Utah Home Fire Insurance v. Colonial Insurance

CARSON, J.

This is a claim for reimbursement for payments made for personal injury protection (PIP) benefits paid by Utah Home Fire Insurance Company (Utah) to its insured, Andrews. The question is whether another insurance company, Colonial Insurance Company (Colonial), is responsible for the payment of PIP benefits to Andrews. The answer to that question depends upon whether the liability insurer of the driver of another’s vehicle that is not described in the declaration section of the driver’s policy must pay PIP benefits to the owner of the vehicle who was injured while a passenger in the vehicle. We answer both questions affirmatively in the circumstances of this case.

Andrews was injured while riding as a passenger in her own vehicle. Barron, Colonial’s insured, was driving Andrews’ vehicle with her permission on October 24, 1980, when it collided with the vehicle of an uninsured motorist. Andrews was both the owner of and a passenger in the vehicle in which the injury occurred. Andrews’ liability insurance was with Utah. Only the “face sheet” of her Utah policy and a specimen of the broad form named operator endorsement to that policy are included in the record. The driver of the vehicle, Barron, had a liability policy with Colonial, and that policy is in evidence. Barron’s liability policy covers Barron’s use of Andrews’ vehicle as a temporary substitute vehicle. However, Barron’s own vehicle, a 1968 Plymouth Fury, was the only vehicle listed in Barron’s liability policy.

Utah paid PIP benefits to Andrews in the amount of $6,430.20. Utah and Andrews sued Colonial, alleging that the vehicle driven by Barron was “the insured vehicle” under Colonial’s insurance policy, ORS 743.800, and that Andrews was entitled to PIP benefits from Colonial, pursuant to Colonial’s insurance policy and Oregon law. They further alleged that Colonial refused to pay PIP benefits to Andrews and that, as a result thereof, Utah was required to provide PIP coverage under its policy with Andrews.¹ Utah has maintained throughout that its first position is that Colonial’s PIP obligation is primary as to Andrews and that Utah’s PIP coverage of Andrews is excess.

Each party moved for summary judgment. The trial court entered summary judgment for Colonial. The Court of Appeals reversed and remanded. 64 Or App 617, 669 P2d 381 (1983). The Court of Appeals found that PIP benefits should be afforded Andrews pursuant to Colonial’s policy with Barron as interpreted in light of the public policy behind the PIP statutes. The court then applied the rule of Lamb-Weston v. Oregon Auto Ins. Co., 219 Or 110, 341 P2d 110, 346 P2d 643 (1959), and required the two insurance companies to prorate the loss “in the ratio which the limits of the policies bear to the total coverage.” 219 Or at 137. Here, the applicable policy limits are those for PIP benefits. 64 Or App at 622-23. The Court of Appeals then reconsidered its opinion solely to correct the amount of money involved in its review. 65 Or App 812, 672 P2d 71 (1983).

PIP COVERAGE

As stated, Utah’s policy with Andrews is not included in the record, other than the “face sheet” and a specimen of the endorsement to which reference is made on the “face sheet,” which indicate that the policy provides broad form named operator coverage for Andrews. Under that type of policy, the insured has coverage while she is driving any vehicle, regardless of ownership. The determination by the Court of Appeals that Utah was partially responsible for payment of PIP benefits to Andrews is not challenged in this review. For that reason, we do not reach that issue. We assume that Andrews is entitled to PIP benefits from Utah.

We first examine the Colonial policy, for only if Andrews is entitled to PIP benefits under the Colonial policy is it necessary to determine what policy, if either, is primary. The Colonial policy extends PIP benefits to the named insured and relatives of the named insured living in the named insured’s household while occupying any motor vehicle. It extends PIP benefits to other passengers only while occupying a vehicle owned by the named insured. Andrews is not entitled to PIP coverage under the specific terms of Colonial’s PIP benefits because she was not occupying a vehicle owned by Barron.

That is only the beginning of the analysis, however. Utah correctly points out that Oregon statutes require that every motor vehicle liability policy issued for delivery in this state must provide PIP benefits to four classes of persons. Colonial cannot provide fewer benefits than the law requires it to provide.

ORS 743.800 provided:²

“Every motor vehicle liability policy issued for delivery in this state that covers any private passenger motor vehicle * * * shall provide to the person insured thereunder and members of that person’s family residing in the same household injured in a motor vehicle accident, passengers injured while occupying the insured motor vehicle and pedestrians struck by the insured motor vehicle * * * [certain listed benefits].”

