Ruth Ann Couch, Administratrix of the Estate of Jennifer Ann Green, Deceased v. Farmers Insurance Company, Inc., and Mid-Century Insurance Company Los Angeles, California
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SUPREME COURT OF ARKANSAS
No.
08-389
RUTH ANN COUCH, ADMINISTRATRIX
OF THE ESTATE OF JENNIFER ANN
GREEN, DECEASED,
APPELLANT;
Opinion Delivered December 19, 2008
APPEAL FROM THE BOONE COUNTY
CIRCUIT COURT, NO. CV-2003-334-4;
HON. GORDON WEBB, JUDGE;
VS.
FARMERS INSURANCE COMPANY,
INC., AND MID-CENTURY INSURANCE
COMPANY
LOS
ANGELES,
CALIFORNIA,
APPELLEES;
AFFIRMED.
DONALD L. CORBIN, Associate Justice
1.
INSURANCE —
CONTRACTS
—
TRIAL COURT DID NOT ERR IN FINDING THAT THE ANTI-
STACKING LANGUAGE CLEARLY AND UNAMBIGUOUSLY APPLIED TO THE UNDERINSURED
MOTORIST COVERAGE . — The first rule of interpretation of a contract is to give the language
employed the meaning that the parties intended; considering the rules of contract
interpretation and giving the language employed the meaning the parties intended, the
supreme court could not say that the trial court erred in finding that the anti-stacking
language clearly and unambiguously applied to the underinsured motorist coverage; the
language cited by Appellant, “[o]ur maximum liability under the UNDERInsured Motorist
Coverage is the limits of the UNDERInsured Motorist Coverage stated in this policy,” was
not in conflict with the other insurance clause and simply set forth the limits for liability
under that particular policy; accordingly, there was no merit to Appellant’s argument that
there was an ambiguity in the insurance contracts.
2.
INSURANCE — UNDERINSURED MOTORIST COVERAGE — ANTI-STACKING PROVISIONS WERE
NOT IN DEROGATION OF ARK . CODE ANN . § 23-89-209. — Clearly, Ark. Code Ann. § 23-89209 mandates that an insurer make underinsured motorist coverage available to an insured,
but an insured is allowed to reject such coverage in writing; simply because an insurer must
offer UIM coverage does not translate to a requirement that an insurer not be allowed to
prohibit the stacking of benefits; an exclusion to coverage cannot violate public policy where
an insured can opt out of UIM coverage altogether.
3.
INSURANCE —
UNDERINSURED MOTORIST COVERAGE
—
TRIAL COURT DID NOT ERR IN
DETERMINING THAT THE ANTI-STACKING PROVISIONS WERE NOT VOID AS VIOLATIVE OF
PUBLIC POLICY .
— An insurer may prohibit the stacking of multiple insurance policies if
these policies unambiguously prohibit the stacking of benefits; just as in prior cases that have
found that anti-stacking provisions are not contrary to the public policy of this state, at issue
here are multiple policies insuring multiple vehicles, and each of those policies contained
clear and unambiguous language excluding the stacking of policies; if these exclusions were
to be disallowed, Appellees would be bound to a risk that was plainly excluded and for which
Appellant did not pay; accordingly, there was no merit to Appellant’s argument that the trial
court erred in determining that the anti-stacking provisions were void as violative of public
policy.
Blair & Stroud, by H. David Blair, and Johnny L. Nichols, for appellant.
Mitchell, Williams, Selig, Gates & Woodyard, PLLC, by: Stuart P. Miller and Lindsey K.
Bell, for appellees.
This is an appeal from an order granting summary judgment in favor of Appellees
Farmers Insurance Company, Inc., and Mid-Century Insurance Company Los Angeles,
California, a member of the Farmers group, in a case where Appellant Ruth Ann Couch,
Administratrix of the Estate of Jennifer Ann Green, Deceased, sought recovery for
underinsured-motorist (UIM) benefits under multiple policies issued by Appellees.
Appellant raises three arguments on appeal, specifically that the trial court erred in finding
that the other insurance provisions of the policies issued by Appellees were (1)
unambiguously incorporated into the UIM endorsement; (2) not void as being in derogation
of Ark. Code Ann. § 23-89-209 (Repl. 2004); and (3) were not void as against public policy
when applied to the UIM coverage.
