Court Opinion

ID: 9606523
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:50:34.455203+00
Date Added: 2024-06-11T14:57:16.978721
License: Public Domain

Utter, J.
(concurring in part, dissenting in part) — Today the majority unnecessarily invalidates a provision of an insurance contract on the grounds of a perceived conflict with Washington's underinsured/uninsured motorist (UIM) law. In doing so, the majority introduces a new layer of confusion into the administration of a statute which has already established a reputation as one of the most abstruse in the state. Because I believe a different analysis of the limited self-insured exclusion at issue in this case can be made consistently with the language and purposes of our UIM law, I respectfully dissent from the majority's opinion in that regard.
*680I
The UIM statute, RCW 48.22, establishes mandatory UIM coverage which must be included in motor vehicle liability policies. If a motor vehicle liability policy is issued or renewed for a vehicle registered or principally garaged in this state, it must include a minimum level of UIM coverage. RCW 48.22.030(2).2 In implementing this mandatory coverage, the statute defines "underinsured motor vehicle" as follows:
(1) "Underinsured motor vehicle" means a motor vehicle with respect to the ownership, maintenance, or use of which either no bodily injury or property damage liability bond or insurance policy applies at the time of the accident, or with respect to which the stun of the limits of liability under all bodily injury or property damage liability bonds and insurance policies applicable to a covered person after an accident is less than the applicable damages which the covered person is legally entitled to recover.
RCW 48.22.030(1).
The City of Seattle (City) does not maintain an automobile liability insurance policy, but is instead certified as a self-insurer. Originally, the City received its certification as a self-insurer from the State of Washington on February 1, 1950. See Clerk's Papers, at 159. The statutory authorization for self-insurance at the time provided:
2. The Director may.. . issue a certificate of self-insurance if he is reasonably satisfied that such person is able and will continue to be able to pay judgments rendered against him for damages arising out of motor vehicle accidents within this state.
Laws of 1949, ch. 211, § 31-m. The existing version of the statute is substantively identical.3
One important purpose of self-insurance under RCW 46.29-.630 is to meet the financial responsibility requirements of the *681motor vehicle laws. RCW 46.30, the law governing financial responsibility, demands that all persons driving motor vehicles in Washington satisfy certain requirements relating to their ability to pay judgments arising out of automobile accidents. RCW 46.30.010. One method by which a party can meet this requirement is through possession of a validly issued certificate of self-insurance from the State. RCW 46.30.020(l)(a). The City has obtained such a certificate and thus meets the requirements of the financial responsibility laws.
The dispute in this case is created by an exclusion of UIM coverage which is based on the self-insurance law. Under the State Farm policy issued to the Kyrkoses, an "underinsured motor vehicle" is defined as:
1. a land motor vehicle, the ownership, maintenance or use of which is:
a. not insured or bonded for bodily injury or liability at the time of the accident; ....
Clerk's Papers, at 139.
The policy excludes certain types of vehicles from this definition. Among the vehicles excluded are those:
3. owned or operated by a self-insurer, up to the extent that bodily injury limits of liability established by the financial responsibility law or any similar law are payable under a certificate of self-insurance[.]
Clerk's Papers, at 140.4 Thus, to the extent damages caused by a self-insured are payable up to the limits of the financial responsibility law, the State Farm policy excludes those damages from the definition of "underinsured motor vehicle". It is worth noting that State Farm's exclusion does not exclude all damages caused by a self-insured, only those payable under a certificate of self-insurance. State Farm did in fact only deny coverage to the extent of the financial responsibility limits, $25,000 per person, and $50,000 per accident.
*682II
In deciding this case, the majority interprets our past jurisprudence as creating a 2-part test for analyzing the validity of exclusions from UIM coverage. This 2-part inquiiy is:
(1) does the proposed exclusion conflict with the express language of the UIM statute?; and if not, (2) is the exclusion contrary to the UIM statute's declared public policy?
Majority, at 674. If either question is answered in the affirmative, the exclusion from UIM coverage is void.
As a general matter, this 2-part inquiry is an appropriate means of approaching exclusions from UIM coverage. In fact, it does not differ substantially from ordinary principles of statutory interpretation, whereby this court first looks to the language of the statute and then to the policies which motivate the statute if the statute's language does not provide a clear answer. Morris v. Blaker, 118 Wn.2d 133, 142-43, 821 P.2d 482 (1992); Roy v. Everett, 118 Wn.2d 352, 357, 823 P.2d 1084 (1992).
The limited self-insured exclusion passes the first prong of this analysis. There is no explicit prohibition of such exclusions in the statute. See generally RCW 48.22. The court's attention should therefore turn to the second prong, analyzing the limited self-insured exclusion in light of the policies which underlie our UIM law.5
The majority, however, concludes that the exclusion does in fact contradict the express language of RCW 48.22.030 and holds it invalid. To accomplish this result, the majority applies the first prong of its 2-part test in a fashion which is contrary to this court's prior UIM jurisprudence. Perhaps inadvertently, the majority has sub silentio called into ques*683tion a number of our previous decisions, exposing apparently settled law to new rounds of litigation.
