James M. Dickau v. Vermont Mutual Insurance Co. , 107 A.3d 621 ( 2014 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2014 ME 158
Docket: Ken-13-545
Argued: September 9, 2014
Decided: December 31, 2014
Panel: SAUFLEY, C.J., and ALEXANDER, SILVER, MEAD, GORMAN, JABAR, and HJELM,
JJ.
Majority: SAUFLEY, C.J., and MEAD, GORMAN, and HJELM, JJ.
Dissent: ALEXANDER, SILVER, and JABAR, JJ.
JAMES M. DICKAU
v.
VERMONT MUTUAL INSURANCE CO.
GORMAN, J.
[¶1] James M. Dickau appeals from a summary judgment entered on
stipulated facts by the Superior Court (Kennebec County, Nivison, J.) in favor of
Vermont Mutual Insurance Company on Dickau’s complaint seeking uninsured
motorist coverage. Dickau contends that, contrary to the Superior Court’s
decision, he is entitled to uninsured motorist coverage on his umbrella policy with
Vermont Mutual pursuant to the policy language or, in the alternative, by operation
of law. We affirm the judgment.
I. BACKGROUND
[¶2] The parties stipulated to the following material facts. In June of 2011,
Dickau was riding his motorcycle in Maine when he was struck by a vehicle driven
2
by Irida L. Macomber. The accident was caused by Macomber. Dickau suffered
more than $250,000 in damages. At the time of the accident, Dickau was covered
by two insurance policies: (1) a Dairyland Insurance Company policy insuring his
motorcycle and providing $250,000 in uninsured motorist coverage, and (2) a
Vermont Mutual personal umbrella policy providing liability coverage above any
qualifying minimum primary insurance for up to $1 million per occurrence.
Macomber had $100,000 in liability insurance coverage through Travelers
Commercial Insurance Company. Dickau settled his claim against Macomber for
her Travelers policy limit of $100,000. Dickau also settled his claim for uninsured
motorist benefits with Dairyland for $150,000 (Dairyland’s $250,000 uninsured
motorist coverage maximum minus the $100,000 from Travelers).
[¶3] In May of 2012, Dickau commenced the present litigation seeking a
declaratory judgment that his umbrella policy with Vermont Mutual provides for
uninsured motorist coverage (Count I), and that, even if the policy does not,
Vermont Mutual was nevertheless required to provide up to $1 million in
uninsured motorist coverage pursuant to statute (Count II), as offset by the
Travelers and Dairyland settlements.1 The parties stipulated to the facts, and each
moved for summary judgment.
1
Vermont Mutual is a Vermont company doing business in Maine. Dickau is a resident of Maine and
the accident occurred in Maine. Notwithstanding Dickau’s references to Vermont law, we apply only
Maine law to the present action. See Flaherty v. Allstate Ins. Co., 2003 ME 72, ¶¶ 16-21, 822 A.2d 1159.
3
[¶4] By decision dated November 12, 2013, the court granted Vermont
Mutual’s motion for summary judgment and denied Dickau’s. Dickau appeals.
II. DISCUSSION
[¶5] Uninsured motorist (UM) coverage is a type of insurance that allows an
injured person to recover, from his own insurer, damages caused by a party who is
uninsured or underinsured.2 24-A M.R.S. § 2902 (2014). In this way, UM
coverage represents an exception to the basic premise underlying insurance law,
and tort law in general, that an injured person’s damages are paid by or on behalf
of the at-fault party. Beal v. Allstate Ins. Co., 2010 ME 20, ¶ 34, 989 A.2d 733;
9 Steven Plitt et al., Couch on Insurance 3d § 122:2 (2008 Rev. ed.); 1 Alan I.
Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance
[hereinafter UM Insurance] § 1.1 (3d ed. 2005).
[¶6] The vast majority of states have opted to make UM coverage
mandatory. Maine first did so in 1967, P.L. 1967, ch. 93, § 1 (effective
Jan. 1, 1968), and is now among the forty-eight states3 that require insurers to
provide uninsured motorist coverage in certain circumstances:
2
“Uninsured” coverage is deemed to include “underinsured” coverage, i.e., coverage of less than the
statutory minimum for bodily injury liability insurance or “less than the limits of the injured party’s
uninsured vehicle coverage,” depending on the type of policy. 24-A M.R.S. § 2902(1) (2014); see Levine
v. State Farm Mut. Auto. Ins. Co., 2004 ME 33, ¶ 8, 843 A.2d 24.
3
Only Michigan and Ohio do not require UM coverage by statute. See 6 New Appleman on
Insurance Law § 65.01[1][a] n.11 (Christopher J. Rubinette ed. 2011).
4
A policy insuring against liability arising out of the ownership,
maintenance or use of any motor vehicle may not be delivered or
issued for delivery in this State with respect to any such vehicle
registered or principally garaged in this State, unless coverage is
provided in the policy or supplemental to the policy for the protection
of persons insured under the policy who are legally entitled to recover
damages from owners or operators of uninsured, underinsured or
hit-and-run motor vehicles, for bodily injury, sickness or disease,
including death, sustained by an insured person resulting from the
ownership, maintenance or use of such uninsured, underinsured or
hit-and-run motor vehicle.
24-A M.R.S. § 2902(1).
[¶7] Pursuant to 24-A M.R.S. § 2902(2), the amount of UM coverage a
policy must provide to an owner or operator of a vehicle registered in Maine
depends on the applicability of the Maine Automobile Insurance Cancellation
Control Act (the MAICCA), 24-A M.R.S. §§ 2911-2924 (2014). For policies
subject to the MAICCA or to certain assigned risk plans,
the amount of coverage to be so provided may not be less than the
amount of coverage for liability for bodily injury or death in the
policy offered or sold to a purchaser unless the purchaser expressly
rejects such an amount, but in any event may not be less than the
minimum limits for bodily injury liability insurance provided for
under Title 29-A, section 1605, subsection 1 [i.e., $50,000 per person
or $100,000 per accident].
