Present: All the Justices
THOMAS M. STONE
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 960412 December 16, 1996
LIBERTY MUTUAL INSURANCE COMPANY
UPON A QUESTION OF LAW CERTIFIED BY THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH CIRCUIT
Acting under the provisions of our Rule 5:42, the United
States Court of Appeals for the Fourth Circuit certified to this
Court a question of Virginia law, the answer to which is
determinative of a proceeding pending before the Fourth Circuit.
We accepted the certification by order entered in June 1996.
The question involves statutory interpretation and a motor
vehicle insurance coverage issue arising from an
uninsured/underinsured motorist endorsement to an insurance
policy.
The record establishes the following facts. Thomas M. Stone
was a part-time employee of Tidewater Pizza, Inc., in Virginia
Beach, for which he delivered pizzas. In making deliveries,
Stone was responsible for providing his own transportation and
used his own vehicle.
In October 1992, while Stone was lawfully operating his
vehicle in the scope of his employment, a collision occurred
between his vehicle and one operated by Carol Drye. Stone
sustained serious personal injuries in the collision.
Later, he recovered a judgment against Drye in the Circuit
Court of the City of Virginia Beach for $250,000 plus interest
and costs. At the time of the collision, only $25,000 of
liability or other coverage was applicable to Drye's use of her
vehicle and available to satisfy Stone's judgment.
In effect at the time of the collision was a "Business Auto"
policy of insurance issued by Liberty Mutual Insurance Company to
"Tidewater Pizza, Inc.," as the named insured. The coverage
afforded under the policy included motor vehicle liability
insurance with a limit of $350,000 and, by endorsement, uninsured
motorist insurance, which included underinsured motorist
coverage, carrying the same limit. For clarity, we shall use the
term "uninsured" to include both underinsured and uninsured
coverage.
Subsequently, Stone filed in the Virginia Beach circuit
court a declaratory judgment action against Liberty Mutual
seeking a declaration that the insurer was liable to him for
$225,000 under the uninsured motorist coverage. Following
removal of the case by the insurer to the United States District
Court for the Eastern District of Virginia, the parties
stipulated to the facts and submitted the coverage issue to the
district court on cross-motions for summary judgment.
The district court sustained Stone's contention that the
insurer's policy issued to Tidewater conflicted with Code § 38.2-
2206, the uninsured motorist statute. When the provisions of an
insurance policy conflict with the requirements of the uninsured
motorist statute, the statute controls and the policy provisions
are void and ineffective. Bryant v. State Farm Mut. Auto. Ins.
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Co., 205 Va. 897, 900, 140 S.E.2d 817, 819 (1965). Thus, the
district court granted Stone's motion for summary judgment and
held he was entitled to uninsured coverage in the sum of $225,000
plus interest and costs. The district court rejected an
alternative theory of coverage offered by Stone.
The insurer appealed the former ruling of the district court
and Stone appealed the latter. The Fourth Circuit agreed with
the district court on the latter ruling and has affirmed that
portion of the district court's order. The issue generating the
former ruling is the subject of this certification.
According to the policy's uninsured motorist coverage, the
insurer agrees to pay, up to the limit of liability, "all sums
the insured is legally entitled to recover as damages from the
owner or driver of an uninsured motor vehicle. The damages must
result from bodily injury sustained by the insured . . . caused
by an accident." Of course, Stone can recover against the
insurer only if he qualifies as an "insured" under the uninsured
coverage.
The uninsured motorist endorsement provides coverage to two
classes of potential insureds. First, the term "insured" is
defined as the named insured (Tidewater) "or any family member"
of the named insured. Second, the term "insured" includes
"[a]nyone else occupying a covered auto." For purposes of the
uninsured motorist coverage, the term "covered auto" is defined
to include "[o]nly those autos [Tidewater owns] which, because of
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the law in the state where they are licensed or principally
garaged, are required to have and cannot reject uninsured
motorists insurance." There are two such vehicles listed in the
policy, a Ford and a Honda; Stone's vehicle is not listed in the
policy.
