Dircks v. Travelers Indem. Co. of Am.

Justice Himonas, dissenting: INTRODUCTION ¶ 32 The legislature has established a comprehensive statutory framework requiring every car on the road to be adequately insured. To accomplish the end of insuring every car, the statutory provisions require vehicle owners to maintain automobile insurance on the cars they own. See UTAH CODE§ 41-12a-301(2)(a) ("[E]very resident owner of a motor vehicle shall maintain owner's or operator's security in effect at any time that the motor vehicle is operated on a highway or on a quasi-public road or parking area within the state[.]"). And to make sure that every car is adequately insured, it provides for default coverage-some of it (such as liability insurance) mandatory and some of it (such as underinsured motorist coverage) waivable-that must be included in any insurance "policy ... purchased to satisfy the owner's or operator's security requirement." Id. § 31A-22-302(1). Of particular relevance to this case, the legislature has provided that when a vehicle owner purchases liability insurance with a particular policy limit, the vehicle owner's automobile insurance policy will, by operation of law, also include the same dollar amount of underinsured motorist insurance unless the purchaser takes affirmative steps to validly waive that coverage. Id. § 31A-22-305.3(3)(b). ¶ 33 The members of this court all agree that when you purchase an insurance policy for vehicles you own-i.e., when you purchase a policy "to satisfy the owner's or operator's security requirement"-that insurance must comply with the default coverage requirements contained in chapter 22 of title 31A of the automobile insurance code. Id. § 31A-22-302(1) (setting forth the coverage requirements for "[e]very policy of insurance or combination of policies purchased to satisfy the owner's or operator's security requirement"). And the court is also of one mind that if you purchase an automobile insurance policy only for vehicles you do not own, that insurance need not comply with the automobile insurance law's default coverage requirements. See Arredondo v. Avis Rent A Car Sys., Inc. , 2001 UT 29 , ¶ 14, 24 P.3d 928 ("Whether a policy or combination of policies was ' purchased to satisfy the owner's or operator's security requirement' ... hinges not on whether it actually satisfies the statutory security requirement, but rather whether it was purchased for the purpose of satisfying the statutory security requirement." (emphases in original) (citation omitted)). ¶ 34 This appeal presents a middle case: What happens if you are one of those few insurance purchasers who purchase insurance for vehicles you own and at the same time, and in the same policy document , also purchase insurance for certain vehicles you do not own (vehicles that, because they are owned by somebody else, must already have basic insurance)? These insurance purchasers will almost invariably be sophisticated businesses purchasing liability insurance on additional vehicles in order to minimize their vicarious liability. But the majority thinks this is the anomalous circumstance in which the automobile insurance law's default coverage requirements apply to insurance policies purchased for vehicles not owned by the purchaser. Because this contravenes the relevant statutory provisions and makes no sense, I respectfully dissent. BACKGROUND ¶ 35 On November 30, 2011, The Travelers Indemnity Company of America issued automobile insurance to Mid-State Consultants, Inc. so that Mid-State could "satisfy [its] owner's or operator's security requirement" for company-owned vehicles. UTAH CODE§ 31A-22-302(1). In addition to this owner's insurance, however, Travelers also sold Mid-State liability insurance for certain vehicles it did not own-personal vehicles of its employees when those vehicles were being used for company business. The policy Mid-State purchased for its own vehicles included (1) $1 million of liability coverage and (2) $1 million of underinsured motorist coverage. But the policy Mid-State purchased for employee-owned vehicles-a policy that came in the form of an "endorsement" to the policy for Mid-State's own vehicles-only provided $1 million liability coverage for employee-owned vehicles. Mid-State did not purchase underinsured motorist coverage for the employee-owned vehicles. ¶ 36 After Derek Dircks was injured, he filed an underinsured-motorist claim with Travelers contending that, because Mid-State did not waive underinsured motorist coverage for