United Services Auto. Ass'n v. Wilkinson

• Decision Date: 08 December 1989
• Docket Number: No. 88-263,88-263
• Citation: 132 N.H. 439,569 A.2d 749
• Parties: UNITED SERVICES AUTOMOBILE ASSOCIATION v. Diane WILKINSON, Administratrix of the Estate of John Wilkinson, Jr., the Hartford Insurance Company, and the United States Fire Insurance Company.
• Court: New Hampshire Supreme Court

Page 749

569 A.2d 749

132 N.H. 439

UNITED SERVICES AUTOMOBILE ASSOCIATION v. Diane WILKINSON, Administratrix of the Estate of John Wilkinson, Jr., the Hartford Insurance Company, and the United States Fire Insurance Company.

No. 88-263.

Supreme Court of New Hampshire.

Dec. 8, 1989.

Rehearing Denied Feb. 26, 1990.

Devine, Millimet, Stahl & Branch P.A., Manchester (Mark W. Dean, on the brief, and Donald Gardner, orally), for plaintiff.

Emile R. Bussiere P.A., Manchester (Richard J. Walsh, on the brief and orally), for defendant Diane Wilkinson, Administratrix.

Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester (Theodore Wadleigh, on the brief, and Michael Mortimer, orally), for defendant The Hartford Ins. Co.

McDonough & O'Shaughnessy P.A., Manchester (Robert G. Whaland, on the brief and orally), for defendant The U.S. Fire Ins. Co.

PER CURIAM.

The parties in this declaratory judgment action appeal from a series of rulings made by a Master (R. Peter Shapiro, Esq.) and approved by the Superior Court (C. Flynn, Dalianis, Pappagianis, JJ.). At issue are the amounts and priorities of uninsured motorist coverage available from various insurers to the Estate of John Wilkinson, Jr., following his death in an automobile accident on May 20, 1982. We consider whether the trial court erred in ruling (1) that intra-policy stacking of uninsured motorist coverage should not be allowed on a fleet automobile insurance policy held by the decedent's employer, issued by The Hartford Insurance Company (Hartford), because Hartford limited its coverage by clear and unambiguous language; and (2) that under RSA 264:15 the "umbrella" policy issued to the employer by the United States Fire Insurance Company (U.S. Fire) affords uninsured and underinsured motorist coverage to insureds under that policy. For the reasons that follow, we affirm the first ruling and reverse the second.

On May 20, 1982, John Wilkinson (the decedent) was killed when the pickup truck he was driving collided with a dump truck operated by Paul J. Corso. The decedent was driving the pickup truck, owned by his employer, Harvey Construction Company (Harvey), within the scope of his employment.

At the time of the accident, Corso was insured for automobile liability under an Aetna Insurance Company policy which set limits of liability at $25,000. Shortly after the accident the decedent's estate settled with Aetna for $25,000. At that time, no judicial determination as to liability for the accident was made.

At the time of the accident, both the decedent and his employer, Harvey, held insurance liability policies with various insurance carriers. The decedent had a personal automobile insurance policy on his two vehicles issued to him by the United Services Automobile Association (USAA) which provided uninsured motorist benefits up to $100,000 per person and $300,000 per accident. Harvey held a business automobile insurance policy issued by Hartford which provided uninsured motorist coverage for Harvey's entire fleet of business-related autos which included more than thirty vehicles. The master found and Hartford does not challenge that its policy is the primary policy as to uninsured motorist coverage, since it insured the vehicle that was actually involved in the accident. There is a dispute as to whether the Hartford policy provided $300,000 or $330,000 in uninsured motorist coverage per person. The Hartford policy contained limiting language in two separate endorsements, CA 21 07 (Ed. 01 78) and Form C-3005-0 infra. Harvey also held an umbrella policy from U.S. Fire that provided excess coverage starting at $500,000 up to a maximum of $15,000,000. U.S. Fire entitled its policy, a "Commercial Catastrophic Comprehensive Liability Policy."

The Wilkinson Estate filed for arbitration to determine liability for the accident. The arbitration has been stayed pending resolution of the declaratory judgment action now before us on this appeal. There has therefore been no final finding of liability for the accident.

In determining the availability of uninsured motorist coverage, the trial court ruled, inter alia, (1) that the Hartford policy coverage could not be stacked because it contained clear and unambiguous language limiting coverage under the uninsured and underinsured motorist provision to $300,000 per person and $500,000 per accident; (2) that the USAA policy provided basic coverage of $100,000 for two vehicles, which could be stacked to afford the decedent's estate $200,000 coverage; (3) that the U.S. Fire umbrella policy provided uninsured and underinsured motorist coverage to the administratrix from $500,000 to $15,000,000; and (4) that the $200,000 uninsured and underinsured motorist coverage provided by the USAA policy could, if the damages warrant it, be "stacked" on the $300,000 coverage provided by the Hartford policy to fill the "gap" between the coverage provided by Hartford's underlying motor vehicle liability policy and U.S Fire's umbrella-type policy. This appeal ensued.