According to the policy's liability coverage, the insurer
agrees to pay, up to the limit of liability, all sums "the
insured legally must pay as damages because of bodily injury
. . . to which this insurance applies, caused by an accident and
resulting from the ownership, maintenance or use of a covered
auto." The term "covered auto" for liability purposes is defined
to include certain non-owned automobiles, that is, automobiles
Tidewater "d[id] not own, lease, hire or borrow which [were] used
in connection with [Tidewater's] business." Stone's automobile
was not owned, leased, hired, or borrowed by Tidewater, but it
was being used in Tidewater's business. However, the definition
of the term "insured" in the liability portion of the policy does
not include Stone. In fact, according to the order of
certification, Stone "stipulated that he is not covered under the
liability provisions of the policy, and indeed, the exclusions
defining the term `insured' clearly operate to exclude him."
Stone does not dispute that his automobile is not a "covered
auto" under the uninsured motorist provisions of the policy; the
only automobiles covered under those provisions are those
vehicles owned by Tidewater. Stone argues, however, consistent
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with the district court's ruling, that he was operating an
automobile to which the Liberty Mutual policy applied because he
was operating a "covered auto" under the liability provisions.
Thus, he says, the insurer was required under Code § 38.2-
2206(A), infra, to provide him uninsured motorist coverage since,
according to Stone, he was an "insured" under Code § 38.2-
2206(B), infra. Stone contends that the policy violates
subsection (A) because although it specifically insures non-owned
automobiles under the liability provisions of the policy, it does
not provide uninsured motorist coverage to anyone occupying the
same non-owned automobiles.
The insurer recognizes that it must provide uninsured
motorist insurance pursuant to subsection (A), but argues it can
limit who is an "insured" without violating the provisions of
subsection (B) of the statute. Alternatively, the insurer
maintains that Stone is not entitled to benefits under the policy
because benefits are excluded under the liability provisions of
the policy given the fact that Stone was not legally liable for
the collision with Drye.
Thus, the following question is framed for us by the Fourth
Circuit: "Whether, under these facts, Stone was an insured as
defined in subsection 38.2-2206B; that is, does subsection 38.2-
2206B mandate that Stone is an insured under the uninsured
motorist endorsement of Tidewater's automobile policy
notwithstanding the policy's language?"
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Elaborating, the Fourth Circuit states that the issue to be
decided is whether "Tidewater's policy with Liberty violated
subsection 38.2-2206A, as the district court concluded, because
Stone is an `insured' under subsection 38.2-2206B." Continuing,
the Fourth Circuit observes that "[i]f Stone is an insured, then
he is entitled to receive uninsured benefits under the policy.
If the policy does not violate subsection 38.2-2206A and Stone is
not, therefore, entitled to receive uninsured motorist benefits
under the policy, then the judgment of the district court will be
reversed."
Virginia's uninsured motorist statute, recently amended,
contained the following pertinent provisions at the time of this
controversy. Code § 38.2-2206 (Repl. Vol. 1994).
Subsection (A) provided that "no policy or contract of
bodily injury . . . liability insurance relating to the
ownership, maintenance, or use of a motor vehicle shall be issued
or delivered in this Commonwealth to the owner of such vehicle or
shall be issued or delivered by any insurer licensed in this
Commonwealth upon any motor vehicle principally garaged or used
in this Commonwealth unless it contains an endorsement or
provisions undertaking to pay the insured all sums that he is
legally entitled to recover as damages from the owner or operator
of an uninsured motor vehicle" within certain monetary limits.
Subsection (A) further provided that "[t]hose limits shall equal
but not exceed the limits of the liability insurance provided by
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the policy. . . ."
Subsection (B) provided that the term "`Insured' as used in
subsection[] A . . . of this section means the named insured and,
while resident of the same household, the spouse of the named
insured, and relatives of either, while in a motor vehicle or
otherwise, and any person who uses the motor vehicle to which the
policy applies, with the expressed or implied consent of the
named insured, and a guest in the motor vehicle to which the
policy applies or the personal representative of any of the
above."
We must consider how far subsection (B) extends to insureds
of the second class under the policy, that is, "[a]nyone else
occupying a covered auto." This is purely a question of
statutory interpretation: Does Stone qualify under the statute
as an insured, notwithstanding the limiting language of the
policy? We hold that he does not.
An analysis of the statute in question must be made against
the following settled background. The Virginia uninsured
motorist statute "is meant to protect an insured motorist, his
family and permissive users of his vehicle against the peril of
injury by an uninsured wrongdoer, not to provide `insurance
coverage upon each and every uninsured vehicle to everyone.'"
Bayer v. Travelers Indem. Co., 221 Va. 5, 8, 267 S.E.2d 91, 93
(1980) (quoting Nationwide Mut. Ins. Co. v. Harleysville Mut.
