Dyer v. Dairyland Insurance Co. ( 2004 )

PRESENT: All the Justices
LENNA JO DYER
OPINION BY
v. Record No. 031532 JUSTICE G. STEVEN AGEE
APRIL 23, 2004
DAIRYLAND INSURANCE COMPANY
FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY
Herbert C. Gill, Jr., Judge
In this appeal we determine whether the plaintiff’s
recovery for the negligence of one tortfeasor under the
liability provision of an automobile insurance policy precludes
recovery under the underinsured motorist provision of the same
policy for the negligence of a joint tortfeasor.
I. BACKGROUND AND PROCEEDINGS BELOW
Lenna Jo Dyer (“Dyer”) was the passenger on a motorcycle
owned and operated by Kerry B. Atkinson (“Atkinson”).
Atkinson’s motorcycle was involved in a collision with a
motorcycle owned and operated by Ricky M. Roberts (“Roberts”).
As a result of the collision, Dyer received injuries and
suffered damages in excess of $100,000. Atkinson and Roberts
were jointly and concurrently negligent and their negligence was
the proximate cause of the collision.
Dairyland Insurance Company (“Dairyland”) insured the
Atkinson motorcycle under a policy providing bodily injury
liability coverage in the amount of $100,000 per claimant and
uninsured/underinsured motorist (“UM” or “UIM” respectively)
coverage of $100,000 per claimant. Under the Atkinson policy,
Dairyland tendered to Dyer the full $100,000 of bodily injury
liability coverage based on Atkinson’s liability. Dairyland
also insured the Roberts motorcycle under a policy providing
$25,000 of bodily injury liability coverage per claimant and
UM/UIM coverages in the same amount. Dairyland tendered the
full $25,000 of bodily injury liability coverage to Dyer based
on Roberts’ liability under his policy.
Dyer obtained a judgment against Roberts in the amount of
$275,000. She then argued in the trial court that she was
entitled to $75,000 in UIM coverage under the Atkinson policy.
Dyer averred Roberts was underinsured in an amount equal to the
difference between his $25,000 of bodily injury liability
coverage and the $100,000 of UIM coverage under the Atkinson
policy. Dairyland responded that it was not obligated to
provide Dyer with UIM coverage under the Atkinson policy because
it had already tendered the full amount of the bodily injury
liability coverage under that policy. On cross-motions for
summary judgment the trial court held that Dairyland was not
obligated to provide UIM coverage to Dyer under the Atkinson
policy. We awarded Dyer this appeal.
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II. ANALYSIS
Code § 38.2-2206(A) requires an insurer under a motor
vehicle liability policy “to make payment for bodily injury
. . . caused by the operation or use of an underinsured motor
vehicle to the extent the vehicle is underinsured, as defined in
subsection B.” Under that subsection:
A motor vehicle is “underinsured” when, and to
the extent that, the total amount of bodily
injury and property damage coverage applicable to
the operation or use of the motor vehicle and
available for payment for such bodily injury or
property damage . . . is less than the total
amount of uninsured motorist coverage afforded
any person injured as a result of the operation
or use of the vehicle.
Dyer argues she is underinsured under the Atkinson policy
as to the Roberts vehicle within the meaning of Code § 38.2-
2206(B). She further contends the resolution of this case is
governed by this Court’s decision in Nationwide Mutual Ins. v.
Hill, 247 Va. 78, 439 S.E.2d 335 (1994). We agree with Dyer.
In Hill, Rebecca H. Henley (“Henley”), a passenger in a
vehicle driven by Mary Ann Forsyth (“Forsyth”), died in an
automobile accident involving another vehicle driven by Martin
W. Jones (“Jones”). Henley’s estate obtained judgment in the
amount of $1,000,000, jointly and severally, against Forsyth’s
estate and Jones. 247 Va. at 80-81, 439 S.E.2d at 336.
The Forsyth vehicle was insured under an automobile
liability policy issued by Nationwide Mutual Insurance Company
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(“Nationwide”) which provided $50,000 of bodily injury liability
coverage per claimant and UM/UIM coverage of the same amount.
Jones was uninsured. Nationwide paid the full $50,000 of its
bodily injury liability to the Henley estate based on Forsyth’s
negligence, but denied UM coverage attributable to Jones’
negligence. Id. at 81, 439 S.E.2d at 336.
The administrator of Henley’s estate then filed a
declaratory judgment action asking for a determination that
Henley was insured under the UM provision of the Nationwide
policy because Jones was an uninsured motorist. Nationwide
argued that the provisions in its UM endorsement required a set-
off of any payments received from the bodily injury liability
coverage against any recovery payable under the UM coverage.
