State Farm Mut. Auto. Ins. Co. v. Lindsey

• Decision Date: 29 June 1995
• Docket Number: No. CV-94-0347-PR,CV-94-0347-PR
• Citation: State Farm Mut. Auto. Ins. Co. v. Lindsey, 182 Ariz. 329, 897 P.2d 631 (Ariz. 1995)
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff/Counterdefendant-Appellant, v. Janice LINDSEY, individually and as surviving spouse of Walter E. Lindsey, the Estate of Walter E. Lindsey, Kathleen Lindsey, Bea Lindsey and Ronald Lindsey, Defendants/Counterclaimants-Appellees.
• Court: Arizona Supreme Court

Page 631

897 P.2d 631

182 Ariz. 329

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff/Counterdefendant-Appellant, v.Janice LINDSEY, individually and as surviving spouse of Walter E. Lindsey, the Estate of Walter E. Lindsey, Kathleen Lindsey, Bea Lindsey and Ronald Lindsey, Defendants/Counterclaimants-Appellees.

No. CV-94-0347-PR.

Supreme Court of Arizona.

June 29, 1995.

[182 Ariz. 330] Bell & O'Connor, P.C. by David M. Bell and James R. Morrow, Phoenix, for plaintiff/counterdefendant-appellant.

Roush, McCracken & Guerrero by Charles D. Roush, Phoenix, for defendants/counterclaimants-appellees.

OPINION

ZLAKET, Justice.

State Farm Mutual Automobile Insurance Company issued separate liability policies on three vehicles owned by Janice and Walter Lindsey.One car, a 1987Nissan Sentra, was titled only in Mrs. Lindsey's name.The policy on that automobile listed her as the "named insured."The second vehicle, a 1985Ford Ranger, was titled only in Walter Lindsey's name, and he was the named insured on its policy.The title to a 1987 Chevrolet Celebrity was in both of their names.The corresponding policy specified both as named insureds.

Each policy provided underinsured motor vehicle (UIM) benefits of $100,000 per person and $300,000 per accident.The insurer charged a separate premium for each vehicle's UIM coverage and did not give the Lindseys a discount for multiple policies.Each contract contained an "other vehicle" clause stating, in part:

There is no coverage under coverage W [underinsured motor vehicle] for bodily injury to an insured:

a. While occupying a motor vehicle owned by you, your spouse or any relative if it is not insured for this coverage under this policy.¹

On July 3, 1989, Walter Lindsey was driving the Chevrolet with Janice as a passenger.They were in a collision caused by another motorist who had liability insurance limits of $25,000 per person and $50,000 per accident.Walter was killed.Janice was seriously injured.²The adverse driver's insurance company paid its policy limits.State Farm thereafter paid the maximum UIM benefits available under any one of its policies--$100,000 for Walter Lindsey's death and $100,000 for Janice Lindsey's injuries.The parties have stipulated that the death of Mr. Lindsey has a value well in excess of all available insurance coverage.They have reached the same agreement with respect to Mrs. Lindsey's injuries.The question to be resolved is whether State Farm is obligated to pay the limits on each of its other two policies.

On cross-motions for summary judgment, the trial court ruled against the insurer.The court of appeals reversed.State Farm Mut. Auto. Ins. Co. v. Lindsey, 180 Ariz. 456, 464, 885 P.2d 144, 152(Ct.App.1994).

DISCUSSION

A.R.S. § 20-259.01(F) allows insurers to prohibit stacking, the practice by which insureds may seek indemnification from the same coverage under two or more policies.SeeAlan I. Widiss, Uninsured and Underinsured Motorist Insurance§ 40.1, at 237 (2d ed. 1995).The statute states:

If multiple policies or coverages purchased by one insured on different vehicles apply to an accident or claim, the insurer may limit the coverage so that only one policy, selected by the insured, shall be applicable to any one accident.

As the court of appeals correctly found, this provision is not self-executing because its wording is merely permissive.Lindsey, 180 Ariz. at 461, 885 P.2d at 149.Thus, to be effective, "[a]dditional policy language is needed to incorporate the limitation into a policy."Id.The key issue here is whether State Farm embodied such language in its contracts.The carrier argues that it effectively incorporated this statutory restriction by reason of the "other vehicle" clause in each policy.We disagree.

Insurers have long relied on "other vehicle" exclusions to deny coverage to insureds who suffer injury in vehicles they own but have elected not to insure.See Widiss § 35.9, supra;see also8C John A. Appleman & Jean Appleman, Insurance Law and Practice§ 5078.15(1981)(examining comparable use of other vehicle exclusions in the context of uninsured motorist coverage).In fact, State Farm policies have contained "other vehicle" provisions for many years, certainly well before the 1982enactment of A.R.S. § 20-259.01(F).See, e.g., Mullis v. State Farm Mut. Auto. Ins. Co., 252 So.2d 229, 231-32(Fla.1971);Boettner v. State Farm Mut. Ins. Co., 388 Mich. 482, 201 N.W.2d 795, 797(1972).Thus, it cannot be asserted that these clauses were specifically included to take advantage of the limitation permitted by the statute.Nevertheless, the fact that they preexisted the legislative measure is not determinative here.Rather, it is the specific language used, as well as that which is missing, that compels us to find against State Farm on this issue.

Where allowed, "anti-stacking clauses are valid if they are unambiguous and follow the provisions of [the statute]."Safeco Corp. v. Kuhlman, 47 Wash.App. 662, 737 P.2d 274, 276(1987)(quotingVadheim v. Continental Ins. Co., 107 Wash.2d 836, 734 P.2d 17, 22(1987)).In A.R.S. § 20-259.01(F), the legislature"specifically outlined circumstances under which an insured is precluded from aggregating multiple coverages."Rashid v. State Farm Mut. Auto. Ins. Co., 163 Ariz. 270, 274, 787 P.2d 1066, 1070(1990).As previously indicated, "one insured" must have bought "multiple policies or coverages ... on different vehicles."A.R.S. § 20-259.01(F).Moreover, the insured must be given the right to choose which policy is to be applied to an accident.Id.

Here, multiple policies were purchased from State Farm.Those contracts, drawn entirely by the carrier, fail in their wording to come close to the provisions of the statute.For example, nowhere do they advise insureds of their right to make a selection of policies in the event of a claim.The court of appeals found that this failure was "insignificant" because the three policies here had identical limits.SeeLindsey, 180 Ariz. at 463 n. 8, 885 P.2d at 151 n. 8.We are most uncomfortable with this conclusion.It is precisely because the contractual omission may be vitally important when coverages are not identical that the issue...