Title: Atkinson v. Penske Logistics, LLC
Citation: N/A
Docket Number: 032037
State: Virginia
Issuer: Virginia Supreme Court
Date: June 10, 2004

Present:  All the Justices 
 
WILLIAM ATKINSON 
 
v.  Record No. 032037 
 OPINION BY JUSTICE DONALD W. LEMONS 
 
 
 
June 10, 2004 
PENSKE LOGISTICS, LLC, ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK 
John C. Morrison, Jr., Judge 
 
 
In this appeal, we consider whether the decision by a 
single named insured on a business automobile insurance policy 
to waive uninsured motorist insurance coverage higher than the 
statutory minimum is binding upon all other named insureds on 
the policy under Code § 38.2-2206. 
I.  Facts and Proceedings Below 
 
On May 19, 2000, William Atkinson ("Atkinson"), an 
employee of Penske Logistics, Inc., which has since merged 
with another company and changed its name to Penske Logistics 
Corp., LLC (collectively, "Penske Logistics"), was operating a 
tractor-trailer in the course of his employment.  The tractor 
was owned by Penske Truck Leasing Co., L.P., ("Penske Truck 
Leasing") but leased to Penske Logistics.  Penske Logistics 
owned the trailer.  Atkinson was injured in an accident with 
an unknown operator of a motor vehicle. 
 
At the time of the accident, Penske Logistics and Penske 
Truck Leasing were named insureds on a motor vehicle liability 
insurance policy issued by Old Republic Insurance Co. ("Old 
Republic").  The parties stipulated that the tractor and 
 
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trailer involved in the accident were covered under the policy 
and that Atkinson qualifies as an insured under the policy. 
 
In his "First Amended Motion for Declaratory Judgment," 
Atkinson sought a declaratory judgment declaring "the extent 
of coverage each carrier owes . . . determin[ing] the total 
coverage available, and declar[ing] the priority of payment 
between the insurance carriers."1  He also sought a declaration 
"that Old Republic is obligated to provide coverage . . . in 
an amount of its policy limits, under policy ML 14804-06, of 
$2,000,000.00."2  Because the injuries to Atkinson were alleged 
to have been caused by a "John Doe" unknown driver, the focus 
of the declaratory judgment action was the availability of 
uninsured and underinsured motorist ("UM/UIM") coverage. 
 
Old Republic, Penske Logistics, and Penske Truck Leasing 
(collectively, "Defendants") filed a motion for summary 
judgment "on the grounds that the named insured, Penske Truck 
Leasing Co., L.P., et al., effectively rejected the higher 
[UM/UIM] coverage for bodily injury equal to its full 
                     
1 Defendants at trial were Penske Logistics, LLC, Penske 
Truck Leasing Company, L.P., Old Republic Insurance Company, 
State Farm Mutual Automobile Insurance Company, Allstate 
Insurance Company, and Government Employees Insurance Company.  
The only policy at issue on appeal was issued by Old Republic.  
Etta Brunell was a plaintiff in the trial court but is not an 
appellant in this proceeding. 
2 Atkinson alleged that the tractor and the trailer each 
constitutes a separate "auto" under Old Republic's policy; 
consequently, the policy limits of $1,000,000 should be 
doubled. 
 
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liability coverage of $1,000,000.00 and instead selected 
[UM/UIM] coverage equal to Virginia's minimum financial 
responsibility limits of $25,000 per person."  In pretrial 
filings, Atkinson acknowledged that Penske Truck Leasing 
waived higher UM/UIM coverage limits but maintained that its 
waiver was ineffective to bind Penske Logistics. 
 
Following a hearing at which the trial court received 
exhibits and heard testimony from one witness, the trial court 
issued a letter opinion which was later memorialized in a 
final decree.  The trial court held that Penske Truck 
Leasing's rejection of higher UM/UIM limits was binding on 
Penske Logistics because, under Code § 38.2-2206, "rejection 
of the higher limits by one named insured is binding on all 
named insureds and all other insureds as defined in § 38.2-
2206(B)."  Atkinson appeals the adverse judgment of the trial 
court. 
II.  Analysis 
 
Atkinson argues that the trial court erred in three ways.  
First, he maintains that the trial court "erroneously presumed 
the existence of an 'agency' relationship between Penske Truck 
Leasing Co., L.P. and Penske Logistics, Inc. (even though 
'agency' was never pled)."  Second, he argues that the trial 
court "should have ruled that Penske Logistics, Inc. was 
required to execute its own rejection of higher UM[/UIM] 
 
