Kay Franklin v. Csaa General Insurance ( 2023 )

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
KAY FRANKLIN,
Plaintiff,
v.
CSAA GENERAL INSURANCE COMPANY,
Defendant.
No. CV-22-0266-CQ
Filed July 28, 2023
Certified Questions from the United States District Court
The Honorable John J. Tuchi, Judge
No. CV-22-00540-PHX-JJT
QUESTIONS ANSWERED
COUNSEL:
Evan Goldstein, Goldstein Woods & Alagha, Phoenix; Robert B. Carey, John
M. DeStefano (argued), E. Tory Beardsley, Hagens Berman Sobol Shapiro
LLP, Phoenix; and Sam Saks, Guidant Law PLC, Tempe, Attorneys for Kay
Franklin
Kymberly Kochis (argued), Eversheds Sutherland (US) LLP, New York,
NY; and Parker C. Bunch, William M. Demlong, The Cavanagh Law Firm,
P.A., Phoenix, Attorneys for CSAA General Insurance Company
Jared Sutton, Jennifer Lee-Cota, Papetti Samuels Weiss McKirgan LLP,
Scottsdale, Attorneys for Amici Curiae Farmers Casualty Insurance
Company F/K/A Metropolitan Casualty Insurance Company, Farmers
Group Property and Casualty Insurance Company F/K/A Metropolitan
Group Property and Casualty Insurance Company, and Economy Preferred
Insurance Company
Brett L. Slavicek, Justin Henry, The Slavicek Law Firm, Phoenix, Attorneys
for Amici Curiae Cameron Bode, Jesus Caballero, Charles Creasman, Brian
Dorazio, Craig Hacker, Christian Loughran, Charles Miller, Jodi Moshier,
Michael Moshier, Jose Rios, and Chase Whitehead
Ian M. Fischer, Micalann C. Pepe, Kate A. Myers, Jaburg & Wilk P.C.,
FRANKLIN v. CSAA GENERAL INSURANCE
Opinion of the Court
Phoenix, Attorneys for Amicus Curiae Amica Mutual Insurance Company
Charles W. Wirken, Jay R. Graif, Gust Rosenfeld P.L.C., Phoenix, Attorneys
for Amici Curiae American Property Casualty Insurance Association and
National Association of Mutual Insurance Companies
Myles P. Hassett, Jamie A. Glasser, David R. Seidman, Hassett Glasser, P.C.,
Phoenix, Attorneys for Amicus Curiae Independent Insurance Agents and
Brokers of Arizona
Josh M. Snell, Patrick C. Gorman, Jones, Skelton & Hochuli P.L.C., Phoenix;
and Kim E. Rinehart, Wiggin and Dana LLP, New Haven, CT, Attorneys for
Amicus Curiae Trumbull Insurance Company
Mick Levin, Mick Levin, P.L.C., Phoenix, Attorney for Amicus Curiae
Arizona Association for Justice
JUSTICE LOPEZ authored the Opinion of the Court, in which
CHIEF JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, JUSTICES
BOLICK, BEENE, MONTGOMERY, and KING joined.
JUSTICE LOPEZ, Opinion of the Court:
¶1 The United States District Court for the District of Arizona
certified two questions for our review: (1) Does A.R.S. § 20-259.01 mandate
that a single policy insuring multiple vehicles provides different
underinsured motorist (“UIM”) coverages for each vehicle, or a single UIM
coverage that applies to multiple vehicles?; and (2) Does A.R.S.
§ 20-259.01(B) bar an insured from receiving UIM coverage from the policy
in an amount greater than the bodily injury liability limits of the policy?
¶2 We hold that § 20-259.01 mandates that a single policy
insuring multiple vehicles provides different UIM coverages for each
vehicle. Notwithstanding creative policy drafting intended to evade
statutory requirements—including technical definitions of coverages and
extensive limitation of liability clauses—insurers seeking to prevent
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Opinion of the Court
insureds from stacking UIM coverages under a single, multi-vehicle policy
must employ subsection (H)’s sole prescribed method for limiting stacking.
We also hold that § 20-259.01(B), by its plain language and non-stacking
function, does not bar an insured from receiving UIM coverage from the
policy in an amount greater than the bodily injury or death liability limits
of the policy.
