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24761 - Wayne M. Ruppe, et al., v. Auto-Owners Insurance Company

Davis Adv. Sh. No. 6
S.E. 2d


THE STATE OF SOUTH CAROLINA

In The Supreme Court

    Wayne M. and Betty

    W. Ruppe,

    Individually, and

    Wayne Ruppe as

    Personal

    Representative of the

    Estate of Sonja K.

    Ruppe,         Petitioners/Respondents,

        v.

    Auto-Owners Insurance

    Company,        Respondent/Petitioner.

ON WRIT OF CERTIORARI TO THE COURT OF

APPEALS

Appeal From Richland County

Frank P. McGowan, Jr., Judge

Opinion No. 24761

Heard December 4, 1997 - Filed February 9, 1998

REVERSED

James A. Merritt and William K. Witherspoon, both
of Berry, Adams, Quackenbush & Stuart, P.A.; and
Deborah R.J. Shupe, of Louthian & Louthian; all of
Columbia, for petitioners/respondents.

p. 18


RUPPE, ET AL., v. AUTO-OWNERS INSURANCE COMPANY
Reginald L. Foster, of Colvin & Foster, P.A., of
Spartanburg, for respondent/petitioner.

        MOORE, A.J.: We granted a writ of certiorari to review the

Court of Appeals' decision holding stacking of liability coverage cannot be

validly prohibited by contract where the owner's vehicles are insured

under a single policy.1 We reverse.

FACTS

        Sonja Ruppe was killed when her car was struck head on by a car

owned and driven by Linda Bagwell. The Bagwells insured two cars

under a single policy with respondent/petitioner (Auto-Owners). Each

car had liability coverage of $100,000. Auto-Owners paid petitioners/

respondents (the Ruppes) $100,000 in liability coverage applicable to the

car involved in the collision. The Ruppes then commenced this declaratory

judgment action claiming they were entitled to stack an additional

$100,000 liability coverage from the Bagwells' other insured vehicle.

        Despite a provision in the policy prohibiting stacking, the trial judge

held the Ruppes were entitled to stack an additional $100,000 in liability

coverage. The Court of Appeals affirmed but modified the amount stacked.

DISCUSSION

        Auto-Owners contends the Court of Appeals erred in allowing

stacking of liability coverage in the face of the policy provision prohibiting

it. We agree.

        Generally, stacking of additional coverage for which the insured has

contracted is permitted unless limited by statute or a valid policy

provision. Jackson v. State Farm Mut. Auto. Ins. Co., 288 S.C. 335, 342

S.E.2d 603 (1986). In Giles v. Whitaker, 297 S.C. 267, 376 S.E.2d 278

(1989), we held a policy provision prohibiting stacking of liability insurance

was valid and stacking was not permitted.2


         1323 S.C. 425, 475 S.E.2d 771 (1996).

        2See also Thompson v. Continental Ins. Co., 291 S.C. 47, 351 S.E.2d 904

(Ct. App. 1986) (disallowing stacking of liability coverages provided under a

single policy where the policy prohibited it).

p. 19


RUPPE, ET AL., V. AUTO-OWNERS INSURANCE COMPANY

        Giles is precisely on point in this case.3 Further, Giles is consistent

with the majority rule that a policy provision limiting stacking of liability

coverage is valid. See, e.g., Gibbons v. Shockley, 341 So.2d 260 (Fla. Dist.

App. 1977); Georgia Farm Bureau Mut. Ins. Co. v. Shook, 215 Ga. App.

66, 449 S.E.2d 658 (1994); Butler v. Robinette, 614 S.W.2d 944 (Ky. 1981);

Oarr v. Gov't Emp. Ins. Co., 39 Md. App. 122, 383 A.2d 1112 (1978).

        The Ruppes contend, however, that a policy provision purporting to

limit stacking of statutorily required coverage is invalid. Statutorily

required coverage is that which is required to be offered or provided.

Brown v. Continental Ins. Co., 315 S.C. 393, 434 S.E.2d 270 (1993). Since

liability insurance is required under S.C. Code Ann. § 38-77-140 (1989),

the Ruppes argue stacking of liability coverage cannot be limited by a

policy provision.

        Dicta in Jackson, supra, states the rule that stacking of statutorily

required coverage cannot be contractually prohibited.4 A review of current

stacking cases, however, indicates this statement is an oversimplification

of our stacking law and we decline to apply it here.

        First, stacking of uninsured and underinsured coverages, which are

both statutorily required coverages, is governed specifically by statute.

