Case Title: Merkel v. Nationwide Insurance Co.

Citation: 166 Vt. 311, 693 A.2d 706

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1997-03-21T00:00:00Z

Document:
Merkel v. Nationwide Insurance Co.  (95-636); 166 Vt. 311; 693 A.2d 706

[Filed 21-Mar-1997]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 95-636

George Merkel                                     Supreme Court

                                                  On Appeal from
     v.                                           Addison Superior Court

Nationwide Insurance Company                      August Term, 1996

Matthew I. Katz, J.

       James A. Dumont and Jon M. Groveman, Law Clerk, of Keiner & Dumont,
  P.C., Middlebury, for plaintiff-appellant

       Allan R. Keyes and John A. Serafino of Ryan Smith & Carbine, Ltd.,
  Rutland, for defendant-appellee

PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

       DOOLEY, J.   Plaintiff George Merkel sought a declaration that
  defendant Nationwide Insurance Company was liable under the underinsured
  motorist provision of its policy, following plaintiff's 1988 accident with
  an underinsured driver.  The Addison Superior Court granted defendant's
  summary judgment motion, and plaintiff appealed.  He argues that: (1)
  defendant failed to obtain an effective election to set the underinsured
  motorist coverage limit at $20,000 per person, so it automatically remained
  at the liability limit of $100,000 per person; and (2) even if defendant
  obtained an effective election at the purchase of the policy, it failed to
  obtain a new reduced-coverage election at the policy's renewal.  We affirm.

       In 1984 plaintiff purchased a liability policy from defendant, with
  liability limits of $100,000 per person/$300,000 per accident.  Plaintiff
  elected coverage of $20,000 per person/$40,000 per accident on a form
  referring to "uninsured" motorist coverage.  At the time of purchase, the
  policy's definition of "uninsured motorists coverage" did not include
  underinsured motorists.  However, a rider sent by defendant to plaintiff in
  1985 or 1986 defined

 

  an uninsured motor vehicle as

     a motor vehicle with respect to the ownership, maintenance, or use
     of which either no auto liability bond or insurance policy applies
     at the time of the accident, or with respect to which the sum of the
     limits of liability under all auto liability bonds and insurance
     policies applicable to the accident is less than the limits of this
     coverage.

  After issuance of the policy in 1984, defendant sent plaintiff annual
  declarations indicating the same uninsured motorist coverage limits, and he
  remitted his premium payments without questioning these limits or seeking
  to change them.

       In 1988, following several policy renewals, plaintiff was in an
  accident with a vehicle covered by a liability insurance policy with a
  $20,000-per-person/ $40,000-per-accident liability limit, the same limit as
  for uninsured motorist coverage in plaintiff's policy.  Plaintiff assessed
  his total losses from the accident at $75,000, recovered $20,000 from the
  other motorist in the accident, and sought the difference of $55,000 from
  defendant.  Defendant denied plaintiff's claim because the other driver was
  not underinsured within the definition of the policy.  Plaintiff brought
  the present action, claiming that the form he signed in 1984 related to
  uninsured motorist coverage but did not mention or relate to underinsured
  motorist coverage, which he never elected to reduce below his own liability
  coverage limits, and that he never agreed to reduce underinsured motorist
  coverage at the renewals of the policy.

       Defendant moved for summary judgment on grounds that under the
  language of the policy and under 23 V.S.A. § 941 plaintiff's election to
  purchase coverage at a lower liability limit applied to both uninsured and
  underinsured motorist coverage and continued at each policy renewal.  The
  court agreed and granted defendant's motion.  This appeal followed.

       Under 23 V.S.A. § 941(a), no liability policy may issue or be
  delivered in Vermont "unless coverage is provided therein . . . for the
  protection of persons insured thereunder who are legally entitled to
  recover damages, from owners or operators of uninsured, underinsured or
  hit-and-run motor vehicles . . . ."  23 V.S.A. § 941(c) states:

 

     (c) Unless the policyholder otherwise directs, the coverages
     under (a) and (b) of this section for new or renewed policies shall
     be identical to those provided in the policy selected by the person
     obtaining said policy but shall not be less than the minimum limits
     of coverage required under the provisions of section 801 of this
     title.

  Plaintiff argues first that these provisions create "separate and distinct"
  categories of coverage for uninsured and underinsured motorists and that to
  be valid, waivers of the statutory limits in § 941(c) had to be separate
  for uninsured and underinsured coverages.  Thus, plaintiff argues that his
  election to reduce his uninsured motorist coverage to $20,000 per person
  had no effect on his underinsured motorist coverage, which remained at the
  limit of his liability coverage, $100,000 per person.

       This is a question of statutory construction.  Our goal in
  interpreting a statute is to discern and implement the intent of the
  Legislature.  See Lane v. Town of Grafton, 8 Vt. L.W. 1, 1 (1997).  We
  consider the purpose of the statute and look to "the broad subject matter
  of the law, its effects and consequences, and the reason and spirit of the
  law."  Id.

       The requirement that liability policies include uninsured motorist
  coverage dates from 1968.  In 1980, the Legislature amended the law to
  require additional coverage with respect to operators of underinsured or
  hit-and-run motor vehicles.  The Legislature imposed this additional
  mandatory coverage in order to eliminate the anomaly that insureds were
  better off when they were hit by an uninsured driver than when they were
  hit by a driver with very little liability coverage.  As we explained in
  Monteith v. Jefferson Ins. Co., 159 Vt. 378, 385-86, 618 A.2d 488, 492
  (1992) (quoting State Farm Mut. Auto. Ins. Co. v. Hancock,