Connors v. GEICO: The Meaning of "Subject To"
The Court of Appeals just handed down Connors v. GEICO. I had been waiting for Connors because I have clients similarly situated to Connors. My side lost.
Connors involved a dispute about how to read GEICO's UM/UIM section's Occurence Limit. The fact pattern breaks down simply. The Connors have $300,000 single limit UIM coverage ($300,000 per person/$300,000 per occurrence) on a GEICO policy. Mr. and Mrs.Connors are injured by tortfeasor with $200,000 occurence limits. Mr. Connors' injury is fatal. Damages for both Connors exceed any insurance coverage. Tortfeasor's insurer pays limits, $100,000 to each of the insureds.
The Connors then turn to GEICO for UM/UIM and ask for $200,000 in UM/UIM payments. GEICO refuses because it feels the Connors already got $200,000 and that it therefore only owes another $100,000 (which GEICO handed over up front). The Connors sue.
The relevant part of the GEICO policy reads as follows:
LIMITS OF LIABILITY
Regardless of the number of insureds, autos or trailers to which this policy applies:
1. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to “each person” is the limit of our liability for all damages, including those for care or loss of service, due to bodily injury sustained by one person as the result of one accident. ("Subsection (1).")
2. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to “each accident” is, subject to the above provision respecting each person, the total limit of our liability for all such damages including damages for care and loss of services, due to bodily injury sustained by two or more persons as the result of one accident. ("Subsection (2).")
. . .
4. . . . The amount payable under this coverage will be reduced by all amounts:
(a) Paid by or for all persons or organizations liable for the injury;
How The Court Resolved This
The Court found that this language unambiguously meant that the GEICO owed the Connors only a $100,000.
Connors had argued that the the "subject to the above" provision operated to make subsection (1) personal limits trump the Subsection (2) occurence cap. (i.e. GEICO had an obligation to pay $300,000 per head to a max of $300,000 total for the accident less payments to individuals. Each individual had received $100,000 from the tortfeasor and could therefore claim another $200,000 from GEICO. But because of the cap, GEICO only had to pay a total of $300,000 (of which GEICO had paid $100,000 up front.)
The Court rejected the Connors' reading on grammatical grounds.The judge cited Garner’s A Dictionary of Modern Legal Usage and Eats, Shoots, & Leaves about the niceties of different types of commas and clauses before deciding that language was ungrammatical. The Court eventually decided that "in order to avoid a nonsensical and wholly meaningless interpretation of the clause," the Court would "overlook the GEICO gecko’s violation of grammatical rules and treat the clause (as it clearly was intended to be treated) as if it were restrictive." See fn. 13. Based on that reading, the court concluded that Subsection (2) meant that in a multi-person accident, Subsection (1)'s personal limits still applied.
I'm not fully comfortable with the Court's reasoning. GEICO wrote an ungrammatical clause and the Court decided that the grammatical mistake rendered the sentence incomprehensible. The Court therefore fixed the clause to reflect what GEICO intended. That is probably what GEICO intended, but that isn't what they wrote.
The Court then goes on to explain with a hypothetical that all that grammar was basically dicta. The real issue was how Subsection (4) applied. The Court then (in two short paragraphs) determined that Subsection (4) required calculating the total amount of payments under Subsection (1) and Subsection (2) and then subtracting all payments made by others for the injury.
The Bottom Line
(1) Add up all the injuries under Subsection (1).
For purposes of Connors, these were never explicitly calculated but agreed to be far higher than any applicable limits.
(2) Apply Subsection (2)'s occurence cap and reduce the damages to $300,000.
(3) Substract all payments already made by others to all parties.
$300,000 - $200,000 (the total payments to both Connors) = $100,000.