See S.C. Code Ann. § 38-77-160 (Supp. 1996). Construing specific


         3In Giles, the insured was driving one of his own three insured vehicles

and was involved in a wreck. The injured party sought to stack the liability

coverage from each of the insured's three policies. The Court of Appeals

found Giles distinguishable in this case because Giles involved more than one

policy. This ruling is incorrect. Stacking does not depend upon the number

of policies issued but rather the number of additional coverages for which the

insured has contracted. Esler v. United Servs. Auto. Ass'n, 273 S.C. 259, 255

S.E.2d 676 (1979).

        4Jackson cites Belk v. Nationwide Mut. Ins. Co., 271 S.C. 24, 244

S.E.2d 744 (1978), for this proposition. Belk involved stacking of personal

injury protection coverage, a type of coverage that at the time was statutorily

required. To the extent Belk may be read to stand for the proposition cited

in Jackson, it is hereby overruled.

p. 20


RUPPE, ET AL., v. AUTO-OWNERS INSURANCE COMPANY

statutory language,5 we have held an insured is entitled to stack

underinsured or uninsured coverage in an amount no greater than the

amount of coverage on the vehicle involved in the accident. S.C. Farm

Bureau Mut. Ins. Co. v. Mooneyham, 304 S.C. 442, 405 LS.E.2d 396 (1991).

To this extent, stacking cannot be contractually prohibited. Nationwide

Mut. Ins. Co. v. Howard, 288 S.C. 5, 339 S.E.2d 501 (1985). Where none of

the insured's vehicles is involved in the wreck, however, stacking of

underinsured or uninsured coverage may be prohibited. Brown, supra.

        Stacking of non-owned liability coverage6 is controlled by our decision

in Jackson, supra. In Jackson, we held stacking of this type coverage may

be prohibited by contract because it is not statutorily required coverage.7

This holding is supported by the rationale that the parties are free to

choose their terms regarding voluntary coverage that is not governed by


        5Section 38-77-160 provides in pertinent part:
        Automobile insurance carriers shall offer, at the option of
the insured, uninsured motorist coverage up to the limits of the
insured's liability coverage in addition to the mandatory coverage
prescribed by Section 38-77-150. Such carriers shall also offer,
at the option of the insured, underinsured motorist coverage up
to the limits of the insured liability coverage to provide coverage
in the event that damages are sustained in excess of the liability
limits carried by an at-fault insured or underinsured motorist or
in excess of any damages cap or limitation imposed by statute.
If, however, an insured or named insured is protected by
uninsured or underinsured motorist coverage in excess of the.
basic limits, the policy shall provide that the insured or named
insured is protected only to the extent of the coverage he has on
the vehicle involved in the accident. If none of the insured's or
named insured's vehicles is involved in the accident, coverage is
available only to the extent of coverage on any one of the vehicles
with the excess or underinsured coverage.

        6Non-owned liability insurance protects an at-fault insured while driving

someone else's vehicle whereas liability coverage protects an at-fault insured

while driving a particular vehicle owned by the insured.

        7From our holding in Jackson it does not follow conversely that stacking

of any coverage that is statutorily required cannot be prohibited by contract.

p. 21


RUPPE, ET AL., v. AUTO-OWNERS INSURANCE COMPANY

statute. Willis v. Fidelity & Cas. Co., 253 S.C. 91, 169 S.E.2d 282 (1969).8

        The guiding principle to be gleaned from our current stacking law is

that stacking may be prohibited by contract if such a prohibition is

consistent with statutory insurance requirements.

        In this case, we look to § 38-77-140 which mandates liability

insurance in this State. This section requires coverage under a policy

issued to the owner of a motor vehicle for liability arising out of the

ownership, maintenance, or use of that motor vehicle. Liability coverage,

therefore, while statutorily required, is limited to the particular vehicle

for which it is purchased. The extent of liability coverage is thus

statutorily defined by the amount of coverage on the insured vehicle and

does not encompass coverage applicable to other vehicles.9 Accordingly, a

policy provision prohibiting stacking is consistent with statutory insurance

requirements regarding liability coverage.

        We reaffirm Giles and hold the policy provision prohibiting

stacking of liability coverage is valid. In light of this disposition, we need

not address the issue raised by the Ruppes regarding the amount of

coverage stacked.

REVERSED.

FINNEY, C.J., TOAL, WALLER and BURNETT, JJ., concur.


        8See also State Farm Mut. Auto. Ins. Co. v. Richardson, 313 S.C. 58,

437 S.E.2d 43 (1993) (insurance companies may prohibit stacking of non-

mandatory coverages).

        9Accord First Nat'l Ins. Co. v. Clark, 899 S.W.2d 520 (Mo. 1995)

(upholding validity of a policy provision prohibiting stacking of liability

coverage because liability insurance relates to the use and operation of a

particularly described motor vehicle).

p. 22