Alberta Graf v. State Farm Mutual Automobile Insurance Company
2016 ME 109
| Me. | 2016Background
- On August 4, 2005 Alberta Graf was rear-ended by a motorist who carried $50,000 liability coverage; Graf settled that tortfeasor for the $50,000.
- Graf and her husband held two State Farm policies: Policy 1 (husband’s) — $1,000,000 UM/UIM and $100,000 medical payments but did not insure Graf’s car and contained an “other‑owned vehicle” exclusion; Policy 2 (Graf’s) — $300,000 UM/UIM and $100,000 medical payments (three‑year limit) and a provision that UM/UIM is excess of medical payments.
- Graf and State Farm agreed to arbitrate causation and damages; the arbitration panel awarded $378,000 in damages (including $125,000 in medical costs) and subtracted the $50,000 tortfeasor settlement, reporting net damages of $328,000.
- The Superior Court retained jurisdiction to decide coverage issues, received evidence about timing/workers’ compensation offsets for medical bills, and ruled Graf was covered only under Policy 2, denied medical payments under either policy, and reduced State Farm’s liability to $250,000 (Policy 2 limits less $50,000 already received).
- The Maine Supreme Judicial Court affirmed the exclusion under Policy 1, held offset against available UM/UIM coverage was proper, vacated the calculation regarding medical payments, and remanded for determination of which medical expenses fall within Policy 2’s medical payments limits and any workers’ compensation offsets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/coverage effect of Policy 1 “other‑owned vehicle” exclusion | Graf: exclusion ambiguous and should not bar her from $1,000,000 UM/UIM | State Farm: exclusion is clear, valid, and precludes coverage for injuries in an uninsured vehicle not covered by the policy | Exclusion is unambiguous, not in conflict with UM/UIM statute or public policy; Policy 1 does not cover Graf’s accident |
| Whether State Farm may offset the tortfeasor’s $50,000 payment against available UM/UIM coverage after arbitration already reduced damages by that payment | Graf: court should not further offset coverage because arbitration already subtracted the $50,000 | State Farm: statute permits insurer to offset the amount paid by tortfeasor against available UM/UIM coverage | Offset against available UM/UIM coverage is proper (but mathematically applied only once) |
| Whether Policy 2’s medical payments and UM/UIM provisions allow duplicate recovery for medical expenses | Graf: entitled to both medical payments (up to $100,000) and UM/UIM for remaining damages | State Farm: policy makes UM/UIM excess of medical payments and precludes duplicative recovery | Policy requires medical payments be applied first; UM/UIM is excess and cannot duplicate medical payments; remand to determine which medical bills fall within medical payments period and any workers’ compensation offsets |
| Prejudgment interest and costs | Graf sought prejudgment interest and fees | State Farm argued no bad faith and policy limits paid | Court correctly denied prejudgment interest; other fee arguments not persuasive on appeal |
Key Cases Cited
- Estate of Galipeau v. State Farm Mut. Auto. Ins. Co., 132 A.3d 1190 (Me. 2016) (upholding similar other‑owned vehicle exclusion against UM/UIM challenge)
- Tibbetts v. Dairyland Ins. Co., 999 A.2d 930 (Me. 2010) (describing UM statute goal and prior treatment of offsets)
- Farthing v. Allstate Ins. Co., 10 A.3d 667 (Me. 2010) (insurer entitled to offset tortfeasor’s payment against available UM/UIM coverage)
- Lewis v. Concord Gen. Mut. Ins. Co., 87 A.3d 732 (Me. 2014) (addressing similar exclusions in UM/UIM policies)
- Ostransky v. State Farm Ins. Co., 566 N.W.2d 399 (Neb. 1997) (interpreting State Farm language to make UM coverage excess of medical payments; no duplicative recovery allowed)