Bristol West Ins. Co. v. Whitt
| Citation | 406 F.Supp.2d 771 |
| Decision Date | 25 August 2005 |
| Docket Number | No. 1:05-CV-2.,No. 5:04-CV-36.,5:04-CV-36.,1:05-CV-2. |
| Parties | BRISTOL WEST INSURANCE COMPANY, Plaintiff, v. Carl Lee WHITT, and Jerry Otto and Angie Otto, as parties interest, Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Kevin J. Plagens, Kopka Pinkus & Dolin PC, Farmington Hills, MI, James H. Milstone, Kopka Pinkus & Dolin PC, South Bend, IN, for Plaintiff.
Robert Edward Love, Love and James, Fort Wayne, IN, Neal R. Lewis, Lewis & Associates, Orland, IN, Michael W. Betz, Betz & Bloss, PC, Grand Rapids, MI, for Defendants.
In these consolidated cases, Plaintiff in Case No. 5:04-CV-36, Bristol West Insurance Company ("BWIC"), requests that the Court enter a judgment declaring that, among other things, BWIC did not breach any duty to Defendant Carl Lee Whitt ("Dr.Whitt") under an automobile insurance policy in connection with the August 25, 2002, accident between Dr. Whitt's automobile and a motorcycle ridden by Defendants Jerry Otto and Angie Otto (the "Ottos"). BWIC also seeks a declaration that it is not bound by a consent judgment entered in a lawsuit in Indiana state court between the Ottos and Dr. Whitt. In Case No. 1:05-CV-2, the Ottos, Dr. Whitt, and Ronald Mishler ("Mishler" and, together with Dr. Whitt and the Ottos, "Defendants"), the owner of the motorcycle involved in the August 25, 2002, accident, have filed a complaint for bad faith insurance practices and for collection of the consent judgment. Now before the Court are the parties' cross motions for summary judgment. For the reasons set forth below, the Court will deny BWIC's motion and grant Defendants' motion for summary judgment.
On or about May 27, 2002, BWIC issued automobile insurance policy No. A30-3562197-04 (the "Policy") to Dr. Whitt. The Policy provides coverage for the period of June 24, 2002, through December 24, 2002, with limits of $500,000 per occurrence and in the aggregate. Pursuant to the Policy, BWIC is obligated to provide coverage as follows:
Subject to the Limit of Liability shown in the Declarations, if you pay a premium for Liability coverage, we will pay damages, other than punitive or exemplary damages, for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted through an offer of settlement or payment. We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy.
(Policy at 4, Part A (Insuring Agreement), Pl.'s Br. Supp. Mot. Ex. B.) The Policy excludes coverage for a person's use of "a vehicle without the express or implied permission of [the insured]" and "[f] or bodily injury or property damage occurring while any vehicle, including [the insured's] covered auto, is being used in the commission of a felony, including theft of [the insured's] covered auto...." (Id. at 6, 7, Part A (Exclusions).) The Policy provides that following an accident, the insured must satisfy several requirements, including:
A. We must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses.
. . . . .
1. Cooperate with us in the investigation, settlement or defense of any claim or suit.
2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss.
(Id. at 29, Part E (Duties After an Accident or Loss).) The Policy also addresses the consequences of an insured's fraud and/or misrepresentation in connection with the submission of a claim:
. . . . .
We may deny coverage for an accident or loss if "you" or an "insured" have knowingly or unknowingly concealed or misrepresented any material fact or circumstance, or engaged in fraudulent conduct, in connection with the presentation or settlement of a claim.
We may void this policy for fraud or misrepresentation after the occurrence of an accident or loss. This means that we will not be liable for any claims or damages which would otherwise be covered. However, this shall not affect coverage under Part A of this policy up to the minimum limits required by the financial responsibility law of the State of Michigan if we certify your policy as proof of financial responsibility to the Secretary of State of the State of Michigan, and if the accident occurs before we notify the named insured that the policy is void. If we void this policy, you must reimburse us if we make a payment. If we void this policy, it will be void from its inception (void ab initio), and no coverage will be provided whatsoever.
(Id. at 31, Part F (General Provisions).) Finally, the Policy provides "Out of State Coverage" as follows:
If an auto accident to which this policy applies occurs in any state or province other than the one in which "your covered auto" is principally garaged, we will interpret your policy for that accident as follows:
A. If the state or province has:
1. A compulsory insurance or similar law requiring a nonresident to maintain insurance whenever the nonresident uses a vehicle in that state or province, your policy will provide at least the required minimum amounts and types of coverage.
