St. Paul Fire and Marine Ins. Co. v. Gilmore

• Decision Date: 08 March 1990
• Docket Number: CA-CV,No. 1,1
• Citation: 165 Ariz. 113,796 P.2d 915
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff-Appellant, Cross Appellee, v. Sharon GILMORE and John Doe Gilmore, wife and husband, Defendants-Appellees, Cross Appellants. 88-318.
• Court: Arizona Court of Appeals

Page 915

796 P.2d 915

165 Ariz. 113

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff-Appellant, Cross Appellee, v. Sharon GILMORE and John Doe Gilmore, wife and husband, Defendants-Appellees, Cross Appellants.

No. 1 CA-CV 88-318.

Court of Appeals of Arizona, Division 1, Department A.

March 8, 1990.

Review Granted Sept. 25, 1990.

[165 Ariz. 114] Rake, Copple, Downey & Black by William J. Downey, Phoenix, for appellant.

Jennings, Strouss & Salmon by Jefferson L. Lankford, and Feder Law Offices, P.A. by Harold Feder, Phoenix, for appellees.

OPINION

SHELLEY, Judge.

Is an insurer providing general commercial liability insurance required to offer underinsured motorist (UIM) coverage pursuant to A.R.S. § 20-259.01(C)? The trial court answered in the affirmative and entered summary judgment in favor of the insured accordingly. For the reasons set forth below, we reverse and remand.

The facts, for purposes of appeal, are undisputed. Appellee Sharon Gilmore was the executive secretary and managed the day-to-day operations of the Arizona Association for Industrial Development (AAID). While driving her car during the course of her employment, Gilmore was seriously injured in an automobile accident caused by another driver. She recovered $50,000 in liability insurance from the other driver, as well as $50,000 in underinsured motorist coverage from her insurance policy covering the car she was driving. She then turned to AAID's insurer, appellant St. Paul Fire and Marine Insurance Company (St. Paul) seeking additional UIM coverage. The St. Paul policy did not, however, include UIM coverage. There is no dispute that Gilmore's injuries exceed the $100,000 she has thus far received.

The St. Paul policy explains in its introduction that it is a "multicover policy" which is intended to protect AAID's business property and to protect AAID against claims made by others. It provides standard fire insurance, property insurance and general liability coverage, including bodily injury and property damage, all in the single limit amount of one million dollars. In addition, the policy includes liability protection for "non-owned" automobiles, which provides "excess" coverage against bodily injury and property claims arising from automobile accidents involving AAID employees driving their own vehicles while on AAID business. Although the policy expressly states that "the owner of a covered auto under any circumstances" is not protected, St. Paul has conceded for purposes of appeal that Gilmore was a protected person under the policy at the time of the accident.

St. Paul filed a declaratory judgment action seeking a ruling that the policy does not provide UIM coverage for Sharon Gilmore and that St. Paul was not obligated to offer that coverage pursuant to A.R.S. § 20-259.01(C). It then moved for summary judgment and Gilmore filed a cross-motion for summary judgment. Initially, the trial court granted St. Paul's motion. Gilmore filed a motion for reconsideration. The trial court reversed its order granting summary judgment in favor of St. Paul. Furthermore, the trial court granted and entered summary judgment in favor of Gilmore. St. Paul appealed.

The question on appeal is whether St. Paul was required by A.R.S. § 20-259.01(C) to offer UIM coverage when it issued the policy to AAID. If it was required to do so, but did not, it is undisputed that the coverage is imputed as a matter of law.

St. Paul argues that it was not required to offer UIM coverage because the AAID policy was neither an automobile liability nor a motor vehicle liability policy and that only those types of policies are required to comply with A.R.S. § 20-259.01(C). More specifically, St. Paul argues that A.R.S. §§ 20-259.01 and 28-1170 must be read in pari materia, and that, when they are so read, the only reasonable conclusion is that its policy was not required to comply with A.R.S. § 20-259.01.

Gilmore responds that recent Arizona case law forbids reading these two statutes together. The St. Paul policy, she argues, clearly provided liability coverage for accidents involving automobiles, and was therefore an automobile or motor vehicle liability policy. Thus, she continues, St. Paul was accordingly required by statute to offer UIM coverage. Since it did not, Gilmore concludes, the coverage must be imputed. Gilmore also cites recent Arizona case law that A.R.S. § 20-259.01 is to be broadly construed in favor of coverage. See Brown v. State Farm Mutual Auto. Ins. Co., 163 Ariz. 323, 788 P.2d 56 (1989). Both parties refer to conflicting cases from other jurisdictions addressing this issue in the context of umbrella or excess liability policies. Before discussing these cases, however, we first look to Arizona law.

