State Farm v. Myra M. Windham

THE STATE OF SOUTH CAROLINA
In The Supreme Court
State Farm Mutual Automobile Insurance Company,
Petitioner,
v.
Myra M. Windham, Respondent.
Appellate Case No. 2020-001693
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal from Lexington County
G. Thomas Cooper, Jr., Circuit Court Judge
Opinion No. 28121
Heard April 27, 2022 – Filed November 2, 2022
AFFIRMED AS MODIFIED
Alfred Johnston Cox and Jessica Ann Waller, both of
Gallivan, White & Boyd, PA, of Columbia, for Petitioner.
Stephen H. Cook and John K. Koon, both of Koon Cook
and Walters, LLC, of Columbia, for Respondent.
JUSTICE HEARN: Respondent Myra Windham was seriously injured while
driving a rental car 1 that constituted a temporary substitute vehicle under her State
Farm policy. In this declaratory judgment action instituted by Petitioner State
Farm, we are asked to determine whether Windham can stack her underinsured
motorist ("UIM") coverage pursuant to section 38-77-160 of the South Carolina
Code. The circuit court agreed with State Farm that stacking was prohibited, and the
court of appeals reversed. Because both parties offer reasonable interpretations of
the policy language, we believe an ambiguity exists, which we construe against the
drafter. Accordingly, we agree with the court of appeals that Windham can stack
and affirm as modified.
FACTUAL AND PROCEDURAL HISTORY
Within the span of only six days and through no fault of her own, Myra
Windham was in two car accidents. The first, on September 29, 2012, rendered her
car inoperable. Consequently, on the date of the second accident, October 5, 2012,
she was driving the rental car provided to her through the insurance of the first
accident's at-fault driver.
In the second accident, Windham sustained injuries that exceeded the
tortfeasor's liability insurance and sought to stack her UIM policies. Windham was
insured under five separate policies 2 with State Farm at the time of the second
accident. Though she was permitted to collect under one UIM policy, State Farm
denied she could stack.
The parties stipulated the rental car in question meets the definition of a
"temporary substitute car" as defined in Windham's State Farm policies. Further, the
parties stipulate the rental car is not a vehicle shown under the "YOUR CAR"
heading of the declarations page on any of the policies issued to Windham or her
husband, nor does the car meet the definition of "owned by" in the policies.
1
To be clear, under the terms of this policy, "temporary substitute cars" do not
include all rental cars, but only those used while the insured's car is inoperable for
one of the enumerated reasons. For example, vehicles rented while on vacation, for
moving furniture or other goods, or while on a work trip would not qualify as
temporary substitute cars under this policy.
2
Windham paid for the maximum $100,000 of UIM coverage on each vehicle.
Upon cross-motions for summary judgment, the circuit court found the
policy's "not owned by" language controlled and thus stacking was prohibited. The
court of appeals reversed, relying on a separate policy provision that states when a
car is both a non-owned vehicle and a "temporary substitute car," it is considered a
temporary substitute car only. We then granted certiorari.
STANDARD OF REVIEW
"An appellate court reviews the granting of summary judgment under the
same standard applied by the trial court pursuant to Rule 56, SCRCP." Brockbank v.
Best Capital Corp., 341 S.C. 372, 379, 534 S.E.2d 688, 692 (2000). Each side in
this dispute asserts the case involves a legal question, i.e., an analysis of Windham's
policy with State Farm and its interplay with S.C. Code Ann. § 38-77-160.
"Determining the proper interpretation of a statute is a question of law, and this
Court reviews questions of law de novo." Town of Summerville v. City of N.
