Mancillas v. Arizona Property & Casualty Insurance Guaranty Fund

JACOBSON, Presiding Judge,

dissenting.

As Justice Feldman has aptly observed: Mere disagreement with those who precede us, without more, is not an adequate reason to overrule precedent. While we should and do pay appropriate homage to precedent, we also realize that we are not prisoners of the past.3

Wiley v. Industrial Comm’n, 174 Ariz. 94, 102, 847 P.2d 595, 602 (1998) (citations omitted).

The majority’s continued reliance upon 25-year precedent established by Porter v. Empire Fire & Marine Insurance Co., 106 Ariz. 274, 475 P.2d 258 (1970), not only shackles us to outmoded reasoning, but also ignores what I believe to be a legislative response to address and remedy problem raised in Porter. See generally 1981 Ariz.Sess.Laws, ch. 224, § 1 (amending former A.R.S. § 20-259.01 by providing for the availability of underinsured motorist coverage).

At the time of the Porter decision, A.R.S. § 20-259.01 provided only that, in order to comply with the applicable Financial Responsibility Laws, insurers had to offer coverage “for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease including death, resulting therefrom.” See former A.R.S. § 20-259.01, added by Laws 1965, ch. 34, § 1, and amended by Laws 1970, ch. 80, § 1, and Laws 1972, ch. 157, § 1 (emphasis added).

Porter, like this case, involved a multiple victim accident in which the tortfeasor, although insured for liability, had insufficient coverage to reimburse each of his victims in the minimum amount provided by the Financial Responsibility Act.

Under these circumstances, as the court properly observed, if the victims were limited to the tortfeasor’s insufficient coverage, they “might be better off if the offending motorist had no insurance whatsoever.” Porter, 106 Ariz. at 279, 475 P.2d at 263. In resolving this dilemma, the court quoted from a Rhode Island case:

[T]he definition of an uninsured automobile must as a matter of public policy be construed to include any differential between liability insurance carried by the tort feasor and the minimum limits mandated by the legislature.

Id., quoting Allstate Ins. Co. v. Fusco, 101 R.I. 350, 223 A.2d 447 (1966). That this result is mandated by public policy considerations based upon legislative intent is reinforced by the language of the Porter decision itself:

[I]f such recovery permits the uninsured motorist carrier to escape liability despite the insufficiency of the recovery, then *396Porter and others in a similar position would be better off if the tortfeasor had carried no insurance. The Uninsured Motorist Law in such instance would not afford the protection which he expected and the Legislature intended.

106 Ariz. at 279, 475 P.2d at 268 (emphasis supplied).

The legislature was not unresponsive to this problem. In 1981, it amended A.R.S. § 20-259.01. To specifically address the problem presented by Porter, the legislature added subsection (C) to the statute, which mandates that every insurer “shall also make available to the named insured ... underinsurance motorist coverage which extends to and covers all persons insured under the policy____” (Emphasis added.)

The amendment further defined this new coverage:

“Underinsurance motor coverage” includes coverage for a person if the sum of the limits of liability under all bodily injury or death liability bonds and liability insurance policies applicable at the time of the accident is less than the total damages for bodily injury or death resulting from the accident.

A.R.S. § 20-259.01(E) (emphasis added).

This provision describes both Mr. Porter’s and Mr. Mancillas’ position as concisely as if the legislature had their factual situations before it when the amendments were enacted.

The legislature obviously intended to provide by underinsurance for situations different from those that are provided for by uninsured coverage. This is made absolutely clear by its enactment of A.R.S. § 20-259.01(F):

Uninsured and underinsured material coverage are separate and distinct and apply to different accident situations. Underinsured motorist coverage shall not provide coverage for a claim against an uninsured motorist in addition to any applicable uninsured motorist coverage.

(Emphasis added.)

Here, it is clear that Mancillas, in writing, rejected underinsurance coverage.4 Yet the majority opinion, in direct contravention of the above statutory provisions, allows the insured to reject underinsurance coverage but affords this coverage under the uninsured clause. The result is that Mancillas does not have to buy underinsurance coverage (nor for that matter, must anyone else) because he will get the additional coverage for the premium he paid for uninsured coverage alone. The majority bases this illogical result on the continued validity of Porter.

