Mid-Century Insurance v. Henault

905 P.2d 379, 128 Wash. 2d 207, 59 A.L.R. 5th 789, 1995 Wash. LEXIS 240

• Court: Washington Supreme Court
• Decided: November 16, 1995
• Docket: 62259-1
• Status: Published

Opinions

Pekelis, J.

— Mid-Century Insurance Company (Mid-Century) appeals from a court of appeals decision reversing a trial court’s order in which it granted summary judgment to Mid-Century on the basis that Christine Henault (Henault) was not covered under the uninsured or under-insured motorist (UIM) provisions of her Mid-Century automobile insurance policy (the policy). Henault sustained injuries when she was struck by an uninsured/ underinsured motorist as she lay in the roadway after having been ejected from her uninsured motorcycle in an earlier collision. Mid-Century contends that the policy’s "owned-vehicle” exclusion applies to preclude coverage in this case. Under this exclusion, no UIM coverage is provided for injuries sustained "[wjhile occupying” an uninsured motor vehicle "owned” by the insured. We therefore must decide whether Henault was "occupying” her uninsured motorcycle at the time of the second impact involving the uninsured motorist. We hold that Henault was not and affirm the court of appeals.

On a March evening in 1990, Henault was riding her motorcycle eastbound on a four-lane street when Jack Curry (Curry) failed to yield the right-of-way at an intersection and struck her motorcycle with his vehicle. Henault, who was a wearing a helmet, was thrown from her motorcycle, landing in the inside westbound lane. Soon after, Angela Butler (Butler), who was driving in the outside westbound lane, arrived at the scene. She initially slowed when she noticed something lying in the road and then stopped upon realizing that it was a person. Tobias Benton (Benton), who was driving a truck directly behind Butler, moved to the inside westbound lane to pass Butler as she slowed. A "split-second” later, Benton noticed something lying in the lane. Although Benton slowed and swerved to avoid it, his front tires struck Henault’s head. Butler, who witnessed the impact through her mirror, saw the upper portion of Henault’s body bounce "several inches off the ground” when she was struck. Benton apparently was uninsured or underinsured.¹

Henault later obtained the full limits of Curry’s automobile insurance policy for damages that she incurred in the accident. This amount, however, was less than the full amount of Henault’s claimed damages. Henault, who had not purchased insurance for her motorcycle, then filed a claim with Mid-Century, seeking the limits of an insurance policy she had purchased for her pickup truck. She specifically sought coverage under the UIM and personal injury protection (PIP) provisions of the policy.

As to UIM coverage, the policy provided that Mid-Century would "pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by the insured person.” Clerk’s Papers at 14 (emphasis omitted.) The policy also contained what is commonly referred to as an "owned-vehicle” exclusion. This exclusion precluded UIM coverage for bodily injury sustained

[w]hile occupying a motor vehicle owned or available for regular use by you ... for which insurance is not afforded under the Liability coverage of this policy.

Clerk’s Papers at 15 (emphasis omitted.) The policy specifically defined "occupying” as "in, on, getting into or out of’ a motor vehicle. Clerk’s Papers at 13.

As to PIP coverage, the policy provided that Mid-Century would pay certain benefits for bodily injury caused by a motor vehicle accident. The policy provided, however, that coverage was excluded for bodily injury "arising out of the ownership, maintenance or use of any motorized vehicle with less than four wheels.” Clerk’s Papers at 16.

Pursuant to the terms of the policy, Henault requested that her claim be arbitrated. Mid-Century responded by filing a declaratory judgment action in which it sought an order that Henault was "occupying” her motorcycle at the time of the second impact and therefore she was not covered under the policy.

On October 22, 1991, Mid-Century moved for summary judgment, arguing that Henault was not covered under either the PIP or UIM provisions of the policy. The trial court agreed and entered summary judgment for Mid-Century.

The court of appeals affirmed the trial court’s order as to PIP coverage, but reversed as to UIM coverage. Mid-Century Ins. Co. v. Henault, 75 Wn. App. 733, 879 P.2d 994 (1994). In concluding that summary judgment had been improperly granted on the issue of UIM coverage, the court held that the owned-vehicle exclusion did not apply because Henault was not "occupying” her motorcycle when she was struck by Benton. The court found that the term "occupying” was unambiguous and reasoned that:

[t]he policy does not distinguish between a person getting out of a vehicle voluntarily and one who does so involuntarily. In our judgment, when a person completes the process of leaving an uninsured motorcycle he or she is no longer in, on, or getting out of that vehicle and, thus, is no longer "occupying” it.