Charleston, 378 S.C. 107, 110, 662 S.E.2d 40, 41 (2008). Further, while declaratory
judgment actions are generally "neither legal nor equitable[,]" assessing coverage
under an insurance policy "is [an action] at law." Auto-Owners Ins. Co. v. Rhodes,
405 S.C. 584, 593, 748 S.E.2d 781, 785 (2013).
LAW/ANALYSIS
I. S.C. Code Ann. § 38-77-160Stacking enables the insured to recover under more than one policy. See
Nationwide Ins. Co. v. Rhoden, 398 S.C. 393, 400 n.3, 728 S.E.2d 477, 481 n.3
(2012). In South Carolina, an individual must be a Class I insured in order to stack.
See Ohio Cas. Ins. Co. v. Hill, 323 S.C. 208, 211, 473 S.E.2d 843, 845 (Ct. App.
1996). "A Class I insured is an insured or named insured who has a vehicle in the
accident. An insured is a Class II insured if none of his vehicles are involved in the
accident." Id. (emphasis added). Here we are asked to determine whether Windham,
as the operator of a rental car, is a Class I or Class II insured.
The General Assembly has set forth this delineation between Class I and
Class II:
If none of the insured's or named insured's vehicles is involved in the
accident, coverage is available only to the extent of coverage on any
one of the vehicles with the excess or underinsured coverage.
S.C. Code Ann. § 38-77-160 (emphasis added). Windham argues this language
plainly includes rental car drivers, whereas State Farm contends the statute excludes
all non-owners. In our view, neither position is supported by the statutory
language. 3
Contrary to State Farm's argument, this Court has previously recognized that
the possessive relationship—"Insured's…vehicle"—means something less than
ownership. Concrete Servs., Inc. v. U.S. Fid. & Guar. Co., 331 S.C. 506, 513, 498
S.E.2d 865, 868 (1998)4. Equally true, however, is that the relationship between
driver and vehicle must be sufficient to make the possessive language logical. See
Montgomery v. Spartanburg Cnty. Assessor, 419 S.C. 77, 81, 795 S.E.2d 866, 868
(Ct. App. 2016) ("This court must read the statute so that no word, clause, sentence,
provision or part shall be rendered surplusage, or superfluous.") (internal quotations
omitted). Accordingly, the parties may contract for the coverage of certain,
specifically defined vehicles; rental cars could be covered by the policy, but the
statute in no way mandates that result. Thus, just as the court of appeals did, we
3
This Court has already once found the relevant language in section 38-77-160
ambiguous "at best" and turned to public policy to guide an interpretation. Rhoden,
398 S.C. at 402, 728 S.E.2d at 482 ("Thus, at best, the statutory language is
ambiguous, and until the legislature clarifies this particular provision of section 38–
77–160 to the contrary, the public policy… governs this case.").
4
State Farm asserts the holding in Concrete Services that "[w]e have never required
'ownership' as a prerequisite to stacking" is irrelevant to Windham's case. We
disagree. Though answering a certified question in which the first issue was
dispositive, the Court chose to continue to the second question to "clarify apparent
confusion concerning whether, in order to stack UIM coverage, an insured must
own the vehicle involved in the accident[.]" Concrete Servs., 331 S.C. at 512, 498
S.E.2d at 868. We concluded that ownership is not required, and "on the contrary,
we have consistently held the determinative factor is Class I status." Id. at 513, 498
S.E.2d at 868.
The Court came to this conclusion in Concrete Services after noting that prior cases
assessed only Class I status, leaving the door open to classes of people who do not
own the vehicle. Id. at 513, 498 S.E.2d at 868 ("Under that definition, it is patent
that one may be the spouse or relative of a named insured and reside in the same
household without owning the vehicle."). We therefore reiterate that Class I status,
and not ownership, is the determinative measure of an insured's ability to stack.
must look to the policy itself to determine whether the parties intended Windham's
relationship to her rental car be sufficient to render her a Class I driver, able to
stack.
II. Windham's policy with State Farm
This Court "must enforce, not write, contracts of insurance and [] must give
policy language its plain, ordinary, and popular meaning." Fritz-Pontiac-Cadillac-
Buick v. Goforth, 312 S.C. 315, 318, 440 S.E.2d 367, 369 (1994). In doing so, the
Court must not "extend or defeat coverage that was never intended by the parties."
