MGA INSURANCE COMPANY, INC. A Texas Insurance Company, Plaintiff and Appellant, v. Marshall GOODSELL, and Donita Goodsell, individually and as special administrator, parents or guardian of Jared Goodsell, a minor child, Derald W. Wiehl, as special administrator for the Estate of Gwen Dumarce, deceased, Infinity Insurance Company, an Alabama Insurance Company, Farm and City Insurance Company, Inc., an Iowa Insurance Company and Dakota Sioux Propane, Defendants. and Sandra White, as special administrator or guardian of Daniel Dumarce, a minor child, Defendant and Appellee.

No. 23610.

Supreme Court of South Dakota.

Considered on Briefs October 3, 2005.

Decided November 30, 2005.

Matthew J. Kinney, Kinney Law Office, Spearfish, South Dakota, Attorney for appellant.

Bram Weidenaar, James L. Hoy of Hoy Trial Lawyers, Sioux Falls, South Dakota, Attorneys for appellee.

SABERS, Justice.

[¶ 1.] Insurer moved for summary judgment to enforce its household exclusion, which, purported to deny coverage to relatives residing with a permissive driver. The circuit court denied the motion and held the household exclusion void as a violation of public policy. We affirm.

FACTS

[¶ 2.] Lorenzo and Angelica Sanchez purchased an automobile insurance policy from MGA Insurance Company (MGA). The policy covered the Sanchez's 1989 Chevrolet Camaro with liability limits of $25,000 per person.

[¶ 3.] Gwen DuMarce and her son, Daniel, had been living with Sanchez's brother, Escubio. The three of them were living in Escubio's mobile home in Madison, South Dakota. However, Gwen was contemplating moving to Sisseton with Daniel.

[¶ 4.] Gwen received permission from Lorenzo to borrow the Camaro on July 27, 2002. She decided to drive with Daniel to Sisseton for the weekend. During the drive, Gwen allegedly tried to elude a highway patrol officer near Sisseton. The Camaro collided with a Dodge pickup, killing Gwen and seriously injuring Daniel. Daniels's maternal grandmother, Sandra White (White), was appointed his special administrator and guardian.

[¶ 5.] MGA brought this declaratory judgment action against White.^* MGA claimed that it had no contractual duty to defend Gwen or provide liability coverage for claims by Daniel or those making claims on his behalf. In support of its claims, MGA cited the "Household Exclusion" section of its policy with Sanchez.

[¶ 6.] MGA moved for summary judgment on November 29, 2004. Neither party disputed any of the material facts. Instead, MGA maintained that the "Household Exclusion" provision barred any recovery by Daniel. That section is as follows:

EXCLUSIONS

This coverage does not apply: ...

(10) For any bodily injury to:

(a) You;

(b) any other insured person under the policy (c) any member of your family residing in the same household with you; or

(d) any member of the family of any other insured person residing in the same household as that insured.

(emphasis added). The definitions section of the policy defined "insured" as:

(a) you;

(b) a relative or resident using your insured car;

(c) any other person using your insured car;

(emphasis added).

[¶ 7.] The circuit court denied summary judgment, holding that SDCL 32-35-70 "does not authorize exclusion of coverage to a relative residing with a permissive user of an insured vehicle and any attempt by Plaintiff to exclude such coverage is contrary to public policy and unenforceable in accordance with Cimarron Ins. Co. v. Croyle, 479 N.W.2d 881 (S.D.1992)." MGA raises one issue on appeal:

Whether the trial court erred in ruling that SDCL renders MGA's "Household Exclusion" clause unenforceable.

Standard of Review

[¶ 8.] Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). Here, there are no genuine issues of material fact, so the question is whether the legal issue has been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987).

[¶ 9.] The proper interpretation of an insurance contract presents a legal question, reviewed de novo by this Court. Gloe v. Union Ins. Co., 2005 SD 30, ¶ 9, 694 N.W.2d 252, 256. Finally, "statutory interpretation and application are questions of law." Block v. Drake, 2004 SD 72, ¶ 8, 681 N.W.2d 460, 462.

The purpose of statutory construction is to discover the true intention of the law which is to be ascertained primarily from the language expressed in the statute. The intent of a statute is determined from what the legislature said, rather than what the courts think it should have said, and the court must confine itself to the language used. Words and phrases in a statute must be given their plain meaning and effect. When the language in a statute is clear, certain and unambiguous, there is no reason for construction, and the Court's only function is to declare the meaning of the statute as clearly expressed.

