Feeley v. Allstate Insurance Co.
Annotate this Case
Feeley v. Allstate Insurance Co. (2004-191); 178 Vt. 642; 882 A.2d 1230
2005 VT 87
[Filed 17-Aug-2005]
ENTRY ORDER
2005 VT 87
SUPREME COURT DOCKET NO. 2004-191
FEBRUARY TERM, 2005
Randal Feeley } APPEALED FROM:
}
}
v. } Franklin Superior Court
}
Allstate Insurance Company }
} DOCKET NO. S89-00 Fc
Trial Judge: Howard E.
VanBenthuysen
In the above-entitled cause, the Clerk will enter:
¶ 1. Defendant Allstate Insurance Company appeals from a Franklin
Superior Court judgment on plaintiff Randal Feeley's claim for underinsured
motorist (UIM) benefits following a work-related motor vehicle accident.
At issue in Allstate's appeal is whether Feeley's UIM policy allows
Allstate to deduct the amount of workers' compensation benefits Feeley
received pursuant to New York law from the UIM proceeds due under his
personal policy with Allstate. The trial court entered judgment against
Allstate on Feeley's claim, and we now affirm.
¶ 2. Feeley is a Vermont resident who was working for a New York
transportation company at the time of the motor vehicle accident giving
rise to this litigation. The driver responsible for the accident was
underinsured, and his liability insurer paid the policy's $25,000
liability limit after the accident. Feeley was covered by his employer's
New York workers' compensation policy, and he received benefits pursuant to
New York law. Feeley sought additional compensation for his injuries under
a Vermont-issued UIM policy with a $300,000 limit. Coincidentally,
Allstate was both the workers' compensation carrier for Feeley's New York
employer and his Vermont UIM insurer.
¶ 3. Allstate refused to pay Feeley the full amount of UIM
benefits available under his policy. Allstate believed that Feeley's
policy entitled it to reduce the UIM obligation by the amount of workers'
compensation Allstate had paid Feeley-totaling approximately
$200,000-pursuant to New York law. Seeking to enforce the terms of the UIM
policy, Feeley filed a declaratory judgment action against Allstate in
Franklin Superior Court. While admitting that New York law prohibited
Allstate, in its capacity as a workers' compensation insurer, from placing
a lien on Feeley's UIM proceeds, the company urged the Franklin Superior
Court to interpret Feeley's UIM policy to allow a reduction in UIM proceeds
by the amount of workers' compensation benefits he received from Allstate.
The company argued that the reduction was necessary to prevent Feeley from
receiving "double recovery."
¶ 4. In a preliminary order, the trial court ruled that (1) New
York law governed Feeley's receipt of workers' compensation, and (2)
pursuant to New York law, Allstate could not recoup its workers'
compensation payments from UIM proceeds payable under Feeley's Vermont
policy. The court reserved the ultimate question of whether Vermont law or
the UIM policy itself provided a basis for the offset Allstate sought until
after the parties completed arbitration on the amount of Feeley's damages.
After the arbitration panel set Feeley's damages at $450,000, Feeley moved
for summary judgment. Allstate had paid Feeley only $210,000 in UIM
benefits (the arbitration panel's noneconomic damages award) so Feeley
asked the court to enter judgment for the remaining amount owed under his
Allstate policy. (FN1) The trial court granted Feeley's motion and entered
judgment in his favor.
¶ 5. Allstate appeals, advancing the same arguments it presented
to the trial court. Like the trial court, we review Allstate's claims
under the summary judgment standard, which allows the court to enter
judgment for any party if the material facts are undisputed and the law
supports the judgment. V.R.C.P. 56(c)(3); Robertson v. Mylan Labs., Inc.,
2004 VT 15, ¶ 15, 176 Vt. 356, 848 A.2d 310.
¶ 6. Before addressing Allstate's arguments, we note that this
dispute arose because Allstate played two roles here. Allstate was both
the workers' compensation insurer for Feeley's employer, obligated to pay
Feeley benefits in accordance with New York law, and Feeley's Vermont UIM
insurer with obligations to the insured mandated by the Vermont
Legislature. In this case, the role with which we are concerned is the
latter: Allstate as a Vermont UIM insurer.
