Dusharm v. Nationwide Ins. Co.
| Decision Date | 29 April 1999 |
| Docket Number | No. 2:97-CV-371.,2:97-CV-371. |
| Citation | 47 F.Supp.2d 514 |
| Court | U.S. District Court — District of Vermont |
| Parties | Danielle Lee DUSHARM, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant. |
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.
In this complaint for declaratory relief, Plaintiff Danielle Lee Dusharm seeks a judgment that Defendant Nationwide Insurance Company ("Nationwide") is obligated to provide underinsured motorist ("UIM") coverage for her under policies issued by Nationwide to her father and her mother. The parties have cross-moved for summary judgment. At issue is whether Nationwide must provide UIM coverage when the tortfeasor motorist's insurance coverage is unavailable to Dusharm due to multiple claimants. To date, the issue has not been addressed by the Vermont Supreme Court. For the reasons stated below the Court holds that the tortfeasor's vehicle is underinsured for purposes of triggering coverage under Nationwide's policies. Accordingly, Dusharm's Motion for Summary Judgment (paper 20) is granted in part; Nationwide's Motion for Summary Judgment (paper 23) is denied.
The following facts are undisputed. On October 3, 1994, 16-year old Danielle Dusharm and Hannah Smith, of Charlotte, Vermont, were passengers in a 1989 Ford Taurus automobile owned by Timothy and Anne Malloy and operated by their daughter Erin Malloy. At approximately 7:53 a.m. Erin Malloy was driving south on Route 116 in Hinesburg, Vermont when she struck a vehicle traveling north which was owned and operated by Susan Lathrop. Malloy was primarily at fault for causing the accident. As a result of the accident Susan Lathrop was gravely injured, and incurred damages in excess of $700,000. Hannah Smith incurred damages including medical bills in excess of $6,500. Danielle Dusharm incurred damages in excess of $50,000,1 with medical bills in excess of $18,000.
At the time of the accident, Erin Malloy was insured under a liability policy issued by The Concord Group Insurance Companies ("Concord Group"), which contained a single liability limit of $300,000. On August 7, 1996, Concord Group offered to settle the Smith and Dusharm claims for $1,000 apiece, noting that the claims of Susan Lathrop alone far exceeded the Smith and Dusharm claims, as well as the limits of its policy. By August 22, 1997, Concord Group had settled the Smith claim for $1,000 and the Lathrop claim for the limits of the policy, less $1,000 set aside for Dusharm's claim.
At the time of the accident, Danielle Dusharm lived with her father, Robin Dusharm, although her mother, Catherine Lapierre, had her legal custody. For purposes of these motions Nationwide accepts that her father's and her mother's automobile insurance policies both apply to Danielle. Robin Dusharm had an automobile insurance policy with Nationwide, which provided uninsured motorists ("UM") coverage2 for relatives. The policy contained limits of $50,000 per person and $100,000 per occurrence. Catherine Lapierre also had automobile insurance with Nationwide, which provided UM coverage for relatives. The amount of that coverage is in dispute, but for purposes of these motions Nationwide accepts that the UM limits on the Lapierre policy are $100,000 per person and $300,000 per occurrence.3
Nationwide has denied UIM coverage, stating that because the Malloy policy contained a $300,000 limit of liability, the Malloy vehicle was not underinsured with respect to the combined per person limits of Nationwide's policies.
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)). Jurisdiction of this matter is based on diversity, 28 U.S.C. §§ 1332, 1441, and 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 this is a matter that 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., 719 A.2d 410, 413 (Vt.1998).
The UM/UIM coverage provisions in Dusharm's two Nationwide policies are identical. Both contain an "Endorsement 2008A uninsured motorists coverage (Vermont)" ("UM endorsement"). The UM endorsement states in relevant part: "We will pay compensatory damages, ... which are due by law to [the named insured] or a relative from the owner or driver of an uninsured or underinsured motor vehicle because of bodily injury suffered by [the named insured] or a relative ..." An underinsured motor vehicle is defined as "one with respect to which the sum of the limits of liability under all liability bonds and insurance policies applicable to the accident is less than the limits of this coverage."