Renault, 75 Wn. App. at 739-40.

Thus, the issue presented in this case is whether under the "owned vehicle” exclusion an insured is "occupying” an owned uninsured vehicle when she has been ejected from it and then is struck later by an uninsured motorist while still lying in the roadway.

The interpretation of insurance policy language is a question of law and therefore we review de novo a trial court’s summary judgment determination regarding insurance coverage. Mutual of Enumclaw Ins. Co. v. Jerome, 122 Wn.2d 157, 160, 856 P.2d 1095 (1993); Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 682, 801 P.2d 207 (1990).

Washington has a strong public policy, both legislative and judicial, to protect innocent victims from uninsured or underinsured motorists. In Clements v. Travelers Indem. Co., 121 Wn.2d 243, 251, 850 P.2d 1298 (1993), this court explained:

The UIM statute does not contain a 'legislative intent’ section, but this court has consistently stated that the Legislature enacted the UIM statute to increase and broaden the protection of members of the public who are involved in automobile accidents. This legislative purpose 'is not to be eroded ... by a myriad of legal niceties arising from exclusionary clauses. RCW 48.22.030 should be read, therefore, to declare a public policy overriding the exclusionary language so that the intendments of the statute are read into and become part of the contract of insurance.’ The UIM statute 'is to be liberally construed in order to provide broad protection against financially irresponsible motorists.’

(Footnotes omitted.) See also Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 207-08, 643 P.2d 441 (1982); Touchette v. Northwestern Mut. Ins. Co., 80 Wn.2d 327, 333, 494 P.2d 479 (1972).

At the same time, the purpose of tying UIM coverage to liability coverage is to allow the insurer to collect a premium on the additional risks associated with uninsured or underinsured motorists. Grange Ins. Ass’n v. MacKenzie, 103 Wn.2d 708, 712, 694 P.2d 1087 (1985); see also Anderson v. American Economy Ins. Co., 43 Wn App. 852, 858, 719 P.2d 1345 (1986). The owned-vehicle exclusion at issue here is intended to prevent an insured from receiving UIM coverage on an uninsured vehicle by virtue of having purchased a policy for another vehicle. See MacKenzie, 103 Wn.2d at 712.

In construing insurance contracts, our principal function is to determine the parties’ intent by examining the contract as a whole. See, e.g., Truck Ins. Exch. v. Rohde, 49 Wn.2d 465, 469, 303 P.2d 659 (1956); Eurick v. Pemco Ins. Co., 108 Wn.2d 338, 340, 738 P.2d 251 (1987). The insurance policy must be given a fair, reasonable, and sensible construction as would be given by an average insurance purchaser. Jerome, 122 Wn.2d at 160; Eurick, 108 Wn.2d at 341. It must not be given a "strained or forced construction” that would lead to absurd results. Eurick, 108 Wn.2d at 341 (quoting E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 Wn.2d 901, 907, 726 P.2d 439 (1986)).

We apply the following rules of construction to aid in determining the parties’ intent: (1) exclusionary clauses are to be construed strictly against the insurer, see, e.g., Eurick, 108 Wn.2d at 340-41, and (2) clear policy language must be enforced as written; no ambiguity may be created where none exists. See, e.g., Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.’ Util. Sys., 111 Wn.2d 452, 456, 760 P.2d 337 (1988).

We note that the language of the "owned-vehicle” exclusion at issue here is derived verbatim from RCW 48.22.030(2). This provision requires all insurers to make UIM coverage available to Washington policyholders, but allows an exclusion for those accidents that occur "while operating or occupying a motor vehicle owned . . . and which is not insured under the liability coverage of the policy.” RCW 48.22.030(2).

In this case, if Henault was "occupying” her uninsured motorcycle at the time of the second impact, the "owned-vehicle” exclusion would apply to preclude UIM coverage. The question to be decided is whether the average insurance purchaser would reasonably conclude that Henault was "occupying” her motorcycle when she was struck by an uninsured motorist as she lay in the roadway after having been ejected from her motorcycle in an earlier collision.

