Nationwide Ins. Co. v. Nicholas

• Decision Date: 20 June 2003
• Parties: NATIONWIDE INSURANCE COMPANY v. Lynette NICHOLAS, individually and as the natural mother of Kurk L. Nicholas, Jr., a deceased minor.
• Court: Alabama Court of Civil Appeals

868 So.2d 457

NATIONWIDE INSURANCE COMPANY v. Lynette NICHOLAS, individually and as the natural mother of Kurk L. Nicholas, Jr., a deceased minor.

2020159.

Court of Civil Appeals of Alabama.

June 20, 2003.

Lynn Hare Phillips of Hare, Clement & Duck, P.C., Birmingham, for appellant.

Douglas J. Fees and Joe A. Macon III of Douglas J. Fees, P.C., Huntsville, for appellee.

YATES, Presiding Judge.

On September 20, 2001, Lynette Nicholas, individually and as the natural mother of Kurk L. Nicholas, Jr., her deceased son, sued Nationwide Insurance Company, seeking underinsured-motorist benefits. Nicholas also alleged negligence and wantonness based, she claimed, on Nationwide's failure to comply with § 32-7-23, Ala.Code 1975, the Alabama Uninsured Motorist Statute.

On August 19, 2002, Nationwide filed a motion for a summary judgment and a statement of undisputed facts, arguing that Nicholas's husband was the primary policyholder and that he had expressly rejected uninsured-motorist coverage. On September 4, 2002, Nicholas filed a brief in opposition to Nationwide's summary-judgment motion, arguing that a genuine issue of material fact existed as to whether she had waived her right to uninsured-motorist coverage. Following a hearing, the trial court entered the following order:

"This matter came before the court for a Pretrial Conference and hearing on Defendant Nationwide Insurance Company's Motion for Summary Judgment.

After hearing argument on the Summary Judgment Motion, and after being apprised by the parties that they waive their right to a jury trial, and that there are no genuine facts in dispute, and that the dispositive issue in the case is a legal one, due to be decided by the Court, and having considered the positions of the parties as set forth in the record and in oral argument presented by the parties;

"It is therefore ordered, adjudged, and decreed that the defendant's Motion for Summary Judgment is denied and, further, that a Final Judgment is, hereby entered in favor of the Plaintiffs in the amount of $40,000.00. Costs are taxed to the Defendant."

No postjudgment motions were filed; Nationwide filed a notice of appeal on November 14, 2002.

It appears that the following facts are undisputed: Nationwide issued an automobile insurance policy listing Kurk Nicholas, Sr., and Lynette Nicholas, as the named insureds. The policy provided that 19year-old Kurk Nicholas, Jr., was qualified for "family" coverage because, under the policy, "residents of the same household, [the policyholder's] spouse, the relatives of either and any other person under the age of 21 in the care of any of the foregoing including the Policyholder" were provided with protection. On October 29, 1999, Kurk Nicholas, Sr., renewed the policy and signed a statement rejecting uninsuredmotorist coverage; that policy was still in effect at the time of the accident in which Kurk Nicholas, Jr., was killed. Three automobiles were insured under the policy. It is undisputed that Lynette Nicholas did not sign a statement. On June 9, 2001, Kurk Nicholas, Jr., was struck by an underinsured intoxicated driver and was killed.¹ The policy provided $20,000 per person and $40,000 per accident in uninsured-motorist coverage.

Section 32-7-23, Ala.Code 1975, provides, in part:

"(a) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in subsection (c) of Section 32-7-6, under provisions approved by the Commissioner of Insurance for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer."

