Constant v. Amica Mutual Insurance

497 A.2d 343, 1985 R.I. LEXIS 583

• Court: Supreme Court of Rhode Island
• Decided: August 26, 1985
• Docket: 82-558-A
• Status: Published

Opinions

OPINION

WEISBERGER, Justice.

This case comes before us on appeal by Arnica Mutual Insurance Company (Arnica) from a partial summary judgment entered by a justice of the Superior Court on the issue of intra-policy “stacking.” Partial summary judgment was entered pursuant to an action for declaratory judgment filed by Andrew and Mary Constant in order to determine the extent of uninsured-motorist coverage afforded them by a policy of insurance issued by Arnica. We reverse and remand for further proceedings. The facts of the case are as follows.

On September 11, 1981, plaintiffs, while vacationing on Block Island, were operating uninsured rented mopeds. While operating these mopeds, Andrew Constant was struck by a hit-and-run vehicle and Mary Constant was forced off the highway by the same vehicle. As a result of this accident, both plaintiffs suffered personal injuries. Andrew Constant’s injuries were extremely serious and included a broken neck. At the time of this incident, plaintiffs owned two motor vehicles that were covered by an automobile insurance policy issued by Arnica. The declarations page of this policy listed the two vehicles, a 1977 Buick station wagon and a 1978 Buick Skylark coupe. In addition to liability coverage, the declaration sheet listed uninsured-motorist coverage for each vehicle in the amount of $50,000 for each accident. The premium for auto No. 1 for the uninsured-motorist coverage was stated as $12. The premium for auto No. 2 for the same coverage was stated as $10.

The policy also contained the following provision:

“LIMIT OF LIABILITY

“The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. This is the most we will pay regardless of the number of covered persons, claims made, vehicles or premiums shown in the Declarations, or vehicles involved in the accident.” (Emphasis added.)

After considering the motion for partial summary judgment, the trial justice, relying on our decision in Taft v. Cerwonka, — R.I. —, 433 A.2d 215 (1981), entered partial judgment “declaring that the policies in this case should be stacked for the purpose of recovery under the uninsured motorist provision.” The effect of this decision is that the maximum coverage of $50,000 for each accident would be doubled to $100,000 in total.

The sole issue raised by this appeal is whether, in light of the limit of liability set forth in the policy, intra-policy stacking is authorized as a matter of law.

The history of the development of the various lines of authority in respect to inter-policy stacking and intra-policy stacking is set forth in great detail in Taft, supra, and need not be repeated here. Suffice it to say that this court recognized inter-policy stacking in Pickering v. American Employers Insurance Co., 109 R.I. 143, 282 A.2d 584 (1971). We confronted the issue of intra-policy stacking in Taft under the following circumstances. Allstate Insurance Company had issued an automobile policy to the plaintiffs, who brought an action to recover for the wrongful death of their daughter arising out of the negligence of an uninsured motorist. In that case the limits-of-liability clause was less specific than the clause contained in Arni-ca’s policy. In addition, the policy contained a clause in respect to insurance on two or more automobiles, the wording of which created an ambiguity in respect to coverage.¹ It is true that this court in Taft purported to rely not upon an ambiguity in the Allstate policy but upon a separate-premium theory. However, we did observe that we would be “careful to limit our holding on this issue to eases factually similar to the one at bar * * *.” Taft, — R.I. at —, 433 A.2d at 219. In our opinion in Taft we were persuaded to a significant degree by a dissenting opinion by Justice Douglas of the Supreme Court of New Hampshire in Grimes v. Concord General Mutual Insurance Co., 120 N.H. 718, 422 A.2d 1312 (1980). Justice Douglas, in his dissenting opinion, emphasized the “reasonable expectation” of the policyholder based upon an ambiguity in the policy under consideration. Consequently, although he advocated the separate-premium approach, he implicitly relied upon a reasonable expectation bottomed upon an ambiguity. Our opinion in Taft cannot be considered without including the implicit ambiguity contained in the Allstate policy.

In the case at bar, the limitation of liability set forth in the Arnica policy is completely free of ambiguity and conveys most clearly that the limit of liability set forth in the declarations, namely $50,000, is the maximum limit regardless of the “number of * * * vehicles or premiums shown in the Declarations * * In our opinion this language would preclude any reasonable expectation on the part of the policyholder that he or she would be entitled to intra-policy stacking. The present controversy demonstrates the wisdom of our holding in Taft that it should be limited to cases factually similar to the one at bar. We have recently held that in the absence of a statutorily declared policy to the contra, the parties to an insurance agreement are free to contract as they desire. Faraj v. Allstate Insurance Co., — R.I. —, —, 486 A.2d 582, 586 (1984) (citing American Family Mutual Insurance Co. v. Ryan, 330 N.W.2d 113, 115 (Minn.1983)).

Our statutorily declared policy applicable to this case is found in G.L.1956 (1979 Reenactment) § 27-7-2.1, as amended by P.L.1981, ch. 251, § 2, which provided in pertinent part as follows:

“No policy insuring against loss resulting from liability imposed by law for property damage caused by collision, bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for property damage caused by collision, bodily injury or death set forth in § 31-31-7 as amended, under provisions approved by the insurance commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit- and-run motor vehicles because of property damage, bodily injury, sickness or disease, including death, resulting therefrom, provided that the named insured shall have the right to reject such coverage, or that portion thereof that applies to property damage.” (Emphasis added.)

The provisions of G.L.1956 (1982 Reenactment) § 31-31-7, then as now, provided for minimum coverage of $25,000 because of bodily injury to one person and a minimum of $50,000 because of bodily injury to two or more persons in any one accident. No one disputes that the limits set forth in the uninsured-motorist provisions of Arni-ca’s policy met the requirements of this section. Consequently, the limitation of liability contained in the Arnica policy restricting the maximum limit to $50,000 does not violate the uninsured-motorist statutory provision.

Thus, in light of the unambiguous limitation of liability, no reasonable expectation on the part of the plaintiffs is violated and no statutory policy is transgressed by giving effect to the terms of the contract between the parties. For this reason it was error for the trial justice to stack the liability in this policy by doubling the amount limited both in the declarations and by virtue of the policy language itself.

For the reasons given, the appeal of Arni-ca is sustained. The judgment of the Superior Court is reversed, and the papers in the case are remanded for the entry of judgment consistent with this opinion.

1 . The Allstate policy contained the following language:

"6. Limits of Liability

“(a) The limit of liability stated in the declarations as applicable to ‘each person’ is the limit of Allstate’s liability for all damages, including damages for care or loss of services, because of bodily injury sustained by one person as the result of any one accident and, subject to the above provision respecting each person, the limit of liability stated in the declarations as applicable to ‘each accident’ is the total limit of Allstate’s liability for all damages, including damages for care or loss of services, because of bodily injury sustained by two or more persons as the result of any one accident.

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"3. Insurance on Two or More Automobiles

“When two or more automobiles are insured by this policy, the terms of this policy shall apply separately to each, but an automobile and attached trailer shall be deemed to be one automobile as respects the limits of liability under Section I and separate automobiles under Section III including any deductible provisions which may apply.”