The term “the insured motor vehicle” is not defined in the PIP sections of law. In determining whether Colonial’s policy must extend coverage to Andrews, we must determine what the legislature meant by the term “the insured motor vehicle.”

The meaning of the term “the insured motor vehicle” is not readily apparent from ORS 743.800. The reference in the statute to “the insured vehicle,” by necessary implication, means the vehicle insured under the liability policy. However, the legislature may have meant, as argued by Colonial, only the vehicle named on the declarations page of the particular liability policy. On the other hand, the legislature may have meant the vehicle insured by reference to the particular liability policy itself, and not just the vehicle listed on the declarations page.

We look again at ORS 743.800. It required that PIP benefits be provided to four classes of persons:

—“the person insured thereunder [injured in a motor vehicle accident] and

—“members of that person’s family residing in the same household injured in a motor vehicle accident,

—“passengers injured while occupying the insured motor vehicle and

—“pedestrians struck by the insured motor vehicle.”

All four classes of persons are required to be insured under the PIP policy, in the sense that all are entitled to benefits.

As noted, PIP coverage is statutory. The coverage aspect of this legislation did not provoke much comment when it was proposed as HB 1300 in 1971. The general tenor of comments and submissions was that ORS 743.800 would mandate PIP coverage in all Oregon automobile liability policies. See, e.g., Presentation of HB 1300, Subcommittee on Financial Affairs, House State and Federal Affairs Committee, Exhibit C, 1971 (drafted by Cornelius Bateson, then Insurance Commissioner).

We turn to the basic framework of the statutory scheme involving motor vehicle liability insurance, including PIP, uninsured motorist and financial responsibility. PIP benefits are required to be included in “[e]very motor vehicle liability insurance policy issued for delivery in this state that covers any private passenger motor vehicle.” ORS 743.800. Former ORS 486.011(11), repealed by Oregon Laws 1983, chapter 338, section 978, defined “motor vehicle liability insurance policy” to mean:

“* * * a policy or part of a policy either designating by explicit description or by appropriate reference all motor vehicles for which coverage is provided by the policy and insuring the named insured and all other persons insured under the terms of the policy against loss from the liabilities imposed by law for damages arising out of the ownership, operation, use or maintenance of those motor vehicles.” See ORS 806.080(1).

The contents of a motor vehicle liability policy were also the subject of ORS 743.786 to 743.795. These sections included definitions to be used for the terms of the motor vehicle liability policy.³ See Minutes, Senate Committee on Highways 1 (May 23, 1967 — Testimony of Ed Smith of Farmers Insurance Group) (HB 1506 “defines terms and language used in motor vehicle policies.”)

ORS 743.789:

“(1) Every motor vehicle liability policy insuring against loss suffered by any natural person resulting from liability imposed by law for bodily injury or death arising out of the ownership, maintenance or use of a motor vehicle shall provide uninsured motorist coverage therein or by indorsement thereon * * *.”

ORS 743.792(2)(b):

“Every [motor vehicle liability] policy required to provide the coverage specified in ORS 743.789 shall provide uninsured motorist coverage which in each instance is no less favorable in any respect to the insured or the beneficiary than if the following provisions were set forth in the policy. However, nothing contained in this section shall require the insurer to reproduce in such policy the particular language of any of the following provisions:

<<$ :Jc * * *

“(2) As used in this policy:

“(b) ‘Insured vehicle,’ except as provided in paragraph (c) of this provision, means:

“(A) The vehicle described in the [motor vehicle liability] policy or a newly acquired or substitute vehicle, as each of those terms is defined in the public liability coverage of the policy, insured under the public liability provisions of the policy; or

“(B) A nonowned vehicle operated by the named insured or spouse if a resident of the same household; provided the actual use thereof is with the permission of the owner of such vehicle and such vehicle is not owned by nor furnished for the regular or frequent use of the insured or any member of the same household.

“(c) ‘Insured vehicle’ does not include a trailer of any type unless such trailer is a described vehicle in the policy.”⁴

This legislative definition of “insured vehicle” to be used in motor vehicle liability policies was in existence when the PIP statutes were drafted and enacted.