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limits, and that [Code § 38.2-2206(B)] did not authorize one 
entity to act for the other."  Third, he asserts that the 
trial court "erroneously ruled that Penske Logistics, Inc. was 
not required to receive separate notice from Old Republic of 
its right to reject higher UM[/UIM] limits" under Code 
§§ 38.2-2202 and –2206.  The Defendants assign cross-error to 
the trial court's "ruling that Atkinson could seek a 
declaratory judgment on issues not specifically pleaded in 
[his motion] for declaratory judgment." 
 
Because the cross-error, if sustained, would end this 
appeal, it will be addressed first.  Defendants assert that 
since Atkinson never alleged in his pleadings that Penske 
Truck Leasing could not waive higher UM/UIM coverage for 
Penske Logistics, the trial court erred in addressing the 
issue at all.  Additionally, Defendants assert that Atkinson 
did not raise the issue of separate notice to Penske Logistics 
in his pleadings.  The flaw in Defendants' assignment of 
cross-error is readily apparent.  Defendants raised the issue 
of waiver and the subsumed issue of separate notice in their 
responsive pleadings.  Had they wished a response in the form 
of a pleading from Atkinson, they could have availed 
themselves of the provisions of Rule 3:12 which provides: 
If a plea, motion or affirmative defense sets 
up new matter and contains words expressly 
requesting a reply, the adverse party shall 
within twenty-one days file a reply admitting 
 
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or denying such new matter.  If it does not 
contain such words, the allegation of new 
matter shall be taken as denied or avoided 
without further pleading.  All allegations 
contained in a reply shall be taken as denied 
or avoided without further pleading. 
Atkinson responded to Defendants' defenses in memoranda and 
argument to the trial court.  He was not required to 
anticipate Defendants' defenses in his initial motion for 
declaratory judgment.  The assignment of cross-error is 
without merit. 
 
We now consider Atkinson's assignments of error.  His 
first assignment of error is predicated upon a faulty premise.  
He asserts that the trial court "erroneously presumed the 
existence of an 'agency' relationship" between Penske Truck 
Leasing and Penske Logistics, "even though 'agency' was never 
pled."  A review of the trial court's two letter opinions and 
its final order reveals no mention of agency as a theory 
underlying the trial court's ruling.  It is clear that the 
trial court based its ruling upon statutory interpretation, 
not a common law theory of agency.  Atkinson's first 
assignment of error is without merit. 
 
We will consider Atkinson's second and third assignments 
of error together.  He maintains that the trial court erred in 
holding that Penske Logistics was not required to have 
separate notice of its right to reject higher UM/UIM coverage 
and further erred in holding that one named insured's waiver 
 
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of UM/UIM coverage binds another named insured under the 
policy. 
 
In 1994, we rendered an opinion in the case of State Farm 
Mut. Auto. Ins. Co. v. Weisman, 247 Va. 199, 441 S.E.2d 16 
(1994).  The Weisman case involved a family auto policy 
listing both husband and wife as named insureds.  Both husband 
and wife received statutory notice pursuant to Code § 38.2-
2202(B) informing them of their right to UM/UIM coverage equal 
to liability coverage and their right to waive such an 
increase in coverage.  A form permitting rejection of the 
higher coverage was provided for husband and wife.  However, 
only the husband executed the form declining the higher UM/UIM 
coverage.  Id. at 201-02, 441 S.E.2d at 17-18. 
 
At the time Weisman was decided, Code § 38.2-2206(A), 
referring to UM/UIM coverage, stated in pertinent part: 
Those limits shall equal but not exceed the 
limits of the liability insurance provided by 
the policy, unless the insured rejects the 
additional uninsured motorist insurance 
coverage by notifying the insurer as provided 
in subsection B of § 38.2-2202. 
Code § 38.2-2206(A)(1994).  We held that the statutory 
language then utilized required "that each named insured under 
an automobile insurance policy" had to reject the higher 
coverage in order for the lower limits to be in effect.  Id. 
at 202-03, 441 S.E.2d at 18–19. 
 