Id.Relevant portions of Windham's policy state:
Non-Owned Car means a car that is in the lawful possession of you or
any resident relative and that neither:
1. is owned by: a. you; b. any resident relative; c. any other person
who resides primarily in your household; or d. an employer of any
person described in a., b., or c. above; nor
2. has been operated by, rented by, or in the possession of: a. you; or b.
any resident relative during any part of each of the 31 or more
consecutive days immediately prior to the date of the accident or
loss…
Owned By means: 1. owned by; 2. registered to; or 3. leased, if the
lease is written for a period of 31 or more consecutive days…
Temporary Substitute Car means a car that is in the lawful possession
of the person operating it and that…replaces your car for a short time
while your car is out of use due to its: a. breakdown; b. repair; c.
servicing, d. damage; or e. theft; and neither you nor the person
operating it own or have registered. If a car qualifies as both a non-
owned car and a temporary substitute car, then it is considered a
temporary substitute car only…
Your Car means the vehicle shown under ''YOUR CAR" on the
Declarations Page. Your car does not include a vehicle that you no
longer own or lease.
If a car is shown on the Declarations Page under "YOUR CAR[,"] and
you ask us to replace it with a car newly owned by you, then the car
being replaced will continue to be considered your car until the earliest
of:
1. the end of the 30th calendar day immediately following the date the
car newly owned by you is delivered to you;
2. the date this policy is no longer in force; or 3. the date you no longer
own or lease the car being replaced.
State Farm contends, and the circuit court agreed, that only owned vehicles or
those listed as "your car" on the declarations page can stack, and there is no basis in
the policy for finding that a temporary car is an owned vehicle under the policy. In
reply, Windham argues the label temporary substitute car implies it took the place
of her owned car for the duration of its temporary use. State Farm claims the policy
intends to treat a temporary car as a non-owned car because "by its very definition,
a 'temporary substitute car cannot be 'owned by' an insured." It comes to this
conclusion by analyzing the section defining a temporary substitute car as a car
"you nor the person operating it own or have registered." State Farm then ties this
to its argument that the legislature intended ownership as a prerequisite to stacking
in most cases under section 38-77-160.
Immediately following the sentence quoted by State Farm is this provision
which we find significant 5: "If a car qualifies as both a non-owned car and a
temporary substitute car, then it is considered a temporary substitute car only."
Windham contends the only apparent purpose of this sentence is to remove
temporary substitute cars from the consequences of being non-owned cars. While
normally all temporary cars would be considered non-owned because, as State Farm
points out, they are by their definition not owned, the policy ostensibly exempts
them from this consequence by denominating them temporary substitute cars only.
5
Although we find this sentence key to the policy's ambiguity, we are mindful that
it cannot be alone dispositive. See Beaufort Cnty. School Dist. v. United Nat. Ins.
Co., 392 S.C. 506, 516, 709 S.E.2d 85, 90 (Ct. App. 2011) ("An insurance contract
is read as a whole document so that one may not, by pointing out a single sentence
or clause, create an ambiguity.") (internal quotations omitted). Instead, we look to
the policy as a whole and consider this sentence in tandem with the plain language
arguments asserted by Windham.
While it is debatable that this alone transforms them into owned vehicles, that is
nevertheless a reasonable interpretation. On one hand temporary substitute vehicles
are not-owned, but on the other, the policy clearly states they are not to be
considered non-owned. Thus, both a finding of coverage and a finding against
coverage could be reasonably supported by a reading of the policy language
concerning non-owned and not non-owned.
