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

• Decision Date: 28 June 1994
• Docket Number: No. 1,CA-CV,1
• Citation: 885 P.2d 144,180 Ariz. 456
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff/Counter-defendant-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/Counter-claimants-Appellants. 92-0057.
• Court: Arizona Court of Appeals

Page 144

885 P.2d 144

180 Ariz. 456

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff/Counter-defendant-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/Counter-claimants-Appellants.

No. 1 CA-CV 92-0057.

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

June 28, 1994.

Review Granted Dec. 20, 1994.

[180 Ariz. 458] Bell & O'Connor, P.C. by David M. Bell, James R. Morrow, Phoenix, for plaintiff/counterdefendant-appellant.

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

OPINION

LANKFORD, Presiding Judge.

State Farm Mutual Automobile Insurance Company ("State Farm") appeals from summary judgment entered in favor of its insureds, the Lindseys. The Lindseys brought this action against State Farm to recover damages stemming from an automobile accident with an underinsured motorist. The trial court's judgment allowed the Lindseys to increase their recovery by "stacking" underinsured motorist coverages under their three State Farm automobile policies, i.e., by adding the covered amounts of each policy's underinsured motorist coverage.

The primary issue on appeal is whether a statutory limitation on stacking underinsured motorist coverages applies in this case. Ariz.Rev.Stat.Ann. ("A.R.S.") section 20-259.01(F) ¹ allows an insurer to prohibit the stacking of underinsured motorist coverage "purchased by one insured." The trial court nevertheless found that the coverages of all three State Farm policies could be added together.

Because section 20-259.01(F) allows State Farm to limit the Lindseys to coverage under a single policy, and because State Farm's policies contain such a limitation, we reverse and remand for entry of summary judgment in favor of State Farm.

The facts necessary to resolve these issues are undisputed. On July 3, 1989, Walter and Janice Lindsey were involved in an automobile accident in Oklahoma that resulted in the death of Walter Lindsey and caused severe injuries to Janice Lindsey. The Lindseys were occupying their Chevrolet Celebrity at the time of the accident. The other driver was at fault, and his insurer paid its liability policy's limits. However, these payments did not fully compensate the Lindseys for their damages.

At the time of the accident, the Lindseys carried a State Farm automobile policy for each of their three vehicles. The named insureds on each vehicle were as follows:

Chevrolet Celebrity ("Chevy Policy") Walter & Janice

Nissan Sentra ("Nissan policy") Janice

Ford Ranger ("Ford Policy") Walter.

Although the named insureds on the policies were different, the applications for each policy listed both Walter and Janice as drivers and insureds. All three of the policies were purchased with community funds and were jointly owned.

Each policy was separately purchased. The Lindseys did not receive a multiple policy discount. When Walter Lindsey inquired into whether a multiple car discount was available State Farm replied "No."

Each policy provided underinsured motorist coverage of $100,000 per person and $300,000 per accident. Each policy also contained what is commonly referred to as an "other vehicle" exclusion. Specifically, the exclusion for underinsured coverage in the Nissan and Ford policies stated:

When Coverages U and W [underinsured motorist] Do Not Apply

* * * * * *

2. THERE IS NO COVERAGE UNDER COVERAGE W 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.

The exclusion for underinsured coverage in the Chevy policy stated:

When Coverages U and W [underinsured motorist] Do Not Apply

THERE IS NO COVERAGE:

* * * * * *

2. FOR BODILY INJURY TO AN INSURED:

a. WHILE OCCUPYING, OR

b. THROUGH BEING STRUCK BY

A MOTOR VEHICLE OWNED BY YOU, YOUR SPOUSE OR ANY RELATIVE IF IT IS NOT INSURED FOR THIS COVERAGE UNDER THIS POLICY.

State Farm paid the Lindseys the maximum benefits available under any one policy--$100,000 for the damages arising out of the death of Walter and $100,000 for the injuries to Janice. The Lindseys claimed that they were entitled to stack their underinsured motorist coverages from all three policies. State Farm initiated this action to obtain a declaration that, by virtue of A.R.S. section 20-259.01(F) and State Farm's policy exclusions, the Lindseys' underinsured motorist coverage is limited to one policy.

The parties filed cross-motions for summary judgment. They stipulated that Walter and Janice each suffered damages in excess of all potentially applicable insurance coverage.

