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Wold v. Progressive Preferred Insurance Co. (8/2/2002) sp-5602
Wold v. Progressive Preferred Insurance Co. (8/2/2002) sp-5602
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
CYNTHIA WOLD, individually )
and as Personal Representative of ) Supreme Court No. S-9775
the ESTATE OF HEIDI WOLD, )
) Superior Court No.
Appellant, ) 3AN-99-10357 CI
)
v. )
)
PROGRESSIVE PREFERRED ) O P I N I O N
INSURANCE COMPANY, )
) [No. 5602 - August 2, 2002]
Appellee. )
)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Brian C.
Shortell, Judge.
Appearances: Laurel J. Peterson, Laurel J.
Peterson, P.C., Anchorage, for Appellant.
Daniel T. Quinn, Richmond & Quinn, Anchorage,
for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Bryner, Justices. [Carpeneti,
Justice, not participating.]
BRYNER, Justice.
I. INTRODUCTION
Heidi Wold was killed while riding in a pick-up that
rolled over after its driver, Koby Smith, swerved to avoid an on-
coming car; the on-coming car kept driving and was never
identified. Heidis estate and her parents settled with Smiths
insurer; Heidis mother, Cynthia, then claimed benefits both
individually and as personal representative of Heidis estate
from Progressive Preferred Insurance Company on Cynthias own
uninsured/underinsured motorists (UM/UIM) policy. Progressive
refused to pay and sought a declaratory judgment, claiming that
the unknown drivers conduct could not trigger UM/UIM coverage
without a collision and that Smiths negligence could not trigger
UM/UIM coverage because the Wolds had not exhausted his liability
coverage. The superior court entered judgment for Progressive.
We affirm in part and reverse in part, agreeing that Alaska law
treats unidentified vehicles as uninsured only when there is a
collision but holding that Heidi Wolds estate used up Smiths
liability coverage and so may claim UM/UIM benefits from
Progressive.
II. FACTS AND PROCEEDINGS
On December 27, 1995, Koby Smith rolled his pick-up
truck when he swerved to avoid a car coming toward him in his
lane of traffic. Smiths truck did not hit the oncoming car; the
car kept driving, and its driver was never identified. Koby
Smiths passenger, sixteen-year-old Heidi Wold, was killed in the
accident. Heidis mother was called to the accident scene and
arrived soon after, just before Heidi died.
Smith was insured under a policy issued by Allstate
Insurance Company that provided both liability and
uninsured/underinsured motorists coverage, each having limits of
$100,000 per person and $300,000 per accident. Heidi Wolds
mother, Cynthia Wold, had her own UM/UIM policy with Progressive,
which had the same limits as the Allstate policy. It is
undisputed that Heidi qualified as an insured person under both
the Allstate and Progressive policies.
Through their attorney, Laurel Peterson, the Wolds
negotiated with Allstate for payment under Smiths liability and
UM/UIM coverages. Cynthia Wold asserted a wrongful death claim
as the personal representative of Heidis estate; on her own
behalf, Cynthia asserted a bystander claim for negligent
infliction of emotional distress (NIED); and both Cynthia and
Heidis father, Greg Wold, evidently asserted individual claims
for loss of consortium or society. The Wolds asserted these
claims against both Smith and the unknown driver, alleging that
each had been negligent. They maintained that Smith was covered
for his own negligence under Allstates liability policy and that,
under Alaska law, the unknown driver was considered to be an
uninsured motorist whose actions were covered under the policys
UM/UIM provisions.1
The Wolds and Allstate reached a settlement on two of
their claims in early December 1997. On December 19 Allstate
sent Peterson two checks for $135,600, one representing a policy-
limits settlement ($100,000 plus costs and attorneys fees) for
the estates wrongful death UM/UIM claim and the other for Cynthia
Wolds NIED UM/UIM claim. Both of these claims arose from the
unknown drivers alleged negligence. Peterson accepted both
checks on behalf of the Wolds.
Meanwhile, two days earlier, on December 17, Peterson
had filed a superior court complaint against Smith in order to
prevent the Wolds unresolved claims from being barred under the
two-year tort statute of limitations,2 which otherwise would have
expired on December 27. The complaint listed as plaintiffs
Cynthia Wold individually, Cynthia Wold, as Appointed Personal
Representative of the Estate of Heidi Wold, and Gary Wold. Over
the next two months Allstate and Peterson continued to negotiate
on the Wolds unresolved claims. In February 1998 the Wolds filed
a global offer of judgment, proposing to settle all their
remaining claims against Allstate and Smith for $100,000 plus
costs, interest, and attorneys fees a total that Peterson
calculated to be $137,883.81. Allstate accepted the offer, and
on March 4, 1998, it delivered a settlement check to Peterson in
trust for Cynthia Wold, Gary Wold, [and] Cynthia Wold as personal
rep of the Heidi Wold Estate, in exchange for the Wolds release
of all claims against Allstate and Smith.
