Kyle v. Buckeye Union Insurance

O’Connor, J. ¶ 1 Former R.C. 3937.18(J) addressed certain circumstances where a policy could exclude uninsured/underinsured motorist (“UM/UIM”) coverage for an insured.1 Former R.C. 3937.18(E) excluded certain tortfeasors’ vehicles from being considered uninsured or underinsured.2 Because these paragraphs address different topics, they do not conflict. ¶ 2 On June 11, 2000, appellant Kathryn Kyle was a passenger in a car driven by her sister, Andrea Kyle. Andrea negligently collided with another vehicle, injuring Kathryn. Andrea and Kathryn were insured under a policy issued to their parents, appellants Steve and Janet Kyle, by Buckeye Union Insurance Company, appellee. This insurance contract provided coverage in the amount of $100,000 per person and $300,000 per accident in both the liability and UM/UIM portions of the policy. ¶ 3 The insurance covered three automobiles and named Andrea as the rated driver of the car that was involved in the collision. The policy, however, contained a standard clause that excluded liability coverage for an insured for bodily injury sustained by any named insured or resident family member. Kathryn and Andrea were living with their parents at the time of the accident; therefore, Kathryn could not collect under the liability portion of the policy. ¶ 4 Appellants do not contest the validity of the liability exclusion. Instead, they assert that since Andrea was not entitled to liability coverage, Andrea was an uninsured driver. In accordance with this position, appellants filed a com 171 plaint for declaratory judgment, seeking to collect under the UM/UIM provisions of the policy after Buckeye Union denied the claim. ¶ 5 Buckeye Union moved for summary judgment and argued that appellants were precluded from UM/UIM coverage by policy language, consistent with former R.C. 3937.18(K)(2), that excluded from the definition of an uninsured vehicle a motor vehicle owned by any family member and by subsection (K)(2) itself, which made the same exclusion. Appellants countered with their own motion for summary judgment, asserting that because former R.C. 3937.18(J)(1) and (K)(2) conflict, an ambiguity arose, and former R.C. 3937.18(J)(1) was controlling. ¶ 6 The trial court granted Buckeye Union’s motion for summary judgment, concluding that UM/UIM coverage was not available because of the policy language and former R.C. 3937.18(K)(2). The court of appeals affirmed, finding no conflict between the subsections. The appellate court determined that former subsection (J)(l) is limited by former subsection (K)(2) so that former (J)(l) applies only when the insured is driving a vehicle not covered by the policy and the tortfeasor is not the named insured, spouse, or resident relative. The cause is now before the court upon our acceptance of a discretionary appeal. ¶ 7 We are asked to decide whether former R.C. 3937.18(J)(1) and (K)(2), effective September 3, 1997, through October 31, 2001, and September 21, 2000, respectively, are in conflict and, if so, whether they can be reconciled. For the following reasons, we find that the subsections are not in conflict. Accordingly, we affirm the judgment of the court of appeals. ¶ 8 On September 3, 1997, the General Assembly enacted Am.Sub.H.B. No. 261, which added several new subsections to R.C. 3937.18, the statute that required the offering of UM/UIM coverage. 147 Ohio Laws, Part II, 2372, 2376. Among those new provisions in the statute were former subsections (J)(l) and (K)(2). These subsections remained unchanged by S.B. No. 57, 148 Ohio Laws, Part IV, 8580, effective November 2, 1999, the version in effect on the inception date of the insurance contract at issue. ¶ 9 Former subsection (J)(l) permitted the exclusion of UM/UIM coverage when the injured insured was occupying a vehicle owned by an insured but not covered under the liability portion of the policy (the “other-owned-vehicle exclusion”): ¶ 10 “(J) The coverages offered under division (A) of this section or selected in accordance with division (C) of this section may include terms and conditions that preclude coverage for bodily injury or death suffered by an insured under any of the following circumstances: 172 ¶ 11 “(1) While the insured is operating or occupying a motor vehicle owned by, furnished to, or available for the regular use of a named insured, a spouse, or a resident relative of a named insured, if the motor vehicle is not specifically identified in the policy under which a claim is made * * 148 Ohio Laws, Part IV, 8580. ¶ 12 In this way, while the insurance company could exclude vehicles owned by the insured but