Derosier v. Pawtucket Mutual Insurance Co.

1. This is a declaratory judgment action concerning
the level of underinsured motorist (UIM) coverage available to a single
insured who is among the multiple injured persons with claims against the
tortfeasor's single-limit policy. The issue is whether, in such
situations, Vermont law requires the liability limits of the tortfeasor's
policy to be compared to the per person or the per accident limits of the
injured insured's split-limit UM/UIM coverage. In its summary judgment
ruling, the superior court concluded that because the tortfeasor's policy
was subject to multiple claims as the result of the accident, the liability
limits of the tortfeasor's policy had to be compared with the per accident,
not the per person, liability limits of the injured insured's UM/UIM
coverage to determine whether the tortfeasor was underinsured. We reverse.

2. On July 29, 1999, plaintiff Ronald Derosier and two other
passengers, Teresa Paul and her son Adam Corbett, were injured in a
single-car accident caused by the driver's negligence. As the result of
the accident, Ms. Paul incurred medical bills in excess of $80,000, and
plaintiff incurred medical bills in excess of $10,000. The
driver/tortfeasor's vehicle was insured under a policy with Champlain
Casualty Company of Vermont. The policy carried a liability limit of
$60,000 per accident, notwithstanding the number of claimants.

3. Champlain Casualty agreed to pay the entire amount to the
injured claimants according to a distribution agreement to be fashioned by
them. The parties arrived at a tentative agreement, whereby Ms. Paul would
accept $59,000 to settle her claims, while plaintiff would accept the other
$1000 and pursue an additional recovery from defendant Pawtucket Mutual
Insurance Company, which had issued an automobile insurance policy to
plaintiff's mother. The Pawtucket policy provided UM/UIM coverage up to
$50,000 for each person making a claim under the policy with respect to a
single accident, and up to $100,000 for all claims made by more than one
person injured in a single accident.

4. Pawtucket Mutual declined to provide UIM coverage to
plaintiff on the grounds that the tortfeasor's vehicle was not
underinsured, given that the $60,000 liability limit in the tortfeasor's
policy was greater than the $50,000 per person limit on UIM coverage in the
Pawtucket policy. Plaintiff brought the instant declaratory judgment
action and filed a motion for summary judgment. The superior court granted
plaintiff's motion, ruling that the tortfeasor's vehicle was underinsured
because, in a multiple-victim accident, the per accident limits of the
tortfeasor's and the insured's policies must be compared.

5. On appeal, Pawtucket Mutual argues that the superior court's
ruling contravenes the terms of the Pawtucket policy and Vermont law.
Plaintiff responds by asking this Court to reject an "apples to oranges"
comparison between the per person limit in the Pawtucket policy and the per
accident limit in the tortfeasor's policy.

6. We conclude that, under the plain language of 23 V.S.A. §
941(f) and the unambiguous terms of the Pawtucket policy, the tortfeasor's
vehicle was not underinsured, and thus plaintiff was not entitled to UIM
coverage under the Pawtucket policy. Section 941(f) provides that

a motor vehicle is underinsured to the extent that its personal
injury limits of liability at the time of an accident are less
than the limits of uninsured motorists coverage applicable to any
injured party legally entitled to recover damages under said
uninsured motorist coverage.

7. The "personal injury limits of liability" in the tortfeasor's
policy are $60,000 per accident, irrespective of the number of claimants.
Thus, to determine whether plaintiff is underinsured, we must compare the
$60,000 limit in the tortfeasor's policy to "the limits of uninsured
motorists coverage applicable to any injured party legally entitled to
recover damages under said uninsured motorist coverage." Id. (emphasis
added). Under the Pawtucket policy, the maximum limit of liability for
UM/UIM coverage is $50,000 for any one person in any one accident and
$100,000 for more than one person in any one accident. The policy
expressly states that the $100,000 per accident limit is subject to the
$50,000 per person limit. Further, the policy states that the maximum
limit is the most that will be paid regardless of the number of insureds,
claims, or vehicles involved in the accident.

