The U.S. Court of Appeals for the Fourth Circuit has ruled that third-party plaintiffs could not recover benefits under an uninsured/underinsured motorists endorsement required by state authorities to be included in an automobile insurance policy where the policy itself contained an exclusion that narrowed the scope of coverage under the mandated endorsement.
The Case
Purnell Furniture Services, Inc., a Virginia company, hired Carlos Castillo and Marco Gabarette as independent contractors to deliver furniture in northern Virginia. Purnell regularly hired independent contractors to deliver its furniture in the contractors' vehicles. For this particular delivery, the originally scheduled contractors were unable to fulfill the order, and Purnell inquired whether Mr. Castillo and Mr. Gabarette could do the job. Due to Purnell's last-minute request, Mr. Castillo and Mr. Gabarette did not have a sufficient vehicle available, so Purnell permitted them to use a truck for that delivery that Purnell had rented from Penske.
Mr. Gabarette drove the truck with Mr. Castillo as passenger. While driving to their destination, they pulled over on the side of the interstate so Mr. Castillo could check on the security of the furniture load. Another driver then struck the rented Penske truck, killing Mr. Castillo and injuring Mr. Gabarette.
At the time of the accident, Purnell had a motor vehicle insurance policy issued by Employers Insurance Company of Wausau that included an uninsured/underinsured motorists (“UIM”) endorsement as required by Virginia law.
The policy limited UIM coverage to three vehicles owned by Purnell, which did not include the rented Penske truck.
Mr. Castillo's estate and Mr. Gabarette sued the allegedly negligent driver. They also sued Wausau for a declaration as to UIM coverage under the policy it had issued to Purnell and their entitlement to that coverage.
The U.S. District Court for the Eastern District of Virginia granted summary judgment in favor of Wausau, holding that the plain language of the Wausau policy dictated that UIM coverage applied only to vehicles that Purnell owned. Because Purnell did not own the Penske truck, it was not a “covered auto” and, therefore, neither Mr. Castillo's estate nor Mr. Gabarette were entitled to UIM coverage.
The estate and Mr. Gabarette appealed to the Fourth Circuit.
The Fourth Circuit's Decision
The Fourth Circuit affirmed.
In its decision, the circuit court explained that the policy's declarations pages limited UIM coverage to “Owned Autos Only.” Because the Penske truck was not listed in the policy as one of the owned vehicles, the Fourth Circuit ruled, there was no UIM coverage related to it under the policy.
The circuit court rejected the argument put forth by Mr. Castillo's estate and Mr. Gabarette that they were entitled to UIM benefits because the UIM endorsement had a definition of “covered auto” that was broader than the UIM limitation of the policy's declarations pages, reasoning that the policy's declarations pages placed limits on UIM coverage that were “more specific than the generic UIM endorsement” and, therefore, that the limits set forth on the declarations pages governed.
The Fourth Circuit acknowledged that the policy's UIM endorsement was “word-for-word the same as the form required by the [Virginia State Corporation Commission (“SCC”)].” The circuit court observed that because the SCC had adopted this form, Wausau “was required to use it.”
Unlike the “government-mandated UIM endorsement,” the declarations pages “were a result of contract negotiations by the parties,” the circuit court concluded, adding that “[t]his language which the parties[] contracted to cannot simply be ignored.”
The case is Levine v. Employers Ins. Co., Nos. 17-1342, 17-1432 (2d Cir. April 12, 2018). Attorneys involved include: ARGUED: Eugene C. Miller, WEINER, SPIVEY & MILLER, PLC; Kevin Michael Leach, TURBITT, O'HERRON & LEACH, PLLC, Burke, Virginia, for Appellants. Edwin Ford Stephens, CHRISTIAN & BARTON, LLP, Richmond, Virginia, for Appellee. Dominick Michael Mullori, Jr., Woodbridge, Virginia, for Amicus Virginia Trial Lawyers Association. ON BRIEF: Alexander S. de Witt, FREEBORN & PETERS LLP, Richmond, Virginia, for Amicus Virginia Association of Defense Attorneys.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].