WOOD v. MUTUAL OF ENUMCLAW INS. CO. No. 23839-0-II.
986 P.2d 833 (1999)
97 Wash.App. 721
James Alexander WOOD, Respondent, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, Appellant.
Court of Appeals of Washington, Division 2.
October 22, 1999.
Ben Shafton, Morse & Bratt, Vancouver, for Respondent.
The trial court granted summary judgment in a declaratory judgment action in favor of James Alexander Wood against Mutual of Enumclaw Insurance Company. The issue we are asked to decide is whether, after the new statute mandating the offering of personal injury protection insurance (PIP) by insurers, a PIP payment can still be offset against underinsured motorist (UIM) coverage when the insured has fully recovered and there is an offset clause. We hold the offset clause to be valid and reverse.
Soon after the accident, Mutual of Enumclaw paid Wood $10,000 in PIP. When Wood and the insurer could not agree on the value of Wood's UIM claim, the matter was arbitrated pursuant to the insurance contract. The arbitration panel awarded Wood $74,617.40 for the UIM claim, consisting of $14,617.40 for special damages and $60,000 in general damages. Mutual of Enumclaw paid $64,617.40 to Wood, claiming a $10,000 credit for PIP benefits previously paid.
Wood filed a complaint for declaratory judgment, in which he sought an order disallowing the $10,000 offset. (In essence, Wood claimed that he was entitled to a total of $84,617.40 from his insurer as a result of the accident.) The trial court granted Wood's motion for summary judgment, attorney fees, and costs.
I. Standard of Review
The case presents purely legal issues. An appellate court reviews the grant of summary judgment de novo. "`Construction of an insurance policy is a question of law for the courts, the policy is construed as a whole, and the policy "should be given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance."'" Kitsap County v. Allstate Ins. Co.,
II. UIM Award May Be Offset By PIP Payments
When UIM, but not PIP, offerings were required by statute, we addressed whether PIP payments may be offset against UIM awards in Barney v. Safeco Ins. Co. of Am.,
In Price, the supreme court held that the superior court is without jurisdiction to decide disputed coverage issues (such as a PIP offset from UIM) in an action to enforce an arbitration award. 133 Wash.2d at 496-502,
Wood does not argue that the contract language is ambiguous. Nor does he attack the reasoning of this court in Barney. Wood's sole argument is that all Washington precedent on this issue should be reexamined in light of the fact that the law now requires that minimum PIP benefits be offered in all automobile liability insurance policies. See RCW 48.22.085, .090, .095; Laws of 1993, ch. 242, §§ 2, 3, 4. Because the Legislature did not provide for such offsets in the PIP or UIM statutes, Wood argues that a contract clause providing for such an offset violates public policy.
III. Does the Contract Violate Public Policy?
Applying the test set forth in Kyrkos, this court must first determine whether the offset conflicts with the express language of the UIM or PIP statutes. Wood does not explain where the conflict arises; instead, he argues that because the Legislature did not specifically authorize the offset of PIP payment from a UIM award, such offsets must not be allowed. By ignoring the first part of the Kyrkos test, he acknowledges that there is no express conflict between the contract and the statutes.
Turning to the second part of the Kyrkos test, we examine whether the offset is in conflict with the purpose of the UIM or PIP statutes. The Legislature created the UIM statute "[to allow] an injured party to recover those damages which the injured party would have received had the responsible party been insured with liability limits as broad as the injured party's statutorily mandated underinsured motorist coverage limits." Britton v. Safeco Ins. Co. of Am.,
Considering the purpose of the UIM and PIP statutes, we consider what would have happened in this case had the tortfeasor been fully insured. Mutual of Enumclaw would have to pay up to $10,000 in PIP benefits pursuant to its contract with Wood. But Mutual of Enumclaw would have an equitable (and presumably contractual) right of subrogation for the $10,000. See Roberts v. Safeco Ins. Co.,
Wood also asserted that the offset clause was in the wrong section of the insurance contract. It appears in the UIM section, not the PIP section. The record does not contain the full contract because the parties agreed that the only relevant section was the offset clause. Assuming that the clause appeared in the UIM section, it would not have mattered because we read the contract as a whole. Barney, 73 Wash.App. at 429,
IV. Attorney Fees
Because Wood was not wrongfully denied coverage, he was not entitled to an award of attorney fees. Olympic S.S. Co. v. Centennial Ins. Co.,
MORGAN, J., and HOUGHTON, J., concur.
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