United States Court of Appeals, Fourth Circuit
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NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of
unpublished dispositions is disfavored except for establishing
res judicata, estoppel, or the law of the case and requires
service of copies of cited unpublished dispositions of the Fourth
Circuit.
Frank E. ARNOLD, Plaintiff-Appellant,
v.
LIBERTY MUTUAL INSURANCE COMPANY, a
Massachusetts
Corporation, Defendant-Appellee,
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY, Defendant.
Frank E. ARNOLD, Plaintiff,
STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY, Defendant-Appellant,
v.
LIBERTY MUTUAL INSURANCE COMPANY, a
Massachusetts
Corporation, Defendant-Appellee.
Nos. 94-1165, 94-1175.
United States Court of Appeals, Fourth Circuit.
Argued September 28, 1994.
Decided October 27, 1994.
Appeals from the United States District Court for the Western District of
Virginia, at Roanoke. Samuel G. Wilson, District Judge. (CA-92-827-R)
Argued: John Dickens Eure, Johnson, Ayers & Matthews, Roanoke, VA,
for appellants.
Argued: Phillip Verne Anderson, Gentry, Locke, Rakes & Moore,
Roanoke, VA, for appellee.
On brief: Robert S. Ballou, Johnson, Ayers & Matthews, Roanoke, VA,
for appellant State Farm.
On brief: P. Brent Brown, William A. Jennings, Carter, Brown &
Osborne, P.C., Roanoke, VA, for appellant Arnold.
On brief: Melissa Warner Scoggins, Gentry, Locke, Rakes & Moore,
Roanoke, VA, for appellee.
W.D.Va.
AFFIRMED.
Before HALL, HAMILTON, and MICHAEL, Circuit Judges.
OPINION
PER CURIAM
1
Frank Arnold (Arnold) and State Farm Mutual Automobile Insurance Company
(State Farm) appeal the grant of summary judgment in favor of Liberty Mutual
Insurance Company (Liberty Mutual) denying their claim for higher insurance
coverage under Liberty Mutual's uninsured/underinsured motorist coverage
issued to Arnold's employer, Blue Ridge Transfer Company (Blue Ridge). The
district court concluded that under Virginia law the term "financial
responsibility" was not ambiguous and that Blue Ridge effectively rejected
uninsured/underinsured default coverage equal to its higher liability limits. We
agree with both conclusions of the district court and therefore affirm.
I.
2
The material facts are not disputed. Arnold, a tractor-trailer driver for Blue
Ridge, was the named insured under his own State Farm policy with
uninsured/underinsured motorist coverage limits of $100,000 per person and
$300,000 per accident. Arnold was also insured under a Liberty Mutual
truckers' policy issued to Blue Ridge with liability limits of $2,000,000. Liberty
Mutual initially issued the trucker's liability policy effective September 1, 1985,
with liability limits of $1,000,000.
Subsequently, and pursuant to amendments in Virginia insurance law with
respect to raising motorists' coverage, Liberty Mutual advised Blue Ridge that
if Blue Ridge purchased liability coverage higher than that required by law,
then its uninsured/underinsured motorist coverage would increase to that
amount unless Blue Ridge rejected the higher coverage and selected the lower
limits within twenty days. See 6A Code of Virginia Sec. 38.2-2202(B) (Michie
1994). Liberty Mutual furnished Blue Ridge a form conspicuously entitled
"Virginia Uninsured Motorist/Underinsured Motorist Coverage," which
provided available coverage limit options, each with a corresponding box to
check if that option was selected. Blue Ridge placed an "X" in the box marked
"Financial Responsibility Limits." Accordingly, Liberty Mutual issued the
policy with uninsured/underinsured coverage limits in the amended amount of
$70,000, representing Virginia's financial responsibility limits in a single
format. The record reveals that Blue Ridge selected uninsured/underinsured
motorist coverage at the lowest permissible level in each state in which it was
afforded the opportunity to select coverage limits.
4
Liberty Mutual also provided Blue Ridge a separate written notice of the United
States Department of Transportation's (DOT) insurance requirements. This
notice apprised Blue Ridge of the DOT's regulations, which established
minimum levels of financial responsibility for public liability for motor
carriers. This notice contained the DOT's schedule of financial responsibility
limits for various types of carriers and apprised Blue Ridge that those
requirements could be satisfied if Blue Ridge purchased an endorsement to its
insurance policy or obtained a surety bond. As with the Virginia policy, Liberty
Mutual furnished Blue Ridge a form entitled "Motor Carrier Insurance Request
Form" for making its coverage limits with respect to its DOT insurance
selections. Blue Ridge executed this form, requesting that Liberty Mutual add
the endorsement to Blue Ridge's policy and provide the DOT-mandated
liability limit of $1,000,000.
While driving a tractor-trailer in the scope of his employment, Arnold was
injured in an accident in Pennsylvania. The tractor-trailer was owned by Blue
Ridge and principally maintained in Virginia. Subsequent to the accident,
Liberty Mutual agreed to pay $70,000 toward Arnold's expenses in accordance
with the terms of the uninsured/underinsured coverage limits in the Virginia
policy, rejecting Arnold's contention that it was obligated to pay the higher
limit of $1,000,000. Liberty Mutual asserted that Blue Ridge's selection of
"Financial Responsibility Limits" meant that Blue Ridge could and did choose
the lowest amount of uninsured/underinsured coverage permissible under
Virginia law. Arnold thereafter instituted suit against Liberty Mutual and State
Farm, seeking a declaratory judgment of the allocation and amount of insurance
available to him under the Liberty Mutual Virginia policy, but he did not assert
a claim with respect to Liberty Mutual's DOT-mandated policy. The district
court held that Liberty Mutual was obligated to pay $70,000. Arnold and State
Farm appealed.