As this appeal presents a question of statutory
interpretation, our jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(b)(6). We find no error and
affirm.
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The record reflects that on January 15, 2000, Jennifer Ann Green was killed in a
single-vehicle accident, while a passenger in Jason Reams’s vehicle. At the time of her
death, Jennifer was a named insured on an automobile insurance policy issued by Appellee,
Mid-Century. This policy provided UIM coverage in the amount of $50,000 for all claims
arising out of injury to a single person. After a settlement was reached whereby Reams’s
insurance carrier paid $20,000 to Appellant, Mid-Century paid benefits of $50,000, including
$5,000 for a death benefit and $5,000 to cover funeral expenses, under the UIM coverage of
the policy upon which Jennifer was the named insured.
Once Mid-Century paid out on Jennifer’s policy, Appellant sought payment for UIM
benefits under three additional policies in effect with Appellees, wherein Jennifer, as a family
member of the three named insureds and a resident of the household, was an insured under
those policies. Two of the policies at issue, each with $50,000 limits under the UIM
coverage, were issued by Farmers: Policy No. 18146299762 and Policy No. 18146299763,
with the named insureds under both policies being Joe and Ruth Ann Couch, Jennifer’s
stepfather and mother. The third policy, Policy No. 18150550870, also with a $50,000 limit
of UIM coverage, was issued by Appellee Mid-Century and listed the named insured as
Roddy Couch, Jennifer’s sibling. Appellees refused to pay under the three additional
policies, citing to other insurance provisions in those policies that Appellees asserted
precluded Appellant from recovering under multiple policies.
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Appellant filed suit, alleging that premiums had been paid for UIM coverage on each
of the three policies, and because Jennifer was an insured under each of those policies, they
were entitled to benefits from Farmers in the amount of $100,000, and benefits from MidCentury in the amount of $50,000. Appellant also sought an award of statutory penalties,
prejudgment interest, and all costs, including attorneys’ fees. After filing an answer denying
Appellant’s allegations, Appellees filed a motion for summary judgment. Therein, Appellees
stated that Mid-Century had paid out on the policy in which Jennifer was the named insured
and that the Appellant sought to stack the UIM benefits from three additional policies, each
of which contained anti-stacking provisions. Appellees asserted that because of the clear and
unambiguous anti-stacking language, it was entitled to summary judgment. Thereafter, the
trial court entered an order denying the motion for summary judgment.
Appellees filed a renewed and amended motion for summary judgment, again arguing
that the three policies at issue each contained anti-stacking provisions that prohibited
Appellant from recovering under multiple policies.
After taking the motion under
advisement, the circuit court entered a letter order on July 16, 2007, granting the motion for
summary judgment. Therein, the circuit court acknowledged that it initially denied the
motion for summary judgment, but upon review of the amended motion, which included an
argument about a specific provision within the policies regarding stacking between multiple
policies issued by the same insurance company, determined that summary judgment was
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warranted. A written order reflecting the trial court’s ruling was entered of record on
September 26, 2007. This appeal followed.
The law is well settled that summary judgment is to be granted by a circuit court only
when it is clear that there are no genuine issues of material fact to be litigated, and the party
is entitled to judgment as a matter of law. See Stromwall v. Van Hoose, 371 Ark. 267, 265
S.W.3d 93 (2007). Once the moving party has established a prima facie entitlement to
summary judgment, the opposing party must meet proof with proof and demonstrate the
existence of a material issue of fact. See id. On appellate review, we determine if summary
judgment was appropriate based on whether the evidentiary items presented by the moving
party in support of the motion leave a material fact unanswered. See id. We view the
evidence in a light most favorable to the party against whom the motion was filed, resolving
all doubts and inferences against the moving party. See id. Our review focuses not only on
the pleadings, but also on the affidavits and documents filed by the parties. See id. The facts
here are undisputed by the parties. As there is not a genuine issue of material fact, the case
was appropriately determined as a matter of law. Therefore, the issue here is whether
summary judgment was granted in favor of the correct party based upon the interpretation
of the law at issue.
As her first point on appeal, Appellant argues that the circuit court erred in finding
that the other insurance provisions of the policies were unambiguously incorporated in the
UIM coverage endorsement. Specifically, Appellant asserts that the anti-stacking language
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contained in the UIM section is limited to intra-policy stacking and is thus inapplicable in
this case. Appellant further argues that if the applicability of the other insurance clause is
ambiguous, any ambiguity must be resolved in favor of the insured. Appellees counter that
the anti-stacking provision is clear and unambiguous. We agree with Appellees.
