Brown v. Markel American Insurance Com.

          MEMORANDUM OPINION AND ORDER

          Susan O. Hickey, United States District Judge.

         Before the Court is Defendant's Motion for Summary Judgment. ECF No. 17. Plaintiff has filed a response. ECF No. 20. Defendant has filed a reply. ECF No. 26. The Court finds this matter ripe for consideration.

         BACKGROUND

         In his Complaint, Plaintiff alleges a breach of contract claim related to a motorcycle insurance policy (the “policy”) issued by Defendant to Plaintiff.^[1] On or about September 22, 2014, Plaintiff was involved in a motorcycle accident. The policy was in effect at the time of the accident. Plaintiff submitted to Defendant a claim for underinsured motorist benefits after the accident. ECF No. 19, ¶ 8; ECF No. 22, ¶ 2. However, Defendant disclaimed coverage, asserting that Plaintiff rejected both personal injury coverage and uninsured motorist coverage and, therefore, underinsured motorist coverage was not, and could not have been, included in the policy under Arkansas statutory law. ECF No. 19, ¶¶ 11, 12; ECF No. 22, ¶ 2.

         Defendant bases its position that Plaintiff rejected underinsured motorist coverage on the receipt of the following two forms signed by Plaintiff: (1) a “REJECTION OF PERSONAL INJURY PROTECTION COVERAGE ARKANSAS” form (the “PIP Form”) in which Plaintiff marked an “X” in the box indicating that he “Reject[ed] all Personal Injury Protection coverages” and (2) an “UNINSURED MOTORISTS COVERAGE ARKANSAS SELECTION/REJECTION FORM” (the “UM Form”) in which Plaintiff marked an “X” in the box indicating that he “Reject[ed] Uninsured Motorists Bodily Injury and Property Damage Coverage in their entirety.” See ECF Nos. 11-2, 11-3.

         Likewise, Defendant bases its position that underinsured coverage was not-and could not have been-included in the policy on Arkansas Code Annotated §§ 23-89-209 and 23-89-403. Section 23-89-209 states, in relevant part, that:

Underinsured motorist coverage as described in this section shall not be available to insureds nor shall insurers be mandated to offer that coverage unless the insured has elected uninsured motorist coverage as provided by § 23-89-403. . . . Underinsured motorist coverage shall not be issued without uninsured motorist coverage being issued in coordination therewith.

         Ark. Code Ann. § 23-89-209(b)(1) & (2). Section 23-89-403 requires that uninsured motorist coverage be included in automobile liability insurance policies but provides that uninsured motorist coverage “shall not be applicable when any insured named in the policy has rejected the coverage in writing, and this rejection shall continue until withdrawn in writing by the insured.” Ark. Code Ann. § 23-89-403(a)(2). Accordingly, Defendant contends that Plaintiff rejected uninsured motorist coverage in writing and that “Arkansas law prohibited [Defendant] from providing [Plaintiff] underinsured motorists coverage once he rejected uninsured motorist coverage.” ECF No. 17, ¶ 7. It is undisputed that the policy declarations page does not reflect that the policy included uninsured or underinsured motorist coverage. ECF No. 19, ¶ 11; ECF No. 22, ¶ 1(c). Defendant further asserts that Plaintiff was not charged a premium for uninsured or underinsured motorist coverage. ECF No. 26, p. 3. Thus, Defendant argues that the Court is barred from finding that Plaintiff is entitled to underinsured motorist coverage.

         In contrast, Plaintiff contends that the denial of coverage was erroneous. In support of this position, Plaintiff cites language included in the UM Form-which Plaintiff argues is a part of the policy. That language, found at the bottom of the form in bolded font, states as follows:

WARNING: If you: a) check more than one box; b) do not check any box; or c) fail to return this form, your policy will be endorsed with Uninsured Motorists coverage and Underinsured Motorists coverage with limits equal to your state's Financial Responsibility limits, for the additional premium charged.

You MUST also complete the separate selection/rejection form for Underinsured Motorists coverage. If you fail to return the selection/rejection form for either Uninsured Motorists coverage or Underinsured Motorists coverage, your policy will be endorsed as stated in the above paragraph.

See ECF No. 11-3. Plaintiff does not contest that he indicated on the UM Form that he rejected “Uninsured Motorists Bodily Injury and Property Damage Coverage in their entirety.” However, Plaintiff asserts that-pursuant to the above-quoted language-in order to effectuate rejection he was required to send in both a form rejecting uninsured motorists coverage as well as a separate form concerning underinsured motorists coverage. There is no indication that Plaintiff submitted a form covering underinsured motorist benefits.^[2] Accordingly, Plaintiff argues that because he failed to submit “the two rejection forms, [he] did not reject [uninsured motorist and underinsured motorist coverage] in the manner required by the policy, and he believed his policy would be endorsed with such coverage.” ECF No. 20, ¶¶ 17, 20. Furthermore, Plaintiff takes the position that Arkansas law did and does not bar Defendant from providing underinsured motorist coverage.

         Accordingly, in the present action, Plaintiff seeks to recover the underinsured motorist benefits Defendant denied as well as statutorily authorized penalties and fees.

         LEGAL ...