T.S. ELLIS, III, District Judge.
Resolution of this removed diversity declaratory judgment action requires interpretation and application of the Supreme Court of Virginia's recent opinion in Virginia Farm Bureau Mutual Insurance Co. v. Williams, 278 Va. 75, 677 S.E.2d 299 (2009). Specifically, at issue on cross-motions for summary judgment is whether plaintiff is entitled under Virginia Farm Bureau to intra-policy stacking of his underinsured motorist ("UIM")
Plaintiff, William Lloyd, is a citizen of Virginia. Defendant, Travelers Property Casualty Insurance Company ("Travelers"), is incorporated and headquartered in Connecticut. At all times relevant to this litigation, plaintiffs seven automobiles were insured by two policies issued by Travelers, one policy covering three of plaintiff's vehicles and the other covering the remaining four. Apart from the number of vehicles insured, the policies are identical in all relevant respects. Each policy is comprised of a policy agreement and a declarations page.
Pertinent here are two policy provisions. First, each policy agreement contains a "limit of liability" section that states, and is formatted, as follows:
This is the most we will pay regardless of the number of:
Compl. Ex. A at 9. The final paragraph beginning with the words, "[t]his is the most we will pay," is the purported anti-stacking language at issue here. The policy agreements do not contain any specific numerical coverages; rather, a schedule listing the applicable coverages is contained in a declarations page. Here, the declarations pages limit uninsured and underinsured motorists bodily injury coverage to "$250,000 each person,"
This declaratory judgment action—and a related Fairfax County Circuit Court civil suit—arise from a car accident in Manassas, Virginia, on November 16, 2007. On that date, plaintiff was driving his 1996 Dodge Caravan on Dumfries Road, a major thoroughfare. Bryan Royal, an employee of Cutting Edge Landscaping LLC and/or Cutting Edge Lawn Care LLC, was driving his employer's Ford F-350 pickup truck on Crossbow Drive, a small side street, at its intersection with Dumfries Road. Plaintiff alleges that Royal negligently "ran" a stop sign and collided with plaintiffs vehicle in the intersection, resulting in a "debilitating traumatic brain injury" to plaintiff. Accordingly, in the state court action, plaintiff seeks damages from Royal, from Royal's alleged employers, and from other alleged tortfeasors.
Plaintiff believes that his damages are ultimately significantly higher than the alleged tortfeasors' liability coverage, and thus he also seeks to recover damages through the UIM coverage of his Travelers policies. To that end, plaintiff sought confirmation from Travelers that his two policies provided him with a total of $1.75 million in UIM coverage, a figure arrived at by stacking the seven $250,000 UIM coverages. Because Travelers did not respond, plaintiff brought this declaratory judgment action.
There is no dispute that plaintiff is entitled to UIM coverage in connection with the car accident. And moreover, the parties correctly agree that plaintiff is entitled to inter-policy stacking—that is, stacking between policies—of the UIM coverages provided by each of his two Travelers policies.
The parties fully briefed and argued the issue at a July 2, 2010 hearing, following which the parties' cross-motions for summary judgment were taken under advisement. Accordingly, the matter is ripe for disposition.
The summary judgment standard is too well-settled to require elaboration here. In essence, summary judgment is appropriate under Rule 56, Fed. R. Civ. P., only where, on the basis of undisputed material facts, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In this case, the parties agree that no material facts are in dispute. Instead, the parties' disagreement focuses sharply on whether Virginia law requires intra-policy stacking of plaintiff's UIM coverages, a legal question appropriately resolved on summary judgment. See Transcontinental Ins. Co. v. RBMW, Inc., 262 Va. 502, 551 S.E.2d 313, 317 (2001) ("[I]nterpretation of the provisions of an insurance contract presents a question of law. . . .").
Well-established principles of Virginia law concerning the interpretation of insurance policies govern this case.