The majority allegedly supports the continued validity of Porter by three cases decided subsequent to the 1981 amendments providing underinsurance coverage. See State Farm Mut. Auto. Ins. Co. v. Eden, 136 Ariz. 460, 666 P.2d 1069 (1983); Herring v. Lumbermen’s Mut. Cas. Co., 144 Ariz. 254, 697 P.2d 337 (1985); Lowing v. Allstate Ins. Co., 176 Ariz. 101, 859 P.2d 724 (1993).

Both Eden and Herring involved accidents occurring prior to the enactment of underinsurance coverage, and, therefore, whether this enactment supersedes the rationale of Porter was not an issue. However, both cases are interesting in how they apply Porter principles.

In Eden, the tortfeasor had insurance coverage of $15,000 per person and $30,000 per accident ($15,000/30,000), the applicable minimum limits under the Financial Responsibility Law, A.R.S. § 28-1142. However, Eden’s uninsured coverage under his own policy was $50,000/100,000. Eden’s argument, under Porter, was that he was entitled to the difference between his higher limits and the liability coverage afforded by the tortfeasor. The court rejected this argument, noting that the prevalent policy of Porter was to afford coverage up to the minimum amount provided in the Financial Responsibility Act:

By statute and case law, uninsured motorist coverage is interwoven with the Fi*397nancial Responsibility Act. We find no merit to [Eden’s] argument that section (B) [A.R.S. § 20-259.0KB)] implicitly changed the definition of “uninsured.” Presumably the legislature was cognizant of the Porter definition of “uninsured” when section (B) was added to A.R.S. § 20-259.01 [increasing uninsured coverage to amounts comparable to liability coverage]. The obvious way to increase the amount of guaranteed protection would have been to increase the limits set by A.R.S. § 28-1142 [minimum amount of coverage]. This the legislature did not do; for us to adopt [Eden’s] definition of “uninsured” would constitute an expansion of the statute.

Eden, 186 Ariz. at 462, 666 P.2d at 1071.

Likewise, in Herring, where the tortfeasor had the minimum amount of coverage, the issue was whether the children of the victim of an accident were entitled to uninsured coverage under their father’s policy. The court, applying Porter, rejected that argument:

[T]he question here is not whether minimum coverage was available for each victim injured or killed in the accident, but whether each of several beneficiaries of the claim for injury or death of a single victim is entitled to look to uninsured motorist coverage for a guarantee of recovery up to the minimum amount. Porter did not go that far, nor, in our view, has the legislature.

Herring, 144 Ariz. at 256, 697 P.2d at 339.

Finally, although Lowing involved an accident that occurred after the underinsurance enactment, it did not involve underinsurance coverage. Rather, the case turned on whether a “phantom” tortfeasor could qualify as an uninsured motorist where the policy required that the uninsured vehicle actually “hit” or have “physical contact” with the victim. Lowing’s reference to Porter was to the accepted rationale of Porter that an injured motorist must receive the minimum amount of compensation under the Financial Responsibility Act. Thus, the court would consider the unidentified tortfeasor to be “functionally uninsured” in order to further that public policy, “because they have no insurance that is in fact available and collectible.” 176 Ariz. at 105, 859 P.2d at 728. The case simply had nothing to do with whether the Porter rationale continues to be applicable after the statutory enactment allows an insured to elect to receive underinsured coverage.

All three of these cases make it clear that the result in Porter was based upon ascertaining legislative intent; that is, allowing recovery to an insured in an amount equal to the minimum coverage offered by the Financial Responsibility Act. However, the legislature has now expressed a new legislative intent to cover the factual scenario of Porter by providing for the availability of underinsurance coverage. To not give effect to this amendment is to make it a nullity and’ignores the rationale of Porter that coverage is a matter of legislative intent.

The majority opinion expresses the general principle that A.R.S. § 20-259.01 “is remedial in nature and should be liberally construed.” To give Mancillas coverage for insurance that he specifically rejected and for which he did not pay a premium is more than “liberal construction”; it is judicial largess.

I would affirm.

. I realize that, while this court cannot "overrule” the Arizona Supreme Court, no such restraints (within constitutional limits) are imposed upon the legislature. This dissent explores that premise that the legislature has done so by its 1981 amendments to A.R.S. § 20-259.01.

. Mancillas argues that this waiver was invalid under Giley v. Liberty Mutual, 168 Ariz. 306, 812 P.2d 1124 (App.1991). Because neither the majority nor this dissent turns on a construction of Giley, I need not explore in depth either its irrationality or its inapplicability to this opinion.