DocketNumber: 2170088
Citation Numbers: 264 So. 3d 98
Judges: Thomas
Filed Date: 3/30/2018
Status: Precedential
Modified Date: 7/29/2022
*100In May 2015, Martez Thomas was the passenger in an automobile owned by Lena Spano and operated by Desean Evans, the father of Spano's child. An automobile operated by Calvin Jones ran a stop sign and collided with Spano's automobile; Thomas was injured. Thomas's damages exceeded the limits of Jones's automobile-liability policy, so Thomas sued Spano's insurer, Safeway Insurance Company of Alabama, Inc. ("Safeway"), in the Jefferson Circuit Court ("the trial court") seeking underinsured-motorist ("UIM") benefits. Safeway filed a motion for a summary judgment, in which it argued that Thomas was not entitled to benefits under Spano's policy based on an exclusion in the policy precluding coverage when the automobile covered under the policy was being operated by an unlicensed driver ("the unlicensed-driver exclusion").
Thomas opposed Safeway's motion and also sought a judgment in his favor. After discovery was completed, the parties stipulated to the following facts: Evans was not and had not ever been a licensed driver, and Thomas was unaware that Evans did not possess a driver's license; no other facts regarding the accident were disputed. Based on arguments made by Thomas, the trial court entered a judgment declaring the unlicensed-driver exclusion unenforceable against Thomas because, the trial court said, based on Thomas's lack of knowledge of Evans's status as an unlicensed driver, the exclusion violated Alabama's UIM statute, Ala. Code 1975, § 32-7-23(a), and Alabama's public policy. The trial court further ordered Safeway to pay to Thomas the policy limits of $50,000 and costs of $173.10. Safeway timely appealed the judgment.
On appeal, Safeway argues that the trial court erred in declaring that the unlicensed-driver exclusion in Safeway's policy violates § 32-7-23(a) or public policy. Safeway contends that the unlicensed-driver exclusion, like many other insurance-policy exclusions examined by Alabama courts, is enforceable and that, in essence, by basing its decision, in part, on Thomas's knowledge of Evans's status, the trial court impermissibly engrafted a knowledge requirement onto the exclusion and rewrote the policy. Based on our review of the relevant statutes and caselaw, we agree with Safeway that the unlicensed-driver exclusion is valid and enforceable.
General Principles Governing the Construction of Insurance Policies
We begin our analysis by setting out the general rules governing our construction of insurance contracts.
"General rules of contract law govern an insurance contract. Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co.,817 So.2d 687 , 691 (Ala. 2001). The court must enforce the insurance policy as written if the terms are unambiguous, id.; Liggans R.V. Ctr. v. John Deere Ins. Co.,575 So.2d 567 , 569 (Ala. 1991). Whether a provision of an insurance policy is ambiguous is a question of law. Turvin v. Alfa Mut. Gen. Ins. Co.,774 So.2d 597 , 599 (Ala. Civ. App. 2000)."
Safeway Ins. Co. of Alabama, Inc. v. Herrera,
In addition, the law gives guidance regarding the construction of exclusions within an insurance policy.
*101"[E]xceptions to coverage must be interpreted as narrowly as possible in order to provide maximum coverage to the insured. However, courts are not at liberty to rewrite policies to provide coverage not intended by the parties. Newman v. St. Paul Fire & Marine Insurance Co.,456 So.2d 40 , 41 (Ala. 1984). In the absence of statutory provisions to the contrary, insurance companies have the right to limit their liability and write policies with narrow coverage. United States Fidelity & Guaranty Co. v. Bonitz Insulation Co. of Alabama,424 So.2d 569 , 573 (Ala. 1982). If there is no ambiguity, courts must enforce insurance contracts as written and cannot defeat express provisions in a policy, including exclusions from coverage, by making a new contract for the parties. Turner v. United States Fidelity & Guaranty Co.,440 So.2d 1026 , 1028 (Ala. 1983)."
