Insurance Company of the State of Pennsylvania v. Kerrie A. Johnson, Administrator for the Estate of Michael W. Johnson
No. 08-053
Supreme Court of Vermont
August 21, 2009
Motion for Reargument Denied October 15, 2009
2009 VT 92 | 987 A.2d 276
Present: Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.
Vacated and remanded for new trial.
¶ 1. Johnson, J. We agreed to review the following question certified from the United States District Court for the District of Vermont: “Whether Vermont‘s uninsured/underinsured motorist statute,
¶ 2. This case arises from the tragic death of Vermont State Police Sergeant Michael Johnson while in the course of duty. The facts underlying the incident are set forth in full in State v. Daley, 2006 VT 5, 179 Vt. 589, 892 A.2d 244 (mem.). In brief, Sergeant Johnson was struck and killed by a motorist, Eric P. Daley, while laying spikes across a highway in an effort to stop Daley‘s vehicle, which was then engaged in a high-speed police chase. Id. ¶ 4. Daley later pled guilty to seven criminal charges and was sentenced to an aggregate term of imprisonment of twenty-six to thirty-three years. We affirmed on appeal. Id. ¶ 13.
¶ 3. Daley‘s automobile liability insurer subsequently paid the third-party liability policy limit of $25,000 to Johnson‘s estate. Thereafter, Johnson‘s employer, the State of Vermont, tendered to the estate its self-insured underinsured-motorist policy limit of $250,000. The estate then filed a complaint in Washington Superior Court against the State, seeking to recover damages in excess of the $250,000 underinsured-motorist limit under the State‘s two umbrella or excess liability policies in effect at the time of the incident, both of which had been issued by the Insurance Company of the State of Pennsylvania (ICSOP). One policy broadly insured against “liability imposed by law or assumed under an insured contract because of bodily injury or property damage arising out of an occurrence during the Policy Period,” and contained a limit of $10 million in excess of the State‘s $250,000 self-insured retained limit. The other policy was largely identical but contained a proviso limiting coverage to liability arising under the Vermont Tort Claims Act and had a policy limit of $1 million in excess of the $250,000 retained limit. Neither policy expressly provided for uninsured or underinsured (UM/UIM) motorist coverage.
¶ 4. The estate claimed, nevertheless, that because the ICSOP policies provided coverage for “liability arising out of the ownership, maintenance or use” of a motor vehicle, they were required to provide UM/UIM coverage under
¶ 5. The principles governing our interpretation of legislation are settled. “Our goal is to implement the Legislature‘s intent and ‘[t]he definitive source of legislative intent is the statutory language, by which we are bound unless it is uncertain or unclear.‘” State v. Stell, 2007 VT 106, ¶ 12, 182 Vt. 368, 937 A.2d 649 (quoting In re Bennington Sch., Inc., 2004 VT 6, ¶ 12, 176 Vt. 584, 845 A.2d 332 (mem.)). “We assume the Legislature intended the plain and ordinary meaning of the language it used, and thus, only when the objective of the legislation would be defeated by literal enforcement of statutory provisions can the Court, in construing a particular law, depart from the ordinary and usual meaning of the language used therein.” Id. (citation omitted). In the absence of such a showing, “enforcement must be according to the statute‘s obvious terms.” Id. (quotation omitted).
¶ 6. As noted, our UM/UIM statute provides, in pertinent part, that “[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein” for the protection of an insured “from owners or operators of uninsured, underinsured or hit-and-run motor vehicles.”
¶ 7. In providing clearly and unambiguously that “[n]o policy” insuring “against liability arising out of the ownership, maintenance or use of any motor vehicle” may issue without UM/UIM coverage, the statute plainly encompasses the excess policies here at issue. Both ICSOP policies provide coverage for amounts in excess of the limit provided by the State‘s retained or primary policy (in this case the State‘s self-insured limit of $250,000) which the State becomes “legally obligated to pay by reason of liability imposed by law or assumed under an insured contract because of bodily injury or property damage arising out of an occurrence during the Policy Period.” Both policies expressly refer to the use of “owned” or “hired” motor vehicles by State officials and employees in the course and scope of employment. ICSOP has thus virtually conceded that its policies provide coverage for liability arising out of the ownership, maintenance, or use of a motor vehicle. There is no question, therefore, that the policies fall within the plain and unqualified language of the UM/UIM statute. See Colwell v. Allstate Ins. Co., 2003 VT 5, ¶ 23, 175 Vt. 61, 819 A.2d 727 (construing
¶ 8. ICSOP asserts, nevertheless, that despite its broad language,
¶ 9. It is a substantial stretch, however, to conclude that
¶ 10. Similarly unpersuasive is ICSOP‘s claim that
¶ 11. ICSOP also cites several references to “automobile insurance policies” or “automobile liability insurance” in materials culled from the statute‘s legislative history. None of these references, however, evinces a discrete legislative intent to exclude excess or umbrella policies that insure against motor vehicle liability, much less even a legislative awareness of the issue. We thus draw no insights from these isolated statements concerning the question before us.