Cas. Co., 203 Va. 600, 603, 125 S.E.2d 840, 843 (1962)).
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Turning to the statute, we construe the plain language of
subsection (A) as merely reciting those circumstances under which
policies providing bodily injury liability insurance, issued in
the Commonwealth upon vehicles principally garaged or used in the
State, must contain endorsements agreeing to pay "the insured"
certain sums that such insured is legally entitled to recover
from the owner or operator of an uninsured motor vehicle. As the
insurer contends, nothing in that subsection purports to require
that all the same vehicles and insureds be covered under both
liability and uninsured motorist coverages of the same policy.
The subsection does expressly recite that the limits of uninsured
motorist coverage shall be equal to but not exceed the limits of
liability insurance, but it does not require other similarities
of coverage.
The focus in this case must be on subsection (B) of the
statute. Given the facts, the crucial statutory language, which
defines the term "insured," describes the extent to which
uninsured motorist coverage is mandated by the statute to
insureds of the second class. An insured is "any person who uses
the motor vehicle to which the policy applies, with the expressed
or implied consent of the named insured, and a guest in the motor
vehicle to which the policy applies or the personal
representative of any of the above."
Dissecting the clauses, we look first to the term "motor
vehicle." The language does not say "a," "any," "every," or
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"all." In two places, it provides "the" motor vehicle to which
the policy applies. Stone was not using either of "the" motor
vehicles to which the policy applies, the Ford or the Honda; he
was using his own motor vehicle. Thus, the statute only
requires, as to insureds of the second class, that uninsured
motorist coverage be provided to those who are in either of the
motor vehicles listed in the policy, as opposed to "any" vehicle
to which the policy might apply.
Second, and more importantly, we look to the language
providing that the person who uses the motor vehicle must do so
"with the expressed or implied consent of the named insured."
Obviously, when the General Assembly employs this language, it is
resorting to language relating to the omnibus clause found in
Code § 38.2-2204(A), which deals with liability insurance
covering motor vehicles (policy must contain a provision insuring
any person using the motor vehicle "with the expressed or implied
consent of the named insured").
When construing such language, we repeatedly have held that
a named insured generally cannot give permission to use a vehicle
that the named insured does not own. For example, in Nationwide
Mut. Ins. Co. v. Cole, 203 Va. 337, 341, 124 S.E.2d 203, 206
(1962), the Court said that "in order for one's use and operation
of an automobile to be within the meaning of the omnibus coverage
clause requiring permission of the named insured, the latter
must, as a general rule, own the insured vehicle or have such an
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interest in it that he is entitled to the possession and control
of the vehicle and in a position to give such permission."
Accord Virginia Auto Mut. Ins. Co. v. Brillhart, 187 Va. 336,
343, 46 S.E.2d 377, 380 (1948).
But Stone contends that because he was operating a "covered
auto" within the meaning of the liability provisions of the
policy, he therefore qualified as an "insured" under the
uninsured motorist statute in that he was using a motor vehicle
to which the policy applies within the mandate of subsection (B).
Stone argues that the employer, Tidewater, impliedly gave Stone
permission to operate Stone's vehicle when he was using it in the
scope of the employer's business. We reject these contentions.
The "expressed or implied consent" language of the
subsection modifies "the motor vehicle to which the policy
applies" clause. If the legislature, in the uninsured motorist
statute, had meant to include as insureds of the second class
occupants of non-owned vehicles, then the General Assembly surely
would have used language like it uses at the end of Code § 38.2-
2204(A), which deals with the sort of permission needed when one
is operating a non-owned vehicle. That statute refers to
"permission or consent of the owner" of a non-owned vehicle, and
deems permission or consent of "the custodian" to be the
permission of the owner. The uninsured motorist statute contains
no such expansive language.
Simply put, "the vehicle" referred to in subsection (B)
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includes only owned, not non-owned vehicles. Thus, there is no
statutory mandate that requires the courts to ignore the
insurer's policy language as written.
Accordingly, the certified question is answered in the
negative.
JUSTICE KOONTZ, with whom JUSTICE LACY joins, dissenting.
I respectfully dissent. The Virginia uninsured motorist
statute is remedial in nature and is to be liberally construed so
that its intended purpose, to protect the innocent victims of
negligent uninsured/underinsured motorists, may be accomplished.
