Thompson v. Shelter Mut. Ins. Co.

• Decision Date: 19 December 1991
• Docket Number: No. 90CA1628,90CA1628
• Parties: Christopher THOMPSON, Plaintiff-Appellee and Cross Appellant, v. SHELTER MUTUAL INSURANCE COMPANY and Shelter General Insurance Company, Defendants-Appellants and Cross-Appellees. . II
• Court: Colorado Court of Appeals

Page 518

835 P.2d 518

Christopher THOMPSON, Plaintiff-Appellee and Cross Appellant, v. SHELTER MUTUAL INSURANCE COMPANY and Shelter General

Insurance Company, Defendants-Appellants and

Cross-Appellees.

No. 90CA1628.

Colorado Court of Appeals,

Div. II.

Dec. 19, 1991.

As Modified on Denial of Rehearing Jan. 23, 1992.

Certiorari Granted Aug. 3, 1992.

Cross-Petition for Certiorari Denied Aug. 3, 1992.

Caplin & Hugen, Brian K. Hugen, Denver, for plaintiff-appellee and cross-appellant.

Greengard Senter Goldfarb & Rice, Thomas S. Rice, Peter H. Doherty, Denver, for defendants-appellants and cross-appellees.

Opinion by Judge JONES.

Defendants, Shelter Mutual Insurance Company and Shelter General Insurance Company, appeal from a summary judgment entered by the trial court in favor of plaintiff, Christopher Eric Thompson. In that judgment, the court concluded that defendants must provide $50,000 in underinsured motorist coverage, in addition to $50,000 paid by a third party's liability insurance company, for damages suffered by plaintiff in an automobile accident. Plaintiff cross-appeals that portion of the judgment in which the trial court held that underinsured motorist benefits, included in several policies under which plaintiff was insured, cannot be added together, or "stacked," to cover the total damages plaintiff suffered.

We determine that the language of the policy is unambiguous and that the trial court improperly allowed $50,000 pursuant to the underinsured motorist provision of the insurance policy. However, we nevertheless reverse the judgment of the trial court because we determine that the language of the policy is void as against public policy and, therefore, unenforceable.

The facts are largely stipulated. Plaintiff was involved in a motor vehicle accident with a third party. The third party's liability insurance company paid plaintiff for the bodily injury he suffered up to the third party's policy limits of $50,000. At the time of the accident, plaintiff was operating a Nissan automobile insured by defendants (Nissan policy). He was also insured by defendants under five other motor vehicle insurance policies.

Plaintiff sought to collect for damages he had suffered in excess of $50,000 pursuant to the underinsured motorist provisions in his Nissan policy. He sought such additional recovery by adding together, or "stacking," the underinsured motorist provisions from the five other policies under which he was insured by defendants with that in the Nissan policy, all of which totaled $200,000 in underinsured motorist benefits. Defendants denied plaintiff's request for payment on the grounds that, according to the language of the policies, no underinsured motorist benefits were available for plaintiff's claims, even under the Nissan policy alone.

Plaintiff filed a complaint for declaratory judgment against defendants in district court. Each party filed a motion for summary judgment after stipulating to the facts. The trial court held that the underinsured motorist benefits from the policies under which plaintiff was insured by defendants could not be "stacked" together. The court also concluded that not enough facts were present in the record to allow it to determine whether plaintiff was entitled to $50,000 in underinsured motorist benefits under the Nissan policy, in addition to the $50,000 received from the third party insurance company.

The respective parties then filed motions for clarification or reconsideration. During a hearing on these motions, the court ruled from the bench that $50,000 of underinsured motorist benefits were available under the Nissan policy with defendants, in addition to the $50,000 that plaintiff had already received from the third party insurance company, but did not state a basis for this ruling.

I.

Defendants contend that the trial court erred by holding that plaintiff was entitled to $50,000 in underinsured motorist benefits pursuant to the Nissan insurance policy. They argue that the actual policy language is clear and unambiguous in prohibiting such benefits in this case. Plaintiff argues that the policy language is ambiguous and that it must be interpreted, in the light most favorable to plaintiff, as allowing underinsured motorist benefits here. We conclude that the Nissan policy unambiguously precludes an underinsured motorist award here.