The trial court granted summary judgment in favor of the Lindseys, ruling that the Lindseys could stack the underinsured motorist coverage of all three policies. The court determined that the limitation on stacking policies "purchased by one insured" did not apply because each of the policies had a different named insured. The court also determined that even if the statute did apply, the policies could still be stacked because the Lindseys would not obtain recovery greater than their actual loss.

State Farm filed a "Motion for Amendment of Judgment" seeking to amend the summary judgment. It argued that even if the phrase "purchased by one insured" was interpreted as "purchased by one named insured," the limitation still applied and the Lindseys could stack only two policies because Janice and Walter each appeared as named insureds on two of the policies. The trial court denied this motion, holding that the coverage under all three policies could be stacked because the named insured on each policy was different--Janice on the Nissan policy, Walter on the Ford policy, and both of them on the Chevy policy.

State Farm appealed from both the summary judgment entered in favor of the Lindseys and the denial of its Motion for Amendment of Judgment.

We first consider whether the trial court properly interpreted the statute. The parties argue over the meaning of the statutory term "purchased by one insured." Because we are presented with an issue of statutory interpretation, we review the trial court's determination de novo. Chaparral Dev. v. RMED Int'l, Inc., 170 Ariz. 309, 311, 823 P.2d 1317, 1319 (App.1991).

"The cardinal rule of statutory interpretation is to determine and give effect to the legislative intent behind the statute." Calvert v. Farmers Ins. Co., 144 Ariz. 291, 294, 697 P.2d 684, 687 (1985). Section 20-259.01(F) evidences a basic legislative intent to allow insurers to limit the stacking of underinsured motorist coverages from policies on different vehicles. "[T]he best and most reliable index of a statute's meaning is its language and, when the language is clear and unequivocal, it is determinative of the statute's construction." Janson v. Christensen, 167 Ariz. 470, 471, 808 P.2d 1222, 1223 (1991). The statute provides in part:

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.

A.R.S. § 20-259.01(F) (emphasis added).

The Lindseys argue that the word "insured" in subsection F should be interpreted to mean "named insured." They contend the Legislature indicated in Subsection B that the term "insured" referred to the "named insured." ² The Lindseys argue that the word "insured" in Subsection F should be given the same meaning as in Subsection B. ³ See Knoell Bros. Constr. v. State Dep't of Revenue, 132 Ariz. 169, 171, 644 P.2d 905, 907 (App.1982).

The language of Subsection F is clear: the Legislature used the terms "purchased by one insured" and "the insured." We hold that by its plain language, section 20-259.01(F) applies when the same person purchases multiple policies, regardless of who is the "named insured" on the declarations page. Because the language of the statute is clear, we need not interpret the term "insured." See Janson, 167 Ariz. at 471, 808 P.2d at 1223 (rules of interpretation are inapplicable when statutory language is clear and unequivocal); cf. Knoell Bros. Constr., 132 Ariz. at 171, 644 P.2d at 907 (when the same word appears several times in a statute it should be given the same meaning throughout unless a different meaning is clearly intended).

Had the Legislature intended to allow insurers to limit stacking only when the same "named insured" purchased multiple policies it easily could have said so. Its use of the term "named insured" in Subsections B and C of A.R.S. section 20-259.01 and in other statutes demonstrates that it was aware of the distinction between an "insured" and a "named insured." ⁴ See, e.g., A.R.S. § 20-1631(B). Because the Legislature specifically used the term "named insured" in other parts of the statute but did not do so in the stacking provision, we will not read it into that provision. See Arizona Bd. of Regents v. Public Safety Ret. Fund Mgr., 160 Ariz. 150, 157, 771 P.2d 880, 887 (App.1989) (subparts of same statute were interpreted differently when court refused to read previously used term into subpart from which it was excluded).

The legislative intent is best served when the statute is applied to allow insurers to limit stacking when an insured purchased multiple policies. The substitution of the term "named insured" for the term "insured" throughout the statute would lead to results clearly not intended by the Legislature. For instance, in subsection (G), the Legislature provided a right of subrogation for insurers who make payments for damages caused by an uninsured motorist. That section provides:

Insurers who make payments for damages to insureds under the uninsured requirements of this section may subrogate and sue for reimbursement of the total amount of said payments...