State Farm Mutual Automobile Insurance Co. v. Wendt

1985 OK 75, 708 P.2d 581, 1985 Okla. LEXIS 157

Opinions

ORDER

Petition for Rehearing filed in the above styled and numbered cause is granted.

IT IS HEREBY ORDERED that the opinion of this Court heretofore promulgated and filed in this cause on October 23, 1984, reported at 55 OBJ 2253, be, and the same is, hereby vacated, withdrawn, and superseded by the substitute opinion of this Court this date adopted.

SIMMS, C.J., DOOLIN, V.C.J., and HODGES, KAUGER, and SUMMERS, JJ., concur. LAVENDER and OPALA, JJ., concur in part, dissent in part. HARGRAVE, J., dissents.

CERTIFIED QUESTION FROM A FEDERAL COURT

The United States District Court for the Western District of Oklahoma certified to this Court the following question:

“Are provisions of insurance policies excluding the named insured, residents of the insured’s household and the insured motor vehicle from uninsured motorist coverage in conflict with 36 O.S.1984 Supp. § 3636 and therefore void where the named insured is injured by the negligent acts of an uninsured permissive user/driver of the insured vehicle?”

Certified question answered in the affirmative. Once a person is insured under an uninsured motorist policy, subsequent exclusions inserted by the insurer in the policy which dilute and impermissibly limit uninsured motorist coverage are void as violative of the public policy espoused by 36 O.S.1981 § 3636.

CERTIFIED QUESTION ANSWERED

ALMA WILSON, Judge.

In the latter part of 1979, State Farm Mutual Automobile Insurance Company issued four policies of insurance defining 19 year old Tommy Wendt as an insured thereunder. On March 11, 1980, Tommy and a friend, Gilreath, embarked upon a trip from Oklahoma City, Oklahoma to Las Vegas, New Mexico in Tommy’s 1978 Chevrolet pickup truck. With Tommy’s permission, Gilreath drove the pickup .truck while Tommy slept. Near Flagstaff, Arizona, on Interstate 40, Gilreath fell asleep at the wheel. The truck left the road and crashed, causing injuries to Tommy, the insured.

At the time of the accident, Gilreath was uninsured, thus leaving Tommy the victim of an uninsured motorist operating a non-owned vehicle. However, at the time of the accident, the four policies of insurance defining Tommy as an insured were in full force and effect. Tommy attempted to recover for his injuries under the provisions of each of these policies, but State Farm denied any liability to Tommy under the four policies pointing to subsequent exclusionary language appearing in the body of the policies which purports to eliminate coverage previously granted Tommy by policy provisions defining Tommy as an insured thereunder. State Farm then filed suit for declaratory judgment in federal district court for a determination of coverage under the policies. Pursuant to the provisions of the Oklahoma Uniform Certification of Questions Act, 20 O.S.1981 § 1601 et seq., the United States District Court for the Western District of Oklahoma certified to this Court the following question:

“Are provisions of insurance policies excluding the named insured, residents of the insured’s household and the insured motor vehicle from uninsured motorist coverage in conflict with 36 O.S.1984 Supp. § 3636 and therefore void where the named insured is injured by the negligent acts of an uninsured permissive user/driver of the insured vehicle?”

I

Oklahoma’s uninsured motorist statute, at 36 O.S.1981 § 3636, provides in unequivocal, mandatory terms that:

(A) No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued, delivered, renewed, or extended in this state with respect to a motor vehicle registered or principally garaged in this state unless the policy includes the coverage described in subsection (B) of this section.

(B) The policy referred to in subsection (A) of this section shall provide coverage therein or supplemental thereto 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 bodily injury, sickness or disease, including death resulting therefrom. Coverage shall not be less than the amounts or limits prescribed for bodily injury or death for a policy meeting the requirements of Section 7-204 of Title 47, Oklahoma Statutes, as the same may be hereafter amended; provided, however, that increased limits of liability shall be offered and purchased if desired, not to exceed the limits provided in the policy of bodily injury liability of the insured. The uninsured motorists coverage shall be upon a form approved by the State Board for Property and Casualty Rates as otherwise provided in the Insurance Code and may provide that the parties to the contract shall, upon the demand of either, submit their differences to arbitration; provided, that if agreement by arbitration is not reached within three (3) months from date of demand, the insurer may sue the tortfeasor. [Emphasis added]