The policy provisions in question state in relevant part as follows:

(4) Underinsured motor vehicle means:

(a) an insured motor vehicle when the sum of the limits of liability of the auto bodily injury liability insurance coverage or bonds on such vehicle is less than the limits of liability of the uninsured motorists coverage carried by an insured ....

(5) Our maximum liability under the uninsured motorists coverage provided shall be the lesser of:

(a) the difference between the limit of uninsured motorists coverage provided and the amount paid to the insured by or for any person or organization who may be held legally liable for the bodily injury.... (emphasis added)

Plaintiff argues that the phrases "coverage carried by an insured" and "coverage provided" are ambiguous and that, by virtue of being terms in adhesion contracts, they should be construed in favor of the insured. He claims that by construing these terms in plaintiff's favor, the underinsured motorist benefits from all six policies under which plaintiff is insured by defendants should be added together, for a total of $200,000. This result would cause the limits of the third party's insurance liability, at $50,000, to be less than the total limits of liability of plaintiff's underinsured motorist coverage, at $200,000, and therefore, plaintiff would be eligible for underinsured motorist benefits of $150,000, including $50,000 from the Nissan policy, in accordance with the policy language.

Thus, plaintiff's argument that he is entitled to an additional $50,000 in underinsured motorist benefits from the Nissan policy turns on whether plaintiff can add together, or stack, the underinsured benefits from the six policies under which he is insured by defendant. If plaintiff cannot stack together all of the underinsured motorist benefits of his policies, then he is not entitled to $50,000 in underinsured motorist benefits under the Nissan policy because the third party liability insurance limit would not be "less than the limits of liability of the uninsured motorist coverage carried by an insured," so as to allow the underinsured motorist benefits to become effective.

The dispositive issue thus becomes whether the underinsured motorists benefits from the six policies under which plaintiff is insured may be stacked. We conclude that the effect of the operative language in the Nissan policy is to unambiguously preclude stacking of plaintiff's underinsured motorist benefits.

The relevant provision in question is found in the insurance contract under the heading "Conditions," and states:

OTHER AUTO INSURANCE IN THE COMPANY

With respect to any occurrence, accident, death, or loss to which this and any other auto insurance policy issued to you by us also applies, the total limit of our liability under all these policies won't exceed the highest applicable limit of liability or benefit amount under any one policy. (emphasis added)

Plaintiff argues that this policy provision allows stacking. Defendants, on the other hand, maintain that the provision is clear and unambiguous in stating that, should an insured have more than one policy with the defendants which may cover an accident or incident, the total limit of liability by the defendants as to all policies would be equal to the total limit of liability as made applicable under the highest limit of any single policy. They argue that the effect of the provision is that stacking cannot occur. While we agree with plaintiff that the provision does not state specifically that stacking is precluded, we also agree with defendants that, as applicable here, the effect of the provision is, nevertheless, to prevent stacking from occurring by limiting defendants' liability.

When we read the "total limit" language of the "other auto insurance" provision in pari materia with the language in the "underinsured motor vehicle" provision and the "limits of liability" provision which speaks to the maximum liability under the underinsured motorist coverage, we conclude that the policy prohibits plaintiff from collecting more than the maximum limit of underinsurance coverage under a single policy. It is plain from the language of the Nissan policy that the key factor in calculating underinsured motorist benefits among all of the policies here is the policy limit provision of the Nissan policy. All of the parties agree that the policy limit is $50,000.

We agree with defendants that the language of the Nissan policy is unambiguous. When the definition of uninsured motor vehicle, the uninsured motorist coverage limit of liability, and the provision concerning other automobile insurance in the defendant companies are read together, their plain effect in this case is to deny underinsured motorist coverage to plaintiff.

Even if the five other policies which cover plaintiff can be stacked in this case, the total limit of defendants' underinsured motorist liability cannot exceed $50,000 because that is "the highest applicable benefit amount" among the six policies. Thus, when that $50,000 total limit of liability is factored into the calculation for determination of "maximum liability" for the underinsured motorist coverage, the result of the calculation is that there is no difference between the limit of underinsured motorist coverage and the amount that was paid to plaintiff by the third party's liability insurance carrier. Pursuant to the plain language of the policy, if there is no difference between those limits, there can be no coverage as to the underinsured motorist provision.

Hence, we conclude, based only on the language...