Virginia decisions concerning stacking of UIM coverages faithfully reflect the requirement that policy exclusions limiting coverage must be clear and unambiguous. For instance, in a pair of cases decided on the same day, the Supreme Court of Virginia in 1972, relying on a Supreme Court of Kansas decision, held that, absent a clear and unambiguous disclaimer, insureds were permitted to stack multiple UM coverages within a single policy that listed multiple vehicles separately and charged an equal premium for each vehicle. See Cunningham v. Ins. Co. of N. Am., 213 Va. 72, 189 S.E.2d 832 (1972) (adopting rationale of Sturdy v. Allied Mut. Ins. Co., 203 Kan. 783, 457 P.2d 34 (1969)); Lipscombe v. Sec. Ins. Co., 213 Va. 81, 189 S.E.2d 320 (1972) ("The Sturdy thesis, which we have adopted, is that it takes `plain, unmistakable language' to prevent `stacking' in this type case [sic]."). Accordingly, "[w]ith the adoption of the principle espoused in Sturdy, it is now the rule in Virginia that the stacking of UM coverage will be permitted unless clear and unambiguous language exists on the face of the policy to prevent such multiple coverage." Goodville Mut. Cas. Co. v. Borror, 221 Va. 967, 275 S.E.2d 625, 627 (1981).
Whether the Travelers policies issued to plaintiff clearly and unambiguously preclude intra-policy stacking of UIM coverages is therefore the central issue presented here. In this regard, two Supreme Court of Virginia decisions are of particular import.
The first, Goodville Mutual Casualty Co. v. Borror, 221 Va. 967, 275 S.E.2d 625 (1981), concerned an insurance policy covering two vehicles—each at "$25,000 each person"—and charging two separate, unequal premiums. Following a car accident, the insurer filed a declaratory judgment action to clarify that the following policy provision—which is similar to that contained in the Travelers policies—clearly and unambiguously precluded intra-policy stacking:
Id. at 627 (alterations in original). The Supreme Court of Virginia agreed, holding as a matter of law "that the language of Goodville's policy, viz., `[r]egardless of the number of . . . motor vehicles to which this insurance applies,' is clear and unambiguous and requires the construction that stacking is not permissible." Id. at 628 (alteration in original). Significantly, no
More recently, the Supreme Court of Virginia distinguished Goodville in Virginia Farm Bureau. There, the plaintiff was involved in a car accident with an underinsured motorist, thus triggering the UIM provisions of a policy under which three vehicles were insured, although none of the three vehicles were involved in the accident.
Although the Goodville and Virginia Farm Bureau policies contained identical anti-stacking clauses, the Supreme Court of Virginia held that the Virginia Farm Bureau anti-stacking clause, when read in the context of the entire policy, did not clearly and unambiguously prohibit intra-policy stacking. See id. at 303 ("[T]hat similarity must be considered in the context of the other policy language."). Specifically, the Supreme Court of Virginia reasoned that the different sets of UIM coverage—namely the single $250,000 UIM coverage and the two $300,000 UIM coverages—cast the anti-stacking clause into doubt in two respects. First, the different coverages "le[ft] unresolved the question whether all three separate limits for `each person' apply." Id. And second, if all three separate limits did not apply, still unclear was "which of the single separate limits for `each person' [would be] applicable." Id. Accordingly, the "disparity in the stated limits of liability for `each person' manifested] an ambiguity regarding the extent of total coverage for `each person' under the policy." Id. And given this ambiguity, the Supreme Court of Virginia required intra-policy stacking and hence declared that the plaintiff was entitled to $850,000 in UIM coverage.
It is worth emphasizing that the Supreme Court of Virginia identified "the different sets of coverage" as the only ambiguity in the policy. Id. To be sure, the decision noted that the Goodville policy differed from the Virginia Farm Bureau policy in that the Goodville UM coverage schedule was placed in close proximity to the anti-stacking clause, while the Virginia Farm Bureau policy placed the anti-stacking language in the policy agreement and listed separately the UIM coverages in the declarations page. See id. (comparing policy provisions from two cases). Yet, these differences were dicta and not material to the disposition of the case, as they played no part in the holding. Instead, the Supreme
Salzman v. Kanchev, No. CL09-1566, slip op. at 7-8 (Va.Cir.Ct. Feb. 4, 2010).