The majority's rationale for invalidating the limited self-insured exclusion is straightforward: It notes that the definition of underinsured motor vehicle in ROW 48.22 refers only to liability bonds and insurance policies and therefore concludes that the Legislature intended to preclude the use of certificates of self-insurance in the definition of underinsured motor vehicles. Majority, at 674-75. Without explicitly stating so, the majority is employing the familiar rule that "[e]xpress mention of one thing [in a statute] implies the exclusion of another". Kreidler v. Eikenberry, 111 Wn.2d 828, 835, 766 P.2d 438 (1989); In re Eaton, 110 Wn.2d 892, 898, 757 P.2d 961 (1988). With regard to another statute, such an approach might be an acceptable means of discerning legislative intent. Also, if this were a case of first impression involving the UIM statute, the majority's approach might be reasonable as a means of establishing a framework in which to analyze UIM exclusions.
In the context of our UIM jurisprudence as it has developed over the past 20 years, however, the majority's approach is unacceptable. As discussed in more detail below, the rule which the majority employs has been explicitly rejected by this court in analyzing UIM exclusions. The majority's approach at this point undermines a number of our previous decisions and thus will only increase the already considerable confusion associated with UIM law.6
The majority's approach to the UIM law is most dramatically inconsistent with this court's decisions in Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 1, 665 P.2d 891 (1983) and Blackburn v. Safeco Ins. Co., 115 Wn.2d 82, 794 P.2d 1259 (1990). In both of these cases, the court considered the validity of policies which excluded UIM coverage for injuries caused by auto*684mobiles already insured under the policy. Millers, 100 Wn.2d at 3; Blackburn, 115 Wn.2d at 86. That is, the exclusions prohibited an insured from claiming UIM coverage when the automobile which caused the injury was the same automobile which was insured by the insured's liability policy. RCW 48.22 does not explicitly indicate any intent with respect to UIM coverage for insured automobiles. See generally RCW 48.22.7 Furthermore, the exclusion involved in Millers operated by excluding insured automobiles from the definition of underinsured motor vehicle. Millers, 100 Wn.2d at 3.
Thus, the circumstances of the "insured automobile" exclusion at issue in Millers (and later Blackburn) and the "self-insured" exclusion at issue in this case are identical. With respect to both exclusions, there is no explicit prohibition in the statute, and the exclusions apply to the definition of underinsured motor vehicle. In Millers, the court upheld the insured automobile exclusion, 100 Wn.2d at 8, and reaffirmed this decision in Blackburn, 115 Wn.2d at 85-86.
To uphold the exclusion in Millers, the court specifically rejected the approach now taken by the majority. Justice Dimmick, writing for the court, stated:
[Petitioners] maintain that since the Legislature set forth several permissible exceptions, and did not expressly allow the insurer to restrict the definition of an underinsured vehicle as Millers' policy does, the restriction is invalid. We disagree.
(Italics mine.) 100 Wn.2d at 5. In other words, the absence of express permission for an exclusion, even when relating to the definition of an underinsured motor vehicle, is not dis-positive as to the exclusion's validity.
The majority argues that, absent the limited self-insured exclusion, the City's vehicle would fall within the statutory definition of underinsured motor vehicle. Majority, at 674-75. That may be true, but it is equally true that, absent the insured automobile exclusion in Millers and Blackburn, the vehicles there would have fallen within the definition of underinsured motor vehicle as well. It is impossible to apply *685the approach adopted by the majority today without calling those decisions into question and thereby creating even more grounds for litigation under our UIM laws.8 Unless the court is willing to jettison the analysis explicitly developed in Millers and implicitly followed in Blackburn, the conclusion is inescapable that the limited self-insured exclusion is not contrary to the express provisions of the UIM statute.
Ill
Once an exclusion has survived comparison to the express language of the statute, it must be then analyzed with respect to the structure and purposes of the UIM law.
Far from contradicting the statute, the limited self-insured exclusion actually replicates the statute's own provisions. Under the statute, a vehicle with liability insurance is deemed to be "underinsured" only if the vehicle's liability insurance is insufficient to pay a judgment against the owner or operator of the vehicle. See RCW 48.22.030(1). Similarly, the State Farm policy treats a vehicle under a self-insurance certificate as "underinsured" only if the liability limits under the financial responsibility law are insufficient to pay a judgment against the owner or operator of the vehicle. In both cases, damages are compared with the amounts legally available to determine whether or not those amounts are adequate. In both cases, if the legally available amounts are insufficient, the UIM policy provisions "kick in" to cover as much of the difference as required. The limited self-insured exclusion is thus in effect merely an extension of the approach already contained within the UIM statute itself.
A facial similarity to the statutory scheme, however, is insufficient to validate a specific UIM exclusion. Instead, when considering the validity of exclusions which are not *686explicitly authorized, we look to the public policies behind the UIM statutory scheme. Blackburn, 115 Wn.2d at 86; Millers, 100 Wn.2d at 7-8. In conducting this analysis, the court also examines the goals which the exclusion in question is purported to further. "Exclusions rest on diverse grounds, and each exclusion must be analyzed in terms of the policies which are said to support it." Mutual of Enumclaw Ins. Co. v. Wiscomb, 95 Wn.2d 373, 382, 622 P.2d 1234 (1980) (Wiscomb I).