24-A M.R.S. § 2902(2); see 29-A M.R.S. § 1605(1) (2014). Thus, although an
insured may elect to reject UM coverage equal to the full amount of coverage
provided for bodily injury by his or her automobile liability policy in favor of only
the statutory minimums, the insured may only do so by signing a form provided by
5
the insurer that contains specific language to that effect. 24-A M.R.S. § 2902(2).
For policies not subject to the MAICCA, UM coverage is required only according
to the statutory minimums: “[T]he amount of coverage so provided may not be less
than the minimum limits for bodily injury liability insurance provided for under
Title 29-A, section 1605, subsection 1.” 24-A M.R.S. § 2902(2); see 24-A M.R.S.
§ 2913 (2014).
[¶8] Given this statutory mandate, most insurers expressly include the
required UM coverage in their policies and then account for that coverage in the
premiums charged. 9 Steven Plitt et al., Couch on Insurance § 122:2; 1 Widiss &
Thomas, UM Insurance § 2.7. When the policy is silent as to UM coverage, or
when the premiums the insurer charges do not appear to account for any UM
coverage, UM coverage is nevertheless deemed to be a part of the policy according
to section 2902, absent the insured’s express waiver. See 1 Widiss & Thomas, UM
Insurance § 2.7.
[¶9] Dickau’s appeal requires us to examine the scope of the policies to
which the UM statute applies and, for the first time, to consider whether the UM
statute’s requirements apply to umbrella policies.
[¶10] An umbrella policy is one of two forms of excess insurance coverage,
the other being so-called “true excess” policies. 4 Rowland H. Long, The Law of
Liability Insurance § 22.03 (2005). A true excess policy “provides coverage above
6
a single primary policy for specific risks,” and “is purchased by the insured to
protect against large losses or an accumulation of small losses.” Id. In short, a true
excess policy effectively extends the policy limit for an underlying primary policy
covering precisely the same losses.
[¶11] An umbrella policy, in contrast, “provides coverage over more than
one primary policy,” such as homeowners’ insurance, automobile insurance, boat
insurance, aircraft insurance, general liability insurance, and the like.4 Id. As with
true excess policies, umbrella policies are “parasitic” in that they require that the
insured maintain and exhaust an underlying primary policy. Peerless Indem. Ins.
Co. v. Frost, 723 F.3d 12, 18 (1st Cir. 2013); see 15 Lee R. Russ &
Thomas F. Segalia, Couch on Insurance 3d § 220:32 (2005 & Supp. 2009). The
secondary nature of umbrella coverage, covering only catastrophic losses, is
reflected in its premiums, which are ordinarily quite low. Globe Indem. Co. v.
Jordan, 634 A.2d 1279, 1284 (Me. 1993); Apodaca v. Allstate Ins. Co., 255 P.3d
1099, 1103 (Colo. 2011); Trinity Universal Ins. Co. v. Metzger, 360 So. 2d 960,
962 (Ala. 1978).
4
There is also more than one type of umbrella policy. For example, parties may contract for other
forms of umbrella policies that cover high-risk events that the underlying primary policy will not, and are
therefore sometimes referred to as gap coverage. 15 Lee R. Russ & Thomas F. Segalia, Couch on
Insurance 3d § 220:32 (2005 & Supp. 2009); 4 Rowland H. Long, The Law of Liability Insurance § 22.03
(2005); 1 New Appleman on Insurance Law § 1.06[7] (Francis J. Mootz III ed. 2011). Dickau’s policy
does not provide such gap coverage, and we have not considered the applicability of the UM statute to
umbrella policies that do.
7
[¶12] Because parties are free to contract as they please, an umbrella policy
could include UM coverage. See, e.g., Apodaca, 255 P.3d at 1107 (“To date, the
General Assembly has left this option to the marketplace.”). Thus, Dickau first
argues that his policy with Vermont Mutual includes UM coverage up to his
$1 million policy limit. Dickau argues in the alternative that, if the policy does not
include such coverage, UM coverage is deemed included in his umbrella policy by
operation of section 2902, again up to his $1 million policy limit. We therefore
analyze whether Dickau’s Vermont Mutual policy provides UM coverage either
pursuant to its terms or by operation of statute.
A. Policy Language
[¶13] We interpret an insurance policy de novo. If the language of the
policy is unambiguous, we apply its plain meaning. Langevin v. Allstate Ins. Co.,
2013 ME 55, ¶ 9, 66 A.3d 585. If the language of the policy is ambiguous, we
construe it against the insurer and liberally in favor of the insured, id., but in that
case, “summary judgment may not be granted because an unresolved factual issue,
i.e., the intent of the parties, remains for the trier of fact,” Me. Mut. Fire Ins. Co. v.
Grant, 674 A.2d 503, 505 (Me. 1996) (quotation marks omitted).
[¶14] Dickau’s policy with Vermont Mutual states that it is a “Personal
Umbrella Liability Policy” with a $1 million limit. On the introductory page, it
states: “Remember, this is a liability policy. It covers your legal liability for claims
8
made against you by someone else. It does not cover damages to your own
property, your car, your house, or your valuables.” The umbrella policy requires
that Dickau maintain certain “MINIMUM PRIMARY INSURANCE
REQUIREMENTS” with regard to automobiles, homes, rental properties,
residential employees, watercraft, and recreational vehicles, and states that it “does
not provide coverage below [those] limits of liability.” In particular, it requires
Dickau to carry “Auto Liability Insurance (Including Uninsured/Underinsured
Motorists Coverage Where Required by Law)” of at least $250,000 per person and
$500,000 per accident for bodily injury.
[¶15] The policy states as to its “[c]overage” as follows: “We pay damages
on behalf of the insured, subject to the Exclusions and Limits of Liability.”
“[D]amages” is further defined with reference to the “sums the insured must pay.”