not identified in the policy, the insured and insurer could also agree to identify all the owned vehicles. This protected the balance of interests — the insured’s interest in coverage and the insurer’s interest in receiving premiums for risks covered. ¶ 13 Former subsection (K)(2) stated that when the tortfeasor who caused the injured insured’s loss operated a vehicle owned by an insured, the tortfeasor would not be considered to be uninsured or underinsured: ¶ 14 “(K) As used in this section, ‘uninsured motor vehicle’ and ‘underinsured motor vehicle’ do not include any of the following motor vehicles: ¶ 15 “(1) A motor vehicle that has applicable liability coverage in the policy under which the uninsured and underinsured motorist coverages are provided; ¶ 16 “(2) A motor vehicle owned by, furnished to, or available for the regular use of a named insured, a spouse, or a resident relative of a named insured.”3 Id. ¶ 17 Appellants argue that because the exclusion in (J)(l) is permissive while that in (K)(2) is mandatory, R.C. 3937.18 is ambiguous. Paragraphs (J) and (K), however, do not regulate the same thing. Where paragraph (J) states circumstances in which an insured can be denied UM/UIM protection, paragraph (K) articulates when a tortfeasor will not be considered uninsured or underinsured. These provisions may function in the alternative or together. A few hypothetical examples involving Kathryn and Andrea are illustrative. ¶ 18 First, assume that the driver of the other vehicle involved in the collision had been at fault and Andrea had not been negligent. In this case, (J)(l) would not permit exclusion of coverage because the vehicle Kathryn occupied was identified under the policy. Likewise, (K)(2) would not exclude coverage because the tortfeasor was not operating a vehicle owned by a member of the Kyle household. Thus, under this scenario, Kathryn would be eligible for UM/UIM coverage. ¶ 19 For the second hypothetical, assume that the other driver had been at fault and Andrea’s car had not been insured under the policy. Paragraph (J)(l) 173 would permit the exclusion of coverage for Kathryn’s injuries because Andrea’s car was owned by the Kyle family but was not insured under the policy. Paragraph (K)(2), however, would not require exclusion of coverage because a third party driving his own car was responsible for the collision. Thus, under R.C. 3937.18, the contracting parties may choose to cover or not cover this scenario. ¶ 20 For the third hypothetical, assume that Andrea had been at fault and Andrea’s car had not been insured under the policy. Here, as in the second hypothetical, (J)(l) would permit the exclusion of coverage for Kathryn’s injuries. In this scenario, (K)(2) would preclude Andrea from being considered uninsured or underinsured because the tortfeasor occupied a vehicle owned by the Kyle family. ¶ 21 As these examples show, former R.C. 3937.18(J)(1) and (K)(2) are complementary. Paragraph (J) addressed certain circumstances in which a policy could exclude UM/UIM coverage for an insured. Paragraph (K) excluded certain tortfeasors’ vehicles from being considered uninsured or underinsured. Because these paragraphs address different topics, they do not conflict. ¶ 22 Applying these sections to the facts at hand, we again see that they do not conflict and that (K)(2) operates to exclude UM/UIM coverage for Kathryn. Andrea was at fault, and her vehicle — occupied by Kathryn — was insured under the same policy from which Kathryn seeks UM/UIM coverage. Here, (J)(l) is inapplicable because the vehicle Kathryn occupied was insured under the policy, but (K)(2) excludes coverage. ¶ 23 The trial court and the court of appeals properly ruled that under these circumstances, R.C. 3937.18(K)(2) precludes UM/UIM coverage for Kathryn Kyle. Judgment affirmed. Moyer, C.J., and Lundberg Stratton, J., concur. O’Donnell, J., concurs in judgment only. Resnick, F.E. Sweeney and Pfeifer, JJ., dissent. Footnotes [1] “The coverages offered under * * * this section * * * may include terms and conditions that preclude coverage * * * under any of the following circumstances * * (Emphasis added.) [2] “As used in this section, ‘uninsured motor vehicle’ and ‘underinsured motor vehicle’ do not include any of the following motor vehicles * * (Emphasis added.) [3] Although the parties focus upon (K)(2), (K)(l) is more on point because the tortfeasor (Andrea) drove a vehicle that was insured under the policy in question. Nevertheless, the more broadly worded (K)(2) also precludes Andrea’s vehicle from being considered uninsured or underinsured. Our reasoning holds true for both provisions.