Insurance Co. of State of Pa. v. Johnson

987 A.2d 276

2009 VT 92

INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA v. Kerrie A. JOHNSON, Administrator for the Estate of Michael W. Johnson.

No. 08-053.

Supreme Court of Vermont.

August 21, 2009.

Motion for Reargument Denied October 15, 2009.

F. Brian Joslin and Richard Hennessey of Theriault & Joslin, P.C., Montpelier, and Patrick Fredette and Timothy Puin of McCormick Barstow, LLP, Cincinnati, OH, for Plaintiff-Appellant.

John F. Campbell of Cambpell & Saunders, Quechee, and Walter G. Campbell and Kelley B. Stewart of Krupnick, Campbell, Malone, Buser, Slama, Hancock, Liberman & McKee P.A., Fort Lauderdale, FL, for Defendant-Appellee.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

¶ 1. JOHNSON, J.

We agreed to review the following question certified from the United States District Court for the District of Vermont: "Whether Vermont's uninsured/underinsured motorist statute, 23 V.S.A. § 941, requires excess liability (or umbrella) policies to provide uninsured/underinsured motorist coverage?" For the reasons set forth below, we conclude that the statute does apply to such policies.

¶ 2. This case arises from the tragic death of Vermont State Police Sergeant Michael Johnson while in the course of duty. The facts underlying the incident are set forth in full in State v. Daley, 2006 VT 5, 179 Vt. 589, 892 A.2d 244 (mem.). In brief, Sergeant Johnson was struck and killed by a motorist, Eric P. Daley, while laying spikes across a highway in an effort to stop Daley's vehicle, which was then engaged in a high-speed police chase. Id. ¶ 4. Daley later pled guilty to seven criminal charges and was sentenced to an aggregate term of imprisonment of twenty-six to thirty-three years. We affirmed on appeal. Id. ¶ 13.

¶ 3. Daley's automobile liability insurer subsequently paid the third-party liability policy limit of $25,000 to Johnson's estate. Thereafter, Johnson's employer, the State of Vermont, tendered to the estate its self-insured underinsured-motorist policy limit of $250,000. The estate then filed a complaint in Washington Superior Court against the State, seeking to recover damages in excess of the $250,000 underinsured-motorist limit under the State's two umbrella or excess liability policies in effect at the time of the incident, both of which had been issued by the Insurance Company of the State of Pennsylvania (ICSOP). One policy broadly insured against "liability imposed by law or assumed under an insured contract because of bodily injury or property damage arising out of an occurrence during the Policy Period," and contained a limit of $10 million in excess of the State's $250,000 self-insured retained limit. The other policy was largely identical but contained a proviso limiting coverage to liability arising under the Vermont Tort Claims Act and had a policy limit of $1 million in excess of the $250,000 retained limit. Neither policy expressly provided for uninsured or underinsured (UM/UIM) motorist coverage.

¶ 4. The estate claimed, nevertheless, that because the ICSOP policies provided coverage for "liability arising out of the ownership, maintenance or use" of a motor vehicle, they were required to provide UM/UIM coverage under 23 V.S.A. § 941(a).¹ In response to the superior court claim, ICSOP filed an action in federal district court, seeking a declaration that § 941 does not apply to umbrella or excess liability policies.² Following a hearing on the parties' cross-motions for summary judgment, the federal magistrate judge issued a report observing that, while many states with similar UM/UIM statutes had resolved the issue, Vermont had thus far "not addressed the applicability of § 941 to umbrella policies." Because it presented a "purely state law question" and was "outcome determinative," the magistrate judge recommended that the question be certified to this Court. See V.R.A.P. 14. The district court adopted the magistrate judge's recommendation and, as noted, certified the following question: "Whether Vermont's uninsured/underinsured motorist statute, 23 V.S.A. § 941, requires excess liability (or umbrella) policies to provide uninsured/underinsured motorist coverage?" We accepted review.³

¶ 5. The principles governing our interpretation of legislation are settled. "Our goal is to implement the Legislature's intent and `[t]he definitive source of legislative intent is the statutory language, by which we are bound unless it is uncertain or unclear.'" State v. Stell, 2007 VT 106, ¶ 12, 182 Vt. 368, 937 A.2d 649 (quoting In re Bennington Sch., Inc., 2004 VT 6, ¶ 12, 176 Vt. 584, 845 A.2d 332 (mem.)). "We assume the Legislature intended the plain and ordinary meaning of the language it used, and thus, only when the objective of the legislation would be defeated by literal enforcement of statutory provisions can the Court, in construing a particular law, depart from the ordinary and usual meaning of the language used therein." Id. (citation omitted). In the absence of such a showing, "enforcement must be according to the statute's obvious terms." Id. (quotation omitted).

