Frank and Bettina Gambrell v. Ids Property Casualty Insurance Co.

IN THE
ARIZONA COURT OF APPEALS
DIVISION TWO
FRANK AND BETTINA GAMBRELL,
Plaintiffs/Appellants,
v.
IDS PROPERTY CASUALTY INSURANCE COMPANY,
Defendant/Appellee.
No. 2 CA-CV 2014-0147
Filed September 9, 2015
Appeal from the Superior Court in Pima County
No. C20124603
The Honorable Ted B. Borek, Judge
The Honorable D. Douglas Metcalf, Judge
AFFIRMED
COUNSEL
Goldberg & Osborne
By David J. Diamond and D. Greg Sakall, Tucson
Counsel for Plaintiffs/Appellants
Jones, Skelton & Hochuli, PLC
By Charles M. Callahan, Jennifer B. Anderson,
and Sean M. Moore, Phoenix
Counsel for Defendant/Appellee
GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
OPINION
Presiding Judge Miller authored the opinion of the Court, in which
Chief Judge Eckerstrom and Judge Espinosa concurred.
M I L L E R, Presiding Judge:
¶1 Frank and Bettina Gambrell appeal from the trial court’s
orders granting summary judgment in favor of defendants IDS
Property Casualty Insurance Company and Stacey Harrish and
denying the Gambrells’ motion for new trial. They contend the
court erred by concluding A.R.S. § 20-259.01(C) permits insurers to
exclude underinsured motorist coverage (UIM) when the insured is
driving a large truck used in a business for transporting property.
We affirm.
Factual and Procedural Background
¶2 The following facts are undisputed. In 2011, Frank
Gambrell was driving a semi-tractor tanker, transporting milk for
his employer, when another driver lost control of his vehicle and
crashed into the tanker. For Frank’s serious injuries, he received
$15,000 from the other driver’s insurance policy and $100,000 in
UIM coverage from his employer’s policy. He then sought an
additional $100,000 from the UIM coverage of his personal
automobile liability insurance policy provided by IDS. IDS denied
Frank’s claim, concluding the UIM coverage did not apply to him
while driving the milk truck. The UIM clause contained in Frank’s
automobile policy provided:
We will pay compensatory damages for
bodily injury caused by accident which an
insured person is legally entitled to recover
from the owner or operator of an
uninsured motor vehicle or underinsured
motor vehicle. We will pay those damages
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
for bodily injury an insured person suffers
in a car accident while occupying a private
passenger car or utility car, or as a
pedestrian, subject to the limits of the
policy.
“Utility car” was defined as one “not used in a business or
occupation other than farming or ranching,” “with a rated load
capacity of 2,000 pounds or less of the pick-up, van or panel truck
type.” The Gambrells had not purchased a specific operator’s policy
for the milk truck.
¶3 The Gambrells’ complaint against IDS alleged breach of
contract and bad faith, and later added claims adjuster Harrish as a
defendant. 1 The defendants filed a joint motion for summary
judgment on the contract claim. The trial court granted the motion
and dismissed the bad faith claim, concluding it was “intertwined”
with the breach of contract claim.
¶4 The Gambrells filed a motion for new trial, restating the
arguments made in their response to the motion for summary
judgment. 2 The trial court denied the motion and this appeal
followed. We review the denial of a motion for new trial for an
abuse of discretion, but we review de novo a trial court’s ruling on a
motion for summary judgment. Jackson v. Nationwide Mut. Ins. Co.,
228 Ariz. 197, ¶ 8, 265 P.3d 379, 381 (App. 2011).
Discussion
¶5 The Uninsured Motorist Act generally requires insurers
to make available UIM coverage in amounts not less than the bodily
injury or death liability limits of a motor vehicle liability policy, and
requires the insurer to include UIM coverage if requested by the
1Hereinafter, we refer to both defendants collectively as “IDS.”
