Old American Cty. Mut. Fire Ins. v. Sanchez
| Decision Date | 22 October 2004 |
| Docket Number | No. 02-0843.,02-0843. |
| Parties | OLD AMERICAN COUNTY MUTUAL FIRE INSURANCE COMPANY, Petitioner, v. Zeferino SANCHEZ, Respondent. |
| Court | Texas Supreme Court |
Robert Harrison Pemberton, Shannon H. Ratliff, Ratliff Law Firm, P.L.L.C., James J. Scheske, Christopher Harris Taylor, Akin Gump Strauss Hauer & Feld LLP, Austin, Barry A. Chasnoff, Akin Gump Strauss Hauer & Feld LLP, San Antonio, for petitioner.
Glynn C. Turquand, Walters & Turquand, Charles C. Sanders, Austin, for respondent.
Articles 5.06-1(1) and 5.06-3(a) of the Texas Insurance Code ("the Code") provide that "any insured named in the policy" may reject Uninsured Motorist ("UM") and Personal Injury Protection ("PIP") coverages. The question here is whether the insured spouse of the person listed as the "named insured" in the declarations page of a policy may reject those coverages. The court of appeals held that the spouse could not. We conclude, however, that the spouse falls within the class of persons statutorily entitled to reject UM and PIP coverages under the policy. Accordingly we reverse the court of appeals' judgment and render judgment in favor of Old American County Mutual Fire Insurance Company ("Old American").
This case is presented on stipulated facts.1 On January 8, 1998, Margarita Sanchez, wife of Zeferino Sanchez, applied for and purchased an insurance policy from Old American for two of the couple's vehicles. Ms. Sanchez rejected UM and PIP coverages on the insurance application, and Old American never assessed premiums for the coverages.2 In applying for the policy, Ms. Sanchez affirmed that the rejections of UM and PIP coverages would apply to the 1998 policy and to all future renewals of that policy. The Sanchezes renewed their existing policy in 1999. Neither Mr. nor Ms. Sanchez requested PIP or UM coverages at that time.
Although Ms. Sanchez's name appeared on the 1998 policy application, she was not listed as a "named insured" on the declarations page.3 The policy, however, defined "you" and "your" (i.e., the insureds under the policy) to include the "named insured" as well as "[t]he spouse if a resident of the same household." Ms. Sanchez fell within the policy definitions of "you" and "your" because she and Mr. Sanchez lived in the same house at all pertinent times. To that end, the parties stipulated that both Mr. and Ms. Sanchez were insured under the policy. The parties disagree, however, about the extent of the policy's coverage. Specifically, the parties dispute whether Mr. Sanchez was entitled to UM and PIP benefits to cover damages arising from a 1999 accident.
On April 11, 1999, Mr. Sanchez's 1984 Chevrolet pickup truck was parked on the shoulder of Interstate 35 in Hays County. A vehicle driven by an uninsured motorist struck Mr. Sanchez's truck as he was lying beneath it repairing a broken fuel hose. The impact caused the pickup to collapse on Mr. Sanchez and sever his spinal cord. Although Mr. Sanchez owned the pickup truck at the time Ms. Sanchez applied for the policy, Ms. Sanchez did not identify the pickup in the application and it was not a "covered auto" under the policy. The policy's UM and PIP provisions excluded coverage for injuries sustained while "occupying" or when "struck by" any vehicle owned by an insured that was not insured under the policy (i.e., the "owned-vehicle exclusion").
After the 1999 accident, Mr. Sanchez filed a claim with Old American for UM and PIP benefits under the policy. Old American filed suit seeking a declaratory judgment absolving it of any obligation to pay those benefits. It then moved for summary judgment on three grounds: (i) Ms. Sanchez's rejection of UM and PIP coverages precluded Mr. Sanchez's recovery of those benefits; (ii) the policy's owned-vehicle exclusion eliminated UM and PIP coverages because Mr. Sanchez sustained his injuries while "upon" and thus "occupying" the uncovered pickup; and (iii) Mr. Sanchez was "struck by" the uncovered pickup, which also invoked the UM and PIP owned-vehicle exclusion. The trial court denied summary judgment on the first ground, granted summary judgment for Old American on the second ground, and did not rule on the third. Mr. Sanchez appealed the trial court's judgment, and Old American cross-appealed, contending that it was also entitled to summary judgment on the first and third grounds.
