Rosales v. State Farm Mutual Automobile Insurance Co.

CARROLL, Chief Justice. George Rosales and Ester Rivera sued State Farm Mutual Automobile Insurance to recover underinsured motorist (UIM) benefits under a Texas Standard Liability Policy issued to Sharon Barrett. The trial court concluded that Rosales and Rivera could not obtain both liability and UIM benefits under a single insurance policy, and granted summary judgment in favor of *805 State Farm. Rosales and Rivera do not argue that genuine issues of material fact preclude summary judgment in this cause, but that the trial court incorrectly applied substantive law to reach an erroneous result. We will affirm the trial-court judgment. FACTS On March 3, 1990, Rosales and Rivera were passengers in Barrett’s 1987 Ford Tempo when it collided with another vehicle. It is undisputed that Barrett caused the accident, and that Rosales and Rivera were seriously injured. Barrett carried a State Farm automobile-insurance policy that provided liability and uninsured/underinsured motorist (UM/UIM) coverage. State Farm paid Rosales and Rivera $25,000 each, the maximum amount of bodily-injury liability insurance available per person under Barrett’s policy. In addition, Rosales and Rivera received UIM benefits from their own insurance policies. Rosales and Rivera also made claims for UIM benefits under the Barrett policy, but State Farm denied these claims. Rosales and Rivera filed suit against State Farm, seeking recovery of UIM benefits under Barrett’s policy, as well as extra-contractual damages flowing from State Farm’s denial of their claims. State Farm moved for summary judgment on the ground that it had no obligation to pay UIM benefits to Rosales and Rivera because Barrett’s vehicle was not an underin-sured vehicle according to the policy’s terms. The trial court granted summary judgment for State Farm, and Rosales and Rivera now appeal. DISCUSSION In a single point of error, Rosales and Rivera contend that the trial court incorrectly applied Texas substantive law in rendering judgment in favor of State Farm. They argue first that State Farm incorrectly applied an exclusion in Barrett’s policy to deny them UIM benefits. State Farm responds that Rosales and Rivera are not entitled to UM/UIM benefits because, by definition, Barrett’s vehicle is not an underinsured vehicle. We agree. Barrett’s policy specifies that uninsured/underinsured vehicles do not include vehicles owned by or furnished or available for the regular me of the named insured. 1 The parties stipulated that Barrett was the named insured on the policy at issue in this cause, and that Rosales and Rivera were riding in a vehicle “owned by or available for the regular use of Sharon Barrett” at the time of the accident. From these stipulated facts, we can conclude only that the policy’s unambiguous language supports State Farm’s coverage position. Rosales and Rivera next advance the public-policy argument that the definitional exclusion at issue contravenes the purpose and intent of the uninsured/under-insured motorist statute. See Tex.Ins.Code Ann. art. 5.06-1 (1981 and Supp.1992). The purpose of that statute is to protect conscientious motorists from financial loss caused by financially-irresponsible motorists. See Briones v. State Farm Mut. Auto. Ins. Co., 790 S.W.2d 70, 74 (Tex.App. 1990, writ denied). Rosales and Rivera support their public-policy argument by pointing to a number of cases that deal with circumstances under which injured parties may combine or “stack” the coverage of two or more separate and distinct insurance policies. See Stracener v. United Serv. Auto. Ass’n, 111 S.W.2d 378 (Tex. 1989) (allowing parties to stack the limits of UIM coverage when other coverages available); American Motorists Ins. Co. v. Briggs, 514 S.W.2d 233 (Tex.1974) (when a person has coverage under two separate uninsured motorist policies, liability is joint and several to the extent of the actual damages); American Liberty Ins. Co. v. Ranzau, 481 S.W.2d 793 (Tex.1972) (“other insurance” clauses may not be used to limit uninsured-motorist liability in contravention of article 5.06-1); Fidelity & Casualty Co. v. Gatlin, 470 S.W.2d 924 (Tex.Civ. App.1971, no writ) (permitting family of deceased passenger to recover uninsured *806 motorist coverage from two different policies). Rosales and Rivera place particular emphasis on Stracener, in which the Texas Supreme Court discussed at length uninsured (UM) and UIM exclusions in insurance policies. 