Transamerica Ins. Co. v. Arbogast

• Decision Date: 10 June 1987
• Docket Number: Civ. A. No. 85-0246-E(K).
• Citation: 662 F. Supp. 164
• Court: U.S. District Court — Northern District of West Virginia
• Parties: TRANSAMERICA INSURANCE COMPANY, a corporation, Plaintiff, v. Helen ARBOGAST, Administratrix of the Estate of Don H. Arbogast, Deceased, Defendant.

662 F. Supp. 164

TRANSAMERICA INSURANCE COMPANY, a corporation, Plaintiff, v. Helen ARBOGAST, Administratrix of the Estate of Don H. Arbogast, Deceased, Defendant.

Civ. A. No. 85-0246-E(K).

United States District Court, N.D. West Virginia, Elkins Division.

June 10, 1987.

Michael Bonasso, Kay, Casto & Chaney, Charleston, W.Va., for plaintiff.

James C. Peterson, Hill & Peterson, Charleston, W.Va., for defendant.

MEMORANDUM OPINION

KIDD, District Judge.

Presently before this Court are cross-motions for summary judgment filed by the parties. The matter has been fully briefed and the parties have entered into and filed a joint stipulation of facts and questions presented which will be set forth below. This action arises out of a dispute as to underinsured motorist coverage of an automobile insurance policy containing an "owned but not insured for this coverage" exclusion. This declaratory judgment action is brought pursuant to Title 28, United States Code, Section 2201 and W.Va.Code § 55-13-1, et seq. for the purpose of seeking a declaration from this Court as to the rights of the parties with respect to the insurance policy here in question. Jurisdiction of this Court is invoked by virtue of diversity of citizenship, 28 U.S.C. § 1332, the Court being of the opinion that this matter involves a controversy between citizens of different states exceeding the sum or value of $10,000, exclusive of interest and costs.

The parties have entered into and filed the following joint stipulation of facts and questions presented:

A. FACTS

1. Transamerica Insurance Company (hereinafter "Transamerica") is a corporation organized and existing under the laws of a state other than West Virginia, and has its principal place of business in a state other than West Virginia.

2. Helen Arbogast is a citizen and resident of the State of West Virginia, County of Randolph.

3. The amount in controversy in this cause exceeds $10,000.00.

4. The complaint and counter-claim herein for declaratory judgment are both brought pursuant to West Virginia Code § 55-13-1 et seq., and 28 USCA § 2201, for the purpose of seeking a declaration by the Court of the rights, status and other legal relations of the parties hereto, and for the purpose of determining questions of actual controversy between the parties hereto.

5. On or about January 4, 1984, Transamerica issued an automobile liability policy designated policy number TRA 1739 29 74 (hereinafter referred to as "Transamerica policy") naming Don H. Arbogast as the named insured, insuring a 1979 Ford automobile, which provided, inter alia, underinsured motorists coverage benefits of $100,000.00.

6. A copy of the terms of the insurance coverage under the Transamerica policy is attached to the complaint filed in this action and is incorporated herein by reference for all purposes.

7. On or about June, 1985, Quality Insurance Company issued to Don H. Arbogast a motorcycle liability policy designated policy number MC 10727 (hereinafter "Quality policy"), naming Don H. Arbogast as the named insured, insuring the 1981 Honda motorcycle involved in the accident which is the subject matter of this case.

8. The application on which the Quality policy was issued indicated a waiver by Don H. Arbogast of underinsured motorists coverage benefits, and pursuant thereto, the Quality policy did not provide underinsured motorists coverage benefits.

9. On or about June 29, 1985, Don H. Arbogast was injured when the motorcycle which he owned and operated collided with an automobile owned and operated by Leroy T. McCollom.

10. On or about July 1, 1985, Don H. Arbogast died from the injuries which he received in such accident.

11. On or about July 5, 1985, Helen Arbogast was appointed Administratrix of the Estate of Don H. Arbogast, deceased, by an Order of the County Commission of Randolph County, West Virginia, a copy of which Order is attached hereto and incorporated herein by reference for all purposes as Exhibit A.

12. The automobile owned by Don H. Arbogast and insured by Transamerica was, in no way, involved with the collision described above, or the damages sustained by the deceased and/or his Estate resulting from such collision.

