State Farm Automobile v. Jacey Lee Orlando

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

STATE FARM AUTOMOBILE INSURANCE COMPANY,
Plaintiff/Appellee,

v.

JACEY LEE ORLANDO,
Defendant/Appellant.

No. CV-23-0228-PR
Filed May 29, 2025

Appeal from the Superior Court in Maricopa County
The Honorable Katherine M. Cooper, Judge
No. CV2020-006088
AFFIRMED

Opinion of the Court of Appeals, Division One
256 Ariz. 55 (App. 2023)
VACATED

COUNSEL:

David M. Bell, Christopher Robbins, Hill, Hall, Stark & Ferraro, PLC,
Phoenix; and Lawrence A. Kasten (argued), Todd Feltus, Kory J.
Koerperich, Lewis Roca Rothgerber Christie LLP, Phoenix,
Attorneys for State Farm Mutual Automobile Insurance Company

Mick Levin (argued), Mick Levin, P.L.C., Phoenix, Attorney for Jacey
Lee Orlando

Bennett Evan Cooper, Timothy M. Strong, Alexandra Crandall,
Dickinson Wright PLLC, Phoenix, Attorneys for Amicus Curiae
American Property Casualty Insurance Association
 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

David L. Abney, Ahwatukee Legal Office, P.C., Phoenix, Attorney
for Amici Curiae Arizona Association for Justice/Arizona Trial
Lawyers Association

JUSTICE MONTGOMERY authored the opinion of the Court, in
which CHIEF JUSTICE TIMMER, VICE CHIEF JUSTICE LOPEZ,
and JUSTICES BOLICK, BEENE, KING, and BRUTINEL (RETIRED)
joined. *

JUSTICE MONTGOMERY, Opinion of the Court:

¶1 The Uninsured/Underinsured Motorist Act (“UMA”)
requires insurers selling motor vehicle liability policies to offer a
policyholder (“insured”) underinsured motorist (“UIM”) coverage.
A.R.S. § 20-259.01(B). UIM coverage permits an insured to file a
claim with her insurer to recover the difference between damages
suffered in an accident and the amount paid by the at-fault
motorist’s liability policy. § 20-259.01(G). Here, we must
determine whether Arizona law requires an insurer to provide
coverage under a UIM policy for an accident involving an all-terrain
vehicle (“ATV”) that did not occur on a public road.

¶2 To make our determination, we must answer the
threshold question of what constitutes a “motor vehicle” for the
UMA to require coverage in the first instance. This, in turn,
requires us to consider Arizona’s overall statutory framework for
motor vehicle liability insurance, the relationship between the UMA
and the Financial Responsibility Act (“FRA”), A.R.S. §§ 28-4001 to
-4153, and the relevant provisions thereof. Ultimately, we hold that
the UMA does not require coverage for ATVs not operated on public
roads and that an insurer may preclude such coverage in a UIM
policy.

∗ Although Justice Brutinel retired prior to the issuance of this
Opinion, he participated in the decision of the Court.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Jacey Lee Orlando was a passenger in an ATV when it
overturned in California’s Imperial Sand Dunes, seriously injuring
her leg. The driver’s insurer paid Orlando the liability policy limit,
which was insufficient to cover the extent of her injuries. Orlando
then filed a claim with her insurer, State Farm, under her UIM policy
(the “Policy”).

¶4 State Farm denied coverage, explaining that the ATV
was not an “underinsured motor vehicle” under the Policy:

Underinsured Motor Vehicle does not include a land
motor vehicle:
....
2. designed for use primarily off public roads except
while on public roads[.]
....
We will pay compensatory damages for bodily injury an
insured is legally entitled to recover from the owner or
driver of an underinsured motor vehicle. The bodily
injury must be:
1. sustained by an insured; and
2. caused by an accident that involves the operation,
maintenance, or use of an underinsured motor vehicle as
a motor vehicle.

