Present: All the Justices
GOVERNMENT EMPLOYEES INSURANCE COMPANY
OPINION BY
v. Record No. 992820 JUSTICE LAWRENCE L. KOONTZ, JR.
September 15, 2000
BERTHA HALL, CO-ADMINSTRATOR
OF THE ESTATE OF PATRICIA
PALMER, DECEASED, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
John K. Moore, Judge
The issue we decide in this case is whether an insured
under a motor vehicle liability insurance policy effectively
waived the maximum uninsured motorist insurance coverage
mandated by Code § 38.2-2206(A) for that policy when she
submitted an uninsured motorist waiver form more than 20 days
after receiving it from her insurer.
BACKGROUND
Evelyn Perry Palmer (Palmer) purchased the automobile
liability insurance policy under consideration from Government
Employees Insurance Company (GEICO) in 1974. On August 23,
1997, Palmer’s daughter, Patricia Palmer, was a passenger in a
car owned and operated by Alicia Danetta Palmer, one of Palmer’s
granddaughters. The car swerved off a highway in Sussex County,
striking a guardrail. Patricia Palmer died as a result of
injuries sustained in the accident. At the time of the
accident, Patricia Palmer resided with her mother and, thus, was
a “person insured” under a provision of Palmer’s policy with
GEICO extending coverage to “any resident of the same
household.” This policy provided $300,000 in bodily injury
liability coverage.
On or about July 1 during each year relevant to this
appeal, GEICO mailed Palmer a “Renewal Solicitation Package” in
anticipation of the policy’s September anniversary date.
Included in this package was a form denoted as M-316-VA (the
waiver form) allowing the policyholder to reduce the amount of
uninsured motorist insurance coverage otherwise statutorily
mandated to equal the amount of bodily injury liability coverage
provided by the policy. Code § 38.2-2206(A). GEICO’s waiver
form explicitly notified the policyholder that she was required
to return the form within 20 days in order to select the lower
uninsured motorist insurance coverage.
On July 9, 1991, Palmer executed the waiver form included
in the 1991 renewal package in an attempt to reduce the amount
of the uninsured motorist insurance coverage under her policy
from $300,000 to $30,000 per person/$60,000 per occurrence.
Although Mrs. Palmer’s husband, Edward J. Palmer, was also a
“named insured” under the policy, he failed to endorse the
waiver form. GEICO nonetheless honored the waiver form and
reduced the uninsured motorist insurance coverage and the policy
premium accordingly.
2
The 1992 renewal package was mailed to Palmer on July 1,
1992. However, Palmer did not execute the waiver form in that
renewal package until August 12, 1992, and GEICO received it on
August 18, 1992. Because her husband had died on May 9, 1992,
Palmer’s signature was the only one required on the 1992 waiver
form. Palmer returned no other waiver forms in subsequent
years, and GEICO continued to provide uninsured motorist
insurance coverage at the reduced rate. 1 The lower cost of the
reduced coverage saved Palmer approximately $14 annually in
premiums for 1991 and 1992, and the savings have risen to
approximately $40 annually in recent years. The policy
declaration form covering the six months in which the accident
occurred indicates uninsured motorist insurance coverage of
$30,000 per person/60,000 per occurrence.
Bertha Hall and Angela Hicks qualified as co-administrators
of Patricia Palmer’s estate on August 29, 1997 and November 25,
1997, respectively. In that capacity, they filed a motion for
judgment alleging that the August 23, 1997 accident was caused
by the combined negligence of Alicia Palmer and “John Doe,” the
driver of an oncoming vehicle which allegedly forced Alicia
1
Palmer did not return waiver forms sent in 1993 and 1994.
Beginning in 1995, GEICO only sent the waiver form to tenured
policyholders every five years rather than annually.