It also specifically excludes from coverage any “Personal injury to [the insured]
or a relative who is a resident of [the insured’s] household” and “[a]ny claim for
Uninsured/Underinsured Motorists Coverage(s) as defined in any primary policy
described in the Declarations.”
[¶16] Dickau points to the declarations page of the policy—on which “Each
Claim for Uninsured/Underinsured Motorists Property Damage Coverage where
such coverage must be provided by law” is labeled “Not Covered”—to argue that
by excluding only UM property damage coverage, Vermont Mutual has implicitly
9
agreed to cover UM personal injury damages. He also contends that the
requirement that he maintain UM coverage as part of a primary policy means that
the umbrella policy provides UM coverage as well.
[¶17] We disagree. As the Superior Court concluded, under no reasonable
interpretation could a policy with a specific exclusion for the insured’s personal
injury be read to provide UM coverage for the insured’s personal injury. The
unambiguous language of the policy as a whole does not support Dickau’s
contention that it provides UM coverage.
B. UM Coverage by Operation of Law
[¶18] Although Dickau’s umbrella policy with Vermont Mutual itself
unambiguously provides no UM coverage, we next conduct a de novo
interpretation of Maine’s UM statute to determine if, despite the language of the
policy, the statute requires Vermont Mutual to provide UM coverage in the
umbrella policy. See Butterfield v. Norfolk & Dedham Mut. Fire Ins. Co.,
2004 ME 124, ¶ 4, 860 A.2d 861, superseded by statute, P.L. 2005, ch. 591, § 1
(effective Aug. 23, 2006).
[¶19] In interpreting a statute, our single goal is to give effect to the
Legislature’s intent in enacting the statute. Berube v. Rust Eng’g, 668 A.2d 875,
877 (Me. 1995). Among the many sources we may consult to determine that
10
legislative intent, we first determine if the language of the statute—here, section
2902—is plain and unambiguous. Butterfield, 2004 ME 124, ¶ 4, 860 A.2d 861.
[¶20] A plain language interpretation should not be confused with a literal
interpretation, however. See Doe v. Reg’l Sch. Unit 26, 2014 ME 11, ¶ 15, 86 A.3d
600 (“A court can even ignore the literal meaning of phrases if that meaning
thwarts the clear legislative objective.” (quotation marks omitted)); Town of
Embden v. Madison Water Dist., 1998 ME 154, ¶ 7, 713 A.2d 328 (stating that
“[r]easoning and judgment, not the mere bald literalness of statutory phrasing,
must guide and control” (quotation marks omitted)); Me. Beer & Wine Wholesalers
Ass’n v. State, 619 A.2d 94, 97 (Me. 1993) (“If necessary, we may ignore the
literal meaning of phrases in favor of an interpretation consistent with the
legislative intent.”); see also Bob Jones Univ. v. United States, 461 U.S. 574, 586
(1983) (“It is a well-established canon of statutory construction that a court should
go beyond the literal language of a statute if reliance on that language would defeat
the plain purpose of the statute . . . .”); United States v. Falvey, 676 F.2d 871, 875
(1st Cir. 1982) (“[C]ourts are not bound to read a statute literally . . . .”). Rather,
courts are guided by a host of principles intended to assist in determining the
meaning and intent of a provision even within the confines of a plain language
analysis. See, e.g., State v. Papazoni, 622 A.2d 501, 503 n.1 (Vt. 1993) (“[L]ike
11
all other rules of statutory construction, [the plain language rule] is no more than
an aid in our efforts to determine legislative intent.”).
[¶21] Among these is the principle that we must interpret the plain language
by taking into account the subject matter and purposes of the statute, and the
consequences of a particular interpretation. Merrill v. Me. Pub. Emps. Ret. Sys.,
2014 ME 100, ¶ 15, 98 A.3d 211. In determining a statute’s “practical operation
and potential consequences,” we may reject any construction that is “inimical to
the public interest” or creates absurd, illogical, unreasonable, inconsistent, or
anomalous results if an alternative interpretation avoids such results. Doe,
2014 ME 11, ¶ 15, 86 A.3d 600 (quotation marks omitted). We also may read
exclusions into a statute when to do otherwise would render the statute “entirely at
odds with its history and apparent intent.” Falvey, 676 F.2d at 875.
[¶22] In applying these principles, we examine the entirety of the statute,
“giving due weight to design, structure, and purpose as well as to aggregate
language.” In re Hart, 328 F.3d 45, 48 (1st Cir. 2003) (quotation marks omitted).
We reject interpretations that render some language mere surplusage. Cent. Me.
Power Co. v. Devereux Marine, Inc., 2013 ME 37, ¶ 8, 68 A.3d 1262. In the
absence of legislative definitions, we afford terms their “plain, common, and
ordinary meaning, such as people of common intelligence would usually ascribe to
them,” Levine v. State Farm Mut. Auto. Ins. Co., 2004 ME 33, ¶ 19, 843 A.2d 24
12
(alteration omitted) (quotation marks omitted); see 1 M.R.S. § 72(3) (2014), but we
must also honor the idiosyncratic meanings and connotations of terms of art,
particularly in specialized areas of law such as insurance, see Dubois v. Madison
Paper Co., 2002 ME 1, ¶ 13, 795 A.2d 696 (“We assume the Legislature intended
the well-established meaning of a well-known term.”).
[¶23] In short, in interpreting the plain language of the statute, we must take
pains to avoid an overly simplistic or overly broad interpretation of section 2902
that wreaks havoc on, rather than preserves, the Legislature’s intent. See, e.g., Bob
Jones Univ., 461 U.S. at 586 (stating that a literal construction of a statute,
“without regard to the object in view, . . . has never been adopted by any
enlightened tribunal—because it is evident that in many cases it would defeat the
object which the Legislature intended to accomplish” (quotation marks omitted));
Me. Beer & Wine Wholesalers Ass’n, 619 A.2d at 97.