Peterson then sent a demand letter to Cynthias own
insurer, Progressive, asserting that the Allstate policys limits
had now been exhausted and that Cynthia and the estate had a
right to further reimbursement under Cynthias UM/UIM policy with
Progressive. Progressive denied any obligation to pay and filed
a superior court action seeking declaratory relief. The
declaratory judgment complaint offered two reasons to support
Progressives position that it had no legal duty to pay the UM/UIM
claims. First, insofar as Cynthia and the estate claimed
coverage for injuries caused by the unknown drivers negligence,
Progressive asserted that Alaska law precluded the unknown driver
from being considered an uninsured motorist because there was no
physical contact between the vehicle driven by Koby Smith and the
phantom drivers vehicle. Second, insofar as Cynthia and the
estate sought to recover for injuries resulting from Koby Smiths
negligence, Progressive asserted that Smith could not be
considered an underinsured driver under Alaska law because the
Wolds had not used up the policy limits available under Smiths
Allstate liability policy.
Following an evidentiary hearing into the circumstances
surrounding the Wolds settlements with Allstate, Superior Court
Judge Brian C. Shortell issued findings of fact and conclusions
of law sustaining Progressives position.
Cynthia appeals in her own right and on behalf of
Heidis estate.
III. DISCUSSION
A. The Physical Contact Requirement
Cynthia challenges the superior courts ruling that
Progressive had no duty to pay her claim for UM/UIM benefits
arising from the unknown drivers negligence because the unknown
drivers car did not collide with Smiths pick-up. Although she
acknowledges that Progressives policy required physical contact,
Cynthia argues that this requirement should not have been
enforced because it is undisputed that Koby Smiths accident was
caused by an unidentified vehicle whose driver failed to stop at
the scene of the accident.3
But the trial courts ruling enforcing the Progressive
policys physical contact requirement was mandated by Alaska law.
In 1984 Alaskas Motor Vehicle Safety Responsibility Act (MVSRA),
to which all automobile policies must conform,4 was amended by
the addition of a section relating to uninsured and underinsured
motorists coverage. Alaska Statute 28.20.445(f) provides:
If both the owner and operator of the
uninsured vehicle are unknown, payment under
the uninsured and underinsured motorists
coverage shall be made only where direct
physical contact between the insured and
uninsured or underinsured motor vehicles has
occurred. A vehicle that has left the scene
of the accident with an insured vehicle is
presumed to be uninsured if the person
insured reports the accident to the
appropriate authorities within 24 hours.[5]
The Alaska Mandatory Automobile Insurance Act (AMAIA)
contains similar language. Alaska Statute 28.22.201(b) reads:
If both the owner and operator of a vehicle
are unknown, payment under the uninsured and
underinsured motorists coverage may be made
only where direct contact between the motor
vehicles has occurred. A vehicle and operator
that have left the scene of an accident with
another vehicle are presumed to be uninsured
if the insured person reports the accident to
the appropriate authorities within 24
hours.[6]
Thus, under both the MVSRA and the AMAIA an insured can only
receive UM/UIM payments for accidents involving an unknown
vehicle if there was physical contact between the vehicles.
The UM/UIM coverage in Cynthias Progressive policy
contained a clause that matched these statutory provisions. The
Progressive policy defined uninsured or underinsured motor
vehicle to include:
a hit and run vehicle which strikes an
INSURED PERSON, YOUR INSURED CAR, or, in the
case of BODILY INJURY, a vehicle which an
INSURED PERSON is OCCUPYING which causes
BODILY INJURY to an INSURED PERSON or
PROPERTY DAMAGE to YOUR INSURED CAR arising
from an ACCIDENT where there is physical
evidence of contact between the INSURED
PERSON or YOUR INSURED CAR and the hit and
run vehicle, provided that:
1) the operator or owner cannot be
ascertained at the time of the ACCIDENT and
remains unknown,
2) the INSURED PERSON or someone on his or
her behalf shall have reported the ACCIDENT
to the appropriate law enforcement agency
within 24 hours.
The policy further specified: If both the owner and operator of
the uninsured vehicle are unknown, payment under the Uninsured
and Underinsured Motorist Coverage shall be made only where
direct physical contact between the INSURED and the UNINSURED or
UNDERINSURED MOTOR VEHICLES has occurred.
Cynthia concedes that Smiths truck did not physically
contact the unknown vehicle and that the literal terms of Smiths
Progressive UM/UIM policy precluded recovery for the unknown
drivers actions. But she nonetheless argues that Progressives
physical contact clause should not be enforced because she
offered extrinsic proof of the presence of the phantom vehicle.
