IN THE SUPREME COURT OF MISSISSIPPI

NO. 2002-CA-01020-SCT

JOSEPH WISE, CHARLENE C. WISE AND

ELIZABETH RAMSEY WISE, MINOR, BY AND

THROUGH HER MOTHER AND NEXT FRIEND,

CHARLENE C. WISE

v.

UNITED SERVICES AUTOMOBILE ASSOCIATION

DATE OF JUDGMENT: 04/12/2002

TRIAL JUDGE: HON. W. SWAN YERGER

COURT FROM WHICH APPEALED: HINDS COUNTY CIRCUIT COURT

ATTORNEYS FOR APPELLANTS: JENNIFER INGRAM WILKINSON

CARROLL H. INGRAM

MARCUS ALFRED TREADWAY

THOMAS G. LILLY

ATTORNEY FOR APPELLEE: JOSEPH W. McDOWELL

NATURE OF THE CASE: CIVIL - INSURANCE

DISPOSITION: AFFIRMED - 10/09/2003

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

BEFORE SMITH, P.J., WALLER AND CARLSON, JJ.

CARLSON, JUSTICE, FOR THE COURT:

¶1. United Services Automobile Association (USAA) was granted summary judgment pursuant to

Miss. Code Ann. § 83-11-103(c) (Rev. 1999) after the circuit court determined there was no

uninsured/underinsured coverage available. Joseph Wise, his wife, Charlene C. Wise, and their daughter,

Elizabeth Ramsey Wise, (collectively the "Wises") appeal the ruling of the circuit court. Finding USAA's
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motion for summary judgment was properly granted, we affirm the judgment of the Circuit Court of the First

Judicial District of Hinds County. 

FACTS AND PROCEEDINGS IN THE CIRCUIT COURT

¶2. On October 11, 1996, Joseph Wise, his wife, Charlene, and their daughter, Elizabeth, were

pedestrians crossing Greymont Avenue in Jackson after leaving the State Fair. Joseph and Charlene were

struck by a pickup truck driven by Alfred Larry Aswell and owned by Steven Bostic. Joseph and Charlene

both allege to have suffered severe physical and emotional injuries. Elizabeth, who was not struck,

witnessed the collision. Before the collision, Aswell and Bostic had been patrons at the bar in the former

Ramada Inn Coliseum. After allowing Bostic to pay his bar tab of nineteen beers, Aswell left in Bostic's

truck which he had been driving for several months.

¶3. At the time of the accident, Joseph Wise had an insurance policy issued by USAA insuring three

separate vehicles with uninsured motorist bodily injury limits of $100,000 per person and $200,000 per

accident. The parties agree there is "stacked" uninsured/underinsured motorist coverage applicable to each

injured party in the amounts of $300,000 per person and $600,000 per accident. Aswell was insured under

Bostic's policy with USF&G, which provided a single liability limit of $300,000.

¶4. The Wises filed suit against Aswell, Bostic, Steel Service Corporation (Aswell's employer), Peoples

Security Life Insurance Company, Inc. (owner of the Ramada Coliseum bar), JMH Operating Company,

Inc. and American General Hospitality, Inc. (operators of the bar). The Wises settled their claims against

Bostic for the full amount of his $300,000 single per accident limit USF&G policy covering his vehicle.

After the settlement, the Wises reduced the original demand made upon USAA for the stacked UM/UIM

per accident limit of $600,000, since more than one person suffered injuries, to $300,000. The Wises also

settled their claims against Steel Service for $4,000, even though both Aswell and Steel Service contended
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Aswell was not acting in the course and scope of his business. After the Wises settled their claims against

the bar defendants, the amount of which has not been disclosed due to a confidentiality agreement, they

informed USAA that the amount of the settlement exceeded USAA's UM coverage of $600,000.

However, because they had not been fully compensated for their injuries, the Wises continued to seek

$300,000 in uninsured motorist benefits from USAA. Aswell, who had no insurance coverage in his name,

still remains a defendant in the case. 

¶5. USAA was joined as a defendant after the Wises filed their third amended complaint on June 25,

1999. On December 19, 2001, USAA filed a motion for summary judgment, arguing that if the Wises

received a settlement amount in excess of USAA's $600,000 per accident limit, then nothing was due or

owing from USAA. USAA claimed the non-duplication provision under the policy's UM coverage would

provide USAA with a limits offset regardless of whether the Wises had been fully compensated for their

injuries. On April 12, 2002, the trial court granted the motion for summary judgment in favor of USAA,

holding there was no UM/UIM coverage claim available to the Wises. Pursuant to Miss. R. Civ. P. 54(b),

the trial court entered an order on May 16, 2002, certifying its previous order of summary judgment as a

final judgment. On June 14, 2002, the Wises timely appealed to this Court.

DISCUSSION

¶6. This Court employs a de novo standard in reviewing a lower court's grant of summary judgment.

Short v. Columbus Rubber & Gasket Co., 535 So.2d 61, 65 (Miss. 1988). Summary judgment may

only be granted where there are no genuine issues of material fact such that the moving party is entitled to

judgment as a matter of law. M.R.C.P. 56(c). The trial court must carefully review all evidentiary matters

in the light most favorable to the non-moving party. Brown v. Credit Ctr., Inc., 444 So. 2d 358, 362
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(Miss. 1983). If in this view, the moving party is entitled to judgment as a matter of law, summary judgment

should be granted. Id.

