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

• Decision Date: 30 June 1998
• Docket Number: No. 16715-1-III
• Citation: Torgerson v. State Farm Mut. Auto. Ins. Co., 957 P.2d 1283, 91 Wn.App. 952 (Wash. App. 1998)
• Court: Washington Court of Appeals
• Parties: Susan and David TORGERSON, wife and husband, Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., a foreign corporation, Respondent.

Page 952

91 Wn.App. 952

957 P.2d 1283

Susan and David TORGERSON, wife and husband, Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., a foreign corporation, Respondent.

No. 16715-1-III.

Court of Appeals of Washington,

Division 3,

Panel Nine.

June 30, 1998.

Reconsideration Denied Aug. 13, 1998.

James A. Domanico, Crary & Clark, Spokane, for Apellants.

Steven M. Cronin, Mullin, Cronin, Casey & Blair, Spokane, William R. Hickman, Pamela A. Okano, Reed, McClure, Seattle, for Respondent.

SWEENEY, Judge.

RCW 48.22.030 requires a written rejection of uninsured/underinsured motorist (UIM) coverage limits less than liability limits for any new policy. Susan and David Torgerson bought a 1983 Dodge van after trading in their Ford van. They added coverages, including UIM coverage, to their insurance policy. However, their State Farm Mutual Automobile Insurance Company policy number remained the same. After an accident with an uninsured motorist, State Farm claimed the UIM coverage was the statutory minimum of $25,000 per person and $50,000 per accident (25/50,000) but could not produce a written rejection. It relied instead on habit and custom evidence to support its claim that the Torgersons must have signed a rejection asking for UIM limits less than their $100,000 per person and $300,000 per accident (100/300,000) liability limits. A jury agreed with State Farm.

The first question presented is whether this is a new (requiring a new written UIM rejection) or replacement policy. We conclude it is a new policy. The next question is whether evidence of habit is admissible to satisfy the written rejection requirement of RCW 48.22.020(4). We conclude it is not. We therefore reverse the judgment and remand for entry of judgment in favor of the Torgersons.

FACTS

In March 1983, Susan and David Torgerson bought insurance from State Farm for their 1973 Ford van. They waived UIM and personal injury protection (PIP) coverage by written rejection forms.

In February 1984, the Torgersons replaced their 1973 Ford van and bought a 15-passenger 1983 Dodge van. Through their agent, David Reighley, they asked for "maximum limits." They intended to use the van to haul Boy Scouts, Bluebirds, church groups and other large groups of children. This latest policy had the same account number as the earlier policy and the same liability limits, 100/300,000. But the Torgersons added PIP, comprehensive, collision and UIM coverage. The policy listed UIM limits at 25/50,000.

In July 1992, the Torgersons' van collided with an uninsured driver. State Farm rejected their request for 100/300,000 UIM limits coverage and offered only 25/50,000. Ms. Torgerson admitted that her State Farm premium billings listed UIM limits of 25/50,000. The Torgersons nonetheless deny that they knew the UIM coverage limits.

They also deny signing the statutorily required UIM waiver for UIM coverage less than their liability limits. RCW 48.22.030(4) (written waiver required on new policies only). State Farm could not produce a copy of the statutorily required signed waiver. However, two of its agents testified that it was their custom and practice to discuss UIM coverage and secure a written waiver if UIM limits were less than liability limits.

The court concluded that the policy was not a "new" policy and therefore State Farm had no obligation to obtain a written rejection for UIM limits less than liability limits. It determined that the issue for the jury was "[d]id the Torgersons request and not receive 100/300,00 coverage or did they request and did they receive what Mr. Reighley says was 25 and 50 and for the reasons he enunciated?" Report of Proceedings at 216 (emphasis added). It rejected the Torgersons' proposed jury instruction 6:

Changes made to an existing policy may constitute a new policy as opposed to a renewal policy if material changes in coverage are requested. If a new policy is created, State Farm has the burden of obtaining a knowing written rejection of Uninsured Motorist benefits in order to avoid providing Uninsured Motorist Coverage in the same amounts as liability limits.

The jury found the Torgersons had not requested the higher UIM limits.

DISCUSSION

A. Standard of Review.

We review the trial court's decision to enter judgment as a matter of law de novo. We view conflicting evidence in the light most favorable to the nonmovant. Hollmann v. Corcoran, 89 Wash.App. 323, 331, 949 P.2d 386 (1997) (citing Forro Precision, Inc. v. International Bus. Mach. Corp., 673 F.2d 1045, 1058 (9th Cir.1982)). The question then is whether there is any evidence or reasonable inferences from the evidence that would support a verdict for the Torgersons. Willis v. Simpson Inv. Co., 79 Wash.App. 405, 410, 902 P.2d 1263 (1995) (citing Baldwin v. City of Seattle, 55 Wash.App. 241, 247, 776 P.2d 1377 (1989)).

