Present:   All the Justices

WILLIAM ATKINSON

v.   Record No. 032037      OPINION BY JUSTICE DONALD W. LEMONS
                                       June 10, 2004
PENSKE LOGISTICS, LLC, ET AL.

           FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
                    John C. Morrison, Jr., Judge

      In this appeal, we consider whether the decision by a

single named insured on a business automobile insurance policy

to waive uninsured motorist insurance coverage higher than the

statutory minimum is binding upon all other named insureds on

the policy under Code § 38.2-2206.

                   I.   Facts and Proceedings Below

      On May 19, 2000, William Atkinson ("Atkinson"), an

employee of Penske Logistics, Inc., which has since merged

with another company and changed its name to Penske Logistics

Corp., LLC (collectively, "Penske Logistics"), was operating a

tractor-trailer in the course of his employment.      The tractor

was owned by Penske Truck Leasing Co., L.P., ("Penske Truck

Leasing") but leased to Penske Logistics.     Penske Logistics

owned the trailer.      Atkinson was injured in an accident with

an unknown operator of a motor vehicle.

      At the time of the accident, Penske Logistics and Penske

Truck Leasing were named insureds on a motor vehicle liability

insurance policy issued by Old Republic Insurance Co. ("Old

Republic").   The parties stipulated that the tractor and
trailer involved in the accident were covered under the policy

and that Atkinson qualifies as an insured under the policy.

     In his "First Amended Motion for Declaratory Judgment,"

Atkinson sought a declaratory judgment declaring "the extent

of coverage each carrier owes . . . determin[ing] the total

coverage available, and declar[ing] the priority of payment

between the insurance carriers."1   He also sought a declaration

"that Old Republic is obligated to provide coverage . . . in

an amount of its policy limits, under policy ML 14804-06, of

$2,000,000.00."2   Because the injuries to Atkinson were alleged

to have been caused by a "John Doe" unknown driver, the focus

of the declaratory judgment action was the availability of

uninsured and underinsured motorist ("UM/UIM") coverage.

     Old Republic, Penske Logistics, and Penske Truck Leasing

(collectively, "Defendants") filed a motion for summary

judgment "on the grounds that the named insured, Penske Truck

Leasing Co., L.P., et al., effectively rejected the higher

[UM/UIM] coverage for bodily injury equal to its full


     1
       Defendants at trial were Penske Logistics, LLC, Penske
Truck Leasing Company, L.P., Old Republic Insurance Company,
State Farm Mutual Automobile Insurance Company, Allstate
Insurance Company, and Government Employees Insurance Company.
The only policy at issue on appeal was issued by Old Republic.
Etta Brunell was a plaintiff in the trial court but is not an
appellant in this proceeding.
     2
       Atkinson alleged that the tractor and the trailer each
constitutes a separate "auto" under Old Republic's policy;
consequently, the policy limits of $1,000,000 should be
doubled.

                                2
liability coverage of $1,000,000.00 and instead selected

[UM/UIM] coverage equal to Virginia's minimum financial

responsibility limits of $25,000 per person."   In pretrial

filings, Atkinson acknowledged that Penske Truck Leasing

waived higher UM/UIM coverage limits but maintained that its

waiver was ineffective to bind Penske Logistics.

     Following a hearing at which the trial court received

exhibits and heard testimony from one witness, the trial court

issued a letter opinion which was later memorialized in a

final decree.   The trial court held that Penske Truck

Leasing's rejection of higher UM/UIM limits was binding on

Penske Logistics because, under Code § 38.2-2206, "rejection

of the higher limits by one named insured is binding on all

named insureds and all other insureds as defined in § 38.2-

2206(B)."   Atkinson appeals the adverse judgment of the trial

court.

                          II.   Analysis

     Atkinson argues that the trial court erred in three ways.

