No. 26971-0-III.The Court of Appeals of Washington, Division Three.
November 25, 2008.
Appeal from a judgment of the Superior Court for Yakima County, No. 07-2-01171-3, Blaine G. Gibson, J., entered February 20, 2008.
Affirmed
by unpublished opinion per Schultheis, C.J., concurred in by Kulik and Korsmo, JJ.
SCHULTHEIS, C.J.
Steven R. George appeals the summary dismissal of his underinsured motorist claim and declaratory judgment. He contends the insurance policy his closely held corporation bought to insure its vehicle covered him under the underinsured motorist provision even though he was not driving, riding in a company car, or traveling for business purposes. We disagree and affirm.
FACTS
BF Interiors, Inc. is a home interior business that has existed at the same location for 50 years in Yakima, Washington. Mr. George is the president of the company and Carla Goldsmith is the secretary. Each owns a 50 percent interest, which they purchased from Mr. George’s father. BF had several employees other than Mr. George and Ms. Goldsmith. The corporation owned a 1977 Dodge van, which was insured by Nationwide Mutual Insurance Company. Mr. George also purchased personal insurance policies through Nationwide.
Unfortunately, Mr. George was rendered a paraplegic as a result of injuries he sustained in a single car accident that occurred on August 20, 2005. At the time of the accident, Mr. George and his wife were passengers in a car owned by his wife’s sister, Janet Krieger, and driven by Ms. Krieger’s son, Matt. The occupants of the car were returning from a nonbusiness-related dinner. Matt Krieger was at fault in the accident — the car drifted when Matt was distracted trying to shoo a bee out of the window, he overcorrected, and the car rolled.
The Krieger vehicle was insured by Pemco Insurance Company, which paid its policy limits for bodily injury ($500,000) and personal injury protection ($10,000). Mr. George was also paid the policy limits of $10,000 for bodily injury and $100,000 for underinsured motorist coverage through his personal auto policy with Nationwide. Mr. George then made an underinsured motorist claim on the BF policy with Nationwide. That claim was denied.
Mr. George filed a declaratory judgment action regarding the benefits due him by Nationwide under the BF policy. Nationwide’s summary judgment motion was granted. This appeal follows.
DISCUSSION
When reviewing an order of summary judgment, we engage in the same inquiry as the trial court. Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 P.3d 1068 (2002). Summary judgment is appropriate only if there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. CR 56(c); Clements v. Travelers Indem. Co., 121 Wn.2d 243, 249, 850 P.2d 1298 (1993). Only when reasonable minds could reach but one conclusion on the evidence should the court grant summary judgment. Smith v. Safeco Ins. Co., 150 Wn.2d 478, 485, 78 P.3d 1274 (2003). This case involves the interpretation of insurance policy language, a question of law that we review de novo. Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 682, 801 P.2d 207 (1990), overruled on other grounds by Butzberger v. Foster, 151 Wn.2d 396, 89 P.3d 689
(2004).
“A contract of insurance should be given a fair, reasonable, and sensible construction, consonant with the apparent object and intent of the parties, a construction such as would be given the contract by the average man purchasing insurance.” Morgan v. Prudential Ins. Co. of Am., 86 Wn.2d 432, 434, 545 P.2d 1193 (1976). Nationwide denied UIM (underinsured motorist) coverage to Mr. George because he “[was] not a named insured on this policy, and since he was not occupying a covered auto.” Clerk’s Papers (CP) at 135.
The policy declarations clearly state that the named insured on the policy is “BF INTERIORS, INC.” CP at 31. The declarations further state that the “[i]nsured is a(n): CORPORATION.” CP at 31. Mr. George is not an expressly named insured.
The declarations section identifies autos covered for liability and personal injury protection, which includes “Specifically Described `Autos,'” “Hired `Autos’ Only,” and “Non-Owned `Autos’ Only.” CP at 31, 50. The underinsured/uninsured coverage is only for “Specifically Described `Autos.'” CP at 31, 50.
“Specifically Described `Autos'” means: “Only those `autos’ described in Item Three of the Declarations for which a premium charge is shown.” CP at 50. The schedule of “COVERED AUTOS YOU OWN” identifies a 1977 Dodge van, which shows premiums for liability, personal injury protection, and uninsured/underinsured coverage.[1] CP at 33.
“Hired `Autos'” means “Only those `autos’ you lease, hire, rent or borrow.” CP at 50. “Non-Owned `Autos'” means “Only those `autos’ you do not own, lease, hire, rent or borrow that are used in connection with your business.” CP at 50. The schedule for “hired or borrowed covered auto coverage and premiums” shows that liability coverage is included. CP at 32. The schedule for “NONOWNERSHIP COVERAGE AND PREMIUMS” identifies a premium for liability coverage for three employees.[2] CP at 32.
The Washington underinsured motorist coverage endorsement within the policy purports to modify the insurance coverage unless it is not modified by the endorsement. A blank space appears, which indicates “information required to complete this endorsement will be shown on the Declarations as applicable to this endorsement.” CP at 46.
Coverage under the underinsured motorist endorsement provides:
We will pay all sums the “insured” is legally entitled to recover as compensatory damages from the owner or driver of an “underinsured motor vehicle”. The damages must result from “bodily injury” or “property damage” sustained by the “insured” caused by an “accident”. The owner’s or driver’s liability for these damages must result from the ownership, maintenance or use of the “underinsured motor vehicle”.
CP at 46.
