Schmick v. State Farm Mut. Auto. Ins. Co., 15459

Decision Date14 August 1985
Docket NumberNo. 15459,15459
Citation704 P.2d 1092,103 N.M. 216,1985 NMSC 73
PartiesMarilyn K. SCHMICK, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
CourtNew Mexico Supreme Court
OPINION

SOSA, Senior Justice.

Plaintiff Marilyn Schmick (Schmick) brought a declaratory judgment action in district court alleging that defendant State Farm Insurance Company (State Farm) had failed to pay the underinsured benefits to which she was entitled. Plaintiff moved for summary judgment asking that the court declare her right to stack the proceeds of two underinsured motorist policies. Defendant made a cross-motion for summary judgment requesting that Schmick not be permitted to stack the two policies. The district court permitted Schmick to stack the policies but offset that amount by the underinsured motorist's liability coverage. Plaintiff appeals. We affirm.

The undisputed facts relevant to this case are that Schmick purchased two uninsured motorist policies, one to insure her Toyota and one to cover the Ford she and her husband owned. Marilyn Schmick was the named insured on the policy for the Toyota and Pete Schmick, her husband, was the named insured on the policy covering the Ford. Each policy provided underinsured motorist benefits in the amount of $15,000, and Schmick paid a separate premium for each.

While driving her Toyota, Schmick was injured in a collision with Luciano Saiz (Saiz), who was also insured by State Farm Insurance Company. Saiz had liability coverage in the amount of $25,000. Accordingly, Schmick received $25,000 in liability insurance proceeds from Saiz. Defendant State Farm paid to Schmick $5,000 in underinsured motorist benefits.

At the hearing on the motions for summary judgment the district court found that plaintiff could stack benefits under the two policies in question. The court then applied New Mexico's uninsured/underinsured motorist statute, NMSA 1978, Section 66-5-301 B (Repl.Pamp.1984), to make the following findings. Plaintiff's aggregate of uninsured motorist coverage, which was found by stacking the two $15,000 policies equalled $30,000. Plaintiff had received $25,000 from Saiz. Thus, pursuant to section 66-5-301(B), Saiz was underinsured by $5,000. Since State Farm had already paid plaintiff $5,000, it owed her nothing more under the two policies.

The district court stated that the statute provided minimum protection up to the amount purchased by the insured. Therefore, plaintiff was entitled to a total of $30,000, to be paid in part by the uninsured motorist carrier. In the district court's view, the underinsurance coverage provided by State Farm was not in addition to that provided by the other vehicle but was intended to supplement the amount paid by the underinsured motorist so that the insured recovered an amount equal to the uninsured motorist protection purchased.

On appeal we address two issues. The first is whether New Mexico's underinsured motorist provision allows an insured to stack two underinsured motorist policies for purposes of determining the tortfeasor's underinsured status. The second issue is whether underinsured motorist benefits are calculated by subtracting the amount of the tortfeasor's liability coverage from the amount of the insured's uninsured motorist coverage or whether the underinsurance benefits due equal the amount of uninsured motorist coverage purchased for the insured's benefit in addition to the amount of liability insurance proceeds available from the tortfeasor.1

In resolving the case before us, we must examine the underinsured motorist provisions of New Mexico's uninsured motorist statute. Sec. 66-5-301(B). The policies in question do not address underinsured motorist coverage. Thus, the statute will be read into the policies and, to the extent that the policy provisions conflict with the statute, the statute prevails. Howard v. Farmers Insurance Co., 5 Kan.App.2d, 499, 619 P.2d 160, (1980). See also, Bauer v. Bates Lumber Co., 84 N.M. 391, 503 P.2d 1169 (Ct.App.), cert. denied, 84 N.M. 390, 503 P.2d 1168 (1972).

Subsection 66-5-301(B) states that "uninsured motorist coverage ... shall include underinsured motorist coverage." The statute further provides that an underinsured motorist is:

an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage. (emphasis added).