I. WHETHER THE PER PERSON LIMIT OR THE PER ACCIDENT

LIMIT APPLIES IN DETERMINING IF THERE IS AN

UNINSURED/UNDERINSURED MOTOR VEHICLE, WHERE THE

ACCIDENT INVOLVES MULTIPLE CLAIMS UNDER ONE UM

POLICY.

¶7. The Wises argue the trial court improperly adopted USAA's argument that the tortfeasor vehicle

was not underinsured by comparing the liability limit of the tortfeasor's policy with the per person limit

of the injured insureds' UM coverage, and thus committed reversible error. The Wises contend that the

proper course of action would have been for the trial court to have used the per accident limit of the

injured insureds' UM coverage because there were two or more injured insureds. The Wises do admit that

the trial judge did not expressly state in his order granting summary judgment in favor of USAA that the

tortfeasor vehicle was not underinsured; however, the Wises state it is obvious that the trial court came to

this conclusion by comparing the $300,000 single liability limit of Bostic's USF&G policy to the $300,000

per person limit of USAA's policy. The Wises also contend this was the position advanced by USAA in

its brief in support of its motion for summary judgment. 

¶8. USAA argues this Court must compare each of the injured insured's available UM/UIM limits to

the $300,000 limits available under the tortfeasor's automobile policy. Because each injured insured has

potentially $300,000 in per person limits available under the USAA policy compared to the $300,000 limits

available under the tortfeasor's automobile policy, no injured insured has a UM/UIM claim because there

is no uninsured motor vehicle as defined by law. USAA argues the Wises confuse this issue by comparing

the stacked UM limits to the amount "actually available to the insured" by considering the per accident

limits. USAA claims this argument has been rejected numerous times by this Court.
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¶9. In granting summary judgment in favor of USAA, the trial judge stated:

Based upon the definition of "uninsured motor vehicle" in § 83-11-101(c)(iii) Miss. Code

Ann. (1999), the "limits versus limits" standard required by the statute and undisputed facts

in this case, and applicable law, there is no uninsured/under insured coverage claim

available to the Plaintiffs. See Wickline v. United States Fidelity & Guaranty Co.,

530 So. 2d 708 (Miss. 1988), Cossitt v. Federated Guar. Mut. Ins. Co., 541 So.

2d 436, 440 (Miss. 1989), Dixie Insurance Company v. State Farm Mutual

Insurance Co., 614 So. 2d 918 (Miss. 1992), Guardianship of Lacy v. Allstate

Insurance Co., 649 So. 2d 195 (Miss. 1995), and Fidelity and Guaranty

Underwriters, Inc. v. Earnest, 699 So. 2d 585 (Miss. 1997). 

Because there were no genuine issues of material fact, the trial court found USAA was entitled to judgment

as a matter of law. The trial court also found that in light of its ruling, USAA had an arguable reason to deny

coverage to the Wises; therefore, the Wises had no valid bad faith claim against USAA. 

¶10. It is undisputed that the Wises had UM coverage limits of $300,000 per person and $600,000 per

accident. It is also undisputed that Bostic's vehicle was covered by a USF&G single limit liability policy of

$300,000. The question this Court must answer is in determining whether a vehicle is an uninsured vehicle

pursuant to statute, which amount is used when multiple claimants are involved-the per person or the per

accident limit?

¶11. It has been well established by this Court that before the UM/UIM provisions of a policy can be

invoked, it must first be determined if the tortfeasor vehicle is an "uninsured motor vehicle." The definition

of "uninsured motor vehicle" is set out in Miss. Code Ann. § 83-11-103 (Rev. 1999):

(c) The term "uninsured motor vehicle" shall mean:

(iii) An insured motor vehicle, when the liability insurer of such vehicle has

provided limits of bodily injury liability for its insured which are less than

the limits applicable to the injured person provided under his uninsured

motorist coverage. . . .

In Wickline v. U.S. Fidelity & Guar. Co., 530 So.2d 708, 713 (Miss. 1988), this Court held:
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The Mississippi statutory definition of uninsured motor vehicle, as amended to incorporate

the underinsured concept, compares the limits of the tortfeasor's liability coverage to "the

limits applicable to the injured person provided under his uninsured motorist

coverage." Miss. Code Ann. § 83-11- 103(c)(iii) (Supp.1972) [emphasis added].

Whether the UM coverage of various policies and vehicles is "applicable to the injured

person" must be determined in accordance with established Mississippi uninsured motorist

law.

Again, this Court must determine what amounts are "applicable to the injured person."

¶12. In Wickline, Stacy Wickline was killed when the car in which she was a passenger collided with

another vehicle parked on the side of the road. Id. at 710. Immediately after this accident Stacy's survivors

received $10,000 from USF&G, the insurance carrier for the owner of the car in which Stacy was a

passenger, as the limits of its liability per person coverage. Id. However, the survivors filed suit alleging

each beneficiary was entitled to the "maximum per person uninsured motorist coverages on the four []

vehicles under the USF&G policy, totaling $80,000." Id. The trial court denied this stacking and further

held that the survivors were "'insureds' under the uninsured motorist provision of the USF&G policy

applicable to the [car in which Stacy was a passenger] and that under the terms of the policy, each was

entitled to $10,000, a total of $20,000, which USF&G could not reduce by the $10,000 coverage paid

under the liability provision of the same policy." Id. at 711.

¶13. This Court first had to determine whether the vehicle was an uninsured/underinsured motor vehicle.

For the uninsured underinsured motorist provisions of the U.S.F. & G. policy [to] come

into play, the [vehicle] must be an "uninsured motor vehicle" as defined in the statute. The

answer to this question is determined by comparing the amount of uninsured motorist

coverage available to the amount of liability insurance available.