B. New Versus Replacement Policy.

An insurance regulatory statute becomes part of the insurance policy. Johnson v. Farmers Ins. Co., 117 Wash.2d 558, 565, 817 P.2d 841 (1991) (citing Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 86, 794 P.2d 1259 (1990)). Insurance companies must make UIM coverage available to Washington policyholders. RCW 48.22.030; Corley v. Hertz Corp., 76 Wash.App. 687, 692, 887 P.2d 401 (1994), review denied, 128 Wash.2d 1007, 910 P.2d 481 (1996). Unless the insured has signed a written rejection, UIM coverage limits equal the liability limits. RCW 48.22.030(3). But if the insured has previously rejected underinsured coverage and the policy under consideration is only a renewal policy, another written UIM rejection is not required. RCW 48.22.030(4). Once the insured declines all or part of the UIM coverage, the insurer is not obligated to provide UIM coverage at the same levels as the bodily injury or third party liability limits unless the insured subsequently makes a written request to reinstate such coverage. Johnson, 117 Wash.2d at 562, 817 P.2d 841. But if a new policy is issued, UIM coverage must again be offered and rejected in writing, otherwise UIM coverage automatically equals the liability limits of the new policy. Corley, 76 Wash.App. at 694, 887 P.2d 401.

The Torgersons contend that the policy on their 1983 Dodge van was a new policy. And therefore they had to be given the right to reject UIM limits in writing. And because State Farm cannot produce the written rejection of UIM coverage, their UIM limits are 100/300,000 by operation of RCW 48.22.030(3). State Farm responds that the 1983 Dodge van replaced the 1973 Ford van. The policy was only a renewal of the existing policy. And, therefore, the 25/50,000 limits noted on the declaration page are the proper UIM limits.

In Johnson, the Supreme Court adopted a "materiality standard" to distinguish a new policy from a renewal policy. Johnson, 117 Wash.2d at 571, 817 P.2d 841 (citing with approval Kerr v. State Farm Mut. Auto. Ins. Co., 434 So.2d 970 (Fla.Dist.Ct.App.1983); Makela v. State Farm Mut. Auto. Ins. Co., 147 Ill.App.3d 38, 100 Ill.Dec. 505, 497 N.E.2d 483 (1986)); Koop v. Safeway Stores, Inc., 66 Wash.App. 149, 154, 831 P.2d 777 (1992), review denied, 120 Wash.2d 1022, 844 P.2d 1018 (1993). The inquiry is fact specific. We look to whether "the changes made to the policy [are] sufficiently material to support a conclusion that a new, as opposed to a renewal, policy was issued." Id.

A "majority of jurisdictions which have dealt with the question do not find a new policy created when a party replaces a vehicle covered under an existing policy with a new vehicle." Johnson, 117 Wash.2d at 571, 817 P.2d 841 (citing Makela, 147 Ill.App.3d at 42-46, 100 Ill.Dec. 505, 497 N.E.2d 483; Metropolitan Property & Liab. Ins. Co. v. Gray, 446 So.2d 216 (Fla.Dist.Ct.App.1984); Hicks v. State Farm Mut. Auto. Ins. Co., 568 P.2d 629 (Okla.1977), overruled on other grounds by Beauchamp v Southwestern Nat'l Ins. Co., 746 P.2d 673 (Okla.1987); El-Habr v. Mountain States Mut. Cas. Co., 626 S.W.2d 171 (Tex. Ct.App.1981), writ ref'd n.r.e.). Likewise, the addition of a new car to an existing policy is no more than a renewal of, or an action supplementary to, the original policy. Johnson, 117 Wash.2d at 571, 817 P.2d 841 (citing Makela, 147 Ill.App.3d at 49-50, 100 Ill.Dec. 505, 497 N.E.2d 483).

The Johnson court also accepted the reasoning of Kerr: "the actions of the insurer in substituting a wife's name for that of her deceased spouse as the named insured on an existing auto policy providing the same coverage levels on the same vehicle did not amount to so material a variation in the policy as to require the insurer to reoffer UIM coverage under Florida statute." Johnson, 117 Wash.2d at 571, 817 P.2d 841 (citing Kerr, 434 So.2d 970).

The court in Johnson concluded that the policy was not new. The Johnson policy changed the named insured, changed the insured vehicle, listed a new address, and listed GMAC as the lienholder on the new vehicle. Id. at 572, 817 P.2d 841. But the court noted: "There were no changes made in coverage, and where coverage levels remain constant, the majority of jurisdictions support the conclusion that no new policy is created. " Id. (emphasis added). The court also noted that the continuation of the same policy number is not determinative. Id.

The fact specific question is: Have there been material changes in coverage which make the policy a "new" policy? Id. at 570-74, 817 P.2d 841.

Here, the original policy on March 24, 1983, insuring the Ford van included the following coverage:

   Liability Limits 100/300,000         Yes
                   Personal Injury Protection           Waived
                   Comprehensive                        No
                   Collision                            No
                   Uninsured/Underinsured               Waived
                

The policy issued for the 1983 Dodge van on February 29, 1984, included the following coverage:

   Liability Limits 100/300,000         Yes
                   Personal Injury Protection           Yes
                   Comprehensive                        Yes

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