The term “the insured motor vehicle” in the section requiring PIP coverage, ORS 743.800, does not presuppose that only a single motor vehicle could be the insured motor vehicle under any single policy. One or more motor vehicles can be covered “by explicit description or adequate reference” in a policy. The definition of “[i]nsured vehicle” in ORS 743.792(2)(b) applies throughout all motor vehicle liability policies and is not limited in application as is the definition of “Insured” (ORS 743.792(2)(a)) to the uninsured motorist coverage part of the policy. As PIP coverage is a prescribed part of every motor vehicle liability insurance policy issued for delivery in this state that covers any private passenger motor vehicle, the ORS 743.792(2) (b) definition of “insured vehicle” applies to PIP coverage as well as uninsured motorist coverage and generally to the entire “motor vehicle liability insurance policy” issued by Colonial.

ORS 743.792(2)(b)(A) recognizes three categories of “[i]nsured vehicle[s]”: (1) the vehicle described in the policy and (2) a newly acquired vehicle or (3) a substitute vehicle as each of those terms is described in the public liability section of the policy, insured under the public liability provisions of the policy.

ORS 743.792(2)(b)(B) adds to this definition a non-owned vehicle, if “operated by the named insured * * * with permission of the owner * * * [where the] vehicle is not owned by nor furnished for the regular or frequent use of the insured * * Cf. former ORS 486.411(l)(a) (requiring proof of future responsibility to include “insuring * * * all other persons using any [covered] motor vehicle with the insured’s consent.”)

Therefore, if under the Colonial policy the Andrews’ vehicle fits any of the categories of ORS 743.792(2) (b), then it is “the insured motor vehicle” for the purposes of PIP.

THE COLONIAL POLICY

With this statutory interpretation in mind, we turn to the policy in question (Colonial’s liability policy) to determine if, at the time in question, the vehicle being driven by Colonial’s insured was “the insured motor vehicle.”

The record contains an affidavit of Andrews that avers: “During the four to six weeks prior to the accident and on the day of the accident [Barron’s] automobile which he owned was broken down and not driveable due to mechanical failure.” Colonial concedes that Andrews’ vehicle is an insured vehicle under its liability policy with Barron, because it was operated as a temporary substitute vehicle for the vehicle that Barron owned.⁵ As mentioned earlier, Colonial argues that nonetheless Andrews is not entitled to PIP benefits under Colonial’s policy with Barron because she is not an “injured person” under the PIP endorsement of that policy. That is so because the PIP endorsement defines “injured person” as one injured in the “insured motor vehicle,” which is defined as a vehicle “of which the named insured is the owner.”⁶ Thus, because Andrews’ vehicle was not owned by Barron, Colonial contends that Andrews, a passenger at the time of the accident, is not extended PIP coverage under the Colonial policy.

We conclude that the statutory phrase “the insured motor vehicle” includes the Andrews’ vehicle under the instant circumstances, because it was operated as a temporary substitute vehicle by Barron and covered under the liability section of Barron’s policy. For that reason, and because Andrews was a passenger occupying the vehicle at the time she sustained injuries, Colonial’s policy with Barron provides PIP coverage for Andrews. The fact that she is not an “injured person,” and that she therefore would not be entitled to PIP benefits under the terms of that policy, does not alter our decision because that policy’s PIP endorsement is inconsistent with the statutory PIP scheme. The private agreement of the parties cannot override the statutory mandate. With the exceptions allowed by ORS 743.815,⁷ the parties can only agree to greater PIP benefits, ORS 743.820.

THE UTAH POLICY

On review of the granting of a motion for summary judgment, we view the record in the light most favorable to the party opposing the motion.

There is no evidence or allegation on this record from which we can conclude that Utah would have primary PIP responsibility to Andrews. Utah admits that Andrews would be entitled to PIP benefits under its broad form named operator policy, although the policy does not insure a particular vehicle by explicit description or appropriate reference. The PIP requirements do not attach unless there is “a motor vehicle liability insurance policy * * * covering any private passenger motor vehicle,” ORS 743.800. By definition, “named operator” policies, also called “nonowner” policies, insure a particular person, not motor vehicle. However, ORS 743.820 allows the parties to provide greater PIP benefits than required by statute, and we take Utah’s admission to indicate that such an agreement governs Utah’s PIP liability under Andrews’ policy. Our conclusion could be different in a case where the carrier represented to the insured or certified to the Motor Vehicle Division that its broad form named operator policy issued to an insured who owned an Oregon-registered motor vehicle satisfied the requirements of ORS chapter 486, see former ORS 486.411(l)(a); see also ORS 806.080.

