Case Title: Colonia Underwriters Ins. Co. v. Richardson

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1996-07-08T00:00:00Z

Document:
COLONIA UNDERWRITERS INSURANCE COMPANY v.
Darrell RICHARDSON

96-330                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered July 8, 1996


1.   Judgment -- standard of review of a summary judgment --
     determination on appeal. -- The standard for review of a
     summary judgment is whether the evidentiary items presented by
     the moving party in support of the motion left a question of
     material fact unanswered and, if not, whether the moving party
     is entitled to judgment as a matter of law; all proof is
     viewed in the light most favorable to the party opposing the
     motion; all doubts and inferences are resolved against the
     moving party; however, where the operative facts of the case
     are undisputed, the court simply determines on appeal whether
     the appellee was entitled to summary judgment as a matter of
     law. 

2.   Insurance -- underinsured motorist coverage -- what is
     required by statute. -- Arkansas Code Annotated  23-89-
     209(a), which provides for underinsured motorist coverage,
     requires insurers to provide underinsured motorist coverage to
     the named insured unless such coverage is rejected in writing
     by the insured.  

3.   Insurance -- uninsured motorist coverage -- substituted
     coverage constitutes new insurance. -- Where parties to an
     insurance contract agree to a policy endorsement which has the
     effect of substituting coverage of one automobile for that of
     another, the transaction constitutes new insurance "delivered
     or issued for delivery in this State" within the meaning of
     the uninsured motorist statute; insurers must offer uninsured
     motorist coverage to the insured upon the event of
     substituting vehicles even though the insured previously
     rejected such coverage.

4.   Insurance -- no-fault insurance -- declaration of insurance
     issued with substituted vehicle requires a second rejection. -
     - A declaration of automobile insurance issued with a
     substituted vehicle also requires a second rejection of no-
     fault insurance under Ark. Code Ann.  23-89-203 (Repl. 1992).
     
5.   Insurance -- underinsured motorist coverage -- once named
     insured rejects coverage it need not be offered again. -- The
     underinsured motorist coverage statute, Ark. Code Ann.  23-
     89-209, makes clear that "after a named insured or applicant
     for insurance rejects underinsured motorist coverage, the
     insurer or any of its affiliates shall not be required to
     notify any insured in any renewal, reinstatement, substitute,
     amended or replacement policy as to the availability of such
     coverage"; here, appellee amended his policy to add two
     vehicles after he had rejected underinsured motorist coverage.
     
6.   Insurance -- coverage may not be implied by operation of law
     when insurer is in compliance with statute -- trial court
     mistaken. -- The trial judge mistakenly relied upon his
     conclusion that the rejection that appellee signed was not
     broad enough to include rejection of coverage for an amendment
     to the contract by the addition of another vehicle; in order
     for underinsured motorist coverage to be implied by operation
     of law, appellant must fail to comply with the underinsured
     motorist coverage statute; the trial court mistakenly
     concluded that coverage may be implied by operation of law
     even if appellant was in compliance with the statute; the
     court cannot force upon the insurance company something that
     is not present in the statute. 

7.   Insurance -- appellee rejected underinsured motorist coverage
     -- no basis existed for coverage to be implied by operation of
     law. -- The underinsured motorist coverage statute at issue
     provided that after a named insured rejects coverage, the
     insurer is not required to notify the insured in any amended
     policy as to the availability of such coverage; appellee
     rejected underinsured motorist coverage when he purchased his
     policy, and appellant was not required to notify him as to the
     availability of such coverage when his policy was amended;
     therefore, there was no basis for underinsured motorist
     coverage to be implied by operation of law; the summary
     judgment in favor of appellee was reversed; appellant's motion
     for summary judgment should have been granted.


     Appeal from Stone Circuit Court; John Dan Camp, Judge;
reversed and remanded.
     Huckabay, Munson, Rowlett & Tilley, P.A., by:  John E. Moore
and Julia L. Busfield, for appellant.
     Gregg, Hart & Farris, by:  Phillip Farris, for appellee.

     Andree Layton Roaf, Justice. 
     July 8, 1996
*ADVREP*SC8*







COLONIA UNDERWRITERS INSURANCE
COMPANY,
                    APPELLANT,

V.

DARRELL RICHARDSON,
                    APPELLEE.


96-330



APPEAL FROM THE STONE COUNTY
CIRCUIT COURT,
NO. CIV-94-38,
HON. JOHN DAN CAMP, JUDGE,



REVERSED AND REMANDED.

