Insurance Co. of State of Pa. v. Johnson

Skoglund, J.,

¶25. dissenting. While I agree that the language of 23 V.S.A. § 941(a) is susceptible to the majority’s interpretation, because all other indications compel a contrary construction, I respectfully dissent.

¶ 26. As the majority recites, our “paramount goal” when construing a statute is to implement the will of the Legislature. Colwell v. Allstate Ins. Co., 2003 VT 5, ¶ 7, 175 Vt. 61, 819 A.2d 727. “When the language of a statute is plain and unambiguous, we presume that the Legislature intended the meaning expressed by that language.” Id. Indeed, in such situations, we view it as our duty “to enforce the statute according to its terms without resort to statutory construction.” Id. However, when “both parties’ interpretations are plausible ... we must ascertain legislative intent through consideration of the entire statute, including its subject matter, effects and consequences, as well as the reason and spirit of the law.” In re Estate of Cote, 2004 VT 17, ¶ 10, 176 Vt. 293, 848 A.2d 264. And even where a statute is unambiguous, “when the objective of the legislation would be defeated by literal enforcement of statutory provisions,” we may “depart from the ordinary and usual meaning of the language used therein.” State v. Stell, 2007 VT 106, ¶ 12, 182 Vt. 368, 937 A.2d 649 (quotation omitted). An inquiry broader than reference to the statutory language alone is appropriate in this case. Such an inquiry compels the conclusion that the Legislature did not intend for 23 V.S.A. § 941(a) to apply to excess or umbrella insurance policies. Thus, I would interpret the statute to exclude such policies from its purview.

¶ 27. Section 941(a) provides, in relevant part, that “[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless [UM/UIM] coverage is provided therein, or supplemental thereto.” 23 V.S.A. § 941(a). The *451question presented by this appeal is whether excess and umbrella liability policies can be “polic[ies] insuring against liability arising out of the ownership, maintenance or use of [a] motor vehicle” within the meaning of the statute. Id. The majority takes the language to mean “no policy [which includes a provision] insuring against liability arising out of the ownership, maintenance or use of any motor vehicle,” whereas ICSOP contends that the language “[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle” simply means “no automobile insurance policy.” In other words, ICSOP reads the statute to govern “automobile insurance policies.”4

¶ 28. The majority fails to acknowledge that appellant has made this plain-language argument, let alone explain why it is not plausible. Moreover, the ambiguity of the language becomes more apparent when one considers how the statute might read were it to unequivocally conform to either the majority’s or appellant’s interpretations. The language could, of course, have expanded the scope of the statute by expressly providing that it applied to excess and umbrella policies, in which case the federal court would not have needed to certify the question it did. On the other hand, the Legislature could have unambiguously limited the statute’s application by expressly circumscribing its purview to “primary automobile insurance policies,” in which case appellant would plainly prevail. The fact remains that, as phrased, the statute could plausibly be read either way.

¶ 29. My main point of departure with the majority, however, is not its failure to grapple with appellant’s plain-language argument, but its failure to recognize that the statutory context of § 941, as well as its legislative history, purpose, and the nature of its *452subject matter, compels a construction that precludes its application to excess and umbrella policies.

¶ 30. It is a matter of common sense, of course, that in the interpretation of statutes, context is important. Cf. In re S-S Corp., 2006 VT 8, ¶ 9, 179 Vt. 302, 896 A.2d 67 (“It is unsurprising that the meaning of a term undefined by statute . . . will vary depending on the context in which the term is used.”). Of this truism has been born the canons of statutory construction, oft-cited by this Court, that we “read operative sections of the statutory scheme in context” and that we read “the entire scheme in pari materia.” Cushion v. Department of PATH, 174 Vt. 475, 479, 807 A.2d 425, 430 (2002) (mem.); see also Galkin v. Town of Chester, 168 Vt. 82, 87, 716 A.2d 25, 29 (1998) (same); Wolfe v. Yudichak, 153 Vt. 235, 240, 571 A.2d 592, 595 (1989) (same).5

¶ 31. Our first clue that 23 V.S.A. § 941 was intended to apply to automobile insurance policies is its placement in the code. Title 23 specifically governs motor vehicles. As chapter 11 of Title 23 is entitled “Financial Responsibility and Insurance,” the provisions therein naturally apply to the financial responsibility of motorists and to motor vehicle insurance. Indeed, § 800(a)’s requirement that drivers maintain “an automobile liability policy” providing a minimum of coverage relates to both topics. And so do the provisions in subchapter 5, entitled “Insurance Against Uninsured, Underinsured or Unknown Motorists,” in which § 941 has been codified. See Humphrey v. Vt. Mut. Auto. Ins. Co., 2009 VT 53, ¶ 8, 186 Vt. 537, 979 A.2d 452 (mem.) (“The overriding purpose of [the] UM/UIM requirement is to protect the insured from the misfortune of being involved in an accident with a financially irresponsible driver.” (quotation omitted)).

