Transamerica Ins. Co. v. Doe

• Decision Date: 28 April 1992
• Docket Number: No. 1,CA-CV,1
• Citation: 840 P.2d 288,173 Ariz. 112
• Parties: TRANSAMERICA INSURANCE COMPANY, a California corporation, Plaintiff-Appellee, v. John and Jane DOE, Defendants-Appellants. 90-456.
• Court: Arizona Court of Appeals

Page 288

840 P.2d 288

173 Ariz. 112

TRANSAMERICA INSURANCE COMPANY, a California corporation, Plaintiff-Appellee, v. John and Jane DOE, Defendants-Appellants.

No. 1 CA-CV 90-456.

Court of Appeals of Arizona Division 1, Department E.

April 28, 1992.

Review Denied Dec. 1, 1992.

Gallagher & Kennedy, P.A. by Kevin E. O'Malley, Phoenix, for plaintiff-appellee.

Gage & Mathers, Ltd. by G. David Gage, Phoenix, for defendants-appellants.

OPINION

McGREGOR, Judge.

John and Jane Doe ¹ (appellants) gave emergency medical assistance to victims of a car accident and, as a result, were exposed to blood infected with the human immunodeficiency virus (HIV). On appeal, appellants challenge the trial court's determination that exposure to the virus and subsequent diagnostic testing did not constitute bodily injury and therefore were not compensable under the underinsured motorist provision of their motor vehicle liability insurance policy issued by Transamerica Insurance Company (Transamerica). Appellants also contend the trial court should have referred this coverage dispute to an arbitration panel. We conclude the coverage dispute does not fall within the insurance policy's arbitration provision and affirm the trial court's judgment in favor of Transamerica.

I.

Appellants are trained medical professionals who witnessed a single-car accident in which two passengers were ejected from the car. Appellants, the first parties not involved in the accident to arrive at the scene, observed the passengers bleeding and needing emergency medical attention. In the course of rendering cardiopulmonary resuscitation and other life-sustaining procedures, appellants came into direct contact with the passengers' blood. Both appellants had open skin lesions at the area of the blood contact.

Five days after the accident, authorities informed appellants that one passenger, who died from accident injuries, had been infected with HIV, which causes acquired immune deficiency syndrome (AIDS). Appellants therefore had been exposed to HIV-infected blood while providing medical treatment. Consequently, appellants underwent approximately one year of diagnostic testing, which required periodically drawing blood samples by means of a syringe and hypodermic needle, to determine whether appellants had been infected with the virus. The blood tests did not reveal the presence of the virus, and appellants' physician has deemed further testing unnecessary. Nevertheless, appellants cannot be absolutely certain they will not contract AIDS from exposure to the passenger's blood.

The car driver's reckless acts caused the accident. The driver's liability insurer paid the full amount of his coverage to the passengers and their survivors. The parties agree that, with respect to appellants, the driver therefore was an underinsured motorist.

Transamerica had issued appellants a motor vehicle insurance policy that was in effect on the date of the accident. The policy provides underinsured motorist coverage according to the following terms:

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. (Emphasis added.)

Appellants claimed to have sustained bodily injury and damages, including anxiety and emotional distress, from exposure to blood infected with HIV and sought compensation from Transamerica under their underinsured motorist coverage. When Transamerica denied their claim, appellants made a written demand for arbitration.

Transamerica initiated this action by filing a complaint for declaratory relief, arguing that appellants did not suffer a compensable "bodily injury" and that appellants' injuries did not arise out of the ownership, maintenance or use of the underinsured motor vehicle. Transamerica further contended the court, rather than an arbitration panel, provided the proper forum to decide the question of available coverage.

Transamerica and appellants filed cross-motions for summary judgment. Relying on appellants' statement of facts, which Transamerica accepted for purposes of the pending motions, the trial court granted summary judgment in favor of Transamerica and subsequently denied appellants' motion for a new trial. Appellants timely appealed. We have jurisdiction pursuant to Ariz.Rev.Stat.Ann. § 12-2101.B and F.1.

II.

We first consider whether the policy required Transamerica to agree to arbitrate the coverage issue. The Transamerica policy provides:

ARBITRATION: If we and a covered person disagree whether that person is legally entitled to recover damages from the owners or operator of an underinsured motor vehicle, or do not agree as to the amount of damages, either party may make a written demand for arbitration....

....