[¶24] Nowhere in the provisions of the UM coverage statute has the
Legislature expressly stated that it applies to umbrella policies. Instead, section
2902(1) states that it applies to “polic[ies] insuring against liability arising out of
the ownership, maintenance or use of any motor vehicle . . . with respect to any
such vehicle registered or principally garaged in this State.” In establishing the
amount of UM coverage to be provided, section 2902(2) further describes those
policies as “motor vehicle insurance policies.” Section 2902 contains no additional
13
detail as to the intended breadth of “motor vehicle insurance policies,” nor does it
contain any express mention of umbrella, excess, or supplemental policies of any
kind.5
1. Minimum Recovery/Full Recovery Distinction
[¶25] Dickau relies in large part on the distinction between minimum
recovery statutes and full recovery statutes to argue that section 2902 applies to his
umbrella policy. According to this view, minimum recovery statutes—which
require insurers to carry only a minimum level of UM insurance (generally to
comply with the state’s financial responsibility statute)—do not apply to umbrella
policies because these statutes are intended to allow an injured person only the
recovery to which he would be entitled if the at-fault party carried the minimum
coverage required by statute. Bartee v. R.T.C. Transp., Inc., 781 P.2d 1084, 1092
(Kan. 1989), superseded by statute, L. 1988, ch. 152, § 1, as recognized in Fiorella
v. Travelers Prop. Cas. Ins. Co., 142 P.3d 321 (Kan. Ct. App. 2006). This view
further provides that full recovery statutes—which require UM coverage in an
amount equivalent to the entire amount of bodily injury liability coverage for
which the insured’s policy provides—do apply to umbrella policies because they
5
Maine is unlike New Hampshire, which has opted to expressly incorporate umbrella policies into its
UM statute. N.H. Rev. Stat. Ann. § 264:15(1) (West, Westlaw through Chapter 330 of the 2014 Reg.
Sess.) (requiring that “umbrella or excess policies . . . shall also provide the uninsured motorist coverage
equal to the limits of liability purchased, unless the named insured rejects such coverage in writing”).
14
are intended to afford an injured person with damages to the extent of the insured’s
policy limits. Bartee, 781 P.2d at 1092-93.
[¶26] As discussed below, we join other states in declining to draw such a
distinction. See Stoumen v. Pub. Serv. Mut. Ins. Co., 834 F. Supp. 140, 142
(E.D. Pa. 1993) (“[T]his Court does not believe that the type of uninsured motorist
statute that a legislature chooses to adopt is dispositive of the issue of whether the
legislature also intends to include umbrella policies within the statute’s reach.”);
Apodaca, 255 P.3d at 1102 (“[W]e find the distinction drawn by other courts
between ‘minimum liability’ and ‘full recovery’ UM/UIM statutes
unpersuasive . . . , and do not rely on this reasoning.”); Rowe v. Travelers Indem.
Co., 800 P.2d 157, 159 (Mont. 1990) (“[B]oth parties agree that the distinction
between ‘minimum liability’ and ‘full recovery’ statutes is meaningless.”).
[¶27] Our primary rationale for declining to make a distinction based on the
“type” of recovery provided by the statute is that the process used by the Maine
Legislature in enacting and amending section 2902 belies any suggestion that the
Legislature intended to do so. As of 1969, section 2902 provided that Maine was a
minimum recovery state, requiring UM coverage of “not less than the minimum
limits for bodily injury liability insurance provided for under the motorists
financial responsibility laws of this State.” P.L. 1969, ch. 132, §§ 1, 21 (effective
Sept. 1, 1969).
15
[¶28] It was not until 1999 that the full recovery language that is now
included in section 2902 was finally enacted.6 P.L. 1999, ch. 271, § 1 (effective
Sept. 18, 1999). Thus, Maine was a minimum recovery jurisdiction for the first
thirty years after the UM statute was enacted, and has been a full recovery state
only for the last fifteen years. Notwithstanding the 1999 change in the amount of
coverage required, in the forty-five years since section 2092 was enacted, the
Legislature has never broadened the class of policies to which UM coverage
applies. Instead, it has maintained the parameters of UM coverage as applying to
policies “insuring against liability arising out of the ownership, maintenance or use
of any motor vehicle.” Compare 24-A M.R.S. § 2902(1) with P.L. 1969, ch. 132,
§ 1; see Apodaca, 255 P.3d at 1106-07. Indeed, in 2005, the scope of the UM
coverage that is required was curtailed rather than expanded by an amendment to
section 2902 providing that only injuries “sustained by an insured person” would
be compensable, in order to clarify that “an insurance policy may limit uninsured
motorist coverage to the recovery of damages by an insured person.” P.L. 2005,
ch. 591, § 1 (effective Aug. 23, 2006); L.D. 2021, Summary (122nd Legis. 2006).
6
In 1975, the Legislature briefly amended section 2902 in a way that rendered Maine a full recovery
state. P.L. 1975, ch. 437, § 2 (effective Oct. 1, 1975). Just a few months later, however, the Legislature
repealed the full recovery language of section 2902 in emergency legislation, declaring that the
requirement that insured persons notify their insurer if they elected only the minimum UM coverage
rather than the full policy limit was “unworkable” and “cause[d] confusion.” P.L. 1975, ch. 676
(emergency, effective Mar. 23, 1976).
16
Although this language is not at issue in the present matter, the amendment
demonstrates the Legislature’s intent to limit the scope of required UM coverage.
[¶29] Also noteworthy is that although Maine’s UM statute now has a full
recovery component, it is not universally a full recovery statute. Recovery up to
the full value of coverage is the default provision as to personal automobile
liability policies (i.e., those policies to which the MAICCA does apply).