BACKGROUND
¶3 Kay Franklin’s mother perished in an automobile accident
caused by a negligent driver. After collecting the per-person liability limit
of the negligent driver’s insurance policy, $25,000, Franklin submitted a
UIM claim 1 to her mother’s insurer, CSAA General Insurance Company
(“CSAA”). At the time of the accident, the mother’s CSAA policy (the
“Policy”) covered the mother’s two vehicles and provided $50,000 of UIM
coverage “per person.” The Policy also contained a limitation of liability
clause, stating in relevant part:
The Limit of Liability shown on the Dec Page is the most we
will pay regardless of the number of:
....
2. covered cars;
....
7. premiums paid.
¶4 Although CSAA paid $50,000, Franklin sought an additional
$50,000 under a “stacking” theory. According to Franklin, the inclusion of
her mother’s second vehicle in the Policy indicated that the Policy provided
a separate, additional UIM coverage that Franklin can stack, thereby
increasing her mother’s total UIM coverage from $50,000 to $100,000.
Franklin’s stacking theory is generally referred to as “intra-policy stacking”
where multiple UIM coverages under a single policy are stacked, as
1 UIM coverage applies when an insured is injured or killed by a negligent
driver whose liability coverage is insufficient to pay for the damages
caused. § 20-259.01(G). Similarly, uninsured motorist (“UM”) coverage
applies where the negligent driver is not covered by a policy with minimum
liability limits required by statute. § 20-259.01(E).
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Opinion of the Court
distinguished from “inter-policy stacking,” where the UIM coverages of
multiple policies on different vehicles are stacked. 2
¶5 In asserting that the Policy permitted intra-policy stacking,
Franklin emphasized CSAA’s failure to comply with § 20-259.01(H), also
known as the “anti-stacking” provision of Arizona’s
Uninsured/Underinsured Motorist Act (the “UMA”), which Franklin
claims provides the sole method for limiting UIM coverage stacking in
Arizona. In other words, Franklin argues that CSAA’s failure to comply
with the statute meant that the Policy failed to preclude intra-policy
stacking.
¶6 CSAA rejected Franklin’s claim for an additional $50,000,
contending that the Policy provided a single UIM coverage and that there
was no additional coverage to stack. Franklin then sued CSAA in federal
district court for declaratory judgment, alleging breach of contract and bad
faith. Franklin later amended the complaint to allege a class action on
behalf of other parties insured by CSAA and similarly situated to her.
¶7 CSAA filed a motion for the district court to certify the two
questions presented here, which the court granted. We accepted review to
clarify how § 20-259.01 regulates insurers’ ability to preclude insureds from
intra-policy stacking UIM coverages. We have jurisdiction under article 6,
section 5(6) of the Arizona Constitution and A.R.S. § 12-1861.
DISCUSSION
¶8 Both certified questions arise from differing interpretations of
the UMA. When interpreting statutes, we begin with the text. See
4QTKIDZ, LLC v. HNT Holdings, LLC, 253 Ariz. 382, 385 ¶ 5 (2022) (“‘When
the plain text of a statute is clear and unambiguous,’ it controls unless an
absurdity or constitutional violation results.” (quoting Sell v. Gama,
231 Ariz. 323, 327 ¶ 16 (2013))). If ambiguous, we interpret the text with
“secondary principles of statutory interpretation, such as ‘the context of the
statute, the language used, the subject matter, its historical background, its
effects and consequences, and its spirit and purpose.’” Ariz. Citizens Clean
2 See Rashid v. State Farm Mut. Auto. Ins. Co., 163 Ariz. 270, 272 n.2 (1990).
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Opinion of the Court
Elections Comm’n v. Brain, 234 Ariz. 322, 325 ¶ 11 (2014) (quoting Wyatt v.
Wehmueller, 167 Ariz. 281, 284 (1991)).
I.
¶9 The first certified question asks whether § 20-259.01 mandates
that a single policy insuring multiple vehicles provides separate UIM
coverages for each vehicle or a single UIM coverage that applies to multiple
vehicles. Stated differently, the first question is whether § 20-259.01
classifies multi-vehicle insurance policies as providing a single UIM
coverage or multiple UIM coverages for each vehicle. We conclude that the
statute’s text is ambiguous, but the statute’s history and purpose clearly
indicate that multi-vehicle policies provide separate UIM coverages for
each vehicle.