2 Judge Borek, who had granted the motion for summary
judgment, retired before the motion for new trial was filed. Judge
Metcalf ruled on the motion for new trial.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
insured. 3 A.R.S. § 20-259.01(A), (B). Subsection C, however,
provides a permissive option:
Any insurer writing automobile liability or
motor vehicle liability policies may make
available the coverages required by
subsections A and B of this section to
owners and operators of motor vehicles
that are used as public or livery
conveyances or rented to others or that are
used in the business primarily to transport
property or equipment.
The trial court held that subsection C meant that insurers need not
offer or provide UIM coverage to owners or operators of commercial
vehicles.4 The court concluded that Frank’s policy lacked coverage
of the milk tanker, and IDS did not breach its contract or act in bad
faith in denying Frank’s UIM claim. The Gambrells argue, as they
did below, that their personal automobile liability policy’s UIM
coverage covered Frank in any vehicle, including the milk truck; that
subsection C creates only a limited exception applicable when a
commercial vehicle owner or operator specifically seeks to insure
that vehicle; and, in the alternative, that the policy language did not
comply with the UIM statute.5
3Mostprovisions of the Act also apply to uninsured motorist
coverage (UM).
4For purposes of this appeal, we will refer to “motor vehicles
that are used as public or livery conveyances or rented to others or
that are used in the business primarily to transport property or
equipment” as referenced in § 20-259.01(C) as “commercial
vehicles.”
5 TheGambrells’ arguments interweave similar contentions,
which we address in a linear manner for ease of understanding.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
Portability of UIM Coverage to a Commercial Vehicle
¶6 The Gambrells first argue the UIM coverage they
purchased for their personal automobiles was portable to the milk
truck, based on the requirements of § 20-259.01 and case law
interpreting it. Our supreme court has repeatedly interpreted
subsection C as an exception to the general requirements of
§ 20-259.01. In Calvert v. Farmers Insurance Company of Arizona, 144
Ariz. 291, 294, 697 P.2d 684, 687 (1985), the court concluded a
provision in the plaintiff’s policy disallowing UM coverage when
the insured was injured in his own uninsured motor vehicle 6 was an
“other vehicle” exclusion that contravened the public policy of the
statute. In doing so, the court noted,
The only exception to the mandatory
requirement of uninsured motorist
protection[ ] under the Act is contained in
7
[former] A.R.S. § 20-259.01(D), which
expressly excludes vehicles “used as public
or livery conveyances or rented to others or
which are used in the business primarily to
transport property or equipment.”
Id.; see also Employers Mut. Cas. Co. v. McKeon, 159 Ariz. 111, 113, 765
P.2d 513, 515 (1988) (“The statute only excepts public livery, rental,
or commercial transportation vehicles from [the UM coverage
offering] requirement.”).
¶7 Additionally, this court addressed the Gambrells’
primary argument more than thirty years ago when a taxi driver
sought to claim UM coverage from his personal automobile insurer
for an accident that occurred while he was driving his taxi. Warfe v.
Rocky Mountain Fire & Cas. Co., 121 Ariz. 262, 263, 589 P.2d 905, 906
6In Calvert, the insured was driving a motorcycle he owned
but had failed to insure under the family automobile insurance
policy. 144 Ariz. at 292-93, 697 P.2d at 685-86.
7 UM coverage was mandatory until 1993. 1993 Ariz. Sess.
Laws 5th Spec. Sess., ch. 1, § 3.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
(App. 1978). We found that the exclusion for vehicles used as a
public conveyance found in the driver’s personal automobile
liability policy was valid because of subsection C. Id. at 264, 589
P.2d at 907.
¶8 The Gambrells argue Warfe is distinguishable because it
addressed UM coverage, not UIM coverage, but do not provide any
support for this contention. Although UM and UIM coverage are
“separate and distinct and apply to different accident situations,”
§ 20-259.01(H), by its express terms subsection C applies to UM
coverage described in subsection A and UIM coverage in subsection
B, § 20-259.01(C). If the legislature had intended to exclude UIM
coverage, it could have done so by eliminating the reference to
subsection B. Gambrells’ argument would require us to rewrite
subsection C, which we cannot do. See In re Estate of Bolton, 233 Ariz.