See Lipscombe v. Security Ins. Co., 213 Va. 81, 83, 189 S.E.2d
320, 322-23 (1972); Nationwide Mutual Insurance Co. v. Sours, 205
Va. 602, 606, 139 S.E.2d 51, 54-55 (1964). We are required to
look to the words used in the statute to determine its meaning
and to give effect only to the meaning so determined. See Rose
v. Travelers Indemnity Co., 209 Va. 755, 758, 167 S.E.2d 339, 342
(1969).
When the accident in question occurred, Code § 38.2-2206
provided in pertinent part that:
A. [N]o policy or contract of bodily injury or
property damage liability insurance relating to the
ownership, maintenance, or use of a motor vehicle shall
be issued or delivered in this Commonwealth to the
owner of such vehicle or shall be issued or delivered
by any insurer licensed in this Commonwealth upon any
motor vehicle principally garaged or used in this
Commonwealth unless it contains an endorsement or
provisions undertaking to pay the insured all sums that
he is legally entitled to recover as damages from the
owner or operator of an uninsured motor vehicle with
limits not less than the requirements of § 46.2-472.
Those limits shall equal but not exceed the limits of
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the liability insurance provided by the policy. . . .
B. "Insured" as used in [subsection] A . . . means the
named insured and, while resident of the same
household, the spouse of the named insured, and
relatives of either, while in a motor vehicle or
otherwise, and any person who uses the motor vehicle to
which the policy applies, with the expressed or implied
consent of the named insured . . . .
(Emphasis added.) 1
There is no dispute that the liability provisions of
Liberty's policy extended liability coverage to Stone's vehicle. 2
Accordingly, subsection (A) required Liberty's policy to also
provide uninsured motorist coverage with limits equal to those of
the liability policy, if Stone, as a user of that vehicle at the
time of the accident, met one of the definitions of an "insured"
contained in subsection (B).
On the facts of this case, the majority correctly identifies
the crucial statutory language in subsection (B) defining
"insured" to be "any person who uses the motor vehicle to which
the policy applies, with the expressed or implied consent of the
named insured."
Contrary to the initial conclusion reached by the majority,
however, this phrase does not limit "the motor vehicle" to one
"listed in the policy." The express language "to which the
1
Subsequent amendments to this statute are not pertinent to
the issue in this case.
2
The declarations page of the liability policy specifically
identifies non-owned vehicles while being used in Tidewater's
business as "COVERED AUTOS."
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policy applies" modifies "the motor vehicle." There can only be
two interpretations of the phrase "the policy" when subsection
(B) is read, as it must be, in context with subsection (A). This
phrase can only mean "the uninsured motorist policy" or "the
liability policy." The former interpretation must be rejected
because it would render the entire statute meaningless. This is
so because the mandate of subsection (A) for uninsured motorist
coverage for an "insured" would never be invoked by a definition
of insured under subsection (B) that is restricted to a user of a
motor vehicle that already has uninsured motorist coverage.
Rather, it is manifest that the legislature intended this phrase
to refer to the liability coverage provision described in
subsection (A), so that the phrase means "the motor vehicle to
which the liability policy applies."
Finally, the majority suggests that the statute's
requirement that use of the vehicle must be "with the expressed
or implied consent of the named insured" eliminates non-owned
vehicles from subsection B because a named insured cannot give
permission to use a vehicle that the named insured does not own.
Nothing in the statute suggests that such an interpretation was
intended by the legislature to limit the mandate of subsection
(A).
To accomplish the mandate that the insurer issue no
liability insurance policy upon any motor vehicle principally
used in this Commonwealth unless it contains an endorsement or
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provisions for uninsured motorist coverage in equal limits, the
legislature expressly used the phrase "with the express or
implied consent of the named insured" to modify the definition of
insured in subsection (B). Thus, the legislature recognized that
there are instances, such as the present case, where a "named
insured," i.e., the person or entity contracting for liability
coverage, would not be the owner of all the vehicles to which the
policy applies. Here, Stone was using a vehicle to which
Liberty's liability policy applies because he was using it in
connection with Tidewater's business, and he was doing so with
the consent of Tidewater, the "named insured."
For these reasons, in my view, at the time of the accident
in question, Stone was an "insured" as defined by subsection (B)
of the statute and, thus, notwithstanding the limiting provisions
of the uninsured motorist endorsement of Tidewater's automobile
policy with Liberty, Code § 38.2-2206 mandated that Stone be
provided coverage as an insured under the uninsured motorist
endorsement of that policy. Accordingly, I would answer the
certified question in the affirmative.
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