A.
¶10 The UMA’s pertinent language concerning intra-policy
stacking resides in § 20-259.01(H). See Am. Family Mut. Ins. Co. v. Sharp,
229 Ariz. 487, 491 ¶ 12 (2012) (“Subsection (H) is the only UMA provision
that authorizes any limitation of UM or UIM coverage.”). Subsection (H)
provides:
If multiple policies or coverages purchased by one insured on
different vehicles apply to an accident or claim, the insurer
may limit the coverage so that only one policy or coverage,
selected by the insured, shall be applicable to any one
accident. If the policy does not contain a statement that
informs the insured of the insured’s right to select one policy
or coverage as required by this subsection, within thirty days
after the insurer receives notice of an accident, the insurer
shall notify the insured in writing of the insured’s right to
select one policy or coverage.
§ 20-259.01(H). Thus, the statute dictates how insurers can prevent
insureds from stacking UIM or UM coverages. Insurers “may limit”
stacking, but insurers must satisfy the statute’s notice requirement to
inform “the insured of the insured’s right to select one policy or coverage,”
either in the policy itself or in writing “within thirty days after the insurer
receives notice of [the] accident.” Id.
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Opinion of the Court
¶11 We emphasize the statutory requirement that, to prevent
stacking, insurers must include in the policy unambiguous language
plainly disavowing the possibility of stacking. CSAA argues that
subsection (H)’s text mandating insurers to provide written notice “within
thirty days” permits insurers to preclude UIM coverage stacking after “[the]
accident” has occurred irrespective of the policy’s underlying language.
Reading the statute to allow insurers to unilaterally limit coverage after the
policy agreement’s execution would violate basic principles of contract law
that require additional consideration and mutual assent for changes to an
existing contract. See Cornell v. Desert Fin. Credit Union, 254 Ariz. 477,
480 ¶ 12 (2023) (“Once a bilateral contract is formed, its terms cannot be
modified absent an additional offer, acceptance, and consideration.”).
Thus, to limit stacking under subsection (H), insurers must (1) expressly
and plainly limit stacking in the policy and (2) satisfy the notice
requirement informing the insured of their “right to select one policy or
coverage” either in the policy itself or in writing to the insured within thirty
days after the insurer is notified of the accident. § 20-259.01(H).
¶12 Subsection (H) only addresses situations where “multiple
policies or coverages purchased by one insured on different vehicles apply
to an accident or claim.” Id. (emphasis added). Thus, as the district court
recently observed, the statute mandates that “[b]efore being allowed to
stack coverages . . . , [insureds] must have actually purchased multiple
policies or coverages on different vehicles.” Heaton v. Metro. Grp. Prop. &
Cas. Ins. Co., No. CV-21-00442-PHX-SRB, 2021 WL 6805629, at *5 (D. Ariz.
Oct. 19, 2021) (emphasis added). Heaton elaborated on this point:
Oftentimes, this is a straightforward exercise. In the case of a
single policy containing UM and UIM coverage on one
vehicle, there is nothing for an insured to stack because there
is one UM coverage and one UIM coverage available to the
insured. Likewise, if an insured has multiple policies with an
insurer, and each policy covers a different vehicle and
contains UM/UIM coverage, then there are multiple policies
on different vehicles and the insured may stack the policies if
the insurer does not adhere to the requirements of
[s]ubsection (H). This case, however, presents a situation that
has not yet been addressed by the Arizona Supreme Court: a
single, multi-vehicle policy that allegedly only provides a
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Opinion of the Court
single UM and UIM coverage that is shared by all the listed
vehicles.
Id. Thus, the dispositive issue becomes whether an insured covered under
a single, multi-vehicle policy necessarily purchased multiple UIM coverages
for each vehicle, triggering subsection (H). See § 20-259.01(H).