employee-owned cars, Mid-State's policy included that coverage by operation of law. The majority agrees. It acknowledges that Mid-State "had no legal duty to purchase any insurance for unowned vehicles." Supra ¶12. And it does not dispute that, if Mid-State had purchased insurance for unowned vehicles in a separate policy document from the document containing insurance for the vehicles it did own, Utah Code section 31A-22-305.3 would not apply to that insurance. It nonetheless concludes that section 305.3 applies to the endorsement Mid-State purchased to cover employee-owned cars. ¶ 37 The majority hangs its hat on the word "policy" in Utah Code section 31A-22-302. According to section 302, the majority reasons, section 305.3 applies to any " policy ... purchased to satisfy the owner's or operator's security requirement." Supra ¶12 (emphasis in original) (quoting UTAH CODE§ 31A-22-302(1) ). And when Mid-State purchased insurance for both company-owned and employee-owned cars, it purchased that insurance in a single "insurance document"-one that was "labeled with a single policy number throughout." Supra ¶13 ("A 'policy' is '[a] document containing a contract of insurance.' " (alteration in original) (quoting policy , BLACK'S LAW DICTIONARY (9th ed. 2009))). Accordingly, the insurance for both the company-owned cars and the employee-owned cars was part of the same "policy ... purchased to satisfy the owner's or operator's security requirement." Supra ¶14 (quoting UTAH CODE§ 31A-22-302(1) ). To be sure, only the company-owned car insurance was actually "purchased to satisfy the owner's or operator's security requirement." But they were both in that same "policy." Per the majority, section 305.3 therefore applied to the insurance for both company-owned cars and the employee-owned cars. Supra ¶14. And section 305.3 provides that the employee-owned car insurance must include underinsured motorist coverage unless Mid-State validly waived that coverage-which it did not do. The fly in the majority's ointment is that its interpretation of "policy" does not square with a cohesive reading of all of the relevant provisions of our automobile insurance law. ANALYSIS ¶ 38 The point of our "owner's or operator's" vehicle insurance law is to make sure that every car on the road is adequately insured. To this end, it requires all automobile insurance owners to maintain "owner's or operator's security" on their automobiles. UTAH CODE§ 41-12a-301(2)(a). It then sets forth some mandatory and default coverage provisions that must be included in all policies "purchased to satisfy the owner's or operator's security requirement" in this state. Id. § 31A-22-302(1). Sections 31A-22-303 and 304 state the required liability coverage contents and limits for a policy of motor vehicle liability coverage purchased to satisfy the owner's or operator's security requirement; section 305 sets forth the default uninsured motorist coverage terms that a policy purchased to satisfy the owner's or operator's security requirement must include (unless waived); and section 305.3 sets forth the default underinsured motorist coverage terms that owner's or operator's insurance must contain (again, unless waived). I read this scheme to prescribe terms only for insurance you purchase on cars that you own. When you buy coverage for cars you do not own, the law governing terms for "owner's or operator's" insurance does not apply. ¶ 39 The majority rejects this reading. It concludes that when a company purchases insurance both to satisfy its "owner's or operator's security requirement" and to provide some coverage for employee-owned vehicles, whether the "owner's or operator's" insurance law prescribes terms of coverage for employee-owned vehicles depends on whether that insurance is included in a document with the same "policy number" as the document providing insurance for the company-owned cars. Supra ¶13. ¶ 40 I cannot countenance this interpretation. As counsel for the Dirckses admitted at oral argument, the majority's position means that whether Mid-State needs to affirmatively waive underinsured motorist coverage turns entirely on how Travelers chooses to label its policy documents. According to the majority's view, because Mid-State purchased insurance for company-owned and employee-owned cars in a document labeled with a single policy number, Mid-State needed to affirmatively waive underinsured motorist coverage. But had Mid-State gone to Travelers and purchased the same exact insurance contracts, except with