Notwithstanding the coverage determination, State Farm invited
Orlando to provide information supporting an alternative
conclusion. After receiving no response, State Farm filed suit to
obtain a declaratory judgment that the Policy did not provide UIM
coverage for the ATV accident. Orlando counterclaimed for breach
of contract, alleging that State Farm’s denial of coverage breached
the Policy. 1

1 Orlando also counterclaimed for insurance bad faith. The
superior court granted summary judgment in favor of State Farm on
that claim, which the court of appeals affirmed. Orlando did not
petition this Court to review the bad faith claim so we do not address
it.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

¶5 State Farm moved for summary judgment, claiming
that the ATV did not meet the Policy’s definition of an
“underinsured motor vehicle.” Additionally, State Farm asserted
that the exclusion was “nearly identical” to exclusions approved of
in Chase v. State Farm Mutual Automobile Insurance Co., 131 Ariz. 461
(App. 1982), and West American Insurance Co. v. Pirro, 167 Ariz. 437
(App. 1990), which concerned uninsured motorist (“UM”) coverage.
Therefore, State Farm also concluded that the Policy was not
statutorily required to provide UIM coverage for the accident.

¶6 Orlando opposed the motion, asserting that State
Farm’s reliance on Chase and Pirro, which addressed UM coverage,
was misplaced because this matter involves UIM coverage. In
support of her argument distinguishing UM and UIM coverage,
Orlando noted that under § 20-259.01(H): “[UM] and [UIM]
coverages are separate and distinct and apply to different accident
situations.” Finally, according to Orlando, the Policy could not
limit UIM coverage because “exceptions to [UIM] coverage not
permitted by [statute] are void,” Am. Fam. Mut. Ins. Co. v. Sharp, 229
Ariz. 487, 488 ¶ 1 (2012) (first alteration in original) (quoting Taylor
v. Travelers Indem. Co., 198 Ariz. 310, 315 ¶ 13 (2000)), and thus the
exclusion was precluded by public policy, see State Farm Mut. Auto.
Ins. Co. v. Duran, 163 Ariz. 1, 3–4 (1989).

¶7 The superior court granted State Farm’s motion,
concluding that the ATV was not an “underinsured motor vehicle”
under the Policy because it was “designed for use primarily off
public roads” and the accident did not occur on a public road. The
court also relied on Chase and Pirro to find that the UMA did not bar
the Policy’s limitation of UIM coverage. Orlando moved for a new
trial, arguing that the cases relied on by the superior court addressed
UM, not UIM, coverage and were therefore inapplicable. The court
denied the motion.

¶8 Orlando appealed, and the court of appeals reversed.
The court concluded that the UIM provision of the UMA did not
permit excluding coverage for the ATV accident. State Farm Auto.
Ins. Co. v. Orlando, 256 Ariz. 55, 63 ¶ 20 (App. 2023). The court’s
rationale rested on unambiguous and “notable differences” between
the text of the UM and UIM provisions. Id. at 58–59 ¶ 10, 60 ¶ 15.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

Specifically, the court observed that: (1) UM coverage is “subject to
the terms and conditions of that coverage,” whereas UIM coverage
contains no such limitation; and (2) UM coverage applies where a
“motor vehicle” caused injury or death, but UIM coverage covers
injuries “resulting from [an] accident” without referencing a motor
vehicle. Id. at 59 ¶ 10 (alteration in original) (quoting
§ 20-259.01(E), (G)). The court further concluded that prior cases
permitting UM coverage exclusions by reference to the FRA setting
forth the requirements for motorist liability coverage did not apply
to this case. Id. at 60 ¶ 15.

¶9 We granted State Farm’s petition for review to
determine whether the UMA requires insurers to provide UIM
coverage for accidents involving vehicles designed primarily for
off-road use and that do not occur on public roads. The
applicability of UIM coverage is an issue of statewide importance.
We have jurisdiction under article 6, section 5(3) of the Arizona
Constitution.

