Patriot General Insurance Company v. Jorge Gutierrez, et ux ( 2015 )

FILED
FEB 24, 2015
In the Office of the Clerk of Court
W A State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
PATRIOT GENERAL INSURANCE )
COMPANY, a foreign corporation, ) No. 32109-6-III
)
Petitioner, )
)
v. )
) PUBLISHED OPINION
JORGE GUTIERREZ and JANE DOE )
GUTIERREZ, and their marital )
community, and JAVIER GUTIERREZ, )
)
Respondents. )
FEARING, J. - We granted discretionary review of the trial court's summary
judgment ruling that Javier Gutierrez is an insured for purposes ofunderinsured motorist
coverage on an automobile insurance policy purchased from Patriot General Insurance by
Jorge Gutierrez, Javier's father. Patriot General insists that Javier is not an insured
because Jorge failed to disclose him, on his initial insurance application, as a member of
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Patriot Gen. Ins. v. Gutierrez
Jorge's household over the age of 14 years. We affinn summary judgment based on
policy language that qualifies Javier as an "insured person," despite his father's failure to
disclose him.
FACTS
On August 11,2010, Jorge Gutierrez applied for car insurance from Patriot
General Insurance Company, through the Tomas Miranda Insurance Agency, a local
agency in Walla Walla. The application listed Jorge as the named insured, and Jorge and
his wife, Maria Carmona, as authorized drivers. Jorge initialed a paragraph stating that
he had listed on his application everyone living with him age 14 or older. That paragraph
reads:
I also certify that all persons age 14 or over who live with me
temporarily or pennanently and all persons who are regular operators of
any vehicle to be insured have been listed on this application and reported
to the Company. I declare that there are no operators of the vehicle(s)
described in this application unless their names and ages are shown above
or are provided in writing to the Company within 14 days of when they
begin driving the vehicle(s) described in this application.
Clerks Papers (CP) at 84. The policy application further states:
I hereby apply to the Company for a policy of insurance as set forth
in this application on the basis of statements contained herein. I understand
and agree that a routine inquiry may be made which will provide applicable
infonnation concerning character, general reputation, personal
characteristics, mode of living and credit history. Upon written request,
additional infonnation as to the nature and scope of the report, if one is
made, will be provided. I understand and agree that such policy shall be
cancelled and the benefits available under such policy may be denied if
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such information is known to be false and would affect acceptance of the
risk or would in any way affect the rating of the risk by the Company.
CP at 84.
At the time of completing the policy application, Jorge Gutierrez's son, Javier, age
18, lived at home with his father. In a declaration opposing Patriot General Insurance
Company's summary judgment motion, Jorge Gutierrez testified he desired "full
coverage" for his family, and he averred that he relied on Patriot General's agent, Tomas
Miranda, to translate and help him complete the application. CP at 106. Jorge is a
monolingual Spanish-speaker and insists he did not understand that the application asked
him to certify that his children would not be using the vehicles. Jorge Gutierrez recalls
telling Tomas Miranda that his son, Javier, and his daughter, Viviana, would also be
drivers. Neither party provided information to the trial court as to whether Patriot
General would have charged a higher premium for the insurance policy if Jorge Gutierrez
had listed his son in the application.
Patriot General issued an auto policy to Jorge Gutierrez with a coverage period
running from October 29,2010 to April 29, 2011. The policy listed only Jorge Gutierrez
and Maria Carmona as authorized drivers.
The first page of the twelve-page Patriot General Insurance Company policy
provides:
In return for your premium payment and subject to the terms and
conditions of this policy, we will insure you for the coverages up to the
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limits of liability for which a premium is shown on the Declarations Page
of this policy. This insurance applies only to car accidents and losses
which happen while this policy is in force. This policy is issued by us in
reliance upon the statements which you made in your application for
insurance. If you have made any false statement in your application, this
policy may not provide any coverage.
CP at 57. The policy includes a separate three-page amended "Underinsured Motorists
Coverage Endorsement," which covers injuries caused by an underinsured motorist. In
relevant part, the endorsement reads:
We will pay damages for bodily injury or property damage which
an insured person is legally entitled to recover from the owner or operator
of an underinsured motor vehicle. The bodily injury or property
damage must be caused by a car accident and result from the ownership,
maintenance or use of an underinsured motor vehicle.
CP at 74.
To determine who constitutes "you" and, in tum, an "insured person" under the
underinsured motorist endorsement, the reader must first journey to the beginning of the
policy and then return to the endorsement. In a policy section titled "DEFINITIONS
USED THROUGHOUT THIS POLICY," the policy defines "you" and "your" as
the person shown as the named insured on the Declarations Page and
that person's spouse if residing in the same household. You and your also
means any relative of that person if they reside in the same household,
providing they or their spouse do not own a motor vehicle.
