Case Title: HARTLINE v. HARTLINE

Citation: 

Docket Number: 87046

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2001-02-12T00:00:00Z

Document:
HARTLINE v. HARTLINE  HARTLINE v. HARTLINE 2001 OK 15 39 P.3d 765 72 OBJ 562 Case Number: 87046 Decided: 02/12/2001 Mandate Issued: 05/25/2001 GLINDA HARTLINE, Plaintiff-Garnishor-Appellee v. JAMES HARTLINE, Defendant v. MID CENTURY INSURANCE COMPANY, Defendant-Garnishee-Appellant ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION IV ¶0 Glinda Hartline brought an action against her husband, James Hartline, to recover for injuries she sustained in an automobile accident in which her husband was at fault. After obtaining against him a $7,000 judgment, she brought a postjudgment garnishment proceeding against Mid-Century Insurance Company in the District Court, McClain County, Noah Ewing, trial judge, for the proceeds of a liability insurance policy under which both she and James were named insureds. The insurer denied coverage. The trial judge ruled for Glinda Hartline and the insurer appealed. The Court of Civil Appeals, Division IV, reversed. On certiorari granted on Glinda Hartline's petition, THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE TRIAL COURT'S JUDGMENT IS AFFIRMED Joe Farnan, Law Office of Joe Farnan, Purcell, Oklahoma, for Appellee. Paul B. Middleton, Dobbs, Schroeder & Middleton, Oklahoma City, Oklahoma, for Appellant. OPALA, J. ¶1 The dispositive question tendered on certiorari is whether an automobile liability policy exclusion, which operates to deny all coverage to a named insured who is injured while riding as a passenger in the insured vehicle, violates the legislative policy underlying Oklahoma's compulsory insurance law. We answer in the affirmative, but only insofar as the injured person is left sans the minimum mandated coverage. [39 P.3d 767 ] I ANATOMY OF LITIGATION ¶2 On 22 September 1993 Glinda Hartline ("Glinda"), a passenger in a 1975 Ford driven by her husband, James Hartline ("James"), sustained bodily injuries in an automobile accident caused by the latter's negligence. Glinda brought an action for damages against James. The trial court entered judgment for Glinda in the amount of $7,000 to be satisfied solely from the proceeds of a liability insurance policy issued by Mid-Century Insurance Company ("Mid-Century"). The policy provided coverage in the minimum amount required by Oklahoma's compulsory insurance law. 1 At the time of the accident, Glinda and James were married to each other and residing in the same household. ¶3 The insurance policy in question was issued on 20 September 1993. Glinda, who was not present when James applied for the policy, did not sign the application form. James alone rejected uninsured motorist coverage. Although the declarations page of the policy lists both James and Glinda as named insureds and billing statements were subsequently sent in both their names, the insurer's internal data sheet identifies James alone as the named insured. Title to the 1975 Ford (and its registration) was in James's name. Neither the title to, nor the registration of, any other motor vehicle stood in Glinda's name. ¶4 Glinda brought a postjudgment garnishment proceeding against Mid-Century, which denied liability. The insurer then moved for summary judgment. Citing as controlling authority this court's pronouncement in Looney v. Farmers Insurance Group,2 the insurer argued that Glinda, as a named insured under the policy, was validly excluded from liability coverage. In response, Glinda argued that Looney no longer controlled the validity of the exclusion in question. Instead, she urged that the insurance proceeds were available to her because our more recent decision in Nation v. State Farm Insurance Company3 had invalidated the policy exclusion relied on by Mid-Century. While awaiting a ruling on the summary judgment motion, the parties prepared a stipulation of facts and submitted the case for a bench trial. Judgment was entered for Glinda; Mid-Century appealed. The Court of Civil Appeals, Div. IV, (COCA) reversed. Agreeing with Mid-Century that Looney was the controlling authority, COCA held that Mid-Century's policy exclusion for bodily injury to an insured was valid and relieved the insurer of liability for Glinda's injuries. Having granted Glinda's certiorari petition, we now vacate COCA's opinion and affirm the nisi prius judgment. II STANDARD OF REVIEW ¶5 The facts in this cause are undisputed, having been submitted to the trial court by stipulation. The issue before us is one of law in which we must determine the validity of an exclusion contained in a policy of automobile liability insurance. Review of contested issues of law is governed by a de novo standard. In its reexamination of a trial court's legal rulings an appellate court exercises plenary, independent and nondeferential authority.4 III THE "INSURED PERSON" EXCLUSION IN MID-CENTURY'S POLICY ¶6 The Mid-Century policy here under review provides in pertinent part: [ 39 P.3d 768 ] PART I - LIABILITY Coverage A - Bodily Injury Coverage B - Property Damage We will pay damages for which any insured person is legally liable because of bodily injury to any person and property damage arising out of the ownership, maintenance or use of a private passenger car, a utility car, or a utility trailer. (emphasis in original denoting defined terms) * * * * * * Exclusions This coverage does not apply to: * * * * * * 11.a. Liability for