Cynthia points out that other courts have been willing to set
aside physical contact policy clauses when corroborative evidence
demonstrates the presence and responsibility of an unknown
vehicle. She argues that we should follow these cases because a
physical contact clause serves no useful purpose in these
circumstances and enforcing it allows an insurer to breach its
duty of good faith and fair dealing.
But Progressive correctly observes that when courts
from other jurisdictions have been willing to invalidate physical
contact requirements in policy clauses, they have generally done
so under statutory regimes that differ from Alaskas. As Widiss
explains in his treatise Uninsured and Underinsured Motorist
Insurance, although physical contact requirements are a
legitimate mechanism for preventing fraud by foreclos[ing] claims
arising from accidents that were allegedly but not actually
caused by the operation of an unidentified vehicle,7 many courts
have declined to strictly enforce clauses in policies requiring
physical contact: Courts in approximately half the states have
concluded that insurers are not entitled to enforce the physical
contact requirement because it is in derogation of the uninsured
motorist legislation and is therefore void.8 Yet almost
all of these courts have construed the disputed policy provisions
in the absence of a statute that requires physical contact. It
appears that only West Virginia has judicially adopted the rule
proposed by Cynthia by allowing a claimant to satisfy an express
statutory physical contact requirement with extrinsic evidence of
a miss-and-run accident. In Hamric v. Doe the West Virginia
Supreme Court concluded that absolute enforcement of the physical
contact requirement is contrary to public policy and that the
physical contact requirement should not prevent recovery when
there is sufficient independent third-party evidence to
conclusively establish that the sequence of events leading to an
injury was initially set in motion by an unknown hit-and-run
driver or vehicle.9 But in reaching this decision, Hamric simply
adopted the reasoning in Girgis v. State Farm Mutual Automobile
Insurance Co.,10 an Ohio case decided in the absence of a
statutory physical contact requirement.11
With the exception of Hamric, courts in jurisdictions
whose UM/UIM statutes include express physical contact
requirements invariably hold that the UM/UIM coverage does not
apply in a miss-and-run case that there must be some actual
contact with the unknown vehicle.12 Orpustan v. State Farm Mutual
Automobile Insurance Co. exemplifies the reasoning of these
courts.13 There, the California Supreme Court enforced a
statutory physical contact requirement despite clear proof that
the claim was not fraudulent,14 concluding that the legislature
had made a permissible policy choice in adopting the requirement:
The statute makes proof of physical contact a condition precedent
in every case for the recovery of damages caused by an unknown
vehicle. There are no exceptions. If it is advisable that the
statute be changed, the solution lies within the province of the
Legislature.15
Here, Cynthias argument parallels Hamrics public policy
analysis. But as mentioned above, Hamrics analysis is
unpersuasive because it relies on a case decided in a state that
had no statutory physical contact requirement. Cynthia also
relies on the Oregon Court of Appealss decision in To v. State
Farm Mutual Insurance,16 which declined to enforce a policys
physical contact clause and, instead, allowed a miss-and-run
claim to be corroborated by competent evidence other than the
testimony of the insured or any person having an uninsured
motorist claim resulting from the accident. 17 But To reached
this decision against the backdrop of a recently enacted statute
that had repealed Oregons former physical contact requirement and
replaced it with a corroboration requirement.18
Here, by contrast, to accept corroborative evidence as
a substitute for physical contact, we would need to override the
express terms of AS 28.20.445(f) and AS 28.22.201(b). Cynthia
thus essentially asks us to nullify a legislative choice on
public policy grounds. Yet statutes themselves reflect the
states public policy; hence, we have recognized that public
policy . . . cannot override a clear and unequivocal statutory
requirement.19
On their face, Alaskas physical contact statutes are
absolute and unambiguous.20 Yet because Alaska does not follow
the plain meaning rule, the plain language of these provisions
does not itself end the inquiry.21 Under Alaskas sliding- scale
approach to statutory construction, strong legislative history
may support a different meaning.22 But [when] a statutes meaning
appears clear and unambiguous, . . . the party asserting a
different meaning bears a correspondingly heavy burden of
demonstrating contrary legislative intent.23
Here, Cynthia fails to identify any legislative history
suggesting that the statutory physical contact requirement was
intended to have limited application. Since Cynthia has rested
her case on general public policy considerations and has failed
to establish any legislative history suggesting that these
provisions were meant to have limited application, we find her
arguments unpersuasive. Because the Progressive policys physical
contact clause comports with the express requirements of Alaska
law, we affirm the superior courts decision precluding Cynthia
and Heidis estate from claiming UM/UIM payments for negligence
attributable to the unknown driver.
B. The Exhaustion Requirement
The superior court determined that by settling for less
than the limits of Smiths Allstate liability policy the Wolds
failed to exhaust the liability policy; thus, Smith was not an
underinsured driver under Alaskas UIM statute, and Cynthia and
Heidis estate were not entitled to payment under Cynthias
Progressive UIM coverage. On appeal Cynthia advances two
arguments against this ruling: first, that the Wolds were not
required to exhaust Smiths liability; and second, that they
actually did exhaust the limits.24
The first argument can be readily answered. Alaskas
Motor Vehicle Code provides that UM/UIM coverage may not apply .