¶13 The Heaton court analyzed the statute’s text and noted that
“nothing in the UMA explicitly addresses whether a multi-vehicle policy
necessarily provides multiple coverages.” 2021 WL 6805629, at *6. The
court then employed secondary interpretation principles, suggesting that it
implicitly found ambiguity in the statute. See id. (relying on statutory
history and Arizona court precedent interpreting the UMA “in the context
of public policy concerns” in concluding that “policies providing UM and
UIM coverage on multiple vehicles necessarily provide ‘multiple
coverages’ under the statute”); see also Brain, 234 Ariz. at 325 ¶ 11 (opining
that ambiguous text is interpreted with “secondary principles of statutory
interpretation”).
¶14 CSAA challenges Heaton’s interpretation of subsection (H),
arguing that it conflicts with Arizona precedent. See Hampton v. Allstate Ins.
Co., 126 Ariz. 403, 405 (App. 1980) (denying UIM stacking where a policy
“clearly limit[ed] [the insurer’s] liability for damages to any one person as
a result of one accident . . . to the sum of $15,000 and the fact that three
vehicles are described and three premiums charged does not warrant
construing policy to allow stacking”). CSAA also contends that, because
certain subsections of the statute describe UIM coverage as “coverage for
persons,” not “vehicles,” the statute unambiguously precludes construing
a policy to include a separate UIM coverage for each vehicle. See
§ 20-259.01(B) (requiring insurers to offer “[UIM] coverage that extends to
and covers all persons” (emphasis added)); § 20-259.01(G) (“[UIM] coverage
includes coverage for a person . . . .” (emphasis added)). We are not
persuaded.
¶15 First, Hampton is distinguishable. Hampton did not interpret
the UMA when it held that policy language may preclude intra-policy
stacking. 126 Ariz. at 405 (considering and rejecting an insured’s public
policy arguments against enforcing a policy’s limitation of liability clause).
This makes sense considering that the UMA was not considered applicable
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Opinion of the Court
to intra-policy stacking scenarios at the time. See State Farm Mut. Auto. Ins.
Co. v. Lindsey, 182 Ariz. 329, 332 (1995) (stating in dicta that insurers may
prevent stacking by issuing a single policy covering multiple vehicles).
Thus, Hampton does not address whether insureds covered under a
multi-vehicle policy have necessarily “purchased” multiple UIM coverages
per vehicle under the current UMA.
¶16 Second, the language in subsections (B) and (G) describing
coverage for “persons” simply illustrates the general understanding that
UIM coverage applies for the benefit of “persons.” For example, insurers
may not deny coverage solely on the grounds that a covered person was
injured in a vehicle owned by the insured but not listed in the policy.
Calvert v. Farmers Ins. Co. of Ariz., 144 Ariz. 291, 297 (1985). As such, the
language describing UIM coverage as “for persons” does not address
whether an insured has purchased multiple UIM coverages.
¶17 Moreover, we prioritize consistency when construing
statutory provisions. See, e.g., Vangilder v. Ariz. Dep’t of Rev., 252 Ariz. 481,
487 ¶ 22 (2022). Interpreting subsections (B) and (G) as implicitly barring
intra-policy stacking directly contravenes subsection (H)’s express
reference to intra-policy stacking and obviates its sole purpose. See
§ 20-259.01(H) (“If multiple policies or coverages purchased by one insured
on different vehicles apply to an accident or claim, the insurer may limit the
coverage so that only one policy or coverage, selected by the insured, shall
be applicable to any one accident.” (emphasis added)). The statute’s use of
“or coverage” next to “policy” distinguishes the two terms in
contemplation of both intra-policy and inter-policy stacking scenarios. See
Heaton, 2021 WL 6805629, at *5 (noting that “in 1997, the legislature
expanded subsection (H) to include intra-policy stacking”).
¶18 Critically, subsection (H), not subsections (B) and (G), limits
intra-policy stacking. See Sharp, 229 Ariz. at 491 ¶ 12 (“Subsection (H) is the
only UMA provision that authorizes any limitation of UM or UIM
coverage.”). Accordingly, we agree with Heaton that the statute’s text does
not explain how or when multiple UIM coverages in a multi-vehicle policy
are “purchased.”
¶19 Dictionaries define “purchased” as “bought” or “paid for.”
