Stordahl v. Government Emp. Ins. Co.

Decision Date13 May 1977
Docket NumberNos. 2988 and 3130,s. 2988 and 3130
Citation564 P.2d 63
PartiesDennis STORDAHL, Appellant, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellee. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Cross-Appellant, v. Dennis STORDAHL, Cross-Appellee.
CourtAlaska Supreme Court

Charles R. Tunley, Anchorage, for appellant and cross-appellee.

Kenneth P. Jacobus, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, for appellee and cross-appellant.

Before BOOCHEVER, Chief Justice, RABINOWITZ, CONNOR and BURKE, Justices, and DIMOND, Justice Pro Tem.

BOOCHEVER, Chief Justice.

This case involves construction of Paragraph J of a Government Employees Insurance Company (GEICO) policy covering Dennis Stordahl for injuries caused by an 'uninsured automobile.' Stordahl was injured by a car owned by an uninsured motorist but driven by a person with applicable insurance. The trial court held by summary judgment that Stordahl was precluded from collecting under the policy because the driver was insured. Stordahl appeals from that decision. GEICO requests that this court affirm the summary judgment below, and in a cross-appeal, contests the denial of attorney's fees.

We affirm the trial court's interpretation of the insurance policy, however, we remand this case so that the trial court may reconsider the question of attorney's fees and set forth its reason if fees are not granted.

The facts in this case are undisputed. On June 14, 1974, Douglas Wood, a licensed driver, was teaching Debra Mounts to drive his automobile in the city of Anchorage, Alaska. Ms. Mounts had no license. Wood sat in the front seat, directing and assisting her driving. At the intersection of C Street and Dimond Boulevard, while turning left, Ms. Mounts lost control of the vehicle. The vehicle ran over appellant, Dennis Stordahl, who was stopped at the intersection on his motorcycle. Stordahl received multiple injuries. Wood was cited for permitting an unlicensed minor to drive and pled guilty to that charge.

Ms. Mounts was covered by GEICO insurance under a policy purchased by her father. GEICO paid Stordahl the amount of $50,000.00 (the amount of the policy limits) plus attorney's fees and costs for a total of $58,356.00 on behalf of Ms. Mounts in exchange for a release to GEICO. The amount paid under Ms. Mounts' policy is in excess of Alaska's statutory minimum insurance. 1

Stordahl had an insurance policy with GEICO for 'uninsured motorists' in the amount of $15,000.00. Stordahl filed a suit against GEICO for the $15,000.00 when GEICO would not pay under the uninsured motorist policy. GEICO, in its answer, claimed that Stordahl had received $58,356.00 for damages already and that receipt of the insurance proceeds 'operates as a setoff and obviates and precludes' Stordahl's further claim.

Following discovery, GEICO moved for summary judgment under the insurance policy. GEICO claimed that, as a matter of law, the 'uninsured motorist' coverage was inapplicable if the driver was insured, even though the owner was not. Stordahl filed a cross-motion for summary judgment. He claimed that Woods was both independently liable in permitting Ms. Mounts to drive and vicariously liable for her acts, and that, therefore, Woods qualified as an 'uninsured motorist.' Stordahl also contended that the language of the policy was ambiguous and should be construed against the insurance company.

The focal point of this case is Paragraph J of the insurance policy which states:

COVERAGE J-DAMAGES FOR BODILY INJURY:

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury', sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; . . .

The subsequent definitional section of Part IV provides:

'Uninsured automobile' means:

(1) An automobile with respect to the ownership, maintenance or use of which there is, in at least the amount specified by the financial responsibility law of the state in which the insured automobile is principally garaged, no bodily injury, liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such automobile . . ..

The trial court found that since Ms. Mounts, the driver, was insured, the vehicle was not an 'uninsured automobile' under the meaning of the policy.

On appeal Stordahl claims that Paragraph J should be read to say:

If there is any person legally responsible for the use (e. g., the owner) who does not have a policy, then the vehicle is uninsured.