. . until the limits of liability of all bodily injury and
property damage liability bonds and policies that apply have been
used up by payments or judgments or settlements.25 In Curran v.
Progressive Northwestern Ins. Co., which we issued after the
present case had already been briefed and argued, we held that
this provision requires a UIM claimant to exhaust or use up all
underlying liability coverage before recovering under a UIM
policy.26 Curran governs here and supports the superior courts
conclusion that the Wolds were required to use up Smiths Allstate
liability coverage before turning to Cynthias own Progressive UIM
policy.
Whether the Wolds actually did use up the coverage
available under Smiths Allstate liability policy is a harder
question to answer. Some additional background is necessary to
frame our review of the superior courts findings and conclusions
on this issue.
The superior courts ruling that the unknown drivers
negligence could not have triggered Progressives duty to pay
under Cynthias UM/UIM policy left open the question whether
Cynthia and the estate might recover UIM benefits attributable to
Koby Smiths negligence. As indicated above, the trial court
correctly recognized that Alaskas Motor Vehicle Code would not
consider Smith to be an underinsured driver for purposes of
triggering Progressives duty to pay UM/UIM benefits until the
limits of Smiths Allstate liability policy [had] been used up by
payments or judgment or settlements.27 The crucial issue before
the superior court thus became whether the three settlement
checks that the Wolds had received from Allstate two in December
1997 and one in March 1998 had used up the limits of Smiths
liability policy.
At the evidentiary hearing below, the chief factual
controversy centered on what specific legal claims Allstate and
the Wolds had settled and what available Allstate policy limits
those settlements affected. As mentioned earlier, Koby Smith was
covered by two Allstate automobile policies: a liability policy
and a UM/UIM policy. The first protected Smith from liability
for property damage and bodily injury arising out of his own
negligent driving; the second protected Smith and his passengers
(including Heidi Wold) against loss resulting from property
damage or bodily injury by uninsured or underinsured drivers,
including Smith himself once his liability coverage was used up
by settlement.
Smiths liability and UM/UIM policies each provided for
maximum payments of $100,000 per person and $300,000 per
accident. The maximum limits specified for each policy were
independent: a policy-limit liability payment would not reduce
the payments available under the UM/UIM policy limits, or vice
versa. Furthermore, a person settling for nominal policy limits
$100,000 would be entitled to receive additional compensation
from Allstate for attorneys fees and prejudgment interest.
In their early negotiations with Allstate, the Wolds,
through their attorney, Laurel Peterson, asserted three distinct
types of claims. First, Cynthia Wold asserted a wrongful death
claim as representative of Heidi Wolds estate;28 second, on her
own behalf, Cynthia asserted a bystander claim for negligent
infliction of emotional distress;29 and third, both parents appear
to have individually asserted claims for loss of consortium or
society.30 Allstate regarded the estates wrongful death claim and
Cynthias NIED claim to be subject to separate per person policy
limits. Moreover, unlike Progressive, Allstate conceded the
unknown drivers status as an uninsured motorist, expressly
waiving its right to rely on Alaskas direct physical contact
requirement.
In negotiating the Wolds claims, then, Allstate
recognized and accepted that the Wolds were asserting each of
their claims against both Smiths liability and UM/UIM policies:
Allstate thus assumed that the estate could potentially recover
$100,000 plus add-ons (attorneys fees and interest) on its
wrongful death claim under each of Smiths policies and that
Cynthia could potentially recover an additional $100,000 plus add-
ons on her bystander NIED claim under each of those policies. By
contrast, Allstate regarded the potential claims for loss of
consortium or society to fall under the same per person policy
limit as the estates wrongful death claims.
In deciding Progressives declaratory judgment action,
the superior court heard testimony concerning the Allstate
settlements from Peterson and reviewed a deposition from Rodney
Layton, the Allstate adjuster who negotiated the Wolds claims
with Peterson. The court also reviewed all relevant settlement
correspondence. Based on this evidence, the superior court
concluded that the two $135,600 checks that Allstate gave to
Peterson in December 1997 represented two per person policy-limit
payments plus add-ons resolving the Wolds claims against Smiths
UM/UIM policy for injuries arising from the unknown drivers
negligence one check settling the estates wrongful death claim
against that policy; the other settling Cynthia Wolds separate
NIED claim. Thus, the court found, these settlements had no
effect on the policy limits available to pay any claims against
Smiths liability policy.
