Lecours v. Nationwide Mutual Insurance Co.

LECOURS_V_NATIONWIDE_MUTUAL_INS_CO.93-558; 163 Vt 157; 657 A.2d 177

[Filed 06-Jan-1995]

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports. 
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
order that corrections may be made before this opinion goes to press. 


                           No. 93-558


Patrick Lecours and                       Supreme Court
Elizabeth A. Peters
                                          On Appeal from
     v.                                    Chittenden Superior Court

Nationwide Mutual Insurance               October Term, 1994
Company, James A. Mullen,
Individually and d/b/a Mullen
Insurance Agency, and David
Schramm


Matthew I. Katz, J.

Alan D. Overton  of Kolvoord, Overton & Wilson, Essex Junction, for
 plaintiffs-appellants 

Samuel Hoar, Jr. and Shapleigh Smith, Jr. of Dinse, Erdmann & Clapp,
 Burlington, for  defendants-appellees 




PRESENT:  Gibson, Dooley, Morse and Johnson, JJ.


  JOHNSON, J.   Plaintiffs appeal from a judgment of the Chittenden Superior
Court declaring that plaintiff Patrick Lecours directed reduction of his
uninsured and underinsured motorist (UM) coverage with defendant Nationwide
Mutual Insurance Company (Nationwide) to the statutory minimum.  We affirm. 

  On August 19, 1992, plaintiff Elizabeth A. Peters was severely injured when
Lecours's Bronco, which she was driving, was struck head-on by an oncoming
vehicle whose driver had liability limits of only $20,000/$40,000, well below
Peters's damages from the accident. Lecours made a claim against Nationwide
for the excess under his UM coverage, and filed the present declaratory
judgment action after Nationwide rejected the claim on grounds that Lecours's
UM coverage was the same as that of the driver of the other vehicle.  Lecours
requested that the reduction in his UM coverage be declared ineffective as a
matter of law. 

  The trial court found that in 1990 Lecours had shifted his automobile
coverage to Nationwide to get better rates.  Lecours's initial Nationwide
policy provided $100,000/$300,000 liability coverage and $100,000/$300,000 UM
coverage for his Honda automobile.  On November 1, 1991, Lecours called his
insurance agent, David Schramm, to advise that he planned to buy a second
vehicle and wanted to add it to his policy.  Schramm testified that Lecours
was interested in reducing the size of the new premium and elected to lower
the UM limits in the policy to $20,000/$40,000.  On the same day as the call
to Schramm, Lecours paid an October 9, 1991 bill from Nationwide, omitting,
however, the UM-related premium, which then still reflected the prior
$100,000/$300,000 coverage. 

  Based on the Mullen Agency microfilm records and Schramm's testimony, the
court found that the agency entered the reduction in UM coverage along with
the second-vehicle coverage on November 14, 1991, effective November 1, 1991.
 The court also found that Lecours received a new policy declaration sheet
and premium notice setting forth the addition of the Bronco and the change in
the UM coverage.  One day later, Nationwide sent an additional policy
declaration and premium bill, reflecting a small premium reduction.  The
court found that Lecours did not protest the UM reduction until after the
accident some nine months later and that it was more likely than not that he
had directed that UM coverage be lowered to the statutory limits.  The
present appeal followed. 

  Plaintiffs argue that Nationwide did not prove that Lecours's decision to
reduce the UM coverage was informed and hence the court's finding that
Lecours had directed the reduction was erroneous.  The thrust of plaintiffs'
argument is that Nationwide had an obligation under the statute to disclose
to plaintiffs the options for UM coverage and the potential consequences of a
reduction in coverage.  Because Nationwide's agents were unfamiliar with UM
requirements, Lecours contends he could not have made a knowing and
intelligent decision to reduce coverage. 

  In reviewing a matter on appeal, we examine the trial court's findings of
fact only for clear error.  V.R.C.P. 52(a)(2).  Factual findings are viewed
in a light most favorable to the prevailing party, disregarding modifying
evidence.  Mullin v. Phelps, No. 93-143, slip op. at 12 (Vt. June 24, 1994).
"A finding will not be disturbed merely because it is contradicted by
substantial evidence; rather, an appellant must show there is no credible
evidence to support the finding."  Highgate Assocs. v. Merryfield, 157 Vt.
313, 315, 597 A.2d 1280, 1281 (1991); see also Kimbrell v. Great American
Ins. Co., 420 So. 2d 1086, 1088 (Fla. 1982) (question of knowing selection of
lower UM coverage is one of fact). 

  The statute at issue is 23 V.S.A.  941(c), which provides: 

            (c) Unless the policy holder otherwise directs, coverages
          under (a) and (b) of this section for new or renewed policies shall
          be identical to those provided in the policy selected by the person
          obtaining said policy but shall not be less than the minimum limits
          of coverage required under the provisions of section 801 of this
          title.