¶ 12. ICSOP additionally refers us to several bills that have been proposed in the Vermont General Assembly since this case arose, seeking to revise
¶ 13. Finally in this regard, ICSOP cites the “inherent differences” between automobile and multi-risk umbrella policies, noting that the latter typically provide greater coverage against lesser risks of catastrophic liability, with accordingly lower pre-
¶ 14. That same purpose is equally served when an insured who is injured by an underinsured motorist receives the full benefit of the “excess” coverage for which the insured — through prudence and foresight — has contracted. As in Monteith, applying the plain language of the statute in these circumstances is “consistent with the basic philosophy of the statute, which is to put the insured in the same position as if the negligent driver had been as responsible as the insured in obtaining liability insurance.” Id. at 381, 618 A.2d at 490 (emphasis added). Whether, or to what extent, application of
¶ 15. ICSOP‘s final argument rests on authority. As the record shows, and as both parties here readily acknowledge, there is a substantial split of authority nationwide on whether UM/UIM statutes apply to multi-coverage umbrella or excess liability policies. See generally L. Gregory, Annotation, “Excess” or “Umbrella” Insurance Policy as Providing Coverage for Accidents with Uninsured or Underinsured Motorists, 2 A.L.R.5th 922 (1992) (collecting cases and statutes and summarizing the varying judicial and legislative responses); 24 J. Appleman, Insurance Law and Practice § 147.2[B][1], at 18, 20 (2d ed. 2004) (noting the split
¶ 16. Thus, we find that courts applying UM/UIM statutes predicated — like
¶ 17. In contrast, some courts have held that UM/UIM statutes that refer specifically to “automobile liability policies” or “motor vehicle policies” exclude, by definition, multi-risk umbrella policies. See, e.g., Rowe v. Travelers Indem. Co., 800 P.2d 157, 159-61 (Mont. 1990) (holding that by its plain terms statute did not include commercial umbrella policy where statute provided that “[n]o automobile liability or motor vehicle liability policy” may issue without UM/UIM coverage and specifically defined motor vehicle policy as “an owner‘s or operator‘s policy of liability insurance“). Such language, of course, is notably absent from
¶ 18. A number of courts, to be sure, have construed similar statutory language to reach a different conclusion. These cases have generally turned on the additional factor of whether the statute requires “minimum” or “full recovery” UM/UIM coverage. Thus, regardless of the specific statutory phrasing, states requiring insurers to write UM/UIM coverage only to the statutory “minimum” of liability coverage have generally held that such statutes do not apply to umbrella or excess policies because the legislative purpose is satisfied by application of the primary policy. See, e.g., Hartbarger v. Country Mut. Ins. Co., 437 N.E.2d 691, 694 (Ill. App. Ct. 1982) (where UM/UIM statute was enacted “to insure a minimum amount of uninsured motorist protection” the insured “receives the full protection contemplated by the statute when he purchases the underlying automobile policy, and whatever additional coverage he does or does not obtain in an umbrella policy is a matter without the scope of that law“); see generally Gregory, supra, at 934 (“Most jurisdictions which ascribe to the view that umbrella policies do not provide uninsured motorist coverage have ‘minimum liability’ statutes . . . thus insuring only that an injured motorist recover the same amount as would be available from an uninsured motorist if the motorist had maintained the minimum statutory limit of bodily injury liability coverage.“).