II.
6
Before turning to the parties' contentions, we address our standard of review.
The district court resolved the case on summary judgment, a legal conclusion
over which this court exercises plenary review. See Cooke v. Manufactured
Homes, Inc., 998 F.2d 1256, 1260 (4th Cir.1993). We must apply the same
standard as used by the district court when reviewing a grant of summary
judgment. See Farwell v. Un, 902 F.2d 282, 287 (4th Cir.1990). Accordingly,
summary judgment was properly granted in favor of Liberty Mutual if there
was no genuine issue of material fact and Liberty Mutual was entitled to
judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). We review de novo the district court's analysis of state law. See Salve
Regina College v. Russell, 499 U.S. 225, 231 (1991).
Virginia law provides that the limits of each liability policy issued to the owner
of a motor vehicle principally maintained in Virginia must at least equal
Virginia's financial responsibility limits with respect to bodily injury and
accident. See 7 Code of Virginia Sec. 46.2-472 (Michie 1994). Additionally,
the policy must provide uninsured/underinsured coverage equal at least to those
limits. See 6A Code of Virginia Sec. 38.2-2206(A) (Michie 1994). If an insured
elects to purchase liability coverage with greater limits, his
uninsured/underinsured coverage limits automatically increase to his selected
liability limits unless the insured rejects the higher limits within twenty days.
See 6A Code of Virginia Sec. 38.2-2202(B) (Michie 1994). The insurer must
notify the insured of its options. See id.
Like Virginia law, DOT regulations require motor carriers to secure liability
coverage or a security bond, and here, Blue Ridge was required to obtain at
least $1,000,000 in liability coverage. See 49 U.S.C.A. Sec. 10927(a) (West
1994); 49 C.F.R. Sec. 387.9 (1993). DOT regulations do not require carriers
such as Blue Ridge to maintain uninsured/underinsured coverage in addition to
public liability insurance. Liberty Mutual was obligated to apprise Blue Ridge
of the DOT liability insurance requirements. See generally 49 C.F.R. Sec.
387.15 (1993).
While Arnold does not contend that he has a claim under Blue Ridge's DOTmandated liability insurance, he and State Farm contend that Blue Ridge has
$1,000,000 in uninsured/underinsured coverage under Liberty Mutual's policy,
advancing two arguments in support of this contention. First, they posit that the
term "Financial Responsibility Limits" on Liberty Mutual's Virginia form for
selecting uninsured/underinsured coverage is ambiguous, particularly in light of
Liberty Mutual's concurrently notifying Blue Ridge of the DOT's insurance
requirements. Second, they assert that Blue Ridge's selection of the financial
responsibility limits for its uninsured/underinsured coverage was an insufficient
rejection under Virginia law of the higher coverage limits. Like the district
court, we reject both contentions.
A.
10
The selection forms provided to Blue Ridge by Liberty Mutual were
conspicuously differentiated between the Virginia form and the DOT form for
selecting DOT-mandated liability coverage. Like the district court, we are
persuaded that when Blue Ridge selected "Financial Responsibility Limits" on
the Virginia form, it knew that it was selecting Virginia's financial
responsibility limits ($70,000) and did not confuse this with the DOT form for
selecting the DOT-mandated liability coverage. After making this
determination, the district court concluded that the term "financial
responsibility" is clearly defined under Virginia law, see 7 Code of Virginia
Sec. 46.2-100 (Michie 1994), and is simply not ambiguous. In reaching this
conclusion, the district court, relying principally on Bray v. Insurance Co. of
Pennsylvania, 917 F.2d 130 (4th Cir.1990), properly analyzed circuit precedent
construing this term under Virginia law as used in the context of this litigation.
We agree with the district court that the term "financial responsibility" is not
ambiguous.
B.
11
The district court next concluded that Blue Ridge's marking the "Financial
Responsibility Limits" box on the Virginia form effected a sufficient rejection
of the higher limits. This conclusion finds support in the case law. See, e.g.,
Guerrucci v. State Farm Mut. Automobile Ins. Co., 759 F.2d 1566 (11th
Cir.1985); Wiard v. Phoenix Ins. Co., 310 S.E.2d 221, 223 (Ga.1983). Again,
we agree with the district court that Blue Ridge's selecting the "Financial
Responsibility Limits" box was a sufficient act to express its intent of choosing
the lowest possible uninsured/underinsured coverage limits.
III.
12
We have carefully considered the record, the briefs, and the parties' oral
arguments. We are compelled to the conclusion that the district court properly
held that the term "financial responsibility" is not ambiguous and that Blue
Ridge effectively rejected the higher uninsured/underinsured coverage limits.
Accordingly, we affirm on the reasoning of the district court. Arnold v. Liberty
Mut. Ins. Co., CA92-0827 (W.D.Va. Jan. 10, 1994).
AFFIRMED