First, he maintains that the trial court "erroneously presumed

the existence of an 'agency' relationship between Penske Truck

Leasing Co., L.P. and Penske Logistics, Inc. (even though

'agency' was never pled)."   Second, he argues that the trial

court "should have ruled that Penske Logistics, Inc. was

required to execute its own rejection of higher UM[/UIM]


                                 3
limits, and that [Code § 38.2-2206(B)] did not authorize one

entity to act for the other."   Third, he asserts that the

trial court "erroneously ruled that Penske Logistics, Inc. was

not required to receive separate notice from Old Republic of

its right to reject higher UM[/UIM] limits" under Code

§§ 38.2-2202 and –2206.   The Defendants assign cross-error to

the trial court's "ruling that Atkinson could seek a

declaratory judgment on issues not specifically pleaded in

[his motion] for declaratory judgment."

     Because the cross-error, if sustained, would end this

appeal, it will be addressed first.   Defendants assert that

since Atkinson never alleged in his pleadings that Penske

Truck Leasing could not waive higher UM/UIM coverage for

Penske Logistics, the trial court erred in addressing the

issue at all.   Additionally, Defendants assert that Atkinson

did not raise the issue of separate notice to Penske Logistics

in his pleadings.   The flaw in Defendants' assignment of

cross-error is readily apparent.    Defendants raised the issue

of waiver and the subsumed issue of separate notice in their

responsive pleadings.   Had they wished a response in the form

of a pleading from Atkinson, they could have availed

themselves of the provisions of Rule 3:12 which provides:

     If a plea, motion or affirmative defense sets
     up new matter and contains words expressly
     requesting a reply, the adverse party shall
     within twenty-one days file a reply admitting

                                4
     or denying such new matter. If it does not
     contain such words, the allegation of new
     matter shall be taken as denied or avoided
     without further pleading. All allegations
     contained in a reply shall be taken as denied
     or avoided without further pleading.

Atkinson responded to Defendants' defenses in memoranda and

argument to the trial court.   He was not required to

anticipate Defendants' defenses in his initial motion for

declaratory judgment.   The assignment of cross-error is

without merit.

     We now consider Atkinson's assignments of error.      His

first assignment of error is predicated upon a faulty premise.

He asserts that the trial court "erroneously presumed the

existence of an 'agency' relationship" between Penske Truck

Leasing and Penske Logistics, "even though 'agency' was never

pled."   A review of the trial court's two letter opinions and

its final order reveals no mention of agency as a theory

underlying the trial court's ruling.    It is clear that the

trial court based its ruling upon statutory interpretation,

not a common law theory of agency.   Atkinson's first

assignment of error is without merit.

     We will consider Atkinson's second and third assignments

of error together.   He maintains that the trial court erred in

holding that Penske Logistics was not required to have

separate notice of its right to reject higher UM/UIM coverage

and further erred in holding that one named insured's waiver

                                5
of UM/UIM coverage binds another named insured under the

policy.

     In 1994, we rendered an opinion in the case of State Farm

Mut. Auto. Ins. Co. v. Weisman, 247 Va. 199, 441 S.E.2d 16

(1994).   The Weisman case involved a family auto policy

listing both husband and wife as named insureds.   Both husband

and wife received statutory notice pursuant to Code § 38.2-

2202(B) informing them of their right to UM/UIM coverage equal

to liability coverage and their right to waive such an

increase in coverage.   A form permitting rejection of the

higher coverage was provided for husband and wife.   However,

only the husband executed the form declining the higher UM/UIM

coverage.   Id. at 201-02, 441 S.E.2d at 17-18.

     At the time Weisman was decided, Code § 38.2-2206(A),

referring to UM/UIM coverage, stated in pertinent part:

     Those limits shall equal but not exceed the
     limits of the liability insurance provided by
     the policy, unless the insured rejects the
     additional uninsured motorist insurance
     coverage by notifying the insurer as provided
     in subsection B of § 38.2-2202.

Code § 38.2-2206(A)(1994).   We held that the statutory

language then utilized required "that each named insured under

an automobile insurance policy" had to reject the higher

coverage in order for the lower limits to be in effect.    Id.

at 202-03, 441 S.E.2d at 18–19.



                                  6
     In an obvious reaction to the Weisman decision, the

General Assembly, in 1995, amended the statutory language at

issue in Code § 38.2-2206(A) to add the provision in effect

today:

     Those limits shall equal but not exceed the
     limits of the liability insurance provided by
     the policy, unless any one named insured
     rejects the additional uninsured motorist
     insurance coverage by notifying the insurer as
     provided in subsection B of § 38.2-2202.
     (emphasis added).

