Stuart v. Insurance Co. of North America

• Decision Date: 15 July 1986
• Docket Number: No. 1,CA-CIV,1
• Citation: 730 P.2d 255,152 Ariz. 78
• Parties: Jeffrey S. STUART, individually; Jonathan I. Stuart and Meryl A. Stuart, minors, by their father and next friend, Stuart Goldstein; Stuart Goldstein, individually; and Stuart Goldstein, as Personal Representative of the Estate of Myra S. Stuart, deceased, Plaintiffs-Appellants, v. INSURANCE COMPANY OF NORTH AMERICA, a foreign corporation, Defendant-Appellee. 7805.
• Court: Arizona Court of Appeals

Page 255

730 P.2d 255

152 Ariz. 78

Jeffrey S. STUART, individually; Jonathan I. Stuart and Meryl A. Stuart, minors, by their father and next friend, Stuart Goldstein; Stuart Goldstein, individually; and Stuart Goldstein, as Personal Representative of the Estate of Myra S. Stuart, deceased, Plaintiffs-Appellants, v. INSURANCE COMPANY OF NORTH AMERICA, a foreign corporation, Defendant-Appellee.

No. 1 CA-CIV 7805.

Court of Appeals of Arizona,

Division 1, Department D.

July 15, 1986.

Lim, Hurley & Stewart by Jerry Stewart, Phoenix, for plaintiffs-appellants.

Stuart Goldstein, in pro. per.

Gallagher & Kennedy by Mark A. Mahoney, Michael K. Kennedy, Phoenix, for defendant-appellee.

GRANT, Presiding Judge.

Appellants are the estate of Myra S. Stuart and her surviving husband and three children. Appellee is Insurance Company of North America (INA), which issued an automobile liability policy containing underinsured motorist coverage applicable to the decedent at her death. This appeal presents the question of whether the 1981 amendment to A.R.S. § 20-259.01 (Laws 1981, ch. 224, § 1) required INA to offer additional underinsured motorist coverage up to the amount of the policy's liability limits to decedent's husband as of the effective date of those amendments, which was approximately two weeks before the decedent's death. We answer that question in the negative, and accordingly affirm the judgment for INA.

The facts are not in dispute. The policy in question was in effect during the period from March 11, 1981 to September 11, 1981. It provided appellant Stuart Goldstein (decedent's surviving husband) and decedent with general liability coverage for bodily injury and property damage up to $500,000 and underinsured motorist coverage up to $100,000. On August 13, 1981, decedent was killed in an automobile collision with a driver whose general liability coverage limit was $15,000/$30,000. The driver's insurance carrier shortly thereafter paid appellants the full $15,000 policy limit.

On August 27, 1981, two weeks after decedent's death, appellant Stuart Goldstein mailed a check for $30.00 to INA with a letter requesting that his underinsured motorist coverage be increased to $500,000 effective for the period from July 27, 1981 through September 11, 1981. The letter asked INA to acknowledge and forward an endorsement to him for the increased coverage. INA cashed the check, but did not acknowledge Goldstein's letter or agree to his request. Instead, INA increased his underinsured motorist coverage limits to $500,000 effective September 11, 1981, the renewal date of the policy.

Appellants commenced this action on May 20, 1982. Count one sought a declaration that because INA had failed to offer appellants additional underinsured motorist coverage up to the $500,000 limit of their liability coverage, appellants had underinsured motorist coverage of $500,000 at decedent's death as a matter of law. Count two of the complaint stated a claim for bad faith and count three a claim for breach of contract.

After the complaint was filed, INA paid appellants $100,000 and appellants voluntarily dismissed count two pursuant to rule 41(a), Arizona Rules of Civil Procedure. INA thereafter moved for summary judgment on the remaining counts of the complaint. The trial court granted the motion and entered judgment for INA. This appeal followed.

Appellants contend that the 1981 amendment to A.R.S. § 20-259.01 required automobile liability insurers to offer each of their existing insureds underinsured motorist coverage with limits up to their policies' general liability coverage limits. Appellants do not present any significant analysis beyond the mere assertion that the amendment was intended to impose such a duty with respect to existing policies. Their thesis is apparently that the literal language of the amended statute requires that interpretation. INA argues in response that appellants' interpretation would constitute an improper retroactive application of the amendment and that the amended statute contains nothing to support the view that the legislature intended to require insurers to offer increased underinsured motorist coverage limits to existing policyholders. INA further argues that appellants' interpretation of the amended statute would render it unconstitutional as an impairment of the obligations of existing contracts in violation of Ariz. Const. art. II, § 25.

