Karlson v. City of Oklahoma City , 1985 Okla. LEXIS 118 ( 1985 )

DOOLIN, Vice Chief Justice.

This matter turns on the issue of whether an injured party, as plaintiff, in a negligence action against a municipality, is “legally entitled to recover” damages in excess of the limits of liability imposed by the Political Subdivisions Tort Claims Act, as that phrase is used in the statutes governing underinsured motorist insurance coverage.

We hold the insured party is so entitled.

The factual background which gave rise to this issue is as follows: the plaintiffs sued the City of Oklahoma City for damages for injuries and wrongful death arising out of an automobile collision involving a city police vehicle. Claiming their damages exceed the maximum liability of the City under the Political Subdivisions Tort Claims Act, the plaintiffs joined as defendant the Allstate Insurance Company, seeking to recover the excess damages under the underinsured motorists provisions of the insurance policy issued by Allstate on the vehicle occupied by the plaintiffs. The trial court sustained the Motion for Summary Judgment of Allstate on the theory that the plaintiffs are not legally entitled to recover damages against the City in excess of the maximum amount of the City’s liability under the Tort Claims Act because the City is immune from suit beyond the maximum amount established by the statute.

The statutory provisions with which we are concerned are 36 O.S.1981, § 3636, which provides, in pertinent part:

(B) The policy referred to in subsection (A) of this section shall provide coverage therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom.

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(C)... For the purpose of this coverage, the term “Uninsured motor vehicle” shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim, regardless of the amount of coverage of either of the parties in relation to each other, [emphasis added].

We must also consider 51 O.S. 1981, § 154, which says:

A. The liability of a political subdivision or an employee on claims within the scope of this act shall not exceed:

1. Twenty-five Thousand Dollars ($25,000) to any claimant for any number of claims for damage to or destruction of property, including consequential damages arising out of a single accident or occurrence;

2. Fifty Thousand Dollars ($50,000) to any claimant for all other claims arising out of a single accident or occurrence; or

3. Three Hundred Thousand Dollars ($300,000) for any number of claims arising out of a single occurrence or accident.

B. No award for damages on any claim against a political subdivision or employee shall include punitive or exemplary damages. The limitation imposed by this section on individual claimants includes damage claimed for loss of services or loss of support arising out of the same tort.

The problem raised by the instant case is to determine the effect of the limitation of liability found in 51 O.S.1981, § 154 on the key requirement of 36 O.S.1981, § 3636(B) that the persons to be protected by uninsured motorist insurance are persons “legally entitled to recover” for the damages they have sustained.

This controversy, like all disputes between insurers and their insureds, is essentially a contract dispute and should be resolved by recourse to established principals of contract law, as those principals have been specially applied to insurance policies. (See Tipton v. Pike, 550 F.Supp. 191 (D.C.Ok.1982)).

We have held, in Lester v. Sparks, 583 P.2d 1097 (Okl.1978) that an insurance policy is a contract and must be given the same consideration as any other contract, except that in cases of doubt, the contract will be construed more strongly against the insurer.

More specifically, and in language more applicable to the case before us, we said in Aetna Ins. Co. v. Zoblotsky, 481 P.2d 761 (Okl.1971).

Contracts of insurance will be liberally construed in favor of the object to be accomplished and if the provisions of a policy are capable of being contraed in two ways, that interpretation should be placed on such provisions which is most favorable to the insured.

The object to be accomplished by the uninsured/underinsured motorist provisions of the automobile liability insurance policy issued by Allstate to the insured is that the insured party would be indemnified should he be unable to recover fully from the motorist causing his injuries.

The question raised by this appeal is whether or not the insured is “legally entitled to recover” from the defendant city, and thus entitled to receive the benefits of the uninsured/underinsured motorist provisions of his automobile liability insurance.

This Court has only once before interpreted the phrase “legally entitled to recover.” Justice Opala, writing for the majority in Uptegraft v. Home Insurance Co., 662 P.2d 681 (Okl.1983) said:

The words, “legally entitled to recover” simply mean that the insured must be able to establish fault on the part of the uninsured motorist which gives rise to damages and prove the extent of those damages.

There are undoubtedly other constructions which might be given this key phrase, but to be consistent with the rules we have stated in Lester and Zoblotsky, supra, we must disregard such other definitions and apply the one most favorable to the insured.

In applying the Uptegraft interpretation to the facts of this appeal, we reach a result which is essentially fair and which comports with the fundamental concept that all contracts should be construed so as to effect the intentions of the parties.

When the insured and Allstate entered into their contract, they contemplated a situation where Allstate might be required to pay for injuries caused by some tort-feasor where that tortfeasor was not able to make full compensation for those injuries. Whether the tortfeasor’s inability to make full compensation results from lack of sufficient insurance, insolvency, or for other reason, is irrelevant.

The intention of the parties at the time of their contracting was that Allstate, not its insured, would assume the risk that the insured might suffer a loss for which a tortfeasor could not make compensation. Our holding here merely gives effect to that intent.

In summary, we hold that in a situation where the liability of a tortfeasor is limited by the Political Subdivisions Tort Claims Act, to an amount which will not compensate an insured for all his proven losses suffered in an automobile accident, that insured may recover from his insurer through the uninsured/underinsured motorist provisions of his automobile liability insurance, according to the terms thereof.

The decision of the trial court in granting summary judgment to Appellee, Allstate Insurance Company is REVERSED and the matter is REMANDED for further proceedings.

SIMMS, C.J., and LAVENDER, HAR-GRAVE, ALMA WILSON and SUMMERS, JJ., concur. HODGES and OPALA, JJ., dissent. KAUGER, J., disqualified.