In conformity with the clearly expressed legislative intent, above, every automobile liability policy issued in this state must provide uninsured motorist coverage for “persons insured thereunder.” Accordingly, this Court has examined with critical scrutiny policy provisions which purport to dilute the legislatively mandated uninsured motorist coverage. In Keel v. MFA Insurance Co., 553 P.2d 153 (Okl.1976), this Court voided “other insurance” clauses to the extent that those clauses precluded the insured from stacking coverages under separate policies. In Biggs v. State Farm, Mutual Automobile Insurance Co., 569 P.2d 430 (Okl.1977) this Court invalidated the “physical contact” requirement for hit-and-run coverage. In Porter v. MFA Mutual Insurance Co., 643 P.2d 302 (Okl.1982), this Court invalidated the “consent to settle” clause. In Lake v. Wright, 657 P.2d 643 (Okl.1982), this Court held the “limits of liability” clause was void and unenforceable as against public policy. In Chambers v. Walker, 653 P.2d 931 (Okl.1982), this Court held invalid a clause in an uninsured motorist policy which permitted the uninsured motorist carrier to offset any amounts paid or payable under Workers’ Compensation against the amounts payable under the uninsured motorist coverage. In Uptegraft v. Home Insurance Co., 662 P.2d 681 (Okl.1983), this Court held invalid a clause in an uninsured motorist policy requiring the insured to sue the tort-feasor within two years or lose his uninsured motorist coverage. In Heavner v. Farmers Insurance Company, 663 P.2d 730 (Okl.1983), this Court refused to apply the insurer’s “insured motor vehicle exclusion” to deny uninsured motorist coverage to a passenger/plaintiff under the driver/tort-fea-sor’s policy. We today reiterate and re-emphasize the viability of our prior decisions, which hold to the principle that once a person is insured under an uninsured motorist policy, subsequent exclusions inserted by the insurer in the policy which dilute and impermissively limit uninsured motorist coverage are void as violative of the public policy espoused by 36 O.S.1981 § 3636, supra.

II

The four policies presently under consideration, in full force and effect at the time of Tommy Wendt’s accident, are identical form policies issued by State Farm. Premiums were admittedly paid and collected on each. Each of the four policies defines the unqualified word “insured” in the following manner:

“Insured — The unqualified word ‘insured’ means:

(1) The first person named in the declarations and while resident of his household, his spouse and the relatives of either;

(2) Any other person while occupying an insured motor vehicle; and

(3) Any person, with respect to damages he is entitled to recover because of bodily injury to which this coverage applies sustained by an insured under (1) or (2) above.”

The “first person named” in Policy No. 133-0974-D10-36; No. 1330-976-D21-36; and No. 149-572-B16-36A is Charles Wendt, Tommy’s father. Tommy, however, is clearly a defined insured under these policies as the parties stipulated to Tommy’s residency in Mr. Wendt’s household. Digressively, Mrs. Wendt is likewise a defined insured in these three policies as resident spouse of the “first person named”. The “first person named” in the fourth policy, No. 155-4288-E21-36 is Tommy Wendt. All policies provide coverage for specific motor vehicles, i.e., No. 133-0974-D10-36, a 1976 Oldsmobile; No. 1330-976-D21-36, a 1975 Chevrolet farm truck; No. 149-5742-B16-36A, a 1977 Ford farm truck; and No. 155-4288-E21-36, a 1978 Ford pickup truck. Thus depending upon the particular policy under which recovery is sought, these vehicles ostensibly qualify, (or do not qualify), as “insured motor vehicles”. The policies provide: “Insured Motor Vehicle — means:

(1) an owned motor vehicle provided the use thereof is by such first named insured or resident spouse or any other person to whom such first named insured or resident spouse has given permission to use such vehicle if the use is within the scope of such permission, or

(2) an automobile not owned by the named insured or any resident of the same household other than a temporary substitute automobile, while being operated by such first named insured or resident spouse,

but the term insured motor vehicle shall not include any motor vehicle while being used as a public or livery conveyance, or any motor vehicle while being used without the permission of the owner. Uninsured Motor Vehicle — means:

(1) a land motor vehicle with respect to the ownership, maintenance or use of which there is in at least the amounts specified by the financial responsibility law of the state in which the described motor vehicle is principally garaged, no bodily injury liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such vehicle, or with respect to which there is a bodily injury liability bond or insurance policy applicable at the time of the accident but the company writing the same denies that there is any coverage thereunder or is or becomes insolvent; or (2) a hit and run motor vehicle as defined.”

The policy, additionally, states the term “uninsured motor vehicle” shall not include:

“(i) A vehicle defined herein as an insured motor vehicle;

(ii) A land motor vehicle furnished for the regular use of the named insured or any resident of the same household; ....”

As regards uninsured motor vehicle coverage, the policies further provide:

“COVERAGE U-DAMAGES FOR BODILY INJURY CAUSED BY UNINSURED MOTOR VEHICLES

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle_”

It is State Farm’s position that based upon the policy provisions quoted herein, Tommy Wendt’s pickup truck is not an “uninsured motor vehicle”, under any of the four policies here in controversy, and therefore, Tommy is not entitled to the uninsured motorist protection afforded by the policies. This conclusion, we find untenable.