BENEFIT APPORTIONMENT

Because we have assumed that the Utah policy provides PIP benefits to Andrews and have held that the Colonial policy provides PIP benefits to her, a secondary issue arises. That issue is whether either policy’s PIP coverage is primary as against the other’s. Such issues are resolved, to the extent possible, under ORS 743.810.

ORS 743.810 was first enacted in 1971 as section 4 of HB 1300. Or Laws 1971, ch 523, § 4. At that time the statute provided that benefits in respect of injuries to the named insured were primary, and benefits with respect to guest passengers injured while occupying the insured motor vehicle were excess. The 1971 legislative history provides insight into the applicability of this language to a situation such as that presented in this case. Cornelius Bateson, then Insurance Commissioner, wrote: “It should be noted here that if the guest or pedestrian has his own auto insurance policy it is primary and the policy of the driver is excess after use of collateral benefits.” Presentation of HB 1300, Subcommittee on Financial Affairs, House State and Federal Affairs Committee, Exhibit C at 2,1971.⁸

ORS 743.810 was amended in 1973 (Or Laws 1973, ch 551, § 4) to change the primacy of benefits for guest passengers and “to make the automobile primary as to everybody that was in the car.” Minutes, House Judiciary Committee 10 (April 17,1973 — Testimony of Ed Smith, Farmers Insurance Group, HB 2537). These amendments were drafted by then Insurance Commissioner Lester Rawls, who explained that the changes to ORS 743.810 “would make the primary coverage on the automobile itself.” Minutes, House Judiciary Committee 9 (April 25, 1973 — Testimony of Insurance Commissioner Rawls, HB 2537).

ORS 743.810(1) was substantially amended in 1975 (Or Laws 1975, ch 784, § 3) and now provides, in part:

“The personal injury protection benefits with respect to:

“(a) The insured and members of his family residing in the same household injured while occupying the insured motor vehicle shall be primary.

“(b) Passengers injured while occupying the insured motor vehicle shall be primary.

i<* * * * *

“(d) The insured and members of his family residing in the same household injured while occupying a motor vehicle not insured under the policy shall be excess.”

A lengthy explanation of section 3 of HB 3199, which became ORS 743.810, Oregon Laws 1975, chapter 784, section 3, states, in part:

“This section assigns the obligation of PIP benefit payment when more than one insurance policy covers the injured person * * *.

“The 1975 Act makes the PIP benefits under a policy covering a particular car primary for all passengers in that car * * *.” Commentary on Oregon Personal Injury Protection Benefits - 1975, House Labor and Business Affairs Committee, HB 3199, Exhibit H, at 1-2, April 28,1975.

The significance of the 1973 and 1975 amendments to ORS 743.810 to the facts of this case cannot be overlooked. The message that is strongest is that the vehicle involved in the collision or accident is primary. In other words, a policy which covers the vehicle is primary as against a policy which does not cover the vehicle. Unfortunately, this is the fullest extent of legislative intent discernible that would be of any assistance in this case. We believe that the 1973 and 1975 amendments have rendered Commissioner Bateson’s 1971 statement inapplicable. The principles basic to the 1971 and 1975 statutes are different in nature and focus. Whatever validity his statement had as an explanation of the 1971 statute is not applicable as indicative of legislative intent with regard to the 1975 statute.

In the instant case, the Andrews’ vehicle was “the insured motor vehicle” under ORS 743.800 in Colonial’s policy with Barron. We have also held that the Andrews vehicle was not “covered” under the Utah policy (and so could not be “the insured vehicle,” ORS 743.800), but that Andrews was covered by PIP because of the agreement of the parties to the Utah policy. Applying ORS 743.810 is thus conclusive as to which PIP coverage is primary. Under ORS 743.810(1)(d), Andrews is Utah’s insured, and thus her PIP benefits under the Utah policy are “excess.” Under ORS 743.810(l)(b), Andrews is a passenger occupying the motor vehicle insured as a temporary substitute vehicle in Colonial’s policy with Barron, and thus her PIP benefits under the Colonial policy are primary.

The decision of the Court of Appeals is affirmed in part and reversed in part. The decision of the trial court is reversed. This case is remanded to the trial court with instructions to enter summary judgment in favor of plaintiffs.

