Williams v. Gov't Emps. Ins. Co.

• Decision Date: 20 August 2014
• Docket Number: No. 27435.,27435.
• Citation: 762 S.E.2d 705,409 S.C. 586
• Court: South Carolina Supreme Court
• Parties: Delores WILLIAMS, Personal Representative of the Estate of Edward Murry, Deceased, and Matthew Whitaker, Jr., as Personal Representative of the Estate of Annie Mae Murry, Deceased, Appellants, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO), Respondent. Appellate Case No. 2011–196449.

409 S.C. 586

762 S.E.2d 705

Delores WILLIAMS, Personal Representative of the Estate of Edward Murry, Deceased, and Matthew Whitaker, Jr., as Personal Representative of the Estate of Annie Mae Murry, Deceased, Appellants,

v.GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO), Respondent.

Appellate Case No. 2011–196449.

No. 27435.

Supreme Court of South Carolina.

Heard March 21, 2013.

Decided Aug. 20, 2014.

Terry E. Richardson, Jr. and Christopher James Moore, both of Richardson, Patrick, Westbrook & Brickman, LLC, of Barnwell; and Robert A. McKenzie, of McDonald, McKenzie, Rubin, Miller and Lybrand, LLP, of Columbia, for Appellants.

William H. Bowman, III and Robert P. Wood, both of Rogers Townsend & Thomas, PC, of Columbia, for Respondent.

Justice BEATTY.

Delores Williams, the personal representative of the Estate of Edward Murry, and Matthew Whitaker, Jr., the personal representative of the Estate of Annie Mae Murry (PRs), brought this declaratory judgment action to determine whether a GEICO motor vehicle insurance policy issued to the Murrys provided $15,000 or $100,000 in liability proceeds for bodily injury for an accident in which both of the Murrys were killed. The circuit court concluded coverage was limited to the statutory minimum of $15,000 based on a family step-down provision in the policy that reduced coverage for bodily injury to family members from the stated policy coverage of $100,000 to the statutory minimum amount mandated by South Carolina law during the policy period. The PRs appeal, contending the step-down provision is ambiguous and/or violative of public policy. We affirm in part and reverse in part.

I. FACTS

The facts in this case were either stipulated to by the parties or are not in dispute. The Murrys, who were husband and wife, purchased a motor vehicle insurance policy from GEICO, policy number 0685–44–55–04, effective September 2, 2006 until March 2, 2007. The Murrys were the only named insureds on the policy. The Murrys carried liability coverage in excess of the statutory minimum limits. As indicated on the “Family Automobile Renewal Policy Declarations” page for the policy (Declarations), they purchased liability insurance with limits of $100,000 per person and $300,000 per accident for bodily injury, and $50,000 per accident for property damage.

On September 3, 2006, the Murrys were the sole occupants of their vehicle when it was struck by a train. Both of the Murrys died from injuries caused by the collision. It is unknown who was the driver and who was the passenger at the time of the accident. However, since both of the Murrys were insureds under the policy, the accident resulted in bodily injury to an insured, regardless of who was driving.

A dispute arose as to the amount of liability proceeds due under the policy. The PRs believed the proper amount of coverage was the stated policy amount of $100,000. GEICO took the position that only $15,000 was owed under the Exclusions portion of the policy as a result of the following provision contained under Section I, entitled “Liability Coverage”:

EXCLUSIONS

When Section I Does Not Apply

We will not defend any suit for damage if one or more of the exclusions listed below applies. We do not provide liability coverage, under Exclusions 1, 2, 3 and 8, in excess of the minimum limits of liability required by South Carolina law. We do not provide any liability coverage for the remaining Exclusions.

1. Bodily injury to any insured or any relative of an insured residing in his household is not covered.¹

The above language is often referred to as a family “step-down provision” as it operates to “step down,” or reduce, coverage for injured family members from the original policy limit, which was $100,000 here, to the statutory minimum limit required by law during the policy period, which was $15,000.²

The PRs filed this complaint against GEICO seeking a declaratory judgment as to the amount of liability proceeds due under the policy for the accident. After a bench trial, the circuit court entered judgment for GEICO. The court concluded “the Family Member Exclusion in the Policy applies to limit liability coverage to $15,000.00 for damages arising out of the accident of September 3, 2006.” ³

The court rejected the PRs' assertion that the GEICO insurance policy was ambiguous, stating even though the Declarations page listed liability coverage for bodily injury of $100,000/$300,000, the policy terms had to be read as a whole and the family step-down provision was capable of only one reasonable interpretation. The circuit court also found the family step-down provision did not violate this state's public policy or the statutes governing automobile insurance, particularly S.C.Code Ann. § 38–77–142. The PRs appealed, and this Court certified the case from the Court of Appeals for its review pursuant to Rule 204(b), SCACR.