Johnson v. Allstate Ins. Co.,
Finally, because this case involves UIM coverage, we must look to the UIM statute for guidance. Alabama's UIM statute reads as follows:
"(a) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in subsection (c) of Section 32-7-6, under provisions approved by the Commissioner of Insurance for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him or her by the same insurer."
Ala. Code 1975, § 32-7-23(a).
We must also be cognizant of the following principles particularly applicable to UIM coverage.
"It was also held in [ State Farm Automobile Insurance Co. v.] Reaves [,292 Ala. 218 ,292 So.2d 95 (1974),] that Alabama's Uninsured Motorist Statute, Tit. 36, § 74(62a), Code 1940 (now § 32-7-23, Code 1975 ), mandated uninsured motorist coverage for 'persons insured thereunder,' that is, persons insured under the liability provisions of the policy. Thus, a class of insureds named in the provisions of an automobile liability policy in Alabama are provided uninsured motorist coverage regardless of whether that class is specifically named in the policy providing uninsured motorist coverage.
"Therefore, the Court must look to the terms for which the parties contracted in order to ascertain the extent of coverage under uninsured motorist provisions."
Alabama Farm Bureau Mut. Cas. Ins. Co. v. Pigott,
*102Watts v. Preferred Risk Mut. Ins. Co.,
Finally, we note that, when considering whether a contractual provision violates public policy, courts must proceed cautiously.
"[When considering] whether a contractual provision is in violation of public policy, our Supreme Court has repeatedly declared that '[t]he principle that contracts in contravention of public policy are not enforceable should be applied with caution and only in cases plainly within the reason on which the doctrine rests.' Lowery v. Zorn,243 Ala. 285 , 288,9 So.2d 872 , 874 (1942) ; see also, e.g., Livingston v. Tapscott,585 So.2d 839 (Ala. 1991) ; Ex parte Rice,258 Ala. 132 ,61 So.2d 7 (1952). As our Supreme Court explained in Milton Construction Co. v. State Highway Department,568 So.2d 784 (Ala. 1990),
" ' "The courts are averse to holding contracts unenforceable on the ground of public policy unless their illegality is clear and certain. Since the right of private contract is no small part of the liberty of the citizen, the usual and most important function of courts of justice is to maintain and enforce contracts rather than to enable parties thereto to escape from their obligations on the pretext of public policy, unless it clearly appears that they contravene public right or the public welfare....
" ' "...." ' "
"568 So.2d at 788 (quoting 17 Am. Jur. 2d Contracts § 178 (1964) )."
Alfa Specialty Ins. Co. v. Jennings,
The Terms of the Insurance Policy
The Safeway policy issued to Spano contains the following provisions and definitions:
" 'Non-Covered Person' as used in this Policy means:
"....
"4. An operator of a vehicle who is an unlicensed driver or whose driving privileges have been terminated or suspended."
Under Part A, which governs liability coverage, the policy provides:
"We will pay damages for bodily injury or property damage for which a Covered Person, as defined in this part, becomes legally responsible because of an auto accident."
A "Covered Person" under Part A is defined as
"1. You for the ownership, maintenance or use of Your Covered Auto[1 ] or trailer, unless it is operated by a Non-Covered Person.
"2. A person, other than a Non-Covered Person, using Your Covered Auto with your express permission within the scope of that permission.
"3. For Your Covered Auto, any person or organization, other than a Non-Covered Person, but only with respect to legal responsibility for acts or omissions of an operator of Your Covered Auto, provided said operator is not a Non-Covered Person."
*103In Part C, the policy addresses UIM coverage. The policy provides:
"We will pay damages which a Covered Person, as defined in this Part, is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury:
"1. Sustained by a Covered Person; and
"2. Caused by an accident, which in no way involves the operation of any automobile by a Non-Covered Person;
"The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle."
In Part C, "Covered Person" is defined as:
"1. You, and a Family Member other than a Non-Covered Person
"2. Any other person occupying Your Covered Auto (provided it is not operated by a Non-Covered Person)"
In Part C, the policy also contains the following exclusion:
"A. We do not provide Uninsured Motorist Coverage for bodily injury sustained by any person:
"1. During or as a result of operation of any automobile by a Non-Covered Person."