1 The action also originally included a claim for reimbursement of uninsured motorist benefits paid by Utah to Andrews. The trial court struck this part of the complaint by interlineation in response to Colonial’s motion to strike. That part of the trial court’s decision was not challenged upon appeal.

2 In 1981, subsequent to the date from which this claim arises, the legislature amended ORS 743.800 to substantially its present form. Or Laws 1981, ch 414, § 1. The amendments expressly do not apply to any liability incurred before the effective date of the amendments. Or Laws 1981, ch 414, § 5.

3 In 1979, ORS 743.786 to 743.840 were the part of ORS chapter 743 entitled “Motor Vehicle Liability Insurance.” ORS 743.786 to 743.795 originally were enacted by the legislature in 1965 as HB 1041. This bill was vetoed by Governor Mark O. Hatfield. In 1967, HB 1041 was made part of HB 1506 and reenacted by the legislature as Oregon Laws 1967, chapter 842. The language of these sections examined here remains unchanged. Presently the part of ORS chapter 743 entitled “Motor Vehicle Liability Insurance” includes sections formerly found in ORS chapter 486, see ORS 743.776 through 743.785.

4 The definition of “Insured” in ORS 743.792(2)(a), had and has a narrower application, extending only to uninsured motorist coverage part of a motor vehicle liability insurance policy. ORS 743.792(2)(a) provided:

“As used in this policy:

“ ‘Insured,’ when unqualified, means when applied to uninsured motorist coverage:

“(A) The named insured as stated in the policy and any person designated as named insured in the schedule and, while residents of the same household, the spouse of any such named insured and relatives of either; provided, neither such relative nor spouse is the owner of a vehicle not described in the policy; and provided further, if the named insured as stated in the policy is other than an individual or husband and wife who are residents of the same household, the named insured shall be only a person so designated in the schedule; and

“(B) Any other person while occupying an insured vehicle provided the actual use thereof is with the permission of the named insured.” (Emphasis supplied.)

The emphasized language was added to HB 1041 in 1965 by the Senate Financial Affairs Committee at the suggestion of Mr. John Steelhammer. The amendment was specific and affected only the definition of “Insured.” See Bill File for HB 1041, Senate Committee Report, April 1,1965 and Senate Amendments to House Bill 104 by Senate Committee on Financial Affairs (April 2, 1965): Engrossed and Enrolled House Bill 1041 at page 2, line 30 (handwritten entry); Minutes, Senate Financial Affairs Committee (April 1, 1965, attachment “Senate Amendment to House Bill 1041 by Committee on Financial Affairs”).

The definitions of ORS 743.786 apply to ORS 743.786 to 743.795. These sections of ORS chapter 743 deal with general requirements of motor vehicle liability insurance policies, and also specific requirements related to uninsured motorist coverage. The definition of “insured vehicle” in ORS 743.792(2)(b) is a general provision governing all motor vehicle liability insurance policies and is not limited to the part providing uninsured motorist coverage.

5 Barron’s policy with Colonial, in the general definitions section, defines “Your insured car” to include:

“* * * any substitute car means any car or utility trailer not owned by you, a relatiue, or resident, being temporarily used as a substitute for any other car covered under this Part, because of its withdrawal from normal use due to breakdown, repair, servicing, loss or destruction.” (Emphasis in original.)

The term “your insured car” does not appear in the PIP endorsement of Barron’s policy.

6 Colonial has provided the affidavit of an employee of the Oregon Insurance Commissioner’s Office that confirms that this policy language has been approved under ORS 743.006 and is widely used. That is a reason to review this case, but is not helpful in resolving the issue in this case. All insurance policy provisions must be so approved before they are utilized in an issued policy. ORS 743.006. Approval by the Insurance Commissioner under ORS 743.006 is no assurance that the approved language is consistent with the statutes.

7 ORS 743.815 provided:

“(1) The insurer may exclude from the coverage for personal injury protection benefits any injured person who:

“(a) Intentionally causes self-injury; or

“(b) Is participating in any prearranged or organized racing or speed contest or practice or preparation for any such contest.

<<* * * *

8 An identical quotation appears in Minutes, Senate Judiciary Committee (May 19, 1971 — Exhibit A, Presentation of House Bill 1300 to Senate Committee on Judiciary at 4).