¶ 19. Those states, in contrast, requiring UM/UIM coverage equal to the limits of liability coverage — as provided by
¶ 20. The great majority of jurisdictions with full recovery statutes similar to our own have reached the same conclusion. See Ormsbee, 859 P.2d at 735 (holding that “[b]ecause the [Arizona] statute links the amount of uninsured/underinsured coverage to the amount of liability coverage, it makes sense that, as the latter increases, as through umbrella polices, the former must also increase“); Dominguez, 420 So. 2d at 883 (relying on the legislative policy of affording the insured coverage “equal to the limits of his motor vehicle liability coverage” in holding that “even an umbrella insurer must afford uninsured motorist coverage equivalent to the liability limits in the absence of an informed rejection“); Abrohams, 638 S.E.2d at 333 (“To hold that umbrella and excess policies are exempt from the UM statute would contravene [full recovery] intent.“); Bartee v. R.T.C. Transp., Inc., 781 P.2d 1084, 1091-94 (Kan. 1989) (relying on full recovery policy of statute to hold that umbrella policy must include UM/UIM coverage); Dobson, 441 So. 2d at 1191 (applying UM/UIM statute to umbrella policies is consistent with legislative policy “to provide full recovery under the terms of any applicable policies to a person injured, through no fault of his own, by an uninsured or underinsured motorist“); Estate of Delmue, 936 P.2d at 329 (applying full recovery UM/UIM statute to umbrella policies is “in harmony with the legislature‘s intent“); Isenhour v. Universal Underwriters Ins. Co., 461 S.E.2d 317, 322 (N.C. 1995) (“Because the statute links the amount of UIM coverage to the amount of liability coverage, the increase of liability coverage through umbrella coverage provisions will naturally cause an insurer to offer UIM coverage in a higher amount.“); see also Duriak, 502 N.E.2d at 622 (applying UM statute to umbrella policy while not specifically citing requirement of UM coverage “equivalent” to liability coverage); Am. Econ. Ins. Co. v. Canamore, 834 P.2d 542, 544 (Or. Ct. App. 1992) (holding that UM statute applies to umbrella policy without drawing express link to full recovery policy of statute). Although a minority of full-recovery states have reached the opposition conclusion, they have generally relied on evidence of a legislative intent to limit the scope of mandatory UM/UIM coverage to primary motor vehicle liability policies, evidence not present here. See Cohn v. Pac. Employers Ins. Co., 569 A.2d 544, 547-48 (Conn. 1990) (concluding that “automobile liability policy as referred to in” the UM/UIM statute necessarily refers to primary underlying motor vehicle policy); United Servs. Auto. Ass‘n v. Wilkinson, 569 A.2d 749, 753 (N.H. 1989) (noting that umbrella policies “do not fit the legislative definition of a motor vehicle liability policy“); see also Kromer v. Reliance Ins. Co., 677 A.2d 1224 (Pa. Super. Ct. 1996) (finding no legislative intent to apply UM/UIM statute to excess policies).
¶ 21. Finally, we note that a few states have found umbrella policies to be exempt from their UM/UIM statutes, regardless of whether they require minimal or full coverage, based on perceived differences between primary and umbrella policies. See, e.g., MacKenzie v. Empire Ins. Cos., 782 P.2d 1063, 1066 n.5 (Wash. 1989) (“As we perceive it, the primary reason that the UIM statutes do not apply to umbrella policies is that such policies are an inherently different type of policy, not because a UIM statute may only require a minimum amount of UIM coverage.“). As discussed earlier, however, such purported distinctions, based upon the fact that umbrella policies cover persons rather than vehicles and multiple rather than single risks, have little or no bearing on the question of whether, under the statute, they provide coverage “against liability arising out of the ownership, maintenance or use of any motor vehicle.”
¶ 22. Thus, while far from uniform, the case law generally supports a result consistent with the language and the legislative purpose underlying our own UM/UIM statute. As one court has cogently observed, to accept the ICSOP position here would “require[] this Court to look beyond the plain language of the statute and ultimately find that the Legislature intended to exclude umbrella policies” despite the fact that it “clearly outlined the type of coverage that triggers the statute‘s application.” DePrizio, 705 N.E.2d at 459. Like the court in DePrizio, we see nothing in
¶ 23. Finally, ICSOP observes that some court decisions applying UM/UIM statutes to excess or umbrella policies have been subsequently reversed or modified by legislative action. We reject the assertion, however, that such action is necessarily indicative of interpretive error. As earlier noted, a statute stands on its own terms; whatever action a legislature may subsequently take offers limited insight into an earlier intention. See Coca Cola Bottling Co., 473 N.E.2d at 189 n.3 (“What the legislation involved in this case means cannot rationally be influenced by [subsequent] legislation.“); Castillo v. State, 874 P.2d 1252, 1257 (Nev. 1994) (observing that generally “courts have held that legislative enactments responding to judicial interpretations of a statute are not ‘clarifications’ of original legislative intent, but are amendments presumed to operate prospectively absent contrary legislative intent.“). Our holding here is compelled by the plain and unambiguous language of the statute, and consistent with the policy of “put[putting] the insured in the same position as if the negligent driver had been as responsible as the insured in obtaining liability insurance.” Monteith, 159 Vt. at 381, 618 A.2d at 490. The Legislature obviously remains free to modify the statute should it decide to adopt a different policy.