II. STANDARD OF REVIEW

“A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue.” Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991). “When the purpose of the underlying dispute is to determine whether coverage exists under an insurance policy, the action is one at law.” S.C. Farm Bureau Mut. Ins. Co. v. Kennedy, 398 S.C. 604, 610, 730 S.E.2d 862, 864 (2012) (citation omitted).

“In an action at law tried without a jury, the appellate court will not disturb the trial court's findings of fact unless there is no evidence to reasonably support them.” Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40, 46–47, 717 S.E.2d 589, 592 (2011) (citation omitted); accord Townes Assocs. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). “However, an appellate court may make its own determination on questions of law and need not defer to the trial court's rulings in this regard.” Kennedy, 398 S.C. at 610, 730 S.E.2d at 864. “When an appeal involves stipulated or undisputed facts, an appellate court is free to review whether the trial court properly applied the law to those facts.” WDW Props. v. City of Sumter, 342 S.C. 6, 10, 535 S.E.2d 631, 632 (2000).

III. LAW/ANALYSIS

On appeal, the PRs contend the circuit court erred in failing to find (1) the insurance contract was misleading and ambiguous, and (2) the family step-down provision violates South Carolina's public policy.

A. Ambiguity

The PRs first argue the insurance contract is contradictory and misleading and that the circuit court erred in failing to find the policy was ambiguous.

An insurance policy is a contract between the insured and the insurance company, and the policy's terms are to be construed according to the law of contracts. Auto Owners Ins. Co. v. Rollison, 378 S.C. 600, 663 S.E.2d 484 (2008); Coakley v. Horace Mann Ins. Co., 376 S.C. 2, 656 S.E.2d 17 (2007); Estate of Revis v. Revis, 326 S.C. 470, 484 S.E.2d 112 (Ct.App.1997); see generallyS.C.Code Ann. § 38–61–10 (2002) (“All contracts of insurance on property, lives, or interests in this State are considered to be made in the State ... and are subject to the laws of this State.”).

“Where the contract's language is clear and unambiguous, the language alone determines the contract's force and effect.” McGill v. Moore, 381 S.C. 179, 185, 672 S.E.2d 571, 574 (2009). “Courts must enforce, not write, contracts of insurance, and their language must be given its plain, ordinary and popular meaning.” Sloan Constr. Co. v. Cent. Nat'l Ins. Co. of Omaha, 269 S.C. 183, 185, 236 S.E.2d 818, 819 (1977).

“It is a question of law for the court whether the language of a contract is ambiguous.” S.C. Dep't of Natural Res. v. Town of McClellanville, 345 S.C. 617, 623, 550 S.E.2d 299, 302–03 (2001). The construction of a clear and unambiguous contract is a question of law for the court to determine. Hawkins v. Greenwood Dev. Corp., 328 S.C. 585, 592, 493 S.E.2d 875, 878 (Ct.App.1997). If the court decides the language is ambiguous, however, evidence may be admitted to show the intent of the parties, and the determination of the parties' intent becomes a question of fact for the fact-finder.⁴Id. at 592, 493 S.E.2d at 878–79.

*595 “Ambiguous or conflicting terms in an insurance policy must be construed liberally in favor of the insured and strictly against the insurer.” Diamond State Ins. Co. v. Homestead Indus., Inc., 318 S.C. 231, 236, 456 S.E.2d 912, 915 (1995). “A contract is ambiguous when it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” Hawkins, 328 S.C. at 592, 493 S.E.2d at 878 (quoting 17A Am.Jur.2d Contracts § 338, at 345 (1991)).

“A contract is read as a whole document so that one may not create an ambiguity by pointing out a single sentence or clause.” McGill, 381 S.C. at 185, 672 S.E.2d at 574. Whether a contract is ambiguous is to be determined from examining the entire contract, not by reviewing isolated portions of the contract. Farr v. Duke Power Co., 265 S.C. 356, 218 S.E.2d 431 (1975); Silver v. Aabstract Pools & Spas, Inc., 376 S.C. 585, 658 S.E.2d 539 (Ct.App.2008).

The PRs contend the circuit court wrongly found they were reading the Declarations in isolation when they had actually pointed to a variety of contradictions in the Declarations and the body of the policy document to show the contract “was far from clear.” The PRs argue the policy starts out by listing the Murrys as the named insureds with $100,000/$300,000 of liability coverage for bodily injury, but it is not indicated anywhere in the Declarations that the coverage does not include either of the named insureds or their household relatives and that only the statutory minimums in South Carolina apply to them. Further, there is nothing in the Declarations or the rest of the policy...