State Farm posits that these inconsistent interpretations should be resolved by
reading the UIM section in isolation which lists coverage exclusions and, it argues,
purposefully omits temporary substitute cars from being exempted from those
exclusions. However, this does not explain what the sentence under construction
actually means nor does it remove the ambiguity created, because the basis of these
exclusions still rests on ownership 6, returning us to the question of precisely where
a car that is "not non-owned," as temporary substitute cars are reasonably
articulated to be, fits within this policy.
Offering only the circular argument that the policy is facially clear because it
is , State Farm produces no viable resolution to the inconsistencies presented.
7
Therefore, facing diametrically-opposing yet reasonable interpretations, the policy
is ambiguous and, construing the provision against the drafter, Windham should be
permitted to stack her UIM coverage. See Gaskins v. Blue Cross-Blue Shield of
6
The "Underinsured Motor Vehicle Coverage" section of the policy does limit
stacking under "If Other Underinsured Motor Vehicle Coverage Applies,"
paragraph three, but only on the basis of ownership: "If: a. you or any resident
relative sustains bodily injury or property damage: (1) while occupying a motor
vehicle not owned by you or any resident relative…the maximum amount that may
be paid from all such policies combined is the single highest limit provided by any
one of the policies. We may choose one or more policies from which to make
payment." (emphasis in original). The question of whether "not non-owned" means
owned still infects the interpretation of this section and thus this section alone does
not rescue the policy term from ambiguity.
7
Unlike the dissent, we do not view the stipulations as dispositive or this insurance
policy as a model of clarity. While the parties stipulated that the rental car did not
qualify as "owned by[,]" they also stipulated that it was a "temporary substitute
vehicle[.]" Neither of these stipulations resolve the fundamental question of
whether the driver of a temporary substitute vehicle can stack because we must
view the policy as a whole.
South Carolina, 271 S.C. 101, 105, 245 S.E. 2d 598, 600 (1978) ("The terms of an
insurance policy must be construed most liberally in favor of the insured, and if the
policy, words and language of the policy, when considered as a whole, give rise to a
patent ambiguity or are capable of two or more reasonable interpretations, at least
one of which favors coverage, that construction which is most favorable to the
insured must be adopted."); S.C. State Budget & Control Bd., Div. of Gen. Servs.,
Ins. Reserve Fund v. Prince, 304 S.C. 241, 248, 403 S.E.2d 643, 647 (1991)
(holding that when an "internal inconsistency in the policy renders it ambiguous and
when a policy is susceptible to more than one reasonable interpretation, one of
which would provide coverage, this Court must hold as a matter of law in favor of
coverage") (internal quotations omitted); USAA Prop. & Cas. Ins. Co. v. Clegg, 377
S.C. 643, 655, 661 S.E.2d 791, 797 (2008) (holding that conflicting terms in an
insurance policy are construed against the insurer). 8
Therefore, we find the policy's contradictory provisions support both
positions advanced by the parties. Construing this ambiguity in favor of coverage
for the insured, Windham is a Class I insured able to stack.
For the forgoing reasons, the court of appeals is AFFIRMED AS MODIFIED.
Acting Justices John D. Geathers and H. Bruce Williams, concur.
JAMES, J., dissenting in a separate opinion in which FEW, J.,
concurs.
8
Counsel for Windham argued before the circuit court that this provision of the
policy was ambiguous, but the circuit court ruled in favor of the insurer. Thereafter,
the court of appeals found the plain language of the policy dispositive and did not
discern an ambiguity. While neither party has argued before us that this policy is
ambiguous, their competing interpretations are both reasonable, therefore creating
an ambiguity which must be construed against State Farm and in favor of coverage.
Clegg, 377 S.C. at 655, 661 S.E.2d at 797.
JUSTICE JAMES: I dissent. Windham has been paid the $100,000 in UIM
coverage to which she is entitled. The provisions of the State Farm policy align with
applicable statutes and, under these facts, unambiguously prohibit Windham from
stacking UIM coverage because none of her vehicles was involved in the accident.
