Rhault v. Tsagarakos

• Decision Date: 18 June 1973
• Docket Number: Civ. A. No. 6510.
• Citation: 361 F. Supp. 202
• Parties: Elizabeth RHAULT, Executrix of the Estate of Eugene J. Rhault v. Anthony N. TSAGARAKOS et al.
• Court: U.S. District Court — District of Vermont

361 F. Supp. 202

Elizabeth RHAULT, Executrix of the Estate of Eugene J. Rhault v. Anthony N. TSAGARAKOS et al.

Civ. A. No. 6510.

United States District Court, D. Vermont.

June 18, 1973.

COPYRIGHT MATERIAL OMITTED

McNamara, Fitzpatrick, Sylvester, Farrell & Maley, Burlington, Vt., for plaintiff.

Pierson, Affolter & Amidon, Burlington, Vt., for Cleveland.

Dinse, Allen & Erdmann, Burlington, Vt., for Tsagarakos.

Dick, Hackel & Hull, Rutland, Vt., for Safeco Ins. Co.

OPINION

HOLDEN, Chief Judge.

This case arises from a fatal accident which occurred on Interstate 89 in Williston, Vermont, on December 4, 1970. The plaintiff's decedent, Eugene Rhault, was standing beside his auto, stopped along the highway, when a collision involving the decedent's and three other vehicles occurred. He died as a result of injuries sustained in the accident. Two of the vehicles involved were operated by defendants Tsagarakos and Cleveland. The third vehicle, which displayed an Alabama registration, left the scene of the accident and was never located. The identity of its driver is unknown.

Rhault's estate brought suit against Cleveland and Tsagarakos and against Safeco Insurance Company, the decedent's automobile insurance carrier, on the basis of an uninsured motorist clause in the insurance contract. Subsequently the plaintiff obtained a $10,000 settlement with Tsagarakos. Safeco then moved for summary judgment, contending that the Tsagarakos settlement negates its obligation under the uninsured motorist clause. These facts and the provisions of the insurance agreement are not in dispute.

The policy provisions upon which Safeco relies in support of its motion for summary of judgment state:

DAMAGES FOR BODILY INJURY CAUSED BY UNINSURED

AUTOMOBILES (Herein referred to as Uninsured Motorists) In consideration of the payment of the premium for this endorsement and subject to all the terms of this endorsement and the applicable terms of the policy, the company agrees with the named insured as follows:

INSURING AGREEMENTS

1. Damages for Bodily Injury Caused by Uninsured Automobiles

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called `bodily injury', sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile;

EXCLUSIONS

This endorsement does not apply:

(a) To bodily injury to an insured with respect to which such insured, his legal representative or any person entitled to payment under this endorsement shall, without written consent of the company, make any settlement with any person or organization who may be liable therefor.

CONDITIONS

6. Limits of Liability. (a) The limit of the company's liability under this endorsement shall be the limit of bodily injury liability required by the motor vehicle financial responsibility law of the state of residence, as shown on the declarations; (b) any amount payable under the terms of this endorsement because of bodily injury sustained in an accident by a person who is an insured under this coverage shall be reduced by

(1) all sums paid on account of such bodily injury by or on behalf of (i) the owner or operator of the uninsured automobile and (ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under Bodily Injury Liability Coverage of the policy;

Safeco's position is that the Tsagarakos settlement negates its obligation on two grounds: (1) the settlement was obtained without Safeco's consent, contrary to "Exclusion (a)"; and (2) when the insurer's liability limit of $10,000 is reduced by the amount of the Tsagarakos settlement, as required by "Condition 6(b)(1)(ii)", Safeco's liability is reduced to zero.

These contentions must be measured in the light of the standard provisions relating to uninsured motorists' protection required by 23 V.S.A. § 941. This statute was enacted in 1967 and is entitled "AN ACT TO REQUIRE THE INSURANCE OF PERSONS AGAINST DAMAGES CAUSED BY UNINSURED OR UNKNOWN MOTORISTS, AND TO FIX MINIMUM LIABILITY INSURANCE COVERAGE." 1967, No. 374 (Adj.Sess.), § 1 eff. July 1, 1968. It provides:

(a) No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may 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, for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, resulting from the ownership, maintenance or use of such uninsured or hit-and-run motor vehicle.

. . . . . .

(c) The coverage under (a) and (b) of this section shall be not less than the minimum limits of coverage required under the provisions of 23 § 801 of this title.

. . . . . .

(e) If payment is made under uninsured motorist coverage, and subject to the terms of that coverage, to the extent of that payment, the insurer is entitled to the proceeds of any settlement or recovery from any person legally responsible for the damage or personal injury, as to which the payment was made, and to amounts recoverable from the assets of the insolvent insurer of the other motor vehicle."

Since the Supreme Court of Vermont has not afforded a judicial interpretation of this statute, this court must construe its meaning without the aid of state precedent.

It is established beyond question that contracts of liability insurance are subject to statutory provisions and are deemed to include the statutory requirements whether they are contained in the insuring agreement or not. The terms of the policy are without force to detract from the requirements of the statute. See Biller v. Meyer (7th Cir. 1929), 33 F.2d 440; Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, 188; 7 Am.Jur.2d Automobile Insurance § 211.

The design of the statute is to protect a responsibly insured motorist against the unfortunate hazard presented by an injury inflicted in an accident with an irresponsible operator who is uninsured or has fled the scene, leaving the insured without recourse for the damage inflicted by an irresponsible operator. The statute has fashioned the means to benefit an insured who has provided protection for others, to obtain protection for himself. Of course he pays a premium for this protection. Thus the law attempts to provide coverage in the insured's own policy, and at his premium, where it does not exist with the other operator so that he may have at least the statutory protection in all events. And the court must construe the policy and the statutory provision to achieve the primary purpose of the enactment. American Mutual Insurance Company v. Romero, 428 F.2d 870, 873 (10th Cir. 1970).

To this end the standard provisions require every automobile liability insurance policy to protect the insured against injury caused by an uninsured...