B. No one will be entitled to duplicate payments for the same elements of loss.
(Id. at 9, Part A (Liability Coverage).)
B. The Accident and Underlying Litigation
On August 25, 2002, Dr. Whitt's automobile collided with a motorcycle owned by Mishler and ridden by the Ottos. The accident occurred in Indiana. Dr. Whitt was driving his vehicle at the time of the accident. The Ottos both suffered serious injuries and the motorcycle was damaged. On or about August 28, 2002, Dr. Whitt reported the accident to BWIC. Dr. Whitt told BWIC that he picked up a hitchhiker, who drugged Dr. Whitt, pushed him out of the vehicle, and caused the accident with the Ottos. Dr. Whitt subsequently gave a recorded statement to BWIC's representative describing the car-jacking.
On or about September 6, 2002, the prosecutor filed a criminal complaint against Dr. Whitt for leaving the scene of a personal injury accident. Dr. Whitt retained attorney Robert Love to represent him in the criminal matter, and Dr. Whitt entered a plea of not guilty. Subsequently, Dr. Whitt pled guilty to a reduced charge of reckless driving.
Shortly after the accident, the Ottos and Mishler retained attorney Neal Lewis to represent them in their claims against Dr. Whitt. Attorney Lewis notified BWIC of the accident, the potential criminal charges against Dr. Whitt, and his clients' claims against Dr. Whitt. (Letter from Lewis to Erb of 9/9/02, Pl.'s Br. Supp. Ex. C.) On or about May 30, 2003, attorney Lewis faxed a draft copy of a complaint against Dr. Whitt to BWIC. BWIC apparently did not respond to the draft complaint. On June 25, 2003, attorney Lewis faxed a copy of summons and complaint captioned Jerry and Angie Otto, et al. v. Carl L. Whitt, M.D., No. 44C01-0306-CT-11 (the "Indiana Litigation".), which attorney Lewis filed in the LaGrange County Circuit Court that same day. (Id. at 27-29.) The complaint alleged, among other things, that Dr. Whitt was operating his vehicle at the time of the accident, that Dr. Whitt was intoxicated, and that Dr. Whitt was negligent.
On July 21, 2003, attorney Lewis sent a letter to BWIC confirming that a complaint had been filed against Dr. Whitt and inquiring whether BWIC would be defending or denying coverage for the claim. (Id. at 36-37.) BWIC responded to attorney Lewis by letter dated September 5, 2003, in which BWIC stated that it was denying coverage for the claim:
Dr. Whitt formally maintains that he was neither operating nor a passenger of the vehicle involved in this accident. He further states that he is a victim of a car-jacking that proceeded [sic] this unfortunate accident. Therefore, pursuant to Indiana Statute, Dr. Whitt is not responsible for the actions of the car-jacker and is not liable for the resulting injuries based upon the facts as reported, and no coverage under the policy.
Accordingly, we must respectfully decline coverage for this claim based upon the facts as reported and applied to Indiana law.
The letter was also sent to Dr. Whitt.
In spite of the version of events that Dr. Whitt had maintained since the accident, in late January 2004, Dr. Whitt signed an affidavit in which he acknowledged that he was driving his vehicle at the time of the accident. Dr. Whitt stated:
Comes now the Affiant and after having been duly sworn does hereby offer the following Affidavit relative to both the civil and criminal actions related to the August 25, 2002 automobile accident. After much thought and consideration and after a thorough review of both the direct and circumstantial evidence which has been gathered by the respective participants, I conclude that I was the operator of the vehicle at the time of the accident.
(Whitt Aff., Pl.'s Br. Supp. Ex. E.) Dr. Whitt or attorney Love provided the affidavit to BWIC on or about January 21, 2004.1 (Campbell Dep. at 21; letter from Campbell to Whitt of 5/16/04, Pl.'s Br. Supp. Ex. J.)
On March 16, 2004, after receiving Dr. Whitt's affidavit, BWIC sent a letter to Dr. Whitt again denying coverage for the claim. The letter stated, "[BWIC] expressly reserves all rights of denial under the policy and in no way waives any or its rights, nor any of your rights,...
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