Summary
In Aetna Casualty and Surety Co. v. Dodson, 235 Va. 346, 367 S.E.2d 505 (1988), we considered a case with facts virtually identical to those presented here, and interpreted the version of the uninsured motorist statute effective at that time.
Summary of this case from Welch v. Miller and Long Co. of MarylandOpinion
45631 Record No. 871205
April 22, 1988
Present: All the Justices
Virginia law does not permit recovery by an insureds estate under an uninsured motorist policy provision where the insured was killed in a work-related motor vehicle accident to which the exclusive remedy clause of the Virginia Workers' Compensation Act applies, since under the Act the estate has no legal entitlement to further damages which might satisfy the condition precedent to recovery under the uninsured motorist provision.
Insurance — Uninsured Motorists — Worker's Compensation — Exclusion of Remedy — Motor Vehicles — Practice and procedure — Code Sec. 65.1-40 and 65.1-103 — Rules of Court
Pursuant to Rule 5:42, two questions of Virginia law were certified to this Court by the United States Court of Appeals for the Fourth Circuit. The certified questions concern the application of an uninsured motorist provision of decedent's insurance policy where the Workers' Compensation Act applies to the accident causing the death of the insured.
The decedent was employed as a construction site supervisor. He was acting in the course of his employment when struck and killed by a truck owned by his employer and operated by a fellow employee, also acting in the course of his employment. The decedent's widow and one of his children, as statutory beneficiaries under the Virginia wrongful death statutes (Code Sec. 8.01-50 et seq.), applied for and received worker's compensation benefits. The decedent was the named insured in a current and effective insurance policy issued by the appellant. The policy contained an uninsured motorist endorsement which stated that the insurer would pay all sums to which the insured or his legal representative was legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle.
Decedent's widow brought a wrongful death action against the employer and three fellow employees, which was dismissed on the grounds that the Workers' Compensation Act afforded the exclusive remedy. The widow, as administratrix, also filed a declaratory judgment proceeding against the insurer, contending that decedent's estate was entitled to and had been denied recovery in an amount equalling the uninsured motorist coverage policy provision. The United States District Court for the Eastern District of Virginia granted a declaratory judgment establishing uninsured motorist coverage and further granted the widow leave to establish fault in another proceeding in which damages would be offset by the worker's compensation benefits.
Both parties appealed the ruling to the United States Court of Appeals for the Fourth Circuit. The insurer appealed the ruling establishing uninsured motorist coverage, and the administratrix cross-appealed the ruling allowing the insurer to offset workers' compensation benefits. The Court of Appeals certified two questions of Virginia law to this Court, which were accepted by order entered November 25, 1987.
1. Pursuant to Code Sec. 65.1-40 and 65.1-103, the Worker's Compensation Act affords the exclusive remedy for personal injury or accidental death sustained within its purview, against a covered employer or against fellow employees whose causative acts arise out of and in the course of employment by a covered employer.
2. Because neither the language of the insurer's uninsured motorist endorsement nor the statute upon which it is based are ambiguous, the administratrix's contentions that contra proferentem principles should apply to the policy provision, that the insurer should not be allowed to take advantage of the workers' compensation bar, and that a construction of the policy language in favor of the insured would follow legislative intent, all fail.
3. The phrase "legally entitled to recover as damages" interposes as a condition precedent to the uninsured motorist insurer's obligation a requirement that the insured have a legally enforceable right to recover damages from an owner or operator of an uninsured motor vehicle.
4. This condition precedent to the insurer's liability under its uninsured motorist provision was not met because workers' compensation afforded the exclusive remedy against the decedent's employer and fellow employees; therefore, the decedent's statutory beneficiaries are not legally entitled to recover damages against them.
5. The first certified question is resolved in the negative because the phrase "legally entitled to recover as damages" is unambiguous.
Appeal upon questions of law certified by the United States Court of Appeals for the Fourth Circuit.
The first certified question is answered in the negative.
Ignacio Britto Pessoa (Christopher K. Speed; Arthur Speed, Ltd., on briefs), for appellant.
John Blazer (R. Harrison Pledger. Jr.; Crews and Hancock, on briefs), for appellee.
