Virginia Federal Court Narrowly Interprets the Recent Virginia Supreme Court Case On UM Anti-Stacking Provisions

In William Lloyd v. Travelers Property Casualty Insurance Company, Judge T.S. Ellis, III of the United States District Court for the Eastern District of Virginia interpreted the Supreme Court’s two principal cases concerning the stacking of UIM coverage. Those cases are the 1981 Virginia Supreme Court case of Goodville Mut. Cas. Co. v. Borror, 275 S.E. 2d 625, (Va. 1981), and the 2009 Virginia Supreme Court opinion of Virginia Farm Bureau Mutual Insurance Co. v. Williams, 677 S.E. 2d 299 (Va. 2009).

In finding that the Travelers policy at issue unambiguously prohibited stacking of the seven “$250,000 each person” limits listed on the declaration page for the seven insured vehicles, Judge Ellis noted that Virginia Farm Bureau did not explicitly or implicitly overrule Goodville. Rather, according to Judge Ellis, Virginia Farm Bureau merely instructs courts interpreting insurance policies that an otherwise valid anti-stacking clause can be rendered ambiguous through its application. Judge Ellis observed that the Virginia Farm Bureau Court merely noted in dicta that the Goodville policy differed from the Virginia Farm Bureau policy and that the Goodville UM coverage schedule was placed in close proximity to the anti-stacking clause, while the Virginia Farm Bureau policy placed the anti-stacking language in the policy agreement and listed separately the UIM coverages in the declaration page. However, Judge Ellis observed that the Virginia Farm Bureau Court’s discussion of this fact was mere dicta and was not material to the disposition of the case and played no part in the holding. Instead, the Virginia Farm Bureau Court focused solely on the “disparity in the stated limits of liability” in the declaration page in finding the policy to be ambiguous with respect to intra-policy stacking. Judge Ellis then observed that “[n]either Goodville nor the instant case present such an ambiguity” and, as such, Judge Ellis ruled that the anti-stacking clause in the Travelers policy was unambiguous and must be given full effect.

This case is very interesting because it is a very clear and well written judicial interpretation of Virginia Farm Bureau, and because it reads Virginia Farm Bureau in a limited fashion that may be beneficial in the future to insurance companies seeking enforcement of anti-stacking clauses in insurance policies.