Jones v. Shelter Mutual Insurance Companies

738 N.W.2d 840, 274 Neb. 186, 2007 Neb. LEXIS 130

• Court: Nebraska Supreme Court
• Decided: August 24, 2007
• Docket: S-06-310
• Status: Published

Opinions

Stephan, J.

This appeal requires us to determine whether an insurer’s definition of “use” of a motor vehicle as “operation and maintenance” violates Nebraska public policy applicable to uninsured motorist insurance. We conclude that it does not.

FACTS

This case was tried to the district court on stipulated facts. On December 30, 2003, Kevin M. Jones was a front seat passenger in an automobile driven by Amanda Stastny. The automobile was struck by an uninsured motorist in Omaha, Douglas County, Nebraska. The uninsured motorist was legally liable for the accident.

At the time of the accident, Shelter Mutual Insurance Companies (Shelter) had in effect a policy of automobile insurance issued to Stastny which insured her automobile. The policy included uninsured motorist coverage. On the same date, American Family Mutual Insurance Company (American Family) had in force an automobile liability insurance policy issued to Jones’ parents, under which Jones was an additional insured for purposes of uninsured motorist coverage. Both Stastny and Jones made claims for uninsured motorist benefits under the Shelter policy, and Jones made a claim for uninsured motorist benefits under the American Family policy. Shelter paid $25,000 in benefits to Stastny, but denied benefits to Jones. American Family paid Jones $60,000 of its $100,000 policy limit, and he executed a release and assignment of any rights he had against Shelter in favor of American Family.

Jones and American Family brought this action to recover uninsured motorist benefits under the Shelter policy. The policy provided for uninsured motorist benefits in the amount of $50,000 per person or $100,000 per accident. It contained a provision limiting uninsured benefits for non-named insureds to the minimum limits required by law, which in Nebraska is $25,000 per person.¹ The Shelter policy provided in relevant part:

PART I — AUTO LIABILITY

COVERAGE A — BODILY INJURY LIABILITY;

COVERAGE B — PROPERTY DAMAGE LIABILITY

ADDITIONAL DEFINITIONS USED IN PART I

As used in this Part, insured means:

(1) You, with respect to your ownership or use of the described auto and your use of a non-owned auto;

(2) any relative, with respect to his or her use of the described auto or a non-owned auto;

(3) any individual who is:

(a) related to you by blood, marriage, or adoption, who is primarily a resident of, and actually living in, your household, including your unmarried and unemancipated child away at school; or

(b) a foster child in your legal custody for more than ninety consecutive days immediately prior to the accident; but only with respect to that individual’s use of the described auto;

(4) any individual listed in the Declarations as an “additional listed insured,” but only with respect to that individual’s use of the described auto; and

(5) any individual who has permission or general consent to use the described auto. However, the limits of our liability for individuals who become insureds solely because of this subparagraph, will be the minimum limits of liability insurance coverage specified by the financial responsibility law applicable to the accident, regardless of the limits stated in the Declarations.

PART IV — UNINSURED MOTORISTS

COVERAGE E — UNINSURED MOTORISTS

ADDITIONAL DEFINITIONS USED IN PART IV

As used in this Part:

(2) Insured means:

(a) You;

(b) any relative;

(c) any individual who is:

(i) related to you by blood, marriage, or adoption, who is primarily a resident of, and actually living in, your household, including your unmarried and unemancipated child away at school; or

(ii) a foster child in your legal custody for more than ninety consecutive days immediately prior to the accident; but only when that individual is occupying the described auto;

(d) any individual listed in the Declarations as an “additional listed insured,” but only when that individual is occupying the described auto; and

(e) any individual who has permission or general consent to use the described auto but only when that individual is using the described auto. However, the limit of our liability for individuals who become insureds solely because of this subparagraph, will be the minimum limits of uninsured motorist insurance coverage specified by the uninsured motorist law or financial responsibility law applicable to the accident, regardless of the limit stated in the Declarations.

The “DEFINITIONS” section of the Shelter policy, applicable to all sections of the policy, defined “Use” to mean “operation and maintenance,” “Occupy” to mean “being in physical contact with a vehicle while in it, getting into it, or getting out of it,” and “Operate” to mean “physically controlling, having physically controlled, or attempting to physically control, the movements of a vehicle.” It is undisputed that Jones was not a relative of Stastny and was not a named insured or an additional insured on the Shelter policy. Jones also was not the operator of the automobile at the time of the accident, nor was he performing maintenance on the vehicle.