Pursuant to Rule 5:42, the United States Court of Appeals for the Fourth Circuit, on October 22, 1987, certified to this Court two questions of Virginia law, which we accepted by order entered November 25, 1987. The certified questions were stated as follows:
Implementing the 1986 amendment to Va. Const. art. VI. Sec. 1, we adopted Rule 5:42, providing for the consideration of questions of Virginia law certified to this Court by certain courts of the United States and by the highest appellate courts of our sister states and of the District of Columbia.
1. Does Virginia law permit recovery by an insured's estate under the UM provision of the insured's policy (paid for by the insured), where the insured was killed in a work-related motor vehicle accident and where the employer/vehicle owner and co-employee/vehicle operator both had insurance, but where the exclusive remedy clause of the Virginia Workmen's Compensation Act bars recovery under those other policies?
2. In the event Virginia law permits recovery under the circumstances in question one above, should the workmen's compensation benefits received by the insured's wife and children be set-off against the insured's estate's UM recovery where the insured's policy contains a set-off provision?
Because we answer the first question in the negative, it is unnecessary to answer the second.
The facts were stipulated in the federal court. On May 18, 1984, Elmer W. Dodson, Jr., was employed by A.G. Van Metre, Jr., Inc. (Van Metre), as a construction site supervisor. While in the course of his employment, he was struck and killed by a truck owned by Van Metre and operated by Rogerio Cardoso, a fellow employee of Van Metre also acting in the course of his employment. Dodson was survived by his widow and five children.
Dodson's widow and children are statutory beneficiaries under the Virginia wrongful death statutes. Code Sections 8.01-50 through 56. The widow and one dependent child applied for benefits under the Workers' Compensation Act. They received an award, and workers' compensation benefits are now being paid to them.
At the time of his death, Dodson was the named insured in a policy of insurance issued by Aetna Casualty and Surety Company (Aetna) covering two trucks owned by Dodson. The premium had been paid, and the policy was in effect. As required by Code Sec. 38.1-381(b), the policy contained an uninsured motorist (UM) endorsement, which provided: "The company will pay . . . all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle . . . ." (Emphasis added.)
Recodified in 1986 as Code Sec. 38.2-2206 A (1986 Repl. Vol.), Acts 1986, c. 562.
Dodson's widow qualified as administratrix: of his estate and brought a wrongful death action in the Circuit Court of Fairfax County against Van Metre, Cardoso, and Steven Reece, another Van Metre employee. The defendants in the circuit court filed a plea in bar, asserting that the Workers' Compensation Act afforded the exclusive remedy, because Dodson's fatal injuries were sustained in the course of, and arose out of, his employment, and because Dodson, Cardoso and Reece were all engaged in their employment with Van Metre at the time of the accident. On July 23, 1987, the Circuit Court of Fairfax County sustained the plea in bar and dismissed the wrongful death action as to Van Metre, Cardoso, and Reece.
The administratrix also joined the manufacturer and the seller of the truck, as well as a party who had allegedly installed equipment thereon. She later nonsuited those parties.
The administratrix petitioned this Court for an appeal of that ruling. which we have this day refused.
The administratrix also filed a declaratory judgment proceeding in the United States District Court for the Eastern District of Virginia against Aetna, contending that Dodson's estate was entitled to $300,000, the limit of Aetna's coverage under the UM endorsement, and that Aetna had denied coverage. Although Van Metre's truck was insured, she contended that the bar of the Workers' Compensation Act denied her the benefit of Van Metre's insurance, bringing Cardoso within the statutory definition of an "uninsured motorist." Aetna raised several defenses by answer, and the parties filed cross-motions for summary judgment. Aetna contended that because Dodson's estate was not "legally entitled to recover" from the owner or operator of the "uninsured motor vehicle," due to the workers' compensation bar, the administratrix failed to meet a condition precedent for coverage under the UM endorsement.
The parties stipulated that although Van Metre's truck was covered by a general liability insurance policy, "because [Dodson's] survivors are receiving workmen's compensation benefits, coverage for Mr. Dodson's death under the terms of that policy would he denied."
