Statute Requires Insurer to Pay for Injuries Incurred Without Fault of Driver
For a person to be responsible for injuries resulting from the operation of an automobile the persons injured must prove that the driver had a duty to operate the vehicle safely, breached that duty and caused damages. Under the common law a person who, without warning, becomes incapacitated by a stroke, heart attack or other illness without warning and injures someone when the incapacitated person injures someone because he or she is unable to operate a vehicle safely, is not liable for the injuries.
The Utah Legislature, feeling sorry for injured people who have no defendant who they can sue successfully, enacted a statute that requires an insurer, up to the limits of the policy, to pay the injured persons even though the insured did not breach a duty and was not legally liable to the third person.
In Lancer Insurance Company v. Lake Shore Motor Coach Lines, Inc., Supreme Court of Utah — P.3d —- 2017 WL 631854, No. 20160244 (2/15/17) the Utah Supreme Court answered a question posed by the United States District Court for the District of Utah seeking the proper interpretation of Utah Code section 31A–22–303(l), which requires motor vehicle liability insurance policies to “cover damages or injury resulting from a covered driver of a motor vehicle” who suddenly and unforeseeably becomes incapacitated.
The personal injury claims at issue in the underlying federal case arise out of a bus accident that happened on October 10, 2009. The bus was driven by Debra Jarvis. Jarvis experienced a sudden and unforeseeable loss of consciousness while driving back to Utah from a high school band competition in Idaho. Her loss of consciousness caused the bus to leave the roadway, hit a ravine, and roll over. Several passengers were injured in the crash.
Each of four individually injured in the roll over filed separate lawsuits in the Fourth Judicial District Court in Utah seeking damages for their injuries. The insureds filed motions for partial summary judgment, asserting that Lancer Insurance Co. (Lake Shore’s insurer) was strictly liable for the passengers’ injuries under the statute. Those motions were denied. In denying the motions, the state district court rejected the strict liability premise attributed by the passengers to the statute. Instead, the court held that the statute preserved the common-law “sudden incapacity” defense, under which Jarvis would not be liable for her sudden loss of consciousness and the injured parties could recover only upon a showing of fault.
Lancer Insurance filed a separate federal case after it succeeded in defending against the motions for summary judgment in state court. In the federal case, Lancer sought a declaratory judgment confirming the conclusion that this provision preserves the common-law “sudden incapacity” defense and thus requires proof of fault to sustain liability in this case.
The federal district court may have recognized the unusual procedural posture of this case—a federal declaratory judgment suit under review while parallel cases involving claims for money damages are still pending in state court (and subject to appeal). That posture presents a risk that a declaratory judgment in federal court could be undermined by an eventual—and conclusive—interpretation of state law by this court. Perhaps with that in mind, the federal district court appropriately certified the following two questions to us:
- whether Utah Code section 31A–22–303(1) imposes strict liability on an insured driver for damages to third parties resulting from the driver’s unforeseeable loss of consciousness while driving; and
- if so, whether the driver’s liability is limited by the applicable insurance policy or by the applicable minimum statutory limit.
The statute requires that “a policy of motor vehicle liability coverage … shall … cover damages or injury resulting from a covered driver of a motor vehicle who is stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the extent that a person of ordinary prudence would not attempt to continue driving.” It further provides that “[t]he driver’s liability under Subsection (1)(a)(v) is limited to the insurance coverage.”
The parties offer competing views of these provisions. The injured parties interpret the statute to call for liability of an incapacitated driver without proof of negligence. They view the requirement of coverage and the reference to the “driver’s liability” as a repudiation of the “sudden incapacity” defense recognized in Utah precedent. The insurance company, on the other hand, views the statute much more narrowly. It contends that the statute doesn’t impose liability at all, but simply directs insurance companies to provide a certain kind of coverage.
The Supreme Court embraced the injured parties’ view. It interpreted section 303(1) to override the common-law “sudden incapacity” defense and to impose strict liability (at least in circumstances in which the driver has a liability policy with the coverage mandated by the statute) and concluded that the driver’s liability is capped by the limits set forth in the applicable insurance policy.
Years ago the Supreme Court embraced the so-called “sudden incapacity” defense. That defense precludes liability for “a person driving an automobile” who is suddenly stricken by an illness that makes it impossible for the driver to control the car and that the driver has no reason to anticipate. A conclusion that there is no breach of the duty of care when a sudden illness removes, without warning, the ability to safely operate an automobile.
The statute announces two key premises: a requirement of insurance coverage (for “damages or injury resulting from a covered driver of a motor vehicle who is stricken by an unforeseeable paralysis, seizure, or other unconscious condition,” UTAH CODE § 31A–22–303(1)(a)(v)), and a limitation of liability (confining the “driver’s liability” to the “insurance coverage,” id. § 31A–22–303(1)(b)).
The Supreme Court viewed these provisions as overriding the common-law “sudden incapacity” defense—at least in a case in which the coverage provided by statute is in place — and thus as subjecting a covered driver (and by extension the insurer) to strict liability. Lancer Insurance notes, the statute nowhere refers to a principle of “strict liability.” The principal mandate of the statute is a requirement of insurance coverage, not an express articulation of a duty or standard of liability in tort.
The Supreme Court found that the text calls for strict liability and to override the common-law principle of sudden incapacity.
The legislature enacted a requirement that all motor vehicle liability insurance policies cover damages or injury resulting from a covered driver of a motor vehicle who is stricken by an unforeseeable paralysis, seizure, or other unconscious condition.
The required insurance coverage overlaps precisely with the common-law sudden incapacity defense. So unless the required coverage also implies an imposition of liability, the legislature would have to be understood to have issued a mandate that has no operative effect. The express requirement of insurance coverage is best understood as an implicit repudiation of the common-law doctrine of sudden incapacity (and an imposition of strict liability).
There would be no point in a limitation of liability to the available “insurance coverage” if such liability is foreclosed as a matter of law by the sudden incapacity defense. Therefore, the Supreme Court found that the statute overrules the common-law doctrine of sudden incapacity in a manner imposing strict liability on a driver (and by extension, the driver’s insurer when the coverage is present and an injured party has a claim for strict liability under the terms of the statute.
By statute the driver’s liability under Subsection (1)(a)(v) is limited to the insurance coverage. The incapacitated driver will owe nothing. If the incapacitated driver was uninsured the defense would apply.
The Supreme Court concluded, therefore, that the statute means what it says: A driver (and by extension her insurer) is subject to liability only up to the amount of the insurance coverage available under an applicable policy and that the statute overrules the common-law doctrine of sudden incapacity to only a limited extent—to the extent of available insurance coverage.
Tort liability is usually subject to the three elements of negligence: duty, breach, damage. Since, in this accident, the driver did not breach a duty and had no liability to the injured parties. By statute, the Legislature, imposed on an insurer the obligation to indemnify anyone injured by an incapacitated person creating by statute strict liability by the insurer.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
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