Anderson v. Co-Op. Ins. Companies

• Decision Date: 13 January 2006
• Docket Number: No. 04-445.,04-445.
• Parties: Deborah ANDERSON v. COOPERATIVE INSURANCE COMPANIES.
• Court: Vermont Supreme Court

895 A.2d 155

2006 VT 1

Deborah ANDERSON v. COOPERATIVE INSURANCE COMPANIES.

No. 04-445.

Supreme Court of Vermont.

January 13, 2006.

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Kevin E. Brown and Clara F. Gimenez of Langrock Sperry & Wool, L.L.P., Middlebury, for Plaintiff-Appellant.

Joan W.D. Donahue and Richard P. Foote of Conley & Foote, Middlebury, for Defendant-Appellee.

Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.

¶ 1. SKOGLUND, J.

Plaintiff Deborah Anderson appeals from the Addison Superior Court's denial of her summary judgment motion and grant of summary judgment in favor of defendant. She argues that defendant must cover a loss that occurred after her automobile insurance policy had expired because defendant was aware of the loss when it extended her an offer, retroactive to the expiration date, to reinstate the policy. Thus, she reasons, the superior court erred in granting summary judgment for defendant. Defendant argues that there is no coverage for plaintiff's claim because the loss occurred after the auto policy had expired, and defendant had unequivocally denied the claim at issue and never retracted that denial. We affirm.

¶ 2. The facts are not in dispute. Plaintiff was covered by an automobile liability policy issued by defendant. Despite receiving a renewal notice from defendant approximately one month before the policy expiration date, plaintiff failed to pay her renewal premium on time. As a result, the policy expired on August 13, 2003. Three days later, on August 16, plaintiff's car sustained substantial damage in an accident. Plaintiff reported the accident to her insurance agent on August 18, and later that day the agent informed plaintiff that defendant was denying coverage for the August 16 accident because the policy had expired on August 13.

¶ 3. Next, plaintiff received a "Final Notice" generated by defendant's computer system and dated August 18, 2003. The notice informed plaintiff that her policy had expired on August 13 and that she could reinstate the policy "back to 8/13/2003" if she paid her premium by August 31. Plaintiff mailed the renewal form with the premium to defendant. On or about August 25, defendant received plaintiff's acceptance of its offer to reinstate coverage, along with the requested premium. Defendant then sent an "Acknowledgment of Late Payment," dated August 25, stating that it received the premium payment and that "coverage has been reinstated and remains in force without interruption."

¶ 4. On August 27, plaintiff resubmitted her claim for coverage of her losses resulting from the August 16 accident. By letter dated August 29, defendant informed plaintiff that the reinstatement of her policy did not provide coverage for the August 16 accident. The letter explained that her policy only covered unknown losses, and that "[t]here was no longer an insurable risk" once she had the accident during the time she was uninsured. The letter also pointed out that plaintiff was advised on August 18 that defendant was denying coverage for the loss. Defendant never retracted its denial of coverage, nor did it or any of its agents ever tell plaintiff that it intended to cover her claims stemming from the August 16 accident.

¶ 5. Plaintiff sued, alleging that defendant wrongfully refused to provide coverage. Both parties filed motions for summary judgment. In an order dated September 3, 2004, the trial court denied plaintiff's summary judgment motion and granted defendant's because the reinstatement "did not cover her for a claim that had already been reported and denied." The court noted that "[w]hile an insurer may agree to cover a loss already known to it, there must be an intent to offer such coverage" and concluded there was no evidence of such an intent on the part of defendant. This appeal followed.

¶ 6. On appeal, this Court reviews a motion for summary judgment de novo, employing the same standard as applied by the trial court. Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 2004 VT 124, ¶ 14, 177 Vt. 421, 869 A.2d 82. To prevail on a motion for summary judgment, the moving party must show there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3). Where a genuine issue of material fact exists, summary judgment may not serve as a substitute for a determination on the merits. Human Rights Comm'n v. Benevolent & Protective Order of Elks, 2003 VT 104, ¶ 11, 176 Vt. 125, 839 A.2d 576.

¶ 7. It is undisputed that, at the time of the accident, plaintiff's policy of automobile insurance had expired. It is also undisputed that, when plaintiff filed a claim for the August 16 accident, she was informed that her claim was denied because no contract of insurance was in existence between plaintiff and defendant. The issue in this case arises from the wording of the Final Notice, generated by defendant on August 18, and the conduct and expectations of the parties in relation to both the terms contained in the Final Notice and any subsequent extension of insurance coverage.

