Supreme Court Seal
South Carolina
JUDICIAL DEPARTMENT
Site Map | Feedback
24773 - Concrete Services, Inc., et al. v. United States Fidelity & Guaranty Co.

Davis Adv. Sh. No. 12
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court

Concrete Services, Inc.

and Ann C. Mickle, Plaintiffs,

v.

United States Fidelity

and Guaranty Company, Defendant.

ON CERTIFICATION FROM THE UNITED

STATES DISTRICT COURT FOR THE DISTRICT

OF SOUTH CAROLINA

David C. Norton, United States District Court

Judge

Opinion No. 24773

Heard February 2, 1998 - Filed March 23, 1998

CERTIFIED QUESTIONS ANSWERED

Robert J. Moran, of Murrells Inlet, for plaintiffs.

Andrew F. Lindemann, of Ellis, Lawhorne,

Davidson and Sims, of Columbia, for defendant.

WALLER., A.J.: The following questions have been certified to

this Court by the United States District Court for the District of South

Carolina:

1. Is the spouse of the sole shareholder of a corporation entitled

to stack UIM coverage where the corporation is the "named

p.3


CONCRETE SERVICES, INC., et al. v. UNITED STATES FIDELITY & GUARANTY CO.

insured" under the policy, and where the spouse was injured

while operating a vehicle owned by the corporation and insured

under the UIM policy?

2. Where the South Carolina Appellate Courts have required an

insured to "have" a vehicle involved in the accident in order to

stack UIM coverage, is it required that the insured own the

vehicle involved in the accident?

FACTS

The plaintiff, Ann Mickle, was involved in an automobile accident while

driving a vehicle owned by her husband's company, Concrete Services, Inc

(Concrete).1 Mickle's damages exceeded the $15,000.00 policy limits of the at

fault driver. At the time of the accident, the vehicle operated by Mickle was

covered by an insurance policy issued by United States Fidelity and Guaranty

(USF&G) to its named insured, Concrete. The policy provided $50,000.00 of

underinsured motorist coverage (UIM) on several vehicles owned by Concrete.

After receiving $50,000.00 in UIM coverage from USF&G under the policy

insuring the vehicle which she was driving, Mickle and Concrete commenced

this declaratory judgment action seeking a ruling that Mickle was entitled to

stack UIM coverages on the other vehicles owned by Concrete. The District

Court certified the above questions to this Court.

I. CORPORATION AS "NAMED INSURED"

Whether the spouse of a sole shareholder of a corporation listed as the

"named insured" is entitled to stack UIM benefits is a novel issue in this

state; the issue turns upon whether Mickle qualifies as a Class I insured.

The critical question in determining whether an insured has the right

to stack is whether he is a Class I or Class II insured. American Sec. Ins.

Co. v. Howard, 315 S.C. 47, 431 S.E.2d 604 (Ct.App.1993). The two classes

of insureds are: (1) the named insured, his spouse and relatives residing in

his household; and (2) any person using, with the consent of the named

insured, the motor vehicle to which the policy applies and a guest in the

motor vehicle. Garris v. Cincinnati, 280 S.C. 149, 311 S.E.2d 723 (1984).

The right to stack is available only to a Class I insured. Fireman's Ins. Co.

v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988); Ohio

Cas. Ins. Co. v. Hill, __S.C. __, 473 S.E.2d 843 (Ct. App. 1996).


1 Mickle was not employed by Concrete.

p.4


CONCRETE SERVICES, INC., et al v. UNITED STATES FIDELITY & GUARANTY CO.

As Mickle is not the "named insured" in the policy, the question is

whether she is a spouse or relative of the "named insured," i.e., the

corporation, Concrete Services.2 If not, then she does not qualify as a Class

I insured and may not stack benefits. Although the issue is novel in South

Carolina, it has been addressed by other courts.

The majority of courts addressing the issue hold that a corporation

insured by a business automobile insurance policy cannot have a "family" as

that term is used in the definition of "insured." See Grain Dealers Mutual

Ins. Co. v. McKee, 943 S.W.2d 455 (Tex. 1997) (noting majority of

jurisdictions analyzing similar policy provisions have found no ambiguity

notwithstanding corporation may not have a "family"); Buckner v. Motor

Vehicle Accident Indem. Corp., 486 N.E.2d 810 (N.Y. 1986) (business policy

covering corporation could not reasonably be read to provide coverage to

family member of officers and sole shareholders of corp); Kaysen v. Federal

Ins. Co., 268 N.W.2d 920 (Minn. 1978) (policy terms listing corporation as

named insured unambiguous, does not include corporate officers and their

spouses); Sproles v. Greene, 407 S.E.2d 497 (N.C.1991) (policy terms listing

corporation as named insured not ambiguous and does not include corporate

officers and spouses); Dixon v. Gunter, 636 S.W.2d 437 (1982) (individual

owners of corporation are not, as such, insureds under a policy issued to a

corporation); General Ins. Co. v, American Builders Inc., 604 P.2d 966

(Wash. App. 1979)(policy unambiguously lists corporation, and no others, as

named insured); Lundgren v. Vigilant Ins. Co., 391 N.W.2d 542 (Minn. App.