American Family and Shelter filed motions for summary judgment. The district court granted Shelter’s motion, finding that Jones was not an insured under the Shelter policy and therefore was not entitled to uninsured motorist benefits. The district court also determined that notwithstanding this fact, the American Family policy was Jones’ primary source of uninsured motorist benefits and that he had not exhausted this coverage prior to asserting his claim against Shelter. The court concluded that “the Shelter . . . policy denying uninsured motorist coverage to Jones under the circumstances is not contrary to Nebraska law.”

Jones and American Family (hereinafter collectively appellants) filed this timely appeal. We granted their petition to bypass the Court of Appeals.²

ASSIGNMENTS OF ERROR

Appellants assign, restated and consolidated, that the district court erred in (1) failing to find that language in the Shelter policy violates Nebraska public policy and the Nebraska uninsured motorist statutes, (2) failing to find that the Shelter policy provides uninsured motorist coverage for Jones, and (3) finding that American Family was the primary uninsured motorist carrier.

STANDARD OF REVIEW

The interpretation of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the trial court.³ Statutory interpretation is a question of law, which an appellate court resolves independently of the trial court.⁴

In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.⁵ When adverse parties have each moved for summary judgment and the trial court has sustained one of the motions, the reviewing court obtains jurisdiction over both motions and may determine the controversy which is the subject of those motions or make an order specifying the facts which appear without substantial controversy and direct such further proceedings as the court deems just.⁶

ANALYSIS

We begin from a point of consensus. The district court determined that Jones was not an “insured” as defined in the Shelter policy. Appellants and Shelter agree with that reading of the policy. The question presented is whether the Shelter policy provision defining “use” to include only “operation and maintenance” of the vehicle is contrary to the public policy embodied in the Uninsured and Underinsured Motorist Insurance Coverage Act,⁷ the purpose of which is “to give the same protection to a person injured by an uninsured or underinsured motorist as the person would have if he or she had been injured in an accident caused by an automobile covered by a standard liability policy.”⁸ The provisions of the act are to be liberally construed to accomplish such purpose.⁹

The act requires in relevant part:

No policy insuring against liability imposed by law for bodily injury . . . suffered by a natural person arising out of the ownership, operation, maintenance, or use of a motor vehicle within the United States . . . shall be delivered, issued for delivery, or renewed with respect to any motor vehicle principally garaged in this state unless coverage is provided for the protection of persons insured who are legally entitled to recover compensatory damages for bodily injury . . . from (a) the owner or operator of an uninsured motor vehicle . . . ,¹⁰

Appellants contend that this statute “specifies the circumstances under which uninsured coverage must be provided” and that those circumstances include “when bodily injury results from the ‘ownership, operation, maintenance, or use of a motor vehicle.”’¹¹ They argue that the statute clearly requires that “ownership,” “operation,” “maintenance,” and “use” must have separate definitions and meaning and that Shelter’s policy fails to carry out this statutory intent because it equates “use” with “operation and maintenance” in its definitions.¹²

Our case law recognizes that in the context of motor vehicle insurance, the term “use” may have a broader meaning than “operation,” especially when applied to passengers.¹³ However, the fact that we have held in past cases that a passenger is “using” a motor vehicle for purposes of a motor vehicle insurance policy is not determinative here, because there is no indication in those cases that the policies included the restrictive definition of “use” found in the Shelter policy.¹⁴

In Allied Mut. Ins. Co.,15 we held that the phrase “persons insured” as used in § 44-6408 means “those persons insured under the liability provisions of a motor vehicle policy.” Because the liability coverage of the policy at issue in that case insured persons “using” the vehicle, we held that the insurer could not limit underinsured motorist coverage “to the smaller class of persons ‘occupying’ the vehicle.”¹⁶

Unlike the policy at issue in Allied Mut. Ins. Co., the Shelter policy before us defines “insured” in substantially the same way under its liability and uninsured motorist coverages. Although both provide coverage for persons using the vehicle with the permission of the named insured, “use” is narrowly defined to include only “operation and maintenance.” Thus, a passenger is not an “insured,” as defined by the policy, under either its liability or its uninsured motorist insurance provisions. An insurance policy is a contract between an insurance company and an insured, and as such, the insurance company has the right to limit its liability by including limitations in the policy definitions.¹⁷ If the definitions in the policy are clearly stated and unambiguous, the insurance company is entitled to have such terms enforced.¹⁸