Statutory Construction

This appeal can essentially be resolved on the question of whether the St. Paul policy is an "automobile liability" or a "motor vehicle liability" policy within the meaning of A.R.S. § 20-259.01(C), the Uninsured Motorist Act (UMA). That statute states, in pertinent part:

C. Every insurer writing automobile liability or motor vehicle liability policies, as provided in subsection A of this section shall also make available to the named insured thereunder and shall by written notice offer the insured and at the request of the insured shall include within the policy underinsurance motorist coverage which extends to and covers all persons insured under the policy, in limits not less than the liability limits for bodily injury or death contained within the policy....

The UMA does not define "automobile liability" or "motor vehicle liability" policy. Gilmore maintains that these phrases are not ambiguous and are self-explanatory. Therefore, she concludes, there is no need to resort to rules of statutory construction to determine their meaning. We disagree, and find it is unclear from a reading of § 20-259.01(C) alone whether the St. Paul policy is the type of policy contemplated by the statute. We therefore turn to the rules of statutory construction to determine whether it is.

The term "motor vehicle liability policy" is defined in A.R.S. § 28-1170, which is part of the Safety Responsibility Act (SRA), formerly known as the Financial Responsibility Act. A.R.S. § 28-1101 et seq. A.R.S. § 28-1170 sets forth the following requirements for a motor vehicle liability policy:

"Motor vehicle liability policy" defined

A. A "motor vehicle liability policy" as the term is used in this chapter means an owner's or an operator's policy of liability insurance, ...

B. The owner's policy of liability insurance must comply with the following requirements:

1. It shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted....

2. It shall insure the person named in the policy as the insured and any other person, as insured, using the motor vehicle or motor vehicles with the express or implied permission of the named insured....

C. The operator's policy of liability insurance shall insure the person named as insured in the policy....

D. The motor vehicle liability policy shall state the name and address of the named insured, the coverage afforded by the policy, the premium charged for the policy, the policy period and the limits of liability and shall contain an agreement or be endorsed that insurance is provided under the policy in accordance with the coverage defined in this chapter as respects bodily injury and death or property damage, or both, and is subject to all the provisions of this chapter.

St. Paul argues that its policy is not a motor vehicle liability insurance policy as defined in A.R.S. § 28-1170 because it did not designate specific vehicles or drivers to be covered by the policy, and it did not comply with the statute's other requirements. If its policy was not a motor vehicle liability policy within the meaning of A.R.S. § 28-1170, St. Paul concludes, it could not be one under § 20-259.01(C) because the two statutes must be read in pari materia.

The cardinal rule of statutory interpretation is to determine and give effect to the legislative intent. Calvert v. Farmers Ins. Co., 144 Ariz. 291, 294, 697 P.2d 684, 687 (1985). The purpose of the SRA is to protect the public using the highways "from financial hardship which may result from the use of automobiles by financially irresponsible persons." Schecter v. Killingsworth, 93 Ariz. 273, 280, 380 P.2d 136, 143 (1963); see Chase v. State Farm Mut. Auto. Ins. Co., 131 Ariz. 461, 463, 641 P.2d 1305, 1307 (App.1982). The subsequently enacted "UMA was intended to close the gap in protection offered by the SRA by requiring insurance companies issuing automobile liability policies to include coverage for injuries suffered by their insureds for damages caused by uninsured motorists." Id. (Emphasis added.) Uninsured motorist insurance (UM) is mandatory in the minimum amount of required liability coverage under A.R.S. § 28-1170, but the insurer must offer the insured the option of purchasing UM coverage up to the liability limits of his policy. A.R.S. § 20-259.01(A), (B).

As an additional gap filler, the insurer, in addition to the mandatory coverage required by A.R.S. §§ 20-259.01(A) and 28-1102,

shall also make available to the named insured thereunder and by written notice offer the insured and at the request of the insured shall include within the policy uninsured motorist coverage which extends to and covers all persons insured under the policy, in limits not less than the liability limits for bodily injury or death contained within the policy.

A.R.S. § 20-259.01(B).

With respect to UIM coverage, there is no mandatory minimum coverage but there is a mandatory offering requirement. It also requires an affirmative request by the insured for coverage. If it is requested by the insured, the request must include the desired amount up to but not exceeding the liability limits of the policy...