584, ¶ 19, 315 P.3d 1241, 1246 (App. 2013).
¶9 The Gambrells next argue Warfe must be overruled
because the public policy behind § 20-259.01 changed in the 1980s.
Specifically, the Gambrells argue UIM coverage is now “personal”
and “portable,” and therefore the UIM coverage they purchased
under their personal liability policies covered Frank when he was
driving the milk truck. They also note that pre-1980s cases
interpreting § 20-259.01 have been overruled due to the shift in
public policy.
¶10 The Gambrells are correct that personal liability policies
are “portable.” The Arizona Supreme Court announced in Calvert
that UM coverage is personal to the insured8 and therefore portable,
covering the insured “when in another automobile, when on foot,
when on a bicycle or when sitting on a porch.” 144 Ariz. at 296, 697
P.2d at 689; see also Higgins v. Fireman’s Fund Ins. Co., 160 Ariz. 20, 23,
770 P.2d 324, 327 (1989) (applying same portability to UIM
8UM and UIM coverage are defined as “first-party” insurance
protecting the driver, in contrast with general liability insurance,
which is “third-party” coverage. See Higgins v. Fireman’s Fund Ins.
Co., 160 Ariz. 20, 23, 770 P.2d 324, 327 (1989); Farmers Ins. Co. of Ariz.
v. Young, 195 Ariz. 22, ¶ 16, 985 P.2d 507, 512 (App. 1998).
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
coverage). UM and UIM coverage are triggered when the insured’s
bodily injury or death is caused by an uninsured or underinsured
vehicle. See § 20-259.01(E) (defining “uninsured motorist coverage”
as coverage for injury or death “if the motor vehicle that caused the
bodily injury or death is not insured by a motor vehicle liability
policy”); see also Lowing v. Allstate Ins. Co., 176 Ariz. 101, 106-07, 859
P.2d 724, 729-30 (1993) (reviewing policy and holding physical
contact with uninsured motor vehicle not required to trigger policy).
Although the statute does not explicitly state that UIM coverage is
personal and portable, the legislature has never explicitly addressed
this interpretation, see § 20-259.01, and courts continue to rely on it,
see, e.g., Beaver v. Am. Family Mut. Ins. Co., 234 Ariz. 584, ¶ 11, 324
P.3d 870, 873 (App. 2014) (noting UIM coverage must be portable for
person insured under policy, but limiting coverage to those insured
under policy in first instance).
¶11 The Gambrells also accurately observe that several cases
previously allowing UM or UIM policy exclusions have been
overruled in favor of allowing portability of such insurance to other
vehicles and situations. See Brown v. State Farm Mut. Auto. Ins. Co.,
163 Ariz. 323, 329, 788 P.2d 56, 62 (1989) (overruling one case);
Calvert, 144 Ariz. at 297, 697 P.2d at 690 (overruling three cases). But
the more recent cases have not directly affected the holding of Warfe.
In recognizing the shift in public policy, courts relied on the
presumption that the legislature would enumerate an exception if
one was intended. See Calvert, 144 Ariz. at 294, 697 P.2d at 687; see
also McKeon, 159 Ariz. at 113, 765 P.2d at 515 (“[E]numeration of
exceptions in a statute creates a strong inference that the legislature
intended no others.”). Of particular importance, and as noted
above, the Calvert court cited subsection C’s commercial-vehicle
exception as an example of an enumerated exception. 144 Ariz. at
294, 697 P.2d at 687; see also McKeon, 159 Ariz. at 113, 765 P.2d at 515.
Because Warfe relied on the same subsection when it allowed the
policy exclusion, there is no indication that the post-Calvert shift in
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
case law undermines the reasoning of Warfe.9 121 Ariz. at 263, 589
P.2d at 906.
¶12 The Gambrells also rely on a federal district court case
analyzing Pennsylvania law to support their argument that their
coverage was portable to the milk truck. Nationwide Mut. Ins. Co. v.
