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

• Citation: 130 N.H. 260,536 A.2d 205
• Decision Date: 31 December 1987
• Docket Number: No. 87-201,87-201
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. Paul B. DESFOSSES.
• Court: Supreme Court of New Hampshire

Page 205

536 A.2d 205

130 N.H. 260

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. Paul B. DESFOSSES.

No. 87-201.

Supreme Court of New Hampshire.

Dec. 31, 1987.

Law Offices of Kenneth G. Bouchard, P.A., Manchester (Paul B. Kleinman, on the brief, and Mark L. Mallory orally), for plaintiff.

Emile R. Bussiere, P.A., Manchester (Emile R. Bussiere, orally, and Richard J. Walsh, on the brief), for defendant.

BROCK, Chief Justice.

This is an appeal from a decision of the Superior Court (Goode, J.), holding sua sponte that the plaintiff, State Farm Mutual Automobile Insurance Company (State Farm), waived its right to contest uninsured motorist (UM) coverage because it failed to stay an arbitrator's award of damages to the defendant, Paul B. Desfosses (Desfosses), in the total amount of UM coverage in dispute. For the reasons that follow, we do not address the issue of waiver, but rather, limit ourselves to the inter-policy stacking issue and hold that the ambiguity contained in the exclusionary clause gives rise to stacking the UM coverage of the two policies involved. We therefore affirm the trial court's decision.

On February 16, 1982, Desfosses was involved in an automobile accident with an underinsured motorist in Middleboro, Massachusetts. As a result of this accident, Desfosses recovered ten thousand dollars ($10,000), the maximum available, from the other motorist's insurance carrier.

State Farm, at the time of the accident, provided insurance coverage, including UM coverage, for two automobiles owned by the defendant's father, Paul A. Desfosses. One of these vehicles was involved in the accident. The younger Desfosses was a member of his father's household at the time of the accident and was therefore an insured under his father's automobile insurance policies. Each vehicle was insured under a separate policy. Each UM coverage provision provided protection limits of $50,000 for damages arising out of bodily injury to any one person.

State Farm concedes its obligation, under the UM provision of the policy insuring the automobile involved in the accident, to provide coverage in the net amount of $40,000, the limits of coverage minus the $10,000 provided by the other driver's liability carrier. However, State Farm denies its obligation to afford additional UM coverage under the UM provision of its policy insuring the second automobile owned by Paul A. Desfosses.

The younger Desfosses subsequently presented a demand for arbitration to the American Arbitration Association (AAA), claiming coverage in an aggregate of $100,000 in uninsured motorist benefits under both policies. State Farm responded by filing a petition for declaratory judgment in the superior court, seeking to resolve the coverage dispute. Counsel for both parties agreed to proceed with the arbitration hearing notwithstanding the pending declaratory judgment action. The arbitration hearing resulted in an award of $100,000 damages to the defendant, the maximum amount potentially available to him under the two policies.

Desfosses then filed a motion in the superior court for judgment on the pleadings on the coverage dispute. The trial judge chose to treat the motion as one to confirm the arbitrator's award pursuant to RSA 542:8 and granted the motion. Following the denial of its motion for reconsideration, State Farm appealed, and requests that we address the issue raised in the original declaratory judgment action relative to whether or not the two UM coverages should be stacked.

Both parties acknowledge that they agreed to proceed with arbitration, reserving the issue of coverage for later adjudication. Nonetheless, the trial court ruled that State Farm waived its right to contest coverage, and the issue of this waiver forms the basis of the first two issues raised on appeal. However, Desfosses, in his brief, states his willingness to concede any challenge to these first two issues in order to focus on the substantive issue between the parties--the stacking issue. Even if we found in favor of State Farm on the first two issues, this would still leave the stacking issue to be resolved. Therefore, we move directly to a consideration of the dispute regarding the extent of the UM coverage available.

The substantive issue, therefore, is whether Desfosses can stack his UM coverage, which is provided in two separate policies, one of which covers one of the vehicles involved in the accident. State Farm argues that our holding in Beliveau v. Norfolk & Dedham Mutual Fire Insurance Co., 120 N.H. 73, 411 A.2d 1101 (1980), and our reliance on that holding in Boucher v. Employers Mutual Casualty Co., 121 N.H. 524, 431 A.2d 137 (1981), requires that we uphold the exclusion in the policies that precludes inter-policy stacking. The exclusion in each policy is identical and states under section III (Uninsured Motorists Insurance), that the uninsured motorist coverage does not apply:

"(a) to bodily injury to an insured while occupying an automobile (other than an insured automobile) owned by the named insured, spouse or any relative of either, or through being struck by such an automobile[.]"

State Farm relies on its definition of an "insured automobile" in the policy to argue that no UM coverage is intended to be provided by the policy covering the Desfosses automobile not involved in the accident, notwithstanding that Desfosses is an insured under both policies. Moreover, State Farm argues, under a narrow reading of the policy, that an insured automobile is limited to one particular policy.

Desfosses responds that, notwithstanding Beliveau, this court's more recent decisions require the court to uphold the stacking of UM coverage. Descoteaux v. Liberty Mut. Ins. Co., 125 N.H. 38, 480 A.2d 14 (1984); Cacavas v. Maine Bonding & Casualty Co., 128 N.H. 204, 512 A.2d 423 (1986). In Beliveau we upheld a policy exclusion identical to the one at issue here under a "reasonable person in the position of the insured" standard. Beliveau, supra 120 N.H. at 74-75, 411 A.2d 1101, 411 A.2d at 1102. More recently, however, in Cacavas, the court observed that the standard for interpreting policy language changed subsequent to our decisions in Beliveau and Grimes v. Concord General Mutual Insurance Co., 120 N.H. 718, 422 A.2d 1312 (1980). Cacavas, supra 128 N.H. at 207, 512 A.2d at 425.

The standard we have applied since those decisions is that "an ambiguous insurance policy will be construed in favor of the insured and against the insurer." Trombly v. Blue Cross/Blue Shield, 120 N.H. 764,...