Court Opinion

ID: 1059969
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:41:06.447245+00
Date Added: 2024-06-11T13:08:13.073786
License: Public Domain

Present:   All the Justices

CARL R. CATRON
                         OPINION BY JUSTICE A. CHRISTIAN COMPTON
v.   Record No. 970582                        January 9, 1998

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, ET AL.

           FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
                    Richard C. Pattisall, Judge

       In this insurance case, we must determine the respective

underinsurance obligations of a self-insurer and a commercial

insurer under two statutes, one codified among the insurance laws

and the other codified among the motor vehicle laws.
       The facts were stipulated.    On June 15, 1989, appellant

Carl R. Catron, an employee of appellee Roanoke County acting

within the scope of his employment, was injured when a Roanoke

County vehicle that he was operating collided with a vehicle

operated by Brian D. Layman.

       At the time of the accident, Layman was insured under a

policy issued by Rockingham Casualty Company that provided

liability coverage limits of $100,000 for each person injured.

At the same time, Catron was the named insured under a policy

issued by appellee State Farm Mutual Automobile Insurance Company

that provided uninsured motorist coverage limits of $100,000 for

each person.

       At the time, Roanoke County was self-insured for automobile

liability and uninsured motorist coverage purposes, and also for

workers' compensation purposes.     The County's limit of liability
for uninsured motorist coverage was $25,000 for each person.

      The County has paid in excess of $222,325 in benefits to

Catron pursuant to its obligations under the Virginia Workers'

Compensation Act for injuries he sustained in the accident.     The

County continues to be liable for benefits under the Act.

      Rockingham tendered a check to Catron in the amount of

$100,000, its policy limits.   The County claims entitlement to

those proceeds as a result of its payment of workers'

compensation benefits.
      In July 1994, Catron filed the present motion for

declaratory judgment naming State Farm, Layman, the County, and

Rockingham as defendants.   Asserting he has incurred medical

expenses and lost wages in excess of $125,000, plaintiff asked

the court to declare that State Farm has the obligation to pay

him $25,000 based on the applicable priority of underinsured

coverage in the case.    State Farm denied that it owed the

plaintiff any insurance benefits under the circumstances.

      The pleadings and stipulation presented a pure question of

law and, upon consideration of argument of counsel, the trial

court ruled against the plaintiff.      The court held that State

Farm's uninsured/underinsured motorist coverage was primary

coverage and that it owed no payment to the plaintiff.     The court

also held that the self-insured uninsured/underinsured motorist

benefit provided by the County was secondary coverage.

      The plaintiff appeals.    The County, although nominally an

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appellee, supports the plaintiff's position on appeal.

      We shall summarize the statutes pertinent to this

controversy.   The uninsured motorist statute requires a motor

vehicle liability policy to provide at least $25,000 for each

person in uninsured motorist coverage through provisions that

"also obligate the insurer to make payment for bodily injury

. . . caused by the operation or use of an underinsured motor

vehicle to the extent the vehicle is underinsured, as defined in

subsection B of this section."    Code § 38.2-2206(A).
      Subsection B states that a motor vehicle is "underinsured"

if "the total amount of bodily injury . . . coverage applicable

to the operation or use of the motor vehicle and available for

payment for such bodily injury . . . is less than the total

amount of uninsured motorist coverage afforded any person injured

as a result of the operation or use of the vehicle."     Code

§ 38.2-2206(B).

      The same subsection provides that "available for payment"

means "the amount of liability insurance coverage applicable to

the claim of the injured person for bodily injury . . . reduced

by the payment of any other claims arising out of the same

occurrence."   Id.

      A focus of this appeal is upon the following provisions of

subsection (B).
         "If an injured person is entitled to underinsured
      motorist coverage under more than one policy, the
      following order of priority of policies applies and
      any amount available for payment shall be credited
      against such policies in the following order of

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      priority:

         1. The policy covering a motor vehicle occupied by
      the injured person at the time of the accident;

         2. The policy covering a motor vehicle not
      involved in the accident under which the injured
      person is a named insured;

         3. The policy covering a motor vehicle not
      involved in the accident under which the injured
      person is an insured other than a named insured;

         Where there is more than one insurer providing
      coverage under one of the payment priorities set
      forth, their liability shall be proportioned as to
      their respective underinsured motorist coverages."