3
Palmer’s car off the highway. 2 The administrators subsequently
filed a declaratory judgment action against GEICO in the Circuit
Court of the City of Virginia Beach. It is this latter action
that is the subject of this appeal. In this action, the
administrators sought a determination that GEICO was obligated
to provide the estate the maximum uninsured motorist insurance
coverage, that is $300,000, rather than the $30,000 stated in
the policy. 3
The trial court found that both the 1991 and 1992 waivers
were ineffective and, therefore, required GEICO to provide
$300,000 in uninsured motorist insurance coverage under Palmer’s
policy. With respect to the 1991 waiver, the trial court ruled
that the then applicable provisions of Code § 38.2-2206(A)
required that each named insured under an automobile insurance
policy reject the statutorily mandated amount of uninsured
motorist insurance coverage in order for a waiver to be valid,
and cited State Farm Mut. Auto. Ins. Co. v. Weisman, 247 Va.
199, 203, 441 S.E.2d 16, 19 (1994). Because Palmer’s husband
2
Evelyn Palmer’s uninsured motorist insurance coverage is
relevant to the administrators’ action for two reasons: Alicia
Palmer’s lack of insurance at the time of the accident, and the
alleged negligence of John Doe, the unidentified driver of the
other vehicle.
3
The trial court rejected the administrators’ requested
determination that the policy permitted a “stacked” recovery in
the event of judgments against both Alicia Palmer and John Doe.
The stacking issue is not before this Court on appeal.
4
was a named insured and did not sign the 1991 waiver form, the
trial court ruled that the waiver was invalid. 4
Citing Code § 38.2-2202(B), the trial court further ruled
that the 1992 waiver form was also invalid because it was not
returned to GEICO within 20 days as required by the statute. In
so ruling, the trial court stated that if GEICO “reduced the
level of Mrs. Palmer’s [uninsured motorist] coverage, despite
the fact that she had not properly rejected the [statutorily
mandated] amount of coverage, the insurer has no one to blame
but itself.”
GEICO filed a motion to reconsider the trial court’s ruling
with respect to the validity of the 1992 waiver. In response,
the trial court recognized that GEICO’s evidence established
that GEICO mailed further premium notices on August 13, 1992 and
September 1, 1992, which, GEICO asserted, would have brought
Palmer’s waiver within the 20 days required by the statute. 5
Nonetheless, the trial court ruled that GEICO “has consistently
chosen to impose greater responsibilities on itself than the law
4
While GEICO argued the validity of the 1991 waiver on
brief, counsel conceded at oral argument of this appeal that the
1991 waiver was invalid under Weisman. Accordingly, we will not
disturb the trial court’s ruling with respect to that waiver.
5
A GEICO representative, Alice Hinkle, testified that the
September 1992 policy had two issue dates because the policy was
processed on August 13, 1992, but that a new endorsement
reflecting changes requested by Palmer was issued on September
1, 1992.
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requires by giving Mrs. Palmer the option of electing a lesser
amount of uninsured motorist coverage with each renewal policy.”
Accordingly, because the waiver form sent with the July 1, 1992
renewal package specified that the executed waiver form be
returned to GEICO within 20 days and it was not, the trial court
declined to modify its prior ruling and entered final judgment
consistent therewith. We awarded GEICO this appeal.
DISCUSSION
GEICO contends that the trial court improperly applied Code
§ 38.2-2202(B) to the 1992 waiver form because the statute
applies only to new policies. Code § 38.2-2202(B) specifically
provides that “[n]o 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” a notice to the policyholder that
uninsured motorist coverage in the same amount as the liability
coverage will be included with the policy unless voluntarily
reduced by the policyholder “within 20 days of the mailing of
the policy or the premium notice, as the case may be.” The
statute further provides that “[a]fter 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
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statement of coverage continuance, or to any subsequently mailed
premium notice.”
Title 38.2 was adopted by the 1986 Acts of Assembly,
Chapter 562, which concurrently repealed Title 38.1. Code
§ 38.1-380.2(B), the predecessor to § 38.2-2202(B), explicitly
provided a notice applicable to each “new or renewal policy
. . . and . . . original or renewal premium notice . . . .”
(Emphasis added.)