24-A M.R.S. § 2902(2). As to those policies to which the MAICCA does not
apply, only minimum recovery is required. 24-A M.R.S. § 2902(2). The scope of
UM coverage that is required is otherwise identical whether the statute is applied to
personal automobile liability policies or other policies, and we perceive no basis
upon which to distinguish how the UM statute is applied to an umbrella policy
based on whether or not the policy is a personal automobile liability policy. The
rationale for both types of UM coverage is the same: compensation for innocent
insured injured persons. Given that rationale, it would be absurd to make a
distinction based on whether a portion of the statute provides for full recovery. See
Doe, 2014 ME 11, ¶ 15, 86 A.3d 600.7
7
We also note that other jurisdictions with full recovery statutes have refused to apply UM coverage
requirements to umbrella policies. The UM statute in Massachusetts, for example, provides for full
recovery—“in amounts or limits prescribed for bodily injury or death for a liability policy”—but the
Massachusetts Supreme Court holds that “an umbrella policy is not an auto liability insurance policy
under [the] UM statute, and therefore need not provide UM benefits.” Liberty Mut. Ins. Co. v.
McLaughlin, 590 N.E.2d 679, 680 & n.2 (Mass. 1992) (quoting Mass. Gen. Laws ch. 175, § 113L(1)
(West, Westlaw through Chapter 389 of the 2014 2nd Annual Session)); see also Archunde v. Int’l
Surplus Lines Ins. Co., 905 P.2d 1128, 1130-31 (N.M. Ct. App. 1995) (holding that New Mexico’s full
17
[¶30] Furthermore, some of the decisions that have relied on the minimum
recovery/full recovery analysis have been superseded by statutes that now
expressly exclude umbrella policies from UM requirements. See Fiorella,
142 P.3d at 325 (rejecting Bartee based on subsequent statutory amendments); see
also Continental Ins. Co. v. Howe, 488 So. 2d 917, 920 (Fla. Dist. Ct. App. 1986)
(discussing the Florida legislature’s amendment of its full recovery UM statute to
exclude umbrella policies, notwithstanding Florida’s prior case law applying the
UM statute to umbrella policies).
[¶31] For these reasons, we conclude that the difference between minimum
recovery statutes and full recovery statutes is a meaningless distinction that sheds
no light on the Legislature’s intended scope of the application of section 2902.
2. “Motor Vehicle Insurance Policies”
[¶32] Dickau urges us to interpret “motor vehicle insurance policies,” the
term found in section 2902, to include any policy that contains any provision for
any coverage of a motor vehicle, including umbrella policies. Because this
interpretation would require us to ignore the history of insurance law, set aside the
meaning of well-established terms of art, and reject the counsel of dozens of
recovery UM statute is “consonant with . . . [the] majority of jurisdictions” that have held that “issuers of
excess liability insurance policies are not required to provide UM/UIM coverage”).
18
decisions from other jurisdictions, we decline to interpret “motor vehicle insurance
policies” in section 2902 as Dickau suggests.
[¶33] On numerous grounds, a majority of jurisdictions treat ‘automobile or
vehicle insurance,’ or some derivation thereof, as a term of art with a meaning
distinguishable from the references to motor vehicles found in an umbrella policy.
See, e.g., Apodaca, 255 P.3d at 1105; Rowe, 800 P.2d at 160. A motor vehicle
insurance policy describes the particular drivers and the particular vehicles for
which the insurance is afforded, and its premiums are calculated with reference to
the specific attributes of those vehicles and drivers—i.e., the age, condition, and
safety features of the vehicles, and the age and accident history of the insured
drivers. Apodaca, 255 P.3d at 1105. Dickau’s Dairyland policy, which he has
already exhausted, is just such an automobile insurance policy. In contrast,
Dickau’s umbrella policy refers only to “[a]utos” in general, without describing
any particular automobiles. The reference to “Autos You Own, Lease or Use
Regularly” exists only for purposes of setting out the minimum underlying policy
requirements.
[¶34] Section 2902 applies only to policies insuring specific vehicles
registered or principally garaged in Maine. 24-A M.R.S. § 2902(1). Dickau’s
umbrella policy, in contrast, contains no such limitation.
19
[¶35] Further, as its name suggests, motor vehicle insurance relates only to
liability arising out of the use or ownership of motor vehicles. Dickau’s umbrella
policy, in contrast, insures him against liability stemming from activities associated
with his use of watercraft and aircraft, as well as homeowners’ liability and general
personal liability. See Apodaca, 255 P.3d at 1105 (“[I]t would be equally
inaccurate to label the umbrella policy an ‘aircraft policy,’ ‘boat policy,’ or
‘homeowners policy.’”). As the Colorado Supreme Court stated in Apodaca,
“[Colorado’s UM] statute does not purport to apply to all ‘liability’ policies; it
applies only to ‘automobile liability or motor vehicle liability’ policies. This
language identifies a particular class of insurance policies that are inherently
tethered to the ownership of a particular motor vehicle and the activity of driving.”
Id. at 1105.
[¶36] Motor vehicle insurance premiums, reflecting their status as primary
insurance based on vehicle-specific liability, are also significantly higher than
premiums for the catastrophic basic liability of umbrella policies. See S. Am. Ins.
Co. v. Dobson, 441 So. 2d 1185, 1188 (La. 1983). “Unlike an automobile liability
insurance policy, the umbrella policy is designed only to protect the insured against
excess judgments, and the risks and premiums are calculated accordingly.” Id.
For motor vehicle insurance policies, the premiums are calculated according to
“the risk of loss through the operation of motor vehicles covered by the policy.”
20
Id. at 1189. Umbrella insurers “assume[] the much smaller risk of the insured’s
exposure to liability in excess of the limits of the underlying primary polic[y].”
Id.; see Metzger, 360 So. 2d at 962; 8C John Alan Appleman & Jean Appleman,
Insurance Law and Practice § 5071.65 (1981) (“Umbrella policies serve an
important function in the industry. In this day of uncommon, but possible,
enormous verdicts, they pick up this exceptional hazard at a small premium.”).
[¶37] In summary, the very nature of UM coverage differs from that of
umbrella coverage. UM coverage is “first-party coverage” in that it pays an
amount to the insured based on a third party’s liability; umbrella coverage is
third-party coverage, payable to a third party based on the insured’s liability.