In Farmers Ins. Co. v. Clure, 41 Wn. App. 212, 702 P.2d 1247 (1985), the court of appeals interpreted the term "occupying” in the context of the owned-vehicle exclusion at issue here. In Clure, the insureds’ son sought UIM coverage for injuries sustained to the left side of his body, which hit the ground when he was thrown from his motorcycle, but not for injuries sustained to the right side of his body, which was struck by the vehicle while he was riding the motorcycle. As in this case, the insurer brought a declaratory judgment action, arguing, inter alia, that the owned-vehicle exclusion precluded coverage for injuries sustained while "occupying” an owned, but not insured vehicle. The insureds responded that the absence of "proximate cause” language, such as "injuries sustained during an accident,” required the conclusion that the exclusion only applied to those injuries sustained while in direct, physical contact with the vehicle. Clure, 41 Wn. App. at 215.

In concluding that the exclusion applied, the court of appeals held that a fair and ordinary meaning of the phrase "bodily injury while occupying” included those injuries which "directly result[ed]” from being thrown from a motorcycle during a collision. Clure, 41 Wn. App. at 215-17. The court reasoned that the average insurance purchaser "would not reasonably conclude that the exclusion from coverage was merely dependent upon the fortuitous circumstance that a portion of his or her body remained in physical contact with the motorcycle at the precise moment of injury.” Clure, 41 Wn. App. at 217. The court also observed that to hold otherwise would render the exclusion "virtually meaningless” and would "alter the nature of the insurer’s risks by factors not contemplated in the computation of premiums.” Clure, 41 Wn. App. at 217.

It is Mid-Century’s position that, in view of the purpose behind the statutorily authorized owned-vehicle exclusion, the average insurance purchaser would reasonably conclude that Henault was "occupying” her motorcycle. Relying on Clure, Mid-Century contends that any injuries Henault sustained as a result of the second impact directly related to one risk — that of riding an uninsured motorcycle.

Unlike the situation in Clure, however, Henault does not seek coverage for injuries sustained when she was thrown to the pavement in the first collision with Curry. Rather, she seeks coverage for injuries she sustained when she was struck by Benton as she lay in the roadway sometime after having been ejected from her motorcycle in the first collision. It is Henault’s position that at the time of the second impact she was no longer "occupying,” i.e., "in, on, getting into or out of’ her motorcycle.

We agree with Henault. The policy, which Mid-Century itself drafted, unambiguously defines "occupying,” as "in, on, getting into or out of’ a motor vehicle. Given this unambiguous definition, it cannot be said that the average insurance purchaser would reasonably conclude that Henault was "occupying” her uninsured motorcycle under the circumstances presented here. On the contrary, it is reasonable to conclude that when the second impact occurred, Henault, who had been lying in the roadway for an unspecified period of time, clearly was not "in, on, getting into, or getting out of’ her motorcycle and therefore she was not "occupying” it.² We hold therefore that Henault was not "occupying” her owned, but not insured, motorcycle when she was struck by an uninsured motorist as she lay in the roadway after having been ejected from her motorcycle in an earlier collision.

Our holding advances the purpose behind the UIM statute, which is to broaden insurance protection for those injured in accidents involving uninsured or underinsured motorists. See Clements, 121 Wn.2d at 251. It is also consistent with the general principles of liberally construing the UIM statute in favor of coverage and construing policy exclusions against the insurer. Clements, 121 Wn.2d at 251; Eurick, 108 Wn.2d at 340-41.

Finally, contrary to Mid-Century’s contentions, our holding does not conflict with prior decisions of this court, the court of appeals, or other jurisdictions. Having already explained and distinguished Clure, we first address our decision in Eurick, 108 Wn.2d 338. In that case, the insureds’ son was killed while riding as a motorcycle passenger. The insureds’ policy excluded coverage for injuries sustained "while operating, occupying or using a motorcycle.” Eurick, 108 Wn.2d at 340. The insureds then sought to recover whatever claims they had as the decedent’s parents under RCW 4.24.010, including the decedent’s medical expenses, loss of services and support, loss of love and companionship, and destruction of the parent-child relationship. The insureds argued that the exclusion did not apply to them because they were not "occupying” the motorcycle and that their claims were distinct and "non-derivative” from those of the decedent. Eurick, 108 Wn.2d at 341. The court, viewing the exclusion as a reasonable insurance purchaser would, held that "the clear intent of the contract was to exclude from the set of risks that. . . [the insurer] would insure against, and that respondents would pay premiums for, all claims arising from injuries sustained by a motorcycle driver or rider.” Eurick, 108 Wn.2d at 342.

