MATTHEW J. WALLACE et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Docket: Cum-16-408
MAINE SUPREME JUDICIAL COURT
Decided: June 29, 2017
2017 ME 141
MEAD, J.
Reporter of Decisions; Argued: April 12, 2017; Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.; Majority: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, and HJELM, JJ.; Dissent: JABAR, J.
[¶1] Matthew J. Wallace and Freja Folce1 appeal from a summary judgment entered by the Superior Court (Cumberland County, Mills, J.) in favor of State Farm Mutual Automobile Insurance Company on their complaint seeking underinsured motorist (UM) payments from two policies issued by State Farm. The plaintiffs contend that the court erred in finding that the tortfеasor who injured them in a motor vehicle accident was not an underinsured driver pursuant to Maine‘s UM statute, and therefore there was no gap in coverage requiring State Farm to pay UM benefits. We affirm the judgment.
[¶2] For the purpose of deciding their respective motions for summary judgment, the parties stipulated to the following facts. On September 29, 2011, Matthew Wallace was driving south on Route 26 in Woodstock; Freja Folce and her minor daughter Zoe were passengers in the vehicle. Corey Hill, who was driving in the opposite direction in a vehicle owned by his employer, Twin Pines Construction, Inc., lost control while attempting to pass another vehicle, crossed the centerline, and collided with Wallace‘s vehiсle. The accident was caused by Hill‘s negligence.
[¶3] Hill was acting in the course and scope of his employment when the accident occurred. His Twin Pines vehicle was insured under a Safety Insurance Company policy that provided liability coverage of $50,000 per person and $100,000 per accident. Twin Pines was also insured under an excess policy issued by Alterra Excess Surplus Insurance Company providing $2,000,000 in excess commercial auto liability coverage; however, the Alterra policy required Twin Pines to maintain $1,000,000 in primary coverage, and provided that Alterra was liable only “to the extent that it would have been held liable had the insured complied” with that requirement. The policies issued to
[¶4] The plaintiffs were insured under a State Farm policy covering their vehicle; that policy provided UM coverage of $100,000 per person and $300,000 per accident. Wallace was also insured under a separate State Farm policy covering а different vehicle with the same UM coverage limits.
[¶5] In August 2013, the plaintiffs filed complaints, which were later consolidated, against Twin Pines, Hill, and State Farm. After the plaintiffs settled with Twin Pines, Alterra paid its excess policy limits—$1,000,000 to Wallace and $1,000,000 to Freja Folce. Safety also paid its policy limits—$50,000 to Freja Folce and $50,000 for the benefit of Zoe. All claims against defendants other than State Farm were then dismissed with prejudice.
[¶6] The plaintiffs and State Farm agreed for purposes of summary judgment that the plaintiffs’ aggregate damages exceeded $100,000—the per accident limit of Safety‘s primary policy—which would entitle the plaintiffs to UM benefits under the State Farm policies if State Farm were liable to pay UM benefits. The parties agreed to resolve the legal issue of State Farm‘s liability by summary judgment.
II. DISCUSSION
[¶8] Using the stipulated facts, we review the court‘s entry of summary judgment for State Farm de novo as a question of law. Estate of Barron v. Shapiro & Morley, LLC, 2017 ME 51, ¶ 12, 157 A.3d 769.
[¶9] Regarding the insurance coverage for the plaintiffs’ damages, the first $100,000 has been paid by the Safety primary policy, and damages in the $1-3 million range have been paid by the Alterra excess policy. The question we must resolve is whether the intermediate range from $100,000 to the limits of State Farm‘s UM liability represents a gap in coverage, meaning that Hill was an underinsured driver, or whether the $2.1 million in payments by Safety and Alterra, significantly exceeding State Farm‘s maximum UM liability, means that, as the trial court found, “Hill was not an underinsured driver.”
[¶11] State Farm‘s position is straightforward: the plaintiffs’ maximum UM coverage is less than the $2.1 million that they received from Twin Pines‘s liability insurers; therefore, there is no underinsured motorist gap that Stаte Farm is responsible to cover. That position, adopted by the Superior Court, is supported by our decisions.
[¶12] In construing
[¶13] The UM statute provides that “[i]n the event of payment to any person under uninsured vehicle coverage . . . to the extent of such payment the insurer shall be entitled to the proceeds of any settlement or recovery from any person legally responsible for the bodily injury as to which such payment was made.”
[¶14] In Farthing, the plaintiff contended that $20,000 paid by the tortfeasor‘s insurer “reduced the total damages she could recover, not the amount she could recover under her UM coverage,” which had a $100,000 per person limit. 2010 ME 131, ¶¶ 2-3, 10 A.3d 667. We applied the formula set out in Tibbetts2 and concluded that
[a]pplying the Tibbetts formula to these facts, if [the tortfeasor] had been insured to the amount of [the рlaintiff‘s] UM coverage, [the plaintiff] would have recovered $100,000 from [the tortfeasor‘s] insurer, given [the plaintiff‘s] damages. The amount actually paid by [the tortfeasor], $20,000, is subtracted from that amount, leaving $80,000 as the coverage gap that Allstate was responsible to, and did, pay. Accordingly, [the plaintiff] in fact recovered $100,000, just as she would have had [the tortfeаsor‘s] insurance been equal to [the plaintiff‘s] UM coverage. That result is consistent with the goal of the UM statute, in that it provides [the plaintiff] as the injured insured the same recovery which would
have been available had the tortfeasor been insured to the same extent.
