Ballestros v. American Standard Insurance Company of Wisconsin (1/20/2011)

January 28, 2011

Arizona Supreme Court Holds That A.R.S. § 20-259.01 Does Not Require Insurers to Provide an Insured Who Speaks Spanish With a Spanish-Language Form Offering Uninsured/Underinsured Motorist Coverage.

Luis Ballesteros (“Ballesteros”), who primarily speaks Spanish, purchased an automobile insurance policy from American Standard Insurance Company of Wisconsin (“American Standard”).  The agent gave Ballesteros an English-language form, approved by the Arizona Department of Insurance, on which to select or reject uninsured motorist and underinsured motorist coverage.  Ballesteros signed the form, indicating that he declined such coverage.  Several months later, Ballesteros’s mother-in-law died in a collision with an uninsured driver.  Ballesteros made a claim for uninsured motorist coverage, which was denied.  He sued American Standard for breach of contract, claiming that because American Standard failed to comply with A.R.S. § 20-259.01 – which requires insurance companies to offer uninsured motorist and underinsured motorist coverage – uninsured motorist coverage should be included in his policy by operation of law.  The trial court granted partial summary judgment to Ballesteros, concluding that American Standard violated § 20-259.01 by not offering him uninsured/underinsured motorist coverage on a Spanish-language form.  The court of appeals reversed but held that American Standard was not entitled to a judgment on its cross-motion for summary judgment.  The court concluded that the use of an approved form did not automatically satisfy § 20-259.01.  The Arizona Supreme Court granted review to determine (1) whether an insurer must provide a Spanish-language form to a Spanish speaker to comply with § 20-259.01, and (2) whether, by using an uninsured/underinsured selection form approved by the Department of Insurance, American Standard complied with the statute.

The Court first held that § 20-259.01 does not require that the uninsured/underinsured offer form be provided in Spanish.  A.R.S. § 20-259.01(A) provides that “[e]very insurer writing automobile liability or motor vehicle liability policies shall make available to the named insured thereunder and by written notice offer the insured and at the request of the insured shall include within the policy uninsured motorist coverage.”  Section (B) imposes the same requirements for underinsured motorist coverage.  Under Arizona law, whether an offer has been made does not depend on the offeree’s understanding of the terms of the offer, but instead on whether a reasonable person would understand that an offer has been made and that, upon acceptance, the offeror would be bound. The Court explained that under this contract principle, whether an insurer “offers” the insured uninsured motorist coverage turns only on whether a reasonable person would understand that a proposal of terms was made, not on the insured’s subjective understanding of the offer form.  The Court thus concluded that the “written notice” notice provision of § 20-259.01 does no require translation of the offer into Spanish so that a Spanish speaker understands the offer’s terms; it requires only that the insurer make an offer that, if accepted, would bind the insurer to provide the offered coverage. 

The Court then held that American Standard complied with § 20-259.01 by providing Ballesteros with a form approved by the Department of Insurance.  A.R.S. § 20-259.01(A) and (B) both provide that “[t]he selection of limits or rejection of coverage by a named insured or applicant on a form approved by the director is valid for all insureds under the policy.”  The legislative history of this statute demonstrates that the legislature adopted this language to avoid requiring a fact-intensive inquiry to determine whether the insurer had offered uninsured motorist coverage.  In light of this clear legislative intent, the Court concluded that imposing a comprehension requirement as suggested by Ballesteros was both unwarranted by the statute and unwise.  Because American Standard provided Ballesteros with an approved form, the Court held that it had satisfied § 20-259.01. 

Chief Justice Berch authored the opinion; Justices Hurwitz, Bales and Pelander and Judge Swann of the Arizona Court of Appeals, Division One, concurred.