the "endorsement" for employee-owned cars relabeled a "policy," the majority would conclude that it did not need to affirmatively waive underinsured motorist coverage. This contravenes the whole thrust of the statutory scheme-which is concerned not with regulating the labels an insurance company affixes to its policy documents, but rather with getting vehicle owners to adequately insure their cars. The majority's view does not even serve a general consumer protection purpose-such as protecting those insurance purchasers who buy two different kinds of automobile insurance at the same time-because insurance companies can circumvent the protections simply by relabeling a single form from an "endorsement" to a "policy." This is a task they could conceivably accomplish by simply assigning different policy numbers to different documents. It borders on the senseless to let the outcome in this case be determined by how Travelers labeled its insurance instruments. 8 ¶ 41 I also reject the majority's interpretation because it seeds analytical confusion. Picture this: Mid-State buys liability coverage with $1 million limits for company-owned vehicles and with $500,000 limits for employee-owned vehicles. Then there would be two liability coverage limits in the same policy document. Under the majority's interpretation, to which one of these should we refer in determining the underinsured motorist coverage limits on employee-owned vehicles? The liability coverage policy with $500,000 limits-i.e., the one that, by the terms of the policy document, covers employee-owned vehicles? But that would mean that a set of statutes that only refers to liability coverage purchased to satisfy the owner's or operator's security requirement would ignore that liability coverage (i.e., the $1 million limit coverage), and their operation would instead turn on liability coverage of a kind that the automobile insurance statutes never mention or purport to govern. But if we were to decide that the $1 million liability coverage set the default limits for underinsured motorist coverage for employee-owned vehicles, then we would have to hold that the inclusion of liability coverage for employee-owned vehicles with $500,000 limits magically operates to cause different liability coverage that is concerned with a completely different set of cars to dictate the limits of underinsured motorist coverage on those vehicles to which the $500,000 policy applies. Which is, if anything, even more outlandish. ¶ 42 The majority's opinion relies, in significant part, on the notion that when a particular statutory provision speaks clearly, we may not read "substantive terms into the text that are not already there." Supra ¶¶23, 27 (quoting Arredondo v. Avis Rent A Car Sys., Inc. , 2001 UT 29 , ¶ 12, 24 P.3d 928 ). And it concludes that here we have a statute that could not be clearer: under Utah Code section 31A-22-302, section 305.3 applies to any policy purchased to satisfy the owner's or operator's security requirement-and it applies even "to those portions of a policy" that are entirely unrelated to the purpose of "satisfy[ing] the security obligation." Supra ¶12. When-as here-owner's or operator's insurance is in the same policy as insurance for unowned cars, section 305.3 therefore applies to the entire policy-no matter that the result distorts the statutory scheme and confuses the law. ¶ 43 I share the majority's general impulse against reading "substantive terms into the text that are not already there." Supra ¶27 (quoting Arredondo , 2001 UT 29 , ¶ 12, 24 P.3d 928 ). I am concerned, however, that neither the Arredondo canon nor a wooden reliance on legal dictionaries helps solve the statutory problem in this case. Here, the legislature has told us that any policy "purchased to satisfy the owner's or operator's security requirement"-that is, any policy " purchased for the purpose of satisfying the statutory security requirement," Arredondo , 2001 UT 29 , ¶ 14, 24 P.3d 928 (emphasis in original)-must include certain terms. UTAH CODE§ 31A-22-302(1). And, by negative implication, it has told us that a policy need not include those provisions when it is not purchased for the purpose of satisfying the owner's or operator's security requirement. See Masich v. U.S. Smelting, Ref. & Mining Co. , 113 Utah 101 , 191 P.2d 612 , 622 (1948) ("[B]y making compensation payable only in the event of total disability, [our law] clearly indicates an intent on the part of the legislature not to make compensation payable for partial