Opinion
16751/07.
Decided July 18, 2008.
Michael Jones, Esq. of Martin, Fallon Mulle, Attorney for petitioner.
Allstate Indemnity Company: Carol M. Wickham, Esq. of Koors and Jednak, Attorney for respondent.
Petitioner moved for an order pursuant to C.P.L.R. § 7503(c) staying arbitration and scheduling an evidentiary hearing to determine if this is a valid uninsured motorist claim. Moreover, if the court determined that this was a valid uninsured motorist claim, petitioner requested an order directing the respondents to submit to a deposition and physical examinations and to provide requested authorizations. This court issued an order dated September 13, 2007, ordering a framed issue hearing to determine whether or not respondent Christopher Gay was insured by Allstate Indemnity Company ("Allstate") on the date of the accident. After several adjournments at the request of the parties, memoranda of law were submitted by the petitioner and respondent, Allstate Indemnity Company ("Allstate") along with affidavits and other supporting documentation for this court to determine whether or not Christopher Gay was insured by Allstate on the date of the accident.
The motor vehicle accident at issue in the case occurred on February 18, 2006 at the intersection of Boston Road and 213th Street in Bronx County. According to the police accident report which was submitted for this court's consideration, the accident occurred when a Dodge van owned and operated by respondent Christopher Gay of 317 Alexander Avenue, Spartanburg, S.C., struck a Honda vehicle owned and operated by respondent Eva Birikorang. According to the police report, an insurance card for Mr. Gay's vehicle was produced and it bore a policy number of 935334812 with Allstate.
The parties have stipulated that if the framed issue hearing was held and the police officer who prepared the report was called to testify, he would testify that on the date of the accident, Mr. Gay was the owner and operator of the Dodge van and he produced an insurance card from Allstate with the aforementioned policy number. Moreover, Allstate would call Sandra Mouzithras to testify with respect to the insurance policy issued to Mr. Gay with a policy period of February 12, 2006 to February 12, 2007.
Allstate submitted the affidavit of Sandra Mouzithras, an underwriter and manager with Allstate. In her affidavit, Ms. Mouzithras states that Mr. Gay had been issued an insurance policy by Allstate for a 1999 Sienna bearing the Vehicle Identification Number (VIN): 4T3ZF19C3XU159061. According to Ms. Mouzithras, South Carolina is a ". . . self-terminating state. If a renewal is issued and a bill is sent, it is the responsibility of the insured to make payment. If payment is not received prior to the renewal date of the policy, the policy is automatically cancelled. This was the case of Mr. Gay's policy." (Allstate, Exhibit B).
Ms. Mouzithras further elaborates that Allstate received a payment from Mr. Gay on February 22, 2006 and because it was received within thirty (30) days of the cancellation of the policy, the policy was reinstated "with a lapse in coverage." (Allstate, Exhibit B). The policy had a lapse from February 12, 2006 to February 21, 2006 as a result of Allstate receiving Mr. Gay's payment on February 22, 2006. Mr. Gay was issued a credit of $25.51 for the period in which there was a lapse and he was sent a refund check for that amount. Therefore, Ms. Mouzithras concludes that Mr. Gay did not have a policy in effect on the date of the subject accident.
In support of its position that Mr. Gay did not have a policy in effect with Allstate at the time of the accident, Ms. Mouzithras annexes several documents/business records. One of these is the Renewal Auto Policy Declarations (hereinafter "Renewal Policy") that was sent to Mr. Gay. Said Renewal Policy states that, "A new policy period is about to begin — your renewal offer materials are enclosed . . . Keep in mind that your bill will be sent separately. Continuing your coverage is simple — just make sure that we receive the required premium payment when it's due, as indicated on your bill." (Allstate, Exhibit B). The Renewal Policy also states, "Important: Please note that this mailing is our policy renewal offer. Your coverage won't continue unless we receive the required payment before the policy effective date and time listed on the enclosed Policy Declarations." (Allstate, Exhibit B). The Policy Declarations page states that the policy is effective on February 12, 2006.
A copy of the automobile insurance bill that was sent to Mr. Gay on or about January 23, 2006 was also annexed to Allstate's memorandum of law. Said insurance bill lists Mr. Gay's name, address, description of his vehicle (2000 Dodge Van Grand Caravan) and states as follows: "This notice reflects your renewal offer premium. If you want your insurance coverage to continue and do not want it to end, please make sure we receive the Minimum Amount Due by the end of the day (midnight) on February 11, 2006 or your policy will end at 12:01 a.m. Standard Time on February 12, 2006." (Allstate, Exhibit B). Moreover, the Policy Endorsement page of Mr. Gay's Renewal Policy further states, "If we offer to renew your policy and your required premium payment isn't received when due you will have rejected our renewal offer. This means that the insurance coverage described in the renewal offer and any endorsements to the renewal offer will not become effective." (Allstate, Exhibit C). The payment for Mr. Gay's policy was not received by Allstate until February 22, 2006, at which time Mr. Gay's policy was reinstated. However, the accident occurred during the lapse in coverage
The parties agree that South Carolina law applies to the policy issued by Allstate to Mr. Gay. Allstate argues that South Carolina Code § 38-77-120(a) is inapplicable as South Carolina Code § 38-77-120(b) provides that where the insurer has manifested its willingness to renew by issuing or offering to the insured a renewal policy, subsection (a) does not apply. Allstate asserts that it clearly manifested its willingness to renew in a reasonable manner by sending the offer to renew to Mr. Gay on January 9, 2006 and again on January 23, 2006, with the premium bill, advising Mr. Gay that the policy would end in twenty (20) days if the premium was not received. Therefore, Allstate argues that there was no coverage for Mr. Gay's vehicle at the time of the accident under its policy.
