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

• Decision Date: 30 June 1997
• Docket Number: No. 96SC283,96SC283
• Citation: 940 P.2d 384
• Parties: 21 Colorado Journal 938 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, v. Renee W. STEIN, Respondent.
• Court: Colorado Supreme Court

Page 384

940 P.2d 384

21 Colorado Journal 938

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, v. Renee W. STEIN, Respondent.

No. 96SC283.

Supreme Court of Colorado En Banc.

June 30, 1997.

Levy & Lambdin, Marc R. Levy, Scott P. Landry, Stephanie A. Montague, Englewood, for Petitioner.

Gary H. Hemminger, P.C., Gary H. Hemminger, Denver, for Respondent.

Justice KOURLIS delivered the Opinion of the Court.

We granted certiorari in this case to review the court of appeals opinion in State Farm Mutual Automobile Insurance Co. v. Stein, 924 P.2d 1154 (Colo.App.1996) (Stein II ). We now affirm the judgment of the court of appeals and hold that a bicyclist is not a "pedestrian" within the meaning of the uninsured motorist (UM) coverage portion of the automobile insurance policies issued by the petitioner, State Farm Mutual Automobile Insurance Company (State Farm), and thus conclude that the "anti-stacking" provision in the policies does not preclude the respondent Renee W. Stein's (Stein) claim for cumulative UM benefits.

I.

The facts in this case are not in dispute. On September 22, 1991, Joel Stein, Stein's now deceased husband, was riding a bicycle when he was struck and killed by a motor vehicle driven by Ronald Clawson (Clawson). Clawson, who was completely at fault for the accident and Joel Stein's resulting death, was uninsured at the time of the collision.

The Steins were insured under five separate automobile insurance policies issued by State Farm, covering five separate motor vehicles (individually referred to as the Policy, collectively referred to as the Policies). All provisions relevant to our analysis are identical in each Policy. The UM coverage under each Policy is limited to $100,000 per person, and $300,000 per accident. In addition, each Policy contains an "anti-stacking" provision in the UM coverage section. The provision limits the insured's right to cumulate or "stack" ¹ UM benefits from more than one policy when the insured sustains bodily injury (1) as a pedestrian; (2) while occupying the vehicle described in the Policy which vehicle is also listed under another policy; or (3) while occupying a vehicle belonging to a person other than an insured under the Policy, a spouse, or a relative.

Pursuant to the Policies, Stein submitted a claim to State Farm individually and as guardian of her four children ² for $100,000 under each of the five Policies, for a total of $500,000, as damages suffered for Joel Stein's death. State Farm, however, maintained that Joel Stein was a "pedestrian" within the meaning of the first anti-stacking category at the time of the accident, thereby limiting State Farm's liability to the maximum benefits payable under any one Policy, or $100,000. State Farm prorated the UM benefits awarded under each Policy accordingly, and paid Stein $100,000.

In July 1992, the matter proceeded to arbitration. ³ In March 1993, the arbitrators concluded that Stein was entitled to stack UM benefits, and awarded her $454,000, including interest and costs, minus the $100,000 State Farm had previously paid. On May 27, 1993, the district court confirmed the arbitration award and entered judgment against State Farm for $354,000. State Farm appealed.

The court of appeals concluded that the arbitrators lacked authority to arbitrate the anti-stacking issue and thus reversed and remanded for the district court to determine the appropriate construction of the term "pedestrian" within the meaning of the anti-stacking provision in the UM coverage section of each Policy. State Farm Mut. Auto. Ins. Co. v. Stein, 886 P.2d 326, 328-29 (Colo.App.1994) (Stein I ).

On remand, the district court found that the term "pedestrian" is ambiguous as used in the UM section of the Policies, and concluded that the technical definition of "pedestrian" as set forth in the No-Fault coverage section of each Policy applied. Under that definition, a bicyclist is a "pedestrian" within the meaning of the anti-stacking provision, and therefore Stein was precluded from stacking her UM benefits under the Policies. Stein appealed that decision.

The court of appeals reversed the district court, concluding that the term "pedestrian" was not ambiguous, and that the common, not the technical, meaning applies. Stein II, 924 P.2d at 1158. The court of appeals determined that the anti-stacking provision does not express a clear intent to limit coverage to persons other than those travelling on foot, and thus does not apply to Stein's claim. Id. The court of appeals remanded the case to the district court with directions to reinstate the May 27, 1993, judgment against State Farm in the amount of $354,000. Id. We come now to the case before this court after almost six years of litigation, and we affirm the court of appeals.

II.