Appellants argue that Shelter’s definition is contrary to the language of § 44-6408. Clearly, however, § 44-6408 relates specifically to uninsured and underinsured motorist coverage and does not dictate who must be insured under the liability coverage of a policy. The phrase “ownership, operation, maintenance, or use” in § 44-6408 simply describes the type of liability coverage a policy may offer. As we held in Allied Mut. Ins. Co., the statute then requires that any person or class of persons insured under that liability coverage must also be insured under the uninsured motorist coverage. Here, Shelter has chosen to limit both its liability and uninsured coverage for a person “using” the vehicle with the consent of the insured to those circumstances in which the use involves the operation and maintenance of the vehicle. Such limitation does not violate the public policy expressed in § 44-6408.

As an alternative basis for its ruling in favor of Shelter, the district court determined that the American Family policy was Jones’ “primary source of benefits under the circumstances” and that Jones’ failure to exhaust such benefits barred any claim against Shelter.

Section 44-6411 provides:

(1) In the event an insured is entitled to uninsured or underinsured motorist coverage under more than one policy of motor vehicle liability insurance, the maximum amount an insured may recover shall not exceed the highest limit of any one such policy.

(2) In the event of bodily injury, sickness, disease, or death of an insured while occupying a motor vehicle not owned by the insured, payment shall be made in the following order of priority, subject to the limitations in subsection (1) of this section: (a) The uninsured or under-insured motorist coverage on the occupied motor vehicle is primary; and (b) if such primary coverage is exhausted, other uninsured or underinsured motorist coverage available to the insured is excess.

(3) When multiple policies apply, payment shall be made in the following order of priority, subject to the limit of liability for each applicable policy:

(a) A policy covering a motor vehicle occupied by the injured person at the time of the accident;

(c) A policy covering a motor vehicle not involved in the accident with respect to which the injured person is an insured.

(Emphasis supplied.) Jones was not an insured under the Shelter policy insuring the vehicle in which he was an occupant at the time of his injury. Accordingly, under § 44-6411, he was not “entitled” to benefits under more than one policy, nor do “multiple policies” apply to him. The district court correctly found that the priority-of-payment provisions in § 44-6411 were not applicable and that the American Family policy is the primary policy under the circumstances of this case.

CONCLUSION

For the reasons discussed, Shelter’s definition of “use” to include only “operation and maintenance” does not violate the public policy embodied in § 44-6408. Because Jones was not an insured under the uninsured motorist coverage afforded by the Shelter policy, the priority-of-payment provisions in § 44-6411 are inapplicable to him. We affirm the judgment of the district court.

Affirmed.

Wright and McCormack, JJ., not participating.

1 See Neb. Rev. Stat. § 44-6408(1)(a) (Reissue 2004).

2 See Neb. Rev. Stat. § 24-1106(2) (Reissue 1995).

3 Lovette v. Stonebridge Life Ins. Co., 272 Neb. 1, 716 N.W.2d 743 (2006); Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 716 N.W.2d 87 (2006).

4 Livengood v. Nebraska State Patrol Ret. Sys., 273 Neb. 247, 729 N.W.2d 55 (2007).

5 Johnson v. Knox Cty. Partnership, 273 Neb. 123, 728 N.W.2d 101 (2007).

6 Id.

7 Neb. Rev. Stat. §§ 44-6401 to 44-6414 (Reissue 2004).

8 See Allied Mut. Ins. Co. v. Action Elec. Co., 256 Neb. 691, 697, 593 N.W.2d 275, 279 (1999).

⁹

10 § 44-6408(1) (emphasis supplied).

11 Brief for appellants at 15.

12 See Zach v. Nebraska State Patrol, 273 Neb. 1, 727 N.W.2d 206 (2007) (holding court must attempt to give effect to all parts of statute, and no word, clause, or sentence will be rejected as superfluous or meaningless).

13 See, Allied Mut. Ins. Co. v. Action Elec. Co., supra note 8; National Union Fire Ins. Co. v. Bruecks, 179 Neb. 642, 139 N.W.2d 821 (1966); Metcalf v. Hartford Acc. & Ind. Co., 176 Neb. 468, 126 N.W.2d 471 (1964).

14 See id.

15 Allied Mut. Ins. Co. v. Action Elec. Co., supra note 8, 256 Neb. at 699, 593 N.W.2d at 280.

¹⁶

17 Hillabrand v. American Fam. Mut. Ins. Co., 271 Neb. 585, 713 N.W.2d 494 (2006).

¹⁸