United States District Court, D. Utah, Northern Division
MEMORANDUM DECISION AND ORDER
KIMBALL United States District Judge
matter is before the court on Plaintiff American National
Property and Casualty Co.'s Motion for Summary Judgment
[Docket No. 16], and Defendant Lloyd McNeely's Motion for
Summary Judgment [Docket No. 18]. On October 26, 2016, the
court held a hearing on the motions. At the hearing,
Plaintiff American National was represented by A.J. Sano and
Defendant McNeely was represented by Brian C. Stewart and
Mark R. Taylor. The court took the motions under advisement.
The court has carefully considered the materials submitted by
the parties and the facts and law relevant to the motions.
Now being fully advised, the court issues the following
Memorandum Decision and Order.
January 18, 2007, Lloyd McNeely and his wife, Joyce Wiley,
obtained automobile insurance through American National
Property and Casualty Company with selected bodily injury
liability limits of $100, 000 per person, $300, 00 each
accident. During the application process, McNeely and Wiley
were presented with a form entitled “Coverage Options
Section/Rejection Form - Utah.” The 2007
Selection/Rejection Form sets forth various coverage options
concerning Personal Injury Protection (“PIP”),
Uninsured Motorist Bodily Injury Coverage (“UM”),
Underinsured Motorist Coverage (“UIM”), and
Uninsured Motorist Property Damage Coverage
respect to UIM, American National's 2007
Selection/Rejection Form stated, in relevant part, that UIM
“provides you with additional insurance benefits if you
or someone in your automobile suffers bodily injury because
of an automobile accident caused by another party who is
primarily at fault, but who does not have enough insurance to
compensate for the injuries.” The form indicates that
McNeely and Wiley selected UIM in amounts equal to their
bodily injury liability limits of $100, 000 per person, $300,
000 each accident.
automobile policy American National issued to McNeely and
Wiley became effective January 28, 2007, and has been renewed
every six months since. Over the years, vehicles were added
to or deleted from the Policy, but no change was ever made to
the named insureds listed on the Policy or to the amount of
bodily injury liability coverage.
January 2013, McNeely and Wiley, who are both retirees living
on a fixed income, sought to reduce the amount of their
insurance premiums. McNeely testified that the cost of the
Policy kept increasing so he talked to his agent about
bringing the cost down.
January 15, 2013, McNeely met with his insurance agent and
decided to have UIM and UM removed from the Policy. To do
this, McNeely signed a form entitled “Coverage Options
Selection/Rejection Form - Utah” (“2013
Selection/Rejection Form”). The 2013
Selection/Rejection Form reads, in relevant part:
Motorist Bodily Injury Coverage (Automobile and
following Underinsured Motorist Bodily Injury limits are
available under your ANPAC insurance policy. Additionally,
if you prefer, you have the option of rejecting
Underinsured Motorist Bodily Injury Coverage completely by
checking the appropriate box below.
Motorist Bodily Injury (UIM) coverage protects an insured
person from bodily injury caused by a liable motorist who
is insured under a bodily injury liability bond or policy
at the time of the accident with limits of liability for
a. which are less than the amount of the damages of the
insured person; or b. that have been reduced by payments to
persons other than the insured to less that the amount of the
damages of the insured person.
the 2013 Selection/Rejection Form, three coverage options are
listed. Option A provides UIM equal to the bodily injury
limits provided under the Policy. Option B rejects UIM equal
to the bodily injury limits but allows for the selection of
lower UIM limits. And Option C rejects UIM coverage in its
entirety. McNeely selected Option C and checked a box which
states: “I do not desire to purchase Underinsured
Motorist Bodily Injury Coverage.” He then signed the
2013 Selection/Rejection Form.
eight months later, on August 13, 2013, McNeely was involved
in an automobile accident with an underinsured motorist. On
May 14, 2015, McNeely's counsel sent a letter to American
National stating that McNeely had settled his liability claim
against the underinsured motorist for the policy limit of
$100, 000, and demanding that American National pay $100, 000
in UIM coverage under McNeely's Policy. On November 30,
2015, American National took examinations under oath of
McNeely and Wiley concerning the facts and circumstances
underlying their rejection of UIM coverage.
January 20, 2016, American National sent a letter to
McNeely's counsel confirming that McNeely's claim for
UIM benefits had been denied based on the 2013
Selection/Rejection Form. American National then filed this
declaratory judgment action seeking a determination on the
UIM coverage claim.
2000, the Utah Legislature amended Utah's insurance code
in an effort to make the presumptive limits of uninsured
motorist and UIM coverage the same as the insured's
liability limits, effective January 1, 2001. Therefore, in
2007 when McNeely and Wiley obtained their Policy from
American National, Utah's insurance code provision
regarding UIM coverage provided:
(f)(i) A named insured may reject underinsured motorist
coverage by an express writing to the insurer that provides
liability coverage under Subsection 31A-22-302(1)(a).
(ii) This written rejection shall be on a form provided by
the insurer that includes a reasonable explanation of the
purpose of underinsured motorist coverage ...