The superior court went on to find that Allstate and
the Wolds continued negotiating after reaching the two December
1997 settlements and eventually settled all their remaining
liability claims in March 1998 in exchange for Allstates March 3
payment of $137,833.81. In the courts view, [t]hese claims
included [Cynthia] Wolds individual NIED liability claim, the
Estates liability claim and Gary Wolds [loss-of-society]
claim(s). Since the court had ruled that the December
settlements did not use up any of Smiths liability limits, it
found that, at the time of the March liability settlement, the
liability portion of the Allstate policy had at least two
$100,000 limits still available for the protection of claims
against Koby Smith, one for the estate and one for Cynthia Wolds
NIED claim. The court further noted that, [w]ith add-ons, these
two limits would have exceeded $270,000. Because Allstates
payment of $137,833.81 fell well below this total and, in the
courts view, represented two distinct liability claims, the court
reasoned that the March liability settlement did not use up the
remaining funds available to Cynthia Wold and the Estate from the
Allstate liability policy. And since the Wolds had failed to use
up Smiths liability limits, the court concluded, they [were]
precluded from pursuing a UM/UIM claim against Progressive based
on the liability of Koby Smith.
On appeal, Cynthia insists that the superior court
erred in characterizing Allstates March settlement payment as a
settlement resolving her NIED liability claim. Although she
argues the point in her opening brief,31 Cynthia acknowledges in
her reply brief that the superior court did not err in ruling
that Allstates December 1997 settlement checks resolved the
estates and Cynthias separate claims against Smiths UM/UIM policy
and therefore used up only the Allstate UM/UIM policy limits.
But Cynthia nonetheless insists that upon settling her UM/UIM
NIED claim in December, she abandoned that claim, relinquishing
her right to assert it as a basis for any further UIM liability
payments. Thus, Cynthia reasons, the only claims that remained
on the table for settlement after December 1997 were the estates
wrongful death liability claim and the individual liability
claims for loss of society all of which Allstate regarded as
accruing to the estates per person liability limit. According to
Cynthia, then, the March settlement check must have paid and
must have used up the policy limits of Smiths liability coverage
available to the estate:
In December, 1997, Allstate had paid
[Cynthia] $135,600, whereupon she agreed to
waive further NIED claims. With an identical
payment to the Estate, Allstates UM/UIM
insurance exposure was fully exhausted. With
the final March 8th settlement, the Estate
had recovered two per-person limits[:] one
each from Allstates UM/UIM and liability
coverages. [Total $273,433.81] Progressives
UM/UIM coverage was necessarily triggered
vis a vis the Estate, the only viable
claimant asserting a claim at the time of the
March settlement. Demand on Progressives
UM/UIM coverage was made accordingly.[32]
The record supports Cynthias argument. In his December
12, 1997, letter to Layton accepting Allstates December 10 offer
to settle the estates and Cynthias separate UM/UIM claims,
Peterson broadly indicated that the settlement would settle and
resolve all future NIED claims and that [n]ot at anytime in
future litigation will Mrs. Wold be allowed to argue additional
damages flowing from her cause of action rights under existing
emotional distress claims. By comparison, Peterson was
considerably more circumspect in the waiver language he used with
respect to the estates December 1997 wrongful death settlement,
stating only that [n]o further underinsured motorist claim can be
made by the estate in future litigation. (Emphasis added.)
On December 17, 1997, five days after writing the
letter accepting Allstates offers to settle the two UM/UIM
claims, Peterson filed a formal complaint against Smith to
preserve the Wolds liability claims against the statute of
limitations. While the complaint expressly asserted the estates
wrongful death claim and the Wolds individual claims for loss of
society, it conspicuously omitted any allegation of a cause of
action for NIED by Cynthia Wold. Three days later, on December
21, Peterson wrote Layton a settlement letter, seemingly
confirming that Cynthias entire NIED claim had been resolved:
Please note that we have settled only Mrs. Wolds negligent
infliction of emotional distress claim (NIED), as well as the
underinsured motorist coverage available to the estate. And on
December 27, 1997, the two-year statute of limitations apparently
expired on the NIED claim with no cause of action having been
filed.33
None of Petersons or Allstates subsequent settlement
correspondence or documents make any reference to any potential
or still-pending NIED claim by Cynthia. And in a letter written
to Progressive shortly after concluding the March 4, 1998,
Allstate settlement, Peterson requested UM/UIM payments under
Cynthias Progressive policy only on behalf of the estate: Please
be aware that the Estate of Heidi Wold has, in fact, resolved its
claims against the driver of the vehicle in which Heidi Wold was
a passenger shortly prior to her death. . . . Clearly the maximum
liability policy applicable to the estate is less than the
damages sustained. Thus, . . . I hereby make demand for the full
policy limits to be tendered immediately. Furthermore, in a
letter to Progressive dated April 21, 1998, Peterson made it
clear that Cynthia could not have been claiming UM/UIM payments
from Progressive for NIED based on Smiths conduct, since Cynthia
claimed only to have exhausted Allstates UM/UIM coverage on her
NIED claim and made no similar claim of exhaustion with respect
to Allstates liability coverage for NIED:
Please note that the estate settled with
Allstate for the full and complete UM/UIM
coverage in December 1997. Thereafter, in
March the estate settled the full liability
claim for a maximum liability coverage
available. Also, you will note that we
settled with Allstate on the full and
complete coverage of Mrs. Wolds underinsured
motorist claim also in December.