GEICO argues that the purpose of uninsured motorist insurance is to provide protection, only if no other recovery is available.

The purpose of contract interpretation is to assertain and effectuate the reasonable expectations of the parties. 2 We have noted, however, that interpretation of insurance contracts is controlled by somewhat different standards. This is due, in part, to the inequality in bargaining power and to the fact that certainty is required to ascertain rates. 3 An insurance policy may be considered a contract of adhesion, 4 and as such, should be construed to provide the coverage which a layperson would have reasonably expected, given a lay interpretation of the policy language. 5 It is not required that ambiguities be found in the policy language as a condition precedent for such construction. 6

Keeping in mind the special considerations applicable to insurance contracts, we shall interpret the contract in this case in accordance with the method set forth in Wessells v. State, 562 P.2d 1042 (Alaska 1977), and in the concurring opinion to Tsakres v. Owens, 561 P.2d 1218 (Alaska 1977). To ascertain the reasonable expectations of the parties, we look to the language of the disputed policy provisions, the language of other provisions of the insurance policy, 7 and to relevant extrinsic evidence. In addition, we refer to case law interpreting similar provisions.

There is no Alaska case on point to assist us here. Looking to the case law of other jurisdictions, then, we note that uninsured motorist protection is a relatively new concept in insurance law, and that there is not an extremely large body of law which has been decided on this issue. 8 Those cases which have interpreted provisions relating to uninsured motorists appear to be in conflict. There is case law supporting both Stordahl's 9 and GEICO's 10 positions.

We hesitate to place too much emphasis on the law of other jurisdictions since varying fact patterns, policy terms and methods of contract interpretation make analogy difficult. Nevertheless, cases decided in the Florida District Courts of Appeals are almost directly on point and merit brief discussion.

Two separate districts in Florida, the First District 11 and the Third District, 12 have addressed fact patterns similar to that presented here and motorist insurance language which is identical. The two districts came to opposite conclusions. The First District of Florida found the language unambiguous and held that since there was applicable insurance, the uninsured motorist coverage did not apply. Disagreeing with this interpretation, the Third District of Florida found the language ambiguous and construed it in favor of the insured.

In addition to the case law discussed above and the disputed language, we have carefully viewed the language of the policy as a whole, and the circumstances of this accident. We agree with the trial court and the First District of Florida. In our opinion, when Stordahl purchased an uninsured motorist policy, he reasonably expected coverage only if there were no other applicable insurance to compensate him for injuries caused by an automobile. We find no extrinsic evidence which convinces us that a contrary expectation was reasonable. 13 Ms. Mounts, through her father's policy, was insured, and Stordahl received $58,356.00 from this policy. This amount is more than the minimum mandatory insurance in Alaska. 14 Thus, since the driver of the only automobile which caused Stordahl's injuries had applicable insurance, we conclude that this case involved an 'insured automobile.' 15

This conclusion is supported by another provision of the GEICO policy. 16 Section (b) of the limitations to uninsured motorist protection reads:

(b) Any amount payable under the terms of this Part because of bodily injury sustained in an accident by a person who is an insured under this Part shall be reduced by

(1) all sums paid on account of such bodily injury by or on behalf of (i) the owner or operator of the uninsured automobile and (ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under Coverage A, and . . ..

Under this provision, even if the $15,000.00 of uninsured motorist protection were applicable to Stordahl's case, it would be reduced to zero under limitation (b) because of the $58,356.00 paid on behalf of Ms. Mounts. No matter how we interpret Paragraph J, it appears that Stordahl would not be able to collect under his GEICO policy.

Our conclusion in this case does not indicate our approval of the wording of Paragraph J. The language employed by GEICO is not a model of either clarity or form. We do not look with favor upon poorly worded language in insurance contracts, and we would urge insurers to reword policies to more clearly align the language with what we believe to be the reasonable expectations of a purchaser of uninsured motorist protection. 17 The fact that this policy could have been clearer, however, does not sway us from our opinion that the reasonable expectation of the insured under the facts of this case would not encompass recovery under Paragraph J. 18

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