Travelers Ins. Co. v. Warren

• Decision Date: 18 July 1996
• Docket Number: No. 85337,85337
• Citation: 678 So.2d 324
• Parties: 21 Fla. L. Weekly S315 The TRAVELERS INSURANCE COMPANY, et al., Petitioners, v. Brett Allan WARREN, etc., Respondent.
• Court: Florida Supreme Court

Page 324

678 So.2d 324

21 Fla. L. Weekly S315

The TRAVELERS INSURANCE COMPANY, et al., Petitioners, v. Brett Allan WARREN, etc., Respondent.

No. 85337.

Supreme Court of Florida.

July 18, 1996.

Cecil L. Davis and R. William Roland of McConnaughhay, Roland, Maida & Cherr, P.A., Tallahassee; and George A. Vaka of Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., Tampa, for Petitioners.

James H. White, Jr. of Staats, White & Clarke, Panama City, for Respondent.

George A. Vaka of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for Nationwide Insurance Companies, Amicus Curiae.

Louis K. Rosenbloum of Levin, Middlebrooks, Mabie, Thomas, Mayes & Mithell, P.A., Pensacola, for The Academy of Florida Trial Lawyers, Amicus Curiae.

GRIMES, Justice.

We review Warren v. Travelers Insurance Co., 650 So.2d 1082, 1084 (Fla. 1st DCA 1995), wherein the district court of appeal certified the following question to be of great public importance:

MAY AN INJURED PERSON WHO IS ENTITLED TO RECOVER BODILY INJURY LIABILITY BENEFITS, BUT WHOSE DAMAGES EXCEED THE POLICY LIMIT FOR LIABILITY COVERAGE, ALSO RECOVER UNDER THE SAME POLICY FOR UNINSURED MOTORIST BENEFITS, WHERE THE POLICY EXCLUDES THE INSURED VEHICLE FROM ITS DEFINITION OF "UNINSURED VEHICLE?"

We have jurisdiction pursuant to article V, section 3(b)(4) of the Florida Constitution.

The pertinent facts are undisputed. In April of 1990, Dianna Lynn Warren was a passenger in a car driven by Celeste Chancey Bryant when the car left the roadway and plunged into Fanning Bayou. Both Warren and Bryant were killed in the accident.

The car was owned by Bryant's father, Edward Chancey, and insured under a policy issued by The Travelers Insurance Company and The Phoenix Insurance Company ("insurers"). The policy provided for $50,000 of liability coverage per person and $50,000 of uninsured motorist ("UM") coverage per person. Further, the policy provided that "[a]nyone else while occupying your car if the occupancy is (or is reasonably believed to be) with your permission ... is also an insured " for purposes of UM coverage. The policy defined an uninsured motor vehicle to include an insured vehicle "to which a bodily injury liability insurance policy or bond applies at the time of the accident, but the limits are less than the total damages for bodily injury or death resulting from the accident." However, the policy also provided that "your car"--the car insured under the policy--was not an uninsured motor vehicle within the meaning of the policy.

As personal representative of his wife's estate, Brett Allan Warren sought recovery, alleging that his wife's injuries and wrongful death were caused by the negligent operation and/or the negligent maintenance of the car. The estate settled with the insurers for $50,000, the liability coverage limit under the policy. The estate, however, reserved all claims for benefits under the UM provisions of the policy and subsequently made a demand upon the insurers, claiming entitlement to UM benefits under the same policy. The insurers denied the claim, and the estate filed an action claiming entitlement to UM benefits.

The trial court granted summary judgment in favor of the insurers, concluding that the "your car" exception precluded the estate from recovering UM benefits. The district court of appeal reversed, concluding that section 627.727(3)(b), Florida Statutes (1989), ¹ overrode the insurance policy's "your car" exception, thereby allowing the estate to recover both liability and UM benefits under the same policy. Warren, 650 So.2d at 1083-84. Coincidentally, less than seven months later, the Second District Court of Appeal concluded that section 627.727(3)(b) does not require insurers to issue policies that would enable class II insureds, i.e., passengers (other than a named insured or resident relatives of a named insured), who are injured in a single-car accident to recover both liability and UM benefits under the same policy. Bulone v. United Servs. Auto. Ass'n, 660 So.2d 399, 400 (Fla. 2d DCA 1995). ² The Bulone court also certified conflict with Warren. Id.

In the instant case, the "your car" exception would clearly prevent the estate from collecting under both the liability and the UM provisions of the policy. However, all automobile insurance policies must offer UM protection as broad as the UM statute requires. Valiant Ins. Co. v. Webster, 567 So.2d 408, 410 (Fla.1990). Therefore, the issue before us is whether section 627.727(3)(b) negates the effect of the policy's "your car" exception.

