William v. City of Newport News

• Decision Date: 09 November 1990
• Docket Number: No. 891570,891570
• Citation: 240 Va. 425,397 S.E.2d 813
• Parties: James L. WILLIAM v. CITY OF NEWPORT NEWS. Record
• Court: Virginia Supreme Court

Page 813

397 S.E.2d 813

240 Va. 425

James L. WILLIAM v. CITY OF NEWPORT NEWS.

Record No. 891570.

Supreme Court of Virginia.

Nov. 9, 1990.

Stephen M. Smith, Hampton, for appellant.

Allen L. Jackson, Deputy City Atty. (Verbena M. Askew, City Atty., Arthur G. Lambiotte, Sr. Asst. City Atty., on brief), for appellee.

Present: All the Justices.

LACY, Justice.

In this case we must determine whether the employee of an employer which self-insures its motor vehicles is entitled to recovery under the uninsured motorist protection statute, Code § 38.2-2206.

On December 22, 1988, James L. William was injured by a vehicle operated by an unknown, uninsured motorist. At the time of the accident, William was a passenger in a vehicle owned by the City of Newport News and was acting within the scope of his employment by the City. William filed a negligence suit against the uninsured motorist and, pursuant to Code § 8.01-222, notified the City of his intention to make a claim "under the City's Uninsured Motorist provisions of [the City's] self-insurance plan." William applied for workers' compensation but was not covered by any other policy of insurance. ¹

The City filed a motion for declaratory judgment seeking a determination that its sole obligation to William was pursuant to the Workers' Compensation Act, Code §§ 65.1-1 et seq. The trial court granted the City's motion, and dismissed the City from the case. Following trial on William's negligence action, the court entered a final judgment for William on a jury verdict against the uninsured motorist for $30,000. We awarded William an appeal from the trial court's declaratory judgment that the City had no liability to William under the uninsured motorist protection provisions.

Although we have considered an employee's ability to recover for injuries inflicted by uninsured motorists in the past, the particular issue in this case is one of first impression. In Yellow Cab Co. v. Adinolfi, 204 Va. 815, 134 S.E.2d 308 (1964), we held that an employee injured in the course of his employment by an uninsured motorist could not recover for his injuries under the uninsured motorist provisions of the Code because the motor vehicle which he was operating at the time of the accident was not insured by a commercial liability policy. The employer had self-insured the motor vehicle. The operative provision of the uninsured motorist protection statutes, then Code § 38.1-381, dealt "only with policies, contracts, and insurance companies. Thus a self-insurer is not affected by the principal parts of § 38.1-381." Id. at 818, 134 S.E.2d at 310; see also Shelton v. American Re-Insurance Co., 210 Va. 655, 173 S.E.2d 820 (1970).

Section 38.2-2206, the successor to § 38.1-381, still refers primarily to policies, contracts, and insurance companies. However, in 1972, the General Assembly amended the motor vehicle code so that self-insurers of motor vehicles are now required to provide uninsured motorist protection "to the extent required by § 38.2-2206." Code § 46.2-368(B). ² Therefore, Yellow Cab is no longer controlling.

While the City acknowledges that, as a self-insurer, it must provide uninsured motorist protection, and concedes that if William were not a city employee he would be entitled to avail himself of the recovery afforded under that protection, it argues that § 65.1-40 of the Workers' Compensation Act limits William's recovery from it to workers' compensation benefits.

Section 65.1-40, known as the "exclusivity provision," states:

The rights and remedies herein granted to an employee when he and his employer have accepted the provisions of this Act respectively to pay and accept compensation on account of personal injury or death by accident shall exclude all other rights and remedies of such employee ... at common law or otherwise, on account of such injury.... (emphasis added).

On its face, this section appears all-encompassing because it recognizes no exceptions in terms of remedies or parties. However, this section has not been applied as broadly as its language might imply. For example, the "exclusivity provision" does not extinguish an employee's common-law right to bring an action against a third party for injuries sustained in a work-related accident, if the tort-feasor was a stranger to the business. Feitig v. Chalkley, 185 Va. 96, 102, 38 S.E.2d 73, 75-76 (1946). Furthermore, this section has never been invoked to prevent an employee from obtaining payment for a work-related injury compensable under a personal insurance policy.

