U.S. Fidelity and Guar. Co. v. Ferguson

• Decision Date: 31 July 1997
• Docket Number: No. 94-CA-01283-SCT,94-CA-01283-SCT
• Citation: 1997 WL 426261,698 So.2d 77
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY v. Dorothy FERGUSON.
• Court: Mississippi Supreme Court

Page 77

698 So.2d 77

UNITED STATES FIDELITY AND GUARANTY COMPANY v. Dorothy FERGUSON.

No. 94-CA-01283-SCT.

Supreme Court of Mississippi.

July 31, 1997.

Marc A. Biggers, Lonnie D. Bailey, Upshaw Williams Biggers Pages & Kruger, Greenwood, for Appellant.

John Booth Farese, Farese Farese & Farese, Ashland, for Appellee.

Before SULLIVAN, P.J., and McRAE and JAMES L. ROBERTS, Jr., JJ.

SULLIVAN, Presiding Justice, for the Court:

¶1 Dorothy Ferguson suffered over $100,000 in damages while riding as a passenger in a vehicle negligently hit by an underinsured driver. The negligent driver only had $25,000 in liability insurance coverage. Mrs. Ferguson demanded that her insurance carrier, United States Fidelity and Guaranty Company (USF & G), aggregate her uninsured motorist bodily injury coverage on her three cars. USF & G refused. The Lafayette County Circuit Court granted Mrs. Ferguson's summary judgment motion, finding that she was entitled to the aggregate amount. USF & G appeals to this Court.

STATEMENT OF THE FACTS

¶2 On July 18, 1993, Dorothy Ferguson, a passenger in her Cadillac Seville, was hit by a vehicle driven by Marzee Sipes. The accident occurred in Pontotoc County. Sipes's vehicle was insured by Allstate with a $25,000 limit of liability. Allstate paid the $25,000 limit of Sipes's coverage to the Fergusons. However, Mrs. Ferguson suffered more than $100,000 in bodily damages.

¶3 At the time of the accident, Dorothy and Reid Ferguson had three vehicles--the Cadillac, a GMC truck, and a Pontiac Firebird--insured under one USF & G policy with a $25,000 limit of liability for Uninsured Motorists Bodily Injury (UMBI) on each vehicle with USF & G. On October 11, 1993, Mrs. Ferguson wrote to USF & G demanding the aggregation of the UMBI coverage for the three cars, totaling $75,000. The letter also stated that Mrs. Ferguson would accept the $25,000 from Allstate and $52,000 ¹ from USF & G to settle her claims. Based upon their interpretation of In re Koestler, 608 So.2d 1258 (Miss.1992), USF & G maintained that they were not required to stack the three UMBI coverages, because Mrs. Ferguson's policy contained an unambiguous anti-stacking clause, and the total uninsured motorist coverage was greater than the statutory minimum of $10,000 per car. USF & G calculated that it owed Mrs. Ferguson $30,000 in uninsured motorist coverage ($10,000 per vehicle times 3 vehicles) less the credit offset of Allstate's $25,000 payment, for a total $5,000. USF & G waived its potential subrogation rights against Marzee Sipes, allowing Mrs. Ferguson to release Allstate and Sipes. USF & G paid Mrs. Ferguson $5,000.

¶4 Mrs. Ferguson has been insured by USF & G for a number of years. In July, 1991, Mrs. Ferguson insured the Cadillac Seville with USF & G. The premium for $25,000 of UMBI coverage on the Cadillac was $22 per six months, renewable every January 10th and July 10th. In July of 1992, the premium was raised to $45. On January 10, 1993, the Fergusons were charged a single $45 premium to cover two cars with $25,000 in UMBI coverage. However, the policy charged separate premiums for each car for all other types of coverage included in the policy. Within the six month period between January 10 and July 10, 1993, the Ferguson family added a third car to the policy. The Ferguson family paid a separate premium for each car's liability and uninsured motorist property damage, but one premium of $45 for all three cars for $25,000 UMBI coverage.

¶5 On February 4, 1994, Mrs. Ferguson filed a complaint for declaratory judgment in Lafayette County Circuit Court. Mrs. Ferguson alleged that USF & G had previously paid stacked uninsured motorist coverage and should not be allowed to unilaterally change its policy without notifying the insured. Even if USF & G was entitled to limit stacking, Mrs. Ferguson claimed that she should receive $45,000, which represents $25,000 for the involved car, plus $10,000 for each of the two uninvolved cars. With credit set-off from the $25,000 Allstate payment, Mrs. Ferguson claimed that USF & G owed her $20,000.

¶6 After discovery, both parties moved for summary judgment. On December 6, 1994, Judge Kenneth Coleman heard oral

arguments from both sides. Judge Coleman rendered a bench opinion granting Mrs. Ferguson's motion for summary judgment and denying USF & G's motion. On December 10, 1994, the lower court entered a nunc pro tunc order granting Mrs. Ferguson's motion for summary judgment and ordering USF & G to pay Mrs. Ferguson $75,000 with credit for the $5,000 previously paid.

