Katelin Newman v. Cornerstone National Insurance Company Dba Freedom National Insurance Services ( 2015 )

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
KATELIN NEWMAN,
Plaintiff/Appellant,
v.
CORNERSTONE NATIONAL INSURANCE COMPANY DBA FREEDOM NATIONAL
INSURANCE SERVICES,
Defendant/Appellee.
No. CV-14-0121-PR
Filed March 18, 2015
Appeal from the Superior Court in Maricopa County
The Honorable David O. Cunanan, Judge
No. CV2011-099023
AFFIRMED
Opinion of the Court of Appeals, Division One
234 Ariz. 377, 322 P.3d 194 (App. 2014)
VACATED
COUNSEL:
Krista M. Carman (argued), Brian R. Warnock, Warnock, MacKinlay &
Carman, PLLC, Prescott, Attorneys for Katelin Newman
John A. Elardo, Venessa J. Bragg, Amanda Nelson, Elardo, Bragg, Appel &
Rossi, P.C., Phoenix, Attorneys for Cornerstone National Insurance
Company dba Freedom National Insurance Services
Stanley G. Feldman, Haralson, Miller, Pitt, Feldman & McAnally, P.L.C.,
Tucson; and David L. Abney, Knapp & Roberts, P.C., Scottsdale, Attorneys
for Amicus Curiae Arizona Association for Justice/Arizona Trial Lawyers
Association
Myles P. Hassett, Julie K. Moen, Jamie A. Glasser, The Hassett Law Firm,
P.L.C., Phoenix, Attorneys for Amicus Curiae Independent Insurance
Agents and Brokers of Arizona
NEWMAN V CORNERSTONE
Opinion of the Court
Joel DeCiancio, Christopher Robbins (argued), DeCiancio Robbins, PLC,
Tempe, Attorneys for Amicus Curiae State Farm Mutual Automobile
Insurance Company
Barry M. Corey, DeConcini McDonald Yetwin & Lacy, P.C., Tucson,
Attorney for Amicus Curiae Nicolette Davis
JUSTICE BRUTINEL authored the opinion of the Court, in which CHIEF
JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES
BERCH and TIMMER joined.
JUSTICE BRUTINEL, opinion of the Court:
¶1 Arizona Revised Statutes § 20-259.01(B) requires motor
vehicle insurers writing liability policies to “make available” and “by
written notice offer” underinsured motorist (“UIM”) coverage to their
insureds. We hold that § 20-259.01(B) does not require the notice to specify
the cost of the UIM coverage.
I.
¶2 Katelin Newman was injured in a motor vehicle accident
caused by another driver’s negligence. The at-fault driver’s insurance was
insufficient to cover Newman’s damages. She sought UIM coverage from
her insurer, Cornerstone National Insurance Company (“Cornerstone”),
but Cornerstone denied her claim because Newman had waived UIM
coverage. Cornerstone had previously offered Newman UIM coverage on
a form approved by the Arizona Department of Insurance (“ADOI”) when
she purchased her car insurance, but Newman declined the coverage.
¶3 Newman sued, seeking a declaration that the UIM waiver
form was void and that she was entitled to coverage. She sought partial
summary judgment on the ground that Cornerstone’s offer was deficient
under A.R.S. § 20-259.01(B) because the written notice offering the UIM
coverage did not include a premium quote, which a proper offer requires.
Cornerstone cross-moved for summary judgment, arguing that: (1) the
ADOI had approved the form on which Newman declined
uninsured/underinsured (“UM/UIM”) coverage, and ADOI-approved
forms satisfy § 20-259.01’s requirements; and (2) even if the ADOI had not
approved the form, Arizona law does not require an offer of UM/UIM
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NEWMAN V CORNERSTONE
Opinion of the Court
coverage to include a premium quote. The trial court denied Newman’s
motion for summary judgment and granted Cornerstone’s cross-motion.
¶4 The court of appeals affirmed, holding that “no premium
price is required for a written offer of UIM coverage to be valid,” and
therefore “Cornerstone’s offer of UIM coverage to Newman satisfied the
requirements of A.R.S. § 20-259.01.” Newman v. Cornerstone Nat’l Ins. Co.,
234 Ariz. 377, 378 ¶ 1, 380 ¶ 10, 322 P.3d 194, 195, 197 (App. 2014). The court
reasoned that the statute is “very specific regarding what the offer must
contain” and declined to impose additional requirements. Id. at 379 ¶ 7, 322
P.3d at 196.
¶5 We granted review to resolve whether the statutorily required
written offer must include a premium quote, a recurrent legal question of
statewide importance. We have jurisdiction pursuant to Article 6, Section
5(3) of the Arizona Constitution and A.R.S. § 12-120.24.