disability."). But it has not told us what to do with a policy purchased in part "to satisfy the owner's or operator's security requirement," even though, sometimes, it tells us exactly how to classify something done in part to accomplish one goal and in part another. See UTAH CODE§ 13-41-102(7) (" 'Service' means any activity that is performed in whole or in part for the purpose of financial gain[.]"); see also id. § 20A-11-1501(1) (" 'Labor organization' means a lawful organization of any kind that ... exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or other terms and conditions of employment."); id. § 4-5-103(1)(c) ("A food is adulterated ... if it consists in whole or in part of a diseased, contaminated, filthy, putrid, or decomposed substance, or if it is otherwise unfit for food[.]"). ¶ 44 Indeed, on a proper understanding of the interpretive problem this case presents, the canon cautioning against reading "substantive terms into the text that are not already there" is inapposite. Arredondo , 2001 UT 29 , ¶ 12, 24 P.3d 928 (citation omitted). It does not solve the real interpretive problem before us. Nor does a plain meaning analysis of the word "policy." Cf. supra ¶¶12-14. The interpretive problem before us is not what a "policy" is. The problem is whether section 305.3 applies to a policy (or combination of policies) that is purchased in part to satisfy the owner's or operator's security requirement and in part for a different purpose-insuring employee-owned cars. The statutory language does not precisely speak to this issue. It says only that section 305.3 applies to any "policy of insurance or combination of policies purchased to satisfy the owner's or operator's security requirement." UTAH CODE§ 31A-22-302(1). To reach the majority's result-that section 305.3 applies to a policy purchased in part to satisfy Mid-State's owner's or operator's security requirement and in part to cover employee-owned cars-we must conclude that section 302 applies section 305.3 to any "policy ... or combination of policies purchased [ in whole or in part ] to satisfy the owner's or operator's security requirement." Id. This is, to be sure, one possible resolution of the statute's imprecision. But it is not the only possible resolution. Another possibility-the one I favor-holds that section 302 applies section 305.3 to any "policy ... or combination of policies [ to the extent they are ] purchased to satisfy the owner's or operator's security requirement." Id. ¶ 45 In a paragraph of ipse dixit , the majority denies that the imprecision I have identified exists. According to the majority, these two sentences are equivalent: (1) "The statute applies to a policy or combination of policies purchased to satisfy the owner's or operator's security requirement" and (2) "The statute applies to a policy or combination of policies purchased in whole or in part to satisfy the owner's or operator's security requirement." Supra ¶18. In the majority's view, "[a] policy that is purchased 'in part' to satisfy an owner's or operator's security requirement is one that is 'purchased to satisfy' the security requirement. The same goes for a policy that is purchased 'in whole' to do so." Supra ¶18. 9 ¶ 46 Of course, when a majority invokes the venerable Draughon -Dumpty doctrine-baldly declaring that an interpretation is beyond the linguistic pale-there is little the losing side can do. 10 I note, however, that many other courts would not have invoked that doctrine in this case. 11 If some of Utah sees no ambiguity and the rest of Utah (along with Massachusetts, D.C. and Nevada) think otherwise, that disagreement itself is strong evidence that the ambiguity exists. ¶ 47 The majority has a couple of responses. First, it insists that there is no ambiguity because "[s]ection 302 regulates at the 'policy' level (not the insurance coverage level)." Supra ¶19. Thus, the majority argues, when a policy contains terms that are "necessary to satisfy the statutory security requirements," section 302 must apply to the entire policy. Supra ¶19. ¶ 48 This is not correct. Section 302 does not regulate at the "policy level"; it regulates at the level of any "policy or combination of policies purchased to satisfy the owner's or operator's security requirement." That is, therefore, the phrase we are tasked with interpreting. And to interpret that phrase, we need to ask ourselves which of the following two constructions makes better sense of our automobile insurance law: (1) section 302 regulates any policy