Case Title: Stone v. Liberty Mutual Insurance Company

Citation: 

Docket Number: 960412

State: virginia

Court: Virginia Supreme Court

Date: 1996-12-16T00:00:00Z

Document:
Present:  All the Justices 
 
THOMAS M. STONE 
                        OPINION BY JUSTICE A. CHRISTIAN COMPTON 
v.  Record No. 960412                December 16, 1996 
 
LIBERTY MUTUAL INSURANCE COMPANY 
 
 
UPON A QUESTION OF LAW CERTIFIED BY THE UNITED STATES 
 
COURT OF APPEALS FOR THE FOURTH CIRCUIT 
 
 
Acting under the provisions of our Rule 5:42, the United 
States Court of Appeals for the Fourth Circuit certified to this 
Court a question of Virginia law, the answer to which is 
determinative of a proceeding pending before the Fourth Circuit. 
 We accepted the certification by order entered in June 1996.  
The question involves statutory interpretation and a motor 
vehicle insurance coverage issue arising from an 
uninsured/underinsured motorist endorsement to an insurance 
policy. 
 
The record establishes the following facts.  Thomas M. Stone 
was a part-time employee of Tidewater Pizza, Inc., in Virginia 
Beach, for which he delivered pizzas.  In making deliveries, 
Stone was responsible for providing his own transportation and 
used his own vehicle.   
 
In October 1992, while Stone was lawfully operating his 
vehicle in the scope of his employment, a collision occurred 
between his vehicle and one operated by Carol Drye.  Stone 
sustained serious personal injuries in the collision.   
 
Later, he recovered a judgment against Drye in the Circuit 
Court of the City of Virginia Beach for $250,000 plus interest 
and costs.  At the time of the collision, only $25,000 of 
 
 
 
 
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liability or other coverage was applicable to Drye's use of her 
vehicle and available to satisfy Stone's judgment. 
 
In effect at the time of the collision was a "Business Auto" 
policy of insurance issued by Liberty Mutual Insurance Company to 
"Tidewater Pizza, Inc.," as the named insured.  The coverage 
afforded under the policy included motor vehicle liability 
insurance with a limit of $350,000 and, by endorsement, uninsured 
motorist insurance, which included underinsured motorist 
coverage, carrying the same limit.  For clarity, we shall use the 
term "uninsured" to include both underinsured and uninsured 
coverage. 
 
Subsequently, Stone filed in the Virginia Beach circuit 
court a declaratory judgment action against Liberty Mutual 
seeking a declaration that the insurer was liable to him for 
$225,000 under the uninsured motorist coverage.  Following 
removal of the case by the insurer to the United States District 
Court for the Eastern District of Virginia, the parties 
stipulated to the facts and submitted the coverage issue to the 
district court on cross-motions for summary judgment. 
 
The district court sustained Stone's contention that the 
insurer's policy issued to Tidewater conflicted with Code § 38.2-
2206, the uninsured motorist statute.  When the provisions of an 
insurance policy conflict with the requirements of the uninsured 
motorist statute, the statute controls and the policy provisions 
are void and ineffective.  Bryant v. State Farm Mut. Auto. Ins. 
 
 
 
 
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Co., 205 Va. 897, 900, 140 S.E.2d 817, 819 (1965).  Thus, the 
district court granted Stone's motion for summary judgment and 
held he was entitled to uninsured coverage in the sum of $225,000 
plus interest and costs.  The district court rejected an 
alternative theory of coverage offered by Stone. 
 
The insurer appealed the former ruling of the district court 
and Stone appealed the latter.  The Fourth Circuit agreed with 
the district court on the latter ruling and has affirmed that 
portion of the district court's order.  The issue generating the 
former ruling is the subject of this certification. 
 