The "exclusivity provision" then, does not apply to every right and remedy available to the employee, even though no exceptions are specifically identified. It does apply, however, to prohibit the employee from recovering damages for injuries sustained in the course of his employment in a tort action filed against his employer or fellow-employee. Id. at 99-101, 38 S.E.2d at 74-75.

Consequently, we have held that uninsured motorist protection is unavailable to an employee if the uninsured motorist causing the injury was a fellow-employee. Aetna Casualty and Surety Co. v. Kellam, 207 Va. 736, 152 S.E.2d 287 (1967), modified, Fidelity and Casualty Co. v. Futrell, 211 Va. 751, 180 S.E.2d 502 (1971). The disallowance is premised on the statutory declaration that the insurer's obligation to pay is limited to "all sums that [the insured] is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle." Code § 38.2-2206(A). An employee injured by a fellow-employee is not legally entitled to recover damages from the fellow-employee by virtue of Code § 65.1-40 and, therefore, a condition precedent to obtaining recovery under the uninsured motorist coverage sections cannot be met. Aetna Casualty and Surety Co. v. Dodson, 235 Va. 346, 351, 367 S.E.2d 505, 508 (1988).

In contrast, we have not prevented an employee injured in the course of his employment from exercising his rights under the uninsured motorist provisions where the injury was inflicted by someone other than a fellow-employee--a stranger to the business. In Horne v. Superior Life Ins. Co., 203 Va. 282, 123 S.E.2d 401 (1962), an employee injured in the course of his employment, who obtained a judgment for his injuries against an uninsured motorist, was entitled to both workers' compensation payments and recovery of the amount of his judgment under the uninsured motorist endorsement of his wife's insurance policy which insured the car in which he was riding when injured. The employee qualified as "an insured" under his wife's policy, and Code § 65.1-40 did not preclude him from recovering damages from the operator of the uninsured motor vehicle, a stranger to the business.

Consistent with this rationale, an employee was allowed to recover under the uninsured motorist endorsement of a motor vehicle liability policy issued to his employer when he was injured in the course of his employment by a third-party, uninsured motorist. In Fidelity and Casualty Co. v. Futrell, Futrell obtained a $35,000 judgment against the third-party tort-feasor. He collected $15,000 under the uninsured motorist endorsement of his own motor vehicle policy and sought the remaining payment from Fidelity, the insurer of his employer's motor vehicle which he was operating when injured. Futrell also collected workers' compensation.

While the employer's insurer argued that it was not liable under the terms of the policy, it understandably never asserted that its liability to Futrell was limited by Code § 65.1-40. ³ Indeed, Futrell was not seeking to recover damages from his employer for injuries sustained in the course of his employment. The liability for those damages was established previously by the judgment obtained by Futrell against the uninsured motorist, and it was that judgment which provided the basis for recovery under the uninsured motorist endorsement of Fidelity's motor vehicle liability policy. Cf. Dodson, supra.

The only difference between Futrell and the instant case is the fact that the employer here chose to provide insurance for its motor vehicles through self-insurance rather than through the purchase of a motor vehicle liability policy. ⁴ Our review of the pertinent statutes, policies, and cases leads us to the conclusion that this single distinction does not invoke the application of the "exclusivity provision" of the Workers' Compensation Act and is insufficient to support a result which would deny William the uninsured motorist protection allowed in Futrell.

Neither Futrell nor William sought to recover damages from his employer for injuries sustained in the course of his employment when he proceeded to enforce his rights under the uninsured motorist protection provisions. Each sought compensation which he legally was entitled to recover by virtue of a judgment against an uninsured motorist. The right to recover these sums from someone other than the uninsured motorist was imposed by statute and was reflected in the contract of insurance in Futrell. The existence of this right is unaffected by the form of motor vehicle liability insurance chosen by the employer/owner of the vehicle. Furthermore, specific exclusion from Code § 65.1-40 is unnecessary because, like the right to proceed against a stranger to the business for injuries incurred in the course of employment, the right to recover under the uninsured motorist provisions is not affected by the workers' compensation statutes.

This application of the Workers' Compensation Act § 65.1-40, the uninsured motorist protection provision § 38.2-2206, and the motor vehicle code § 46.2-368, as they relate to an employee, is consistent with the language of the statutes and the intent of the General Assembly in enacting uninsured motorist protection provisions. In 1972, uninsured motor vehicle protection was available to an employee who was injured while using a motor vehicle if he qualified as "an...