In summary, then, the record seems to contain no
evidence indicating that Cynthia Wold ever asserted or purported
to assert an NIED liability claim against Allstate based on
Smiths conduct after she successfully settled her NIED UM/UIM
claim in December. To the contrary, Peterson consistently
professed to have abandoned any such claim, omitted it from the
Wolds formal complaint against Smith, and allowed the claim to
expire under the statute of limitations as of December 27, 1997.
Thus, although Layton testified as to his subjective belief that
the Wolds March 1998 global settlement and release included a
settlement of Cynthia Wolds unresolved NIED liability claim, the
record fails to establish that this belief was reasonable: as of
March 1998, the Wolds were not asserting or threatening to assert
against Allstate or Smith Cynthias NIED liability claim; and it
appears that the possibility of any legally colorable NIED
liability claim no longer existed.
Because we find no justification for concluding that
Allstates March 4 settlement encompassed a pending or potential
claim for NIED asserted or assertable against Smiths Allstate
liability policy by Cynthia Wold, we hold that it was error for
the trial court to conclude the settlement used up a portion of a
separate per person liability policy limit attributable to such a
claim.
But this conclusion does not fully answer whether
Allstates settlement payments used up the liability coverage
available to the estate under Smiths policy. Allstates March 4,
1998, global settlement agreement with the Wolds resolved not
only the estates wrongful death claim against Smiths liability
policy, but also the individual claims for loss of society that
Cynthia and Gary Wold set out in their complaint. If those
claims triggered separate per person limits under Smiths
liability policy, then any payments allocated to the loss-of-
society claims would not have reduced the coverage available to
pay the estates wrongful death claim; hence, the estate would not
have used up its available per person limits of Smiths liability
policy.
Because we have not previously decided whether a
Gillispie34 loss-of-society claim can trigger a separate per
person policy limit, we requested the parties to file
supplemental briefing on this issue. In its supplemental
briefing, Progressive argues that the Wolds claims for the loss
of their daughters society were subject to the same per person
limit in the Allstate liability policy as Heidis estates wrongful
death claim. Progressive bolsters its argument by discussing case
law from other jurisdictions, which generally seems to hold that
all consequential damages flowing from bodily injury to a single
person fall within a one per-person limit.35
We find it unnecessary to resolve the issue
definitively here.36 In the present case, it appears that Rodney
Layton, the Allstate claims adjuster who settled the Wolds
claims, took the same position as Progressive, viewing a claim
for loss of consortium or society as opposed to a claim for NIED
as a derivative claim that would not trigger a separate per
person Allstate policy limit. Given that Layton and Progressive
both agree on the proper treatment of the loss-of-society claims
under Smiths Allstate policy, we find no reasonable basis in this
case for allocating any portion of the March 4 global settlement
attributable to Cynthia and Greg Wolds individual loss-of-society
claims to a separate per person policy limit than the limit
covering the estates wrongful death claim. And because the
claims for wrongful death and loss of society are the only
specific liability claims that the Wolds were still asserting
when they negotiated the global settlement, it follows that
Allstates March 3 settlement payment exhausted the limits of the
liability coverage available to Heidi Wolds estate under Smiths
Allstate policy.
For this reason, we hold that it was error to declare
that the estate had failed to use up Smiths Allstate liability
coverage and was barred from asserting a UM/UIM claim against
Progressive.37
IV. CONCLUSION
We AFFIRM the superior courts ruling on the physical
contact issue, REVERSE its ruling on the estates exhaustion of
the Allstate liability coverage, and REMAND for entry of judgment
in conformity with this opinion.
_______________________________
1 AS 28.20.445(f) and AS 28.22.201(b) both provide, in
relevant part, that a vehicle that has left the scene of an
accident with an insured vehicle is presumed to be uninsured if
the person insured reports the accident to the appropriate
authorities within 24 hours.
2 See AS 09.10.070.
3 Cynthias argument that the unknown driver was an
uninsured motorist presents questions of statutory construction,
which we answer using our independent judgment. See Progressive
Ins. Co. v. Simmons, 953 P.2d 510, 512 (Alaska 1998).
4 Id. at 522.
5 Ch. 70, 12, SLA 1984 (creating AS 28.20.445).
6 For the source of this language see chapter 108,
section 1, SLA 1989.
7 1 Alan I. Widiss, Uninsured and Underinsured Motorist
Insurance 9.2, at 565 (Rev. 2d ed. 1999); see also David J.