Swisher, 731 F. Supp. 691, 697 (E.D. Pa. 1989). In the applicable
statute in that case, however, UM coverage was generally
mandatory, and could be rejected by a commercial driver only in
writing. Id. Here, UIM coverage is generally not mandatory under
§ 20-259.01,10 and need not be offered at all to a commercial vehicle
operator. We do not find the reasoning in Swisher applicable.
¶13 The Gambrells also contend subsection C does not
allow an exclusion because our supreme court stated in 2012 that the
anti-stacking provision in § 20-259.01(H) is the “only [Uninsured
Motorist Act] provision that authorizes any limitation of UM or UIM
coverage.” See Am. Family Ins. Co. v. Sharp, 229 Ariz. 487, ¶ 12, 277
P.3d 192, 196 (2012). IDS argues the apparent conflict between Sharp
and the language of the statute is because the exception in
subsection C does not permit a policy “exclusion” or “limitation” on
properly-purchased UIM coverage, but permits insurance
companies to write policies that simply do not include commercial
vehicle UIM coverage. The trial court reached the same conclusion,
finding, “I don’t think you have the coverage under (c) unless it’s
provided for.” We agree.
¶14 First, Sharp addressed the anti-stacking provision, not
the commercial vehicle provision, and noted in dicta that it was the
9There have been no substantive alterations to subsection C
since Warfe. Compare 1972 Ariz. Sess. Laws, ch. 157, § 1, with 2003
Ariz. Sess. Laws, ch. 86, § 1. Nonetheless, we recognize that either
the legislature or our supreme court may extend portability
principles to operators of commercial vehicles, but unless that
occurs, Warfe controls.
10UM coverage is mandatory for certain commercial vehicles
that transport passengers. A.R.S. § 28-4033(A)(2).
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
only exception. See id. Further, there was no reference to subsection
L, another clear exception to the requirement that insurers offer UM
and UIM coverage. § 20-259.01(L).11 But even assuming the anti-
stacking provision is the only “limitation” allowed in the UM/UIM
statute, the approach by the trial court and IDS—that the lack of
commercial coverage is not an “exclusion” but merely a lack of
purchased coverage—finds support in a case interpreting subsection
L, Petrusek v. Farmers Insurance Company of Arizona, 193 Ariz. 552, 975
P.2d 142 (App. 1998).
¶15 In Petrusek, the court concluded it would not impute
UIM coverage to a business automobile policy because the policy fit
the requirements of subsection L.12 Id. ¶¶ 9-11. The court did not
refer to this gap in coverage as an exclusion; rather, because such
coverage was not required, it would not be imputed to the policy.
Id. Essentially, the policy lacked the coverage. Similarly, here,
because subsection C treats UIM coverage differently for commercial
vehicles, the Gambrells’ policy would not cover the milk truck
unless specifically requested and included. See id. ¶ 9. Because such
an offering was not mandatory and there is no indication the
Gambrells sought to insure the milk truck, coverage cannot be
imputed.13 See id.
11 Subsection L provides an exception to the mandatory
offering requirement for general commercial liability policies, excess
policies, or other policies that do not provide primary motor vehicle
insurance for a specifically insured motor vehicle. § 20-259.01(L).
12 Although the court in Petrusek refers to subsection K, the
operative language was moved to subsection L. Compare Petrusek,
193 Ariz. 552, ¶ 9, 975 P.2d at 144 (quoting former subsection K) with
§ 20-259.01(L).
13Thisdoes not alter our conclusion that Warfe controls, even
though Warfe uses “exclusion” language, rather than referring to
subsection C as an exception to the general rules of the statute.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
Applicability of the Commercial Vehicle Exception
¶16 The Gambrells argue subsection C only applies when an
insured specifically seeks an owner’s or operator’s policy on a
commercial vehicle, and because they purchased their policy for
their personal vehicles under subsection B, the language of
subsection C did not apply. First, this conflicts with the holding in
Warfe, as discussed earlier. See 121 Ariz. at 263, 589 P.2d at 906.