Id. at 712. This Court stated that pursuant to the Mississippi UM statute as amended "stacking of the

injured person's limits is allowed for the purpose of qualifying the tortfeasor as an uninsured motorist." Id.

at 713. 
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If an injured person is insured under more than one policy of uninsured motorist insurance,

the limits of each such policy are "applicable" to him. Harthcock v. State Farm

Mutual Automobile Insurance Company, 248 So.2d 456 (Miss.1971). If he is

injured while riding as a passenger, the uninsured motorist coverage of the vehicle in which

he is riding, in addition to that of his own vehicles, is "applicable to the injured person".

Southern Farm Bureau Casualty Insurance Company v. Roberts, 323 So.2d

536 (Miss.1975).

Id. Therefore, this Court held the two State Farm policies under which the survivors were insured were

applicable in addition to the USF&G policy of the tortfeasor vehicle. Id. Because the bodily injury liability

limits for the tortfeasor vehicle were less than the limits applicable to the injured person provided under the

uninsured motorist coverage, the tortfeasor vehicle was thus an uninsured motor vehicle as defined by

statute. Id.

¶14. This Court also held because stacking was so imbedded in Mississippi's uninsured motorist law,

the survivors would be allowed to stack the uninsured motorist coverage of each of the four vehicles

covered under the USF&G policy. Id. at 714-15. The final issue this Court addressed was whether

USF&G was entitled to an offset of the liability payments already made. Id. at 716. This Court, relying

upon a then recent ruling in State Farm Mut. Auto. Ins. Co. v. Kuehling, 475 So. 2d 1159 (Miss.

1985), which allowed for an offset for uninsured motorist coverage from the tortfeasor's liability carrier

based upon the specific policy and the UM statute, held that USF&G was entitled to offset its uninsured

motorist coverage by the payment of the tortfeasor's liability carrier. Wickline, 530 So. 2d at 717. 

¶15. InCossitt v. Federated Guar. Mut. Ins. Co., 541 So. 2d 436, 438 (Miss. 1989), Jan Cossitt

along with Odom McDaniel and Joseph White were injured in an automobile accident when their vehicle

was struck by Lester Davis. McDaniel subsequently died of his injuries. Id. Suit was filed by McDaniel's

estate and White against Davis. Id. The suits were settled after Davis's liability insurance carrier paid
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$10,000 to each party. Id. These payments totally exhausted the available liability coverage under Davis's

insurance policy. Id. However, Cossitt received nothing from the insurance carrier because she did not file

suit. Id. Cossitt claimed that because there were no longer any proceeds with which to pay her claims

under Davis's liability policy, he was now an uninsured motorist as to her so that her own insurance carrier,

Federated Guaranty, was obligated to her under her policy which provided for uninsured motorist

coverage. Id.

¶16. At the time of the accident, the tortfeasor had in effect bodily injury liability coverage in the amount

of $10,000 per individual and $20,000 per accident. Id. at 439. Cossitt had in effect uninsured motorist

coverage for bodily injury in the amount of $10,000 per individual and $20,000 per accident. Id.

Instantly, it can be seen that the focus in determining whether the tortfeasor is uninsured is

on the respective "limits" of the policies." Mississippi law defines an [un]insured vehicle in

terms of policy limits, as distinguished from proceeds actually received by a particular

claimant," and furthermore, "the amount of the claimant's damages is also irrelevant when

determining eligibility for uninsured motorists benefits." Wilson v. Nationwide Mutual

Ins. Co., 667 F.Supp. 349, 355 (N.D.Miss. 1987); Herrod v. National Indemnity

Co., 643 F.Supp. 956, 959 (N.D.Miss. 1986); Wickline v. U.S. Fidelity &

Guaranty Co., 530 So.2d 708, 712-13 (Miss. 1988).

541 So. 2d at 440. This Court held because the limit of liability provided by Davis's insurer was not less

than the limit provided by Cossitt's uninsured motorist coverage, the tortfeasor was not an uninsured

motorist pursuant to statute. Id. This Court also stated:

At first blush, it might appear that the policy of the Uninsured Motorist Act is to assure

each injured party the availability of at least the minimum amount provided by the

Mississippi Motor Vehicle Safety Responsibility Law. However, a closer inspection proves

such a policy unintended, and inconsistent with the uninsured motorist provisions of the

Motor Vehicle Safety Responsibility Law.

The applicable section of the Motor Vehicle Safety Responsibility Law

referred to in Section 83-11-101 provides as follows: 

(2) Such owner's policy of liability insurance: 
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(b) shall pay on behalf of the insured named therein and any other person,

as insured, using any such motor vehicle or motor vehicles with the

express or implied permission of such named insured, all sums which the

insured shall become legally obligated to pay as damages arising out of the

ownership, maintenance or use of such motor vehicle or motor vehicles

within the United States of America or the Dominion of Canada, subject

to limits exclusive of interest and costs, with respect to each

such motor vehicle, as follows: ten thousand dollars

($10,000.00) because of bodily injury to or death of one (1)

person in any one (1) accident and, subject to said limit for one

(1) person, twenty thousand ($20,000.00) because of bodily

injury to or death of two (2) or more persons in any one (1)

accident, and five thousand dollars ($5,000.00) because of injury to or

destruction of property of others in any one (1) accident. 

(Emphasis added). Mississippi Code Annotated, Section 63-15-43(2)(b) (Supp. 1988);

see also Sections 63-15-3(j), 63-15-11(4), 63-15-31. Thus, this statute sets the

minimum amount of uninsured motorist coverage which every automobile liability policy

must include, unless rejected by the insured. 