Section 627.727(3)(b) was an amendment to the UM statute enacted as chapter 89-243, Laws of Florida. In order to determine the effect of the amendment, it is necessary to consider the evolution of the UM statute prior to the passage of chapter 89-243. In Dewberry v. Auto-Owners Insurance Co. 363 So.2d 1077, 1081 (Fla.1978), this Court interpreted the UM statute to require a reduction in UM coverage to the extent of the receipt of any payments from the tortfeasor's liability coverage. In 1984, however, the legislature sought to provide that benefits paid under the tortfeasor's liability coverage should be an offset against damages rather than against the claimant's UM coverage. Ch. 84-41, § 1, at 95, Laws of Fla. The legislature failed to fully accomplish its goal because it only amended subsection (1) of the UM statute and did not address subsection (3). As a result, in cases where the claimant's UM coverage exceeded the tortfeasor's liability coverage, payments from the tortfeasor's liability coverage would offset the amount of damages but no longer reduce the claimant's UM coverage. However, because the legislature failed to amend subsection (3) of the statute, if the tortfeasor's liability coverage exceeded the claimant's UM coverage, "there was simply no uninsured motor vehicle upon which to predicate a claim for UM coverage." Shelby Mut. Ins. Co. v. Smith, 556 So.2d 393, 396 (Fla.1990).

Prior to this Court's decision in Shelby, the legislature enacted chapter 88-370, Laws of Florida, which reinstated the Dewberry concept of setting off the liability coverage payments from UM coverage rather than from the damages. However, the next year, the legislature passed chapter 89-243 containing the amendment at issue in this case. From the House of Representatives' final staff analysis and economic impact statement, it is clear that the amendment was intended to return UM coverage to its pre-1988 status in which liability payments would be offset against damages rather than UM coverage. Fla. H.R. Comm. on Ins., CS for HB 331 (1989) Staff Analysis (June 30, 1989). Under the heading "EFFECT OF PROPOSED CHANGES," the staff analysis states: "The bill reverses the amendments made by section 15 of chapter 88-370, thereby restoring excess uninsured motorist coverage. It also amends s. 627.727(3)(b), to clear up Legislative intent that UM coverage is excess." Id. By referencing Shelby Mutual Insurance Co. v. Smith, 527 So.2d 830 (Fla. 4th DCA 1988), the staff analysis makes plain that chapter 89-243 amended section (3)(b) of the UM statute to ensure that the UM coverage would be excess over liability coverage even in instances where the tortfeasor's liability coverage was greater than the claimant's UM coverage. See id.

The staff analysis does not suggest that chapter 89-243 was intended to enable class II insureds who are injured in a single-car accident to recover both liability and UM benefits under the same policy. Thus, we hold that section 627.727(3)(b), enacted as chapter 89-243, reinstated the principle that liability payments shall only be set off against damages rather than the UM coverage, but it does not stack UM coverage on top of liability coverage under one policy for the benefit of class II insureds. ³ Section 627.727(3)(b) states that a vehicle constitutes an uninsured motor vehicle when the liability insurer of the vehicle has provided liability coverage for its insured which is less than the total damages sustained by the claimant. Having determined that section 627.727(3)(b) does not require a stacking of both liability and UM benefits under the same policy, we therefore conclude that the "liability insurer" referred to in section 627.727(3)(b) means an insurer other than the insurer providing UM coverage to the claimant.

The legislature's response to this Court's decision in Brixius v. Allstate Insurance Co., 589 So.2d 236 (Fla.1991), reinforces our interpretation of section 627.727(3)(b). In Brixius, the claimant was injured in a single-car accident while riding as a passenger in a car owned by her but which was driven by an uninsured friend. 589 So.2d at 236-37. While the claimant's car was "insured" for purposes of liability coverage, the claimant could not recover liability benefits because of a family-household exclusion contained in her policy. Consequently, she sought to recover UM benefits under her policy. Her insurer denied coverage based on a policy provision much like the "your car" provision at issue in the instant case. On review, this Court upheld the "your car" exception relying upon our prior decision in Reid v. State Farm Fire & Casualty Co., 352 So.2d 1172, 1172 (Fla.1977), in which we had held that a vehicle cannot be both an uninsured and insured vehicle under the same policy. Brixius, 589 So.2d at 237-38.

Responding to our decision in Brixius, the legislature amended the UM statute in 1992 to add section 627.727(3)(c) so as to avoid the inequity of denying benefits to a class I insured who had paid for the liability coverage to protect permissive users and had also paid for UM coverage. Bulone, 660 So.2d at 404 n. 7; see also Fla. S. Comm. on Com., SB 170H (1992) Staff Analysis (June 2, 1992). Section 627.727(3)(c), Florida Statutes (Supp.1992), provides that where a nonfamily permissive user is driving an insured vehicle and causes injury to a class I insured passenger, the...