The district court ruled in favor of the administratrix, granting declaratory judgment establishing UM coverage, and granting the administratrix "leave, in a separate proceeding, to establish fault and determine the full measure of damages with an off set for workman's compensation coverage." Aetna appealed to the United States Court of Appeals for the Fourth Circuit the district court's ruling establishing UM coverage. The administratrix cross-appealed the ruling allowing Aetna to offset workers' compensation benefits. The court of appeals certified those questions to us as stated above.
In Virginia, the Workers' Compensation Act affords the exclusive remedy for personal injury or accidental death sustained within its purview, against a covered employer or against fellow employees whose causative acts arise out of and in the course of employment by a covered employer. Code Sections 65.1-40 and -103. Here, the administratrix, having applied for and received workers' compensation benefits, cannot and does not contest the applicability of the Workers' Compensation Act to the facts surrounding her decedent's accidental death. Rather, she contends that the phrase "legally entitled to recover as damages," appearing in Aetna's policy, is ambiguous, and should be construed against Aetna, which drafted the policy, upon contra proferentem principles. Therefore, she argues, even though workers' compensation would be an exclusive remedy, barring her right to proceed against Van Metre and its employees, nevertheless, Aetna should be unable to take advantage of the workers' compensation bar. She contends that a construction of the policy language in favor of the insured would "respect the legislative intent behind the UM scheme by affording coverage to injured claimants in situations where adequate compensation would not otherwise exist."
[2-3] We do not agree with the administratrix. Leaving aside the question whether contra proferentem principles apply to contracts whose language is prescribed by statute, we find nothing ambiguous in the language of Aetna's UM endorsement or in the statute upon which it is based. The phrase "legally entitled to recover as damages" interposes, as a condition precedent to the UM insurer's obligation, the requirement that the insured have a legally enforceable right to recover damages from an owner or operator of an uninsured motor vehicle. We do not perceive a rational alternative which would render the phrase ambiguous.
Aetna cites Midwest Mutual v. Aetna Casualty, 216 Va. 926, 223 S.E.2d 901 (1976), for the proposition that the insured is not "legally entitled to recover" from an uninsured motorist until the insured's claim against the tortfeasor is reduced to judgment. Midwest Mutual is inapposite here. It was an action for contribution between two insurance carriers and turned solely upon the principles governing the suitable right of contribution enforceable at law between joint obligors.
Because workers' compensation afforded the exclusive remedy against the decedent's employer and fellow employees for his accidental death, his statutory beneficiaries are not "legally entitled to recover" damages against them. It follows that a condition precedent to Aetna's liability under its UM endorsement was not met.
The parties have cited a number of cases in which other jurisdictions have considered similar questions, but most are inapposite because workers' compensation is not an exclusive remedy in those jurisdictions. An exception is Perkins v. Insurance Co. of North America, 799 F.2d 955 (5th Cir. 1986), which was governed by the law of Mississippi. That law provided that workers' compensation was an injured employee's exclusive remedy for work-related injuries against his employer and his fellow employees. Further, Mississippi's UM law, virtually identical to Virginia's, was incorporated into the language of the insurance policy in question. The federal court, considering arguments similar to those advanced before us, in the absence of a ruling by the courts of Mississippi, relied on Professor Larson's treatise on workers' compensation:
Ordinarily, for the uninsured motorist clause to operate in the first place, the uninsured third person must be legally subject to liability. Thus, if the third person is specifically made immune to tort suit by the compensation act's exclusive remedy clause, the uninsured motorist provision does not come into play. In the familiar example of coemployee immunity, the issue thus becomes whether the accident was in the course of employment; if it was, the uninsured motorist carrier has no liability.
799 F.2d at 959 (emphasis deleted) (quoting A. Larson, 2A Workmen's Compensation Law Sec. 71.23(j) at 14-37 (1983) (1987 Supp. at 14-44)). We agree with that analysis.
In the present case, the United States District Court distinguished Perkins on the ground that Perkins sought recovery under the UM provisions of his employer's policy, while here the administratrix seeks to recover under the decedent's own UM policy. The district court reasoned that because of this difference, "the policy underlying the Workmen's Compensation Act is less compelling." Because we view the certified question as resolved by the interpretation of the unambiguous phrase "legally entitled to recover as damages," we do not reach considerations of legislative policy.
The first certified question is answered in the negative.