Cossitt, 541 So. 2d at 441. This Court also found guidance from the Alabama Supreme Court, which

addressed the identical argument based on an analogous statute: 

The statute mandates a minimum of $10,000 coverage only in the case of accidents

resulting in bodily injury to or the death of one person. Where an accident results in bodily

injury to or the death of two or more persons, the statute mandates a minimum coverage

of $20,000 for the accident. The statute clearly contemplates situations in which the

recovery of each individual might be less than $10,000. It appears, therefore, that the

policy behind the statute is to assure the availability of minimum coverage

for each accident, not for each injured person. The minimum which the legislature

intended to make available was available in the present case under [Davis'] liability policy.

For this reason we cannot hold that he was an "uninsured motorist." (Emphasis added).

Id. (quoting Criterion Ins. Co. v. Anderson, 347 So.2d 384, 386 (Ala. 1977)).

¶17. In Dixie Ins. Co. v. State Farm Mut. Auto. Ins. Co., 614 So.2d 918 (Miss. 1992), Glen

Hurst and Donald Cannon were riding in a car when Hurst negligently drove off the highway, thus injuring

Cannon. Hurst's insurer, State Farm, provided liability coverage of $25,000 per person and $50,000 per

accident, and UM coverage in the amount of $25,000 per person and $50,000 per accident.Id. at 919.
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Cannon's insurer, Dixie, provided UM coverage in the amount of $10,000. Id. State Farm settled with

Cannon for $20,193.66. Id. This payment, in addition to the settlements of the other passengers, exhausted

State Farm's per accident limit. Id. After the settlement, Cannon filed suit against State Farm and Dixie

demanding additional payment because he had not been fully compensated for his injuries. Id. The trial

judge ordered that State Farm was liable to Cannon under its UM coverage provision and ordered State

Farm to pay Cannon $25,000 minus the liability payment, leaving State Farm with a balance of $4,806.34.

Id. The trial judge also found that Dixie was liable to Cannon under its UM coverage provision and ordered

Dixie to pay Cannon $10,000. Id. at 920. This Court affirmed the judgment of the trial judge and held:

Pursuant to the holding of State Farm Mutual Auto. Ins. Co. v. Kuehling, 475

So.2d 1159, 1163 (Miss.1985), a policy may, by its language, "provide [ ] for offsets of

the [UM] coverage by amounts paid by the tortfeasor's carrier...." Applying that rule to this

case, one could say that, to the extent of $20,193.66, State Farm provided liability

insurance of $25,000 and cannot be considered wholly uninsured. Subtracting or offsetting,

$20,193.66 from $25,000, the court correctly arrived at an uninsured liability due from

State Farm of $4,806.34.

614 So. 2d at 922.

¶18. InGuardianship of Lacy v. Allstate Ins. Co., 649 So.2d 195 (Miss. 1995), William Rawls's

vehicle collided with three other vehicles, injuring fourteen people and killing one. Rawls's truck, which was

insured by State Farm, had coverage of $500,000 per person and $1,000,000 per accident. Id. at 196.

The aggregate amount of the uninsured motorist coverage was $1,000,000. Id. Steven Lacy was covered

under his stepfather's Allstate Insurance policy which provided uninsured motorist coverage in the amount

of $50,000 (this included two vehicles). Id. After all parties agreed to enter into binding arbitration, Lacy's

damages were determined to be $85,000. Id. at 197. Because the total amount of damages exceeded

Rawls's liability coverage, each party received a pro rata share of the available funds. Id. Lacy received
11

$65,765.96.Id. Lacy argued his carrier, Allstate, was responsible for the difference between his assessed

damages and what he had received from his own uninsured motorist coverage. Id. He also asserted that

the uninsured motorist coverage of all the insured parties involved in the accident should be aggregated, so

that the aggregated amount would exceed the liability coverage on the tortfeasor vehicle. Id.

¶19. This Court first had to determine whether Lacy was an "insured" under either the insurance policy

and/or the UM statute. See Gillespie v. Southern Farm Bureau Cas. Ins. Co., 343 So.2d 467, 471

(Miss. 1977).

This underinsured motorist claim turns on the phrase "limits of bodily injury liability for its

insured which are less than limits applicable to the injured uninsured motorist" found in the

uninsured motorist statute, Miss. Code Ann. § 83-11-103 (Supp.1987). This statute

provides for "limits," but this Court has never defined that term. When only one individual

claimant is involved, the limit would be that of the particular liability policy. However, when

multiple claimants are presented in a scenario such as the case at hand, the determination

of the limits of bodily injury liability is much more complex. We consider this proposition

under the accepted principles of Miss. Code Ann. § 83-11-103 and the policies issued in

accordance with the statute, which are (1) to liberally construe the statute in favor of the

insured and (2) to strictly avoid or preclude exceptions or exemptions from coverage.

Matthews v. State Farm Mutual Automobile Ins. Co., 471 So.2d 1223, 1225

(Miss. 1985).

Lacy, 649 So. 2d at 197. Because this Court held the Legislature did not intend all injured persons in an

accident to aggregate their uninsured motorist coverage in order to qualify the tortfeasor vehicle as an

uninsured motor vehicle, this Court found that Lacy was not an "insured" under the policies of the other

injured parties. Id. at 199-01. This Court held:

This Court has not allowed aggregation of uninsured motorist policies where the claimant

is not an insured within the coverage he seeks to aggregate, whether as an additional

insured, permissive user, or a guest passenger. In each case where we have found

aggregation to be applicable, the claiming party necessarily has been an "insured" as

defined by the statute on policy.