DISCUSSION

¶10 We review de novo a grant of summary judgment,
viewing the evidence and reasonable inferences in the light most
favorable to the party opposing the motion. S. Ariz. Home Builders
Ass’n v. Town of Marana, 254 Ariz. 281, 284 ¶ 16 (2023). We also
review questions of statutory interpretation de novo. State v. Ariz.
Bd. of Regents, 253 Ariz. 6, 12 ¶ 22 (2022). And we read words in
statutes in context to determine their meaning. Stambaugh v. Killian, 242 Ariz. 508, 509 ¶ 7 (2017). “In construing a specific provision, we
look to the statute as a whole and we may also consider statutes that
are in pari materia—of the same subject or general purpose—for
guidance and to give effect to all of the provisions involved.” Id.

¶11 The facts relevant to our determination are not in
dispute. Furthermore, it is undisputed that under the plain
language of the Policy, Orlando is not entitled to UIM coverage.
Instead, the parties dispute whether the Policy exclusion violates the
UMA. State Farm argues that the textual distinctions between the
UM and UIM provisions are irrelevant because the predicate
circumstance for either type of coverage is an accident with a motor

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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

vehicle. State Farm thus contends that we must resolve this case by
reading the UMA in pari materia with the FRA to ascertain the
relevant definition of “motor vehicle,” which State Farm asserts does
not encompass an off-road vehicle operated off public roads.

¶12 Conversely, Orlando argues that because the UIM
provision of the UMA does not expressly permit the Policy
exclusion, it is invalid. Therefore, according to Orlando, the UMA
and FRA cannot be read in pari materia to limit UIM coverage to
motor vehicles as defined by the FRA. Orlando further asserts that,
as noted in § 20-259.01(H), UM and UIM coverages are “separate and
distinct,” precluding the application of Chase and Pirro.

¶13 As the parties’ arguments demonstrate, the
relationship between the FRA and UMA informs our analysis. We
therefore begin by reviewing the statutory framework for motor
vehicle liability coverage.

A. Arizona’s Motor Vehicle Insurance Framework

¶14 In 1951, the legislature adopted the FRA to require
minimum liability coverage for operators or owners of motor
vehicles operating on public roads in Arizona. See 1951 Ariz. Sess.
Laws ch. 122 (1st Reg. Sess.); § 28-4135(A). 2 We have long
recognized that the primary purpose of the FRA is “the protection of
the public using the highways from financial hardship which may
result from the use of automobiles by financially irresponsible
persons.” Schecter v. Killingsworth, 93 Ariz. 273, 280 (1963); see also
State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 253 (1989)
(same). Because “many automobile owners [still] failed to
purchase insurance” despite the FRA’s requirements, in 1965 the
legislature enacted the UMA, now codified at § 20-259.01. See
Wilson, 162 Ariz. at 253. The UMA required insurers to “provide
coverage for injuries resulting from accidents with uninsured or
unknown vehicles.” Id.; see also 1965 Ariz. Sess. Laws ch. 34 (1st
Reg. Sess.).

2 Although now known as the Safety Responsibility Act, we utilize
FRA for ease of reference.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

¶15 Due to “perceived inadequacies in UM insurance,” the
legislature further amended the UMA in 1981 to require insurers to
offer UIM coverage for accidents in which damages for bodily injury
or death exceed applicable policy limits. Wilson, 162 Ariz.
at 253–54; see also 1981 Ariz. Sess. Laws ch. 224 (1st Reg. Sess.).
Thus, over time, UM and UIM coverage have functioned as “‘gap
fillers’ permitting insureds to provide themselves with a source of
compensation for bodily injuries sustained as a result of the
negligence of a financially irresponsible or inadequately insured
driver.” Wilson, 162 Ariz. at 255. And because the UMA functions
as a gap filler for the FRA with the same policy considerations, the
UMA’s scope of coverage—whether UM or UIM—must be
coextensive with what the FRA requires. Lowing v. Allstate Ins. Co., 176 Ariz. 101, 104 (1993) (“The purpose of § 20–259.01 is, broadly
speaking, to ‘close the gap in protection under the [FRA] . . . and
protect people who are injured by financially irresponsible
motorists.” (cleaned up)); see also Brown v. State Farm Mut. Auto. Ins.
Co., 163 Ariz. 323, 327 n.6 (1989) (noting that UM and UIM coverage
share the same policy considerations). Otherwise, the UMA would
operate to expand coverage beyond what the FRA requires.