CP at 58. The policy defines "relative" in the paragraph directly below:
"Relative" means a person living in your household related to you
by blood, marriage or adoption, including a ward or foster child. Relative
includes a minor under your guardianship who lives in your household.
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Any relative who is age fourteen (14) or older must be listed on the
application or endorsed on the policy prior to a car accident or loss.
CP at 58 (italics added). Patriot General's policy does not explicitly state that
undisclosed relatives are not covered. The underinsured motorist endorsement lists
exclusions from coverage, but does not specify whether household members above the
age of 14, and not listed on the application or policy, are excluded from coverage.
Additional definitional language, on which we rely, is provided in the
underinsured motorist endorsement. The language reads:
As used in this Part:
(1) "Insured Person" means:
(A) You.
(B) Any other person occupying your insured car with your
permission.
(C) Any person for damages that person is entitled to recover
because of bodily injury to you or another occupant of your car.
No person shall be considered an insured person if that person uses a motor
vehicle without permission ofthe owner.
CP at 74 (italics added).
On January 9,2011, Javier Gutierrez suffered serious injuries as a passenger in a
single-car-rollover accident. Javier was 19 at the time of the accident and living with
Jorge. The car's driver, Matthew Vincent Lanier, was uninsured. Javier tendered an
uninsured motorist claim under the Patriot General Insurance Company policy, which
claim Patriot General denied on May 22, 2012. Patriot General denied coverage because
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Javier was over the age of 14 years, living with Jorge, and not listed on Jorge's policy;
and therefore did not quality as "you."
PROCEDURE
Patriot General Insurance Company filed an action for declaratory judgment
against Jorge and Javier Gutierrez, seeking a declaration that it had no duty to pay
uninsured motorist benefits to Javier because he was not covered by Jorge's policy.
Javier Gutierrez counterclaimed for coverage, breach of contract, bad faith, and violation
of Washington's Consumer Protection Act, chapter 19.86 RCW.
Patriot General filed a motion for summary judgment on the issue of whether
Javier Gutierrez was covered by his father's underinsured motorist (VIM) policy at the
time of the accident. Javier and Jorge Gutierrez opposed the motion. The trial court
granted the nonmoving parties Gutierrezes summary judgment because it found that the
undisputed facts supported their position. Javier and Jorge Gutierrez were granted
judgment "solely to the extent that the Court determines that there is VIM coverage for
defendant Javier Gutierrez." CP at 163. The trial court determined that the definition of
"insured" provided in Washington's casualty insurance statute should be read into the
policy and replace the policy's definition of "insured person." The statute provides, in
relevant part:
(5) "Insured" means:
(a) The named insured or a person who is a resident of the named
insured's household and is either related to the named insured by blood,
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marriage, or adoption, or is the named insured's ward, foster child, or
stepchild.
RCW 48.22.005.
LA W AND ANALYSIS
On appeal, Patriot General Insurance Company complains that Jorge Gutierrez
failed to list his son Javier as a member of Jorge's household above the age of 14. Patriot
General contends this omission precludes coverage for Javier Gutierrez. Jorge and Javier
Gutierrez argue that the Patriot General policy affords coverage, despite the omission,
because the policy does not expressly exclude from coverage any family member above
the age of 14 not listed in the application. According to the Gutierrezes, Jorge's failure to
disclose Javier to Patriot only amounts to a breach of a duty to disclose and does not
preclude coverage under the plain language of Jorge's car insurance policy.
The Gutierrezes also contend the statutory definition of "insured," under RCW
48.22.005, should be read into Jorge's policy in order to afford Javier uninsured motorist
coverage. Patriot General responds that RCW 48.22.005's definition of "insured" does
not require car insurance policies to provide uninsured motorist coverage to a named
insured's family members. Patriot General contends RCW 48.22.005 only applies to
personal injury protection coverage. We agree with Jorge and Javier Gutierrez that the
language of the insurance policy, without reference to any statute, affords Javier
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underinsured motorist coverage. Therefore, we do not address the application of RCW
48.22.005.
We agree with the trial court that Jorge and Javier Gutierrez should be granted
summary judgment. When, as here, the relevant facts are not in dispute, we may order
entry of summary judgment in favor of the nonmoving party. Impecoven v. Dep 't of
Revenue, 120 Wn.2d 357, 365,841 P.2d 752 (1992); Lelandv. Frogge, 71 Wn.2d 197,
201,427 P.2d 724 (1967); Wash. Ass'n ofChild Care Agencies v. Thompson, 34 Wn.
App. 225, 230, 660 P.2d 1124 (1983).
Familiar principles of insurance policy construction compel our ruling that Javier
Gutierrez is covered under the Patriot General underinsured motorist endorsement. The
interpretation of an insurance policy is a question oflaw, and summary judgment is
appropriate if the contract has only one reasonable meaning when viewed in the light of
the parties' objective manifestations. Port ofSeattle v. Lexington Ins. Co., III Wn. App.
