Dusharm v. Nationwide Ins. Co.
| Decision Date | 14 April 2000 |
| Docket Number | No. 2:97-CV-371.,2:97-CV-371. |
| Citation | 92 F.Supp.2d 353 |
| Parties | Danielle Lee DUSHARM, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Vermont |
Marikate Ellen Kelley, Ward, Kelley & Babb, South Burlington, VT, for Danielle Lee Dusharm, plaintiff.
Michael John Gannon, Susan J. Flynn, Affolter, Gannon & Flynn, Burlington, VT, for Nationwide Insurance Company, defendant.
This is a lawsuit brought by Plaintiff Danielle Lee Dusharm ("Danielle," "Ms. Dusharm") against Nationwide Insurance Company ("Nationwide") for breach of insurance contract. Ms. Dusharm moved for summary judgment, and Nationwide has filed an opposition and cross motion for summary judgment. For the reasons that follow, Dusharm's Motion for Summary Judgment is GRANTED (paper 54) and Nationwide's Cross-Motion for Summary Judgment is DENIED (paper 56 and 58).
Plaintiff Danielle Dusharm was one of two passengers in a car accident on October 13, 1994. The car was driven by her friend, Erin Malloy, who struck a vehicle operated by Susan Lathrop, causing Ms. Lathrop severe injuries which rendered her comatose. Ms. Malloy and her passengers were also injured in the accident.
Plaintiff is the daughter of Catherine Lapierre and Robin Dusharm. Ms. Dusharm's parents are divorced, and Ms. Lapierre had custody at the time of the accident. Both parents had independent insurance policies with Nationwide. Ms. Dusharm lived with her mother in St. Albans until July 1994. After a disagreement with her mother, Danielle began staying with her father, taking one suitcase of clothing to his home in Hinesburg.
Although Mr. Dusharm's home became her primary place of residence and she began school there in the fall, she kept her personal belongings in her bedroom at her mother's home, including the majority of her clothing and her furniture. Ms. Dusharm offered in affidavit that she did not indicate in any way that the move to her father's home was permanent. She stayed overnight with her mother at least two weekends per month, and made several other visits to St. Albans through the course of the month. Ms. Lapierre claimed Danielle as a dependant on her 1994 taxes, and Danielle continued to visit and keep her personal belongings with her mother until her mother moved to a smaller apartment several months after the accident.
At the time of the accident, Ms. Lapierre lived with James Thacker, a Nationwide policyholder. His policy, number 51D540596, had liability coverage of $100,000 per person/$300,000 per incident and uninsured motorist/underinsured motorist ("UM/UIM") coverage of $20,000/$40,000. Mr. Thacker elected in writing to have his UM/UIM limits lower than his liability limits when he initiated coverage by Nationwide. Ms. Lapierre later became a named policyholder on Mr. Thacker's insurance plan. The inclusion of Ms. Lapierre on the insurance contract was executed in a phone conversation between Ms. Lapierre and a Nationwide insurance agent at Mullen Agency whose identity is unknown. Defendant's records show that Ms. Lapierre became a named policyholder in February 1994; Defendant's records also show that her two cars were added to the policy by James Thacker in July 1993, prior to her inclusion as a policyholder. Ms. Lapierre claims that Nationwide did not obtain direction from her regarding setting UM/UIM limits below the liability limits, and Nationwide does not dispute this claim.
Ms. Dusharm brought this action in Chittenden Superior Court by filing a Complaint for Declaratory Judgment on October 15, 1997. The matter was removed to this Court on the basis of diversity of citizenship. In August 1998, Plaintiff amended her complaint, adding a claim for additional coverage under the automobile insurance policy between defendant and her mother based on the failure of the insurer to obtain informed and voluntary election for the UM/UIM limits to be lower than the liability limits as required by 23 V.S.A. § 941. A claim was also added alleging defendant's failure to pay Family Compensation due under the terms of that contract.
In July 1998, the parties filed cross motions for summary judgment. By agreement of the parties, the issue of informed consent for lower limits under the Thacker/Lapierre insurance policy was not resolved by the July 1998 motions. For purposes of those summary judgment motions, Defendant accepted that Ms. Dusharm was insured under both parents' policies. However, Nationwide has contested Ms. Dusharm's status as an insured under her mother's policies for any other purpose and has not paid Family Compensation to Ms. Dusharm under the terms of her mothers' policy. Nationwide has not contested Ms. Dusharm's coverage under her father's policy, and has paid Family Compensation under that policy.