The cardinal rule of statutory construction is to ascertain the statute's meaning and the legislature's intent. City of Phoenix v. Superior Court in and for Maricopa County, 139 Ariz. 175, 677 P.2d 1283 (1984); Mardian Construction Co. v. Superior Court, 113 Ariz. 489, 557 P.2d 526 (1976). In doing so the courts will consider the context of the statute, the language used, its subject matter, its effects and consequences, and the spirit and purpose of the law. Sellinger v. Freeway Mobile Home Sales, Inc., 110 Ariz. 573, 521 P.2d 1119, 62 A.L.R.3d 161 (1974). A statute may operate retroactively if it is merely procedural and does not affect an earlier established substantive right, Bouldin v. Turek, 125 Ariz. 77, 607 P.2d 954 (1979), but as a general rule a statute will be given prospective effect only, absent a plain indication of an intent that it operate retroactively. Courts are not controlled by the literal meaning of statutory language in pursuing the objective of giving effect to the legislature's intent. State Bd. of Directors for Junior Colleges v. Nelson, 105 Ariz. 119, 460 P.2d 13 (1969); State ex rel. Corbin v. Pickrell, 136 Ariz. 589, 667 P.2d 1304 (1983). Although A.R.S. § 20-259.01 is remedial and should be liberally construed to carry out the legislature's intent, Evenchik v. State Farm Ins. Co., 139 Ariz. 453, 679 P.2d 99 (App.1984), not every construction denying coverage violates the purpose of the statute. Love v. Farmers Ins. Group, 121 Ariz. 71, 588 P.2d 364 (App.1978).

When construing legislation, a court must determine and give effect to legislative intent behind the statute. Kriz v. Buckeye Petroleum Co., 145 Ariz. 374, 377, 701 P.2d 1182, 1185 (1985). Where the words of the statute fail to reveal that intent, as is the case with this statute, and the legislative history does not shed light on the issue, a court must read the statute as a whole, considering its subject matter, effects, consequences, purpose, and spirit. Id. at 377, 701 P.2d at 1185. Further, the court should construe the statute so as to give it a fair and sensible meaning. City of Phoenix v. Superior Court in and for Maricopa County, 139 Ariz. 175, 178, 677 P.2d 1283, 1286 (1984).

The legislative history of the statute before us is as follows. The legislature passed section 20-259.01 in 1965. This section provided for insurance coverage to include protection from negligent uninsured motor vehicle operators. It required insurers to make the insured aware of the availability of uninsured motorist coverage. The amount of the uninsured motorist coverage was set forth in A.R.S. § 28-1142. The insured had the option to reject this coverage. In 1970, section 20-259.01 was amended to include a definition of an uninsured motorist. In 1972, section 20-259.01 was further amended. This amendment designated the original pargaraph as subsection A and deleted the provision which required the uninsured motorist coverage to be called to the attention of the insured and which gave the insured the right to reject such coverage. This deletion made mandatory uninsured coverage for all insureds in the amounts set forth in A.R.S. § 28-1142. The amendment also added subsection B which gave insurers the option to make available to the insured additional uninsured motorist coverage. A.R.S. § 28-1142, part of the Safety Responsibility Act, required liability insurance for bodily injury or death to a limit of not less than $15,000 for one person and not less than $30,000 for any one accident.

The scheme embodied in the version of A.R.S. § 20-259.01 prior to the 1981 amendment is apparent from its text. Subsection A operated to prohibit insurers from delivering or issuing automobile liability policies which did not include uninsured motorist coverage of at least $15,000/$30,000. At the same time, subsection B required those insurers writing liability policies "as provided in subsection A" to make available additional uninsured motorist coverage of up to three times the minimum limits of A.R.S. § 28-1142, or $45,000/$90,000. Read together, pre-amendment subsections A and B did no more than prescribe certain specific coverage requirements that insurers had to meet in delivering or issuing new automobile liability policies.

Laws 1981, ch. 224, § 1 amended A.R.S. § 20-259.01 to provide in pertinent part as follows:

A. No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state, with respect to any motor vehicle registered or principally garaged in this state, unless coverage is provided in the policy or supplemental to the policy, in limits for bodily injury or death prescribed in subsections B and C of this section, but not less than the limits prescribed in § 28-1102, under provisions filed with and approved by the insurance director, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured and underinsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. For the purposes of the coverage provided for pursuant to this section, "uninsured motor vehicles", subject to the terms and conditions of such coverage, includes any insured motor vehicle if the liability insurer of the vehicle is unable to make payment on the liability of its...