¶16 Thus, in the matter before us, the UMA would only
require State Farm to provide coverage under Orlando’s UIM policy
if the ATV is a “motor vehicle” that the FRA requires to be insured.
Consequently, the arguments raised by Orlando—and the court of
appeals’ related analysis—regarding textual distinctions between
the UM and UIM coverage provisions and what the UMA requires,
which assume the UMA applies, are irrelevant to deciding whether

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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

the UMA requires UIM coverage in the first instance. 3

B. Relevant Provisions Of The UMA

¶17 In addition to the nature of the UMA as a gap filler for
the FRA, the relevant provisions of the UMA make it clear that it
applies to accidents with motor vehicles.

¶18 The UMA requires insurers to offer UM and UIM
coverage to insureds. See § 20-259.01(A), (B). 4 Under
subsection (E), UM coverage provides “coverage for damages due to
bodily injury or death if the motor vehicle that caused the bodily
injury or death is not insured by a motor vehicle liability policy.”
(Emphasis added.) Thus, UM coverage is expressly addressed to
circumstances involving motor vehicles.

¶19 UIM coverage, pursuant to subsection (G), provides
“coverage for a person if the sum of the limits of liability under
all . . . liability insurance policies applicable at the time of the
accident is less than the total damages . . . resulting from the
accident.” The liability insurance policies applicable to an accident

3 This does not mean the UM and UIM provisions are irrelevant for
addressing coverage issues. See Sharp, 229 Ariz. at 491–92 ¶ 16
(emphasis in original) (prohibiting insurers from denying “UIM
coverage under a policy merely because the insured was partially
indemnified as a claimant under the liability coverage of a different
policy issued by the same insurer”); Brown, 163 Ariz. at 329 (“We
hold State Farm’s UIM excess/escape clause and prorata (sic) limit
reduction clause violate the public policy embodied in A.R.S.
§ 20–259.01 (UIM statute) if applied so as to obviate or reduce the
UIM coverage available to Brown for her actual damages.”); Calvert
v. Farmers Ins. Co. of Ariz., 144 Ariz. 291, 297 (1985) (“We hold that
the exclusion denying coverage to an insured injured by an
uninsured motorist while the insured is occupying a vehicle owned
by the insured but not listed in the policy is invalid as being contrary
to the coverage mandated by A.R.S. § 20–259.01.”).
4 Currently, insurers are only mandated to offer UM and UIM
coverage. § 20-259.01(A), (B). Insureds are not required to
purchase such coverage. Id.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

are necessarily motor vehicle liability policies. Otherwise, a UIM
policyholder injured in any type of accident—even a slip and fall in
a convenience store—could make a UIM claim where applicable
liability insurance policies did not cover the total damages suffered.
This would render UIM coverage indistinguishable from general
accident insurance, covering harm from accidents regardless of
whether they involved a motorist or motor vehicle. We will not
read the UMA to permit such an absurd result. See France v. Indus.
Comm’n, 250 Ariz. 487, 490 ¶ 13 (2021) (declining to read “a statute
in a manner that leads to an absurd result”).

¶20 The UMA’s definitional provisions are also consistent
with our conclusion that the UMA applies to accidents with motor
vehicles. Subsection (D) defines an uninsured motor vehicle to
include “any insured motor vehicle if the liability insurer of the vehicle
is unable to make payment on the liability of its insured, within the
limits of the coverage, because of insolvency.” 5 (Emphasis added.)
Likewise, subsection (F) provides that any payment under the
applicable policy “insuring the motor vehicle that caused bodily
injury or death” equal to or less than the applicable policy limits will
preclude payment under UM coverage. (Emphasis added.)