BACKGROUND
Windham and her husband were the named insureds under five State Farm
automobile insurance policies that covered separate vehicles; one policy covered their
Toyota Camry. Each policy contains identical language, and each provides $100,000
in UIM coverage for covered damages. The Camry was damaged in a two-car wreck
on September 29, 2012, with a driver insured by Allstate. Allstate provided Windham
a rental vehicle owned by Enterprise Leasing Corporation. Six days later, Windham
was driving the rental vehicle and was involved in a second accident with Jennifer
McArdle. Windham claims the second accident was McArdle's fault and further
claims she sustained damages exceeding the total of McArdle's liability insurance
coverage and the $500,000 in UIM coverage from her five State Farm policies.
Windham has been paid the full amount of McArdle's liability coverage. State Farm
paid Windham the $100,000 limit of UIM coverage from one policy and claims
Windham cannot stack UIM coverage from the other four policies. State Farm
commenced this declaratory judgment action to resolve the stacking issue.
The parties filed cross-motions for summary judgment, and the circuit court
granted State Farm's motion, concluding Windham could not stack UIM coverage
under the terms of her policy and South Carolina Code section 38-77-160 (2015).
The circuit court explained the "clear and unambiguous language" of Windham's
policy prohibits stacking when the insured is injured in a vehicle that is not "owned
by" the insured. The circuit court found that because the rental car was not "owned
by" Windham, the policy prohibited stacking. The circuit court further ruled the
policy's anti-stacking provision was consistent with section 38-77-160: "Because
there is no dispute that Windham did not own the vehicle involved in the accident
and [because] none of her vehicles were involved in the accident, she did not 'have' a
vehicle in the accident as is required by the statute." See S.C. Code Ann. § 38-77-
160 ("If none of the insured's or named insured's vehicles is involved in the accident,
coverage is available only to the extent of coverage on any one of the vehicles with
the excess or underinsured coverage.").
The court of appeals reversed. State Farm Mut. Auto. Ins. Co. v. Windham,
432 S.C. 134, 850 S.E.2d 633 (Ct. App. 2020). The court of appeals explained section
38-77-160 permits a Class I insured to stack UIM coverage, and "a Class I insured is
an insured or named insured who 'has' a vehicle involved in the accident." Id. at 149,
850 S.E.2d at 641 (alteration omitted) (quoting Nationwide Mut. Ins. Co. v. Rhoden,
398 S.C. 393, 401, 728 S.E.2d 477, 481 (2012)). The court of appeals held Windham
"had" a vehicle involved in the accident because the rental car met the policy
definition of "temporary substitute car" and, therefore, "took the place of her
vehicle[.]" Id.The court of appeals did not meaningfully discuss the policy's anti-stacking
provision, but it appears the court of appeals held the provision conflicts with section
38-77-160 and is unenforceable. See id. at 148, 850 S.E.2d at 640 ("We have never
required 'ownership' as a prerequisite to stacking . . . . Accordingly, we hold that prior
cases requiring a person to 'have' a vehicle involved in the accident as a prerequisite
to stacking mean[s] only that a person must be a Class I insured." (emphasis omitted)
(quoting Concrete Servs., Inc. v. U.S. Fid. & Guar. Co., 331 S.C. 506, 513, 498
S.E.2d 865, 868 (1998))).
The relevant portion of section 38-77-160 states,
If, however, an insured or named insured is protected by uninsured or
underinsured motorist coverage in excess of the basic limits, the policy
shall provide that the insured or named insured is protected only to the
extent of the coverage he has on the vehicle involved in the accident. If
none of the insured's or named insured's vehicles is involved in the
accident, coverage is available only to the extent of coverage on any one
of the vehicles with the excess or underinsured coverage.
(emphasis added). In case law, we have explained stacking in terms of Class I and
Class II insureds. A Class I insured is a named insured, his or her spouse, or resident
relative who "has a vehicle involved in the accident." S.C. Farm Bureau Mut. Ins.