1986) (UIM coverage not a nullity when issued to a corporation since injured

party would be covered had he been injured while occupying an insured

vehicle); Meche v. Thibodeaux, 550 SO.2d 346 (La. App. 3 Cir. 1989) (where

corporation is the only named insured, UM coverage applies only to persons

while occupying a covered vehicle); Ott v. Firemen's Fund Ins. Co., 936

S.W.2d 165 (Mo. App. 1996) (president and sole shareholder of close corp. not

"named insured" of policy issued to corp.). See also American States Ins. Co.

v. C & G Contracting, Inc., 924 P.2d 111 (Ariz. App. 1996); Cutter v. Maine

Bonding and Cas., 579 A.2d 804 (N.H. 1990); Hogan v. Mayor & Alderman


2 An endorsement to the policy added Mickle's husband, Steve Mickle

as a "named insured." The District Court's order specifically states that the

endorsement adding Steve Mickle as a "named insured" applies only to

liability coverage. Although Mickle asserts an effective offer of UIM coverage

was not made with regard to the endorsement, we find such matters are

properly determined by the trial court. Accordingly, we do not address

Mickle's status under the endorsement.

p.5


CONCRETE SERVICES, INC., et al. v. UNITED STATES FIDELITY & GUARANTY CO.

of Savannah, 320 S.E.2d 555 (Ga. App. 1984); Busby v. Simmons, 406 S.E.2d

628 (N.C. 1990); Meyer v. Amer. Economy Ins. Co., 796 P.2d 1223 (Or. App.

1990); Sears v. Wilson, 704 P.2d 389 (Kan. App. 1985);Jacobs v. USF&G, 627

N.E.2d 463 (Mass. 1994). These courts are unpersuaded by claims that since

a corporation is incapable of suffering personal injuries or having family

members, a policy using "family member" terminology is ambiguous such that

coverage should be afforded; on the contrary, these courts find the policy

effectual since it provides coverage to Class II insureds, i.e., persons using a

vehicle which is covered under the terms of a policy. Sproles v. Greene,

supra (fact that corporation is the only class I insured doesn't render UIM

coverage a nullity since individuals are covered as class II insureds); Buckner

v. Motor Vehicle Accident Indem. Corp., supra (policy not meaningless since

it provides coverage to persons occupying autos owned by corporation or being

operated on behalf of corporation); Lundgren v. Vigilant Ins. Co., supra

(ambiguity in use of "family member" language did not render UIM coverage

a nullity where individuals were covered while occupying a covered vehicle).

A minority of jurisdictions, however, hold that, since a business

corporation cannot have relatives, a policy issued to a corporation which

defines the insured to include such persons creates an ambiguity, thereby

affording coverage. See e.g. Hager v. American W. Ins. Co., 732 F.Supp.

1072 (D. Mont. 1989)(finding ambiguity in use of term "family member" in

insurance policy issued to closely held corporation rendered it reasonable to

conclude that readily identifiable officers and shareholders of corporate entity

fall within purview of term,); Hawkeye Security Ins. Co. v. Lambrecht, 852

P.2d 1317 (Colo. Ct. App. 1993)(spouse of insured corp.'s sole shareholder

construed to be a "family member" for UM purposes); King v. Nationwide Ins.

Co., 519 N.E.2d 1380 (Ohio 1988). Under this view, when "family member"

language is used in a policy issued to a corporation, it creates an ambiguity

which is to be resolved against the insurer and in favor of the insured. Ceci

v. National Indem. Co., 622 A.2d 545 (Conn. 1993). See also Hansen v. Ohio

Casualty Ins. Co., 687 A.2d 1262 (Conn. 1996); Lunge v. Nat'l Casualty Co.,

977 F.Supp. 672 (D. Vt. 1997).

We decline to adopt the minority view. We agree with the majority

view that a corporation, as such, cannot have a spouse or family members.

Further, as noted in the District Court's certification order, the policy in

question defines "Insured" as "You," and "If you are an individual, any

'family member."' This language clearly demonstrates that it applies to family

members only of individuals and not to corporations such that there is no

ambiguity. Accord Kitts v. Utica Nat'l Ins. Group, 667 N.E.2d 30 (Ohio

1995)(no ambiguity where policy distinguished between corporation and an

p.6


CONCRETE SERVICES, INC., et al. v. UNITED STATES FIDELITY & GUARANTY CO.

"individual"). Moreover, it is clear that Steve Mickle was aware the policy

did not cover either himself, his spouse or his family, as he purchased

separate coverage under an endorsement adding "Broadened Coverage for

Named Individuals." See American States Ins. Co. v. C & G Contracting,

Inc., supra (insured corporation's president had no reasonable expectation he

was family member of corporation). Had the policy covered family members,

there would have been no need for this endorsement adding Steve Mickle as

a named insured.3 Accordingly, we follow the majority view and hold that

Mickle was not aspouse or family member of the named insured, Concrete

Services. It follows that if she is not the spouse of a named insured, then

she is not a Class I insured and may not stack coverage under the policy

issued to Concrete.