¶21 Next, subsection (H) provides that “[UM] and [UIM]
coverages are separate and distinct and apply to different accident
situations,” and limits an insured’s ability to recover under both UM
and UIM coverage in certain circumstances. The phrase “different
accident situations” necessarily references the circumstances in
which the accident is with either an uninsured or underinsured
motorist. Finally, in the event of a claim under UM or UIM
coverage for an accident with “an unidentified motor vehicle,” the
UMA requires that “the insured shall provide corroboration that the
unidentified motor vehicle caused the accident.” § 20-259.01(M)
(emphasis added); see also Brown, 163 Ariz. at 327 (determining that
“A.R.S. § 20–259.01 should be construed to require indemnification
of victims of accidents with uninsured or underinsured motorists”).

5 This definition, though, only addresses the insurance status of a
motor vehicle. It fails to aid in determining what actually
constitutes a motor vehicle.
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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

¶22 Despite the frequent references, the UMA itself does
not define “motor vehicle.” The FRA, however, does. But whether
the FRA’s definition of motor vehicle informs our determination of
coverage for an ATV accident under the UMA depends on whether
we consider the FRA and UMA in pari materia.

C. Applicability Of The In Pari Materia Doctrine

¶23 This Court reads statutes “of the same subject or
general purpose” in pari materia. Stambaugh, 242 Ariz. at 509 ¶ 7; see
also Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 252 (2012) (discussing the related-statutes canon).
Relying on Chase and Pirro, State Farm argues that the UMA should
be read in pari materia with the FRA. Orlando disputes the
propriety of an in pari materia review based on Employers Mutual
Casualty Co. v. McKeon, 159 Ariz. 111 (1988), and St. Paul Fire &
Marine Insurance Co. v. Gilmore, 168 Ariz. 159 (1991), two decisions in
which this Court declined to read the FRA and UMA together.

¶24 At the outset, Orlando’s reliance on McKeon and
Gilmore is misplaced for two reasons. First, at the time this Court
decided each case, we did not utilize the in pari materia doctrine or
other “venerable doctrines of judicial construction” absent
ambiguity. McKeon, 159 Ariz. at 114; see also Gilmore, 168 Ariz.
at 164 n.6. This Court’s more recent decisions make clear, though,
that in pari materia is a primary tool of interpretation and ambiguity
is not a prerequisite to applying it. See, e.g., San Diego Gas & Elec.
Co. v. Ariz. Dep’t of Revenue, 562 P.3d 879, 882 ¶ 11 (Ariz. 2025)
(noting use of in pari materia without referencing ambiguity); In re
Drummond, 257 Ariz. 15, 18 ¶ 5 (2024) (using in pari materia review
before determining statutory language ambiguous and examining
“secondary interpretation methods”); Stambaugh, 242 Ariz. at 510 ¶ 9
(considering statutory language “in relation to the statutory scheme”
at the outset to conclude no ambiguity existed); see also Brett M.
Kavanaugh, Fixing Statutory Interpretation, 129 Harv. L. Rev. 2118,
2144–63 (2016) (reviewing Robert A. Katzmann, Judging Statutes
(2014)) (arguing that employing agreed-upon semantic canons for
statutory interpretation can limit instances of ambiguity in the first
place).

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 STATE FARM AUTOMOBILE V. JACEY LEE ORLANDO
Opinion of the Court

¶25 Second, McKeon and Gilmore are inapposite to the
matter before us. In McKeon, this Court addressed “whether
Arizona law permits the exclusion of mandatory [UM] coverage by
contractual arrangement.” 159 Ariz. at 113. The McKeon Court
declined to read the FRA and UMA together, referencing the fact that
the FRA predated the passage of the UM provision, which addressed
a more specific set of circumstances. Id. at 114. The Court further
reasoned that the statutes had differing purposes concerning
insurance coverage and concluded that “an exclusion [permitted]
under [the FRA] does not require a similar result for [UM]
protection.” Id. Accordingly, “in pari materia [did] not fit the
statutory framework.” Id.