901,907,48 P.3d 334 (2002). Insurance policies are to be construed as a whole, with
force and effect given to each clause. Am. Star Ins. Co. v. Grice, 121 Wn.2d 869,874,
854 P.2d 622 (1993) ... , An inclusionary clause in an insurance contract should be
liberally construed to provide coverage whenever possible.'" Mercer Place Condo.
Ass 'n v. State Farm Fire & Cas. Co., 104 Wn. App. 597,602, 17 P.3d 626 (2000)
(quoting Rileyv. Viking, Ins. Co., 46 Wn. App. 828, 829,733 P.2d 556 (1987). Insurance
limitations require clear and unequivocal language. Bordeaux, Inc. v. Am. Safety Ins.
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Co., 145 Wn. App. 687, 694, 186 P.3d 1188 (2008). If an insurer wants exclusions
upheld, it has the burden of drafting them in "clear" and "unequivocal" terms. Int'l
Marine Underwriters v. ABCD Marine, LLC, 179 Wn.2d 274, 288, 313 P.3d 395 (2013).
Patriot General argues that in order to be an "insured person" entitled to UIM
coverage under the car insurance policy it sold to Jorge Gutierrez, a person must meet the
definition of "you." We agree. Patriot General further argues that a "relative" can be
insured only if the relative is disclosed on the policy's application or endorsement if that
"relative" is over the age of 14 and living with the named insured. We disagree. The
policy does not expressly state that an undisclosed relative is excluded from being an
insured.
Patriot General argues that the sentence, "Any relative who is age fourteen (14) or
older must be listed on the application or endorsed on the policy prior to a car accident or
loss," should be read as defining who is insured under the policy. CP at 58. We agree
that the sentence could be read in this light, but the Gutierrezes' contention that the
sentence only imposes a duty to cooperate and does not act as an exclusion is equally
plausible.
Patriot General further argues that the relevant sentence is not an exclusion, but
rather a permissible limitation on the definition of "insured." Patriot General does not
explain the practical difference between a limitation on coverage and an exclusion from
coverage.
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When reading the Patriot General insurance policy as a whole, we side with Javier
and Jorge Gutierrez. The Patriot General under insured motorist endorsement lists nine
exclusions from coverage. The list could have, but did not, exclude from coverage injury
to a household member above the age of 14 who was not listed on the application.
An important comparison of insurance policy language must be mentioned. In the
underinsured motorist endorsement's additional definitions, the policy reads: "No person
shall be considered an insured person if that person uses a motor vehicle without
permission of the owner." CP at 74. If Patriot General wished to limit the definition of
"insured" to achieve the meaning it advances on appeal, it could and should have drafted
language that reads: "No relative shall be considered an insured person if that person is
age fourteen (14) or older and not listed on the application or policy endorsement." It did
not.
In addition, the first page of the Patriot General Insurance Company auto policy
provides, in part: "This policy is issued by us in reliance upon the statements which you
made in your application for insurance. If you have made any false statement in your
application, this policy may not provide any coverage." CP at 57 (italics added).
Significantly, the language does not read: "If you made any false statement in your
application, this policy shall not provide any coverage." The policy does not tell the
insured under what circumstances a false statement may lead to loss of coverage.
Finally, Jorge Gutierrez's application read, in part:
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I hereby apply to the Company for a policy of insurance as set forth
in this application on the basis of statements contained herein. . .. I
understand and agree that such policy shall be cancelled and the benefits
available under such policy may be denied if such information is known to
be false and would affect acceptance ofthe risk or would in any way affect
the rating of the risk by the Company.
CP at 84.
Patriot General forwarded no evidence before the trial court that Jorge Gutierrez
knew of any false statement. Nor did it provide evidence that Jorge's risk rating would
change based on the fact that his two teenage children resided with him.
In short, Patriot General controlled the language in its auto policy. The
Gutierrezes played no role in drafting the language. If Patriot General wished to exclude
underinsured motorist coverage to a household member, above the age of 14, who was
not disclosed in the application for insurance, Patriot General could have expressly so
stated in the policy. We will not assist Patriot General in rewriting the policy.
Both Javier and Jorge Gutierrez seek recovery of reasonable attorney fees and
costs on appeal against Patriot General Insurance Company. We agree they are entitled
to this recovery under Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d
37,52-53,811 P.2d 673 (1991) since they were required to litigate to gain coverage
under the Patriot General insurance policy.
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CONCLUSION
We affirm the trial court's declaration of coverage for Javier Gutierrez under the
Patriot General insurance policy. We direct that this court's commissioner review Javier
and Jorge Gutierrez's applications for fees and costs and to award a reasonable sum to
both. We thereafter remand to the superior court for further proceedings.
Fearing, J. .
WE CONCUR:
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