887 F.3d 623
4th Cir.2018Background
- Purnell Furniture hired Castillo and Gabarette as independent contractors to deliver furniture; Purnell provided a rented Penske truck for one delivery.
- While Castillo (passenger) and Gabarette (driver) were stopped to check the load, another driver struck the Penske truck; Castillo was killed and Gabarette injured.
- Purnell held an auto policy from Wausau that included an SCC-mandated UIM endorsement; the Declarations limited UIM coverage to autos coded “62” (defined as "Owned Autos Only"). Liability coverage was broader (code "61" = "Any Auto"). The rented Penske truck was not listed as a Purnell-owned vehicle.
- Castillo’s estate and Gabarette sued for declaratory relief seeking UIM coverage under Wausau’s policy; Wausau moved for summary judgment and removal occurred to federal court on diversity grounds.
- The district court granted summary judgment to Wausau, concluding the policy’s plain language and Virginia precedent limit UIM coverage to declared owned vehicles; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether occupants of the rented Penske truck are entitled to UIM benefits under Wausau’s policy | The UIM endorsement defines "covered auto" as any vehicle to which the policy's liability coverage applies, so occupants of the Penske (which liability covers) should get UIM | The Declarations specifically limit UIM coverage to "Owned Autos Only" (code 62); Penske truck is not listed, so no UIM coverage | Affirmed: UIM coverage limited to vehicles designated on Declarations (owned autos); Penske truck not covered |
| Whether the SCC-mandated UIM endorsement's broader language controls over narrower Declarations limitations | Endorsement is standard form and defines covered auto broadly; that should govern | Declarations are the parties’ negotiated terms and may expressly limit UIM coverage; Virginia precedent instructs courts to look to declarations | Declarations control when they unambiguously limit UIM; endorsement does not override negotiated declarations |
| Whether the policy language is ambiguous, triggering contra proferentem | Plaintiffs: conflict between Declarations and endorsement creates ambiguity to be construed for coverage | Wausau: Declarations (written by insurer) are unambiguous; endorsement is SCC form insurer was required to use, so contra proferentem presumption is inapplicable | Court: No ambiguity as applied under Virginia law and precedent; interpret declarations to limit UIM to owned autos |
| Whether Virginia law/statute requires parity between liability and UIM coverages for all vehicles to which liability applies | Plaintiffs: Va. Code § 38.2-2206(B) suggests UIM must extend to "any person who uses the motor vehicle to which the policy applies" | Wausau: Virginia cases permit insurers to limit UIM to vehicles listed in declarations; statute sets a floor, not a ceiling | Held: Statute does not bar limiting UIM by declarations; insurer may limit UIM to listed (owned) vehicles |
Key Cases Cited
- Bayer v. Travelers Indem. Co., 221 Va. 5 (1980) (declarations controlling for UM/UIM coverage; non-owned vehicle not covered under those declarations)
- Nationwide Mut. Ins. Co. v. Hill, 247 Va. 78 (1994) (clarifies Bayer and looks to declarations to determine which vehicles are covered for UM/UIM)
- Stone v. Liberty Mut. Ins. Co., 253 Va. 12 (1996) (Virginia statute does not require UIM coverage for all vehicles to which liability applies; insurers may limit UIM to listed owned vehicles)
- Seals v. Erie Ins. Exch., 277 Va. 558 (2009) (analysis begins with UM/UIM endorsement definition but uses declarations to identify whether the specific vehicle is a covered auto)