¶26 Indeed, under the circumstances in McKeon, the
general/specific canon directs that the more recent and specific UM
provision mandating coverage applies over the more general FRA
provision permitting exclusion from coverage. 6 See State v. Jones, 235 Ariz. 501, 503 ¶ 8 (2014) (discussing the general/specific canon
and noting that “[w]hen ‘two conflicting statutes cannot operate
contemporaneously, the more recent, specific statute governs over
an older, more general statute’” (quoting UNUM Life Ins. Co. of Am.
v. Craig, 200 Ariz. 327, 333 ¶ 29 (2001))); see also Scalia & Garner, supra
¶ 23, at 183 (discussing the general/specific canon). Thus, although
the FRA and UMA addressed motor vehicle liability policies, the in
pari materia doctrine was irrelevant to determining the specific
coverage matter at issue. In contrast, the matter before us does not
involve competing coverage provisions in the FRA and UMA.
Instead, it involves discerning the applicable definition of a motor
vehicle to determine whether UIM coverage is required in the first
place.

¶27 In Gilmore, this Court considered whether an
endorsement for automobile liability coverage in a comprehensive
general liability insurance policy was “an ‘automobile liability or

6 At that time, the FRA permitted an insured and an insurer in a
liability policy to agree in writing to exclude as an insured any
named person when operating a motor vehicle. McKeon, 159 Ariz.
at 113 n.4. Also, the UMA required an insurer to provide a
minimum level of UM coverage for insureds. Id. n.3.
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Opinion of the Court

motor vehicle liability’ policy so that the insurer is required by the
UMA to offer [UIM] coverage.” 168 Ariz. at 161. The insurer
argued that the UMA and FRA must be read together such that the
UMA only applies to “motor vehicle liability policies defined in and
issued pursuant to the [FRA].” Id. at 164.

¶28 The Gilmore Court declined to read the FRA and UMA
together because the FRA’s definition of a motor vehicle liability
policy was explicitly limited in application by the legislature,
precluding its application to the UMA. Id. at 164. Additionally,
the Gilmore Court found that another statutory provision was
applicable. Id. at 165. Accordingly, there was no basis for reading
the two statutes together in the first place. Moreover, the issue in
Gilmore addressed the types of insurance policies that trigger the
requirement to offer UM coverage under the UMA, which is not the
issue before us. Lastly, neither McKeon nor Gilmore relied on the
“subject to” language to hold that UM coverage did not apply. In
other words, not qualifying for UM coverage under the UMA was not
considered an exception to UM coverage. Thus, neither McKeon nor
Gilmore precludes us from reading the FRA and UMA together.

¶29 As discussed, the UMA was enacted and amended to
fill gaps in the FRA’s motor vehicle liability coverage requirement
and operates together with the FRA in a congruent regulatory
scheme. Stambaugh, 242 Ariz. at 509 ¶ 7; see also Chase, 131 Ariz.
at 463 (noting that “[t]he UMA was intended to close the gap in
protection offered by the [FRA]”). Hence, the UMA and FRA are
statutes “of the same subject or general purpose.” See Stambaugh,
242 Ariz. at 509 ¶ 7. Therefore, we will read the UMA and FRA in
pari materia to determine whether UIM coverage is required under
the UMA and next turn to consider the FRA’s definition of a motor
vehicle.

D. The FRA Definition Of Motor Vehicle

¶30 The FRA defines a motor vehicle in the context of
establishing the scope of mandatory motor vehicle liability coverage.
According to the FRA, “‘[m]otor vehicle’ means a self-propelled
vehicle that is registered or required to be registered under the laws
of this state.” A.R.S. § 28-4001(3). And under the FRA, “[a] motor
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Opinion of the Court

vehicle that is operated on a highway in this state” must be
sufficiently insured. § 28-4135(A).

¶31 However, the insurance requirement “does not apply
to the owner or operator of any: All-terrain vehicle or off-road
recreational motor vehicle operating on a dirt road that is located in
an unincorporated area of this state.” § 28-4132(9). Furthermore,
an ATV is not required to be registered under Arizona law when not
operating on a public highway. A.R.S. § 28-2153(D)(9), (D)(11); see
also A.R.S. § 28-1171(6)(b) (defining an ATV as an “off-highway
vehicle”). The FRA also exempts ATVs operating on unpaved
roads not maintained by any state or municipal entity in
unincorporated areas of Arizona. § 28-4132(9).