Apodaca, 255 P.3d at 1103; see Rowe, 800 P.2d at 160; Moser v. Liberty Mut. Ins.
Co., 731 P.2d 406, 410 n.16 (Okla. 1986).
[¶38] Given these many distinctions, other courts have interpreted umbrella
policies as “wholly distinct classes of liability policies” that provide “generalized
excess liability coverage” only tangentially tied to vehicles, as opposed to the
traditional auto insurance policies to which UM statutes were intended to apply.
Apodaca, 255 P.3d at 1105 (“[A]n umbrella policy is not transformed into an
automobile or motor vehicle liability policy simply because it includes coverage
for liability arising from the use of automobiles” (quotation marks omitted));
Sidelnik v. Am. States Ins. Co., 914 S.W.2d 689, 694 (Tex. App. 1996) (“While the
21
[insureds’] umbrella policy provides excess coverage for liability arising from an
automobile accident, this fact does not convert it into an ‘automobile liability
insurance’ policy within the meaning of [Texas’s UM statute].”). The
Massachusetts Supreme Court, for example, has construed the “fair and reasonable
meaning” of “motor vehicle liability policy” not to include umbrella liability
provisions. Liberty Mut. Ins. Co. v. McLaughlin, 590 N.E.2d 679, 679-81
(Mass. 1992) (quotation marks omitted).
[¶39] Our holding in Globe Indemnity is also analogous. In that case,
Claudia Jordan was driving a vehicle lent to her by a car dealership when she
struck and injured the insured. 634 A.2d at 1280-81. The dealership carried a
garage policy as well as an umbrella policy that “covered the same risks that the
underlying Garage policy covered” up to a higher policy limit, both through the
same insurer. Id. at 1281. The dealership’s insurer sought a declaratory judgment
that the umbrella policy could not be accessed to defend or indemnify Jordan, who
had her own motor vehicle insurance policy. Id. at 1281. Jordan argued that, even
if the dealership’s primary garage policy only provided her with coverage up to the
then-statutory minimums, the garage’s umbrella policy could be accessed to cover
any damages sustained by the injured party in excess of the garage policy limit. Id.
at 1283.
22
[¶40] We agreed with the dealership’s insurer, stating that “[s]tatutes
mandating minimum primary coverage are not intended to affect umbrella policies,
and the statutes here do not operate to expand the contract language of [the
umbrella policy].” Id. In holding that the insurer was not bound to cover Jordan
pursuant to the umbrella policy, we distinguished between underlying primary
policies (the garage policy), which are mandated by statute, and excess policies
(the umbrella policy), which are voluntary. Id. Although Globe Indemnity did not
address UM coverage in particular, our analysis of the differences between primary
and umbrella policies in that case indicates that UM statutory coverage
requirements, like mandatory coverage minimums, may not be tied to umbrella
policies by operation of law.8
[¶41] Here, as we did in Globe Indemnity, we look to the very core of
mandatory insurance requirements in this state. Maine mandates that any
“operator or owner of a vehicle registered in this State or required to be registered
in this State” must maintain automobile liability insurance in minimum amounts as
to property damage, injury or death, and medical payments. 29-A M.R.S. §§ 1601,
8
Just last year, the First Circuit completed a similar analysis in Peerless Indemnity Ins. Co. v. Frost,
holding that although “the Law Court has never explicitly deemed the uninsured/underinsured motorist
statute inapplicable outside the context of motor vehicle insurance policies, the court has repeatedly
employed language to that effect,” suggesting that the UM coverage requirement is limited to the
underlying primary policy. 723 F.3d 12, 19 (1st Cir. 2013). Ultimately, the First Circuit concluded, “In
summary, given the legislative text, structure, history, and policy, as well as relevant case law from both
within and without Maine, we predict that the Maine Law Court would hold that section 2902 does not
apply to the [umbrella] polic[y] at issue in this case.” Id. at 24.
 23
1605(1)(C) (2014). There is, however, no such express requirement for umbrella
policies, or any other form of excess, secondary, or supplemental policy. Thus, it
would be illogical for us to hold that the Legislature has placed mandatory UM
coverage requirements on what is otherwise a completely voluntary form of
insurance. See Doe, 2014 ME 11, ¶ 15, 86 A.3d 600.
[¶42] In sum, we conclude that, for purposes of the UM coverage provision,
umbrella policies are not “motor vehicle insurance policies,” and therefore the UM
coverage requirements of section 2902 are not applicable to Dickau’s umbrella
policy. See, e.g., Todd v. Federated Mut. Ins. Co., 409 S.E.2d 361, 365
(S.C. 1991) (characterizing auto insurance and umbrella insurance as
“fundamentally different”); Dobson, 441 So. 2d at 1189 (stating that umbrella
insurance and motor vehicle insurance are “wholly different in nature and
purpose”); Sidelnik, 914 S.W.2d at 693 (discussing the “inherent differences
between primary liability and umbrella policies”).
[¶43] The legislative intent underlying section 2902 is to protect insured
people injured in motor vehicle accidents caused by uninsured or underinsured
drivers. The protection provided gives those injured persons insurance coverage in
an amount equal to what they would have obtained if the uninsured or
underinsured driver and vehicle were insured to the same extent as the injured
person and his vehicle. See Moser, 731 P.2d at 408. That purpose is fully
24
achieved by applying section 2902 to statutorily-required motor vehicle insurance
policies. See Mass, 610 A.2d at 1194 (stating that the rationale for Connecticut’s
UM statute—“to ensure that insureds receive more than the bare minimum of
uninsured motorist coverage in recognition of the often catastrophic consequences
of automobile collisions and the gross inadequacy of statutory minimum
coverages”—is adequately served even by interpreting the statute not to apply to a
personal excess policy (alterations omitted) (quotation marks omitted)); Todd,
409 S.E.2d at 365 (“The underlying primary policy provides the insured with all
the benefits accorded under [the] uninsured motorist statutes.”); Dobson, 441 So. 2d
at 1189 (“This object has been achieved by the underlying primary automobile
liability insurance policy . . . [and w]e see no reason to strain the interpretation
[of the UM statute].”); Hartbarger v. Country Mut. Ins. Co., 437 N.E.2d 691, 694
(Ill. App. Ct. 1982) (“[T]he insureds had received the protection of the mandatory
uninsured motorist coverage statute through their primary automobile liability
policy and were thus not left without the relief anticipated by that law.”).