or combination of policies purchased in whole or in part to satisfy the owner's or operator's security requirement or (2) section 302 regulates any policy or combination of policies to the extent purchased to satisfy the owner's or operator's security requirement. ¶ 49 Second, the majority suggests that Arredondo , 2001 UT 29 , 24 P.3d 928 , "forecloses [my] alternative reading of the statute." Supra ¶22; see also supra ¶¶20-21. I cannot for the life of me see how. In Arredondo , we explained that whether a policy or combination of policies was purchased to satisfy the owner's or operator's security requirement depends on the purpose for which the policy or combination of policies was purchased, and that the automobile insurance law only operates to imply terms for policies purchased for the purpose of obtaining owner's or operator's security. See Arredondo , 2001 UT 29 , ¶ 14, 24 P.3d 928 ("Whether a policy or combination of policies was ' purchased to satisfy the owner's or operator's security requirement of [s]ection 41-12a-301' hinges not on whether it actually satisfies the statutory security requirement, but rather whether it was purchased for the purpose of satisfying the statutory security requirement."(citation omitted)). This case presents a related scenario: Mid-State purchased (1) a policy that satisfied its owner's or operator's security requirement and (2) an endorsement that has a separate purpose-providing liability coverage for certain vehicles Mid-State did not own. Arredondo tells us to focus on the purpose of these instruments. To the extent their purpose is to satisfy the owner's or operator's security requirement, Arredondo tells us that section 302 applies section 305.3 to them. Arredondo does not directly speak to whether section 302 applies section 305.3 to an endorsement to a policy whose purpose is not to satisfy the owner's or operator's security requirement, but it is certainly in keeping with Arredondo 's basic approach to conclude that it does not. Arredondo does not foreclose my alternative reading. ¶ 50 The upshot of this is that the phrase "section 302 applies section 305.3 to any policy or combination of policies purchased to satisfy the owner's or operator's security requirement" is, at minimum, ambiguous between (1) "section 302 applies section 305.3 to any 'policy or combination of policies purchased [ in whole or in part ] to satisfy the owner's or operator's security requirement' " and (2) "section 302 applies section 305.3 to any 'policy or combination of policies [ to the extent they are ] purchased to satisfy the owner's or operator's security requirement.' " Supra ¶¶44, 48. Properly framed, therefore, the interpretive problem is which of these two possible interpretations of section 302 is better. This question cannot be answered by recourse to the canon against reading substantive terms into the statutory text because both possible interpretations necessarily interpolate terms into that text. Instead, we must recur to the broader "linguistic, structural, and statutory context" in which this interpretive problem arises. State v. Rushton , 2017 UT 21 , ¶ 11, 395 P.3d 92 (citation omitted). ¶ 51 For the reasons I have explained, I think my interpretation is the better one. It is supported by the statutory scheme as a whole-a scheme that is plainly aimed at regulating the contents of owner's or operator's insurance (not insurance on cars you don't own). See supra ¶38. It also avoids the mismatch between means and ends to which the majority's interpretation gives rise-that is, it does not create a form of "consumer protection" (1) that applies only to those few, sophisticated consumers who purchase liability coverage on both their own cars and other people's cars at the same time and (2) that the insurance company can effortlessly circumvent by relabeling its insurance policy documents. See supra ¶40. And, finally, it avoids the analytical confusion that would flow from the majority's preferred interpretation. See supra ¶41. CONCLUSION ¶ 52 I am unpersuaded by the majority's interpretation. It misconstrues-and underestimates-the interpretive problem before us. It grafts ineffectual protections for a small sliver of the most sophisticated insurance consumers onto a statutory scheme that is otherwise effective at regulating the insurance that automobile owners must purchase for their own cars. And it unsettles the law by creating a situation in which an important legal question-which of two different liability policy limits