According to the policy's uninsured motorist coverage, the 
insurer agrees to pay, up to the limit of liability, "all sums 
the insured is legally entitled to recover as damages from the 
owner or driver of an uninsured motor vehicle.  The damages must 
result from bodily injury sustained by the insured . . . caused 
by an accident."  Of course, Stone can recover against the 
insurer only if he qualifies as an "insured" under the uninsured 
coverage. 
 
The uninsured motorist endorsement provides coverage to two 
classes of potential insureds.  First, the term "insured" is 
defined as the named insured (Tidewater) "or any family member" 
of the named insured.  Second, the term "insured" includes 
"[a]nyone else occupying a covered auto."  For purposes of the 
uninsured motorist coverage, the term "covered auto" is defined 
to include "[o]nly those autos [Tidewater owns] which, because of 
 
 
 
 
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the law in the state where they are licensed or principally 
garaged, are required to have and cannot reject uninsured 
motorists insurance."  There are two such vehicles listed in the 
policy, a Ford and a Honda; Stone's vehicle is not listed in the 
policy. 
 
According to the policy's liability coverage, the insurer 
agrees to pay, up to the limit of liability, all sums "the 
insured legally must pay as damages because of bodily injury 
. . . to which this insurance applies, caused by an accident and 
resulting from the ownership, maintenance or use of a covered 
auto."  The term "covered auto" for liability purposes is defined 
to include certain non-owned automobiles, that is, automobiles 
Tidewater "d[id] not own, lease, hire or borrow which [were] used 
in connection with [Tidewater's] business."  Stone's automobile 
was not owned, leased, hired, or borrowed by Tidewater, but it 
was being used in Tidewater's business.  However, the definition 
of the term "insured" in the liability portion of the policy does 
not include Stone.  In fact, according to the order of 
certification, Stone "stipulated that he is not covered under the 
liability provisions of the policy, and indeed, the exclusions 
defining the term `insured' clearly operate to exclude him." 
 
Stone does not dispute that his automobile is not a "covered 
auto" under the uninsured motorist provisions of the policy; the 
only automobiles covered under those provisions are those 
vehicles owned by Tidewater.  Stone argues, however, consistent 
 
 
 
 
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with the district court's ruling, that he was operating an 
automobile to which the Liberty Mutual policy applied because he 
was operating a "covered auto" under the liability provisions.  
Thus, he says, the insurer was required under Code § 38.2-
2206(A), infra, to provide him uninsured motorist coverage since, 
according to Stone, he was an "insured" under Code § 38.2-
2206(B), infra.  Stone contends that the policy violates 
subsection (A) because although it specifically insures non-owned 
automobiles under the liability provisions of the policy, it does 
not provide uninsured motorist coverage to anyone occupying the 
same non-owned automobiles. 
 
The insurer recognizes that it must provide uninsured 
motorist insurance pursuant to subsection (A), but argues it can 
limit who is an "insured" without violating the provisions of 
subsection (B) of the statute.  Alternatively, the insurer 
maintains that Stone is not entitled to benefits under the policy 
because benefits are excluded under the liability provisions of 
the policy given the fact that Stone was not legally liable for 
the collision with Drye.   
 
Thus, the following question is framed for us by the Fourth 
Circuit:  "Whether, under these facts, Stone was an insured as 
defined in subsection 38.2-2206B; that is, does subsection 38.2-
2206B mandate that Stone is an insured under the uninsured 
motorist endorsement of Tidewater's automobile policy 
notwithstanding the policy's language?"  
 
 
 
 
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Elaborating, the Fourth Circuit states that the issue to be 
decided is whether "Tidewater's policy with Liberty violated 
subsection 38.2-2206A, as the district court concluded, because 
Stone is an `insured' under subsection 38.2-2206B."  Continuing, 
the Fourth Circuit observes that "[i]f Stone is an insured, then 
he is entitled to receive uninsured benefits under the policy.  
If the policy does not violate subsection 38.2-2206A and Stone is 
not, therefore, entitled to receive uninsured motorist benefits 
under the policy, then the judgment of the district court will be 
reversed."  
 