(Emphasis supplied.)  The burden of proof is properly on the insurer to show
that the insured made a knowing rejection of higher UM coverage.  See Auger
v. State Farm Mut. Auto. Ins. Co., 516 So. 2d 1024, 1026 (Fla. Dist. Ct. App.
1987) ("the burden of proof of the insured's knowing rejection of higher
uninsured motorist coverage limits is upon the insurance company"). A lesser
requirement would be entirely inconsistent with the broad remedial purpose of
the UM statute.  See Monteith v. Jefferson Ins. Co., 159 Vt. 378, 381, 618 A.2d 488, 490 (1992) (basic philosophy of UM statute is to put insured in
same position as if negligent driver had been as responsible as insured in
obtaining liability insurance). 

  The trial court correctly placed the burden on Nationwide to show that the
option of lowering UM coverage was presented to the insured, and that the
insured's decision was informed and voluntary.  The statute does not require
more, and the proof was entirely sufficient on this point.  David Schramm
testified that when asked about possible ways to save on the policy premium,
he reviewed options in a telephone conversation with Lecours, including the
option of reducing UM coverage.  According to Schramm, Lecours requested that
UM coverage be lowered.  Lecours's November 1, 1991 premium payment omitting
the earlier, higher UM coverage premium corroborated Schramm's testimony. 
Plaintiffs' alternative interpretations of the evidence were expressly
rejected by the findings. 

  Nevertheless, plaintiffs contend that the insured could not have given a
knowing and informed waiver under  941(c) unless Nationwide had provided an
adequate explanation of UM coverage by the agent.  See Johnson v. Concord
Mut. Ins. Co., 300 A.2d 61, 65 (Pa. 1973) (printed form indicating rejection
insufficient where agent failed to explain the type of protection being
rejected).  They reason that as a prerequisite to claiming a valid, knowing
and informed rejection by the insured, the insurance agent must first
demonstrate an understanding of Vermont's UM law at the time of the requested
reduction and that neither David Schramm nor James Mullen understood the UM
statute on November 1, 1991. 

  Regardless of what the agents understood, the most that can be inferred
from the statutory language is that the insured must know that there are
options with respect to UM coverage and that the default option is coverage
consistent with liability coverage.  No other explanation, such as the
legislative purpose or advice as to whether to comply with that purpose, is
required of the insurance company to make the insured's voluntary election
for lower limits more knowing. 

  Moreover, in this case, the court found that Lecours was not, in fact,
uninformed and was not misled.  He had enjoyed UM coverage equal to his
liability coverage until November 1, 1991, when he decided to make a change. 
Lecours knew that he could continue UM coverage at that time with the same
limits as his liability limits, knew that he could reduce those limits,
expressed the desire to save money on his total premium, asked for such a
change, and paid a prior premium in a manner that corroborated other evidence
of adequate knowledge and information.  These findings were not clearly
erroneous. 

  We agree with plaintiffs that the purpose of the statute is to encourage
drivers to recognize that it is in their interest to adequately insure
themselves against the risk of an accident with an uninsured motorist. 
According to plaintiffs, such purpose is not furthered by a narrow
interpretation of the insurer's burden to inform.  There is, however, no
support in the statute or the legislative history to expand the insurer's
burden and we are constrained not to rewrite the statute.  If there is a
better method for effectuating the legislative purpose, we leave it to the
legislature to devise. 

  Similarly, we do not agree with plaintiffs that, for a reduction in UM
coverage to be effective under  941(c), we should infer a requirement that
a request be in writing.  However wise and useful such a provision might be,
the requirement of a writing is not contained in the statute and may not be
inferred.  Although our overall aim is to give effect to the intent of the
legislature, we must look first to the plain meaning of the statutory
wording.  State v. International Collection Serv., Inc., 156 Vt. 540, 542,
594 A.2d 426, 428 (1991). 

  The statute does not state how the insured should direct the insurer to
reduce UM coverage limits.  The focus of the issue, however, is less on the
manner of directing than on what constitutes proof that the direction has
been given.  Plaintiffs do not argue that an insured cannot give an oral
direction, but rather that, given the position of the insurance company as
the party with the greater power to avoid controversy by requiring a writing,
no oral variance of a contract or a statute should be permitted as a matter
of policy.  See Walker v. Coleman, 367 So. 2d 395, 397 (La. Ct. App. 1979)
(proof of a waiver of statutorily mandated coverage must be in writing to be
effective).  The opinion in Walker, however, may have been influenced by the
the Louisiana legislature, which amended the UM statute, prior to the court's
decision but after the insured's waiver, to require written waivers.  Id.  In
any event, we decline to follow Walker. We will expand the plain meaning of a
statute by implication only when expansion is necessary to make the statute
effective.  McAllister v. AVEMCO Ins. Co., 148 Vt. 110, 112, 528 A.2d 758,
759 (1987).  Under  941(c), placing the burden of proof on the insurer to
demonstrate a knowing and informed waiver satisfies the statutory goals.  See
Kimbrell, 420 So. 2d  at 1088 (proof of knowing rejection need not be
written); Grange Ins. Ass'n v. Great American Ins. Co., 575 P.2d 235, 238
(Wash. 1978) (insurer must have written or other express communication of
rejection from person applying for insurance). 

  Affirmed.