Marchitelli, Annotation, Uninsured Motorist Indorsement:
Construction and Application of Requirement that There Be
Physical Contact with the Unidentified or Hit-And-Run Vehicle;
Miss-And-Run Cases, 77 A.L.R. 5th 319, 2[a] at 340 (2000).
8 1 Widiss 9.7, at 612.
9 499 S.E.2d 619, 623-24 (W. Va. 1997).
10 662 N.E.2d 280 (Ohio 1996).
11 Hamric, 499 S.E.2d at 623-24.
12 See 1 Widiss 9.5; Marchitelli, 77 A.L.R. 5th 319,
4[a]; see, e.g., Autry v. Nationwide Gen. Ins. Co., 948 F. Supp.
615, 619 (S.D. Miss. 1996) (applying Mississippi law which
contains a statutory physical contact requirement); Orpustan v.
State Farm Mut. Auto. Ins. Co., 500 P.2d 1119, 1123 (Cal. 1972)
(in banc) (rejecting the insureds theory that solid evidence that
the no-contact accident was caused by the negligence of a phantom
driver should satisfy the fraud-prevention statute requiring
physical contact as one that could not be judicially adopted);
Texas Farmers Ins. Co. v. Deville, 988 S.W.2d 331, 333-34 (Tex.
App. 1999) (interpreting Tex. Ins. Code Ann. art. 5.06-1(2)(d) to
limit coverage for accidents caused by unknown vehicles to cases
in which there was physical contact between the insured and
unknown vehicles); Mayer v. State Farm Mut. Auto. Ins. Co., 870
S.W.2d 623, 624-25 (Tex. App. 1994) (same); Young v. State Farm
Mut. Auto. Ins. Co., 711 S.W.2d 262, 262-63 (Tex. App. 1986)
(same); Hayne v. Progressive N. Ins. Co., 339 N.W.2d 588, 590-96
(Wisc. 1983) (determining that statute defining uninsured motor
vehicle to include an unidentified motor vehicle involved in a
hit-and-run accident required actual physical contact between the
insured and unidentified vehicles).
13 500 P.2d 1119 (Cal. 1972).
14 See id. at 1123.
15 Id.
16 860 P.2d 294 (Or. App. 1993), revd in part and affd in
part, 873 P.2d 1072 (Or. 1994).
17 See To, 860 P.2d at 295-97 (quoting ORS 742.504(2)(g)).
18 See id. To thus implicitly draws a line permitting
courts to override physical contact insurance clauses on public
policy grounds only in the absence of parallel statutory
requirements. Though the facts of this case make it tempting to
tilt toward not toeing Tos tacit line in toto, to do so, we
think, would allot too little deference to legislative
prerogatives.
19 Curran v. Progressive Northwestern Ins. Co., 29 P.3d
829, 833 (Alaska 2001).
20 See AS 28.20.445(f); AS 28.22.201(b).
21 See Homer Elec. Assn v. Towsley, 841 P.2d 1042, 1044
(Alaska 1992); Univ. of Alaska v. Geistauts, 666 P.2d 424, 428
n.5 (Alaska 1983); State v. Alex, 646 P.2d 203, 208-09 n.4
(Alaska 1982).
22 See Progressive Ins. Co. v. Simmons, 953 P.2d 510, 516
(Alaska 1998); Geistauts, 666 P.2d at 428 n.5; Alex, 646 P.2d at
208-09 n.4; State, Dept of Natural Res. v. City of Haines, 627
P.2d 1047, 1049 n.6 (Alaska 1981).
23 Geistauts, 666 P.2d at 428 n.5; see also Homer Elec.
Assn, 841 P.2d at 1044.
24 Determining whether the Wolds settled with Allstate for
less than the liability limits of the Allstate policy is a
question of contract interpretation. See Leisnoi, Inc. v.
Stratman, 956 P.2d 452, 454 (Alaska 1998); Singh v. State Farm
Mut. Auto. Ins. Co., 860 P.2d 1193, 1199 (Alaska 1993) (It is
well established that a settlement is a contract.). The superior
courts answer to that contract question was based on evidence
relating to the process by which the Wolds settled with Allstate.
Because the superior courts decision was made by reconciling
conflicting extrinsic evidence, we review to determine whether
substantial evidence supports the trial courts interpretation.
See Little Susitna Const. Co. v. Soil Processing, Inc., 944 P.2d
20, 23 (Alaska 1997) ([W]e do not reweigh the evidence but ask
only whether it creates room for diversity of opinion among
reasonable people.); Municipality of Anchorage v. Gentile, 922
P.2d 248, 256 (Alaska 1996) ([W]here the trial court relies on
conflicting extrinsic evidence . . . we are confined to
determining whether the facts support the trial courts
interpretation. ) (quoting Fairbanks N. Star Borough v. Tundra
Tours, Inc., 719 P.2d 1020, 1025 (Alaska 1986)); see also Tundra
Tours, 719 P.2d at 1024-25 ([T]he standard used in reviewing
factual findings must be applied where extrinsic evidence is in
dispute.); Jackson v. Nagle, 677 P.2d 242, 247 n.4 (Alaska 1984).