      The appeal also focuses on Code § 46.2-368 (formerly

§ 46.1-395), codified among the motor vehicle laws.   This statute

deals with the discretionary power of the Commissioner of the

Department of Motor Vehicles to issue certificates of self-

insurance.

      It specifies the certificate must provide protection

against an uninsured or underinsured motorist "to the extent

required by § 38.2-2206."   It also provides that "protection

against the uninsured or underinsured motorist required under

this section . . . shall be secondary coverage to any other valid

and collectible insurance providing the same protection which is

available to any person otherwise entitled to assert a claim to

such protection by virtue of this section."   § 46.2-368(B).

      On appeal, the plaintiff contends the trial court erred in

ruling that the credit priorities of § 38.2-2206(B) were reversed

by the "secondary" language of § 46.2-368(B).

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      The plaintiff argues he met the definition of

"underinsured" in 2206(B).   He says the amount of coverage

"available for payment" is $100,000, the full amount of the

bodily injury liability coverage of Layman's Rockingham policy.

This sum is less than the total amount of uninsured motorist

coverage afforded him, which is $125,000 (the County's $25,000

uninsured coverage plus the plaintiff's $100,000 State Farm

policy in which he was the named insured).   Consequently, he

argues, he was underinsured in the amount of $25,000.
      Continuing, the plaintiff argues that the "order of

priorities for crediting an amount available for payment against

the underinsured coverage is controlled by § 38.2-2206(B)(1)."

He contends that the statutory language establishes the following

order of credits:   (1) $25,000 uninsured coverage from the County

(the policy covering the vehicle occupied by the injured person

at the time of the accident); and (2) $100,000 uninsured coverage

from plaintiff's State Farm policy (the policy covering a vehicle

not involved in the accident but under which the injured person

is a named insured).

      Therefore, the plaintiff contends, "[t]he entire $25,000 of

Roanoke County's coverage is covered by the $100,000 credit.    The

remaining $75,000 of that $100,000 credit covers $75,000 of State

Farm's $100,000."   Thus, plaintiff concludes, $25,000 remains and

State Farm will owe that amount if his personal injury claim is

tried or settled for an amount equal to or more than $125,000.

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      State Farm, on the other hand, argues the trial court

correctly ruled that its coverage was primary and the County's

coverage was secondary.   Because the municipal self-insurance is

secondary, State Farm argues, State Farm's coverage assumes the

"position of primary coverage in the UIM calculation," meaning

that "State Farm's policy is first in line for payment and also

for the credit generated by the available liability coverage."

Thus, it contends, "that credit covers all of State Farm's

potential coverage, and State Farm owes nothing in this case."
      State Farm argues "the legislature meant what it said" in

Code § 46.2-368(B) "when it made a self-insurer `secondary' for

purposes of coverage analysis under the Virginia UM/UIM statute,

Code § 38.2-2206."   Embarking on what it calls a "chronological

review of the relevant statutory and decisional history" of the

subject, State Farm urges there is "no doubt" that the County,

"as a UM/UIM self-insurer, is subject to the requirements of Code

§ 38.2-2206 in all respects except that its coverage is

`secondary' for all purposes."

      State Farm argues that, since 1972, "former Code § 46.1-395

and current Code § 46.2-368 have required self-insurers to

provide UM coverage, but have placed self-insurers categorically

in the `secondary' position for purposes of UM coverage

priority."   State Farm contends that, in 1988, "sixteen years

after self-insurers first became obligated to provide `secondary'

UM coverage, Code § 38.2-2206 was amended to create a single,

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statutory priority rule for multiple applicable UIM coverages --

a priority that governs the order in which the coverages line up

both for payment and for allocation of the `credit' for available

liability coverage."

        Continuing, State Farm urges that, regarding "coverage on

the vehicle involved in the accident, self-insured coverage

ordinarily would be first priority UIM coverage for purposes of

payment and allocation of the credit under Code § 38.2-2206.      The

categorical command of Code § 46.2-368, however, makes the self-

insured coverage `secondary' to all other coverages, meaning that

it comes last for purposes of payment and allocation of the

credit.   This is the conclusion that the trial court correctly

reached in this case."
        Finally, State Farm contends the plaintiff's argument rests

on a "misreading" of Code § 38.2-2206.    It claims the General

Assembly did not intend "to make self-insurers secondary for some

purposes but primary for other purposes under Code § 38.2-2206."