III

Coverage under each of the policies in this case must be viewed independently. Coverage in each case stems not from owning an automobile, but from falling within the definition of an insured under any given insurance contract. Any attempt to tie uninsured motorist coverage to automobiles alone, rather than to people, must fail. See, Cothren v. Emcasco Insurance Company, 555 P.2d 1037 (Okl.1976). Tommy Wendt is entitled to recover under Policy No. 155-4288-E21-36 as an insured thereunder, albeit, the accident occurred in the precise vehicle named in that policy. Otherwise, the protection mandated by § 3636 is frustrated inasmuch as the named vehicle was effectively “uninsured” when driven by an uninsured permissive motorist.

IV

Tommy Wendt is likewise entitled to recover under the remaining policies here in dispute. In each policy Tommy is a defined insured. Moreover, the vehicle involved in the accident is an uninsured motor vehicle as to these policies. The proffered exclusion, “uninsured motor vehicle shall not include a land motor vehicle furnished for the regular use of the named insured or any resident of the same household”, is inapplicable. Based on the stipulated facts, Tommy was a passenger in a truck he owned and the truck was not “furnished” for his use by his parents or anyone else. We find no exclusion, then, which prevents Tommy from recovering under these policies. Neither do we find “stacking” preclusive of Tommy’s recovery under these policies.

In Keel, supra, this Court invalidated policy exclusions that prevented concurrent recoveries under policies of insurance for which separate premiums were collected by the insurer. We stated:

“The insured in this case has two policies for which he has paid an additional premium for uninsured motorist coverage. There is no dispute that both policies cover the insured in this accident. The pyramiding or the stacking of the policies is the only dispute. By imposition of both policies, the insured is not receiving a windfall. He has paid the insurer a premium for this protection, and is only attempting to recover the actual amount of his damages which are within the limits of both policies. On the other hand, the insurer has collected a premium for each policy. In such instance, it would be manifestly unjust to permit the insurer to avoid its statutorily imposed liability by its assertion of ‘other insurance clauses’ which would deny the insured from receiving that for which he has paid a premium. ” Id. at 156. [Emphasis added]

Where insurance premiums have been paid for separate policies, then the insurer must provide coverage under each policy. Here Tommy Wendt is an insured under his parents’ policies by a policy definition which defines as an “insured” any resident relative of the insured’s household. Tommy’s parents had a reasonable contractual expectation that Tommy would be covered under the three policies. Uninsured motorist premiums were paid on each of the three policies. An insurer may not thus be unjustly enriched.

The facts of this case further reflect that Tommy Wendt comes within the auspices of our recent decision in Babcock v. Adkins, 695 P.2d 1340 (Okl.1984). Babcock dealt with strangers to an insurance policy (insured only due to their status as passengers in an insured vehicle) who wished to “stack” the coverages under other policies of the named insured. There, this Court stated:

“In line with our language in Shepard, we now hold that the occupants of an insured motor vehicle involved in an accident, who are entitled to uninsured motorist coverage solely because of their status as passengers, may not stack the uninsured motorist coverage under separate policies purchased by the owner of the involved vehicle for a noninvolved vehicle or vehicles unless those passengers also qualify as insureds under those separate policies.” Id. at 1343. [Emphasis added]

Finally, the case of Shepard v. Farmers Insurance Co., Inc., 678 P.2d 250 (Okl.1983), has been cited to this Court as dis-positive herein. Such is not the case. In Shepard the insurance policy by definition precluded as an ‘insured’ any resident relative of the named insured who owned an automobile. This Court held this definition permissible and stated:

“Although upholding the exclusionary language might appear to create a situation in which a relative-vehicle owner would receive less protection than a relative-non-owner merely based upon vehicle ownership, coverage in each case stems not from owning an automobile, but from falling within the definition of an ‘insured’ under any given insurance contract.

Keel and its progeny required that a claimant be permitted to recover upon multiple policies for which multiple uninsured motorist premiums had been paid. However, a claimant may not recover unless he or she is an ‘insured’, and the terms of the contract determine who is an insured thereunder." Id. at 252. [Emphasis added]

The instant case is plainly distinguishable. Here, the terms of the contract define Tommy Wendt as an insured. The claimant in Shepard never became an insured, by definition.

Tommy Wendt is entitled to recover under the uninsured motorist portion of each of the policies involved in this suit.

CERTIFIED QUESTION ANSWERED.

SIMMS, C.J., DOOLIN, V.C.J., and HODGES, KAUGER and SUMMERS, JJ., concur.

LAVENDER and OPALA, JJ., concur in part, dissent in part.

HARGRAVE, J., dissents.