Standard of Review
We review a summary judgment de novo; we apply the same standard as was applied in the trial court. A motion for a summary judgment is to be granted when no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. As noted above, the parties stipulated to the facts in this case; thus, the only issue before the trial court, and this court on appellate review, is whether Thomas was entitled to a judgment as a matter of law. See Nationwide Ins. Co. v. Rhodes,
Discussion
Safeway argues that Thomas is not entitled to UIM coverage because he was a passenger in Spano's automobile ("the covered auto") while it was being driven by Evans, who was not a licensed driver at the time of the accident. Based on the definitions and exclusions stated in the policy, Safeway contends, Thomas's right to any recovery as a passenger in the covered auto was extinguished by the fact that Evans was a noncovered person operating the covered auto. Thomas argues, however, that the unlicensed-driver exclusion violates § 32-7-23 and public policy, which, he says, is that innocent persons are entitled to coverage for damages resulting from an accident with an uninsured or underinsured motorist. The trial court agreed with Thomas that, because he was an innocent passenger, unaware that Evans was an unlicensed driver, he was entitled to coverage.
However, the UIM statute does not require coverage for all "innocent" persons who might be injured by an uninsured or underinsured motorist. Section 32-7-23(a) specifically prescribes that UIM insurance coverage be provided in every insurance policy for "the protection of persons insured thereunder." See Higgins v. Nationwide Mut. Ins. Co.,
In addition, § 32-7-23(a) permits a person to reject UIM insurance in whole or in part. Several cases have discussed the rejection of UIM coverage. See Reed v. Farm Bureau Mut. Cas. Ins. Co.,
In McCullough, our supreme court considered whether an exclusion that excluded the insurer from liability when the insured's son, Robert, was driving any covered automobile was enforceable to prevent the estate of the passenger killed in the vehicle operated by Robert from recovering UIM benefits or whether the exclusion was void as against public policy. Our supreme court indicated that the appellant, the estate of the deceased passenger, had argued that the issue was " 'whether or not, the restrictive endorsement contained in the liability insurance policy issued herein, was effective to cut off any uninsured motorist coverage running to the benefit of [the deceased passenger].' " McCullough,
Similarly, this court rejected the argument that an injured passenger was entitled to UIM coverage under an insurance policy that excluded coverage for unlisted drivers under 25 years old who resided in the household of the insured. Hambrick,
Relying on McCullough, we determined that UIM benefits were not due Hambrick under White's policy.
We realize that Thomas has attempted to distinguish cases like Hambrick and McCullough on the ground that those cases involve a rejection of coverage for "specific" individuals. Of course, in Hambrick, it was the failure to list a specific person, Lightfoot, on the insurance application that resulted in the determination that the insured, White, had rejected any coverage for him.
We also reject Thomas's argument that the unlicensed-driver exclusion is void as against public policy because of a statement contained in Grimes v. Alfa Mutual Insurance Co.,
Based on the principles espoused by both our court and our supreme court, we conclude that the trial court erred in declaring that the exclusion in Safeway's policy violated § 32-7-23(a) and public policy.
REVERSED AND REMANDED.
Thompson, P.J., and Pittman and Donaldson, JJ., concur.
Moore, J., concurs in the result, without writing.
The parties appear to agree that the automobile in which Thomas was a passenger was a "covered auto" under the terms of Spano's policy.
In his appellate brief, Thomas asserts for the first time an argument that Safeway should be estopped from relying on the unlicensed-driver exclusion because it consented to his settlement with Jones for Jones's policy limits. "We decline to consider the question of estoppel, raised for the first time on appeal." Warrior Drilling and Eng'g Co. v. King,
Because we have concluded that the exclusion is valid, we need not address Safeway's contention that the trial court rewrote the exclusion by engrafting a knowledge requirement. We note, however, that a court may not rewrite the unambiguous terms of an insurance contract. Johnson,