¶ 32. The case for a narrow interpretation of § 941 becomes stronger upon inspection of the two other statutes in the *453subchapter. As is typical of provisions governing automobile liability insurance generally, see supra, ¶27 n.4, the statutes in subchapter 5 do not identify their subjects with uniform language. As discussed, § 941 applies to “polie[ies] insuring against liability arising out of the ownership, maintenance or use of any motor vehicle.” In contrast, § 942 refers to “automobile liability insurance . . . policies],” and § 943 refers to “policies of motor vehicle liability insurance.” The majority takes this as evidence that the Legislature intended the applicability of § 941 to be broader than §§ 942 and 943, which, in its opinion, plainly only relate to automobile insurance policies. See ante, ¶¶ 8-9. However, because we construe statutes in pari materia together, I do not give this variance in language any significant weight. See supra, ¶ 27 n.4. According significance to variations in legislative language is only appropriate when those variations are useful in clarifying meaning — for instance, when there is some uniformity against which to compare a linguistic aberration. See Galkin, 168 Vt. at 88, 716 A.2d at 29 (concluding that omission of particular language in statute “lack[ed] legal significance” where the Legislature failed to use uniform language throughout). In light of the many different phrases the Legislature has used to refer to automobile insurance policies throughout the code, it is not at all likely that it intended “policies] insuring against liability arising out of the ownership, maintenance or use of any motor vehicle,” § 941, “automobile liability insurance . . . policies],” § 942, and “policies of motor vehicle liability insurance,” § 943, to mean two or three different things. See Davis v. Hunt, 167 Vt. 263, 267, 704 A.2d 1166, 1169 (1997) (reading general language as limited by specific language in the immediately preceding subsection).

¶ 33. My reading is also supported by what we can tell about the Legislature’s likely purpose in enacting § 941 from the statute’s legislative history. For instance, in March 1968, prior to the original enactment of the statute, the Commissioner of Banking and Insurance sent a memo to the Senate Banking and Corporations Committee regarding House Bill H.487, describing the bill as a means to “improve the automobile liability insurance climate in Vermont” by filling a “gap[J” in such coverage. Letter from Comm’r J. Hunt to Senate Banking and Corps. Comm. (Mar. 18, 1968) (emphasis added). The Commissioner further explained that “[t]his bill would make [UM coverage] a required provision of every policy of automobile liability insurance in Vermont.” Id. *454(emphasis added). Such communications constitute some evidence that excess and umbrella coverage was not being considered as within the scope of the original act.

¶ 34. The legislative history of § 941’s amendments is similarly instructive. In 1979, House Bill H.411 was introduced to make changes to the Vermont financial responsibility laws by adding language regarding underinsured motorists as well as increasing minimum coverage limits for all motor vehicle policies. The stated purpose of H.411 was “to require automobile insurance policies to provide protection against certain underinsured motorists.” H.411, 1979-1980 Gen. Assem., Bien. Sess. (Vt. 1979) (emphasis added). And more recently, in the report to the General Assembly by the Department of Banking, Insurance, Securities and Health Care Administration regarding UM/UIM coverage, the introduction and executive summary described § 941 as applicable to “all automobile liability insurance policies issued for delivery in Vermont.” Dep’t of Banking, Ins., Secs. & Health Care Admin., Report to the General Assembly Pursuant to H. 453, § 2, at 1 (Jan. 15, 2004) (emphasis added). Consistent with' a narrow interpretation of § 941, the report repeatedly refers to “automobile insurance liability policies” or “automobile liability insurance” without reference to other liability coverage such as umbrella or excess policies. Id. at 1-11.