We first address the amount of coverage afforded by the Hartford policy. The Hartford policy provided uninsured motorist coverage to Harvey's fleet of commercial vehicles. At the time of the accident, Harvey had paid separate uninsured motorist premiums for at least thirty-six of the approximately forty-two vehicles in its fleet. The Hartford business auto policy provided uninsured motorist coverage with stated limits of liability in the amount of $500,000 per accident and either $300,000 or $330,000 per person, depending upon which section of the policy one reads. USAA argues that the Hartford policy coverage should be stacked to provide the Wilkinson estate with coverage of thirty-six times the stated limits of per person liability, for a total of either $10,800,000 or $11,880,000, depending upon whether the policy is interpreted to provide $300,000 or $330,000 per person coverage.

Application of the Hartford policy terms in the instant case presents us with two issues of contract interpretation. The first is whether the applicable per person policy limit of liability is $300,000 or $330,000, and the second is whether the policy's limits of liability are susceptible to stacking.

We construe ambiguities in insurance policies against the insurer. State Farm Mut. Auto. Ins. Co. v. Desfosses, 130 N.H. 260, 263, 536 A.2d 205, 207 (1987); Trombly v. Blue Cross/Blue Shield, 120 N.H. 764, 771-72, 423 A.2d 980, 984-85 (1980). An ambiguity includes "all terms about the meaning or application of which reasonable disagreement between the contracting parties is possible." Smith v. Liberty Mut. Ins. Co., 130 N.H. 117, 122, 536 A.2d 164, 166 (1987). The Hartford policy contained two different per person limit of liability figures, one specifying $300,000 and the other specifying $330,000. We construe the resulting ambiguity against the insurer and apply the $330,000 figure.

The answer to the second Hartford coverage issue requires further analysis. In this State all motor vehicle liability insurance policies must provide policy holders who purchase liability coverage with uninsured motorist coverage in an amount equal to the amount of the liability coverage they purchased. RSA 264:15, I. This statutory provision was intended to allow policy holders to protect themselves against losses caused by irresponsible automobile drivers with insufficient insurance coverage to pay for the injuries they cause to the insured. Courtemanche v. Lumbermens Mut. Cas. Co., 118 N.H. 168, 172-73, 385 A.2d 105, 107-08 (1978) (discussing, RSA 268:15-a, I, the precursor to RSA 264:15).

" 'Intra-policy stacking' allows the insured to aggregate the limits of [uninsured motorist] coverage by multiplying the stated limit of liability by the number of vehicles covered under a policy." Cacavas v. Maine Bonding and Casualty Co., 128 N.H. 204, 205, 512 A.2d 423, 424 (1986). Although stacking of uninsured motorist coverage is generally allowed, insurance companies are free to limit their liability and prevent stacking through the use of clear and unambiguous policy language. Green Mt. Ins. Co. v. Bonney, 131 N.H. 762, 561 A.2d 1057 (1989) (citing Cacavas, supra, 128 N.H. at 208, 512 A.2d at 425).

In construing insurance policy language which purports to limit liability or prevent stacking, we employ a strict construction standard which requires that ambiguities in insurance policies be construed in favor of the insured and against the insurer. See Trombly, supra, 120 N.H. at 770-72, 423 A.2d at 985; Laconia Rod & Gun Club v. Hartford Acc. & Indemn. Co., 123 N.H. 179, 182, 459 A.2d 249, 251 (1983).

The Hartford policy contains two clauses which purport to limit stacking liability. The first is endorsement CA 21 07 (Ed. 01 78), which provides:

"Paragraph 1 of OUR LIMIT OF LIABILITY is changed to read:

1. Regardless of the number of covered autos, insureds, claims made or vehicles involved in the accident, our limit of liability is as follows:

a. The most we will pay for all damages resulting from bodily injury to any one person caused by any one accident is the limit shown in this endorsement for "each person".

b. Subject to the limit for "each person", the most we will pay for all damages resulting from bodily injury caused by any one accident is the limit shown in this endorsement for "each accident ".

c. If coverage for property damage is provided by this insurance, the most we will pay for all damages resulting from property damage caused by any one accident is the limit of property damage shown in this endorsement for "each accident ".

(Emphasis in original.)

The second was endorsement Form C-3005-0, which reads:

"OUR LIMIT OF LIABILITY is changed to read:

A. Regardless of the number of covered autos, insureds, claims made or vehicles involved in the accident, our limit of liability is as follows:

1. The most we will pay for all damages resulting from bodily injury to any one person caused by any...