Virginia's uninsured motorist statute, recently amended, 
contained the following pertinent provisions at the time of this 
controversy.  Code § 38.2-2206 (Repl. Vol. 1994). 
 
Subsection (A) provided that "no policy or contract of 
bodily injury . . . liability insurance relating to the 
ownership, maintenance, or use of a motor vehicle shall be issued 
or delivered in this Commonwealth to the owner of such vehicle or 
shall be issued or delivered by any insurer licensed in this 
Commonwealth upon any motor vehicle principally garaged or used 
in this Commonwealth unless it contains an endorsement or 
provisions undertaking to pay the insured all sums that he is 
legally entitled to recover as damages from the owner or operator 
of an uninsured motor vehicle" within certain monetary limits.  
Subsection (A) further provided that "[t]hose limits shall equal 
but not exceed the limits of the liability insurance provided by 
 
 
 
 
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the policy. . . ." 
 
Subsection (B) provided that the term "`Insured' as used in 
subsection[] A . . . of this section means the named insured and, 
while resident of the same household, the spouse of the named 
insured, and relatives of either, while in a motor vehicle or 
otherwise, and any person who uses the motor vehicle to which the 
policy applies, with the expressed or implied consent of the 
named insured, and a guest in the motor vehicle to which the 
policy applies or the personal representative of any of the 
above." 
 
We must consider how far subsection (B) extends to insureds 
of the second class under the policy, that is, "[a]nyone else 
occupying a covered auto."  This is purely a question of 
statutory interpretation:  Does Stone qualify under the statute 
as an insured, notwithstanding the limiting language of the 
policy?  We hold that he does not. 
 
An analysis of the statute in question must be made against 
the following settled background.  The Virginia uninsured 
motorist statute "is meant to protect an insured motorist, his 
family and permissive users of his vehicle against the peril of 
injury by an uninsured wrongdoer, not to provide `insurance 
coverage upon each and every uninsured vehicle to everyone.'"  
Bayer v. Travelers Indem. Co., 221 Va. 5, 8, 267 S.E.2d 91, 93 
(1980) (quoting Nationwide Mut. Ins. Co. v. Harleysville Mut. 
Cas. Co., 203 Va. 600, 603, 125 S.E.2d 840, 843 (1962)). 
 
 
 
 
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Turning to the statute, we construe the plain language of 
subsection (A) as merely reciting those circumstances under which 
policies providing bodily injury liability insurance, issued in 
the Commonwealth upon vehicles principally garaged or used in the 
State, must contain endorsements agreeing to pay "the insured" 
certain sums that such insured is legally entitled to recover 
from the owner or operator of an uninsured motor vehicle.  As the 
insurer contends, nothing in that subsection purports to require 
that all the same vehicles and insureds be covered under both 
liability and uninsured motorist coverages of the same policy.  
The subsection does expressly recite that the limits of uninsured 
motorist coverage shall be equal to but not exceed the limits of 
liability insurance, but it does not require other similarities 
of coverage. 
 
The focus in this case must be on subsection (B) of the 
statute.  Given the facts, the crucial statutory language, which 
defines the term "insured," describes the extent to which 
uninsured motorist coverage is mandated by the statute to 
insureds of the second class.  An insured is "any person who uses 
the motor vehicle to which the policy applies, with the expressed 
or implied consent of the named insured, and a guest in the motor 
vehicle to which the policy applies or the personal 
representative of any of the above." 
 
Dissecting the clauses, we look first to the term "motor 
vehicle."  The language does not say "a," "any," "every," or 
 
 
 
 
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"all."  In two places, it provides "the" motor vehicle to which 
the policy applies.  Stone was not using either of "the" motor 
vehicles to which the policy applies, the Ford or the Honda; he 
was using his own motor vehicle.  Thus, the statute only 
requires, as to insureds of the second class, that uninsured 
motorist coverage be provided to those who are in either of the 
motor vehicles listed in the policy, as opposed to "any" vehicle 
to which the policy might apply. 
 