¶ 7. Allstate argues that the UIM policy it furnished to Feeley
gave the company the right to reduce its UIM obligation by "all amounts
payable under any workers compensation law, disability benefits law, or
similar law, Automobile Medical Payments, or any similar automobile medical
payments coverage." The provision at issue is enforceable so long as it is
not inconsistent with Vermont's UIM law. See Sanders v. St. Paul Mercury
Ins. Co., 148 Vt. 496, 507, 536 A.2d 914, 921 (1987) (explaining that the
Court will enforce plain meaning of an insurance policy provision in the
absence of ambiguity, statutory violation, or "inherently unfair or
misleading language"). The critical question, then, is whether Vermont's
UIM statute, 23 V.S.A. § 941, allows an insurer to reduce the insured's UIM
payment by the amount of workers' compensation benefits that are payable to
the insured pursuant to the laws of another state.
¶ 8. Our analysis begins with the purpose of § 941, the
uninsured/underinsured motorist provision of Vermont's Financial
Responsibility Law, 23 V.S.A., Chapter 11. Motor vehicle insurers may not
sell an automobile liability policy in Vermont without coverage for
accidents involving uninsured (UM) or underinsured motorists. 23 V.S.A. §
941(a); The Travelers Cos. v. Liberty Mut. Ins. Co., 164 Vt. 368, 374, 670 A.2d 827, 830 (1995). The coverage is intended to provide "the prudent
motorist with maximum insurance coverage," Monteith v. Jefferson Ins. Co.,
159 Vt. 378, 386, 618 A.2d 488, 492 (1992), when involved in an accident
with a marginally insured (or uninsured) motorist. Colwell v. Allstate
Ins. Co., 2003 VT 5, ¶ 10, 175 Vt. 61, 819 A.2d 727. Section 941 defines
when a driver is "underinsured" by comparing the tortfeasor's liability
limits with the limits of the insured's UIM coverage. 23 V.S.A. § 941(f).
If the insured purchased UIM coverage greater than the limits of liability
in the tortfeasor's policy, the tortfeasor is "underinsured" within the
meaning of § 941. Id.; Colwell, 2003 VT 5, ¶ 8. This type of "gap
coverage" "place[s] the insured in the same position as if, at the time of
the accident, the tortfeasor had liability coverage equal to the insured's
UIM coverage." Colwell, 2003 VT 5, ¶ 14; see Webb v. U.S. Fid. & Guar.
Co., 158 Vt. 137, 141, 605 A.2d 1344,1347 (1992) (describing Vermont's UIM
statute as filling the gap between the tortfeasor's liability coverage and
the insured's UIM coverage).
¶ 9. A policy clause limiting UIM coverage in a manner
inconsistent with § 941's central purpose is unenforceable. Monteith, 159
Vt. at 385-86, 618 A.2d at 492-93; see Muir v. Hartford Accident & Indem.
Co., 147 Vt. 590, 593-94, 522 A.2d 236, 238 (1987) (invalidating liability
payment set-off provision in uninsured motorist policy because it
conflicted with purpose of uninsured motorist law to ensure coverage as if
all drivers had insurance). In Monteith, the Court invalidated the
insurer's "antistacking" provision, thereby allowing the insured to add the
limits of all his UIM policies to determine the extent of the tortfeasor's
underinsurance. 159 Vt. at 384, 618 A.2d at 491. The provision at issue
was irreconcilable with the statutorily mandated coverage because it failed
to provide " 'the insured injured person the same recovery which would have
been available to him had the tortfeasor been insured to the same extent as
the injured party.' " Id. at 384-85, 618 A.2d at 492 (quoting Connolly v.
Royal Globe Ins. Co., 455 A.2d 932, 935 (Me. 1983)). In Muir, the Court
held unenforceable a provision that allowed the UM insurer to reduce its UM
obligation to the passenger/insured by liability payments made by the
insurer and the third-party motorist's liability carrier. 147 Vt. at
593-94, 522 A.2d at 238-39. Key to the Court's decision in Muir was the
overriding purpose of § 941: protecting the insured from the misfortune of
being involved in an accident with a financially irresponsible driver. Id.
¶ 10. Applying that principle to the facts of this case, we
conclude that the provision upon which Allstate relies to limit its UIM
liability is unenforceable as inconsistent with the purpose of mandatory
UIM coverage. Had the tortfeasor been insured to the same extent as
Feeley, $300,000 in compensation from the tortfeasor's liability insurer
would have been available to him. Cf. Caberto v. Nat'l Union Fire Ins.
Co., 881 P.2d 526, 531 (Haw. 1994) (explaining that a policy provision
that reduces the amount of UM proceeds payable to the insured by the amount
of workers' compensation benefits he received does not give the insured the
same amount of damages he would have been entitled to receive had the
tortfeasor been adequately insured). No deduction for workers'
compensation or other disability payments would have been permitted. Id.