This Court granted Plaintiff's Motion for Summary Judgment and denied Defendant's Motion for Summary Judgment by Opinion and Order dated April 28, 1999. Nationwide filed a Notice of Appeal on June 28, 1999, but the matter returned to this Court by Stipulation Withdrawing Appeal Ordered August 23, 1999, as the Opinion and Order dated April 28, 1999 did not resolve all the issues between the parties.
The remaining issues are whether Ms. Dusharm is an insured under her mother's automobile insurance policy, and whether Defendant was required to obtain informed and voluntary election for the uninsured limits to be lower than the liability limits on the policy with Plaintiff's mother. Specifically, Plaintiff first claims that her mother's policy has no residence requirement; in the alternative, if a residence requirement is read into the policy, Plaintiff argues that she meets that requirement. Second, Plaintiff argues Nationwide failed to receive approval for UM/UIM limits lower than liability limits as required by 23 V.S.A. § 941, voiding the lower UM/UIM limits.
Defendant counters the policy has a residency requirement that Ms. Dusharm did not meet at the time of the accident. They further argue that the lower UM/UIM coverage in the Thacker/Lapierre policy was attained without violation of 23 V.S.A. § 941, and in the alternative, at least requires an evidentiary hearing to resolve the disputed issues surrounding Ms. Lapierre's involvement with decisions about UM/UIM coverage limits under the Nationwide policy.
Summary Judgment is appropriate when there is no genuine issue as to any material fact, and the moving party is entitled to a judgment as a matter of law. Fed. R.Civ.P. 56(c); Alexander & Alexander Services, Inc. v. These Certain Underwriters at Lloyd's, London, England, 136 F.3d 82, 86 (2d Cir.1998) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The movant bears the burden of showing that no genuine issue of material fact exists. Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1223 (2d Cir.1994) (citing Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir.1975)). All ambiguities must be resolved and all inferences from the facts drawn in favor of the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In sum, "[t]he court must draw all reasonable inference in favor of the non-moving party and only grant summary judgment for the moving party if no reasonable trier of fact could find in favor of the non-moving party." Vermont Gas Systems, Inc. v. United States Fid. & Guar. Co., 805 F.Supp. 227, 231 (D.Vt.1992) citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, "conclusions of law or unwarranted deductions of fact are not admitted." First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 771 (2d Cir.1994).
Jurisdiction of this matter is based on diversity, 28 U.S.C. § 1332(a)(1). The Court applies Vermont law to the substantive issues. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). As the matters before the Court has not yet been addressed by the Vermont Supreme Court, this Court must determine the issues as it believes that body would determine them. See Mainline Tractor & Equip. Co. v. Nutrite Corp., 937 F.Supp. 1095, 1101 (D.Vt.1996); Paquette v. Deere and Co., 168 Vt. 258, 719 A.2d 410, 413 (1998).
"The cardinal principle for the construction and interpretation of insurance contracts — as with all contracts — is that the intentions of the parties should control." Newmont Mines Ltd. and Esso Resources Canada Ltd. v. Hanover Ins. Co., 784 F.2d 127, 135 (2d Cir.1986). However, the Vermont Supreme Court held in Valente v. Commercial Ins. Co., 126 Vt. 455, 459, 236 A.2d 241 (1967) that "[i]t is a fundamental rule that a policy of insurance must be construed liberally in respect to the person insured and strictly with respect to the insurer." When it is impossible to determine the exact meaning of an ambiguous provision, the Court should employ the rule of contra proferentum, which construes the ambiguity against the drafter of the insurance policy. "It is a general rule of construction in Vermont that a doubtful provision in a written instrument is construed against the party responsible for drafting it." Trustees of Net Realty Holding Trust v. AVCO Fin. Servs. of Barre, Inc., 147 Vt. 472, 520 A.2d 981, 983 (1986) (citing Page v. Lyle H. Hall, Inc., 125 Vt. 275, 214 A.2d 459, 463 (1965)).
The Vermont Supreme Court has not addressed the issue of the residence of children of divorced parents for insurance purposes. However, the Rutland Superior Court has found that a teenage child who resides primarily with one parent is also a resident of the other parent's household due to regular overnight visits (defined as at least one per month), and evidence of intention to maintain continuing ties with the household of the visited parent. Celetano v. Champlain...
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