The underinsured motorist endorsement also identifies “WHO IS AN INSURED”:
1. You.
2. If you are an individual, any “family member”.
3. Anyone else “occupying” a covered “auto”. . . .
4. Anyone for damages he or she is entitled to recover because of “bodily injury” sustained by another “insured”.
CP at 46.
Under the underinsured endorsement, the terms “you” and “your” refer to the named insured as identified in the declarations. CP at 50. “Insured” means “any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage.” CP at 60.
An exclusion in the underinsured endorsement reads: “This insurance does not apply to . . . `Bodily Injury’ sustained by . . . You while `occupying’ any vehicle owned by you or made available for your regular use that is not a covered `auto’ for LIABILITY COVERAGE under this Coverage Form.” CP at 46-47.
Based on the clear language of the policy, persons (other than the corporation) are insured only if they are “occupying” a covered auto. CP at 46.
Mr. George first argues that he is a named insured because, as a person with a one-half interest in a closely held corporation, there is no distinction between him and the corporate entity. Our courts have held to the contrary.
For example, in General Insurance Co. of America v. Icelandic Builders, Inc., 24 Wn. App. 656, 657, 604 P.2d 966 (1979), a policy was purchased in the name of Icelandic Builders, Inc., a closely held corporation for a family construction business. All of the corporate shares were held by the patriarch, S.J. Kristjanson. Mr. and Ms. Kristjanson and their son, Timothy, were directors. Timothy was seriously injured in a car accident when his personal car collided with an uninsured motorist. He claimed coverage under the corporate policy as a resident in his father’s household. The policy identified “insureds” in virtually the same manner as the policy in this case. Id. at 657-58.
Timothy asserted that the corporation had no existence independent of the Kristjanson family. He argued that, if the corporation was considered to be the only named insured, there was no “person” who would be entitled to uninsured coverage because a corporation “cannot sustain bodily injury so as to qualify for coverage.” Id. at 659. Further, he argued that “this section of the policy is ambiguous because it purports to insure specific persons yet excludes any person if the named insured is a corporation.”Id.
The court disagreed. It held that the named insured was the corporation and there was no other designated insured. Id. at 660. Further, “[t]he identification of a corporation as the named insured does not so obfuscate the meaning of the term `person’ as to create an ambiguity.”Id. at 659. The same is true here.[3]
Mr. George next contends that because the insurance policy affords more extensive liability coverage than underinsured motorist coverage, the policy violates underinsured motorist statutory mandates. See Federated Am. Ins. Co. v. Raynes, 88 Wn.2d 439, 443, 563 P.2d 815 (1977) (“the statutory policy of RCW 48.22.030 vitiates any attempt to make the meaning of insured for purposes of uninsured motorist coverage narrower than the meaning of that term under the primary liability section of the policy”). Mr. George essentially argues that, due to the inclusion of hired autos and nonowned autos in the liability section that is not included in the underinsured motorist section, the liability coverage is more extensive than the underinsured motorist coverage. But Mr. George does not show that he was occupying a hired auto or nonhired auto at the time of the accident.
Underinsured motorist policies often divide “covered persons” into three classes: (1) “first party insureds” consisting of the person named in the policy and that person’s family members; (2) “other insureds,” or any person who is injured while occupying a vehicle covered under the policy; and (3) individuals who are entitled to recover damages because of bodily injury sustained by either a first party or “other insured” (i.e., a spouse claiming damages for loss of consortium). Blackburn v. Safeco Ins. Co., 115 Wn.2d 82, 88-89, 794 P.2d 1259 (1990). This is the type of policy that BF purchased. Underinsured motorist policies afford first party insureds “coverage that applies at all times, whatever may be the insured’s activity at the time of the accident.” Id. at 89. In contrast to first party insureds, “other insureds” are covered only while occupying a covered motor vehicle. Id.
“Other insureds” have the option of contracting with an insurance company for their own UIM coverage under a policy which provides them with UIM coverage that applies at all times as a “named insured.” Thus, insureds have the option to contract with an insurance company and pay a premium for UIM insurance that applies at all times, regardless of their status in a particular vehicle.
Id.
BF did not contract to cover Mr. George as a first party insured under its policy. Mr. George was not covered as an “other insured” because he was not occupying a vehicle covered by the policy. This limitation is reasonable and consistent with public policy. Smith v. Cont’l Cas. Co., 128 Wn.2d 73, 83, 904 P.2d 749 (1995).
The public policy underlying the underinsured motorist statute is to create a second layer of floating protection for the insured, not to guarantee full compensation. Greengo v. Pub. Employees Mut. Ins. Co., 135 Wn.2d 799, 809-10, 959 P.2d 657 (1998). The public policy is not violated here because the policy exclusion does not operate to foreclose the possibility of any underinsured motorist recovery. Tissell v. Liberty Mut. Ins. Co., 115 Wn.2d 107, 795 P.2d 126 (1990). The second layer of recovery is still present through Mr. George’s own underinsured motorist policy. Millers Cas. Ins. Co. of Tex. v. Briggs, 100 Wn.2d 1, 7, 665 P.2d 891 (1983); Blackburn, 115 Wn.2d at 91. “No public policy requires an insurer to provide an insured with a third source of recovery, particularly when the insured has seen fit not to carry [adequate] UIM coverage of his own.” Blackburn, 115 Wn.2d at 91-92.
We affirm and deny Mr. George’s request for attorney fees.
A majority of the panel has determined that this opinion will not be printed in the Washington Appellate Reports but it will be filed for public record pursuant to RCW 2.06.040.
KULIK, J. and KORSMO, J., concur.