Spears v. Glens Falls Insurance Company

• Decision Date: 17 May 2005
• Docket Number: No. 101655,101655
• Citation: 114 P.3d 448,2005 OK 35
• Parties: PAM and DENNIS SPEARS, as Guardians and Next of Kin of NATHAN SPEARS, Plaintiffs, v. GLENS FALLS INSURANCE COMPANY, Defendant.
• Court: Oklahoma Supreme Court

2005 OK 35

114 P.3d 448

PAM and DENNIS SPEARS, as Guardians and Next of Kin of NATHAN SPEARS, Plaintiffs, v. GLENS FALLS INSURANCE COMPANY, Defendant.

No. 101655

Supreme Court of Oklahoma

May 17, 2005

Rex K. Travis, Oklahoma City, Oklahoma, for Plaintiffs.

Richard J. Harris, Sarah J. Glick, Oklahoma City, Oklahoma, for Defendant.

KAUGER, J.

¶ 1 The question certified¹ asks this Court to determine whether the defendant, Glens Falls Insurance Company (Glens Falls/insurer), was required to give the plaintiffs, Pam and Dennis Spears (Spears/insureds), pre-policy notification that stacking of uninsured/underinsured motorist (UM/UIM) insurance was prohibited by the insurance contract. The parties stipulated that: 1) the original UM/UIM coverage form presented to the insureds conformed with the requirements of 36 O.S. Supp. 2004 §3636;² 2) the policy was renewed annually between 1993 and 2003 with the insureds receiving a coverage summary at each renewal; 3) although the policy covered three vehicles, only one premium for UM/UIM coverage was charged; and 4) the UM/UIM coverage endorsement to the policy provided in pertinent part:

". . . The limit of liability shown in the Coverage Summary for each person for Uninsured Motorist Coverage is our maximum limit of liability for all damages. . . . This is the most we will pay regardless of the number of: . . . Vehicles insured by this or any other policy issued by us or others . . ."

Under these facts and pursuant to Silver v. Slusher, 1988 OK 53, 770 P.2d 878, cert. denied, 493 U.S. 817, 110 S.Ct. 70, 107 L.Ed.2d 37 (1989) and Cofer v. Morton, 1989 OK 159, 784 P.2d 67, acknowledging that insurers need not give insureds extensive pre-policy explanations concerning UM/UIM coverage alternatives, insurers need not notify, prior to policy issuance, insureds that UM/UIM coverage may not be stacked.

STIPULATED FACTS

¶ 2 In January, 1993, the Spears selected UM/UIM coverage equal to their bodily injury liability limits on a form provided by the insurer in conformance with the legislatively imposed requirements.³ The insureds signed a second UM/UIM notice and selection form in March of 1996, and again chose the maximum statutory coverage limit. The policy was renewed annually with Glens Falls underwriting the policy beginning in 2001. The most recent policy renewal occurred on January 3, 2003. At each renewal, the insureds were given copies of the policy including a coverage summary and all endorsements. The policy provides bodily injury liability coverage in the amount of $100,000 per person and $300,000 per accident.

¶ 3 Although the policy indicates that there are three vehicles covered, a single premium of $252.00 was charged for UM/UIM coverage which is listed separately from all other vehicle premiums. Furthermore, all other charges under the policy are assigned on a per-vehicle basis. Finally, the inclusion of multiple vehicles under the UM/UIM coverage did not alter the premium or result in increased charges.

¶ 4 The insurance policy contained the following provision limiting UM/UIM coverage:

". . . LIMIT OF LIABILITY

1. The limit of liability shown in the Coverage Summary for each person for Uninsured Motorists Coverage' [sic] is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of bodily injury sustained by any one person in any one motor vehicle accident. `Bodily injury sustained by any one person' includes all injury and damage to others resulting from this bodily injury.

Subject to this limit for each person, the limit of liability shown in the Coverage Summary for each accident for `Uninsured Motorist' coverage is our maximum limit of liability for all damages for bodily injury resulting from any one motor vehicle accident.

This [sic] most we will pay regardless of the number of:

a. Covered persons . . .

c. Vehicles involved in an accident or shown in the Coverage Summary . . .

d. Vehicles insured by this or any other policy issued by us or others . . ." [Emphasis in original.]⁴

¶ 5 The insurer did not advise the insureds, prior to policy issuance, that they were precluded from stacking their UM/UIM coverage. The insureds' son, Nathan Spears, was injured in an accident with an uninsured motorist on December 15, 2003. Arguing that the insureds were entitled to only a single recovery for UM/UIM coverage, the insurer paid the insureds $100,000. The insureds asserted their entitlement to stack the UM/UIM coverage of their three vehicles and sought a recovery of $300,000.