Thus, in applying New Mexico's underinsured motorist provision, the first step is to determine the limits of liability under Schmick's uninsured motorist coverage. This presents the issue of whether Schmick may stack the two $15,000 policies to determine Saiz' underinsured status. Resolution of this issue requires disposing of three points raised by State Farm. We first address defendant's argument concerning the correct interpretation of the word "coverage" as used in our underinsured motorist statute. State Farm contends that Schmick's uninsured motorist coverage is limited to one policy because the statute says "the limits of liability under the insured's uninsured motorist 'coverage ' " and not coverages. Furthermore, defendant asserts that since the Legislature used the word "sum" in referring to the tortfeasor's liability coverage it could have also used "sum" when referring to the limits of the insured's uninsured motorist coverage had it intended "coverage" to be plural.

There are no prior cases which construe "coverage" as used in New Mexico's underinsured motorist provision. In interpreting this statute, we ascertain the legislative intent from the language used and words will be given their ordinary meaning unless a different intent is clearly indicated. Davis v. Commissioner of Revenue, 83 N.M. 152, 489 P.2d 660, (Ct.App.), cert. denied, 83 N.M. 151, 489 P.2d 659 (1971). Furthermore, in determining the legislative intent, we look "not only to language used in the statute, but also to the object sought to be accomplished and the wrong to be remedied". Chavez v. State Farm Mutual Automobile Insurance Co., 87 N.M. 327, 328, 533 P.2d 100, 101 (1975) (citing Rodman v. State Farm Mutual Automobile Insurance Co., 208 N.W.2d 903 (Iowa 1973).

The statutory definition of underinsured motorist indicates that an insured is entitled to underinsurance benefits to the extent that his uninsured/underinsured coverage exceeds the tortfeasor's liability insurance. In other words, the intent of the Legislature was to put an injured insured in the same position he would have been in had the tortfeasor had liability coverage in an amount equal to the uninsured/underinsured motorist protection purchased for the insured's benefit. In this case, two uninsured/underinsured policies were purchased for Schmick's benefit. Therefore, in order to effectuate the Legislature's intent, the two underinsured motorist policies must be stacked for an aggregate of $30,000. "Coverage", then, includes one or more policies depending on the number purchased for the insured's benefit. See Connolly v. Royal Globe Insurance Co., 455 A.2d 932 (Me.1983).

This interpretation of the statutory language is in accord with the broad objective of the uninsured/underinsured motorist statute. We have stated that the uninsured motorist statute must be liberally construed to implement the purpose of compensating those injured through no fault of their own. Chavez v. State Farm Mutual Automobile Insurance Co., 87 N.M. at 329, 533 P.2d at 102. To that end, the only limitations on protection are those specifically set out in the statute itself: that the insured be legally entitled to recover damages and that the negligent driver be uninsured. Id. In the context of underinsured motorist protection, a subcategory of uninsured motorist coverage, the requirements are that the insured be legally entitled to recover damages and that the negligent driver be inadequately insured. Therefore, in the case before us we liberally construe "coverage" to include both policies so that Schmick be compensated as fully as possible for the injuries she suffered. See Konnick v. Farmers Insurance Co., 103 N.M. 112, 703 P.2d 889 (1985).

Further support for this result is found in the rules governing statutory construction. The Legislature has mandated that in interpreting statutes, "words importing the singular number may be extended to several persons or things" unless such a construction would be "inconsistent with the manifest intent of the Legislature or repugnant to the context of the statute". NMSA 1978, Sec. 12-2-2. Thus, although "coverage" might be either a singular or plural noun, it may be read as plural where to do so would neither contravene the intent of the Legislature nor interfere with the internal consistency of the statute. We hold that "coverage" must, in fact, be read in the plural in order to further the legislative goal of compensating innocent victims of underinsured motorists. Furthermore to do so would not render the statute internally inconsistent.

The second point State Farm raises in determining the limits of Mrs. Schmick's uninsured/underinsured motorist coverage is whether plaintiff has available to her proceeds from both policies given that she is the "named insured" on only one. Defendant argues that only "named insureds" may stack policy proceeds. Mere "insureds", according to State Farm, are limited to recovering under the policy on the vehicle in which they were riding at the time of the accident. Thus, Schmick has only $15,000 in underinsurance coverage available to her; since the tortfeasor had $15,000 in liability coverage, the tortfeasor was not underinsured and State Farm...

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