¶ 24. For all of the foregoing reasons, therefore, we answer the question certified to us by the United States District Court for the District of Vermont in the affirmative, holding that
The certified question is answered in the affirmative.
¶ 25. Skoglund, J., dissenting. While I agree that the language of
¶ 26. As the majority recites, our “paramount goal” when construing a statute is to implement the will of the Legislature. Colwell v. Allstate Ins. Co., 2003 VT 5, ¶ 7, 175 Vt. 61, 819 A.2d 727. “When the language of a statute is plain and unambiguous, we presume that the Legislature intended the meaning expressed by that language.” Id. Indeed, in such situations, we view it as our duty “to enforce the statute according to its terms without resort to statutory construction.” Id. However, when “both parties’ interpretations are plausible . . . we must ascertain legislative intent through consideration of the entire statute, including its subject matter, effects and consequences, as well as the reason and spirit of the law.” In re Estate of Cote, 2004 VT 17, ¶ 10, 176 Vt. 293, 848 A.2d 264. And even where a statute is unambiguous, “when the objective of the legislation would be defeated by literal enforcement of statutory provisions,” we may “depart from the ordinary and usual meaning of the language used therein.” State v. Stell, 2007 VT 106, ¶ 12, 182 Vt. 368, 937 A.2d 649 (quotation omitted). An inquiry broader than reference to the statutory language alone is appropriate in this case. Such an inquiry compels the conclusion that the Legislature did not intend for
¶ 27. Section 941(a) provides, in relevant part, that “[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless [UM/UIM] coverage is provided therein, or supplemental thereto.”
¶ 28. The majority fails to acknowledge that appellant has made this plain-language argument, let alone explain why it is not plausible. Moreover, the ambiguity of the language becomes more apparent when one considers how the statute might read were it to unequivocally conform to either the majority‘s or appellant‘s interpretations. The language could, of course, have expanded the scope of the statute by expressly providing that it applied to excess and umbrella policies, in which case the federal court would not have needed to certify the question it did. On the other hand, the Legislature could have unambiguously limited the statute‘s application by expressly circumscribing its purview to “primary automobile insurance policies,” in which case appellant would plainly prevail. The fact remains that, as phrased, the statute could plausibly be read either way.
¶ 29. My main point of departure with the majority, however, is not its failure to grapple with appellant‘s plain-language argument, but its failure to recognize that the statutory context of
¶ 30. It is a matter of common sense, of course, that in the interpretation of statutes, context is important. Cf. In re S-S Corp., 2006 VT 8, ¶ 19, 179 Vt. 302, 896 A.2d 67 (“It is unsurprising that the meaning of a term undefined by statute . . . will vary depending on the context in which the term is used.“). Of this truism has been born the canons of statutory construction, oft-cited by this Court, that we “read operative sections of the statutory scheme in context” and that we read “the entire scheme in pari materia.” Cushion v. Department of PATH, 174 Vt. 475, 479, 807 A.2d 425, 430 (2002) (mem.); see also Galkin v. Town of Chester, 168 Vt. 82, 87, 716 A.2d 25, 29 (1998) (same); Wolfe v. Yudichak, 153 Vt. 235, 240, 571 A.2d 592, 595 (1989) (same).5
¶ 31. Our first clue that
¶ 32. The case for a narrow interpretation of
¶ 33. My reading is also supported by what we can tell about the Legislature‘s likely purpose in enacting
¶ 34. The legislative history of
¶ 35. While I admit that these pieces of legislative history are not conclusive proof of an intent to exclude excess and umbrella policies from the purview of
¶ 36. The majority dismisses the recently proposed bills by reasoning that “[n]othing in the bills . . . indicates whether they are intended to amend or clarify existing law.” Ante, ¶ 12. However, as we have often stated, “[w]hile we recognize that clarification is a legitimate objective of legislative action, we presume that the Legislature intends to change the meaning of a statute, unless the circumstances clearly indicate clarification to be intended.” Tarrant v. Dep‘t of Taxes, 169 Vt. 189, 198, 733 A.2d 733, 740 (1999) (quotation omitted). I see no circumstances indicating that the proposed bills were intended to clarify existing law, and thus nothing to rebut the presumption that the amendments are intended to alter it. See id. (reaching the same conclusion). This Court‘s role is “to interpret statutes so as to give them effect,” not to involve itself in ongoing political and legislative initiatives. In re C.S., 158 Vt. 339, 344, 609 A.2d 641, 644 (1992). Apparently, in the Legislature‘s judgment,
