Adams v. Universal Underwriters Ins. Co.
| Decision Date | 18 May 2011 |
| Docket Number | 1:10-cv-00146-JAW |
| Court | U.S. District Court — District of Maine |
| Parties | DANIEL ADAMS, Plaintiff, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Defendant. |
Following a default judgment in a personal injury suit between the Plaintiff and a third-party towing company, the Plaintiff seeks proceeds from the towing company's insurer under Maine's reach and apply statute, 24-A M.R.S. § 2904, common law breach of contract, and the Declaratory Judgment Act, 14 M.R.S. § 5951 et seq. The parties cross-move for summary judgment, primarily contesting whether the insurer's notice of cancellation to the towing company effectively canceled its insurance policy before the Plaintiffs accident. The Court concludes that cancellation was effective and grants the insurer's and denies the Plaintiffs motion for summary judgment.
On March 21, 2010, Daniel Adams filed with the Maine Superior Court, Penobscot County, Maine, a three count complaint against Universal Underwriters Insurance Company (Universal) claiming compensation under Maine's "reach andapply" statute, 24-A M.R.S. § 2904 (Count I), breach of contract (Count II), and seeking a declaratory judgment (Count III).1 Notice of Removal (Docket # 1) Attach. 1 (Compl.) at 2-4. On April 20, 2010, Universal removed the case to federal court. Notice of Removal.
On September 17, 2010, Universal moved for summary judgment on all counts. Def.'s Mot. for Summ. J. (Docket # 13) (Def.'s Mot.). Mr. Adams responded and, in the same filing, moved for summary judgment on Count I. Pl.'s Resp. to Def.'s Mot. for Summ. J. and Mot. for Summ. J. (Docket # 17) (Pl.'s Resp. and Mot.). Universal filed a consolidated reply and response in opposition to Mr. Adams' motion. Def.'s Reply Mem. in Support of its Mot. for Summ. J. and Mem. in Opp'n to Pl.'s Mot. for Summ. J. (Docket # 18) (Def.'s Reply and Resp.). Mr. Adams replied to Universal's opposition. Pl.'s Reply Mem. to Def.'s Mem. in Opp'n to Pl.'s Mot. for Summ. J. (Docket # 21) (Pl.'s Reply).
On or about July 1, 2007, Universal issued a "Unicover" insurance policy to KDT Towing & Repair, Inc. (KDT). Def.'s Statement of Material Facts ¶ 1 (Docket # 14) (DSMF); Pl.'s Resp. to Def.'s Statement of Material Facts and Statement of Additional Material Facts ¶ 1 (Docket # 16) (PRDSMF). Although KDT made payments on a Universal policy effective from July 1, 2006 to July 1, 2007, it paid no premiums on the policy effective July 1, 2007. DSMF ¶ 2; PRDSMF ¶ 2.
Universal set about the task of cancelling the policy due to non-payment of premium. On August 8, 2007, Universal sent a notice to KDT by certified mail, return receipt requested, cancelling the policy for nonpayment of premiums. DSMF ¶ 3; PRDSMF ¶ 3. The notice stated that termination would be effective as of August 21, 2007. DSMF ¶ 3; PRDSMF ¶ 3. The parties dispute whether the United States Postal Service (USPS) issued a certificate of mailing confirming that the cancellation notice was sent on August 8, 2007. DSMF ¶ 4; PRDSMF ¶ 4. More precisely, Mr. Adams does not deny that the USPS issued a certificate of mailing but asserts that "[t]here is insufficient proof of any such certificate." PRDSMF ¶4. The cancellation notice was delivered and the certified mail receipt was signed by a KDT representative on August 13, 2007. DSMF ¶ 5; PRDSMF ¶ 5.
On February 22, 2008, Mr. Adams sustained an injury caused by an employee of KDT. DSMF ¶ 6; PRDSMF ¶ 6. On July 7, 2008, Mr. Adams filed suit against KDT for negligence in the Kennebec County Superior Court, and on February 10, 2010, the Superior Court issued a default judgment against KDT for $175,718 plus interest and costs. DSMF ¶¶ 7-9; PRDSMF ¶¶ 7-9. Mr. Adams' civil action seeks to recover that judgment against Universal.
Universal moves for summary judgment on all three of Mr. Adams' causes of action. As regards Counts II and III—breach of contract and declaratory judgment, respectively—Universal says that "[s]ince Mr. Adams is not a party to the KDTpolicy, he is not in privity of contract and, therefore, does not have standing to bring claims for breach of contract or for a declaratory judgment with respect to that policy." Def.'s Mot. at 3. As regards Count I, Maine's reach and apply statute, Universal says that the "[t]he absence of coverage is a complete defense," and asserts that Universal cancelled the policy under which Mr. Adams seeks payment either as of August 21, 2007 or August 23, 2007. Id. at 4-5.
