Nation v. State Farm Ins. Co.

• Decision Date: 17 May 1994
• Docket Number: No. 70513,70513
• Citation: 1994 OK 54,880 P.2d 877
• Parties: Larry M. NATION, Special Administrator of the Estate of Jeffrey George, deceased, Appellant, v. STATE FARM INSURANCE CO., Appellee.
• Court: Oklahoma Supreme Court

Page 877

880 P.2d 877

1994 OK 54

Larry M. NATION, Special Administrator of the Estate of Jeffrey George, deceased, Appellant, v. STATE FARM INSURANCE CO., Appellee.

No. 70513.

Supreme Court of Oklahoma.

May 17, 1994.

Rehearings Denied Sept. 22, 1994.

Certiorari to the Oklahoma Court of Appeals, Division 4, Ronald Shaffer, Judge.

Certiorari granted to review the opinion of the Court of Appeals, Division 4, which reversed the trial court's grant of summary judgment in favor of the appellee insurer. The question is whether the household exclusion contained in the insurance policy is valid. We hold that under the facts of this case it is invalid to the extent that 47 O.S.1991 §§ 7-600 et seq. requires minimum liability coverage. The exclusion is valid above the statutorily-required minimum.

CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEAL'S OPINION VACATED; JUDGMENT OF TRIAL COURT REVERSED; REMANDED WITH INSTRUCTIONS.

C. Rabon Martin, Martin & Turner, Tulsa, for appellant.

Galen L. Brittingham, Jody R. Nathan, Thomas, Glass, Atkinson, Haskins, Nellis & Boudreaux, Tulsa, for appellee.

PER CURIAM:

This is a claim against State Farm Insurance Co. under three automobile liability policies. Each policy contained a "household exclusion", providing that the liability insurance does not cover injury to "any member of the family of an insured residing in the same household of the insured." The question is whether that exclusionary clause runs counter to the Oklahoma statute requiring minimum limits of liability insurance as a condition of operating a vehicle. Under the facts of this case, and as to the policies in question, we find that the statute does require invalidation of the household exclusion up to the amount of liability insurance required by statute.

Michael George fell asleep while driving a vehicle borrowed from Frances Morgan. An accident ensued, killing George's five-year-old son, Jeffrey. The vehicle was insured by State Farm Insurance Company under a policy purchased by Morgan, the liability coverage being $100,000. George also had two policies issued by State Farm, the liability limits on both of these being $25,000. All The administrator of the deceased son's estate filed a claim with State Farm under the liability and UM portions of all three policies. State Farm denied the claim, asserting the household exclusion as the basis for denial under all three policies. This exclusion provides that insurance coverage shall not extend to members of the family of the insured who reside in the same household. It is not disputed that George, the father, was an insured under all three policies, and it is the liability insurance coverage afforded by these three policies that is contested today.

three polices contained both liability and uninsured motorist coverage. Total liability coverage was $150,000 and total uninsured motorist coverage was $45,000.

The administrator filed suit in state court against State Farm and George. In turn, State Farm filed an action in federal court, asking for a declaration that the household exclusion was valid under current Oklahoma law. The federal court agreed, except as to the exclusion's application to UM coverage. The administrator appealed to the Tenth Circuit, which appeal has been stayed pending this proceeding. State Farm paid the total UM coverage of $45,000.

A non-jury trial was held in the state court action, resulting in a judgment against State Farm and George. The total judgment was for $130,000, but the payment of UM benefits was subtracted from the total, leaving $85,000 owing on the judgment. The administrator filed a garnishment proceeding against State Farm seeking recovery of the remaining $85,000. State Farm denied responsibility for the judgment. The trial court granted State Farm's motion for summary judgment.

The plaintiff/administrator appealed and the Court of Appeals reversed. Its basis was that Court's belief that the household exclusion was invalid in light of Oklahoma's legislation requiring a minimum amount of liability insurance. The court ordered that the estate be permitted to recover up to the limits of the policies. We granted certiorari to review this question of first impression.

The plaintiff urges that the household exclusion is invalid because it violates the policy behind Oklahoma's Compulsory Liability Insurance Law, 47 O.S.Supp.1983 Sections 7-600 through 7-607. State Farm, on the other hand, asserts that this Court upheld the exclusion in Looney v. Farmers Insurance Group, 616 P.2d 1138 (Okla.1980), and that we should do likewise today.