Further, nothing in the language of subsection C indicates that it
only applies when an insured seeks to specifically insure the
commercial vehicle. § 20-259.01(C). The subsection simply states
insurers may make coverage available “to owners and operators of
motor vehicles that are used as public or livery conveyances or
rented to others or that are used in the business primarily to
transport property or equipment.” Id. An operator is a person “in
actual physical control of a motor vehicle,” as Frank was. A.R.S.
§ 28-4001(6). That Frank only sought insurance from IDS for his
personal vehicles does not change the fact that Frank was such an
operator. 14 UIM coverage for ownership or operation of a
commercial vehicle was not required to be included in their personal
vehicle policy, and it was not included. The Gambrells lacked
coverage for Frank’s operation of the milk truck.
¶17 Additionally, under the Gambrells’ interpretation,
owners or operators could avoid the statute’s enumerated exception
by insuring their other vehicles. We acknowledge the general public
policy behind UIM insurance is that it is portable and generally
covers most injuries caused by underinsured drivers, including
those that occur while the insured is in a vehicle he owned but failed
to sufficiently insure. However, prior cases detailing that public
policy did not concern commercial vehicles, which are treated
differently under the statute. See § 20-259.01(A) through (C);
Higgins, 160 Ariz. at 23, 770 P.2d at 327 (“other vehicle” exclusion
void); McKeon, 159 Ariz. at 115, 765 P.2d at 517 (named driver
exclusion void); Spain v. Valley Forge Ins. Co., 152 Ariz. 189, 194, 731
14We note the Gambrells repeatedly state that Frank was “in”
the milk truck. We limit our holding to the undisputed facts of this
case, in which Frank was the driver of the commercial vehicle.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
P.2d 84, 89 (1986) (offset provisions void); Calvert, 144 Ariz. at 294,
697 P.2d at 687 (“other vehicle” exclusion void). The Gambrells’
argument to expand the reasoning of these cases to encompass
commercial vehicles is unavailing, especially in view of the more
directly applicable authority from Warfe.
Validity of Policy Language
¶18 The Gambrells argue in the alternative that even if
§ 20-259.01(C) applies, IDS was required to mirror the language of
the statute to invoke the limitations in its policy. They rely on State
Farm Mutual Automobile Insurance Company v. Lindsey, 182 Ariz. 329,
897 P.2d 631 (1995), a case in which our supreme court addressed
the anti-stacking provision now found in § 20-259.01(H). Relying on
previous case law that allowed for anti-stacking clauses in policies if
the language is “‘unambiguous and follow[s] the provisions’” of the
statute, the court found the policy failed to effectuate the permissible
limitation. Id. at 331-32, 897 P.2d at 633-34. Section 20-259.01(H) is
unique, however, in that it requires the insurer to notify the insured
about the limitations. Further, Lindsey involved a policy limitation,
whereas the Gambrells’ policy merely lacked non-mandatory
coverage. The Gambrells also cite no case law imputing this
mirrored-language requirement to subsection (C). Nothing in
subsection (C) requires notice of a lack of UIM insurance, and the
Gambrells do not argue the policy language was unclear or
ambiguous. Because we find the lack of commercial vehicle
coverage was permissible pursuant to § 20-259.01(C) and there is no
requirement that IDS mirror the language of the statute in order to
trigger the exception, the trial court did not err by granting
summary judgment in favor of IDS. Further, because the Gambrells’
motion for new trial restated their arguments in opposition to IDS’s
motion for summary judgment, the court did not err by denying the
motion for new trial.
Attorney Fees
¶19 The Gambrells seek attorney fees pursuant to A.R.S.
§ 12-341.01. Because they are not the successful party on appeal, as
required by § 12-341.01(A), we decline to award attorney fees.
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GAMBRELL v. IDS PROP. CAS. INS. CO.
Opinion of the Court
Disposition
¶20 For the foregoing reasons, we affirm.
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