With this in mind, it is equally worth emphasizing the structure of the analysis in Virginia Farm Bureau. The Supreme Court of Virginia, consistent with Goodville and ample other authority, began with the general principle that courts must "construe ambiguous policy language purporting to exclude certain occurrences from coverage most strongly against the insurer," and that specifically with respect to stacking "any ambiguity regarding the stacking of coverage within a policy will be construed against the insurer." 677 S.E.2d at 302. The central question presented, therefore, was whether the policy provisions, when read in pari materia, clearly and unambiguously prohibited intra-policy stacking. In the circumstances, the anti-stacking clause could not be applied clearly and unambiguously because the declarations page contained one UIM coverage for $250,000 and two additional UIM coverages for $300,000. In other words, although the policy contained an express prohibition sufficient to prohibit intra-policy stacking, the policy was nonetheless ambiguous as to whether the $250,000 or $300,000 UIM coverages applied. Neither Goodville nor the instant case present such an ambiguity. Given this, the longstanding principle requiring ambiguities to be construed in favor of the insured compelled the conclusion in Virginia Farm Bureau that intra-policy stacking was not clearly and unambiguously precluded.
In sum, Goodville stands for the proposition that the clause, "[r]egardless of the number of . . . motor vehicles to which this insurance applies," clearly and unambiguously prohibits intra-policy stacking of UIM coverages as a matter of law. Goodville, 275 S.E.2d at 628 (alterations in original). This rule is qualified, however, by Virginia Farm Bureau, which instructs courts interpreting insurance policies to "consider [ ] . . . the context of the other policy language." Va. Farm Bureau, 677 S.E.2d at 303. That Virginia Farm Bureau neither explicitly nor implicitly overrules Goodville is made clear by the Supreme Court of Virginia's statement that ambiguity arose only when the "different sets of coverage . . . [were] considered along with the `anti-stacking' language." Id. (emphasis added). Thus, where the anti-stacking clause is itself ambiguous, or cannot be applied clearly and unambiguously, intra-policy stacking is required because the policy must be construed in favor of the insured. Yet, where the anti-stacking clause is clear and unambiguous, and can also be applied clearly and unambiguously, the prohibition on stacking must be given effect. See Gile, 524 S.E.2d at 645 ("If a term in a policy is ambiguous, we construe the term in favor of coverage. . . . However, if the disputed policy language is unambiguous, we apply its terms as written.").
These principles, applied here, compel the conclusion that the Travelers policies issued to plaintiff fit squarely within the Goodville rationale and are distinguishable from the Virginia Farm Bureau policy, and thus from the Virginia Farm Bureau rationale. To begin with, the Travelers policies contain a clear and unambiguous prohibition against intra-policy stacking, namely "[t]his is the most we will pay regardless of the number of . . . [v]ehicles or premiums shown in the Declarations." Compl. Ex. A at 9. This clause is not materially different from the clause held to prohibit stacking as a matter of law in Goodville. See 275 S.E.2d at 628 ("[T]he language of Goodville's policy, viz., `[r]egardless of the number of . . . motor vehicles to which this insurance applies,' is clear and unambiguous and requires the construction that stacking is not permissible."). Moreover, the Travelers policies contain seven identical UIM coverages for "$250,000 each person," one for each vehicle insured. Accordingly, this case, like Goodville, does not present a situation in which a "disparity in the stated limits of liability for `each person' manifests an ambiguity regarding the extent of total coverage for `each person' under the policy." Va. Farm Bureau, 677 S.E.2d at 303. To the contrary, the anti-stacking clause can be clearly and unambiguously applied because the only applicable UIM coverage is $250,000. Simply put, no ambiguity exists in the Travelers policies, and hence the anti-stacking clause must be applied, as written. See Gile, 524 S.E.2d at 645. Therefore, each of the Travelers policies issued to plaintiff provides $250,000 in UIM coverage, and because plaintiff is permitted to stack the two policies' coverages together (i.e., inter-policy stacking), plaintiff is entitled to $500,000 in UIM coverage.