Our review of this case is confined to determining the appropriate construction of the term "pedestrian" as used in the anti-stacking provision in the UM coverage section of each Policy. We conclude that "pedestrian" as used in the anti-stacking provision of the Policies is not ambiguous, but rather retains its plain and ordinary meaning of a person on foot. We hold that because Joel Stein was on a bicycle at the time of the accident, he was not a "pedestrian" within the meaning of the UM coverage section of the Policies. Therefore, Stein is entitled to recover within the full amount of her UM benefits under each Policy.

A.

An insurance policy is a contract, the interpretation of which is a matter of law that we review de novo. See Union Ins. Co. v. Houtz, 883 P.2d 1057, 1061 (Colo.1994). Both the insured and the insurer are bound by the terms of the policy, unless those terms are waived or annulled. See Chacon v. American Family Mut. Ins. Co., 788 P.2d 748, 750 (Colo.1990).

General rules of contract interpretation apply such that the policy is construed to promote the intent of the parties. See Browder v. United States Fidelity & Guar. Co., 893 P.2d 132, 133 (Colo.1995); Union Ins., 883 P.2d at 1061; Parrish Chiropractic Centers, P.C. v. Progressive Cas. Ins. Co., 874 P.2d 1049, 1055 (Colo.1994). As with any contract, we look to the plain language of the policy itself to ascertain such intent. See Parrish, 874 P.2d at 1055.

We will enforce the policy as written, unless there is an ambiguity in the policy language. See Union Ins., 883 P.2d at 1061; Ballow v. PHICO Ins. Co., 875 P.2d 1354, 1359 (Colo.1993). A policy provision is ambiguous if it is reasonably susceptible on its face to more than one interpretation. See Union Ins., 883 P.2d at 1061; Parrish, 874 P.2d at 1055. In determining whether there is an ambiguity in a policy provision, we must evaluate the policy as a whole and construe the language in harmony with the plain and generally accepted meaning of the words employed, unless the intent of the parties, as expressed in the contract, indicates that an alternative interpretation is intended. See Union Ins., 883 P.2d at 1061; Parrish, 874 P.2d at 1055; Ballow, 875 P.2d at 1359; Chacon, 788 P.2d at 750. A mere disagreement between the parties regarding the meaning of a policy term does not create an ambiguity. See Union Ins., 883 P.2d at 1061; Parrish, 874 P.2d at 1055.

When a contractual provision is clear and unambiguous, courts should neither rewrite it nor limit its effect by a strained construction. See Parrish, 874 P.2d at 1055; Terranova v. State Farm Mut. Auto. Ins. Co., 800 P.2d 58, 60 (Colo.1990). Thus, in the absence of ambiguity, an insurance policy must be given effect according to the plain and ordinary meaning of its terms. See Farmers Ins. Exch. v. Dotson, 913 P.2d 27, 30 (Colo.1996).

In this case, the relevant portion of the anti-stacking provision, which is identically phrased in the UM coverage section of each Policy, states:

If There Is Other Coverage

1. If the insured sustains bodily injury as a pedestrian and other uninsured motor vehicle coverage applies:

a. the total limits of liability under all such coverages shall not exceed that of the coverage with the highest limit of liability; and

b. we are liable only for our share. Our share is that per cent of the damages that the limit of liability of this coverage bears to the total of all uninsured motor vehicle coverage applicable to the accident.

The words "insured" and "bodily injury" appear in bold italics, while the term "pedestrian" is in normal typeface. Each Policy contains a general definition section on page three consisting of words "which are used in several parts of the policy." In that section, the Policy states: "[State Farm] define[s] some words to shorten the policy. This makes it easier to read and understand. Defined words are printed in bold face italics. You can pick them out easily."

Each Policy is separated into five distinct coverage categories: Liability; No-Fault; Uninsured Motor Vehicle; Physical Damage; and Death, Dismemberment, and Loss of Sight. The term "pedestrian" only appears in the No-Fault and UM coverage sections. "Insured" and "bodily injury" that are used in the anti-stacking provision are both defined in the general definition section and are in bold italic typeface throughout the Policies. However, the term "pedestrian" is not listed in the general definitions, but rather is defined only in conjunction with the definition of "insured" in the No-Fault section, and only there does it appear in bold italics.

"Pedestrian" is technically defined in the No-Fault coverage section as "a person not occupying a motor vehicle or machine operated by a motor or engine." ⁴ The technical definition of "pedestrian" as a person not occupying a motor vehicle is used in the definition of "insured" for purposes of No-Fault coverage. "Insured" holds four different definitions throughout the Policy: in the general definition section, and in the Liability, No-Fault, and UM coverage sections. In the No-Fault section, an "insured" includes "any other person who sustains bodily...