2 OWNERSHIP OF VEHICLE

In light of our holding that Mickle is not a Class I insured, she may

not stack UIM coverage in this case, and the answer to the second certified

question is purely academic. However, since we accepted certification on this

issue, we address the matter to clarify apparent confusion concerning

whether, in order to stack UIM coverage, an insured must own the vehicle

involved in the accident? We hold that, so long as an individual otherwise

qualifies as a Class I insured, he or she need not "own" the vehicle in order

to stack.

The statute controlling the right to stack UIM benefits is S.C. Code

Ann. ยง 38-77-160 (Supp. 1997) which provides, in pertinent part:

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.

(Emphasis supplied). Cases of this Court and the Court of Appeals have

interpreted this statute to mean that a Class I insured is an insured or

named insured who "has" a vehicle involved in the accident. South Carolina


3 As noted previously, the district court ruled the endorsement applies

only to liability coverage, and that issue is not before this Court.

p.7


CONCRETE SERVICES, INC., et al. v. UNITED STATES FIDELITY & GUARANTY CO.

Farm Bureau Mut. Ins. Co. v. Moonevham, 304 S.C. 442, 405 S.E.2d 396

(1991); Ohio Casualty Insurance Co. v. Hill, _ S.C. _, 473 S.E.2d 843 (Ct.

App. 1996); American Security Ins. Co. v. Howard, 315 S.C. 47, 431 S.E.2d

604 (Ct. App. 1993). An insured is a Class II insured if none of his vehicles

are involved in the accident. Fireman's Ins. Co. v. State Farm Mut. Auto.

Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988).

The question is whether, in order to "have" a vehicle involved in the

accident, it must be owned by the insured. We find that it need not. We

hold that, in order to "have" a vehicle involved in the accident, it is necessary

only that the insured qualify as a Class I insured. We have repeatedly

defined a Class I insured as "the named insured, his spouse and relatives

residing in his household." Davidson v. Eastern Fire and Cas. Ins. Co., 245

S.C. 472, 141 S.E.2d 135 (1965); Garris v. Cincinnati. supra; Fireman's Ins.

Co. v. State Farm, supra. Under that definition, it is patent that one may

be the spouse or relative of a named insured and reside in the same

household without owning the vehicle. We have never required ownership

as a prerequisite to stacking;4 on the contrary, we have consistently held the

determinative factor is Class I status. South Carolina Farm Bureau Mut.

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

Ins. Co. v. Howard, 288 S.C. 5, 339 S.E.2d 501 (1985); Fireman's Ins. Co. v.

State Farm Mut. Auto. Ins. Co.,supra.. Accordingly, we hold that prior cases

requiring a person to "have" a vehicle involved in the accident as a

prerequisite to stacking mean only that a person must be a Class I insured

with respect to a vehicle involved in the accident, i.e., they must be either

the named insured, or the spouse or relative living in the same household

with the named insured.5

CONCLUSION

1. Mickle is neither the named insured, nor the spouse or relative of

the corporation, Concrete Services, and therefore does not qualify as a Class


4 To the extent the Court of Appeals' opinions in National General Ins.

Co. v. Pena, 308 S.C. 521, 419 S.E.2d 375, (Ct. App. 1992) and American

Security Ins. Corp. v. Howard, supra, suggest that ownership is required,

they are overruled.

5 Further, this Court recently held that an insured may contract for

coverage which permits stacking, even though his vehicle is not involved in

an accident. Putnam v. S.C. Farm Bureau, 323 S.C. 494, 476 S.E.2d 902

(1996).

p.8


CONCRETE SERVICES, INC., et al. v UNITED STATES FIDELITY & GUARANTY CO.

I insured with respect to the first certified question. Accordingly, she may

not stack UIM coverage under the policy issued to Concrete Services. The

answer to the first certified question is "No."

2. Ownership of a vehicle is not required as a prerequisite to stacking

of UIM benefits, so long as the individual qualifies as a Class I insured, i.e.,

is the spouse or relative of the "named insured." Since Mickle is neither the

spouse nor relative of the named insured (i.e., Concrete) in this case, she is

not entitled to stack.6 The answer to the second certified question is "No."

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


6 The situation would be different had the "named insured" been

Mickle's husband. In that case, Mickle would be a Class I insured by virtue

of her status as the spouse of the "named insured." Accord American Fire

and Casualty Co. v. Sinz, 487 So.2d 340 (Fla. App. 4 Dist. 1986)(where policy

designated executive officers of corporation as named insureds, appellant was

"insured" not by virtue of being a "relative of a named insured corporation,"

but by being a relative resident of the same household as a named insured,

i.e., the executive officer).

p.9