Purchase, Black’s Law Dictionary (11th ed. 2019) (“The act or an instance of
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Opinion of the Court
buying.”); Purchase, Merriam-Webster, https://www.merriam-
webster.com/dictionary/purchase (last visited July 25, 2023) (“[T]o obtain
by paying money or its equivalent.”). These definitions, coupled with the
statute’s silence, show that it is equally plausible to interpret
“multiple . . . coverages purchased” in subsection (H) in two ways. First, as
the Heaton court implicitly found, “coverages purchased” can broadly
signify wherever an insured pays multiple premiums for each vehicle under
a multi-vehicle policy, regardless of technical policy language defining
“UIM coverage” to be a single coverage. See Heaton, 2021 WL 6805629, at *6.
Second, “coverages purchased” may be more narrowly construed, touching
only where the multi-vehicle policy’s plain language states that an insured
has purchased multiple UIM coverages. Cf. Hampton, 126 Ariz. at 405.
¶20 Because “coverages purchased” under subsection (H) is
“reasonably susceptible to differing interpretations,” we find that it is
ambiguous. See Premier Physicians Grp., PLLC v. Navarro, 240 Ariz. 193, 195
¶ 9 (2016). Specifically, the statute’s text is unclear as to whether all
multi-vehicle policies contain multiple purchased UIM coverages for each
vehicle, thereby triggering subsection (H), or whether insurers may define
“coverages” purchased in the policy to be a single coverage, thereby
avoiding subsection (H)’s application entirely.
B.
¶21 The text’s ambiguity warrants application of secondary
interpretive principles, including consideration of the statute’s context,
history, and purpose. See Brain, 234 Ariz. at 325 ¶ 11; see also Antonin
Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 256
(2012) (stating that statutory history “form[s] part of the context of the
statute, and (unlike legislative history) can properly be presumed to have
been before all the members of the legislature when they voted”). In 1995,
subsection (H) 3 read as follows:
If multiple policies or coverages purchased by one insured on
different vehicles apply to an accident or claim, the insurer
may limit the coverage so that only one policy, selected by the
insured, shall be applicable to any one accident.
3 In 1995, subsection (H) was codified as A.R.S. § 20-259(F). See Lindsey,
182 Ariz. at 331.
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Opinion of the Court
Uninsured and Underinsured Motorist Act, 1982 Ariz. Sess. Laws ch. 298,
§ 1(F) (2d Reg. Sess.) (emphasis added). In the same year, this Court
suggested in dicta that insurers could limit UIM stacking by issuing a
single, multi-vehicle policy as opposed to issuing multiple policies for each
vehicle. See Lindsey, 182 Ariz. at 332 (“We do not suggest that [the
insurer] . . . does not have the right to preclude coverage stacking . . . . We
merely find that this insurer did not take the steps necessary to effectuate
the limitation. It might have done so by issuing one policy on all three
vehicles.”).
¶22 However, in 1997, the legislature added a notice requirement
and the additional language “or coverage” to subsection (H) as follows:
If multiple policies or coverages purchased by one insured on
different vehicles apply to an accident or claim, the insurer
may limit the coverage so that only one policy or coverage,
selected by the insured, shall be applicable to any one
accident. If the policy does not contain a statement that
informs the insured of the insured’s right to select one policy
or coverage as required by this subsection, within thirty days
after the insurer receives notice of an accident, the insurer
shall notify the insured in writing of the insured’s right to
select one policy or coverage.
§ 20-259.01(H) (emphasis added).
¶23 CSAA argues that the 1997 amendment merely solidified
subsection (H)’s application in the inter-policy stacking context. We
disagree. Lindsey reaffirmed subsection (H)’s application in the inter-policy
context, obviating any need to amend the statute for this purpose. See
182 Ariz. at 332 (permitting inter-policy stacking where the insurer failed to
satisfy the UMA’s requirements). Instead, the 1997 amendment’s addition
of “or coverage” to subsection (H) was likely to (1) reject Lindsey’s “single
coverage” method for limiting stacking; (2) explicitly recognize intra-policy
stacking; and (3) establish subsection (H) as the sole means by which
insurers may limit intra-policy stacking. See Heaton, 2021 WL 6805629, at *6.