777 S.W.2d at 381-84. From these cases, Rosales and Rivera conclude that Texas courts have repeatedly disregarded all forms of liability-limiting clauses in determining the applicability of UIM benefits. We note, however, that the issue in this cause — whether Rosales and Rivera may recover both liability and UIM benefits under a single insurance policy — is distinguishable from the issue of stacking coverage under separate insurance policies. We know of no case where a Texas court has permitted an injured passenger to obtain both liability and UIM benefits under a single insurance policy, and appellants cite us to no such authority. Moreover, a number of Texas courts have upheld limitations on UM/UIM coverage in recent years without concluding that those limitations contravene public policy. See, e.g., Scarborough v. Employers Casualty Co., 820 S.W.2d 32 (Tex.App. 1991, no writ) (woman injured while, a passenger in her own vehicle precluded from UIM coverage as a matter of law); Berry v. Texas Farm Bureau Mut. Ins. Co., 782 S.W.2d 246 (Tex. App.1989, writ denied) (holding valid an owned-but-unscheduled restriction in a UM policy); Sims v. Standard Fire Ins. Co., 781 S.W.2d 328 (Tex.App.1989, writ denied) (“excluded driver” endorsement in a UM/ UIM policy held valid and enforceable). In fact, this Court recently upheld the validity of an owned-but-unscheduled-vehicle exclusion in a UM/UIM policy. See Conlin v. State Farm Auto. Ins. Co., 828 S.W.2d 332 (Tex.App.1992, writ requested). We acknowledge that in the recent case of Briones v. State Farm Mutual Insurance Co., 709 S.W.2d 70, 72-74 (Tex.App. 1990, writ denied), the San Antonio Court of Appeals, relying primarily on Stracener, held that a definitional exclusion on uninsured coverage was an invalid restriction of coverage required by article 5.06-1 of the Insurance Code. That case presented a narrow set of facts in which Briones was a passenger in an uninsured vehicle furnished by his employer and driven by an uninsured co-worker. When Briones sought to recover under the UM clause of his family automobile policy, State Farm refused coverage on the ground that the vehicle in which Briones was injured had been furnished by the employer for Briones’s regular use. Id. at 71. Although the Briones court concluded that enforcing the definitional exclusion under the particular facts of that case would frustrate the intent of the UM statute, the court did not condemn definitional exclusions in all cases. Instead, the Briones court advocated that courts determine on a case-by-case basis whether upholding a definitional exclusion operates to deprive an insured of the protection required by the UM/UIM statute. Id. at 74. We believe that invalidating the definitional exclusion in the present cause would not further the purpose of the UM/UIM statute since nothing in the record indicates that Barrett was a “financially irresponsible motorist.” See id. As noted, Rosales and Rivera each recovered $25,000 liability under Barrett’s policy. State Farm argues that Barrett did not purchase UIM coverage for the purpose of increasing her own policy limits or protecting her passengers from her own negligence, but as protection from the negligence of other uninsured and underin-sured drivers. State Farm contends that permitting Rosales and Rivera to recover both liability and UIM payments under Barrett’s policy would effectively convert UIM coverage into a second layer of liability coverage, a result not contemplated by the parties to the policy and not calculated in the cost of the policy premium. We agree with State Farm and conclude that UIM coverage is not available for damages sustained by a passenger who has already recovered the full amount of liability limits under that same policy. Having recovered the liability limits under Barrett’s policy, Rosales and Rivera are precluded from recovering the remainder of their damages under the UIM provision of that same policy. Accordingly, we *807 overrule this point of error and affirm the trial court's summary judgment. Footnotes [1] The parties refer to this policy provision as the "definitional exclusion."