Alberta Graf v. State Farm Mutual Automobile Insurance Company
149 A.3d 529
| Me. | 2016Background
- On August 4, 2005, Alberta Graf was rear-ended by a motorist insured with $50,000 liability coverage from Progressive; Graf settled that tortfeasor for $50,000.
- Graf and her husband had two State Farm policies: Policy 1 (husband’s name) — $1,000,000 UM/UIM and $100,000 medical payments, but excluded coverage for injuries in vehicles not insured under that policy; Policy 2 (Graf’s name) — $300,000 UM/UIM and $100,000 medical payments (limited to services within 3 years), and stated UM/UIM is excess over medical payments.
- The parties agreed to arbitrate causation and damages but reserved coverage questions for the Superior Court.
- An arbitration panel found Graf’s total damages were $378,000, including $125,000 of medical expenses, and subtracted the $50,000 tortfeasor settlement to report net damages of $328,000.
- The Superior Court ruled Graf was covered only under Policy 2, denied medical payments coverage under either policy, offset the $300,000 UM/UIM limit by the $50,000 settlement, and entered judgment awarding Graf $250,000 from State Farm; Graf appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Policy 1’s “other-owned vehicle” exclusion bars coverage for Graf’s injury in her own car | Graf: exclusion ambiguous or inapplicable; she is an insured under Policy 1 and thus entitled to UM/UIM limits | State Farm: exclusion unambiguous and valid; excludes injuries in vehicles not insured under Policy 1 | Court: exclusion is unambiguous, lawful, not against public policy; Policy 1 does not cover Graf |
| Whether State Farm may offset its UM/UIM obligation by the $50,000 tortfeasor payment after arbitration already deducted that amount | Graf: improper to offset again; arbitration already accounted for settlement | State Farm: statute allows insurer to reduce available UM/UIM coverage by tortfeasor payment; offset applies to coverage availability | Court: insurer entitled to offset available UM/UIM coverage by tortfeasor payment; offset mathematically applies once against available coverage |
| Whether Graf may recover both Policy 2 medical payments and UM/UIM benefits for the same medical expenses | Graf: entitled to both medical payments (up to $100,000 for services within 3 years) and UM/UIM | State Farm: policy makes UM/UIM excess and prevents duplicate recovery of medical expenses already paid under medical payments | Court: policy requires medical payments be applied first and prevents duplication; medical payments must be quantified before applying UM/UIM |
| Whether the Superior Court correctly denied medical payments coverage under Policy 2 without determining which medical expenses fell within 3-year period or were offset by workers’ compensation | Graf: arbitration established $125,000 medical expenses; court should have applied medical payments first | State Farm: some medical bills were outside 3-year window or payable by workers’ compensation; court can resolve these facts | Court: remanded — the arbitration did not decide which medical costs fell within medical payments or were offset by workers’ comp; trial court must determine that amount and then calculate State Farm’s remaining obligation |
Key Cases Cited
- Estate of Galipeau v. State Farm Mut. Auto. Ins. Co., 132 A.3d 1190 (Me. 2016) (upholding other-owned-vehicle exclusion against UM/UIM challenge)
- Tibbetts v. Dairyland Ins. Co., 999 A.2d 930 (Me. 2010) (discussing goal of UM statute and offset principles)
- Farthing v. Allstate Ins. Co., 10 A.3d 667 (Me. 2010) (insurer entitled to offset UM/UIM coverage by tortfeasor payment when damages exceed coverage)
- Gross v. Green Mountain Ins. Co., 506 A.2d 1139 (Me. 1986) (policy exclusions enforced if unambiguous and not contrary to statute or public policy)