[¶44] We conclude that the Legislature did not intend for section 2902 to
provide the universe of coverage argued by Dickau; to determine otherwise would
be to rewrite section 2902 to accommodate a remedy significantly greater than the
Legislature intended. See Hartbarger, 437 N.E.2d at 694 (“It does not give us the
authority to rewrite the unambiguous provisions of the umbrella policy in order to
25
expand the maximum coverage afforded to the plaintiff, and we will not do so.”);
Moser, 731 P.2d at 409 (“[T]he excess coverage . . . is beyond the contemplation,
scope and intent of [Oklahoma’s UM statute], which we find to be limited in
application to policies insuring against primary liability . . . .”). We decline to do
so.
The entry is:
Judgment affirmed.
SILVER, J., with whom ALEXANDER and JABAR, JJ., join, dissenting.
[¶45] I respectfully dissent. The Court’s holding is at odds with our rules of
statutory construction and the very purpose of the uninsured motorist statute. For
the reasons below, I would conclude that section 2902 unambiguously applies to an
umbrella policy that is linked to a primary automobile policy.
[¶46] “The purpose of the [uninsured motorist] statute is to permit an
injured party to receive the same recovery as would have been available to him or
her had the tortfeasor carried an equivalent level of insurance.” Molleur v.
Dairyland Ins. Co., 2008 ME 46, ¶ 10, 942 A.2d 1197; see Wescott v. Allstate Ins.,
397 A.2d 156, 166 (Me. 1979) (“The legislative intent is to benefit all insured
motorists by throwing the burden of compensating for injuries which would
26
otherwise go without redress from the individual victim to the insurance industry
for a premium.”). “By enacting section 2902, the Legislature has . . . indicated a
strong public policy in favor of the just compensation of accident victims.” Beal v.
Allstate Ins. Co., 2010 ME 20, ¶ 34, 989 A.2d 733 (quotation marks omitted);
see Pease v. State Farm Mut. Auto. Ins. Co., 2007 ME 134, ¶ 16, 931 A.2d 1072
(noting “the legislative intent to close coverage gaps rather than endorse patchwork
policies that leave responsible, insured consumers without the protection they have
paid for” (Silver, J., concurring)).
[¶47] As a general rule of statutory interpretation, “[w]e seek to discern
from the plain language of the statute the real purpose of the legislation, avoiding
results that are absurd, inconsistent, unreasonable, or illogical. If the statutory
language is clear and unambiguous, we construe the statute in accordance with its
plain meaning in the context of the whole statutory scheme.” State v. Mourino,
2014 ME 131, ¶ 8, --- A.3d. --- (quotation marks omitted). Given its broad intent
to “benefit all insured motorists,” Wescott, 397 A.2d at 166, we employ an
additional rule of construction when interpreting the uninsured motorist statute. In
order to properly “effectuate the purposes of this remedial statute, we construe the
protections of section 2902 liberally in favor of insureds and strictly against
insurers.” Beal, 2010 ME 20, ¶ 34, 989 A.2d 733; see Molleur, 2008 ME 46, ¶ 10,
942 A.2d 1197 (“This purpose is effected by interpreting the statute liberally in
27
favor of insured individuals and by strictly interpreting it against insurers.”). Only
if a statute is ambiguous do we consider its legislative history. Strout v. Cent. Me.
Med. Ctr., 2014 ME 77, ¶ 10, 94 A.3d 786.
[¶48] Against that backdrop, we must determine whether section 2902(1),
which applies to all “polic[ies] insuring against liability arising out of the
ownership, maintenance or use of any motor vehicle . . . with respect to any such
vehicle registered or principally garaged in this State,” 24-A M.R.S. § 2902(1)
(2014), applies to an umbrella policy that provides coverage in excess of the limits
of a primary automobile policy. The Supreme Court of Vermont addressed this
very question in 2009.9 It concluded that “[i]n providing clearly and
unambiguously that ‘[n]o policy’ insuring ‘against liability arising out of the
ownership, maintenance or use of any motor vehicle’ may issue without [uninsured
and underinsured motorist] coverage, the statute plainly encompasses the excess
policies here at issue.” Ins. Co. of State of Pennsylvania v. Johnson,
987 A.2d 276, 279 (Vt. 2009) (second alteration in original). Like the language of
9
Notably absent from the Court’s opinion is any reference to Insurance Company of the State of
Pennsylvania v. Johnson, 987 A.2d 276 (Vt. 2009). The Court correctly notes that it applies the law of
Maine, not Vermont, to the present action. Court’s Opinion ¶ 3 n.1. It thus ignores Johnson completely
but goes on to cite cases from, inter alia, Colorado, Alabama, Oregon, Kansas, Montana, Florida,
Massachusetts, New Mexico, Washington, Louisiana, Oklahoma, Texas, South Carolina, and Illinois to
make its point. For the reasons discussed in Johnson, those cases are inapplicable to the circumstances
here. See Johnson, 987 A.2d at 282 (“More important than the numbers, however, are the reasons
underlying the decisions. . . . [C]ourts applying UM/UIM statutes predicated—like [the Vermont UM
statute]—on the type of coverage rather than the type of policy have concluded that the statute’s plain
language compels the inclusion of excess or umbrella policies.”).