¶ 35. While I admit that these pieces of legislative history are not conclusive proof of an intent to exclude excess and umbrella policies from the purview of § 941, they are persuasive evidence that lawmakers and their contemporaries did not have excess and umbrella policies in mind when drafting, amending, and discussing the statute. If this were not enough to persuade me that the scope of § 941 should be limited to automobile insurance policies, more recent activity at the State House would be. Recently proposed in the House was a bill amending § 941 to explicitly provide that “an insurer must offer [UM/UIM] coverage ... in excess or umbrella insurance policies.” H.787, 2007-2008 Gen. Assem., Bien. Sess. (Vt. 2008). A related Senate bill was contemporaneously proposed by Senator Campbell, appellee’s counsel. See S.349, 2007-2008 Gen. Assem., Bien. Sess. (Vt. 2008) (proposing requiring uninsured motorist coverage for state employees to be not less than $5 million per occurrence and $10 million aggregate). So while previous generations of legislators apparently did not contemplate the possibility that excess and umbrella *455policies may be implicated by § 941, today’s lawmakers most certainly do.

¶ 36. The majority dismisses the recently proposed bills by reasoning that “[n]othing in the bills . . . indicates whether they are intended to amend or clarify existing law.” Ante, ¶ 12. However, as we have often stated, “[w]hile we recognize that clarification is a legitimate objective of legislative action, we presume that the Legislature intends to change the meaning of a statute, unless the circumstances clearly indicate clarification to be intended.” Tarrant v. Dep’t of Taxes, 169 Vt. 189, 198, 733 A.2d 733, 740 (1999) (quotation omitted). I see no circumstances indicating that the proposed bills were intended to clarify existing law, and thus nothing to rebut the presumption that the amendments are intended to alter it. See id. (reaching the same conclusion). This Court’s role is “to interpret statutes so as to give them effect,” not to involve itself in ongoing political and legislative initiatives. In re C.S., 158 Vt. 339, 344, 609 A.2d 641, 644 (1992). Apparently, in the Legislature’s judgment, § 941 does not as yet apply to excess and umbrella policies. We should not cut off legislative debate as to whether that should continue to be the case by reading the proposed amendments into the current version of § 941.

¶ 37. Perhaps the most persuasive evidence that the Legislature did not mean to extend the reach of § 941 to umbrella and excess policies, however, is the inherent dissimilarity between first party automobile insurance policies and third party excess and umbrella policies. See Fireman’s Fund Ins. Co. v. CNA Ins. Co., 2004 VT 93, ¶ 39, 177 Vt. 215, 862 A.2d 251 (recognizing that “excess policies are generally purchased to provide the insured protection in the event of a catastrophic loss that exceeds the limits of the insured’s primary policy.”). Umbrella and excess policies provide broad coverage for catastrophic losses at modest cost, whereas primary automobile insurance policies are designed to protect exclusively against loss or legal liability for damages “arising out of the ownership, maintenance or operation of an automobile.” Mass v. U.S. Fid. & Guar. Co., 610 A.2d 1185, 1190 (Conn. 1992). For this reason, the extension of UM/UIM requirements to excess and umbrella policies has been criticized, among others, by a leading commentator on insurance law, who states:

Umbrella policies serve an important function in the industry. In this day of uncommon, but possible, enor*456mous verdicts, they pick up this exceptional hazard at a small premium. Assuming one’s automobile and homeowner’s policies have liability limits of $100,000 or even $500,000, the umbrella policy may pick up at that point and cover for an additional million, five million, or ten million. It may assume as a primary carrier certain coverages not included elsewhere, such as invasion of privacy, false arrest etc., but there is no intention to supplant the basic carriers on the homeowners or automobile coverages. Therefore, these should not even enter into our current consideration.
However, because of the misunderstanding of the courts as to the nature of such coverages, they have been held to fall within the definition of automobile liability insurance.

8C J. & J. Appleman, Insurance Law and Practice § 5071.65, at 107-08 (1981); id. Interim Supp. § 5071.65, at 17-18 (2003).

¶ 38. Appellant points out that subjecting excess policies to mandatory UM/ÜIM requirements defeats insurers’ legitimate expectations. While, as the majority correctly notes, insurers’ expectations are not dispositive of the meaning of a statute, Monteith v. Jefferson Ins. Co. of N.Y., 159 Vt. 378, 384-85, 618 A.2d 488, 489 (1992), the Legislature’s expectations are. Due to the inherent differences between the two kinds of policies at issue in this case, I think it unwise to assume that the Legislature meant for § 941 to apply to excess and umbrella policies without a clear statement to that effect.