... A decision agreed to by two of the [three] arbitrators will be binding as to:

1. Whether the covered person is legally entitled to recover damages; and 2. The amount of damages....

Appellants assert this policy provision entitles them to arbitration of all disputed issues related to coverage, liability and damages. We disagree.

An arbitrator cannot resolve issues outside the scope of the arbitration agreement. Allstate Ins. Co. v. Cook, 21 Ariz.App. 313, 315, 519 P.2d 66, 68 (1974). Appellants' Transamerica policy permits an arbitration panel to resolve disputed issues pertaining to owner/operator liability or the amount of damages. Neither of these is at issue here. Instead, this case turns upon appellants' right to recover from their own insurer, an issue that is not made arbitrable by the terms of the underinsured motorist policy. See id. (arbitrator exceeded his jurisdiction by ruling on insured's right to recover from insurer pursuant to identical arbitration provision). Therefore, we affirm the trial court's determination that the dispute involved in the present case falls outside the policy's arbitration provisions.

III.

Appellants' principal argument is that, because appellants are entitled to recover for damages according to the terms of their Transamerica policy, the trial court erred in granting Transamerica's motion for summary judgment. In reviewing a summary judgment, we view the evidence in a light most favorable to the losing party, giving that party the benefit of all favorable inferences that may be reasonably drawn from the evidence. Wisener v. State, 123 Ariz. 148, 149, 598 P.2d 511, 512 (1979). If, when viewed in this manner, reasonable people could differ, summary judgment is not appropriate. Orme School v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). Additionally, the decision to grant or deny a motion for a new trial falls within the sound discretion of the trial court and we will not upset its ruling absent a clear showing of abuse of discretion. Adroit Supply Co. v. Electric Mut. Liab. Ins. Co., 112 Ariz. 385, 389, 542 P.2d 810, 814 (1975).

Appellants' underinsured motorist coverage indemnifies them against damages they are "legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury ... caused by an accident." Appellants reason that, by virtue of the "rescue doctrine," ² the underinsured driver owed appellants, as rescuers, an independent duty of care that entitled them to compensation for damages suffered in their attempted rescue of the injured passengers. We assume, without deciding, that appellants could have recovered against the negligent driver. Appellants' ability to do so, however, fulfills only the first of the three conditions imposed to entitle appellants to underinsured motorist coverage. Under the terms of the policy, appellants also must establish they are legally entitled to recover from the negligent driver because of bodily injury caused by the accident. Although principles of tort law govern appellants' right to recover against the negligent driver, the terms of appellants' Transamerica policy govern appellants' right to recover against their insurer. We proceed, therefore, to consider whether appellants suffered bodily injury according to their policy terms. ³

A.

Appellants first contend they sustained bodily injury as a result of their physical exposure to the infected blood of the passenger. Appellants' Transamerica policy does not define the term "bodily injury." Because the term is not ambiguous on its face, we interpret it according to its ordinary meaning. See Mid-Century Ins. Co. v. Duzykowski, 131 Ariz. 428, 430, 641 P.2d 1272, 1274 (1982). In insurance law, the term "bodily injury" is narrower and more restrictive than "personal injury." Allstate Ins. Co. v. Diamant, 401 Mass. 654, 518 N.E.2d 1154, 1156 (1988). Bodily injury encompasses only physical injuries, impairment of physical condition, sickness, disease, or substantial pain. See, e.g., Rolette County v. Western Casualty and Sur. Co., 452 F.Supp. 125, 129-30 (D.N.D.1978); Allstate, 518 N.E.2d at 1156; Commonwealth of Pennsylvania v. Goins, 348 Pa.Super. 22, 501 A.2d 279, 280 (1985); 1A Appleman's Insurance Law and Practice, § 354 (rev. ed. 1981). Although this court has not considered whether physical exposure to HIV-infected blood constitutes a bodily injury for purposes of insurance coverage, we have twice recently considered the closely related question whether exposure to asbestos that increases the risk of asbestosis or lung cancer constitutes bodily injury or damage sufficient to support a tort cause of action.

In Burns v. Jaquays Mining Corp., 156 Ariz. 375, 376-77, 752 P.2d 28, 29-30 (App.1988), the plaintiffs, who resided in a mobile home park adjacent to an asbestos mill and tailings pile, were exposed to substantial quantities of airborne asbestos fiber. DeStories v. City of Phoenix, ...