Id. at 201. This Court also stated that:
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the term "limits" refers to what an insured may or may not receive from the liability carrier,

particularly when it involves multiple claims, and if it is less than his UM coverage, he may

then aggregate. Unfortunately, this is of little benefit to the appellant in the case at hand

since he received $65,765.86 from the liability carrier and only had $50,000.00 in UM

coverage. If there had been coverage over the $65,765.86 amount, then he would have

availed himself to the UM coverage up to the amount of either his damages or policy limits,

whichever was less.

Id. at 198.

¶20. In Fidelity & Guar. Underwriters, Inc. v. Earnest, 699 So.2d 585 (Miss. 1997), three

passengers, including Tracy Earnest were killed in a single-car accident involving a vehicle negligently driven

by Charles Plunkett. Plunkett's insurance policy, issued by F&G, provided for $50,000 single limits liability

coverage and $25,000 uninsured motorist coverage. Id. at 586. Tracy was covered under her father's

insurance policy, issued by State Farm, which provided for $45,000 in uninsured motorist benefits through

stacking.Id. Pursuant to statute, Plunkett was an uninsured motorist. F&G offered to pay each passenger

one-third of the $50,000 in liability coverage, but it denied any liability for UM benefits. Id. State Farm

paid $20,000 in UM benefits. Id. The trial court held that State Farm's tender of $20,000 relieved it of any

additional liability. Id. The trial court also found F&G was liable for $8,333.33 in UM benefits ($25,000-

16,666.67). Id.

¶21. This Court affirmed the judgment of the trial court finding that State Farm, pursuant to its policy,

was entitled to an offset; however F&G was not. This Court found the offset provision in F&G's policy

exceedingly broad, "purporting to grant F&G the right to offset against payments made on behalf of the

tortfeasor regardless of which party made the payments and regardless of to whom the payments were

made." Id. 

The extent of a UM carrier's right to offset is to a certain degree dependent upon the

provisions providing for the offset in the UM insurance contract. In Dixie Ins. Co. v.
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State Farm Mut. Auto. Ins. Co., 614 So.2d 918 (Miss. 1992), for example, this Court

held that, under the provisions of Dixie's own policy, Dixie only had a right to offset liability

payments which it itself had made. Accordingly, this Court held that the policy provision

granted Dixie no right to offset liability payments made by State Farm. The holding in

Dixie thus indicates that this Court will not infer a broader right of the insurer to offset

when the language of the insurer's own policy provides for a more narrow right of offset

than that for which it might legally provide.

699 So. 2d at 588. 

¶22. While the above cases are illustrative of this State's history of uninsured motorist law, the cases do

not provide a clear answer as to whether the per person or the person accident limit should be used to

determine if the tortfeasor is an uninsured motorist when there are two or more claimants under the same

uninsured motorist policy. This Court may either compare the total amount of uninsured motorist coverage

available ($600,000) to the tortfeasor's single liability limit ($300,000) and determine the tortfeasor is an

underinsured motorist, or this Court may compare the amount available to each insured (in this fact scenario

Mr. and Mrs. Wise are each entitled to $300,000) to the tortfeasor's single liability limit ($300,000) and

determine that neither injured insured is entitled to uninsured motorist benefits. Cases from the North

Carolina Court of Appeals provide guidance.

¶23. InNorth Carolina Farm Bureau Mut. Ins. Co. v. Gurley, 532 S.E.2d 846 (N.C. Ct. App.

2000), the court addressed the issue of whether the per person or per accident limit was the applicable

underinsured motorist limit. Kathryn Gurley and her two passengers, Sherry Gurley and Wendy Woolard,

were injured in an automobile accident due to the negligence of Charles Fornes. Id. at 847. Fornes was

insured by Allstate whose policy provided liability limits of $25,000 per person and $50,000 per accident.

Id. Allstate tendered its $50,000 to the injured parties. Id. The Gurleys each received $17,000, and

Wendy received $16,000. Id. Sherry had an uninsured motorist policy with Farm Bureau which provided
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policy limits of $50,000 per person and $100,000 per accident. Id. Therefore, the injured parties sought

coverage under this uninsured motorist policy. Id.

¶24. The North Carolina and Mississippi uninsured/underinsured motorist statutes and case law are very

similar.

The North Carolina UIM statute necessitates a two-step analysis in resolving any UIM

claims. First, we must address whether the insured is even eligible for UIM coverage. UIM

coverage is available if two conditions are satisfied: (1) the negligent driver's automobile

was an "underinsured highway vehicle"; and (2) the negligent driver's liability coverage has

been exhausted. N.C. Gen.Stat. § 20-279.21(b)(4) (1999). Under our statute, an

"underinsured highway vehicle" is: 

a highway vehicle with respect to the ownership, maintenance, or use of

which, the sum of the limits of liability under all bodily injury liability bonds

and insurance policies applicable at the time of the accident is less than the

applicable limits of underinsured motorist coverage for the vehicle involved

in the accident and insured under the owner's policy. 

Id. The respective liability and UIM limits are thus directly compared to each other.

532 S.E.2d at 848. The court found that because Fornes's liability policy was less than the underinsured

coverage, the automobile was an "underinsured highway vehicle." Id. The court also held that because

Allstate tendered $50,000, its policy coverage had been exhausted. Id. Therefore, both conditions had

been met. Id.