The court of appeals held that Old American was not entitled to summary judgment on any of the asserted grounds and remanded to the trial court for further proceedings. 81 S.W.3d 452, 462-63. As to the first ground, the court held that Ms. Sanchez was not: (i) a "named insured" because her name was not listed on the declarations page of the policy, or (ii) an "insured named in the policy" with authority to reject coverages because she was not explicitly named in the policy. Id. at 459-60 & n. 8. As to the second and third grounds, the court held that Mr. Sanchez was neither "occupying" nor "struck by" his truck in the accident that gave rise to this suit. Id. at 458, 462.
We granted Old American's petition for review. 47 Tex. Sup.Ct. J. 2 (Oct. 3, 2003). Because we conclude that Old American was entitled to summary judgment on the first ground, we do not reach the other two grounds asserted by the parties in this case.
The parties do not dispute that Ms. Sanchez rejected UM and PIP coverages in writing; they do not assert that there were any formal defects with the manner or form of rejection; and they agree that premiums were never assessed for the coverages. The only issue is whether Ms. Sanchez had statutory authority to waive them. To resolve this issue, we must determine whether, under articles 5.06-1(1) and 5.06-3(a) of the Texas Insurance Code, the spouse of the person identified as the named insured in the declarations page of a policy may reject UM and PIP coverages. The parties assert, and we agree, that this is a legal question with no genuine issues of material fact.
Articles 5.06-1(1) and 5.06-3(a) of the Code mandate UM and PIP coverages in Texas automobile liability insurance policies, unless those coverages are explicitly waived. See Tex. Ins.Code arts. 5.06-1(1), 5.06-3(a). Specifically, article 5.06-1(1) of the Texas Insurance Code states:
No automobile liability insurance (including insurance issued pursuant to an Assigned Risk Plan established under authority of Section 35 of the Texas Motor Vehicle Safety-Responsibility Act), covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state unless coverage is provided therein or supplemental thereto, in at least the limits described in the Texas Motor Vehicle Safety-Responsibility Act, under provisions prescribed by the Board, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, or property damage resulting therefrom. The coverages required under this Article shall not be applicable where any insured named in the policy shall reject the coverage in writing; provided that unless the named insured thereafter requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured has rejected the coverage in connection with a policy previously issued to him by the same insurer or by an affiliated insurer.
Id. art. 5.06-1(1) (emphasis added).
Similarly, article 5.06-3(a) reads as follows:
No automobile liability insurance policy, including insurance issued pursuant to an assigned risk plan established under authority of Section 35 of the Texas Motor Vehicle Safety-Responsibility Act, covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state unless personal injury protection coverage is provided therein or supplemental thereto. The coverage required by this article shall not be applicable if any insured named in the policy shall reject the coverage in writing; provided, unless the named insured thereafter requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy if the named insured has rejected the coverage in connection with a policy previously issued to him by the same insurer or by an affiliated insurer.
Id. art. 5.06-3(a) (emphasis added).
The UM and PIP statutes are remedial in nature. The UM statute is designed to compensate insured persons who are legally entitled to recover damages from uninsured persons who cause motor vehicle accidents. Id. art. 5.06-1(1); see 9 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3D § 122:2 (1997) [hereinafter Couch]. UM coverage essentially enables a victim of a motor vehicle accident to recover from his or her insurer the amount, up to policy limits, the victim would have been able to collect from the person who caused the accident had that person been insured. See Tex. Ins.Code art. 5.06-1(5); Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 272 (Tex.1999); see 9 Couch at § 122:1. The PIP statute is intended to provide no-fault compensation for victims of motor vehicle accidents. Tex. Ins.Code art. 5.06-3(c); Tex. Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123 (Tex.2004); see 9 Couch at § 125:1. Generally, PIP coverage requires the insurer, regardless of legal fault, to pay the insured an amount up to $2,500 to cover loss of income and medical expenses arising from accidents. Tex. Ins.Code art. 5.06-3(b); see 9 Couch at § 125:2.
This Court has recognized that, because of their remedial purposes, articles 5.06-1(1) and 5.06-3(a) should be liberally interpreted to give effect to the...
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