As such, allowing insurers to define coverages as a sole coverage in the
policy, see Lindsey, 182 Ariz. at 332; cf. Hampton, 126 Ariz. at 405, would
permit circumvention of subsection (H) entirely, essentially rendering the
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1997 amendment meaningless. Thus, § 20-259.01’s statutory history
demonstrates that, for purposes of triggering subsection (H), all
multi-vehicle policies necessarily provide multiple UIM coverages per
vehicle that insureds have “purchased.”
¶24 In sum, § 20-259.01’s text and history support a broad
interpretation of “coverages purchased” that recognizes a separate UIM
coverage “purchased” for each vehicle in a multi-vehicle policy. This
interpretation aligns with the UMA’s object to afford insureds coverage. See
A.R.S. § 1-211(B) (“Statutes shall be liberally construed to effect their objects
and to promote justice.”). We agree with Heaton that the purpose of
subsection (H), as amended, is to provide the sole means by which insurers
may limit UIM/UM stacking—whether intra-policy or inter-policy—and
allowing insurers to circumvent the statute by defining UIM coverages as a
sole coverage in the policy would render subsection (H) meaningless.
II.
¶25 The second certified question asks whether § 20-259.01(B)
bars an insured from receiving UIM coverage from the policy in an amount
greater than the bodily injury liability limits of the policy. In other words,
it asks whether subsection (B) imposes a ceiling on UIM coverage based on
the bodily injury or death liability limits of the policy.
¶26 When interpreting a statutory provision, we consider the
statute as a whole, reading the provision’s words in context. Stambaugh v.
Killian, 242 Ariz. 508, 509 ¶ 7 (2017). Subsection (B), in relevant part,
provides as follows:
Every insurer writing automobile liability or motor vehicle
liability policies shall also make available to the named
insured thereunder and shall by written notice offer the
named insured and at the request of the named insured shall
include within the policy underinsured motorist coverage
that extends to and covers all persons insured under the
policy, in limits not less than the liability limits for bodily injury
or death contained within the policy. . . . At the request of the
named insured, the named insured may purchase and the
insurer shall then include within the policy underinsured
motorist coverage that extends to and covers all persons
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Opinion of the Court
insured under the policy in any amount authorized by the
insured up to the liability limits for bodily injury or death
contained within the policy.
§ 20-259.01(B) (emphasis added). Subsection (B), as a whole, reflects two
primary functions that relate to the offer and purchase of UIM coverage.
First, subsection (B) dictates that insurers must initially offer insureds UIM
coverage with “limits not less than the liability limits for bodily injury or
death.” Id. (emphasis added). The legislature’s use of the words “not less
than” means that, at a minimum, the insurer must offer UIM coverage that
is at least the same amount of the policy’s bodily injury or death liability
limits.
¶27 Second, subsection (B) permits insureds to request and
purchase UIM coverage in any amount that the insured selects. Insureds
may reject the insurers’ initial offer and “request” UIM coverage “in any
amount . . . up to the liability limits for bodily injury or death contained
within the policy.” Id. Upon making such a request, the insured “may
purchase and the insurer shall then include [the requested coverage] within
the policy.” Id. In other words, insureds are entitled to purchase coverage
less than what insurers are obligated to initially offer, but the insureds
themselves must first request the lesser coverage. Id. Also, in such an
instance, as distinct from where an insured purchases coverage “in an
amount equal to the limits for bodily injury or death,” insurers must offer
the lesser coverage using a special “form approved by the director” of the
Arizona Department of Insurance (“DOI”). Id.
¶28 CSAA argues that subsection (B)’s use of “up to” imposes a
ceiling on insureds’ ability to receive UIM coverage exceeding bodily injury
or death liability limits contained in the policy, cf. Green v. Mid-Am. Preferred
Ins. Co., 156 Ariz. 265, 273 (App. 1987) (“[A]n insured is precluded from
purchasing a greater amount of underinsured coverage than liability
coverage.”), as evinced by insureds’ inability to select such coverage in
DOI-approved forms. Not so. Subsection (B)’s “up to” language refers to
per-vehicle coverage, as distinct from total UIM coverage in a stacked
scenario. When viewed in context, rather than imposing a ceiling on
coverage insureds may purchase, the “up to” language merely obligates
insurers to sell coverage “in any amount” the insured authorizes “up to the
liability limits for bodily injury or death contained within the policy.” The
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insurers’ obligation to sell UIM coverage “up to” the liability limits does
not statutorily proscribe UIM coverage in excess of those limits.