The UIM policy Allstate furnished thus "undercuts the policy and purpose of
UM/UIM statutes" and cannot be enforced. Monteith, 159 Vt. at 384, 618 A.2d
at 492.
¶ 11. Allstate argues that Feeley "is trying to take advantage of a
quirk in New York law to get double recovery that is precluded under
Vermont law." Rather than preventing double recovery for Feeley, Allstate
is in fact seeking to reduce its obligation to its insured under Vermont
UIM law because it was also the insurer responsible for paying Feeley's
workers' compensation benefits. If Feeley's UIM policy had been provided
by a different company, the weakness of Allstate's argument on the terms of
the UIM policy is readily apparent. The only statutorily authorized offset
for UIM proceeds is the amount the insured obtains from "any person legally
responsible for the damage or personal injury." 23 V.S.A. § 941(e).
Although § 941(e) does not preclude other offsets, any limit on UIM
coverage may not reduce the recovery which would have been available to the
insured had the tortfeasor purchased insurance with the same (or greater)
limits as the insured. Monteith, 159 Vt. at 386, 618 A.2d at 492.
Reducing Feeley's UIM proceeds by any amounts "payable under any workers
compensation law" results in lesser recovery than would have been available
to Feeley if the tortfeasor had been as financially responsible as he.
¶ 12. Allstate argues that § 941(e) should be read in pari materia
with § 624(e) of the Vermont Workers' Compensation Act to ensure that
Feeley is not overcompensated for his losses. If the Vermont Workers'
Compensation Act applied in this case, Allstate would have a point.
Section 624(e) allows a workers' compensation carrier to recover from the
injured worker any amounts the worker receives from a privately purchased
insurance policy, but only to prevent "double recovery." 21 V.S.A. §
624(e); Travelers Ins. Co. v. Henry, 2005 VT 68, ¶ 11. No one disputes,
however, that New York law governs Feeley's receipt of workers'
compensation benefits, and thus § 624(e) of Vermont's workers' compensation
scheme has no application in this case. Allstate does not present any
legal authority to support its novel suggestion that the trial court, or
this Court, may utilize the doctrine of in pari materia when one of the
statutes at issue is ruled inapplicable to the claim before the court.
Considering that § 624(e) was inapplicable to Feeley's receipt of workers'
compensation benefits, the trial court did not err by refusing to interpret
§ 941(e) in pari materia with § 624(e).
¶ 13. We note that Allstate's reliance on § 624(e) demonstrates
that its interest in this case is not as Feeley's UIM carrier, but, rather,
as the workers' compensation insurer responsible for paying him benefits in
accordance with New York law. Only a Vermont workers' compensation carrier
may reach an insured's UIM proceeds under § 624(e), however, and then only
to the extent that doing so prevents double recovery. See Henry, 2005 VT
68, ¶ 11. In effect, Allstate is trying to avoid the "quirk" in New York
law, which precludes the offset Allstate seeks, by invoking a Vermont
statute that has no relevance to Feeley's UIM claim. We will not "subvert
an important rationale underlying [§ 941] by allowing a quirk in New York's
law to upset policy underpinnings of Vermont's law." St. Paul Fire &
Marine Ins. Co. v. Surdam, 156 Vt. 585, 591, 595 A.2d 264, 267 (1991).
¶ 14. Finally, Allstate argues that the trial court erred by
overruling a preliminary order it issued by disallowing the offset for
workers' compensation benefits. Allstate asserts that the preliminary
order, issued in November 2001, definitively established Allstate's right
of recoupment from Feeley's UIM proceeds. Feeley responds that Allstate
has misconstrued the order. We agree. The November 2001 order expressly
reserved ruling on the offset issue until the parties had completed
arbitration. It explained that the question of "whether the bar against
double recovery applies to this case" must await the arbitrators' decision
on Feeley's total damages. Thus, the court did not, as Allstate claims,
determine that Feeley had to repay a portion of his New York workers'
compensation benefits from the UIM proceeds due under his policy with
Allstate.
Affirmed.
BY THE COURT:
_______________________________________
Paul L. Reiber, Chief Justice
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Denise R. Johnson, Associate Justice
_______________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Ernest W. Gibson III, Associate Justice
(Ret.) Specially Assigned
------------------------------------------------------------------------------
Footnotes
FN1. The amount remaining was $65,000. That figure results from deducting
the tortfeasor's $25,000 payment from the remaining $90,000 (the $300,000
policy limit minus the $210,000 UIM payment) due under Feeley's UIM policy.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