¶25. The court next had to determine how much coverage the insureds were entitled to receive under

the UIM policy. Id. North Carolina's statute outlines the limit as follows:

[T]he limit of underinsured motorist coverage applicable to any claim is determined to be

the difference between the amount paid to the claimant under the exhausted liability policy

or policies and the limit of underinsured motorist coverage applicable to the

motor vehicle involved in the accident. N.C. Gen.Stat. § 20-279.21(b)(4) (emphasis

added). 

Id. The court determined that the applicable UIM limit would not always be the same in every situation.

Specifically, we conclude that the applicable UIM limit under N.C. Gen. Stat. § 20-

279.21(b)(4) will depend on two factors: (1) the number of claimants seeking coverage
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under the UIM policy; and (2) whether the negligent driver's liability policy was exhausted

pursuant to a per-person or per-accident cap.

Id. In Gurley, there were three injured parties compensated under the per accident limit; therefore, the

applicable UIM limit was also the per accident limit. 

Our interpretation of the applicable UIM limit under the statute makes sense both logically

and pragmatically. Logically, our interpretation provides internal consistency with the rest

of the UIM statute. For instance, to determine whether UIM coverage even applies, the

statute explicitly mandates that the UIM limits be compared directly with the negligent

driver's liability limits. N.C. Gen. Stat. § 20-279.21(b)(4); Harris v. Nationwide Mut.

Ins. Co., 332 N.C. 184, 188, 420 S.E.2d 124, 127 (1992). Because our legislature

requires a comparison between the liability and UIM limits in determining the availability

of UIM coverage, we conclude the legislature intended a similar comparison in determining

the limit of that coverage.

Id. at 849 (emphasis in original). 

¶26. In Nationwide Mut. Ins. Co. v. Haight, 566 S.E.2d 835 (N.C. Ct. App. 2002), Charles

Holleman failed to yield the right-of-way to a vehicle driven by Sondra Haight and her three passengers.

Holleman's vehicle was insured by Aetna with a policy providing liability coverage of $100,000 per person

and $300,000 per accident. Id. at 836. Haight's vehicle was insured by Nationwide under a policy

providing UIM coverage with a "combined single limit" of $500,000. Id. Aetna paid $100,000 each to

Haight and the Estate of one of the passengers. Id. Haight and the Estate then made claims for UIM

coverage pursuant to the Nationwide policy. Id. Nationwide tendered $200,000 to Haight and the Estate.

¶27. Following the previous holding in Gurley, the court held:

As we explained in Gurley, when the liability policy is exhausted pursuant to the peraccident limit, then the proper calculation of UIM coverage available is obtained by

subtracting the per-accident limit of the tortfeasor's liability policy from the per-accident

limit of the UIM policy. See Id. at 182, 532 S.E.2d at 849. Thus, in such a case, despite

the language of the statute, only one calculation is performed for all claimants combined.

Here, the liability policy was exhausted pursuant to the per-person limit for these
16

defendants, and we must decide how to offset those payments from the UIM "combined

single limit," which more nearly resembles a per-accident limit.

****

We believe that the statute and policy here require that we calculate the difference between

the "combined single limit" of $500,000 under the UIM policy and the combined total

actually paid to these two defendants by the liability carrier. Thus, the amount of UIM

coverage available to defendants is $500,000 less $200,000, resulting in $300,000 to be

shared on a pro rata basis.

Haight, 566 S.E.2d at 838. 

¶28. Using the North Carolina cases as guidance, Bostic's single liability limit of $300,000 is equivalent

to a per accident limit. Comparing that limit to the per accident limit of the Wises' USAA policy of

$600,000, Bostic's vehicle should be considered an underinsured motor vehicle pursuant to statute.

Therefore, the Wises are entitled to uninsured motorists benefits.

¶29. The Wises have already settled with Bostic for the full amount of his single liability limit of

$300,000. They have also settled with Aswell's employer, Steel Service Corporation, for $4,000. A

confidential settlement was reached between the Wises and the bar defendants; however, the Wises

admitted to USAA that this settlement exceeded the total amount of available uninsured motorist benefits.

Notwithstanding this admission, the Wises still contend that USAA is liable for $300,000 in uninsured

motorist benefits (the difference between the total available UM benefits and the amount paid by the

tortfeasor's liability carrier). 

¶30. The Wises’ USAA policy provides in pertinent part:

PART C - UNINSURED MOTORISTS COVERAGE

INSURING AGREEMENT

UNINSURED MOTORISTS COVERAGE

We will pay compensatory damages which a covered person is legally entitled to recover

from the owner or operator of an uninsured motor vehicle because of:
17

1. BI sustained by a covered person and caused by an accident; 

 

The owner's or operator's liability for these damages must arise out of the ownership,

maintenance or use of the uninsured motor vehicle. WE will pay under this coverage

only after the limits of liability under any applicable liability bonds or

policies, or deposits of cash or securities have been exhausted by payment

of judgments or settlements.

(emphasis added). According to the language of the policy, USAA is entitled to offset its UM payments

by any judgments and settlements paid to the insureds. Therefore, the trial court was correct in determining

that the Wises no longer have any uninsured motorist claims available to them. The Wises have admitted

that they have been paid, through settlements, an amount which exceeds their available uninsured motorist

benefits; therefore, USAA is no longer liable for any uninsured motorist benefits. 

II. WHETHER THE TRIAL COURT WAS CORRECT IN ITS

DETERMINATION THAT THE WISES DID NOT HAVE A VALID

BAD FAITH CLAIM.

¶31. The preceding discussion under Issue I demonstrates without doubt that USAA had a legitimate

and arguable basis in law for denying the Wises' claim for uninsured motorist benefits. See Cossitt, 541

So.2d at 443. Therefore, the trial judge was correct in determining the Wises did not have a valid bad faith

claim. This issue is without merit.