Id. ¶ 8 (quotation marks omitted). Here, the plaintiffs have recovered far more from the tortfеasor‘s insurers than the maximum amount of UM coverage provided by the State Farm policies. Accordingly, they have surpassed “the same recovery which would have been available had the tortfeasor been insured to the same extent.” Id. (quotation marks omitted).
[¶15] We recently reaffirmed the Farthing process:
When the total damages are greater than the amount of UM/UIM coverage . . . [section 2902(4)] mandates that insurers оffset the amount of coverage available in the UM/UIM policy, rather than the amount of damages incurred, by the amount actually paid by the tortfeasor. We have explained that the reason for doing so is that the goal of the UM statute is to provide an injured insured the same recovery that would have been available had the tortfeasor been insured to the same extent as the injured party. Thus, it was proper to offset the amount of available coverage with the other motorist‘s payment . . . .
Graf v. State Farm Mut. Auto. Ins. Co., 2016 ME 153, ¶ 17, 149 A.3d 529 (emphasis added) (alterations, original emphases, citations, and quotation marks omitted). Here, offsetting the amount of UM coverage available to the plaintiffs with Twin Pines’ $2.1 million payment yields the trial court‘s result—“There is no gap in coverage and defendant State Farm is not required to pay.”
Judgment affirmed.
JABAR, J., dissenting.
[¶16] I respectfully dissent because the plain language of Maine‘s UM statute, and our jurisprudence interpreting it, require that the plaintiffs be afforded the same recovery that they would have been entitled to had the Twin Pines vehicle been insured to the same extent as Wallace‘s UM coverage.
[¶17] The automоbile accident at the heart of this case produced disastrous consequences. The plaintiffs, Wallace and Folce, allege in their pleadings that, as a result of the accident, they both suffered brain injuries and numerous lacerations. In addition, Wallace alleges to have suffered a crushed right humerus, pulmonary contusions, and fractures to his rаdius, ulna, ribs, and both femurs. According to her complaint, Folce lost the use of her left eye.
[¶18] As the Court detailed, at the time of the accident, the Twin Pines vehicle was covered by a Safety Insurance Company liability policy with limits of $50,000 per person and $100,000 per accident. The automobile was also covered by an Alterra excess policy with limits of $2,000,000. Undеr the terms of the Alterra excess policy, Twin Pines was required to maintain a minimum of
[¶19] Alterra settled with Wallace and Folce for its $2,000,000 policy limits, with each receiving $1,000,000. Presumably, Alterra believed that Wallace and Folce‘s damages totaled at least $3,000,000 because, by the terms of its policy, Alterra was liable only for damages exceeding the deductible amount of $1,000,000. Twin Pines’ primary insurer, Safety Insurance Company, also settled with Wallace and Folce for its policy limits of $50,000 per person. Therefore, because Twin Pines did not maintain $1,000,000 of underlying insurance as was required pursuant to the Alterra excess policy,
[¶20] The plaintiffs now seek to recover under the UM provisions of the State Farm policies. Pursuant to
[¶21] The facts of this case are unique because of the $1,000,000 deductible contained in the Alterra excess policy, and this Court has never applied the UM statute under like circumstances. The leading cases applying and enunciating the purpose of the UM statute have not dealt squarely with a situation where an excess policy is subject to a $1,000,000 deductible. All of
[¶22] The facts of this case demonstrate that the plaintiffs did not receive the “same recovery” that they would have been entitled to had the Twin Pines vehicle been insured to the “same extent” as Wallace‘s UM coverage. See Farthing, 2010 ME 131, ¶ 6, 10 A.3d 667 (quotation marks omitted). The math is simple. If the Twin Pines vehicle were insurеd to the “same extent” as the plaintiffs’ UM coverage—i.e., $100,000 per person, $300,000 per accident—rather than the $50,000 per person limits of the Safety policy, then Wallace and Folce would have each recovered $1,100,000 ($100,000 from the Safety policy and $1,000,000 from the Alterra excess policy). However, since the Safety
[¶23] The Court concludes that because “the plaintiffs have recovered far more from the tortfeasor‘s insurers than the maximum amount of UM coverage provided by the State Farm policies,” Wallace and Folce cannot prevail on their UM claims. Court‘s Opinion ¶ 14. Simply looking at the total Wallace and Folce received is not the proper analysis to apply here. Such a simplistic aрproach falls short of promoting the aims of the statute and is ill-suited given the unique facts of this case. Although Wallace and Folce have recovered sums in excess of the State Farm UM policy limits, they received less than what they would have been entitled to had the Twin Pines vehicle carried the same liability insurance as the plaintiffs’ $100,000 UM policy limits.
[¶25] In conclusion, the plaintiffs Wallace and Folce are entitled to receive the difference between Twin Pines’ primary coverage ($50,000 per person) and the limits of the State Farm UM policy ($100,000 per person). Therefore, I would vacate and enter a judgment in favor of Wallace and Fоlce for $50,000 each.
Steven D. Silin, Esq., and Robert H. Furbish, Esq. (orally), Berman & Simmons, P.A., Lewiston, for appellant Matthew J. Wallace
Michael F. Vaillancourt, Esq., Ainsworth, Thelin & Raftice, P.A., South Portland, for appellant Freja Folce
J. William Druary, Jr., Esq., and Gregory M. Patient, Esq. (orally), Marden, Dubord, Bernier & Stevens, PA LLC, Waterville, for appellee State Farm Mutual Automobile Insurance Company
Cumberland County Superior Court docket numbers CV-2013-367 and CV-2013-532