¶ 8. We hold that, as a matter of law, plaintiff cannot demonstrate that defendant was required to cover the August 16 accident by virtue of its offer to reinstate her policy and her acceptance of that offer. This conclusion flows from defendant's explicit denial of coverage before plaintiff received and accepted defendant's offer to reinstate the policy, which shows that defendant properly exercised, and did not, as plaintiff contends, waive its right to deny coverage under the expired policy.

¶ 9. Plaintiff argues that defendant could have withdrawn or amended its offer to reinstate coverage to exclude any claims of which it had knowledge and which had occurred during the lapse period. She notes, correctly, that coverage exclusions must be specific and unambiguously expressed in the policy, and any uncertainty in this regard must be resolved in favor of the insured. Am. Fid. Co. v. Elkins, 125 Vt. 313, 315, 215 A.2d 516, 518 (1965). She claims defendant extended an unconditional offer of retroactive coverage back to August 13, 2003, which plaintiff accepted. Thus, she reasons, its decision not to limit its offer evinces its intent to cover the August 16 accident. In effect, plaintiff argues that we should find an implied waiver of defendant's right to deny the claim in the offer to renew.

¶ 10. A waiver is a voluntary relinquishment of a known right, Green Mountain Ins. Co. v. Maine Bonding & Cas. Co., 158 Vt. 200, 206, 608 A.2d 1160, 1165 (1992), and can be express or implied. Holden & Martin Lumber Co. v. Stuart, 118 Vt. 286, 289, 108 A.2d 387, 389 (1954). As to express waiver, the undisputed facts show that defendant, in its offer to reinstate the policy, did not expressly waive its right to deny coverage for the August 16 accident by rescinding its previous denial.

¶ 11. In assessing a claim of implied waiver, "caution must be exercised both in proof and application." Id. To succeed on an implied waiver theory, plaintiff must show "some act or conduct on the part of defendant[] that was unequivocal in character." West River Power Co. v. Bussino, 111 Vt. 137, 139, 11 A.2d 263, 264 (1940). As other jurisdictions have recognized, implied waiver blurs the line between the doctrines of waiver and estoppel. See, e.g., Brown v. Taylor, 120 N.M. 302, 901 P.2d 720, 723 (1995) ("Waiver implied from a course of conduct may be termed a waiver by estoppel."); Gitter v. Tenn. Farmers Mut. Ins. Co., 60 Tenn. App. 698, 450 S.W.2d 780, 784 (1969) ("[I]mplied waiver partakes of what is referred to as waiver by estoppel."). Thus, to prove implied waiver, a plaintiff must show that she honestly and reasonably believed, based on the defendant's conduct, that the defendant would forego asserting some right to which it was otherwise entitled, and that the plaintiff acted to her detriment in reliance on that belief. Brown, 901 P.2d at 723-24; Gitter, 450 S.W.2d at 785.

¶ 12. We find no implied waiver in this case. At best, from plaintiff's perspective, defendant's conduct was equivocal, because, on the one hand, it flatly denied coverage for the accident and, on the other, sent a reinstatement offer that did not reference the denied claim. Furthermore, plaintiff had no basis for a reasonable, honest belief that defendant intended to forego its right to deny coverage. In fact, plaintiff knew that defendant had already exercised it right to deny her claim because her policy had expired. Although defendant's offer to reinstate the policy, upon payment of the premium, did not reiterate that denial, the offer to reinstate did not reflect any intention to reverse that decision. Moreover, plaintiff can point to no detrimental change in her position occasioned by defendant's conduct. Thus, plaintiff cannot demonstrate an implied waiver by defendant.

¶ 13. In this regard, the instant case closely resembles Gitter. There, the plaintiff testified that she received a notice from the defendant insurance company indicating that her automobile insurance would expire on May 4 if she failed to pay the premium by that date. Without having paid the premium, her car was damaged in an accident on May 7. Sometime after the accident, she received a "Final Notice" from the defendant, stating that if she paid the premium within fifteen days of the May 4 due date her coverage would be reinstated without interruption. On May 23, more than fifteen days after the due date, but before the defendant had denied coverage, she tendered payment to the defendant, and defendant issued her a policy commencing May 24. On May 26, the defendant informed the plaintiff that she did not have coverage on the date of the accident. The court's words, in holding that the plaintiff could not prove an implied waiver, ring strikingly true to the instant case:

In the case at bar there was no proof of any reliance by the complainant on the...