CONCLUSION

¶32. The trial judge was correct in finding there were no USAA uninsured motorist benefits available

to the Wises. The Wises exhausted the $600,000 available uninsured motorist benefits through other

settlements; therefore, USAA is no longer liable for uninsured motorist benefits. The trial judge was also

correct in finding the Wises did not have a valid bad faith claim against USAA. The judgment of the Circuit

Court of the First Judicial District of Hinds County is affirmed.

¶33. AFFIRMED.
18

PITTMAN, C.J., SMITH, P.J., WALLER AND COBB, JJ., CONCUR. EASLEY

AND GRAVES, JJ., DISSENT WITHOUT SEPARATE WRITTEN OPINION. McRAE,

P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED IN PART BY EASLEY,

J. DIAZ, J., NOT PARTICIPATING.

McRAE, PRESIDING JUSTICE, DISSENTING:

¶34. Based upon its incorrect reading of the applicable insurance policy language and its

misapprehension of the facts and law, the majority erroneously affirms that the trial court's ruling that there

were no uninsured motorist benefits available to the Wises. However, under the applicable language the

uninsured motorist provision of the United Services Automobile Association ("USAA") policy and the

statutory and case law of the settlements were apportioned among three injured individuals and onlythose

settlements which resulted from the "owners and operators" of the "uninsured motor vehicle" as defined by

the policy and statute may be used for the purposes of determining whether the applicable uninsured

motorist maximum liability limits per accident have been exhausted. Since settling defendants Peoples

Security Life Insurance Company ("Peoples Security"), JMH Operating Company ("JMH Operating"),

American General Hospitality ("American General"), and Steel Service Corp. ("Steel Service") were

never "owners and operators" of "uninsured motor vehicles," any settlements executed between these four

defendants and the Wises cannot be used to offset the uninsured motorist coverage benefits provided by

the USAA policy. For these reasons, I dissent.

¶35. In order to better understand why coverage has not been exhausted the applicable facts and law

must be recited. The facts and applicable law can best be summarized through the following steps of

analysis:

(1) The Complaint filed by the Wises alleged injury to three individuals – Joseph Wise

("Joseph"); Charlene C. Wise ("Charlene"); and Elizabeth Ramsey Wise

("Elizabeth").
19

(2) All three Plaintiffs were covered under insurance policies issued by USAA. By

stacking these three policies, the uninsured motorist coverage amounts applicable

to the Wises included $300,000 per person and a $600,000 maximum for the

accident. See McDaniel v. Shaklee U.S., Inc., 807 So.2d 393, 396-99

(Miss. 2001); Fidelity & Guar. Underwriters, Inc. v. Earnest, 699 So.2d

585, 588 (Miss. 1997);Dixie Ins. Co. v. State Farm Mut. Auto. Ins., Co.,

614 So.2d 918, 921 (Miss. 1992); Cossitt v. Federated Guar. Mut. Ins.

Co., 541 So.2d 436, 439-43 (Miss. 1989); Washington v. Georgia Am. Ins.

Co., 540 So.2d 22, 25 (Miss. 1989);Wickline v. U.S. Fid. & Guar. Co., 530

So.2d 708, 712-13 (Miss. 1988). USAA has even admitted that these are in fact

the policy limits under the uninsured motorist coverage. The policy further

provides as to coverage that "we will pay compensatory damages which a covered

person is legally entitled to recover from the owner or operator of an

uninsured motor vehicle. . . . [t]he owner's or operator's liability

for these damages must arise out of the ownership, maintenance or

use of the uninsured motor vehicle." See also Miss. Code Ann. § 83-

11-101. The policy defines "uninsured motor vehicle" as "a land motor vehicle or

trailer," and gives several types and descriptions of those which are covered. See

also Miss. Code Ann. § 83-11-103(c). 

(3) Defendant Steven Bostic was covered by a United States Fidelity & Guaranty Co.

("USF&G") policy which specifically provided that maximum liability limits per

"EACH ACCIDENT" totaled $300,000. The USF&G policy states in clear

language under "LIMIT OF LIABILITY" that despite the substantive law of

the State where the accident occurred, "it will not change [its] total limit of

liability." Even USAA admits in its Memorandum Brief in Support of its Motion

for Summary Judgment that the USF&G policy had a "single limit of liability

coverage of $300,000." As this is the policy language of the insurance contract,

this Court must adhere to the plain meaning of the language and find that the

$300,000 liability limits provided were per "EACH ACCIDENT." McDaniel,

807 So.2d at 396-99; Earnest, 699 So.2d at 588; Dixie Ins., 614 So.2d at

922; Cossitt, 541 So.2d at 439-43; Wickline, 530 So.2d at 717.

(4) Defendant Alfred Aswell ("Aswell"), the intoxicated driver who injured the Wises,

had no personal insurance. However, Defendant Steel Services Corp. ("Steel

Services"), Aswell's employer, was also named as a Defendant in the suit. Since

Steel Services did not own the auto which Aswell drove, insure the auto in which

Aswell drove, or give Aswell permission to drive the automobile, it is clear that any

liability policy invoked on behalf of Steel Services would be a general liability

policy.

(5) Defendants Peoples Security Life Insurance Company ("Peoples Security"), JMH

Operating Company ("JMH Operating"), and American General Hospitality
20

("American General") were either operators or owners of the Ramada Inn. These

three defendants were covered by a general liability policy issued to insure the

premises and operations of the Ramada Inn including the Ramada Inn bar. No

vehicles were covered by this policy, and certainly the vehicle driven by Aswell

was not insured by this policy.