"The purpose of the statute is to allow an injured party to recover those damages which would have been received had the responsible party maintained liability insurance." Britton v. Safeco Ins. Co. of Am., 104 Wn.2d 518, 522, 707 P.2d 125 (1985) (quoting Finney v. Farmers Ins. Co., 92 Wn.2d 748, 751-52, 600 P.2d 1272 (1979)). Accord, Brown v. Snohomish Cy. Physicians Corp., 120 Wn.2d 747, 756, 845 P.2d 334 (1993); Kenworthy v. Pennsylvania Gen. Ins. Co., 113 Wn.2d 309, 314, 779 P.2d 257 (1989).
Consideration of the policy behind the UIM statute reveals the validity of the limited self-insured exclusion. Like the UIM statute itself, the limited self-insured exclusion only excludes coverage when the self-insured has a legally identifiable means of payment.9 The exclusion in this case does not exclude all damage caused by self-insurers, but rather only up to the limits of the financial responsibility law. Thus, the exclusion provides protection for those injured by self-insúred vehicles precisely equal to the protection available to those injured by ordinary insured vehicles.
Invalidating the limited self-insured exclusion would actually create the anomalous situation that an accident victim could be better off being hit by a self-insured than by an ordinary insured. When a party is injured by an ordinary *687insured, he or she is typically required to proceed against the tortfeasor and the tortfeasor's insurance company for compensation for their damages. If, for example, the City had been in possession of a liability insurance policy, the Kyrkoses would have been required to proceed first against the City and the City's insurance company. The City's insurance company would have been hable to the extent of the City's liability policy, and State Farm would have been hable to the Kyrkoses under their UIM policy for any damages not covered by the City's policy. Because the City is self-insured, however, the Kyrkoses argue they should be absolved of proceeding against the City, as in the ordinary case, and instead be allowed to proceed directly against their insurance company in arbitration for the full amount of their damages (up to the limits of their UIM policy). Through arbitration against State Farm, the Kyrkoses hope to avoid the potential inconveniences of litigation faced by those who are the victims of ordinary insured tortfeasors.
In short, the Kyrkoses are arguing the City's unique status as a self-insured mandates they receive preferential treatment under the UIM statute. This result runs contrary to the policy of the statute. The UIM law ensures only that victims of underinsured motor vehicles receive equal treatment as victims of insured motor vehicles, not that they receive preferential treatment. "The injured party is not entitled to be put in a better position, by virtue of being struck by an under-insured motorist, than she would be had she been struck by a fully insured motorist." Keenan v. Industrial Indem. Ins. Co., 108 Wn.2d 314, 321, 738 P.2d 270 (1987). Accord, Roller v. Stonewall Ins. Co., 115 Wn.2d 679, 685-86, 801 P.2d 207 (1990). This principle of equal treatment supports the enforceability of the limited self-insured exclusion.
It also might be argued the limited self-insured exclusion is invalid because the statute requires the most expeditious calculation of UIM coverage. There is an important value to being able to determine as quickly as possible whether or not a particular victim will be covered by their UIM policy. Automobile victims would suffer substantially if they could *688not receive UIM coverage until a judgment had been rendered and a tortfeasor had manifested its inability to pay the judgment. While these concerns are valid, they are not relevant to the question before us.
In order to facilitate the expeditious calculation of whether a given tortfeasor is underinsured or not, the statute relies on the readily identifiable liability limits included in "bonds" and "insurance policies". Very simply, if damages exceed these limits, the tortfeasor is underinsured. The limited self-insured exclusion mandates an equally simple calculation. If damages exceed the minima of the financial responsibility law, then the tortfeasor is underinsured.10 Public policy in favor of readily identifiable UIM coverage therefore does not require the invalidation of the limited self-insured exclusion.
Construing RCW 48.22.030 to permit a limited self-insured exclusion also furthers other public policy goals. First, it harmonizes the UIM law with the financial responsibility law. We have in the past recognized the value of considering the financial responsibility laws in understanding the provisions of the UIM statute. In Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 643 P.2d 441 (1982) (Wiscomb II), for example, we relied on the purposes behind the financial responsibility law in striking down a "family or household" UIM exclusion clause. 97 Wn.2d at 206-09.
Second, allowing the limited self-insured exclusion recognizes that insurance agreements are essentially contractual in nature. Sears, Roebuck & Co. v. Hartford Accident & Indem. Co., 50 Wn.2d 443, 449, 313 P.2d 347 (1957). "[A]n insurer is permitted to limit its liability unless to do so would be inconsistent with public policy". Britton, 104 Wn.2d at 528; see also Trinity Universal Ins. Co. v. Willrich, 13 Wn.2d 263, 272, 124 P.2d 950, 142 A.L.R. 1 (1942). While we should not rely upon "freedom of contract" ideals to allow insurers to *689violate public policy as embodied in the UIM statute, Wiscomb II, 97 Wn.2d at 210-12, such principles are a valid consideration when no public policy is being violated. See State Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 481, 687 P.2d 1139 (1984).
Of course, a fall self-insured exclusion might not be valid under this analysis of the limited self-insured exclusion. A full self-insured exclusion would raise the grave possibility of a self-insured being unable to actually meet a large judgment. The victim of an inadequately financed self-insured could then be deprived of compensation altogether. In this case, however, we are faced only with a limited self-insured exclusion and such questions are therefore academic.
For these reasons, I believe it is unnecessary to invalidate the limited self-insured exclusion contained within the State Farm policy. With all due respect, I dissent from that portion of the court’s opinion.
Durham and Guy, JJ., concur with Utter, J.
Reconsideration denied August 3, 1993.