In response, plaintiff makes three unpersuasive arguments. First, plaintiff argues that a clause found in the declarations pages—"[i]nsurance is provided only where a premium is shown for the coverage"—authorizes intra-policy stacking. Yet, this clause neither bears on the permissibility of stacking, nor renders the anti-stacking clause ambiguous, thereby requiring a construction in favor of coverage. Indeed, it is notable that the policies at issue in Goodville and Virginia Farm Bureau contained similar, if not identical, language regarding premiums. Yet (i) Goodville held the anti-stacking clause to be clear and unambiguous as a matter of law, and (ii) Virginia Farm Bureau did not identify this as creating an ambiguity. Accordingly, the presence or absence of a clause concerning premiums does not affect the analysis here.
Second, plaintiff contends that two factors support the conclusion that the Travelers anti-stacking clause applies only to property damage, and not to bodily injury: (i) the placement of the anti-stacking clause directly after the paragraph limiting property damage, but not after the paragraph limiting bodily injury; and (ii) the use of the word "this" at the beginning of the anti-stacking clause. These arguments are unpersuasive. It is clear that the clause in the Travelers policies, "[t]his is the most we will pay regardless of the number of . . . [v]ehicles or premiums shown in the Declarations,"
Third, plaintiff argues that Virginia Farm Bureau (i) effectively overruled Goodville's holding that the anti-stacking clause at issue in those cases clearly and unambiguously prohibited stacking as a matter of law, and (ii) sets forth the more stringent rule that the anti-stacking clause and the schedule listing the UIM coverages appear in close proximity to one another. These arguments misunderstand the Virginia Farm Bureau decision. To begin with, as discussed supra, Virginia Farm Bureau neither explicitly nor implicitly overrules Goodville; rather, Virginia Farm Bureau simply states that an otherwise valid anti-stacking clause is rendered ambiguous where, unlike here, application of the anti-stacking clause leads to an unclear result. See Va. Farm Bureau, 677 S.E.2d at 303 (holding that anti-stacking language becomes ambiguous in light of different sets of coverage). In addition, although the Supreme Court of Virginia in Virginia Farm Bureau noted that the Goodville policy placed the anti-stacking language in close proximity to the schedule of coverages, as compared to placing the anti-stacking language in the policy agreement and the schedule of coverages in a declarations page, this observation was peripheral to the court's holding. See id. (focusing on "disparity in the stated limits of liability for `each person'") Significantly, Virginia Farm Bureau did not hold that the separation of these provisions created an ambiguity as to stacking. See Salzman, No. CL09-1566, slip op. at 7-8 ("Had the Supreme Court considered the use of a declarations page itself to be an ambiguity, it would have stated so in clear and specific terms as it identified the other ambiguities that were present in the policy."). Simply put, plaintiffs argument incorrectly stretches the holding of Virginia Farm Bureau to include factual observations that were simply stated in dicta. Finally, plaintiffs argument is squarely at odds with the well-settled principle under Virginia law that "[i]n ascertaining the parties' intention regarding specific contract provisions, [a court must] consider the document as a whole." Pocahontas Mining LLC v. CNX Gas Co., LLC, 276 Va. 346, 666 S.E.2d 527, 531 (2008). Indeed, Virginia Farm Bureau itself instructs courts to consider anti-stacking clauses "in the context of the other policy language." 677 S.E.2d at 303. Thus, in this case the anti-stacking clauses cannot be interpreted in isolation; rather, they must be read in conjunction with the declarations pages, which are expressly cross-referenced in the anti-stacking clauses. See Compl. Ex. A at 9 ("This is the most we will pay regardless of the number of . . . [v]ehicles or premiums shown in the Declarations." (emphasis added)). For these reasons, the separate placement of the anti-stacking clauses from the UIM coverage schedules creates no ambiguity here.
In sum, it is well-settled "in Virginia that the stacking of UM coverage will be permitted unless clear and unambiguous language exists on the face of the policy to prevent such multiple coverage." Goodville, 275 S.E.2d at 627. Although under Goodville the inclusion of the clause, "[r]egardless of the number of . . . motor vehicles to which this insurance applies,"
An appropriate Order shall issue.