25 AS 28.20.445(e)(1). An identical provision appears in
AS 28.22.201(a)(1).
26 29 P.3d 829, 833 (Alaska 2001) (interpreting AS
28.20.445(e)(1)).
27 AS 28.20.445(e)(1).
28 See AS 09.55.580.
29 See generally Mattingly v. Sheldon Jackson Coll., 743
P.2d 356, 365 (Alaska 1987).
30 See AS 09.15.010; Gillispie v. Beta Constr. Co., 842
P.2d 1272, 1273 (Alaska 1992) (AS 09.15.010 creates parental
cause of action for loss of child separate from wrongful death
action brought by childs estate).
31 Cynthias opening brief contends, for example, that
[t]he facts show that $135,600, was paid by Allstate to
compromise . . . Cynthias NIED claim under the liability
provisions of the Allstate[ ] policy. An additional $135,600,
was paid to compromise the Estates UM claims . . . associated
with the phantom vehicle.
32 (Record cites omitted.)
33 See AS 09.10.070.
34 Gillispie v. Beta Constr., 842 P.2d 1272 (Alaska 1992).
35 Progressive identifies Gonzalez v. Allstate Ins. Co.,
921 P.2d 944 (N.M. 1996), Spaur v. Allstate Ins. Co., 942 P.2d
1261 (Colo. App. 1996), and Medley v. Frey, 660 N.E.2d 1079 (Ind.
App. 1996), as demonstrating that other courts interpreting
similar policy language hold that emotional damage to a survivor
is not a separate bodily injury triggering a second unit of
coverage.
36 Indeed, the issue may not be amenable to a definitive
resolution, since much of the case law cited by the parties in
their supplemental briefing seems to suggest that whether a loss-
of-society claim should trigger separate per person coverage may
hinge more on a particular policys definition of the scope of its
bodily injury coverage than on the inherent nature of a cause of
action for loss of society. Compare, e.g., Abellon v. Hartford
Ins. Co., 212 Cal. Rptr. 852, 854-55 (Cal. App. 1985); Employers
Cas. Ins. Co. v. Foust, 105 Cal. Rptr. 505, 508 (Cal. App. 1972);
Giardino v. Fierke, 513 N.E.2d 1168, 1173 (Ill. App. 1987);
Williamson v. Historic Hurstville Assn, 556 So. 2d 103, 107 (La.
App. 1990); Valliere v. Allstate Ins. Co., 596 A.2d 636, 638 (Md.
1991) (holding that although loss of consortium or other service
was not a bodily injury within meaning of usual policy language,
policy in question specifically defined term bodily injury to
include loss of services and insurer was bound by that
definition); Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255,
1261 (N.J. 1992); Wolfe v. State Farm Ins. Co., 540 A.2d 871, 873-
74 (N.J. Super. App. Div. 1988); Lavanant v. Gen. Accident Ins.
Co. of Am., 595 N.E.2d 819, 822 (N.Y. 1992) (concluding that
bodily injury defined in a property insurance policy as bodily
injury, sickness, disease or death was ambiguous); and Allstate
Ins. Co. v. Handegard, 688 P.2d 1387, 1388-89 (Or. App. 1984),
with Spaur v. Allstate Ins. Co., 942 P.2d 1261, 1263 (Colo. App.
1996); Medley v. Frey, 660 N.E.2d 1079, 1080-81 (Ind. App. 1996);
Allstate Ins. Co. v. Diamant, 518 N.E.2d 1154, 1156 (Mass. 1988)
(The term personal injury is broader and includes not only
physical injury but also any affront or insult to the reputation
or sensibilities of a person. Bodily injury, by comparison, is a
narrow term and encompasses only physical injuries to the body
and the consequences thereof.); State Farm Mut. Auto. Ins. Co.
v. Descheemaeker, 444 N.W.2d 153, 154-55 (Mich. App. 1989);
Gonzales v. Allstate Ins. Co., 921 P.2d 944, 946-47 (N.M. 1996);
and Richie v. Am. Family Mut. Ins. Co., 409 N.W.2d 146, 147-48
(Wis. App. 1987) (distinguishing between personal injury and
bodily injury).
37 Because we have limited our decision to the propriety
of allocating the Wolds loss-of-society settlement to separate
per person limits under the Allstate policy, we express no view
as to the proper handling of these individual claims under the
specific terms of Progressives UM/UIM policy an issue that the
parties have not addressed and that we think should properly
remain open for consideration by the superior court in the first
instance, if it arises.