¶ 39. There is voluminous authority recognizing that excess and umbrella policies are inherently different from automobile insurance policies and the principle that this difference supports limiting the applicability of UM/UIM requirements to the latter type of policy. See, e.g., Reddy v. N.H. Ins. Co., 612 A.-2d 64, 68-69 (Conn. App. Ct. 1992) (noting that “the distinction between primary and excess insurance policies is the key to determining whether a policy is an automobile liability insurance policy and thus is required to provide uninsured motorist coverage pursuant to [statute]”); Mass, 610 A.2d at 1190 (excess policies serve purpose distinct from policies that exclusively cover liability arising out of ownership, maintenance or operation of a motor vehicle); Liberty Mut. Ins. Co. v. McLaughlin, 590 N.E.2d 679, *457680 (Mass. 1992); Sidelnik v. Am. States Ins. Co., 914 S.W.2d 689, 694 (Tex. App. 1996) (“We are persuaded that umbrella policies providing excess liability coverage serve a purpose distinct from that served by policies that exclusively cover liability from damages arising from the ownership, maintenance, or use of an automobile.”); MacKenzie v. Empire Ins. Cos., 782 P.2d 1063, 1066 n.5 (Wash. 1989) (“As we perceive it, the primary reason that the UIM statutes do not apply to umbrella policies is that such policies are an inherently different type of policy.”). I presume that the Legislature enacted and amended § 941 well-informed of the differences between these two kinds of insurance coverages. I therefore cannot countenance adopting a construction of § 941 that ignores this distinction.

¶ 40. Finally, I will briefly address several points of disagreement with how the majority applies authority from other jurisdictions. The majority bootstraps support for its election to join up with one side of an admittedly considerable split in authority in part by means of its conclusion that § 941 is “predicated . . . on the type of coverage rather than the type of policy.” Ante, ¶ 16. I have explained why, in my judgment, this variation in language is insignificant in determining the meaning of this statute. Supra, ¶ 32. Moreover, I agree with those courts which have reasoned that whether a statute requires “minimum” or “full recovery” UM/UIM coverage — the second tool by which the majority parses the caselaw, ante, ¶¶ 18-20 — is irrelevant to the question of whether excess and umbrella policies come within the statute’s purview. See, e.g., Schmitt v. Am. Family Mut. Ins. Co., 161 F.3d 1115, 1116 (7th Cir. 1998).

¶ 41. For all the above-stated reasons, I respectfully dissent. I am authorized to state that Justice Burgess joins in this dissent.

Indeed, the Legislature has referred to automobile insurance policies with variously phrased provisions of differing lengths throughout the code. See 8 V.S.A. § 4203(5), (6) (“[p]olicies of motor vehicle insurance”); id. § 4210 (“motor vehicle liability insurance policy”); id. § 4222(1) (“automobile liability policy”); id. § 4223 (“automobile insurance”); id. § 4227 (“automobile bodily injury and property damage liability coverage”); id. § 4241 (“automobile insurance against bodily injury, property damage, medical payments, or other loss, including what are commonly known as ‘liability,’ ‘collision,’ ‘comprehensive’ or ‘uninsured motorist’ coverages”); 23 V.S.A. § 800(a) (“automobile liability policy”); id. § 941 (“policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle”); id. § 942 (“automobile liability insurance”); id. § 943 (“motor vehicle liability insurance”).

Our current formulation of the latter canon is unfortunate, and I take this opportunity to correct it. “In pari materia” means “[o]n the same subject,” or “relating to the same matter.” Black’s Law Dictionary 862 (9th ed. 2009). As a result, the canon should read “statutes that are in pari materia may be construed together.” Id. (emphasis omitted); see also Town of Highgate v. State, 59 Vt. 39, 45, 7 A. 898, 898 (1886) (“It is a well settled rule that all statutes in pari materia, are to be read and construed together as if they formed parts of the same statute, and were enacted at the same time.”). The latter canon is but an extension of the former; it broadens the relevant “context” to statutes regarding the same subject wherever codified and whenever enacted. See Black’s Law Dictionary, supra, at 862.