State v. Myrl & Roy's Paving, Inc., 2004 SD 98, ¶ 6, 686 N.W.2d 651, 653-54 (citing Martinmaas v. Engelmann, 2000 SD 85, ¶ 49, 612 N.W.2d 600, 611).

Decision

[¶ 10.] In Cimarron Ins. Co. v. Croyle, we examined whether an insurer can exclude coverage to the named insured or any resident family member. 479 N.W.2d at 882. We viewed the insurer's exclusion in light of South Dakota's Financial Responsibility Laws. The public policy set forth in South Dakota's Financial Responsibility Laws was explained as strongly "favoring monetary protection and compensation for the benefit of those injured through the negligent operation of a vehicle." Id. at 884. Ultimately, we held that the insurer's household exclusion was void as contrary to that public policy, stating, "[insurer's] household exclusion effectively renders the [insured], and others like her, uninsured and thus unprotected, in violation of public policy." Id. [¶ 11.] Our holding was underscored by the fact that:

[T]his class of victims is the one most frequently exposed to the potential negligence of the named insured [i.e., the operator]. Typical family relations require family members to ride together on the way to work, church, school, social functions, or family outings. Consequently, there is no practical method by which the class of persons excluded from protection by this provision may conform their activities so as to avoid exposure to the risk of riding with someone who, as to them, is uninsured.

Id. (citation omitted). Furthermore, the "vast majority of jurisdictions [had] [held] such household exclusions invalid under similar statutory schemes." Id.

[¶ 12.] The Legislature acted quickly to prospectively alter our decision in Cimarron. 1992 SD Sess Laws, ch 233, § 1 (current version at SDCL 32-35-70 (2004); Isaac v. State Farm Mut. Auto. Ins. Co., 522 N.W.2d 752, 756 n. 1 (S.D.1994)). The statute now provides in relevant part:

An owner's policy of liability insurance ... shall insure the person named therein and any other person as insured, using any insured vehicle or vehicles with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of the vehicle or vehicles[.] The policy may exclude or limit coverage pursuant to § 58-11-9.3 or for a relative residing in the named insured's household.

SDCL 32-35-70 (emphasis added).

[¶ 13.] The amendment allows insurers to issue motor vehicle policies with resident family member exclusions. Employers Mutual Casualty Co. Inc. v. State Auto Ins., 2001 SD 34, ¶ 11, 623 N.W.2d 462 (citing Isaac, 522 N.W.2d at 756 n. 1). The Legislature, however, did not alter the statute in a manner that changes its underlying policy of "favoring monetary protection and compensation for the benefit of those injured through the negligent operation of a vehicle." Instead, the amendment provides an exception that permits insurers to exclude coverage from a specific class of insureds: relatives residing in the named insured's household. See SDCL 32-35-70.

[¶ 14.] The effect the amendment had on our decision in Cimarron is to preclude a similar result in future cases. Policies that exclude coverage for relatives residing in the named insured's household are not contrary to public policy. While the result reached in Cimarron is no longer obtainable, the rationale remains alive and well. South Dakota's Financial Responsibility Law continues to mandate coverage for those injured.

[¶ 15.] We examine whether in amending SDCL 32-35-70, the Legislature intended to permit insurers to exclude coverage for relatives (of a permissive driver) residing with a permissive driver. In doing so, we adhere to our longstanding precedent involving statutory construction.

[¶ 16.] The intent of the law is "ascertained primarily from the language of the statute." Myrl & Roy's Paving, Inc., 2004 SD 98, ¶ 6, 686 N.W.2d at 654. "When the language of the statute is clear, certain and unambiguous, there is no reason for construction, and the Court's only function is to declare the meaning of the statute as clearly expressed." Id. However, we are not confined to the language of the statute at issue. Instead, "enactments relating to the same subject" are also relevant in determining legislative intent. Gloe v. Iowa Mutual Ins. Co., 2005 SD 29, ¶ 11, 694 N.W.2d 238, 242 (noting that this Court construes UM and UIM statutes together).

[¶ 17.] There are instances when it is necessary to look beyond the express language of a statute in determining legislative intent. Most notably, when the language is ambiguous, unclear, or if confining ourselves to the express language would produce an absurd result. Myrl & Roy's Paving, Inc., 2004 SD 98, ¶ 6, 686 N.W.2d at 654; Moeller v. Weber, 2004 SD 110, ¶ 46, 689 N.W.2d 1, 16 ("we must fall back on the...