Co. v. Mooneyham, 304 S.C. 442, 443 n.1, 405 S.E.2d 396, 397 n.1 (1991);
Fireman's Ins. Co. v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 544, 370 S.E.2d
85, 88 (1988); Concrete Servs., 331 S.C. at 512, 498 S.E.2d at 868. A Class II
insured is a named insured, his or her spouse, or resident relative "whose vehicle
was not involved in the accident." Mooneyham, 304 S.C. at 443 n.1, 405 S.E.2d at397 n.1; Fireman's Ins. Co., 295 S.C. at 544, 370 S.E.2d at 88; Concrete Servs., 331
S.C. at 512-13, 498 S.E.2d at 868. Absent policy provisions broadening the right to
stack UIM coverage, only Class I insureds can stack such coverage.
"[I]nsurance policies are contracts to be interpreted in accord with contract
law." Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40, 52,
717 S.E.2d 589, 595 (2011). I will first review the State Farm policy to ascertain the
parties' intent. See Nationwide Ins. Co. of Am. v. Knight, 433 S.C. 371, 375, 858
S.E.2d 633, 635 (2021) (explaining that a coverage analysis begins with the insurance
policy and then looks to whether its provisions "violate[] any legislatively-expressed
public policy").
STIPULATIONS AND POLICY PROVISIONS
The parties entered into several stipulations of fact, most of which relate to
policy provisions pertinent in this case. These stipulations and policy provisions are:
First, Windham and her husband are the insureds under each policy.
Second, none of the Windhams' vehicles was involved in the second accident.
Third, the rental vehicle was a "temporary substitute car." Each policy defines
"Temporary Substitute Car" as:
[A] car that is in the lawful possession of the person operating it and
that:
1. replaces your car for a short time while your car is out of use due
to its:
a. breakdown;
b. repair;
c. servicing;
d. damage; or
e. theft; and
2. neither you nor the person operating it own or have registered.
The temporary substitute car provision also states, "If a car qualifies as both a non-
owned car and a temporary substitute car, then it is considered a temporary substitute
car only."
Fourth, each policy defines "Non-Owned Car" as:
[A] car that is in the lawful possession of you or any resident relative
and that neither:
1. is owned by:
a. you;
b. any resident relative;
c. any other person who resides primarily in your household;
or
d. an employer of any person described in a., b., or c. above;
nor
2. has been operated by, rented by, or in the possession of:
a. you; or
b. any resident relative
during any part of each of the 31 or more consecutive days
immediately prior to the date of the accident or loss.
Fifth, the parties stipulate the rental vehicle was not "owned by" Windham.
Each policy defines "Owned By" as:
1. owned by;
2. registered to; or
3. leased, if the lease is written for a period of 31 or more consecutive
days, to.
Sixth, the rental vehicle is not shown on any declarations page as "YOUR
CAR." Each policy defines "Your Car" as "the vehicle shown under 'YOUR CAR'
on the Declarations Page. Your car does not include a vehicle that you no longer own
or lease."
Seventh, the UIM section of each policy contains the following paragraph
concerning an insured's ability to stack coverage:
3. If:
a. you or any resident relative sustains bodily injury or property
damage:
(1) while occupying a motor vehicle not owned by you or
any resident relative; or
(2) while not occupying a motor vehicle; and
b. Underinsured Motor Vehicle Coverage provided by this policy
and one or more other vehicle policies issued to you or any
resident relative by the State Farm Companies apply to the
same bodily injury or property damage, then
the maximum amount that may be paid from all such policies
combined is the single highest limit provided by any one of the
policies. We may choose one or more policies from which to make
payment.
Paragraph 3 prohibits stacking if the insured is injured while occupying a vehicle that
is not "owned by" the named insured, his or her spouse, or resident relative. This
paragraph unambiguously prohibits Windham from stacking and does not violate
section 38-77-160.