Second, and more importantly, we look to the language 
providing that the person who uses the motor vehicle must do so 
"with the expressed or implied consent of the named insured."  
Obviously, when the General Assembly employs this language, it is 
resorting to language relating to the omnibus clause found in 
Code § 38.2-2204(A), which deals with liability insurance 
covering motor vehicles (policy must contain a provision insuring 
any person using the motor vehicle "with the expressed or implied 
consent of the named insured"). 
 
When construing such language, we repeatedly have held that 
a named insured generally cannot give permission to use a vehicle 
that the named insured does not own.  For example, in Nationwide 
Mut. Ins. Co. v. Cole, 203 Va. 337, 341, 124 S.E.2d 203, 206 
(1962), the Court said that "in order for one's use and operation 
of an automobile to be within the meaning of the omnibus coverage 
clause requiring permission of the named insured, the latter 
must, as a general rule, own the insured vehicle or have such an 
 
 
 
 
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interest in it that he is entitled to the possession and control 
of the vehicle and in a position to give such permission."  
Accord Virginia Auto Mut. Ins. Co. v. Brillhart, 187 Va. 336, 
343, 46 S.E.2d 377, 380 (1948). 
 
But Stone contends that because he was operating a "covered 
auto" within the meaning of the liability provisions of the 
policy, he therefore qualified as an "insured" under the 
uninsured motorist statute in that he was using a motor vehicle 
to which the policy applies within the mandate of subsection (B). 
 Stone argues that the employer, Tidewater, impliedly gave Stone 
permission to operate Stone's vehicle when he was using it in the 
scope of the employer's business.  We reject these contentions. 
 
The "expressed or implied consent" language of the 
subsection modifies "the motor vehicle to which the policy 
applies" clause.  If the legislature, in the uninsured motorist 
statute, had meant to include as insureds of the second class 
occupants of non-owned vehicles, then the General Assembly surely 
would have used language like it uses at the end of Code § 38.2-
2204(A), which deals with the sort of permission needed when one 
is operating a non-owned vehicle.  That statute refers to 
"permission or consent of the owner" of a non-owned vehicle, and 
deems permission or consent of "the custodian" to be the 
permission of the owner.  The uninsured motorist statute contains 
no such expansive language. 
 
Simply put, "the vehicle" referred to in subsection (B) 
 
 
 
 
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includes only owned, not non-owned vehicles.  Thus, there is no 
statutory mandate that requires the courts to ignore the 
insurer's policy language as written. 
 
Accordingly, the certified question is answered in the 
negative. 
JUSTICE KOONTZ, with whom JUSTICE LACY joins, dissenting. 
 
I respectfully dissent.  The Virginia uninsured motorist 
statute is remedial in nature and is to be liberally construed so 
that its intended purpose, to protect the innocent victims of 
negligent uninsured/underinsured motorists, may be accomplished. 
 See Lipscombe v. Security Ins. Co., 213 Va. 81, 83, 189 S.E.2d 
320, 322-23 (1972); Nationwide Mutual Insurance Co. v. Sours, 205 
Va. 602, 606, 139 S.E.2d 51, 54-55 (1964).  We are required to 
look to the words used in the statute to determine its meaning 
and to give effect only to the meaning so determined.  See Rose 
v. Travelers Indemnity Co., 209 Va. 755, 758, 167 S.E.2d 339, 342 
(1969). 
 
When the accident in question occurred, Code § 38.2-2206 
provided in pertinent part that: 
 
A.  [N]o policy or contract of bodily injury or 
property damage liability insurance relating to the 
ownership, maintenance, or use of a motor vehicle shall 
be issued or delivered in this Commonwealth to the 
owner of such vehicle or shall be issued or delivered 
by any insurer licensed in this Commonwealth upon any 
motor vehicle principally garaged or used in this 
Commonwealth unless it contains an endorsement or 
provisions undertaking to pay the insured all sums that 
he is legally entitled to recover as damages from the 
owner or operator of an uninsured motor vehicle with 
limits not less than the requirements of § 46.2-472.  
Those limits shall equal but not exceed the limits of 
 
 
 
 
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the liability insurance provided by the policy. . . .  
 