It argues "Code § 38.2-2206(B) establishes a single order of

priority among applicable UIM coverages and endows that order of

priority with two consequences:    it governs both the order in

which UIM coverage pay[s] and the order in which available

liability insurance is credited.   Code § 46.2-368 make[s] self-

insured UM/UIM coverages `secondary' to all other coverages for

all purposes, without distinction."     We do not agree with State

Farm.

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      We have already determined "the language of Code § 38.2-

2206(B) to be clear and unambiguous."     Dairyland Ins. Co. v.

Sylva, 242 Va. 191, 195, 409 S.E.2d 127, 129 (1991).    And, when

statutory language is clear and unambiguous, "there is no need

for construction by the court; the plain meaning and intent of

the enactment will be given it."     Brown v. Lukhard, 229 Va. 316,

321, 330 S.E.2d 84, 87 (1985).    Unless a literal interpretation

of statutory language will amount to a manifest absurdity, courts

should not adopt a construction that, in effect, holds the

legislature did not mean what it actually has expressed.     Sylva,

242 Va. at 194, 409 S.E.2d at 129.

      We shall read § 38.2-2206(B) literally, for the moment

without regard to § 46.2-368.    The applicable "order of priority

of policies" dictates that the sum available for "payment" shall

be "credited" against the several policies in "the following

order of priority:"   first, the County's $25,000, from the policy

covering the County motor vehicle occupied by the plaintiff at

the time of the accident (there is no dispute that a self-

insurer's certificate of insurance is equivalent to an insurance

"policy" for purposes of this controversy); second, State Farm's

$100,000, from the policy covering a motor vehicle not involved

in the accident under which the plaintiff was the named insured.

      Code § 46.2-368(B), however, provides that the "protection

against the uninsured or underinsured motorist required under

this section . . . shall be secondary coverage to any other valid

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and collectible insurance providing the same protection which is

available to any person otherwise entitled to assert a claim to

such protection by virtue of this section."   We hold that this

language does not alter or reverse the credit priorities, as

opposed to the payment priorities, set forth in § 38.2-2206(B).

      The General Assembly, in what is now § 46.2-368, has

recognized "a distinction in the financial implications of

recovery from self-insurers and recovery from commercial

insurers."   William v. City of Newport News, 240 Va. 425, 432,

397 S.E.2d 813, 817 (1990).   The legislature has placed self-

insurers in a favored status.   For example, the proviso in Code

§ 38.2-2206(I) requires a self-insurer's workers' compensation

payments to be set off against any judgment for damages awarded

pursuant to the statute for personal injuries resulting from the

industrial accident.

      Consistent with the foregoing legislative policy, the

General Assembly has not specified that the "secondary" language

in 368 modifies the credit priority design of 2206.   Nowhere in

368 are the words "credit" or "priority" used.   Surely, if the

General Assembly had intended 368 to modify the credit priorities

of 2206, it would have included language to effect that purpose,

so that a self-insurer always would be prohibited from assuming a

first priority credit position.   This has not been done.

      As the plaintiff points out, State Farm seeks a reading of

the statutes "that will push its $100,000 credit ahead of Roanoke

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County's $25,000 credit, so that its underinsurance coverage will

be totally set off by the credit, and the County will therefore

bear the entire burden of the underinsurance coverage . . . .

[T]his would totally defeat the legislative intent behind § 46.2-

368(B)."

       Finally, State Farm relies heavily on Hackett v. Arlington

County, 247 Va. 41, 439 S.E.2d 348 (1994), a case decided before

the 1995 amendment to § 46.2-368(B) that obligated self-insurers

to provide underinsured motorist coverage.    See Acts 1995, ch.

85.   There, we stated:   "The sole question presented in this

appeal is whether Arlington County, a self-insured entity, is

required to provide underinsurance coverage to an employee."     247

Va. at 42, 439 S.E.2d at 348.    Interpreting § 46.2-368(B) with

§ 38.2-2206, we answered the query in the affirmative.    Hackett

is not controlling here.   The issues in the two cases are

entirely different.

       Consequently, we hold that the trial court erred in ruling

§ 46.2-368(B) modified the credit priorities of § 38.2-2206.     We

will reverse the judgment below and enter final judgment here in

favor of the plaintiff.    We will declare that Code § 38.2-2206(B)

controls the coverage credit priorities in this case and that

State Farm is liable to the plaintiff for $25,000 if there is a

settlement or judgment in the plaintiff's personal injury claim

equal to or in excess of $125,000.

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     Reversed and final judgment.

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