bodily injury to an insured person. (emphasis in original denoting defined terms) ¶7 The policy defines an insured person - for purposes of both the liability coverage and exclusionary clause provisions - as (1) the named insured listed on the declarations page, (2) that person's spouse if a resident of the same household, and (3) relatives of either residing in the same household.5 ¶8 Mid-Century argues the quoted policy exclusion relieves it of liability to Glinda. This is so because she falls within the excluded class as a named insured on the declarations page of the policy. The insurer contends that this court's pronouncement in Looney, which affirmed the validity of an exclusionary provision barring recovery by a named insured, compels today a decision in its favor. Glinda, on the other hand, contends that Looney is no longer the controlling authority on the validity of named insured/household exclusionary clauses, having been supplanted by this court's more recent pronouncement in Nation. The latter decision, she urges, teaches that named insured/household exclusionary clauses are void as contrary to the public policy that underlies compulsory liability insurance. IV NEITHER LOONEY NOR NATION ADEQUATELY ADDRESSES THE OVERBROAD EXCLUSION CLAUSE IN MID-CENTURY'S POLICY ¶9 In Looney we were presented with facts quite similar to those in the case at hand. Nita Looney was injured while riding as a passenger in a car owned and driven by her husband, with whom she was then living. The accident was Mr. Looney's fault, and Mrs. Looney obtained a judgment against him. She then brought a postjudgment garnishment proceeding against the vehicle's insurer, Farmers Insurance Group (Farmers), which denied liability based upon a policy exclusion for bodily injury to (1) any member of the insured's household except a servant, or (2) the named insured. The policy defined a named insured as the insured named on the policy's declarations page and that individual's spouse if a resident of the same household. Mrs. Looney was arguably excludable both as a named insured and as a member of the insured's household. ¶10 Mrs. Looney argued that Farmers' exclusionary provision was unenforceable because it violated the public policy of the state expressed in Oklahoma's Financial Responsibility Act (the Act).6 ¶12 We also reject Glinda's contention that Nation v. State Farm Insurance Company ¶13 In sum, neither Looney nor Nation adequately addresses overbroad exclusion clauses in automobile policies that adversely affect the "named insured" or "members of the household." We welcome the opportunity [ 39 P.3d 771 ] presented here - where the named-insured and household exclusions are merged into a single "insured exclusion" clause - to pronounce a standard for distinguishing between permissible and impermissible exclusions in liability policies issued in compliance with Oklahoma's compulsory insurance law. V THE COMPULSORY INSURANCE LAW ¶14 The provisions of 47 O.S. Supp 1993 §601 (C)(1) prohibit the operation of any motor vehicle in this state unless it is insured or secured "for the payment of loss resulting from the liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of the vehicle." (emphasis added) ¶15 As originally enacted the compulsory insurance law did not make any reference to exclusionary provisions. ¶16 Even in the absence of a violation of a law's express provision, an exclusion may nonetheless be invalid for nonconformity to the policy of the law. The principal purpose of law-mandated liability insurance is the protection of the public from the financial hardship which may result from the use of automobiles by financially irresponsible persons. ¶17 Extant jurisprudence consistently holds that insurance policy clauses which operate to deny coverage to the general public are void as contrary to statutorily articulated public policy. ¶18 Family exclusions potentially affect a sizable portion of Oklahoma's population. Almost everyone may plausibly be placed within the excluded class under some relative's policy. Unrestricted application of family exclusions means that seriously injured accident victims will be left with no secured source of compensation for their injuries. ¶19 Our sister states generally have either completely validated or completely invalidated named insured and household exclusionary clauses. ¶20 The solution lies in the interaction of liability insurance and uninsured mot- [ 39 P.3d 773 ] orist coverage, the two components of an increasingly integrated system of automobile insurance. VI SUMMARY ¶22 Oklahoma jurisprudence teaches that clauses in insurance policies which leave an innocent third-party victim of the insured's negligence without any insurance protection are void as contrary to statutorily articulated public policy. James rejected in the instant case uninsured motorist coverage on behalf of himself and Glinda, and Glinda did not own another insured vehicle which could have provided her with uninsured motorist coverage. Because the exclusion in Mid-Century's policy operated to deny Glinda all coverage, it is unenforceable as void for [ 39 P.3d 774 ] breach of the law's policy. ¶23 THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE TRIAL COURT'S JUDGMENT IS AFFIRMED ¶24 HARGRAVE, C.J., WATT, V.C.J., and HODGES, OPALA, and KAUGER, JJ., concur. ¶25 WINCHESTER, J., concurs by reason of stare decisis. ¶26 SUMMERS, J., with whom LAVENDER and BOUDREAU, JJ. join, concur in judgment. FOOT