Pressing the earlier date of cancellation, Universal points to 24-A M.R.S. § 2908(5)3:
Def.'s Mem. at 4. Universal says that, in accordance with subsection C, the USPS certified the mailing on August 8, 2007, providing conclusive proof of KDT's notice three days later on August 11, and satisfying the ten-day cancellation window before cancellation on August 21. Id. at 4-5 Universal argues that even lacking "conclusive proof through a certificate of mailing, the certified mail receipt signed by a KDT representative demonstrates actual notice to KDT. Id. at 5. Although the later notice date compresses the cancellation window to fewer than ten days, in Universal's view, cancellation would not be voided entirely but merely extended to August 23—ten days after KDT's actual receipt of notice. Id. In support, Universal asserts that "[a] majority of courts have held that a cancellation notice which mistakenly provides for fewer days' notice than required by statute is not void, but is to be read as if the notice stated the proper date allowed by statute." Id.
Universal contrasts the statute's use of the word "until" with the Maine Supreme Judicial Court's use of the term "unless." Here, the statute provides that cancellation is not effective "until" receipt of notice. Id. at 6. Citing Maine Bonding & Casualty v. Knowlton, 598 A.2d 749 (Me. 1991), Universal says that even though the Law Court views "unless" as mandating strict statutory compliance in order to effect a policy cancellation, the statute's use of "until" allows cancellation to be delayed. Universal points out that Knowlton cites Ophus v. Tri-State Insurance, 392 N.W.2d 653 (Minn. App. 1986), where in a similar context, a Minnesota court distinguished between "unless" and "until." Id. at 8-9. Id.
Mr. Adams opposes Universal's summary judgment motion and moves for summary judgment as to Count I of his Complaint. Pl.'s Resp. and Mot. at 1. He argues that Universal's insurance policy had not been cancelled as of February 22, 2008, the date of his injury. Id. at 2. Challenging Universal's assertion thatcancellation was effective on August 11, 2007, Mr. Adams highlights what he says is the absence of conclusive proof of receipt of the notice. Id. at 3. First, Mr. Adams says that the conclusive proof provision in subsection C does not apply to certified mail notices, as was the case here. Id. He offers the affidavit of Kevin Taylor, a USPS Head Window Clerk, who explains that a certificate of mailing is not issued for certified mail. See PRDSMF Attach. 1 ¶ 7 (Aff. of Kevin Taylor). In Mr. Adams' estimation, since a certificate of mailing is not issued for certified mail, and since certified mail establishes the delivery date, subsection C "was only intended to establish a presumed date of receipt where a receipt date could not otherwise be proven." Pl.'s Resp. and Mot. at 4. Mr. Adams reasons that "the statute did not intend to allow insurers to rely on subsection C to establish a different delivery date than that proven by a certified mail receipt." Id.
Second, Mr. Adams says that even if subsection C applies, Universal has not satisfied its burden since "1) Defendant has not provided proof of a 'Post Office Certificate of Mailing' that would satisfy the statutory requirements, and 2) even if it is accepted that KDT received the cancellation notice on the third calendar day after mailing, KDT still was not provided 10 days prior to the stated cancellation date." Id. at 4-5. As regards the former, Mr. Adams focuses on Form 3877, a document proffered by Universal to demonstrate conclusive proof of receipt. See DSMF Attach. 2 at 5; Mr. Adams says that Universal failed to show that Form 3877 "is a 'post-office certificate of mailing' within the meaning of 24-A M.R.S.A. § 2908(5)(C)," and he points to the absence of an affixed stamp or an official date on,or any explanation of who filled out the form. Pl.'s Resp. and Mot. at 5-6. As regards the length of the period prior to cancellation, Mr. Adams argues that, even assuming KDT received notice of cancellation on August 11, 2007, it did not receive ten days notice because "[i]f one assumes KDT received the notice during the day on August 11, 2007, the amount of time that elapsed between the date of receipt and cancellation was somewhere between 9 and 9.5 days." Id. at 7.
Mr. Adams finally rejects Universal's assertion that a policy cancellation mistakenly providing less than ten days notice becomes effective once the statutory period has run. In Mr. Adams' view, "[w]hen an insurance company provides an insured with a shorter notice of cancellation than required by statute, the notice is rendered ineffective and the policy remains in effect." Id. at 8. He dismisses cases on which Universal relies as "not on point." Id. at 9. Specifically, he targets Universal's reliance upon Knowl...
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