should serve as the benchmark for underinsured motorist coverage limits-has no determinate answer. ¶ 53 I would hold that the automobile insurance laws at issue in this case govern only the terms of insurance policies purchased to satisfy the owner's or operator's security requirement. Because Mid-State did not purchase liability insurance on employee-owned cars in order to satisfy the owner's or operator's security requirement, section 305.3 does not apply to that insurance. Mid-State's Travelers insurance policy therefore did not include $1 million of underinsured motorist coverage for employee-owned cars, notwithstanding the fact that Mid-State did not affirmatively waive that coverage. Footnotes [8] The majority's response to this analysis is that the statute will "promote[ ] transparency" by "requiring insurers to offer either two separate insurance policies (one that satisfies the insurance requirements and an additional policy for excess insurance) or a single policy that includes an acknowledgment that excess coverage within the policy does not get the full benefits of the insurance code." Supra ¶15. But this is simply to restate a point I have just given reasons for rejecting. My conclusion remains untouched: where the distinction between "two separate insurance policies" and "a single policy" could be as subtle as the distinction between a document labeled (say) "BA-7511L495-12-GRP" and one labeled "BA-7511I495-12-GRP," the requirement that the majority reads into the statute will do little to promote transparency. [9] The majority tells us that "[t]his is not ipse dixit ," but is, instead, "a conclusion that follows from the natural meaning of the statutory text as we understand it." Supra ¶19. There is little distinction, and even less difference, between "it means x because I say so" and "x is its natural meaning as I understand it." "The majority deems its construction 'natural' ... [b]ut that is just the majority judges' intuition speaking." Oliver v. Utah Labor Comm'n , 2017 UT 39 , ¶ 68, --- P.3d ---- (Lee, A.C.J., concurring in the judgment) (citation omitted). [10] See Draughon v. Dep't of Fin. Insts , 1999 UT App 42 , ¶ 11 n.4, 975 P.2d 935 (" 'When I use a word,' Humpty Dumpty said in a rather scornful tone, 'it means just what I choose it to mean-nothing more nor less.' 'The question is,' said Alice, 'whether you can make words mean different things.' 'The question is,' said Humpty Dumpty, 'which is to be master-that's all.' " (quoting Lewis Carroll, Through the Looking Glass and What Alice Found There 123 (1941))). [11] Many courts think "the purpose" is ambiguous between, for example, "the primary purpose" or "the sole purpose" or simply "a purpose"-an ambiguity that simply does not exist if "purchased for the purpose of satisfying the owner's or operator's security requirement" is equivalent to "purchased in whole or in part " for that purpose. See, e.g. , United States v. LaRouche Campaign , 695 F.Supp. 1265 , 1272 (D. Mass. 1988) (Keeton, J.) ("If a statute is interpreted as requiring proof of purpose ... that an act contribute to bringing about a defined event, a[n] ... ambiguity remains. Does 'purpose' mean 'sole purpose,' or 'primary purpose,' or instead is the 'purpose' element satisfied if ... [the purpose is] included as at least one of the ... purposes (even if not the primary or dominant one) ...?"); Waldie v. Schlesinger , 509 F.2d 508 , 510 n.1 (D.C. Cir. 1974) ("[W]hen affiants declare that the purpose of the Academies is to prepare men for combat, it is unclear whether they mean it is the sole purpose, the primary purpose, or merely a purpose. Plaintiffs' case hangs on resolution of such ambiguities, and plaintiffs should have the opportunity to resolve them in court."); Nev. Tax Comm'n v. Nev. Cement Co. , 117 Nev. 960 , 36 P.3d 418 , 422 (2001) ("NRS 372.050's language, defining a taxable 'retail sale' as a sale of property for any purpose other than resale, could suggest a primary-purpose test as well a sole-purpose test. Similarly, NRS 372.080, exempting from taxation the keeping, retaining, or exercising power over property for the purpose of being processed, fabricated or manufactured into, attached to, or incorporated into, other tangible personal property, could suggest a sole-purpose test, a primary-purpose test, or a physical-ingredient test. Thus, these statutes are ambiguous, and we look to the legislature's intent, and construe them in line with what reason and public policy indicate." (emphases in original)).