When presented with an issue regarding interpretation of a contract, this court has
stated:
The first rule of interpretation of a contract is to give to the language
employed the meaning that the parties intended. In construing any contract,
we must consider the sense and meaning of the words used by the parties as
they are taken and understood in their plain and ordinary meaning. “The best
construction is that which is made by viewing the subject of the contract, as the
mass of mankind would view it, as it may be safely assumed that such was the
aspect in which the parties themselves viewed it.” It is also a well-settled rule
in construing a contract that the intention of the parties is to be gathered not
from particular words and phrases, but from the whole context of the
agreement.
Health Resources of Ark., Inc. v. Flener, 374 Ark. 208, ___, ___ S.W.3d ___, ___ (2008)
(citations omitted).
In granting summary judgment, the circuit court held that each of the four insurance
policies at issue contained clear and unambiguous anti-stacking language that applied to the
UIM coverage. Specifically, the court stated that the anti-stacking language appeared “to be
applied by reference to the Under-Insured Motorists Endorsement and by its terms it
unambiguously provides that the policy limits of the four policies in this case cannot be
stacked.” We now turn to the policy provisions at issue.
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In one of the insurance policies 1 issued by Farmers on behalf of the named insureds,
Joe Couch and Ruth Ann Couch, the following language is found:
PART II - UNINSURED MOTORISTS
Coverage C - Uninsured Motorist Coverage
(Including Underinsured Motorist Coverage)
....
Other Insurance
....
4.
If any applicable insurance other than this policy is issued to you
by us or any other member company of the Farmers Insurance
Group of Companies, the total amount payable among all such
policies shall not exceed the limits provided by the single policy
with the highest limits of liability.
The following language is found in the endorsement for Underinsured-Motorist Coverage:
Under Part II of the policy the provisions that apply to Exclusions, Limits of
Liability, Other Insurance and Arbitration remain the same and apply to this
endorsement except where stated otherwise in this endorsement.
This endorsement is part of your policy. It supersedes and controls anything
to the contrary. It is otherwise subject to all other terms of the policy.
Considering our rules of contract interpretation and giving the language employed the
meaning the parties intended, we cannot say that the trial court erred in finding that the antistacking language clearly and unambiguously applied to the UIM coverage. Nothing in the
insurance contracts demonstrates the existence of an ambiguity involving intra-policy
stacking versus inter-policy stacking, as Appellant suggests.
1
The language cited by
Each of the policies at issue here contain the exact same language.
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Appellant, “[o]ur maximum liability under the UNDERInsured Motorist Coverage is the
limits of the UNDERInsured Motorist Coverage stated in this policy,” is not in conflict with
the other insurance clause and simply sets forth the limits for liability under that particular
policy. Accordingly, there is no merit to Appellant’s argument that there was an ambiguity
in the insurance contracts.
Next, Appellant argues that the trial court erred in finding that the other insurance
clause when applied to UIM coverage was not void as being in derogation of section 23-89209. In support of this argument, Appellant cites to this court’s decision in Heiss v. Aetna
Casualty & Surety Co., 250 Ark. 474, 465 S.W.2d 699 (1971). Appellees counter that Heiss
is inapplicable and nothing in section 23-89-209 precludes the prohibition against the
stacking of policies. Appellee is correct.
We review issues of statutory construction de novo. Ryan & Co. AR, Inc. v. Weiss,
371 Ark. 43, 263 S.W.3d 489 (2007). It is for this court to decide what a statute means, and
we are not bound by the circuit court’s interpretation. Id. The basic rule of statutory
construction is to give effect to the intent of the General Assembly. Id. In determining the
meaning of a statute, the first rule is to construe it just as it reads, giving the words their
ordinary and usually accepted meaning in common language. Id. This court construes the
statute so that no word is left void, superfluous, or insignificant, and meaning and effect are
given to every word in the statute if possible. Id. When the language of a statute is plain and
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unambiguous and conveys a clear and definite meaning, there is no need to resort to rules of
statutory construction. Id. We turn then to the statute at issue.