It is the Court's judgment today that upon the facts of this case the household exclusion is invalid insofar as it attempts to defeat the legislature's mandate of a minimum amount of liability insurance coverage available for persons in the position of the deceased passenger here. The plaintiff may recover the statutory minimum amount of $10,000 each, or a total of $30,000, under the three liability policies. The trial court's summary judgment for State Farm is reversed and the District Court is instructed to enter judgment for the plaintiff consistent herewith.

The issues raised in the dissent by Wilson, J., were neither advanced nor briefed by the parties. We express no opinion on how any of these legal problems collateral to this case should be settled.

LAVENDER, V.C.J., and SIMMS, KAUGER and SUMMERS, JJ., concur.

OPALA and WATT, JJ., concur in judgment.

HODGES, C.J., and HARGRAVE and ALMA WILSON, JJ., dissent.

SUMMERS, Justice, concurring:

I agree that the household exclusion clause violates the legislature's mandate of compulsory liability insurance. I would hold the clause invalid up to the amount of the statutorily required minimum coverage. Above that required amount I would permit the application of principles governing insurance contracts generally to determine the coverage in effect.

I. COMPULSORY LIABILITY INSURANCE AND THE HOUSEHOLD EXCLUSION

In 1976, Oklahoma joined the majority of states by enacting a Compulsory Insurance Law. This law, as amended in 1983, requires liability insurance as follows On an after January 1, 1983, every owner of a motor vehicle registered in this state, other than a licensed used motor vehicle dealer, shall, at all times, maintain in force with respect to such vehicle security for the payment of loss resulting from the liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of the vehicle. Every person, while operating or using a motor vehicle registered in this state which is not owned by such person, shall maintain in force security for the payment of loss resulting from the liability imposed by law for bodily injury, death or property damage sustained by any person arising out of the operation or use of the vehicle, unless such security has been provided by the owner in accordance with this section which does not exclude said person from coverage. 47 O.S.1991 Section 7-601(B). (emphasis mine)

The minimum required coverage, under Section 7-204, is $10,000.00 per person, $20,000.00 per accident, and $10,000.00 for property damage. The purpose behind this legislation was to mandate that "any vehicle operated on the highways of Oklahoma be secured against liability to innocent victims of the negligent operation or use of the insured vehicle." Young v. Mid-Continent Cas. Co., 743 P.2d 1084, 1088 (Okla.1987). This statute embodies a public policy that innocent victims of the negligent operation of a motor vehicle should be compensated for their injuries. Id. at 1987. Clearly, the legislature contemplated that no vehicle should be permitted to operate on the roads of Oklahoma unless the vehicle is insured or "secured" according to the requirements set out in the Act. Beavin v. State ex rel. Dept. of Public Safety, 662 P.2d 299, 302 (Okla.1983).

This legislative intent is the driving force behind our interpretation of the statute. "When a policy expressly states that it provides coverage required by Oklahoma's compulsory liability insurance laws, the policy must be strictly construed against the insurer by a standard consistent with its terms and with the statutory policy it embodies." Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, 747 P.2d 947, 952 (Okla.1987). While strictly construed against the insurer, the statute must be broadly construed to accomplish the legislative goal. Id.

The administrator asserts that the legislative intent of providing compensation to injured victims, together with this Court's partial abrogation of the doctrine of parental immunity, leads to the conclusion that the household exclusion is invalid. He asserts that by allowing a child to recover from the parent to the extent of liability coverage, this Court has recognized the trend toward compensation for tortious acts by a parent against a child. This idea, when considered in light of the strong policy of the compulsory liability insurance laws, leads to the inevitable conclusion that the household exclusion is at least partially invalid.

A. PARENTAL IMMUNITY

At common law the doctrine of family, or parental, immunity was a defense to lawsuits between spouses and between parents and children. This doctrine prevented the child or spouse from collecting damages for torts committed by another family member. The trend, however, is to abolish this immunity. Oklahoma has abrogated spousal immunity both by statute and case law. 43 O.S.Supp.1989 § 214; Fiedeer v. Fiedeer, 42 Okla. 124, 140 P. 1022 (1914). We have also partially abrogated the doctrine as between children and parents. Unah v. Martin, 676 P.2d 1366, 1370 (Okla.1984).

In Unah an unemancipated minor brought suit against his father for injuries sustained in an automobile accident. After noting that the modern trend in sister jurisdictions is to abolish the doctrine ¹, we agreed that it should be...