¶ 6. As noted, our UM/UIM statute provides, in pertinent part, that "[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may 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" for the protection of an insured "from owners or operators of uninsured, underinsured or hit-and-run motor vehicles." 23 V.S.A. § 941(a). The statute mandates minimal coverage of $50,000 for one person and $100,000 for two or more persons killed or injured, but further provides that if the policy's liability limits are higher, the limits of UM coverage "shall be the same, unless the policyholder otherwise directs." Id. § 941(c).

¶ 7. In providing clearly and unambiguously that "[n]o policy" insuring "against liability arising out of the ownership, maintenance or use of any motor vehicle" may issue without UM/UIM coverage, the statute plainly encompasses the excess policies here at issue. Both ICSOP policies provide coverage for amounts in excess of the limit provided by the State's retained or primary policy (in this case the State's self-insured limit of $250,000) which the State becomes "legally obligated to pay by reason of liability imposed by law or assumed under an insured contract because of bodily injury or property damage arising out of an occurrence during the Policy Period." Both policies expressly refer to the use of "owned" or "hired" motor vehicles by State officials and employees in the course and scope of employment. ICSOP has thus virtually conceded that its policies provide coverage for liability arising out of the ownership, maintenance, or use of a motor vehicle. There is no question, therefore, that the policies fall within the plain and unqualified language of the UM/UIM statute. See Colwell v. Allstate Ins. Co., 2003 VT 5, ¶ 23, 175 Vt. 61, 819 A.2d 727 (construing § 941 to require UM/UIM coverage for all forms of insurance covering motor vehicle liability, including self insurance).

¶ 8. ICSOP asserts, nevertheless, that despite its broad language, § 941 is intended to apply narrowly—and exclusively—to primary automobile liability policies. ICSOP claims that this intention may be inferred from several sources. First, it cites the statute's placement in chapter 11 of Title 23, which sets forth the requirements for drivers to maintain automobile insurance and financial responsibility. Several provisions within the chapter refer, to be sure, to automobile liability insurance. See 23 V.S.A. § 800(a) (setting forth the requirement that drivers maintain "an automobile liability policy" with minimum liability coverage); id. § 942 (providing that insurers who are "authorized to issue automobile liability insurance" may issue renewal endorsements and binders); id. § 943 (providing broadly that "[a]ll policies of motor vehicle liability insurance delivered or issued ... in this state shall be deemed to include provisions in accordance" with the subchapter).

¶ 9. It is a substantial stretch, however, to conclude that § 941's reference to policies "insuring against liability arising out of the ownership, maintenance or use of any motor vehicle" must, therefore, have also been intended to refer solely to primary automobile policies. On the contrary, the rules of statutory construction normally demand that we accord significance to variations in legislative language. See Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (differing language used in different statutory subsections held to have different meaning based on Court's presumption that "[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely") (quotations omitted); State v. DeRosa, 161 Vt. 78, 80, 633 A.2d 277, 279 (1993) ("[W]e presume the Legislature used the language [in the statute] advisedly."). If anything, therefore, the Legislature's decision to predicate the application of § 941 on the nature of the coverage rather than—as elsewhere in the chapter—the type of policy supports a conclusion that the Legislature fully intended the broad scope that the specific language commands. Absent any evidence of an intent to the contrary, therefore, we discern no grounds to depart from the plain meaning of § 941, which applies by its terms to the excess policies here at issue.

¶ 10. Similarly unpersuasive is ICSOP's claim that § 941's reference to "any motor vehicle registered or principally garaged in this state" evinces a legislative intent to include only primary automobile policies that cover particular vehicles, to the exclusion of excess policies that cover individuals and entities who qualify as insureds. See ...