Section 23-89-209 sets forth the provisions for UIM coverage and provides in relevant
part:
(a)(1) No private passenger automobile liability insurance covering
liability arising out of the ownership, maintenance, or use of any motor
vehicles in this state shall be delivered or issued in this state or issued as to any
private passenger automobile principally garaged in this state unless the
insured has the opportunity, which he or she may reject in writing, to purchase
underinsured motorist coverage.
Clearly, section 23-89-209 mandates that an insurer make UIM coverage available to an
insured, but an insured is allowed to reject such coverage in writing. We fail to see,
however, how the anti-stacking provisions at issue here are in derogation of this section.
Simply because an insurer must offer UIM coverage does not translate to a requirement that
an insurer not be allowed to prohibit the stacking of benefits. We agree with Appellees that
an exclusion to coverage cannot violate public policy where an insured can opt out of UIM
coverage altogether. See Harasyn v. St. Paul Guardian Ins. Co., 349 Ark. 9, 75 S.W.3d 696
(2002).
Likewise, the Heiss decision relied on by Appellant is unavailing in this regard. In
Heiss, 250 Ark. 474, 465 S.W.2d 699, a man was killed in a collision involving an uninsured
motorist. The deceased had an insurance policy and paid separate premiums for uninsuredmotorist coverage and medical payments. The insurer claimed that it was entitled to deduct
the medical payments made from the $20,000 limit contained in the uninsured-motorist
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section of the policy. This court rejected the insurer’s argument, holding that any such
deduction for medical expenses was in derogation of the explicit requirements of the
uninsured-motorist statute and financial responsibility laws at issue, which established limits
of payment for injuries or death. To hold otherwise would have allowed the insurer to pay
less than mandated by the legislature. Pursuant to section 23-89-209(a)(4), however, if an
insurer issues UIM coverage, such coverage must be at least equal to the limits prescribed
for bodily injury or death in Ark. Code Ann. § 27-19-605 (Repl. 2008), and the amount paid
by Farmers under Jennifer’s policy exceed that statutory limit. Accordingly, our decision in
Heiss is of no import to the present case.
Before leaving this point, we note that Appellant argues that it is unfair to allow
Appellees to receive multiple premiums but only require them to pay on one policy. In
support of this contention, Appellant cites to cases from other jurisdictions that have held as
much. First, just as we held in Chamberlin v. State Farm Mutual Automobile Insurance Co.,
343 Ark. 392, 36 S.W.3d 281 (2001), the reliance on authority from other jurisdictions is
unpersuasive, particularly where this court has previously addressed the same issue.
Moreover, the Couch family maintained four insurance policies on four different
automobiles, and the premiums paid on those policies were calculated based on coverage for
each singular vehicle. At the time the Couches contracted with Appellees to provide
insurance coverage, they were aware that each of those policies contained language
prohibiting the stacking of multiple policies. If we were to void the anti-stacking provisions
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of these contracts, Appellees would be forced to pay quadruple coverage in exchange for
only one premium paid for the deceased. Accordingly, we find no merit to the contention
that Appellees are gaining a windfall because it accepted multiple premiums where those
premiums were calculated on coverage for a single vehicle and based on the explicit
prohibition of stacking multiple policies.
As her final point on appeal, Appellant argues that the trial court erred in finding that
the other insurance clause, when applied to UIM coverage, is not void as against public
policy. In support of her contention, Appellant argues that the anti-stacking provision
undermines the public policy favoring compensation of the person wrongfully injured or
killed and that limitations on coverage are not favored. In advancing her argument,
Appellant acknowledges this court’s decisions in Clampit v. State Farm Mutual Automobile
Insurance Co., 309 Ark. 107, 828 S.W.2d 593 (1992), and Chamberlin, 343 Ark. 392, 36
S.W.3d 281, but argues that those cases are distinguishable and should be limited so as to not
apply to this case. Appellees counter that this court has settled the public-policy argument
and that there is no reason to deviate from that precedent. We agree.
This court has held that unless the legislature has specifically prohibited exclusions,
courts will not find the restrictions void as against public policy. Harasyn, 349 Ark. 9, 75
S.W.3d 696. Moreover, as we previously stated, an exclusion to coverage cannot violate
public policy when one considers that a driver can opt out of the coverage altogether. Id.