Petitioner submits a memorandum of law stating that Allstate was required to provide Mr. Gay with (fifteen)15 days' written notice of cancellation of the insurance policy pursuant to South Carolina Code § 38-77-120(a) which indicates that no cancellation is effective unless the insurer delivers a written notice of cancellation stating the date, not less than fifteen (15) days after the date of mailing on which the cancellation becomes effective. Petitioner asserts that Allstate concedes that it did not send a cancellation notice to Mr. Gay that would comport with the requirements of § 38-77-120(a). Petitioner argues that the bill which was sent after the offer of renewal does not contain the language required by South Carolina law.
Petitioner further argues that the renewal bill is "rife with contradiction and ambiguity" because it states that payment is due on February 12, 2006, which was a Sunday but another section of the bill states that payment is due no later than midnight February 11, 2006 and yet a third section of the bill states, "To allow time for mail and processing, please send your payment no later than February 7, 2006." (Allstate, Exhibit B). Petitioner asserts that Mr. Gay could not have paid his bill on February 12, 2006 because it was a Sunday nor could he have paid it on February 11, 2006 because it was a Saturday.
According to petitioner, the Allstate policy did not "self-terminate." Petitioner further argues that South Carolina does not permit automatic cancellation or self-termination under the circumstances of this case. Moreover, petitioner contends that South Carolina Code § 38-77-120(a) and (b) should be read together and that cancellation without notice is not permitted absent an overt act demonstrating the intent to cancel by the insured or his/her agent. Therefore, since there was no overt act by the insured, Mr. Gay, demonstrating an intent to cancel the policy, Allstate was required to send a cancellation notice and it should not be permitted to avoid coverage based upon the ten (10) day lapse.
South Carolina Code 1976 § 38-77-120 states the requirements for notice of cancellation of or refusal to renew policy. Subsection (a) states, "No cancellation or refusal to renew by an insurer of a policy of automobile insurance is effective unless the insurer delivers or mails to the named insured at the address shown in the policy a written notice of cancellation. This notice . . . must state the date not less than fifteen days after the date of the mailing or delivering on which the cancellation or refusal to renew becomes effective . . ." Subsection (b) states, "Subsection (a) of this section does not apply if the: (1) insurer has manifested to the insured its willingness to renew by actually issuing or offering to the insured to issue a renewal policy, certificate, or other evidence of renewal, or has manifested such intention to the insured by any other means; (2) named insured has demonstrated by some overt action to the insurer or its agents that he expressly intends that the policy be canceled or that it not be renewed."
Petitioner asks that this court interpret the statute as reading that both subdivision (1) and (2) of § 38-77-120(b) should be read together such that Allstate's manifestation of its willingness to renew would not be enough as there must also be an overt act by the insured demonstrating his intent to cancel as well. This court finds that petitioner's interpretation of the statute is erroneous. The case cited by petitioner, South Carolina Farm Bureau Mutual Insurance v. Courtney , 349 S.C. 366, 563 S.E.2d 648 (2002), is inapplicable to the case at bar. That case involved a new insurance policy that was obtained for a replacement vehicle. The court found that an automatic termination clause allowing unilateral cancellation by an insurer is invalid without notice to the insured as it violates § 38-77-120 and the fact that a new insurance policy was obtained on the replacement vehicle did not qualify as an overt act showing the insured's intent to cancel.
Petitioner herein has cited to no case law from South Carolina to support its position that subsections (b)(1) and (b)(2) of § 38-77-120 should be read together such that Allstate would have to show both that Allstate manifested its willingness to renew the policy and that the insured, Mr. Gay, demonstrated by some overt act his intent to cancel as well.
Moreover, in Bannister v. Ohio Cas. In. Co. , 314 S.C.388, 444 S.E.2d 528 (1994), cited by Allstate, the insured had been sent an offer to renew his policy and the premium due date was listed as October 26, 1990. The owner did not pay the premium and on the evening of October 26, 1990, was involved in a one-car accident injuring himself and his passenger. The insurance company, having no knowledge of the accident sent two reminders to the insured regarding the payment due. The owner did not pay the premium and the insurance company terminated him for non payment of renewal. Therefore, he was not covered under the insurance policy on the date of the accident. The issue on appeal was whether the offer to renew was proper and effective under South Carolina statute. The court held that because the insurer manifested its willingness to renew the policy by sending its renewal certificate to the insured in compliance with section 38-77-120(b), subsection (a) did not apply.
Section 38-77-120(b) is clear that the cancellation notice required in section 38-77-120(a) does not apply where as here, the insurer, Allstate, manifested its willingness to renew the insurance policy by offering the insured, Mr. Gay, a renewal policy. Therefore, Allstate was not required to send Mr. Gay the 15 day notice of cancellation required under section 38-77-120(a).
This court finds that since Mr. Gay did not remit his payment to Allstate by the time it was due, there was a lapse in coverage from February 12, 2006 to the date the payment was received by Allstate, February 22, 2008. Therefore, there was no coverage for Mr. Gay's vehicle pursuant to the Allstate policy on the date of the accident. Accordingly, petitioner's application to stay arbitration is hereby denied and the petition is dismissed as to Allstate. Respondents Eva Birikorang and Chrisine Morales are directed to submit to depositions and physical examinations and to provide petitioner with the necessary authorizations.
This constitutes the decision and order of this court.