According to the policy language, the limit of the Malloy liability policy applicable to the accident is to be compared with the limits of UM coverage under the Nationwide policies.4 Stacked, those limits are $150,000 per person and $400,000 per accident. Because this is a multi-victim accident, the per accident limitation is the key provision for determining whether a vehicle is underinsured. See Botting v. Allstate Ins. Co., 707 A.2d 1319, 1321 (Me. 1998); Erie Ins. Co. v. Thompson, 330 Md. 530, 625 A.2d 322, 325 (1993) . The Malloy vehicle is underinsured with respect to Dusharm if its $300,000 per accident limit of liability is less than the per accident limit of Dusharm's UM coverage. Because $300,000 is less than $400,000, the Malloy vehicle is underinsured.
Once the determination is made that Dusharm has a UIM claim because the Malloy vehicle is underinsured, she may obtain recovery against the Nationwide policies if her damages exceed her recovery from the tortfeasor's liability insurance, up to the per person limits of the policies. Of course, any payments by the tortfeasor's liability insurance will be set off against the total UM coverage. UM endorsement at 4 (Limits of Payment ¶ 7); Brunet v. American Ins. Co., 660 F.Supp. 843, 848-49 (D.Vt.1987). Thus, Dusharm has a potential recovery from the Nationwide policies of $149,000.
Under this analysis of the policy language, it is unnecessary to reach the issue of whether UIM coverage is triggered when a tortfeasor's liability insurance is equal to or greater than the UIM coverage, but is unavailable due to multiple claimants. Nevertheless, the Court will address the issue, in light of the fact that the amount of UM/UIM coverage under the Lapierre policy is disputed. If Dusharm's total UM/UIM coverage under the Nationwide policies is $70,000/$140,000, then according to Nationwide's interpretation of the language of the policies, the Malloy vehicle is not underinsured and the policies' UM/UIM coverage is not triggered. Dusharm claims, however, that the policy language is ambiguous and should be construed in favor of coverage.
A policy must be construed according to its terms and the evident intent of the parties as expressed in the policy language. City of Burlington v. National Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719, 721 (1994) (citing Sanders v. St. Paul Mercury Ins. Co., 148 Vt. 496, 500, 536 A.2d 914, 916 (1987)). This principle avoids "binding insurers to coverage that the parties did not reasonably contemplate." State Farm Mut. Auto. Ins. Co. v. Roberts, 166 Vt. 452, 461, 697 A.2d 667, 672 (1997). In determining the reasonable expectations of parties to an insurance contract, the Court "must consider the policy in its entirety with an eye toward its general purpose." Id.
Disputed terms in an insurance policy should be accorded their "plain, ordinary and popular meaning." Burlington v. National Union Fire, 163 Vt. at 127-28, 655 A.2d at 721. See also Gerrish Corp. v. Universal Underwriters Ins. Co., 947 F.2d 1023, 1030 (2d Cir.1991). An insurer will not be deprived of unambiguous policy provisions which benefit it. Peerless Ins. Co. v. Wells, 154 Vt. 491, 494, 580 A.2d 485, 487 (1990). Principles of fairness demand, however, that any ambiguity in the language of the policy be resolved in favor of the insured. City of Burlington v. Associated Elec. & Gas Ins. Services, Ltd., 164 Vt. 218, 221, 669 A.2d 1181, 1183 (1995); Garneau v. Curtis & Bedell, Inc., 158 Vt. 363, 367, 610 A.2d 132, 134 (1992). See also Gerrish, id. Language in an insurance contract is ambiguous if "it is reasonably or fairly susceptible of different constructions," but a court's duty is to enforce the agreement made, not to rewrite it on behalf of a party. Northern Sec. Ins. Co. v. Hatch, 165 Vt. 383, 386, 388, 683 A.2d 392, 395, 396 (1996).
Dusharm argues that in the multiple claimant context the policy language "limits of liability under all ... insurance policies applicable to the accident" is ambiguous, that is, it is unclear whether the phrase refers to the express policy limits of liability coverage, or to the amount of insurance actually available to the injured insured. Where "limits of liability" language is ambiguous, it is construed against the insurer. Sanders, 148 Vt. at 500, 536 A.2d at 916. With due respect to the courts which have held that similar language is "potentially ambiguous," see, e.g., Gonzales v. Millers...
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