The sole issue on appeal is, when a policy lists more than one named insured, must each named insured expressly reject uninsured-motorist coverage or is the rejection by one of the named insureds effective as a rejection of such coverage on behalf of all the named insureds? Our supreme court has held "a policy exclusion that `is more restrictive than the uninsured motorist statute ... is void and unenforceable.' " Peachtree Cas. Ins. Co. v. Sharpton, 768 So.2d 368, 370 (Ala.2000)(quoting Watts v. Preferred Risk Mut. Ins. Co., 423 So.2d 171, 175 (Ala.1982)). The Uninsured Motorist Statute "lays down a rule of construction requiring courts to interpret all motor vehicle liability insurance policies as providing the statutory coverage unless an agreement to reject on the part of the named insured is in evidence." Insurance Co. of North America v. Thomas, 337 So.2d 365, 369 (Ala.Civ.App.1976).

In State Farm Mutual Automobile Insurance Co. v. Martin, 292 Ala. 103, 289 So.2d 606 (1974), the issue was whether the husband, one of the named insureds, was covered by the provisions of his State Farm policy where his wife had signed a statement rejecting such coverage. The husband's daughter had been injured when she was struck by an uninsured motorist. State Farm declined the husband's uninsured-motorist coverage because of the wife's express rejection of such coverage. The evidence in the record indicated that the Alabama Department of Insurance had sent a memorandum to insurance companies requiring that rejections of uninsuredmotorist coverage "`shall be in writing signed by the named insured.'" 292 Ala. at 106, 289 So.2d at 609 (emphasis omitted). State Farm had preprinted forms providing for such a rejection, which the wife signed. Both the husband and the wife were listed in the policy as named insureds. The husband sued State Farm, seeking a declaratory judgment on the question of coverage. The trial court held that the husband was covered.

Title 36, § 74(62a), Ala.Code 1940 (Recomp.1958), the predecessor to § 32-2-37, was in effect when Martin was decided; it provided, in pertinent part:

"No automobile liability ... policy ... shall be delivered or issued ... in this state ... unless coverage is provided therein ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer."

Our supreme court in Martin held that the trial court did not err in concluding that the daughter was covered. The supreme court held that the general provision of the statute requiring that uninsured-motorist coverage be offered was qualified by a proviso that the "named insured" shall have the right to reject such coverage and that "[a] proviso limits or modifies the enacting clause, and should be strictly construed in accord with the general purpose of the enactment." 292 Ala. at 105, 289 So.2d at 608. In the present case, where Lynette Nicholas, as a "named insured," did not reject the uninsured-motorist coverage existing under the family policy, such coverage continued in force as to her, notwithstanding the later rejection of that coverage by Kurk Nicholas, Sr. Section 32-7-23 does not authorize one named insured to reject uninsured-motorist coverage on behalf of another named insured.

Nationwide cites Universal Underwriters Insurance Co. v. Thompson, 776 So.2d 81 (Ala.2000), McCullough v. Standard Fire Insurance Co. of Alabama, 404 So.2d 637 (Ala.1981), and Safeway Insurance Co. v. Hambrick, 723 So.2d 93 (Ala.Civ.App.1998), as authority for the proposition that a signed, written rejection of uninsuredmotorist coverage by one named insured is effective to remove uninsured-motorist coverage from the entire automobile policy. However, each of those cases is easily distinguishable. Thompson involved a garage policy issued to several named insureds. The insurance company provided the insureds with an "Elective Options Form," which provided boxes to be "checked" under different columns and headings to indicate rejection of uninsured-motorist coverage. Our supreme court held that, because the form was ambiguous, a question of fact existed as to whether the "checked" boxes on the form indicating a rejection of uninsured-motorist coverage except as to certain individuals or whether they indicated that such coverage was not rejected but that the amount of coverage for certain individuals was increased. Both McCullough and Hambrick involved insurance policies that did not provide any coverage (i.e., neither liability nor uninsured-motorist coverage) for the named insured's child.

Other jurisdictions have addressed the issue whether, when an insurance policy lists more than one individual as a named insured, a written rejection of uninsuredmotorist coverage by one of the named insureds is effective as a rejection on behalf of all of the named insureds. In Plaster v. State Farm Mutual Automobile Insurance Co., 791 P.2d 813 (Okla.1989), the Oklahoma Supreme Court answered a certified question from a federal...