¶29 Moreover, CSAA’s interpretation of subsection (B) would
nullify the UMA’s definition of UIM coverage in subsection (G). See
§ 20-259.01(G) (“To the extent that the total damages exceed the total
applicable liability limits, the [UIM] coverage provided in subsection B of
this section is applicable to the difference.”). Under CSAA’s approach, UIM
coverage is rendered illusory because, per subsection (G), it only applies
where damages exceed bodily injury or death limits in the policy, but, per
subsection (B), UIM coverage may never exceed bodily injury or death
liability limits. While one may argue that subsection (G)’s reference to
“total applicable liability limits” addresses the tortfeasor’s liability limits,
not the insured’s, subsection (G) does not expressly distinguish the two. Id.
¶30 Additionally, if subsection (B) imposed a cap on total UIM
coverage receivable, then subsection (H) would be rendered superfluous
because stacked UIM coverages would almost always exceed the policy’s
bodily injury or death liability limits. See Vangilder, 252 Ariz. at 487 ¶ 22
(“[This Court] avoid[s] interpretations that render statutory provisions
meaningless, unnecessary, or duplicative.” (quoting Ariz. Dep’t of Revenue
v. Action Marine, Inc., 218 Ariz. 141, 143 ¶ 10 (2008))). Such an interpretation
is also contrary to our jurisprudence that recognizes subsection (H) as “the
only UMA provision that authorizes any limitation of UM or UIM
coverage.” Sharp, 229 Ariz. at 491 ¶ 12; see also § 20-259.01(H) (detailing
insurers’ exclusive means of limiting intra-policy stacking).
¶31 At first glance, Green seems inapposite with Sharp’s
characterization of subsection (H) as containing the UMA’s sole limitations
of UIM coverage. Compare Sharp, 229 Ariz. at 491 ¶ 12, with Green, 156 Ariz.
at 273 (stating that “the [UMA] only permits an insured to purchase
underinsured motorist coverage ‘up to the liability limits for bodily injury
or death contained within the policy.’ Thus, an insured is precluded from
purchasing a greater amount of [UIM] coverage than liability coverage.”
(internal citation omitted)). But this discrepancy is readily explained. Green
predates the 1997 amendments to the UMA and did not address the
stacking of multiple UIM coverages “per vehicle,” but rather “per person.”
156 Ariz. at 272–73 (holding that wrongful death plaintiffs were only
entitled to a single UIM coverage despite the policy’s language affording
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“per-person” UIM coverage because the decedent, as the only named
insured injured or killed in the accident, was the only person entitled to
UIM coverage).
¶32 Finally, CSAA overstates the significance of the
DOI-approved forms in interpreting subsection (B). Although the forms
are appropriately understood as offering a safe harbor for insurers in
meeting their duty to make a written offer where insureds purchase UIM
coverage below the policy’s bodily injury or death liability limits, Ballestros
v. Am. Standard Ins. Co. of Wis., 226 Ariz. 345, 348 ¶ 9, 349–50 ¶ 20 (2011), the
forms do not operate as a statutory limit on the amount of UIM coverage a
policy may provide.
¶33 Subsection (B) is silent concerning stacking. Instead, it
codifies requirements pertaining to the offer and purchase of UIM
coverage, but does not restrict what an insurer may be obligated to pay out
pursuant to a claim. If the insured requests UIM coverage with limits
exceeding “the liability limits for bodily injury or death,” then the insurer
may provide the requested coverage free from any further constraint by
subsection (B). § 20-259.01(B).
CONCLUSION
¶34 In answering the certified questions, we hold that
(1) § 20-259.01’s text, history, and purpose provide that an insured covered
by a multi-vehicle policy has necessarily “purchased” multiple UIM
coverages for each vehicle under subsection (H); thus, rather than
employing singular definitions of “coverage” in their policies, insurers
must comply with the statute’s requirements in order to prevent insureds
from intra-policy stacking; and (2) § 20-259.01(B) does not limit UIM
coverage.
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