(6) Based upon these facts, the uninsured motorist coverage provided by the USAA

policy had been invoked by the fact that the USF&G policy carried $300,000 per

accident and the USAA policy carried $300,000 per person and $600,000 per

accident ($300,000 : $600,000). See McDaniel, 807 So.2d at 396-99;

Earnest, 699 So.2d at 588; Dixie Ins., 614 So.2d at 921; Earnest, 699

So.2d at 588; Dixie Ins., 614 So.2d at 921; Cossitt, 541 So.2d at 439-43;

Wickline, 530 So.2d at 712-13. Once the uninsured motorist provision is

invoked, a determination then must be made as to whether the plaintiffs have

exhausted their coverage – meaning received more than $600,000 in

compensation from "owners and operators" of the "uninsured motor vehicle" as a

result of the accident. See Earnest, 699 So.2d at 588; Wickline, 530 So.2d

708.

 

(7) The three Plaintiffs, together, settled with USF&G for a total of $300,000

collectively. However, this $300,000 in damages was allocated between

the three Plaintiffs. This $300,000 encompassed the maximum

liability limits of USF&G per accident, not per person. Joseph's

portion of the settlement totaled $225,000;Charlene's portion of the settlement

totaled $55,000; and Elizabeth's portion of the settlement totaled $20,000. 

(8) The three Plaintiffs, together, also settled with Steel Services, Aswell's employer,

for $4,000, collectively. This $4,000 was allocated between the three Plaintiffs

even though the record is silent as to the exact allocation amounts. However, this

$4,000 settlement does not apply in assessing the available funds in the USAA

uninsured motorist coverage provisions, since Steel Services was in no way

an "owner or operator" of the "uninsured motor vehicle" as

specifically provided by the USAA policy language. See Miss. Code

Ann. § 83-11-103(c) (Rev. 1999); Earnest, 699 So.2d at 589; Miller v.

Allstate Ins. Co., 631 So.2d 789, 791 (Miss. 1994); Dixie Ins., 614 So.2d

at 922; Cossitt, 541 So.2d at 439-43; Wickline, 530 So.2d at 717; State

Farm Mut. Auto Ins. Co. v. Daughdrill, 474 So.2d 1048, 1052-54 (Miss.

1985). Since Steel Services, Corp. was not an "owner or operator"

of the "uninsured motor vehicle," the $4,000 settlement may not be

used to reduce the available uninsured motorist funds. 

(9) The three Plaintiffs, together, settled with Peoples Security, JMH Operating, and

American General, the three entities responsible for the Ramada Inn's ownership

and operation. The amount of the settlement and the allocation among the three
21

Plaintiffs was not disclosed in the record. However, the exact amount or

allocation of the settlement is not necessary for the analysis. Since Peoples

Security, JMH Operating, and American General were not

"owners or operators" of the "uninsured motor vehicle," any

settlement executed with the Plaintiffs may not be used to reduce

the available uninsured motorist benefits provided for in the USAA

policy. See Miss. Code Ann. § 83-11-103(c); Earnest, 699 So.2d at 589;

Miller, 631 So.2d at 791; Dixie Ins., 614 So.2d at 922; Cossitt, 541 So.2d

at 439-43; Wickline, 530 So.2d at 717; Daughdrill, 474 So.2d at 1052-54.

(10) USAA eventually paid $1,000 to the Wises for medical payments. Although this

may have been inadvertent, it still must be considered in reducing the amount of

damages available to the Plaintiffs.

(11) In sum, the Plaintiffs have received $301,000 in recovered monies that must be

used to reduce the $600,000 maximum per accident limits provided by the USAA

policy. The Plaintiffs, collectively, are entitled to recover $299,000 in uninsured

motorist benefits from USAA. See Harris v. Magee, 573 So.2d 646 (Miss.

1990).

¶36. The majority's analysis went awry once it failed to correctly apply the USAA policy language and

the uninsured motorist statute. The majority fails to adhere to the "owner or operator" policy language.

Specifically, what the majority misses in its analysis is the following:

PART C – UNINSURED MOTORISTS COVERAGE

** ********

INSURING AGREEMENT

UNINSURED MOTORISTS COVERAGE

We will pay compensatory damages which a covered person is legally

entitled to recover from the owner or operator of an insured

motor vehicle . . . 

The owner's or operator's liability for these damages must arise out of the

ownership, maintenance or use of the uninsured motor vehicles.

(emphasis added). Clearly, Peoples Security, JMH Operating, American General, and Steel Services

were never "owners and operators" of the "uninsured motor vehicle." None of these four settling
22

defendants had any relation to the "uninsured motor vehicle." By USAA's very policy language, any

settlements executed with these defendants do not operate to reduce the recoverable uninsured benefits

available to the Wises. 

¶37. These four defendants had no connection to the "uninsured motor vehicle" which Aswell was driving

when the accident occurred, and all were covered by general liability policies which do not provide for any

sort of automobile coverage. The majority's holding is troubling since it finds that uninsured motorist

benefits may be offset by compensation paid to the plaintiffs by general liability policies. That holding is

contrary to the very purpose of the uninsured motorist statute. It is totally absurd and contrary to the law

to require offset for benefits received from persons other than "owners and operators" of "uninsured motor

vehicles" and who have no connection whatsoever to the ownership, operation, supervision, or maintenance

of the "uninsured motor vehicle." I would reverse the circuit court's judgment and remand this case for

further proceedings. 

¶38. For the above-stated reasons, I dissent.

EASLEY, J., JOINS THIS OPINION IN PART.