13. Helen Arbogast, as Administratrix of the Estate of Don H. Arbogast, has submitted a claim for damages to the liability insurance carrier for Leroy McCollom, and said carrier has agreed to pay the policy limits of liability insurance in the amount of $25,000.00 applicable to the accident in question in this case, but performance of the settlement is pending approval of the Circuit Court of Randolph County, West Virginia.

14. Helen Arbogast, as Administratrix of the Estate of Don H. Arbogast, has filed a claim with Transamerica Insurance Company seeking payment of benefits under the underinsured motorists coverage of the Transamerica policy.

15. Transamerica has denied payment of such claim on the ground that the terms and conditions of the Transamerica policy, generally, and the terms and conditions of Part C2 thereof, in particular, exclude underinsured motorists coverage for Don H. Arbogast in connection with the subject accident.

16. Don H. Arbogast, deceased, was a "covered person" as defined under the first definition of covered persons, on page 12 of the Transamerica policy, and Leroy T. McCollom was the owner and operator of an "underinsured motor vehicle" as defined on page 12, part C2 of the same policy.

17. The claim submitted to Transamerica by Helen Arbogast as Administratrix of the Estate of Don H. Arbogast falls within exclusion Al under Part C2 of the Transamerica policy thereunder (page 12 of the policy).

18. Such exclusionary clause, by its express and unambiguous language, operates to bar defendant's claim and defendant maintains that such exclusionary language is null and void as a matter of law.

B. QUESTIONS PRESENTED

1. Whether exclusion A1 under Part C2 of the Transamerica policy is valid, to wit: Whether the "owned but not insured for this coverage" exclusionary language is valid in the State of West Virginia.

2. If the Court decides the first issue in the negative, a second issue arises, to wit: Whether the maximum underinsured coverage available in this case is the face amount of the limit on the Transamerica policy (in the instant case $100,000.00) or the face amount of the limit on the Transamerica policy less the policy limit paid under the general liability policy of the underinsured motorist (in the instant case $100,000.00 - $25,000.00 = $75,000.00).

The terms of the Transamerica policy regarding underinsured motorists coverage is as follows; the underlined portions below appear as bold face type in the policy here in question:

2. UNDERINSURED MOTORISTS COVERAGE: We will pay damages which a covered person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident. The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the underinsured motor vehicle.

We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.

"Coverd person" as used in Part Means:

1. You or any family member.

2. Any other person while occupying your covered auto.

3. Any person for damages that person is entitled to recover because of bodily injury to which this coverage applies sustained by a person described in 1. or 2. above.

"Underinsured motor vehicle" means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage.

However, "underinsured motor vehicle" does not include any vehicle:

1. to which a liability bond or policy applies at the time of the accident, but its limit for bodily injury liability is less than the minimum limit for bodily injury liability specified by the financial responsibility law of the state in which your covered auto is principally garaged.

2. Owned by you or any family member.

3. Owned by any governmental unit or agency.

4. Operated on rails or crawler treads.

5. Which is a farm type tractor or equipment designed mainly for use off public roads while not upon public roads.

6. While located for use as a residence or premises.

7. Owned or operated by a person qualifying as a self-insurer under any applicable motor vehicle law.

8. To which a bodily injury liability bond or policy applies at the time of the accident, but the bonding or insuring company denies coverage or is or becomes insolvent.

EXCLUSIONS

A. We do not provide Underinsured Motorists Coverage for bodily injury sustained by any person:

1. While occupying, or when struck by, any motor vehicle or trailer of any type owned by you or any family member which is not insured for this coverage under this policy.

2. While occupying your covered auto when it is being used to carry persons or property for a fee. This exclusion does not apply to a share-the-expense car pool.

3. Using a vehicle without a reasonable belief that the person is entitled to do so.

B. This coverage shall not apply directly or indirectly to benefit any insurer or self-insurer under any workers' or workmen's compensation, disability benefits or similar law.

Looking at the above policy language, the parties have stipulated that at the time of the accident, Arbogast was a covered person within the meaning of the policy and McCollom was operating an underinsured motor vehicle. The exclusion language applicable here under which Transamerica has denied coverage reads as follows:

EXCLUSIONS

A. We do not provide underinsured motorist coverage for bodily injury sustained by any person:

1. While occupying, or when struck by, any motor vehicle or trailer of any type owned by you or

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