ANALYSIS
I. The policy unambiguously prohibits stacking when an insured is injured in
an accident while occupying a temporary substitute car.
As noted above, the last sentence of the "temporary substitute car" definition
provides, "If a car qualifies as both a non-owned car and a temporary substitute car,
then it is considered a temporary substitute car only." Because Windham's rental car
qualifies as both, it is a temporary substitute car only. Windham stipulates the rental
car does not meet the policy definition of a car "owned by" her, and the policy's anti-
stacking provision plainly provides Windham cannot stack if she was "occupying a
motor vehicle not owned by [her] or any resident relative."
In the face of Windham's stipulation that the rental car was not "owned by"
her, Windham curiously argues that because the rental car is a temporary substitute
car and not a "non-owned car," the rental car must "be treated like an owned vehicle
even though [Windham] does not actually own it." Equally curious is Windham's
argument that her previously damaged Camry was "involved" in the second accident
for stacking purposes, as she stipulated that none of her vehicles was involved in that
accident.
The majority rightly acknowledges the reasonableness of State Farm's
argument that under the policy's terms, a temporary substitute car is not "owned by"
the insured. However, the majority joins in Windham's torture of the plain language
of the policy and concludes:
While normally all temporary [substitute] cars would be considered non-
owned because, as State Farm points out, they are by their definition not
owned, the policy ostensibly exempts them from this consequence by
denominating them temporary substitute cars only. While it is debatable
that this alone transforms them into owned vehicles, that is nevertheless
a reasonable interpretation.
(emphasis added). In reaching this conclusion, the majority ignores the parties'
stipulation that Windham did not own the rental car. The majority then concludes
State Farm's and Windham's interpretations are equally reasonable and therefore
result in an ambiguity in the policy that must be resolved against State Farm. The
majority rewrites the policy to provide that if rental cars qualify as both non-owned
cars and temporary substitute cars, they are "not non-owned," thus transforming
them into owned cars. I disagree because there is no ambiguity. Even absent the
stipulations, the only reasonable interpretation of the policy is that Windham did not
own the rental car.
Advancing a similar argument, Windham cites Bell v. Progressive Direct
Insurance Co.9 for the proposition that State Farm's reading of the policy "ignores
the principle that insurance contracts are to be read in accordance with reasonable
expectations of insureds." Specifically, Windham points to the definition of
"temporary substitute car" as a car that "replaces" a car listed on the declarations
page. Windham claims it was her reasonable expectation that the rental car "replace"
the Camry for all purposes under the policy, including UIM coverage. Windham's
invocation of the doctrine of reasonable expectations should fail, as we specifically
noted in Bell that "the doctrine cannot be used to alter the plain terms of an insurance
policy." Id. at 581, 757 S.E.2d at 407. The plain terms of the State Farm policy
compel the conclusion that the rental car was not owned by Windham.
II. Windham did not have a vehicle involved in the accident.
As acknowledged by the majority and the court of appeals, a Class I insured
is a named insured, his or her spouse, or resident relative who has a vehicle involved
9
407 S.C. 565, 578-81, 757 S.E.2d 399, 405-07 (2014).
in the accident. Windham, 432 S.C. at 146, 850 S.E.2d at 639. Only a Class I insured
may stack UIM coverage. Concrete Servs., 331 S.C. at 509, 498 S.E.2d at 866; see
Mooneyham, 304 S.C. at 444, 405 S.E.2d at 397.10
In their effort to determine what it means "to have" a vehicle involved in the
accident, the court of appeals and the majority mistakenly seize upon our isolated
statement in Concrete Services that "[w]e have never required 'ownership' as a
prerequisite to stacking" to conclude section 38-77-160 contains no ownership
requirement. Windham, 432 S.C. at 149, 850 S.E.2d at 641 (quoting Concrete Servs.,
331 S.C. at 513, 498 S.E.2d at 868). A proper reading of Concrete Services
demonstrates section 38-77-160 prohibits stacking when the named insured is injured
in a vehicle owned by neither the named insured, his or her spouse, nor a resident
relative.