¶ 37. Perhaps the most persuasive evidence that the Legislature did not mean to extend the reach of
Umbrella policies serve an important function in the industry. In this day of uncommon, but possible, enor-
mous verdicts, they pick up this exceptional hazard at a small premium. Assuming one‘s automobile and homeowner‘s policies have liability limits of $100,000 or even $500,000, the umbrella policy may pick up at that point and cover for an additional million, five million, or ten million. It may assume as a primary carrier certain coverages not included elsewhere, such as invasion of privacy, false arrest etc., but there is no intention to supplant the basic carriers on the homeowners or automobile coverages. Therefore, these should not even enter into our current consideration. However, because of the misunderstanding of the courts as to the nature of such coverages, they have been held to fall within the definition of automobile liability insurance.
8C J. & J. Appleman, Insurance Law and Practice § 5071.65, at 107-08 (1981); id. Interim Supp. § 5071.65, at 17-18 (2003).
¶ 38. Appellant points out that subjecting excess policies to mandatory UM/UIM requirements defeats insurers’ legitimate expectations. While, as the majority correctly notes, insurers’ expectations are not dispositive of the meaning of a statute, Monteith v. Jefferson Ins. Co. of N.Y., 159 Vt. 378, 384-85, 618 A.2d 488, 489 (1992), the Legislature‘s expectations are. Due to the inherent differences between the two kinds of policies at issue in this case, I think it unwise to assume that the Legislature meant for
¶ 39. There is voluminous authority recognizing that excess and umbrella policies are inherently different from automobile insurance policies and the principle that this difference supports limiting the applicability of UM/UIM requirements to the latter type of policy. See, e.g., Reddy v. N.H. Ins. Co., 612 A.2d 64, 68-69 (Conn. App. Ct. 1992) (noting that “the distinction between primary and excess insurance policies is the key to determining whether a policy is an automobile liability insurance policy and thus is required to provide uninsured motorist coverage pursuant to [statute]“); Mass, 610 A.2d at 1190 (excess policies serve purpose distinct from policies that exclusively cover liability arising out of ownership, maintenance or operation of a motor vehicle); Liberty Mut. Ins. Co. v. McLaughlin, 590 N.E.2d 679, 680 (Mass. 1992); Sidelnik v. Am. States Ins. Co., 914 S.W.2d 689, 694 (Tex. App. 1996) (“We are persuaded that umbrella policies providing excess liability coverage serve a purpose distinct from that served by policies that exclusively cover liability from damages arising from the ownership, maintenance, or use of an automobile.“); MacKenzie, 782 P.2d at 1066 n.5 (“As we perceive it, the primary reason that the UIM statutes do not apply to umbrella policies is that such policies are an inherently different type of policy.“). I presume that the Legislature enacted and amended
¶ 40. Finally, I will briefly address several points of disagreement with how the majority applies authority from other jurisdictions. The majority bootstraps support for its election to join up with one side of an admittedly considerable split in authority in part by means of its conclusion that
¶ 41. For all the above-stated reasons, I respectfully dissent. I am authorized to state that Justice Burgess joins in this dissent.
Notes
No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein, or supplemental thereto, for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured, underinsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, and for property damages resulting from the ownership, maintenance or use of such uninsured, underinsured or hit-and-run motor vehicle.
We note as well that, although the parties vigorously disputed whether the policies expressly provided for UM/UIM benefits, the federal magistrate judge concluded that they “did not expressly provide underinsured motorist coverage.” The estate objected to this portion of the magistrate judge‘s report and recommendation, but the district court‘s certification order also concluded that “[t]he policies as worded would not provide coverage in this case.” The question of policy coverage was not certified to this Court, and we express no view on the issue.