Nationwide Mut. Ins. Co. v. Scarlett

• Decision Date: 24 July 1989
• Docket Number: No. 17441,17441
• Citation: 780 P.2d 142,116 Idaho 820
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio corporation, Plaintiff-Respondent, v. Mark SCARLETT, individually and as next friend of Angela Scarlett; Gary O. Scarlett, individually and as next friend of Danielle Scarlett and Desiree Scarlett, Defendants-Appellants.
• Court: Idaho Supreme Court

Page 142

780 P.2d 142

116 Idaho 820

NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio corporation, Plaintiff-Respondent, v. Mark SCARLETT, individually and as next friend of Angela Scarlett; Gary O. Scarlett, individually and as next friend of Danielle Scarlett and Desiree Scarlett, Defendants-Appellants.

No. 17441.

Supreme Court of Idaho.

July 24, 1989.

Rehearing Denied Oct. 19, 1989.

Davison, Copple, Copple & Copple, Boise, for defendants-appellants. E. Don Copple argued, Boise.

Hawley, Troxell, Ennis & Hawley, Boise, for plaintiff-respondent. John F. Kurtz, Jr., argued, Boise.

BAKES, Chief Justice.

This is a declaratory judgment action under the uninsured/underinsured motorist provision of an automobile insurance policy. The facts relevant to the insurance claim are undisputed. On May 8, 1986, the insured, Gary O. Scarlett (Scarlett) purchased from Nationwide Mutual Insurance Company (Nationwide) an automobile insurance policy insuring four specified vehicles. Scarlett's policy provided uninsured/underinsured motorist coverage for each of the four vehicles in the amount of $100,000 per person, $300,000 per occurrence. On July 8, 1986, Scarlett's two daughters, Desiree and Danielle, and his niece, Angela Scarlett, were involved in a traffic accident while in one of the vehicles covered under Scarlett's policy. Desiree was driving, with Angela and Danielle as passengers. An automobile driven by Robin Jo Darrell (Darrell) crossed the center line and collided head on with the Scarlett vehicle. All three of the Scarlett girls suffered serious injuries as a result of the collision. A passenger in the Darrell vehicle was killed in the accident.

Shortly thereafter, litigation was initiated on behalf of the Scarlett girls against Darrell. Darrell carried automobile liability insurance through Continental Insurance Company (Continental) with the same $100,000/$300,000 limits as those contained in Scarlett's policy with Nationwide. Pursuant to a settlement agreement, Continental paid the full policy limits, $300,000, which was paid as follows: $150,000 to Angela Scarlett, $50,000 each to Danielle and Desiree Scarlett, and $50,000 to the estate of the passenger in the Darrell vehicle.

The Scarletts then made a claim against Nationwide under the uninsured/underinsured provision of its policy insuring the Scarlett automobile. Nationwide denied coverage and brought an action in the district court for a declaratory judgment. The Scarletts filed a motion for partial summary judgment; Nationwide then filed a cross motion for summary judgment on the theory that Darrell's vehicle was not "underinsured" as defined in the Nationwide policy. In a declaratory judgment, the district court ruled that the Darrell motor vehicle was not an underinsured motor vehicle as defined in the Nationwide policy, and accordingly, Nationwide's motion for summary judgment was granted. The Scarletts appeal. We affirm.

The threshold issue before this Court is whether the uninsured/underinsured motorist coverage on Scarlett's four vehicles may be aggregated, or "stacked," for the purpose of determining whether Darrell was underinsured. Under the Nationwide policy, a motor vehicle is "underinsured" if the amount of liability insurance on the negligent party's vehicle is less than the limits of Nationwide's uninsured/underinsured motorist coverage. Nationwide's Endorsement 1603, which provided the underinsured coverage, amended the uninsured motorist coverage to include the following:

1. An uninsured motor vehicle includes an underinsured motor vehicle. This is one for which there are bodily injury liability coverage or bonds in effect. Their total amount, however, is less than the limits of this coverage. These limits are shown in your policy's Declarations.

Thus, in order for the Scarletts to receive benefits from the Nationwide underinsured motorist coverage, the limit of liability on Darrell's policy had to be less than the limit on Scarlett's uninsured/underinsured motorist coverage. Although the limits of Darrell's liability coverage was $100,000 per individual and $300,000 per occurrence, the same as Scarlett's uninsured/underinsured motorist coverage, Scarlett nevertheless contends that because four vehicles were insured under his Nationwide policy he should be able to quadruple those limits; i.e., Nationwide was effectively committed to $400,000 per individual and $1.2 million per occurrence. Accordingly, Scarlett argues, since the limits of the Darrell policy ($100,000/$300,000) are less than the four-car combined limits of his own coverage ($400,000/$1.2 million), he is entitled to uninsured/underinsured motorist coverage under his own Nationwide policy. However, the following excerpt from the Nationwide policy expressly rejects Scarlett's claim. The Limits of Payment provision of the Nationwide policy provides:

LIMITS OF PAYMENT.

....

2. Limits apply as stated in the Declarations. The insuring of more than one person or vehicle under this policy does not increase our Uninsured Motorists payment limits. In no event will any insured be entitled to more than the highest limit applicable to any one motor vehicle under this policy. (Emphasis added.)

The foregoing policy language is plain and unambiguous and clearly provides that merely because more than one vehicle is insured under the policy, that fact "does not increase our Uninsured Motorists Payment limits. In no event will any insured be entitled to more than the highest limit applicable to any one motor vehicle under this policy." That provision clearly prevents Scarlett from combining ("stacking") the coverages for each of the motor vehicles. The Nationwide policy limits the uninsured/underinsured coverage to "the highest limit applicable to any one motor vehicle," which is $100,000/$300,000, and which was the same amount of coverage the tortfeasor Darrell had in its liability coverage. Accordingly, under Nationwide's Endorsement 1603, attached to the Scarlett policy, the Darrell vehicle was not underinsured because the Darrell liability coverage was not "less than the limits of this coverage."

Scarlett argues, nevertheless, that the limits of payment clause is ineffective and unenforceable because it is against public policy. However, this Court has on two recent occasions ruled to the contrary. In Blackburn v. State Farm Mutual Auto. Ins. Co., 108 Idaho 85, 697 P.2d 425 (1985), this Court traced the development of Idaho's uninsured motorist statute and held that the legislative mandate that insurers offer "uninsured" motorist coverage did not require that insurers offer "underinsured" motorist coverage, and therefore such "underinsured" motorist coverage was controlled entirely by the contractual obligations in the insurance policy itself. In Meckert v. Transamerica Ins. Co., 108 Idaho 597, 701 P.2d 217 (1985), this Court rejected the argument that limitations on underinsured motorist coverage violates some public policy set out in the Idaho insurance statutes. The Court stated:

[T]he Idaho statutes do not regulate underinsured motorist coverage. There are no requirements that insurance carriers offer such underinsured motorist coverage, nor that motorists have such underinsured coverage. Neither the Idaho legislature nor the courts have declared that...