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In an obvious reaction to the Weisman decision, the 
General Assembly, in 1995, amended the statutory language at 
issue in Code § 38.2-2206(A) to add the provision in effect 
today: 
Those limits shall equal but not exceed the 
limits of the liability insurance provided by 
the policy, unless any one named insured 
rejects the additional uninsured motorist 
insurance coverage by notifying the insurer as 
provided in subsection B of § 38.2-2202. 
(emphasis added). 
Code § 38.2-2206(A)(2002); see also 1995 Va. Acts ch. 189 
(adding emphasized language).  It is abundantly clear that the 
General Assembly specifically intended to permit a single 
named insured to bind other named insureds by its rejection of 
higher UM/UIM coverage. 
 
Nonetheless, Atkinson argues that because subsection A 
also states "[t]his rejection of the additional uninsured 
motorist insurance coverage by any one named insured shall be 
binding upon all insureds under such policy as defined in 
subsection B of this section," we must look to subsection B 
for definitions that somehow restrict or modify the ability of 
any one named insured to bind other named insureds. 
Subsection B of Code § 38.2-2206 states in part: 
"Insured" as used in subsections A, D, G, 
and H of this section means the named insured 
and, while resident of the same household, the 
spouse of the named insured, and relatives, 
wards or foster children of either, while in a 
motor vehicle or otherwise, and any person who 
 
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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. 
Atkinson asserts that because the definition of "insured" 
includes "the named insured" and thereafter refers 
specifically to "the spouse of the named insured" and users 
"with the expressed or implied consent of the named insured," 
the proper construction of subparagraph A must require 
separate rejection by each named insured.  Atkinson's 
interpretation is not a reasonable construction of the 
statute.  To reach Atkinson's conclusion requires the term 
"named insured" to be read as though the word "named" is 
simply an adjective modifying the noun "insured."  However, 
"named insured," as used in Code § 38.2-2206, is a term of art 
with its own definition, separate from the definition of the 
term "insured."  A "named insured" is the policyholder.  An 
"insured" is simply a party who may be covered under the 
policy.  Not all "insureds" are "named insureds." 
Where there is more than one named insured, as in this 
case, the language of Code § 38.2-2206(A) specifies that "any 
one named insured" can waive higher UM/UIM coverage for "all 
insureds."  It is clear from subsection A that a single named 
insured may waive coverage, regardless of the total number of 
named insureds.  The definition of "insured" in Code § 38.2-
 
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2206(B) does not alter who may act to waive coverage.    
Instead, subsection B defines who may be affected by the 
decision of a single named insured to waive higher UM/UIM 
coverage.  We hold that the trial court did not err in its 
judgment that Code § 38.2-2206(A) permitted Penske Truck 
Leasing to waive higher UM/UIM coverage and bind another named 
insured, Penske Logistics, by its rejection of the higher 
coverage. 
 
Finally, Atkinson acknowledges that Penske Truck Leasing 
received notice of the right to purchase higher UM/UIM 
coverage or reject such coverage; however, he asserts that 
Penske Logistics did not receive such notice.  Accordingly, he 
argues that the waiver by Penske Truck Leasing could not bind 
Penske Logistics in the absence of notice to Penske Logistics.  
What Atkinson fails to realize is that neither Penske Truck 
Leasing nor Penske Logistics were entitled to notice under the 
facts of this case. 
 
Code § 38.2-2206(A) refers to required notice under Code 
§ 38.2-2202(B), which further provides in part: 
B. No new policy or original premium notice of 
insurance covering liability arising out of the 
ownership, maintenance, or use of any motor 
vehicle shall be issued or delivered unless it 
contains the following statement printed in 
boldface type, or unless the statement is 
attached to the front of or is enclosed with 
the policy or premium notice: 
. . . . 
 
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After twenty days, the insurer shall be 
relieved of the obligation imposed by this 
subsection to attach or imprint the foregoing 
statement to any subsequently delivered renewal 
policy, extension certificate, other written 
statement of coverage continuance, or to any 
subsequently mailed premium notice. 
The policy in question in this case is a renewal policy. 
Notice under Code § 38.2-2202(B) is not applicable to renewal 
policies.  GEICO v. Hall, 260 Va. 349, 354-355, 533 S.E.2d 
615, 617-618 (2000). 
III.  Conclusion 
 
 
For the reasons stated, the trial court did not err and 
the judgment of the trial court will be affirmed. 
Affirmed.