Court Opinion

ID: 9681969
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:02:35.900813+00
Date Added: 2024-06-11T18:17:36.804433
License: Public Domain

Donald L. Corbin, Justice, dissenting. The majority extends the discredited reasoning of Holcomb v. Farmers Ins. Exch., 254 Ark. 514, 495 S.W.2d 155 (1973), to deny full compensation to Arkansans who have paid multiple insurance premiums in consideration for coverage under multiple underinsured motorist provisions. More appalling is the majority’s extensive reliance on Dullenty v. Rocky Mountain Fire and Casualty Co., 111 Idaho 98, 721 P.2d 198 (1986), a case in which the Idaho Supreme Court specifically reserved the stacking issue presented in this case: We do not speak to and specifically reserve the question in a circumstance . . . where an insured under two or more motor vehicle liability policies, each issued by the same carrier, and each of which insures a separate vehicle, and in each of which policies issued by the same carrier the insured has elected to and paid a premium for uninsured motorist coverage. Id. at 106-7, 721 P.2d at 206-7. The issue answered affirmatively in Dullenty was whether an insurance carrier could exclude coverage under an “owned but not insured” clause when the insured elected to pursue coverage from that carrier for an incident that occurred in another owned vehicle, despite the vehicle’s coverage by a separate carrier under a policy that likewise provided uninsured motorist coverage. Neither Dullenty nor Holcomb and its progeny addressed the concerns that arise when an insured or her representative seeks recovery on two policies with underinsured motorist coverage, both of which were purchased from the same carrier. While I disagree with the results in both Dullenty and the Holcomb line of cases, two distinguishing factors in this case militate even more strongly in favor of mandating coverage. First, the Clampits paid an additional premium to obtain additional underinsured motorist coverage. This additional paid consideration eliminates any supposed prejudice to State Farm under the “free ride” theory advanced by the Dullenty opinion and relied upon by the majority of this court. Rather, the “stacking” rule is entirely consistent with the economics of a contractual relationship. Justice Stevens pointed this out in his concurring opinion in Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981), a choice-of-law arising out of an attempt by an insured’s spouse to “stack” the uninsured motorist coverage on three automobiles. “[T]he [stacking] rule is consistent with the economics of a contractual relationship in which the policyholder paid three separate premiums for insurance coverage for three automobiles, including a separate premium for each uninsured motorist coverage.” Id. at 328 (Stevens, J., concurring). When underinsured motorist coverage is at stake, the second distinguishing feature in this case, it seems particularly unfair to uphold “owned but not insured” exclusionary clauses. Underinsured motorist coverage is specifically designed to fully compensate the insured when the tortfeasor’s coverage meets the minimum amount required by law but does not provide sufficient compensation to the insured victim. The majority concedes the distinction in underinsured and uninsured coverage, yet chooses to rely on this court’s reaffirmance of Holcomb, supra, in Crawford v. Emcasco Ins. Co., 294 Ark. 569, 745 S.W.2d 132 (1988). The majority’s reasoning seems circular since the Crawford court also relied on Dullenty, supra, and upheld the exclusionary clause because the insurance company did not even have knowledge of the vehicle involved in the incident. The present case is distinguishable, as pointed out above, because State Farm received premiums for the very coverage it now declines to pay. As a result, “the coverage bought, paid for and reasonably expected is illusory.” Chaffin v. Kentucky Farm Bureau Ins. Co., 789 S.W.2d 754 (Ky. 1990), (overruling Safeco Ins. Co. of America v. Hubbard, 578 S.W.2d 49 (Ky. 1979), relied on by this court in Crawford, supra). ■ The majority also relies on Kluiter v. State Farm Mut. Auto. Ins., 417 N.W.2d 74 (Iowa 1987). However, the Iowa Supreme Court upheld the exclusionary clause in Kluiter on the sole basis of an Iowa statute that.expressly permitted insurance companies to avoid duplicate coverage. The Arkansas Legislature has not been so generous to the insurance industry, and I object to the majority’s usurpation of the legislature’s prerogative. See Calvert v. Farmers Ins. Co. of Arizona, 144 Ariz. 291, 296, 697 P. 2d 684, 689 (1985) (“Any gaps in uninsured motorist protection dependent on location of the insured should be sanctioned by the Legislature and not by this Court”); State Farm Mut. Auto. Ins. Co. v. Hinkel, 87 Nev. 478, 483, 488 P.2d 1151, 1154 (1971) (“[s]uch an amendment would be the prerogative and responsibility of the legislature and not the function of this court”). In sum, I believe “anti-stacking” exclusionary clauses on underinsured motorist coverage deny Arkansans policyholders their reasonable expectations of full compensation. By so denying, these exclusions violate the public policy of this state. Accordingly, I dissent.