Case Title: Frederick County School Bd. v. Hannah

Citation: 

Docket Number: 022984

State: virginia

Court: Virginia Supreme Court

Date: 2004-01-16T00:00:00Z

Document:
PRESENT: Hassell, C.J., Lacy, Keenan, Kinser, Lemons, and Agee, 
JJ., and Stephenson, S.J. 
 
FREDERICK COUNTY SCHOOL BOARD 
 
 
 
OPINION BY 
v.  Record No. 022984 
JUSTICE G. STEVEN AGEE 
 
 
 
January 16, 2004 
 
JOHN HARRIS HANNAH, JR., ETC., ET AL. 
 
FROM THE CIRCUIT COURT OF FREDERICK COUNTY 
Jay T. Swett, Judge Pro Tempore
 
I. 
 
The dispositive issue in this appeal is whether the trial 
court erred in denying a school board's motion to reduce the 
plaintiffs' ad damnum clause to $50,000, the limit on liability 
the school board alleged was set by Code § 22.1-194.  For the 
reasons that follow, we will affirm the judgment of the trial 
court. 
II. 
 
John Harris Hannah, Jr. ("Hannah"), a minor who sues by his 
mother and next friend, Barbara Foster, now Barbara Ruffner 
("Ruffner"), and Ruffner, individually (collectively, "the 
Plaintiffs"), instituted an action against the Frederick County 
School Board ("the School Board"), seeking damages for personal 
injuries and other loss sustained by Hannah and Ruffner as a 
result of a school bus accident.  The School Board admitted its 
negligence caused the accident, but contended damages were 
limited to $50,000 by Code § 22.1-194.  Alternatively, the 
School Board asserted the Plaintiffs' right to recover was 
barred by the doctrine of sovereign immunity if the $50,000 
limit did not apply. 
 
The School Board is a member of the Virginia School Board 
Association ("VSBA") which operates a self-insurance pool (the 
"Pool"), as authorized by Code § 15.2-2703.  The School Board is 
a member of the Pool, which provides various lines of self-
insurance to the School Board, including liability coverage of 
up to $1,000,000 for motor vehicle accidents. 
 
The School Board filed a motion to reduce the Plaintiffs' 
ad damnum clause to $50,000, arguing Code § 22.1-194 limited its 
liability in this case to $50,000 because the School Board met 
the self-insurance qualification of Code § 22.1-190(D).  Even 
though the School Board admitted it had never obtained the 
certificate of self-insurance from the Commissioner of the 
Department of Motor Vehicles required by Code § 22.1-190(D), it 
contended members of the Pool were exempt from that requirement 
by Code § 15.2-2704. 
 
The trial court disagreed and found the specific statutory 
provision of Code § 22.1-190(D) controlling.  The trial court 
ruled that a certificate of self-insurance from the Commissioner 
of the Department of Motor Vehicles is required when the 
liability limit of Code § 22.1-194 is to be claimed by reference 
to Code § 22.1-190.  The trial court therefore denied the motion 
 
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to reduce the ad damnum and awarded Hannah damages of $74,500 
and Ruffner damages of $4,510.  We awarded the School Board this 
appeal. 
A. 
The resolution of the issues on appeal depends on the 
statutory interpretation of three different Code sections which 
state in pertinent part: 
A. Every vehicle shall be covered in a policy of 
liability and property damage insurance issued by 
an insurance carrier authorized to transact 
business in this Commonwealth, in the amounts of 
at least $50,000 for injury, including death, to 
1 person, $200,000 for injury, including death, 
to all persons injured in any 1 accident, and 
$10,000 for damage, including destruction, to the 
property of any person, other than the insured 
. . . . 
 
. . . . 
 
D. This insurance shall not be required in cases 
where pupils are transported in vehicles which 
are owned or operated by a . . . school board 
which has qualified for and received a 
certificate of self-insurance from the 
Commissioner of the Department of Motor Vehicles, 
following a certification of financial 
responsibility equal to that required under 
subsection A of this section. 
 