Concrete Services presented two certified questions related to stacking. Ann
Mickle was injured while driving a vehicle owned by her husband's company,
Concrete Services. Concrete Services was the named insured on the vehicle's
insurance policy, and Mickle's husband was the sole shareholder of Concrete
Services. Answering the first certified question, we held Mickle was not a Class I
insured because the corporation—the named insured—could not possibly have a
spouse or resident relatives. We therefore held Mickle could not stack.
Even though our answer to the first certified question resolved the case, we
then turned to the second certified question: "Where the South Carolina Appellate
Courts have required an insured to 'have' a vehicle involved in the accident in order
to stack UIM coverage, is it required that the insured own the vehicle involved in the
accident?" Concrete Servs., 331 S.C. at 508, 498 S.E.2d at 865. We answered that
certified question "no" and held section 38-77-160 does not require the insured to
personally own the vehicle involved in the accident in order to stack. We held, "[I]n
order to 'have' a vehicle involved in the accident, it is necessary only that the insured
qualify as a Class I insured." Id. at 513, 498 S.E.2d at 868. We recognized that in
many instances, the spouse or resident relative of the named insured does not own
the insured vehicle. We explained that under the Class I definition, "it is patent that
one may be the spouse or relative of a named insured and reside in the same
household without owning the vehicle. We have never required 'ownership' as a
prerequisite to stacking; on the contrary, we have consistently held the determinative
factor is Class I status." Id. (footnote omitted).
10
Of course, the insurer and the insured can contract for coverage greater than what
is minimally required by statute.
The context of our holding in Concrete Services is key. The majority isolates
the statement "[w]e have never required 'ownership' as a prerequisite to stacking" and
concludes section 38-77-160 is completely devoid of any ownership requirement.
This reading of Concrete Services ignores the plainly stated context of our holding—
even if the named insured's spouse or resident relative does not personally own the
vehicle involved in the accident, that person may stack UIM coverage if the named
insured had a vehicle involved in the accident. At the least, we require the named
insured to own the vehicle. Accordingly, the majority's reliance on Concrete Services
for the blanket proposition that ownership is not a prerequisite to stacking is
misplaced.
Ultimately, the answer to the question of whether section 38-77-160 contains
an ownership requirement lies in the language employed by the General Assembly.
To repeat, section 38-77-160 provides, "If none of the insured's or named insured's
vehicles is involved in the accident, coverage is available only to the extent of
coverage on any one of the vehicles with the excess or underinsured coverage."
"Insured" is defined to include the named insured, his or her spouse, and resident
relatives. See S.C. Code Ann. § 38-77-30(7). Incorporating this definition, section
38-77-160 plainly allows a policy to prohibit stacking if the named insured, his or her
spouse, or resident relatives do not own a vehicle involved in the accident. This
interpretation is supported by both the plain language of the statute and an in-context
review of Concrete Services.
CONCLUSION
"As a general rule, insurers have the right to limit their liability and to impose
conditions on their obligations provided they are not in contravention of public policy
or some statutory inhibition." Williams v. Gov't Emps. Ins. Co. (GEICO), 409 S.C.
586, 598, 762 S.E.2d 705, 712 (2014). The anti-stacking provision in Windham's
policy does not contravene section 38-77-160, nor does it expand Windham's right to
stack beyond the statutory minimum required by section 38-77-160.
Because the rental car was not owned by Windham, her husband, or a resident
relative, Windham did not "have" a vehicle involved in the accident. Windham has
been paid the $100,000 in UIM coverage to which she is entitled, and she cannot
stack additional UIM coverage under the terms of the policy. Therefore, I would
reverse the court of appeals' decision.
FEW, J., concurs.