8. Plaintiff is the only claimant covered under the Pawtucket
policy. He is the only "injured party legally entitled to recover damages"
under that policy's uninsured motorist coverage. The "limits of uninsured
motorists coverage applicable" to plaintiff under the policy is $50,000.
Therefore, 23 V.S.A. § 941(f) requires us to compare the $60,000 personal
injury liability limit in the tortfeasor's policy to the $50,000 limit of
UM/UIM coverage applicable to plaintiff in the Pawtucket policy. Doing so
demonstrates that the tortfeasor was not underinsured at the time of the
accident, and thus plaintiff is not entitled to UIM coverage under the
Pawtucket policy. Accordingly, plaintiff cannot recover from the uninsured
motor vehicle provision of the Pawtucket policy, and the trial court erred
in so ruling.

9. Our holding does not require a comparison of "apples to
oranges," as plaintiff suggests. Rather, it simply requires the comparison
of liability limits mandated by § 941(f). Plaintiff contends that this
interpretation will lead to unfair results, and yet he advances a
construction of § 941(f) that would expose insurers to potential unlimited
UIM liability based on the number of persons injured in an accident rather
than on the terms of the applicable insurance policy or the language of the
governing statute.

10. As the Connecticut Supreme Court explained in Doyle v. Metro.
Prop. & Cas. Ins. Co., 743 A.2d 156, 161 (Conn. 1999), the function of
split-limit UIM coverage is to provide broader coverage in situations
involving multiple "claimants," but such coverage cannot "convert an
otherwise nonunderinsured vehicle into an underinsured vehicle." In Doyle,
the tortfeasor had a $100,000 single-limit liability policy, and the
insured claimant had a policy with split-limit UIM coverage of $100,000 per
person and $300,000 per accident. Rejecting claims similar to those made
by plaintiff here and construing a statute similar to § 941(f), the court
held that the tortfeasor was not underinsured because the proper comparison
was between the tortfeasor's liability limit and the per person limit of
UIM coverage available to the single insured claimant. Id. at 161-62.

11. Of course, in situations where multiple injured insureds
covered under a single insurance policy are seeking UIM coverage, comparing
per accident liability limits would be appropriate. For example, in
Botting v. Allstate Ins. Co., 707 A.2d 1319 (Me. 1998), three members of a
family injured in an automobile accident sought to compare the $300,000 per
accident limit of their split-limit UIM policy with the tortfeasor's
$100,000 single-limit policy. The court held that because all three of the
insureds had been injured in the accident, the per accident limit, rather
than the per person limit, of the split-limit policy had to be compared to
the tortfeasor's policy to determine whether the tortfeasor was
underinsured. Id. at 1321; see Day v. Allstate Ins. Co., 721 A.2d 983, 985
(Me. 1998) (reaching same result where couple injured in car accident
sought UIM coverage under same policy). Similarly, in Allstate Ins. Co. v.
Sanders, 644 N.E.2d 884 (Ind. Ct. App. 1994), two injured brothers sought
UIM coverage under a $100,000 per accident single-limit policy. The
tortfeasor had split-limit liability coverage of $50,000 per person and
$100,000 per accident. Construing a statute similar to § 941(f), the court
held that the tortfeasor was not underinsured because the per accident
limit of the tortfeasor's policy was not less than the single limit stated
in the policy insuring the brothers. Id. at 887.

12. Our case, however, presents a single injured insured claiming
UIM coverage. Hence, comparing per accident liability limits would not be
consistent with either § 941(f) or the insured's policy. Nevertheless,
notwithstanding the plain language of the statute and the unambiguous terms
of the insurance policy, (FN1) plaintiff suggests that UIM coverage should be
available whenever an insured's damages exceed the amount actually
available to the insured under the tortfeasor's policy, and that, in no
event should an insured receive less that what he would have received had
the tortfeasor been uninsured rather than underinsured. These arguments
are unavailing for the reasons stated in another opinion issued today,
Colwell v. Allstate Ins. Co., Nos. 2000-053 & 2000-410 (Vt. Jan. 31, 2003).

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Click the case caption above for the full text of the Court's opnion.

Reversed and remanded.

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Reported by: Fountainheads