Code § 22.1-190(A) and (D) (emphasis added). 
In case the locality or the school board is the 
owner, or operator through medium of a driver, 
of, or otherwise is the insured under the policy 
upon, a vehicle involved in an accident, the 
locality or school board shall be subject to 
action up to, but not beyond, the limits of valid 
and collectible insurance in force to cover the 
injury complained of or, in cases set forth in 
 
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subsection D of § 22.1-190, up to but not beyond 
the amounts of insurance required under 
subsection A of § 22.1-190 and the defense of 
governmental immunity shall not be a bar to 
action or recovery. 
 
Code § 22.1-194 (emphasis added). 
A group self-insurance pool shall be deemed a 
self-insurer for motor vehicle security under 
§ 46.2-368.  Members of the pool participating in 
the motor vehicle self-insurance provided by the 
pool shall be deemed to meet the requirements of 
security as required and an application for a 
certificate of self-insurance under § 46.2-368 
shall not be required.
 
Code § 15.2-2704 (emphasis added). 
 
Pursuant to Code § 22.1-194, a school board is subject to a 
limited waiver of sovereign immunity when its vehicle is 
"involved in an accident."  Immunity is waived either to "the 
limits of valid and collectible insurance in force to cover the 
injury" or the coverage set by Code § 22.1-190(A) when the 
certificate of self-insurance under Code § 22.1-190(D) has been 
obtained. 
 
The School Board argues that it is entitled to the 
liability limit derived from Code § 22.1-190(A), $50,000 in this 
case, although it has not obtained the certificate of self-
insurance required by Code § 22.1-190(D).  The School Board 
avers that, as a member of the Pool, Code § 15.2-2704 exempts it 
from the self-insurance certificate requirement of Code § 22.1-
 
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190(D), and thus, that it qualifies for the Code § 22.1-190(A) 
limitation level. 
 
The question to be answered is whether the School Board, 
without meeting the requirements of Code § 22.1-190(D), may 
nonetheless qualify for the limited liability by virtue of Code 
§ 15.2-2704.  Application of accepted rules of statutory 
construction answer that inquiry in the negative. 
B. 
"[W]hen one statute speaks to a subject in a general way 
and another deals with a part of the same subject in a more 
specific manner, the two should be harmonized, if possible, and 
where they conflict, the latter prevails."  Virginia Nat'l Bank 
v. Harris, 220 Va. 336, 340, 257 S.E.2d 867, 870 (1979); accord 
County of Fairfax v. Century Concrete Servs., 254 Va. 423, 427, 
492 S.E.2d 648, 650 (1997); Dodson v. Potomac Mack Sales & 
Service, 241 Va. 89, 94-95, 400 S.E.2d 178, 181 (1991). 
 
Code § 15.2-2703 authorizes a variety of designated 
political subdivisions1 to join self-insurance pools while Code 
§ 15.2-2704 establishes the powers of those pools.  Code § 15.2-
                     
1 Political subdivision, for purposes of Code § 15.2-2703, 
"means any county, city, or town, school board, Transportation 
District Commission, or any other local governmental authority 
or local agency or public service corporation owned, operated or 
controlled by a locality or local government authority, with 
power to enter into contractual undertakings."  Code § 15.2-
2701. 
 
 
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2704 exempts all covered political subdivisions in such self-
insurance pools from obtaining a certificate of self-insurance 
under Code § 46.2-368.2  Neither the self-insurance pool statutes 
nor Code § 46.2-368 reference the self-insurance certificate 
requirement set out in Code § 22.1-190(D). 
 
By contrast, Code § 22.1-190 sets forth insurance 
requirements, specific only to school boards, that must be met 
with respect to vehicles used in the transportation of students.  
One of these requirements is that a school board obtain a 
certificate of self-insurance from the Department of Motor 
Vehicles, set out in Code § 22.1-190(D), in order to benefit 
from the lower statutory liability limits available in Code 
§ 22.1-194. 
 
Other noteworthy evidence exists demonstrating the General 
Assembly's intent to differentiate between the use of insurance 
pools by political subdivisions generally and by school boards 
specifically.  For example, Code § 15.2-2704, the more general 
statute, exempts the Pool from providing uninsured motorist 
coverage otherwise mandated by Code § 38.2-2206.  In comparison, 
                     
2 A certificate of self-insurance under Code § 46.2-368 
refers to Chapter 3 of Title 46.2, but does not address the 
particular requirements of insurance coverage for specific 
categories or functions of political subdivisions.  By contrast, 
Code § 22.1-190 and Code § 22.1-194 are located in Chapter 12, 
Article 2 of Title 22.1, which deals specifically with insurance 
provisions for pupil transportation. 
 