RCW 48.22.030(3) and (4) allow insureds to reject all or part of their UIM coverage if rejection is made in writing.

The self-insurance statute was most recently amended in 1963. See Laws of 1963, ch. 169, § 63; RCW 46.29.630(2).

The State Farm policy also contains an exclusion for vehicles owned by governmental units. Since I agree with the majority's conclusion that such an exclusion is contrary to the public policy of the UIM laws, majority, at 675-76, I do not discuss this exclusion.

One problem generated by the majority's formulation of the 2-part test is its reference to the UIM statute's "declared public policy". Majority, at 673-74. As this court has recognized, "the statute does not define the legislative intent or purpose behind the UIM statute." Blackburn v. Safeco Ins. Co., 115 Wn.2d 82, 87, 794 P.2d 1259 (1990). As evidenced in part II, infra, I interpret the second prong of the analysis to involve consideration of the public policy behind the statute as developed in our case law.

"[E]ven after multiple amendments, 'the statute remains a patchwork of provisions that create ambiguity and confusion.'" Blackburn, 115 Wn.2d at 87 n.3 (quoting Dellwo & Conniff, The Washington Underinsured Motor Vehicle Insurance Statute: Reading the Legislature's Mind, 23 Gonz. L. Rev. 235, 235 (1987-1988)).

The statute does specifically allow an exclusion for worainsured automobiles owned by the insured or a family member. RCW 48.22.030(2).

Arguably, Lovato v. Liberty Mut. Fire Ins. Co., 109 Wn.2d 43, 742 P.2d 1242 (1987) would also be subject to reexamination under the majority's logic. In Lovato, this court upheld an exclusion for extraterritorial UIM coverage. There is no express permission for an extraterritorial exclusion within the UIM statute. Absent the exclusion for extraterritorial accidents, the Lovatos' accident would have been covered. Under the majority's approach the exclusion should have been stricken; nevertheless, the exclusion was upheld. 109 Wn.2d at 46-47.

The majority suggests that a certificate of self-insurance is not a legally identifiable means of payment. Majority, at 678-79. The Legislature, however, has determined that such a certificate is sufficient to meet the requirements of the State's financial responsibility laws. RCW 46.30.020(1)(a). Thus, the Legislature has determined that the possessor of such a certificate will be able to pay a judgment, at least to the extent of the financial responsibility laws. Perhaps the majority feels the Legislature has been unwise in this respect, but, of course, we are not free to replace the Legislature's judgment with our own.

Of course, a victim may still be required to litigate or arbitrate the amount of damages, but this requirement is a necessary corollary of our UIM statute. See 3 A. Widiss, Uninsured and Underinsured Motorist Insurance § 35.2 (2d ed. 1985) (under UIM laws like Washington's, damages are always a question of fact to be determined prior to applicability of UIM coverage).