The issue presented in Eurick is not the one we face. There, the policy exclusion unequivocally precluded coverage for the injuries sustained by their son, the driver; hence the parents’ claim based on his in juries was excluded as well. In this case, the policy exclusion does not unequivocally preclude coverage for injuries sustained by the driver. Rather, as the foregoing analysis demonstrates, unlike Eurick, it is by no means certain that the average insurance purchaser would reasonably conclude under these circumstances that coverage is precluded under the owned-vehicle exclusion.

Mid-Century also contends that our holding conflicts with Truck Ins. Exch. v. Rohde, 49 Wn.2d 465, 303 P.2d 659 (1956) where the insured drove his vehicle over the center line and collided one after the other with three motorcycles. The court held that this chain of events constituted one accident or occurrence, rather than three separate accidents. Rohde, 49 Wn.2d at 471-72. The court reasoned that "[t]here was but one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage.” Rohde, 49 Wn.2d at 471.

Not only was the issue different in Rohde, but it was also factually distinguishable from this case. Unlike Rohde, the sequence of events which led up to Henault’s being struck by Benton in the second impact was not uninterrupted. Although the record does not indicate precisely how long Henault lay in the roadway after the first impact, it is clear that sufficient time had passed for Butler to arrive at the scene, see Henault lying in the roadway, slow down, and stop before the second impact.

Finally, Mid-Century relies upon Dunlap v. United States Auto. Ass’n, 470 So. 2d 98, 99 (Fla. Dist. Ct. App. 1985) in which the court denied personal injury protection coverage to an insured who had been ejected from a motorcycle and then immediately run over by a taxi. The Dunlap court held that the insured was not a "pedestrian,” i.e., a person not "occupying” a motor vehicle, because the concept of "occupying” extended to one who is run over by a motor vehicle "immediately following” ejection from the vehicle. Dunlap, 470 So. 2d at 99. In so holding, the Dunlap court applied the rule that an insured continues "occupying” the motor vehicle from which he or she was ejected unless the facts demonstrate that the "occupancy” has terminated and a new activity commenced before the second impact. Dunlap, 470 So. 2d at 99.

We decline to follow Dunlap for three reasons. First, Dunlap is factually distinguishable because Henault was not struck immediately after she was ejected from her motorcycle in the first collision. Second, as discussed above, Henault was not "occupying” her motorcycle according to the unambiguous definition of that term as drafted by Mid-Century. Third, we consider it significant that the Dunlap court based its holding primarily upon the reasoning of United States Fidelity & Guar. Co. v. Daly, 384 So. 2d 1350 (Fla. Dist. Ct. App. 1980). Yet, the Daly court interpreted the term "occupying” to provide coverage, not deny coverage as in Dunlap.

In sum, we conclude that Henault was not "occupying” her uninsured motorcycle when she was struck by an uninsured motorist as she lay in the roadway after having been ejected from her motorcycle in an earlier collision. We therefore affirm the court of appeals and reverse the trial court’s order granting summary judgment to Mid-Century on the issue of whether the owned-vehicle exclusion applies to preclude UIM coverage.

Durham, C.J., and Dolliver, Smith, Johnson, and Mad-sen, JJ., concur.

1 The parties assume that this was Benton’s status. Although we are unable to find support for this in the record, we will assume that he was uninsured for the purposes of this opinion.

2 Accordingly, we see no reason to resort to a factor-based test to determine when a person is "getting out of’ a vehicle as Mid-Century advocates. See Rau v. Liberty Mut. Ins. Co., 21 Wn. App. 326, 585 P.2d 157 (1978); see also Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 801 P.2d 207 (1990); Sears v. Grange Ins. Ass’n, 111 Wn.2d 636, 762 P.2d 1141 (1988); Cherry v. Truck Ins. Exch., 77 Wn. App. 557, 892 P.2d 768 (1995).