 
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Code § 22.1-190(A), the specific statute, sets a minimum 
required liability coverage of $50,000 for school boards and 
mandates that "the policy of insurance shall provide coverage 
for loss or damage caused by an uninsured motorist . . . ." 
 
The School Board argues that Code § 15.2-2704 and Code 
§ 22.1-190(D) "can be reasonably construed to give full force 
and effect to each."  The School Board does so by reading the 
exemption for a certificate of self-insurance in Code § 15.2-
2704 as an implied exemption to the Code § 22.1-190(D) 
certificate requirement.  It is incongruous for the School Board 
to rely on Code § 15.2-2704, the statute of general application, 
to waive the certification requirement but then claim that Code 
§ 22.1-190, the statute of specific application, establishes the 
ad damnum limitation of $50,000.  As noted above, the School 
Board's reasoning creates a conundrum in the case of uninsured 
motorist coverage. 
 
The School Board's proposed reading ignores the General 
Assembly’s expressed intent to regulate the insurance 
requirements for motor vehicles used to transport students by a 
specific statutory framework as opposed to the general 
requirements of the Pool for all other permitted political 
subdivisions.  The more specific statutory provisions must 
prevail.  The General Assembly has specifically required school 
                                                                  
 
 
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boards to meet different requirements regarding motor vehicle 
insurance than other political subdivisions.  Among those 
requirements is obtaining a certificate of self-insurance where 
the liability limit of Code § 22.1-194 is to be claimed by 
reference to Code § 22.1-190. 
 
Construing the statutes in this manner "harmonize[s] Code 
§ 22.1-190(D) and Code § 15.2-2704 so as to give full force and 
effect to both" without undermining the important governmental 
purpose and benefit that self-insurance pools provide.  Such a 
construction has no effect on any political subdivision, other 
than school boards, which is the evident intent of the General 
Assembly through its more specific statutes in Title 22.1.  
School boards who wish to join self-insurance pools and take 
advantage of the liability limit under Code § 22.1-194, as in 
this case, need only apply for a certificate of self-insurance 
from the Commissioner of the Department of Motor Vehicles as 
mandated by the plain language of the statute. 
C. 
 
The School Board alternatively argues that if it is not 
entitled to the $50,000 statutory liability cap, the Plaintiffs' 
claims are barred by the doctrine of sovereign immunity. 
 
Initially, the School Board argues the reference to "the 
policy" in the first sentence of Code § 22.1-194 means only a 
policy as set out in Code § 22.1-190(A) which must be "issued by 
 
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an insurance carrier authorized to transact business in this 
Commonwealth."  In reliance upon Code § 15.2-2709, which 
provides group self-insurance pools are not an insurance company 
or an insurer, the School Board then reasons the Code § 22.1-194 
provision for "valid and collectible insurance in force" must 
come only from "the policy".  In other words, since the Pool's 
self-insurance is not insurance in the form of "the policy", 
then Pool funds cannot be "valid and collectible insurance." 
 
The School Board, however, reads only part of the first 
sentence in Code § 22.1-194.  The plain reading of the statute 
reflects that a school board is "subject to action up to . . . 
the limits of valid and collectible insurance in force" in two 
circumstances.  The first instance is where "the school board is 
the owner . . . of . . . a vehicle involved in an accident 
. . . ."  The second instance is where the school board 
"otherwise is the insured under the policy upon[] a vehicle 
involved in an accident . . . ." (emphasis added). 
 
By writing the statute in the disjunctive, the General 
Assembly has clearly provided that the School Board, solely by 
virtue of its ownership of "a vehicle involved in an accident" 
is liable up to "the limits of valid and collectible insurance."  
While a school board may also be liable when it "otherwise is 
the insured under the policy," that circumstance is not a 
 
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condition precedent for the School Board's liability when it 
owns "a vehicle involved in an accident." 
 