While we recognize the presumption that a recodified
statute is not substantively changed unless a contrary intent
appears plainly in the revised version, we will not merely
assume that a recodified statute has the identical effect of its
predecessor where a change exists in the language of the
recodified provision. State Farm Mut. Auto. Ins. Co. v. Major,
239 Va. 375, 378, 389 S.E.2d 307, 309 (1990). The terms
“renewal policy” and “renewal premium notice” are conspicuously
absent from the corresponding first paragraph of this recodified
statute. These deletions, together with the retention of the
language concerning new policies and original premium notices,
amply demonstrate the General Assembly’s intent to remove
renewal notices from the scope of Code § 38.2-2202(B). The
maxim expressio unius est exclusio alterius applies. “This
maxim provides that mention of a specific item in a statute
implies that omitted items were not intended to be included
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within the scope of the statute.” Turner v. Sheldon D. Wexler,
D.P.M., P.C., 244 Va. 124, 127, 418 S.E.2d 886, 887
(1992)(citing Tate v. Ogg, 170 Va. 95, 103, 195 S.E. 496, 499
(1938)). Moreover, the final paragraph of Code § 38.2-2202(B)
expressly permits the insurance company to exclude the notice
from a “renewal policy.” Accordingly, we hold that the trial
court erred in ruling that the time limit contained in the
statute applied to renewal notices sent to Palmer.
We next consider whether the 20-day limit stated in the
waiver form mailed to Palmer with the 1992 renewal package,
although not required by Code § 38.2-2202(B), nevertheless bound
GEICO to provide the uninsured motorist insurance coverage
mandated by Code § 38.2-2206(A) because Palmer returned the
waiver form to GEICO more than 20 days after it was mailed to
her. Examining the course of dealing between the parties, we
find that the 20-day limit was not an essential term and, thus,
could be waived by GEICO. Moreover, the subsequent actions by
both GEICO and Palmer were consistent with an agreement for the
lower amount of uninsured motorist insurance coverage.
In Stanley’s Cafeteria, Inc. v. Abramson, 226 Va. 68, 73,
306 S.E.2d 870, 873 (1983), we discussed the import of a course
of dealing regarding the modification of a contract:
We agree that a course of dealing by contracting
parties, considered in light of all the circumstances,
may evince mutual intent to modify the terms in their
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contract. See Kent v. Kent, 2 Va. Dec. 674, 678, 34
S.E. 32, 33 (1899). . . . But the circumstances
surrounding the conduct of the parties must be
sufficient to support a finding of a “mutual
intention” that the modification be effective, Warren
v. Goodrich, 133 Va. 366, 388, 112 S.E. 687, 694
(1922), and such intention must be shown by “clear,
unequivocal and convincing evidence, direct or
implied,” id. at 389, 112 S.E. at 694.
226 Va. at 73, 306 S.E.2d at 873; see also Cardinal Development
Co. v. Stanley Constr. Co., 255 Va. 300, 305-06, 497 S.E.2d 847,
850-51 (1998)(finding subsequent conduct of parties established
mutual intent to modify contract).
In the instant case, the mutual intent of the parties that
Palmer’s policy provide for a reduced amount of uninsured
motorist insurance coverage is established by unequivocal
evidence. Although not within the 20 days specified in the
waiver form, Palmer signed and returned the form to GEICO which
clearly indicated that she wanted to be provided uninsured
motorist insurance coverage under her policy in the amount of
$30,000 per person/$60,000 per occurrence. Consistent with
Palmer’s expressed intent to waive the higher available
coverage, GEICO issued a renewal policy to her with the
requested uninsured motorist insurance coverage and reduced her
premium accordingly. Both parties received what they bargained
for: a reduced premium in exchange for reduced insurance
coverage. Accordingly, we hold that the 1992 waiver was
effective to reduce the amount of Palmer’s uninsured motorist
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insurance coverage from $300,000 to $30,000 per person/$60,000
per occurrence. That waiver was effective at the time of the
accident in question. See USAA Casualty Ins. Co. v. Alexander,
248 Va. 185, 190, 445 S.E.2d 145, 147 (1994)(waiver and
reduction of coverage remains in effect during subsequent
renewals of the policy).
CONCLUSION
For these reasons, we will reverse the trial court’s
judgment, and will enter final judgment establishing GEICO’s
maximum uninsured motorist insurance liability in this case at
$30,000 per person/$60,000 per occurrence.
Reversed and final judgment.
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