¶ 6 The Spears sued Glens Falls in Cleveland County District Court filing the petition on May 20, 2004. The insurer was successful in getting the cause removed to federal court on diversity grounds. Once the cause was in the federal system, the insurer answered on July 9, 2004, and filed a counterclaim for declaratory judgment seeking costs and a finding that it fulfilled all its obligations to the insureds through its $100,000.00 payment. On September 30, 2004, the insureds filed a motion for summary judgment which the insurers countered on October 1, 2004.

¶ 7 Recognizing that state law is determinative of the stacking issue and that this Court has not addressed the precise issue presented, the federal court certified the question to this Court pursuant to the Uniform Certification of Questions of Law Act, 20 O.S. 2001 §1601 et seq. on January 7, 2005. We set a briefing cycle which was completed on February 25, 2005.

¶ 8 PURSUANT TO THE TEACHINGS OF SILVER v. SLUSHER AND COFER v. MORTON AND, UNDER THE FACTS PRESENTED, AN INSURANCE COMPANY NEED NOT PROVIDE INSUREDS WITH PRE-POLICY NOTICE THAT STACKING OF UM/UIM IS PROHIBITED BY THE INSURANCE CONTRACT.

¶ 9 Although the insureds recognize that our jurisprudence provides that an insurer may limit UM/UIM coverage to a single recovery where only one premium is charged for multiple vehicles, the Spears argue that before issuance of the policy, Glens Falls was required to present them with all options for UM/UIM coverage — including notice that stacking was prohibited. The insurer asserts that it was not required to provide stackable UM/UIM coverage. Furthermore, Glens Falls contends that when only one UM/UIM premium is charged for multiple vehicles and when the policy language prohibits stacking, multiple recovery is prohibited. Finally, the insurer urges that Silver v. Slusher, 1988 OK 53, 770 P.2d 878, cert. denied, 493 U.S. 817, 110 S.Ct. 70, 107 L.Ed.2d 37 (1989) — holding that an insurer has no affirmative duty, either contractually or statutorily, to provide an explanation of UM/UIM motorist coverage to insureds as an indispensable precondition for securing an effective rejection of UM/UIM coverage, is instructive. We agree.

¶ 10 The insureds find support in Scott v. Cimarron Ins. Co., Inc., 1989 OK 26, 774 P.2d 456 and Withrow v. Pickard, 1995 OK 120, 905 P.2d 800. Additionally, they rely heavily on two non-precedential opinions⁵ released for publication by the Court of Civil Appeals, Mid-Continent Group v. Henry, 2003 OK CIV APP 46, 69 P.3d 1216 and Kinder v. Oklahoma Farmers Union Mutual Ins. Co. (Kinder I), 1991 OK CIV APP 53, 813 P.2d 546.

¶ 11 In Scott and Withrow, supra, we held that stacking was not allowed under policies when only one premium was charged for UM/UIM coverage. Nevertheless, the insureds assert these opinions support their position because, in both instances, the insured was given pre-policy notification that stacking was prohibited by language included in the application form.

¶ 12 We agree with the insureds that inclusion of such pre-policy information is the better practice and would ensure a determination that the contractual expectation of the parties was for singular UM/UIM coverage. However, neither of the opinions strengthens the insureds' position.

¶ 13 Withrow specifically determined that insurance companies were under no obligation to offer stackable UM/UIM coverage⁶ and rejected contentions that because the insured was not offered stackable coverage when a third car was added to the policy, it arose by operation of law. Furthermore, the Withrow Court reiterated that once the insurer had provided the insured with the statutorily approved form, as Glen Falls did here, it had done all the law required.⁷ Finally, Withrow characterizes, as a crucial factor in determining reasonable expectations of the insured, the payment of multiple premiums in consideration of whether stacking is allowed.⁸ This reasoning comports with Max True Plastering Co. v. United States Fidelity & Guaranty Co., 1996 OK 28, 912 P.2d 861, in which we emphasized that stacking of UM/UIM coverage was allowable when such coverage was within the reasonable expectations of the parties, i.e. when separate premiums were paid on a series of vehicles covered by a single policy. Here, it is undisputed that the Spears paid only one premium for multiple vehicle UM/UIM protection.

¶ 14 Like Withrow, Scott does not bolster the insureds' arguments. In Scott, the Court recognized that, without exception, the issue of stackable coverage turned on whether a single or separate premiums had been charged for multiple vehicular coverage.⁹ Here, it is uncontested that a single charge was made for UM/UIM coverage and that the charge did not vary with the addition of vehicles to the policy — there was one premium paid for UM/UIM coverage on all the Spears' vehicles.

¶ 15 In Kinder v. Oklahoma Farmers Union Mutual Ins. Co. (Kinder I), 1991 OK CIV APP 53, 813 P.2d 546,¹⁰ the Court of Civil Appeals determined that genuine issues of material fact existed concerning whether the insureds understood that UM/UIM coverage was limited to one recovery where the policy covered several vehicles. The cause was returned to the trial court for a determination of the factual issue. However, when the cause was appealed the second time, this Court held in Kinder v. Oklahoma Farmers Union Mutual Ins. Co. ...