Code § 38.2-2206(A)(2002); see also 1995 Va. Acts ch. 189

(adding emphasized language).   It is abundantly clear that the

General Assembly specifically intended to permit a single

named insured to bind other named insureds by its rejection of

higher UM/UIM coverage.

     Nonetheless, Atkinson argues that because subsection A

also states "[t]his rejection of the additional uninsured

motorist insurance coverage by any one named insured shall be

binding upon all insureds under such policy as defined in

subsection B of this section," we must look to subsection B

for definitions that somehow restrict or modify the ability of

any one named insured to bind other named insureds.

     Subsection B of Code § 38.2-2206 states in part:

          "Insured" as used in subsections A, D, G,
     and H of this section means the named insured
     and, while resident of the same household, the
     spouse of the named insured, and relatives,
     wards or foster children of either, while in a
     motor vehicle or otherwise, and any person who

                                7
     uses the motor vehicle to which the policy
     applies, with the expressed or implied consent
     of the named insured, and a guest in the motor
     vehicle to which the policy applies or the
     personal representative of any of the above.

Atkinson asserts that because the definition of "insured"

includes "the named insured" and thereafter refers

specifically to "the spouse of the named insured" and users

"with the expressed or implied consent of the named insured,"

the proper construction of subparagraph A must require

separate rejection by each named insured.   Atkinson's

interpretation is not a reasonable construction of the

statute.   To reach Atkinson's conclusion requires the term

"named insured" to be read as though the word "named" is

simply an adjective modifying the noun "insured."     However,

"named insured," as used in Code § 38.2-2206, is a term of art

with its own definition, separate from the definition of the

term "insured."   A "named insured" is the policyholder.   An

"insured" is simply a party who may be covered under the

policy.    Not all "insureds" are "named insureds."

     Where there is more than one named insured, as in this

case, the language of Code § 38.2-2206(A) specifies that "any

one named insured" can waive higher UM/UIM coverage for "all

insureds."   It is clear from subsection A that a single named

insured may waive coverage, regardless of the total number of

named insureds.   The definition of "insured" in Code § 38.2-


                                 8
2206(B) does not alter who may act to waive coverage.

Instead, subsection B defines who may be affected by the

decision of a single named insured to waive higher UM/UIM

coverage.   We hold that the trial court did not err in its

judgment that Code § 38.2-2206(A) permitted Penske Truck

Leasing to waive higher UM/UIM coverage and bind another named

insured, Penske Logistics, by its rejection of the higher

coverage.

     Finally, Atkinson acknowledges that Penske Truck Leasing

received notice of the right to purchase higher UM/UIM

coverage or reject such coverage; however, he asserts that

Penske Logistics did not receive such notice.   Accordingly, he

argues that the waiver by Penske Truck Leasing could not bind

Penske Logistics in the absence of notice to Penske Logistics.

What Atkinson fails to realize is that neither Penske Truck

Leasing nor Penske Logistics were entitled to notice under the

facts of this case.

     Code § 38.2-2206(A) refers to required notice under Code

§ 38.2-2202(B), which further provides in part:

     B. No new policy or original premium notice of
     insurance covering liability arising out of the
     ownership, maintenance, or use of any motor
     vehicle shall be issued or delivered unless it
     contains the following statement printed in
     boldface type, or unless the statement is
     attached to the front of or is enclosed with
     the policy or premium notice:

                             . . . .

                                9
     After twenty days, the insurer shall be
     relieved of the obligation imposed by this
     subsection to attach or imprint the foregoing
     statement to any subsequently delivered renewal
     policy, extension certificate, other written
     statement of coverage continuance, or to any
     subsequently mailed premium notice.

The policy in question in this case is a renewal policy.

Notice under Code § 38.2-2202(B) is not applicable to renewal

policies.   GEICO v. Hall, 260 Va. 349, 354-355, 533 S.E.2d

615, 617-618 (2000).

                        III.   Conclusion

     For the reasons stated, the trial court did not err and

the judgment of the trial court will be affirmed.

                                                       Affirmed.




                                10