 
B.  "Insured" as used in [subsection] A . . . means the 
named insured and, while resident of the same 
household, the spouse of the named insured, and 
relatives of either, while in a motor vehicle or 
otherwise, and any person who uses the motor vehicle to 
which the policy applies, with the expressed or implied 
consent of the named insured . . . . 
 
(Emphasis added.)
1
 
There is no dispute that the liability provisions of 
Liberty's policy extended liability coverage to Stone's vehicle.
2 
 Accordingly, subsection (A) required Liberty's policy to also 
provide uninsured motorist coverage with limits equal to those of 
the liability policy, if Stone, as a user of that vehicle at the 
time of the accident, met one of the definitions of an "insured" 
contained in subsection (B). 
 
On the facts of this case, the majority correctly identifies 
the crucial statutory language in subsection (B) defining 
"insured" to be "any person who uses the motor vehicle to which 
the policy applies, with the expressed or implied consent of the 
named insured." 
 
Contrary to the initial conclusion reached by the majority, 
however, this phrase does not limit "the motor vehicle" to one 
"listed in the policy."  The express language "to which the 
                     
     
1Subsequent amendments to this statute are not pertinent to 
the issue in this case. 
     
2The declarations page of the liability policy specifically 
identifies non-owned vehicles while being used in Tidewater's 
business as "COVERED AUTOS." 
 
 
 
 
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policy applies" modifies "the motor vehicle."  There can only be 
two interpretations of the phrase "the policy" when subsection 
(B) is read, as it must be, in context with subsection (A).  This 
phrase can only mean "the uninsured motorist policy" or "the 
liability policy."  The former interpretation must be rejected 
because it would render the entire statute meaningless.  This is 
so because the mandate of subsection (A) for uninsured motorist 
coverage for an "insured" would never be invoked by a definition 
of insured under subsection (B) that is restricted to a user of a 
motor vehicle that already has uninsured motorist coverage.   
Rather, it is manifest that the legislature intended this phrase 
to refer to the liability coverage provision described in 
subsection (A), so that the phrase means "the motor vehicle to 
which the liability policy applies." 
 
Finally, the majority suggests that the statute's 
requirement that use of the vehicle must be "with the expressed 
or implied consent of the named insured" eliminates non-owned 
vehicles from subsection B because a named insured cannot give 
permission to use a vehicle that the named insured does not own. 
Nothing in the statute suggests that such an interpretation was 
intended by the legislature to limit the mandate of subsection 
(A).   
 
To accomplish the mandate that the insurer issue no 
liability insurance policy upon any motor vehicle principally 
used in this Commonwealth unless it contains an endorsement or 
 
 
 
 
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provisions for uninsured motorist coverage in equal limits, the 
legislature expressly used the phrase "with the express or 
implied consent of the named insured" to modify the definition of 
insured in subsection (B).  Thus, the legislature recognized that 
there are instances, such as the present case, where a "named 
insured," i.e., the person or entity contracting for liability 
coverage, would not be the owner of all the vehicles to which the 
policy applies.  Here, Stone was using a vehicle to which 
Liberty's liability policy applies because he was using it in 
connection with Tidewater's business, and he was doing so with 
the consent of Tidewater, the "named insured."   
 
For these reasons, in my view, at the time of the accident 
in question, Stone was an "insured" as defined by subsection (B) 
of the statute and, thus, notwithstanding the limiting provisions 
of the uninsured motorist endorsement of Tidewater's automobile 
policy with Liberty, Code § 38.2-2206 mandated that Stone be 
provided coverage as an insured under the uninsured motorist 
endorsement of that policy.  Accordingly, I would answer the 
certified question in the affirmative.