                   Justice Andree Layton Roaf




     This case involves an interpretation of the underinsured
motorist coverage statute.  Ark. Code Ann.  23-89-209 (Supp.
1995).  Appellee Darrell Richardson was involved in an accident
with an underinsured vehicle.  At the time of the accident,
Richardson was insured by appellant Colonia Underwriters Insurance
Company (Colonia).  Richardson filed suit against Colonia alleging
that he was entitled to underinsured motorist coverage in the
amount of $25,000.  The trial court granted summary judgment in
favor of Richardson on the basis that he was entitled to
underinsured motorist coverage by operation of law.  We reverse and
remand.
     The relevant facts in the instant case are not in dispute.  On
July 13, 1992, Richardson purchased an insurance policy for a 1982
Oldsmobile Cutlass from Colonia.  At that time, he rejected
underinsured motorist coverage by signing the following statement:
     I have had Underinsured Motorist Coverage explained to me
     and fully understand it.  I reject Underinsured Motorist
     Coverage and understand that my policy will not contain
     this coverage when issued or renewed.  However, I may
     request to add the coverage later.
Richardson was issued a policy with a term from July 13, 1992, to
July 13, 1993.  On November 13, 1992, Colonia issued two General
Change Endorsements showing that his policy had been amended to add
insurance on a 1991 Isuzu Trooper and a 1982 Datsun truck.  The
1982 Oldsmobile remained on the policy after the addition of the
two new vehicles.
     On January 13, 1993, Richardson was injured when he was struck
by a truck owned by Big "M," Inc.  The liability carrier for Big
"M" ultimately paid Richardson $105,000, the total limits of its
policy.  Richardson, however, claimed bodily injury and damages in
excess of Big "M"'s insurance coverage.  In March 1994, Richardson
made demand upon Colonia to pay the underinsured motorist coverage;
Colonia refused payment.  Richardson had never been charged nor had
he ever paid a premium for underinsured motorist coverage.
     Richardson filed the present action against Colonia on August
19, 1994; he sought the policy limit of $25,000, a 12% penalty,
interest from the date of demand, and attorney's fees.  Colonia
admitted that Richardson made demand for the payment of
underinsured motorist coverage; however, Colonia contended that
Richardson specifically rejected underinsured motorist coverage. 
     Subsequently, Colonia moved for summary judgment on the basis
that Richardson rejected underinsured motorist coverage and,
pursuant to Ark. Code Ann.  23-89-209(2), that rejection was
effective as to substitute vehicles added to his policy.  In his
response to Colonia's motion, Richardson asserted that any time a
new vehicle is insured, a new policy is issued.  Richardson
asserted that he was not offered underinsured motorist coverage
either at the time that the 1991 Isuzu Trooper was insured or at
the time that a 1985 Nissan truck was insured.  In addition,
Richardson moved for partial summary judgment on the issue of
whether underinsured motorist coverage for the 1991 Isuzu Trooper
should be implied as a matter of law.
     On July 3, 1995, the trial court entered an order granting
summary judgment in favor of Richardson.  The trial court concluded
that the instant case involved the addition of a vehicle to an
existing policy rather than the substitution of vehicles on a
policy.  The trial court further concluded that Richardson's
rejection of underinsured motorist coverage was not broad enough to
include rejection of underinsured motorist coverage for an
amendment to the policy by the addition of another vehicle.  The
trial court noted that the contract language simply rejected
coverage for the policy when issued or renewed; the language was
not broad enough to include a substituted or amended policy. 
Finally, the trial court found that because Richardson was not
given the opportunity to reject in writing underinsured motorist
coverage on the 1991 Isuzu Trooper and the 1985 Nissan truck, such
coverage was implied by operation of law.
     A jury trial was held regarding the issue of damages, and the
jury returned a verdict in favor of Richardson in the amount of
$25,000.  On December 7, 1995, judgment was entered, and Richardson
was awarded $25,000, prejudgment interest from the date of demand,
12% penalty, attorney's fees, costs, and expenses.  On appeal,
Colonia contends that the trial court erred in finding that
underinsured motorist coverage was implied as a matter of law and
in awarding prejudgment interest.
     The standard for review of a summary judgment is whether the
evidentiary items presented by the moving party in support of the
motion left a question of material fact unanswered and, if not,
whether the moving party is entitled to judgment as a matter of
law.  National Bank of Commerce v. Quirk, 323 Ark. 769, 918 S.W.2d 138 (1996).  We view all proof in the light most favorable to the
party opposing the motion, resolving all doubts and inferences
against the moving party.  Id.  However, where the operative facts
of the case are undisputed, we simply determine on appeal whether
the appellee was entitled to summary judgment as a matter of law. 
Hertlein v. St. Paul Fire and Marine Ins. Co., 323 Ark. 283, 914 S.W.2d 303 (1996).
     Richardson obtained the initial insurance policy from Colonia
in July 1992, the policy was amended in November 1992, and he was
injured in January 1993.  During that period, Ark. Code Ann.  23-
89-209(a), Underinsured motorist coverage, provided in part:
     Every insurer writing automobile liability insurance
     covering liability arising out of the ownership,
     maintenance, or use of any motor vehicles in this state
     shall provide underinsured motorist coverage unless
     rejected in writing by a named insured. . . .  After a
     named insured or applicant for insurance rejects
     underinsured motorist coverage, the insurer or any of its
     affiliates shall not be required to notify any insured in
     any renewal, reinstatement, substitute, amended or
     replacement policy as to the availability of such
     coverage.
(Emphasis supplied.)  We have recognized that this statute requires
insurers to provide underinsured motorist coverage to the named
insured unless such coverage is rejected in writing by the insured. 
Shelter Mutual Ins. Co. v. Irvin, 309 Ark. 331,