¶32 Thus, under the FRA, a motor vehicle is “a
self-propelled vehicle” that is “operated on a highway” and does not
include an “[a]ll-terrain vehicle or off-road recreational motor
vehicle operating” off-road.

E. The FRA Definition And UIM Coverage

¶33 Because we conclude any textual differences between
the UMA’s provisions concerning UM and UIM coverage are
irrelevant to our analysis, we disagree with Orlando and the court of
appeals that Chase and Pirro are distinguishable and inapplicable to
this case. Instead, we find that Chase and Pirro illustrate the
application of the FRA’s definition of a motor vehicle to determining
coverage under the UMA.

¶34 In Chase, the court considered whether an automobile
liability policy’s exclusion of UM coverage for “injuries suffered off
the public roads caused by off-road vehicles” violated the UMA.
131 Ariz. at 462. Chase had been standing inside a garage when a
golf cart “crashed into, and partially through, the garage door,
striking” and injuring him. Id.

¶35 Reading the UMA and FRA in pari materia, the court
first considered whether the FRA required coverage for the off-road
vehicle involved in the accident. Id. at 464–65. Given the shared
purpose and a “close reading” of both the FRA and UMA, the court
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concluded the FRA was “silent as to any requirement that insurance
policies obtained to provide proof of financial responsibility also
cover off-road accidents.” Id. at 465.

¶36 The court, adopting the reasoning promulgated in
other jurisdictions, concluded that what constitutes a “motor
vehicle” for purposes of the UMA turns on two considerations:
(1) whether the vehicle at issue is required to be insured under the
FRA; and (2) whether the accident at issue took place on a public
highway. Id. at 466–68. Accordingly, for purposes of the UMA, it
defined “motor vehicle” as including (1) vehicles required to be
insured by the FRA, and (2) vehicles not required to be insured by
the FRA that are being operated on public roads when the accident
at issue occurs. Id. at 468. Applying this definition, the court
concluded that “[UM] coverage for operation of a golf cart resulting
in an accident off the public highway is neither required nor
prohibited by the Arizona UMA” and, therefore, the “exclusion of
such off-road accidents” from UM coverage “is a matter of contract”
and does not “conflict with the mandates” of the UMA or FRA. Id.

¶37 In Pirro, the insured was killed in an off-road accident
involving an unregistered dune buggy/sandrail that was designed
mainly for use off public roads. 167 Ariz. at 437–38. The policy in
question included an exclusion for an uninsured motor vehicle
“[d]esigned mainly for use off public roads while not on public
roads.” Id. at 438. The court cited to Chase in support of its
conclusion:

[L]iability insurance need only cover motor vehicles
operated on highways and, since uninsured motorist
coverage is intended to provide the reciprocal or
mutual equivalent of automobile liability coverage
under the [FRA] and automobiles that are not intended
to be operated on the highways need not be covered by
liability insurance, it follows that excluding such
vehicles from uninsured motorist coverage does not
violate the public policy of the State of Arizona.

Id. (emphasis in original).

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Opinion of the Court

¶38 Applying the FRA definition of motor vehicle, we hold
that UIM coverage of an off-road ATV accident is neither required
nor prohibited under the UMA. UIM coverage in such a
circumstance is a matter of contract. Therefore, the Policy’s
definition of “underinsured motor vehicle,” resulting in preclusion
of UIM coverage, is permissible under Arizona law.

CONCLUSION

¶39 For the reasons stated, we vacate ¶¶ 10–20 of the court
of appeals’ opinion and that portion of ¶ 33 addressing summary
judgment on the breach of contract claim. We affirm the superior
court’s entry of summary judgment in favor of State Farm. At oral
argument, State Farm acknowledged the good faith arguments made
by Orlando and that it would be an appropriate exercise of our
discretion to decline to award attorney fees should it prevail. See
A.R.S. § 12-341.01. We agree, and therefore deny State Farm’s
request for attorney fees.

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