Nationwide Mut. Ins. Co. v. Kelleher, 2607-III

• Decision Date: 21 February 1979
• Docket Number: No. 2607-III,2607-III
• Citation: 22 Wn.App. 712,591 P.2d 859
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Respondent, v. Mark J. KELLEHER, Appellant.
• Court: Washington Court of Appeals

Page 712

22 Wn.App. 712

591 P.2d 859

NATIONWIDE MUTUAL INSURANCE COMPANY, Respondent, v. Mark J. KELLEHER, Appellant.

No. 2607-III.

Court of Appeals of Washington, Division 3, Panel 4.

Feb. 21, 1979.

As Amended March 16, 1979.

Peterson, Taylor, Day & Shea, Edward F. Shea, Pasco, for appellant.

Leavy, Taber, Schultz, Bergdahl & Sweeney, John G. Schultz, Pasco, for respondent.

ROE, Judge.

Plaintiff Nationwide Mutual Insurance Company, hereafter called "Nationwide," issued a policy to Joe R. Berry. The policy provided for a comprehensive property damage and bodily injury liability with a $20,000 limit per person. Additionally, the policy carried an endorsement for personal injury protection (PIP). While Rodney J. Berry was driving the car, with defendant in this case, Mark J. Kelleher, riding as a passenger, the automobile left the roadway and was involved in a one-car collision, causing serious injuries to the defendant. The total damages incurred by Kelleher exceeded the amount of $32,400, which was his maximum recovery under the policy.

Nationwide paid the maximum under the PIP for medical and surgical costs of $10,000. In addition, the insurer paid $2,400 under the PIP endorsement as 85 percent of the insured's wage loss. Kelleher then claimed $20,000 for bodily injury under the liability endorsement. Nationwide seeks by this declaratory judgment action to offset or deduct from this $20,000, $12,400, the amount already paid by it under PIP, so that its overall maximum liability to Kelleher would be the applicable bodily injury liability, namely, $20,000. The defendant appeals from a summary judgment in favor of plaintiff. ¹ The trial court found that under paragraph 6 of the Trust Agreement, since the company was entitled to be subrogated to the proceeds of any settlement or judgment the insured may get from the exercise of any right of recovery against Any person for the bodily injury, that the insurance carrier is now called upon to pay for bodily injury, but since the injured person has already recovered under the PIP endorsement (not from a third person but from the carrier itself), that this is included in the phrase "any person" under paragraph 6. Therefore the setoff should be allowed. This seems to be an imaginative and strange construction. Had the carrier intended to include itself as one of the "any persons" from whom recovery had already been had, it could easily have added the phrase "including the carrier." The provisions of the insurance policy should not be strained to reach a result favorable to the carrier.

Section II refers to deduction under Family Protection (Uninsured Motorists), not bodily injury, which is the issue here.

Language in insurance policies must be interpreted in accordance with the way the average man can understand it, rather than in a technical sense. Dairyland Ins. Co. v. Ward, 83 Wash.2d 353, 517 P.2d 966 (1974). Insurance policies are more strongly construed against insurance companies because they are written for them by men learned in the law and trained in drafting contracts of this kind. Starr v. Aetna Life Ins. Co., 41 Wash. 199, 83 P. 113 (1905). Any ambiguities in the policy will be construed against the insurer, particularly with reference to exceptions and limitations to the policy's coverage. Witherspoon v. St. Paul Fire & Marine Ins. Co., 86 Wash.2d 641, 548 P.2d 302 (1976).

Sections 6 and 7 were recently interpreted in Thiringer v. American Motors Ins. Co., 91 Wash.2d 215, 588 P.2d 191 (1978), where the insured suffered greater damages than the face of the policy. The insured had accepted settlement of $15,000 from the tort-feasor, who had no other reachable assets. The carrier sought to offset this amount against the amount payable under the PIP coverage, but the offset was denied on the basis that only after the insured had made a full recovery for his damages did the insurer's right of subrogation arise. The general rule is that although the carrier is entitled to be reimbursed to the extent that its insured recovers the same loss from a tort-feasor, it can recover only the excess remaining after the insured is fully compensated for his loss. This policy fosters adequate protection to the automobile victim. In interpreting identical contractual provisions, the court said:

(I)f payment under the PIP coverage is made to the insured, the insurer shall be reimbursed to the extent that the insured recovers such damages from a person legally responsible for the injury. It does not provide that, if the insured recovers less than his total damages from such party, the amount recovered shall be allocated first to those losses covered by the PIP endorsement and then to other damages suffered by the insured. Such a provision, were it included, would be obviously unfair, since the insured pays a premium for the PIP coverage and has a right to expect that the payments promised under this coverage will be available to him if the amount he is able to recover from other sources, after diligent effort, is less than his general...