II.
¶6 We review the interpretation of statutes de novo. State v.
Hansen, 215 Ariz. 287, 289 ¶ 6, 160 P.3d 166, 168 (2007). Section 20-259.01(B)
provides:
Every insurer writing automobile liability or motor vehicle
liability policies shall also make available to the named insured
thereunder and shall by written notice offer the insured and at
the request of the insured shall include within the policy
underinsured motorist coverage which extends to and covers
all persons insured under the policy, in limits not less than the
liability limits for bodily injury or death contained within the
policy. The selection of limits or rejection of coverage by a
named insured or applicant on a form approved by the
director shall be valid for all insureds under the policy.
(Emphasis added.)
¶7 Newman argues that an “offer,” as understood under the
common law, must include the price. But this interpretation conflicts with
our prior interpretation of the statute.
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NEWMAN V CORNERSTONE
Opinion of the Court
¶8 We have held that § 20-259.01’s requirement that an insurer
“make available” UM/UIM coverage means “that insurers be willing to
provide such coverage.” Ballesteros v. Am. Standard Ins. Co. of Wis., 226 Ariz.
345, 348 ¶ 11, 248 P.3d 193, 196 (2011). In Ballesteros we also held that the
provision “by written notice offer” requires only “that insurers bring the
availability of such coverage to the insured’s attention.” Id. (citing 1981
Ariz. Sess. Laws, Ch. 224, § 1 (1st Reg. Sess.)). As used in § 20-259.01, the
word “offer” is a verb and means “[t]o bring to or before; to present for
acceptance or rejection; to hold out or proffer; to make a proposal to; to
exhibit something that may be taken or received or not.” Tallent v. Nat’l
Gen. Ins. Co., 185 Ariz. 266, 267–68, 915 P.2d 665, 666–67 (1996) (quoting
Black’s Law Dictionary 1081 (6th ed. 1990)). Thus, § 20-259.01(B) requires
an insurer to “make available” UIM insurance and to communicate that
availability in a written notice. The statute does not require the insurer to
convey all material terms of the proposed insurance contract. Although we
applied general contract principles in both Tallent and Ballesteros, we
declined to add requirements not specifically included in the statute. Id.;
Ballesteros, 226 Ariz. at 348–49 ¶¶ 13–14, 248 P.3d at 196–97.
¶9 Whether an offer of UM/UIM coverage has been made does
not depend on the insured’s understanding of the terms being offered, but
instead on whether a reasonable person would understand that his or her
acceptance would bind the insurer to provide the offered coverage.
Ballesteros, 226 Ariz. at 348–49 ¶¶ 13–14, 248 P.3d at 196–97. Based on that
reasoning, we held that § 20–259.01 does not require an explanation of UIM
coverage. Tallent, 185 Ariz. at 267, 915 P.2d at 666. Similarly, the offer need
not be translated into Spanish; the statute requires only that the insurer
provide written notice offering coverage that, if accepted, binds the insurer.
Ballesteros, 226 Ariz. at 349 ¶ 14, 248 P.3d at 197.
¶10 Here, Cornerstone’s UM/UIM selection form brought the
availability of coverage to Newman’s attention. It informed her that she
had “a right to purchase both Uninsured Motorist coverage and
Underinsured Motorist coverage” in an amount up to her policy’s liability
limit. If Newman had elected to receive UM/UIM coverage on
Cornerstone’s form and initialed the box captioned “Accept,” a reasonable
person in her position would understand that Cornerstone was bound to
provide the coverage regardless of whether a premium price was included.
Cornerstone’s offer of UIM coverage satisfied A.R.S. § 20-259.01’s
requirements.
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NEWMAN V CORNERSTONE
Opinion of the Court
¶11 Although the cost might be useful information in encouraging
insureds to purchase coverage and helping them to decide whether to buy,
§ 20-259.01 does not require this information. We have previously refused
to add requirements to this statute and again decline to do so. Ballesteros,
226 Ariz. at 349 ¶ 17, 248 P.3d at 197; Tallent, 185 Ariz. at 268, 915 P.2d at
667. Nothing precluded Newman from asking how much UIM coverage
would cost before she chose to forgo it, and nothing suggests that insurers
would refuse to provide the price information if requested.
III.
¶12 For the foregoing reasons, we affirm the trial court’s judgment
and vacate the court of appeals’ opinion. Cornerstone also requests an
award of its attorney fees on appeal pursuant to A.R.S. § 12-341.01. In the
exercise of our discretion, we deny its request.
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