While acknowledging the holding in Harasyn, Appellant avers that the decision should be
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overruled or at least limited to the facts of that case. In the absence of a compelling reason
to do so, this court declines to overrule Harasyn. It has been said that
[it] is necessary, as a matter of public policy, to uphold prior decisions unless
great injury or injustice would result. The policy behind stare decisis is to
lend predictability and stability to the law. In matters of practice, adherence
by a court to its own decisions is necessary and proper for the regularity and
uniformity of practice, and that litigants may know with certainty the rules by
which they must be governed in the conducting of their cases. Precedent
governs until it gives a result so patently wrong, so manifestly unjust, that a
break becomes unavoidable.
State Auto Prop. & Cas. Ins. Co. v. Ark. Dep’t of Envtl. Quality, 370 Ark. 251, 257, 258
S.W.3d 736, 741 (2007) (quoting Cochran v. Bentley, 369 Ark. 159, 174, 251 S.W.3d 253,
265 (2007)).
Appellant also acknowledges this court’s holdings in Clampit and Chamberlin
upholding anti-stacking provisions as not being violative of public policy. Appellant
contends, however, that those two cases are distinguishable and that their application should
be limited. We disagree. In Clampit, 309 Ark. 107, 828 S.W.2d 593, a husband and wife
owned two vehicles that were insured under separate policies. The couple and their daughter
were killed in an automobile collision while occupants in one of the insured vehicles. The
other driver was underinsured, and personal representatives of the deceased brought an action
against the insurer to recover the limits of UIM benefits under both policies. The insurer
refused to pay under both policies, citing an owned-but-not-insured exclusion which
precluded recovery under both policies. This court held that the exclusion to UIM coverage
did not violate the public policy of this state, explaining, by way of example, that if an insurer
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is required to insure against a risk of an undesignated-but-owned vehicle, it is required to
insure against risks that it is unaware of and unable to charge a premium for. The court
further reasoned:
If we were to disallow the exclusions in question, the insurance companies
would have to spread the increased (and unknown) risk among all insureds,
regardless of the risk or circumstances of each case, the end result being that
multi-car owners would be acquiring insurance at rates subsidized by singlecar owners—a result we deem neither desirable nor compatible with public
policy.
Id. at 113, 828 S.W.2d at 597.
Following Clampit, this court again addressed the issue of stacking in Chamberlin,
343 Ark. 392, 36 S.W.3d 281. In that case, the insured, while a passenger in her husband’s
vehicle, was injured in a collision with an underinsured driver. At the time of the accident,
the insured and her husband owned three separate insurance policies, one for each of their
three vehicles, issued by the same insurer. The insurer paid UIM benefits on only one policy,
rejecting claims on the other two policies because of owned-but-not-insured exclusions
contained in each policy. The insured filed suit, and after the trial court granted summary
judgment, the insured appealed to this court. We affirmed the grant of summary judgment,
noting that we had considered and rejected the appellant’s precise argument in Clampit.
Although the insured argued that this court’s position reflected a minority-jurisdiction
position, this court held that it was bound to follow its prior law. In concluding that the antistacking provision was valid, the court noted that the policy language was clear and
unambiguous and that the parties were free to contract as to the terms, as long as they were
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not violative of state law. Finally, the Chamberlin court noted: “Although aware of our
judicial decisions . . . the legislature has not amended the governing statutes to permit
stacking. . . . [T]he General Assembly’s silence over ‘a long period gives rise to an arguable
inference of acquiescence or passive approval’ to the court’s construction of the statute.” Id.
at 398, 36 S.W.3d at 284 (quoting Chapman v. Alexander, 307 Ark. 87, 90, 817 S.W.2d 425,
427 (1991)).
Despite the clear pronouncements in both Clampit and Chamberlin, Appellant asks
this court to deviate from its established position that anti-stacking provisions are not
contrary to the public policy of this state. The distinction that those two cases involved
owned-but-not-insured exclusions rather than an other insurance clause is not a meaningful
one. The gist of Clampit and Chamberlin is that an insurer may prohibit the stacking of
multiple insurance policies if those policies unambiguously prohibit the stacking of benefits.
Just as in the prior cases, at issue here are multiple policies insuring multiple vehicles, and
each of those policies contained clear and unambiguous language excluding the stacking of
policies. If we were to disallow those exclusions, we would bind Appellees to a risk that was
plainly excluded and for which Appellant did not pay. Accordingly, we find no merit to
Appellant’s argument that the trial court erred in determining that the anti-stacking
provisions were not void as violative of public policy.
Affirmed.
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