It is uncontested that the School Board owned the vehicles 
involved in the accident in this case.  By the plain language of 
the statute, that is sufficient to subject the School Board to 
liability up to "the limits of valid and collectible insurance."  
While not the proceeds of an insurance "policy," in the 
strictest sense of that term, the insurance protection provided 
by the Pool is nonetheless "valid and collectible insurance in 
force to cover the injury complained of."  See generally USAA 
Casualty Insurance v. The Hertz Corp. 265 Va. 450, 578 S.E.2d 
775 (2003). 
 
Finally, the School Board argues that since it did not 
satisfy the requirements of Code § 22.1-190(D), it cannot be 
required to pay the judgment because Code § 22.1-194 prohibits 
using school funds to satisfy motor vehicle claims "except where 
approved self-insurance has been provided pursuant to § 22.1-190 
D."  Requiring the School Board, via Pool payment, to pay the 
appellees' judgment does not violate Code § 22.1-194's 
prohibition against using school funds to satisfy motor vehicle 
claims.  Payments from the assets of the Pool are no longer 
"school funds," but are Pool funds.  To hold otherwise would be 
tantamount to holding that a school board's insurance premiums 
paid to an insurance company constitute "school funds," for 
 
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purposes of Code § 22.1-194, when the insurance company pays a 
motor vehicle claim. 
III. 
 
For the reasons set forth above, the School Board is not 
entitled to the $50,000 liability limit of Code § 22.1-190(A) as 
derived through Code § 22.1-194 because it failed to obtain a 
certificate of self-insurance from the Department of Motor 
Vehicles as required by Code § 22.1-190(D).  Code § 22.1-194 
abrogated the School Board's sovereign immunity up to the limits 
of its coverage through the Pool, which is sufficient to satisfy 
the Plaintiff's award in this case.  Accordingly, the judgment 
of the trial court will be affirmed. 
Affirmed. 
 
SENIOR JUSTICE STEPHENSON, with whom JUSTICE LACY and JUSTICE 
KEENAN join, dissenting. 
 
 
 
I respectfully dissent.  It is well established that, when 
two statutes are in apparent conflict, a court, if reasonably 
possible, must give them such a construction as will give force 
and effect to both.  Commonwealth v. Zamani, 256 Va. 391, 395, 
507 S.E.2d 608, 609 (1998); Board of Supervisors v. Marshall, 
215 Va. 756, 761, 214 S.E.2d 146, 150 (1975). 
In the present case, it is reasonably possible to construe 
and harmonize Code § 22.1-190(D) and Code § 15.2-2704 so as to 
 
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give full force and effect to both.  Code § 22.1-190(D) 
reasonably can be read to govern school boards that are 
individually self-insured for school bus accidents, requiring 
such school boards to apply for and receive a certificate of 
self-insurance.  However, when a school board is not 
individually self-insured but is a member of a self-insurance 
pool, Code § 15.2-2704 provides that it "shall be deemed to meet 
the requirements of security as required and an application for 
a certificate of self-insurance . . . shall not be required." 
(Emphasis added.)  Therefore, the School Board qualified for the 
limit on liability despite its lack of a certificate of self-
insurance. 
 
In reaching this conclusion, I have given weight to the 
intent of the General Assembly in approving self-insurance pools 
for political subdivisions such as school boards.  That intent 
is expressed in Code § 15.2-2700 as follows: 
 
The General Assembly hereby finds and determines that 
insurance protection is essential to the proper functioning 
of political subdivisions; that the resources of political 
subdivisions are burdened by the high cost of and frequent 
inability to secure such protection through standard 
carriers; that proper risk management requires the 
spreading of risk so as to minimize fluctuation in 
insurance needs; and that, therefore, all contributions of 
financial and administrative resources made by a political 
subdivision pursuant to an intergovernmental contract as 
authorized by this chapter are made for a public and 
governmental purpose, and that such contributions benefit 
each contributing political subdivision. 
 
 
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The trial court's ruling and the holding of the majority in 
the present case undermine the important governmental purpose 
and benefit that self-insurance pools provide.  School boards, 
without the $50,000 limit on liability, would be reluctant to 
become members of and reap the benefit from a self-insurance 
pool. 
 
I would hold, therefore, that the trial court erred in 
denying the School Board's motion to reduce the Plaintiffs' ad 
damnum to $50,000 and in awarding damages in excess of the 
$50,000 limit.  Accordingly, I would reverse the trial court's 
judgment and remand the case for a redetermination of damages. 
 
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