28
the provision at issue in Johnson, the plain language of section 2902 does not
discriminate between primary motor vehicle insurance policies and umbrella
policies. See id. at 280 (“It is a substantial stretch . . . to conclude that [the]
reference to policies ‘insuring against liability arising out of the ownership,
maintenance or use of any motor vehicle’ must, therefore, have also been intended
to refer solely to primary automobile policies.”).
[¶49] Section 2902(1) is based on the nature of the coverage, not the type of
insurance policy. See id. at 282. An umbrella policy will fall within the scope of
section 2902 if it provides coverage for liability that “aris[es] out of the ownership,
maintenance or use of any motor vehicle.” The umbrella policy does so here—in
its schedule of minimum primary insurance requirements, the policy refers to
“Auto Liability Insurance (including Uninsured/Underinsured Motorist Coverages
Where Required By Law) For Autos You Own, Lease, or Use Regularly.” Read
plainly, and in light of our mandate to construe section 2902 “liberally in favor of
insureds and strictly against insurers,” the statute applies to the umbrella policy.
Beal, 2010 ME 20, ¶ 34, 989 A.2d 733.
[¶50] The Court points out that “[s]ection 2902 applies only to policies
insuring specific vehicles registered or principally garaged in Maine,” and notes
that Dickau’s umbrella policy does not refer to a particular vehicle. Court’s
Opinion ¶ 33-34. But the statute’s application to policies “insuring specific
29
vehicles” does not exclude Dickau’s umbrella policy from its requirements, for two
reasons. First, uninsured motorist coverage, “[u]nlike liability coverage, . . . inures
to the person, not the vehicle.” Pease, 2007 ME 134, ¶ 15, 931 A.2d 1072
(Silver, J., concurring) (quotation marks omitted); see Johnson, 987 A.2d at 280-81
(“Of course, uninsured motorist coverage, much like the excess or umbrella
policies here at issue, is designed for the protection of persons, not vehicles.”
(quotation marks omitted)). Because section 2902 requires coverage that inures to
a person and not the specific covered vehicle, that the umbrella policy does not
refer to a specific covered vehicle does not bring it outside of the Legislature’s
intent to require coverage.
[¶51] Second, the umbrella policy does insure Dickau’s specific
vehicle. By their very nature, umbrella policies are “generally conditioned on the
existence of one or more primary coverages.” Johnson, 987 A.2d at 281 (quotation
marks omitted). Dickau’s insurance policy required an underlying motor vehicle
insurance policy before it would provide coverage. That underlying motor vehicle
policy provides coverage “with respect to” Dickau’s vehicle. Therefore, the
umbrella policy provides coverage “with respect to” that vehicle. See, e.g.,
Rebernick v. Wausau Gen. Ins. Co., 711 N.W.2d 621, 626 (Wis. 2006) (“The terms
of the [umbrella] policy require, as a condition of insurance, that there be
underlying automobile insurance coverage in a specified amount. The underlying
30
primary automobile policy, in turn, refers to a particular motor vehicle. Thus, the
. . . umbrella policy insures ‘with respect’ to a particular motor vehicle that is
named or described in the policy by incorporation of the underlying policy.”).
[¶52] The Court turns our rule of construction on its head by interpreting
section 2902 liberally in favor of insurance carriers and strictly against insured
motorists. See Wescott, 397 A.2d at 169 (noting that “this remedial statute must be
construed liberally in favor of the insured victim and strictly against the insurer”).
In emphasizing that we must not read a statute literally if it “thwarts the clear
legislative objective,” Doe v. Reg’l Sch. Unit 26, 2014 ME 11, ¶ 15, 86 A.3d 600
(quotation marks omitted), the Court implies that reading the uninsured motorist
statute so as to encompass umbrella policies would be “inimical to the public
interest” and “wreak[] havoc” on the intent of the Legislature. See Court’s
Opinion ¶¶ 21, 23. In order to reach this conclusion, however, the Court ignores
the very purpose of section 2902, which is to benefit all insured motorists by
“permit[ting] an injured party to receive the same recovery as would have been
available to him or her had the tortfeasor carried an equivalent level of insurance.”
Molleur, 2008 ME 46, ¶ 10, 942 A.2d 1197; see Wescott, 397 A.2d at 166. In this
case, going beyond the plain language of section 2902—which the Court does here
by reading an exclusion into the statute that does not exist—“defeat[s] the plain
purpose of the statute,” Bob Jones Univ. v. United States, 461 U.S. 574, 586
31
(1983), and thwarts the Legislature’s support for “a strong public policy in favor of
the just compensation of accident victims.” Beal, 2010 ME 20, ¶ 34, 989 A.2d 733
(quotation marks omitted).
[¶53] In the absence of any language in section 2902 that suggests that its
reach is limited to primary policies, the statute should not be read so narrowly in
order to avoid its application when an injured insured has elected to purchase an
umbrella policy with higher liability coverage. The Court bends over backward to
avoid applying section 2902 to umbrella policies and, in doing so, contravenes our
mandate to interpret “the protections of section 2902 liberally in favor of insureds
and strictly against insurers.” Beal, 2010 ME 20, ¶ 34, 989 A.2d 733 (quotation
marks omitted).
[¶54] For these reasons, I conclude that the uninsured motorist statute
unambiguously applies to Dickau’s umbrella policy. Accordingly, I would vacate
the judgment of the Superior Court and remand for judgment in favor of Dickau.
On the briefs:
Steven D. Silin, Esq., and Robert H. Furbish, Esq., Berman & Simmons,
P.A., Lewiston, for appellant James M. Dickau
James D. Poliquin, Esq., Norman, Hanson, & DeTroy, LLC, Portland, for
appellee Vermont Mutual Insurance Company
32
At oral argument:
Robert H. Furbish, Esq., for appellant James M. Dickau
James D. Poliquin, Esq., for appellee Vermont Mutual Insurance Company
Kennebec County Superior Court docket number CV-2012-168
FOR CLERK REFERENCE ONLY