Id. at 83, 439 S.E.2d at 338. We approved the trial court’s
determination that the set-off provisions of the Nationwide UM
endorsement violated Code § 38.2-2206 and were contrary to
public policy. Nationwide was liable for payment of the full
policy amount as to each tortfeasor: $50,000 of bodily injury
liability coverage attributable to Forsyth and $50,000 of UM
coverage attributable to Jones. Id. at 86, 439 S.E.2d at 339.
Dairyland asserts on appeal that the outcome of this case
is not governed by Hill, but instead by two more recent cases,
Superior Insurance Co. v. Hunter, 258 Va. 338, 520 S.E.2d 646(1999) and Kramer v. Commonwealth, 263 Va. 128, 556 S.E.2d 7614
(2002). Dairyland avers these later cases bar Dyer from
recovering under both the bodily injury liability and UIM
provisions of the Atkinson policy. We disagree.
The issue in Hunter was whether the UIM “provision of a
tortfeasor’s automobile liability insurance policy is available
to satisfy claims of passengers in the tortfeasor’s vehicle who
are insured under the same policy and whose claims for damages
exceed the limits of the policy’s liability coverage.” Hunter,
258 Va. at 340, 520 S.E.2d at 647. We concluded that the
General Assembly, by virtue of Code § 38.2-2206, “did not intend
that a vehicle could be ‘underinsured’ with respect to itself.”
Id. at 344, 520 S.E.2d at 649. Accordingly, the plaintiff in
Hunter had no claim to UIM coverage where the full bodily injury
liability coverage limit had been paid and there was only one
tortfeasor and one insurance policy.∗
Likewise, Kramer involved a state employee killed by an
uninsured driver. The Commonwealth’s Risk Management Plan only
provided $25,000 in UM coverage but allowed for $50,000 of UIM
coverage. The decedent’s estate sought to combine and collect
both the UM and UIM coverages. We reiterated the principle
expressed in Hunter that the Commonwealth’s Risk Management Plan
∗
Some language in Hunter could be read to limit recovery
under both the bodily injury liability coverage and UIM
provisions of a single policy; however, that language must be
read in the context of a claim with one policy and one
tortfeasor.
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could not “be underinsured with respect to itself in order to
provide additional coverage.” Kramer, 263 Va. at 133, 556
S.E.2d at 763.
In contrast to Hunter and Kramer, the case at bar is the
result of the joint negligence of two tortfeasors, Atkinson and
Roberts, who were insured under separate policies. Under the
plain terms of Code § 38.2-2206(B), the Roberts vehicle was
underinsured because his policy’s bodily injury liability
coverage was “less than the total amount of uninsured motorist
coverage [under the Atkinson policy] afforded any person [Dyer]
injured as a result of the operation or use of the vehicle.”
Dyer’s entitlement to the UIM coverage under the Atkinson policy
does not mean the Atkinson motorcycle was underinsured as to
itself. Instead, it means that Roberts, a joint and several
tortfeasor, was underinsured and therefore Dyer is entitled to
the UIM coverage under the Atkinson policy.
Hill is clear and commanding authority to apply the same
rule in the UIM setting, where joint tortfeasors and multiple
policies are present, as already applies to UM coverage. If we
determined Hill was inapplicable to the case at bar, it would
create the discrepant circumstance in which Dyer would be in a
worse position than if Roberts had been uninsured. The General
Assembly specifically eliminated this anomaly in the 1982
amendments to former Code §§ 38.1-381(b) and (c) which are now
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Code §§ 38.2-2206(A) and (B). See Nationwide Mutual Insurance
Company v. Scott, 234 Va. 573, 576, 363 S.E.2d 703, 704 (1988).
Dairyland also maintains that the Atkinson policy prohibits
an insured from collecting both liability and UIM coverage.
Because the policy was not entered into the record, we need not
address Dairyland’s argument in this regard. Moreover, such a
provision would conflict with the requirements of Code §§ 38.2-
2206(A) and (B) as we explained above. “The provisions of the
statute [Code § 38.2-2206] are part of [the] contract of
insurance, and we will not consider language in [a] policy that,
arguably, is inconsistent with the statute as we have construed
it.” Id. at 577, 363 S.E.2d at 705.
III. CONCLUSION
This Court’s rationale in Hill applies with as equal force
to UIM coverage as it does to UM coverage. We therefore hold
that Dyer is entitled to UIM coverage under the Atkinson policy
equal to the difference between Robert’s coverage under his
policy ($25,000) and the available UIM coverage under the
Atkinson policy ($100,000), a total of $75,000. The trial court
thus erred in granting summary judgment to Dairyland and in
failing to grant summary judgment to Dyer. Accordingly, we will
reverse the judgment of the trial court and enter final judgment
for Dyer.
Reversed and final judgment.
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