STATEMENT OF THE LAW

I.

WHETHER AN INSURED MAY AGGREGATE UMBI COVERAGE UNDER A

POLICY INSURING MULTIPLE VEHICLES BUT FOR WHICH

THE INSURED PAID ONLY ONE PREMIUM FOR

UMBI COVERAGE?

¶7 This Court has endorsed "stacking" or aggregating uninsured motorist coverage of multiple policies since our decision in Harthcock v. State Farm Mutual Automobile Insurance Co., 248 So.2d 456 (Miss.1971). In fact, stacking is so firmly imbedded in Mississippi uninsured motorist law that it "has become a positive gloss upon the Uninsured Motorist Act." Wickline v. U.S. Fidelity & Guar. Co., 530 So.2d 708, 714 (Miss.1988). However, up until now we have also consistently maintained that insurance companies and their insured are free to contractually limit stacking of uninsured motorist coverage, so long as the policy language is clear and unambiguous and the statutory minimum is upheld. Koestler, 608 So.2d at 1261, partially overruled by Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658 (Miss.1994); State Farm Mutual Automobile Insurance Co. v. Kuehling, 475 So.2d 1159, 1162 (Miss.1985); State Farm Mutual Automobile Insurance Co. v. Talley, 329 So.2d 52, 54 (Miss.1976); Talbot v. State Farm Mutual Automobile Insurance Co., 291 So.2d 699, 701 (Miss.1974). "Over and above legally mandated minimums, the parties have always remained free to agree as they wish. The Act but reinforces the point when it empowers the parties to contract for coverage 'over the minimum requirement.' " Koestler, 608 So.2d at 1263. We still will not interfere with the right of the insurer and insured to contract for the amount of uninsured motorist (UM) coverage that the insured wants to purchase or the amount or number of premiums that the insurer charges for that coverage, so long as the policy meets the minimum statutory requirements.

¶8 In previous cases before this Court, we have allowed aggregation of UM coverage despite anti-stacking clauses based upon ambiguity in the language of the policy or the fact that separate premiums were charged for each car. Insurance companies have responded by rewriting their policy language and altering their premium scheme in order to circumvent our decisions. We now affirmatively declare that the public policy of this State mandates stacking of UM coverage for every vehicle covered under a policy, regardless of the number or amount of the premium(s) paid for UM coverage. We hereby hold that anti-stacking clauses as applied to UM coverage are against public policy, and contracts contrary to public policy are unenforceable. See Hertz Commercial Leasing Division v. Morrison, 567 So.2d 832, 834-35 (Miss.1990).

¶9 We point to the language of our earliest stacking case to show that the intent of our uninsured motorist law is to provide the insured with adequate protection against injury caused by an uninsured motorist:

After a careful consideration of the authorities from other jurisdictions and the requirements of our statute, we hold that the uninsured motorists coverage of each policy of liability insurance is available to the injured insured until all sums which he shall be entitled to recover from the uninsured motorist have been recovered. The coverage is mandatory on the insurer and this undertaking cannot be diminished by a provision in the policy. We find no words in the statute indicating that one policy providing minimum coverage is all the statute requires. The statute requiring the coverage does not say how much uninsured motorists coverage shall be provided for each accident or each vehicle or each uninsured motorist. It requires each policy to provide the minimum coverage....

Harthcock, 248 So.2d at 461-62. More recently, this Court reiterated its positive stand in favor of stacking:

Stacking is firmly imbedded in our uninsured motorist law. The sort of stacking sought here, i.e., stacking multiple coverages within a single policy, has been mandated. As with other types of stacking, the rationale offered is that multiple premiums are paid and multiple (stacked) coverages should be available. However, what is important is the fact that stacking has become a positive gloss upon our Uninsured Motorist Act.

....

Uninsured motorist coverage is designed to provide innocent injured motorists a means to recover all sums to which they are entitled from an uninsured motorist. The statute is to be liberally construed so as to achieve compensation.

....

Unlike other jurisdictions, such as Alabama, Minnesota and Montana, which have legislatively mandated that stacking is contrary to public policy, stacking is retained in Mississippi as a "positive gloss" of our UM statute.

Harris v. Magee, 573 So.2d at 653-55 (Miss.1990) (citations omitted).

¶10 To say that an insured may contract with his insurance company to limit stacking is disingenuous. Insurance contracts essentially are contracts of adhesion. The insured has only two choices in "negotiating" the terms of his policy--he may accept the terms offered by his insurance company, or he may reject them and go to a different insurance company. When the entire insurance industry writes its policies to preclude stacking of UM coverage, attempting to circumvent case law and defeat public policy, the insured is denied any choice whatsoever. This Court has previously recognized the need to protect insureds because of their uneven bargaining power in dealing with insurance...