Grossberg v. Travelers Indem. Co. of America

• Decision Date: 14 November 2011
• Docket Number: Case No. 3:11cv223–DWD.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Tawny GROSSBERG, Plaintiff, v. The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.

825 F.Supp.2d 717

Tawny GROSSBERG, Plaintiff,

v.The TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant.

Case No. 3:11cv223–DWD.

United States District Court, E.D. Virginia,Richmond Division.

Nov. 14, 2011.

Paul Christopher Guedri, Allen Allen Allen & Allen, Richmond, VA, for Plaintiff.

John Becker Mumford, Jr., Kathryn Elizabeth Kransdorf, Hancock Daniel Johnson & Nagle PC, Glen Allen, VA, for Defendant.

MEMORANDUM OPINION

DENNIS W. DOHNAL, United States Magistrate Judge.

This matter is before the Court by consent of the parties pursuant to 28 U.S.C. § 636(c)(1) on the parties' cross motions for summary judgment (ECF Nos. 11, 13). The matter has been thoroughly addressed by the parties' submissions, and the Court has entertained oral argument on the motions. For the reasons that follow, the Plaintiff's Motion for Summary Judgment (ECF No. 11) is DENIED and the Defendant's Motion for Summary Judgment (ECF No. 13) is GRANTED.

I. BACKGROUND

The Court has reviewed each party's statement of undisputed facts, including the extensive supporting documentation filed in support of the respective positions. Withholding discussion of disputed material facts to be treated separately as to each motion, infra, as required where the parties have submitted cross-motions for summary judgment, see Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.2003) (citations omitted), the Court has concluded that the following narrative represents the facts for purposes of resolving the cross-motions for summary judgment.¹

On November 12, 2005, Tawny Grossberg (“Grossberg” or the “Plaintiff”) sustained injuries during a car accident in the City of Richmond, Virginia. (Agreed Stipulations of Fact (“Stips.”) at ¶¶ 1, 5.) She subsequently filed suit against the other driver and, after a jury trial in state court, obtained a judgment in the amount of $615,000.00 (the “Judgment”), plus interest on the amount of $123,000.00 from November 2005.² ( Id. at ¶¶ 6–9.) The other driver's insurance company paid the sum of $300,000.00 to Grossberg, which represents the limit of its coverage, leaving the remainder of the Judgment unpaid. ( Id. at ¶¶ 11–12.)

Grossberg sought to collect the remaining amount, plus interest, from The Travelers Indemnity Company of America (“Travelers” or the “Defendant”) pursuant to a commercial insurance policy (the “Policy”) issued to U.S. Vittles, Inc., t/a Buzz and Ned's Real Barbeque (“Buzz and Ned's”), but Travelers denied coverage. ( Id. at ¶¶ 4, 7; Compl. at ¶¶ 28–29, ECF No. 1–1; Ans. at ¶¶ 28–29, ECF No. 3.) The Policy provides uninsured/underinsured motorist coverage by an endorsement covering “ ‘You’ or any ‘family member,’ ” as well as “[a]nyone else ‘occupying’ a ‘covered auto.’ ” (Policy at 29, ECF No. 10–1.) The Policy defines “You” as “the person or organization shown as the named insured,” which is the corporate entity comprising Buzz and Ned's. ( Id. at 28.) The Policy further defines “family member” to mean “a person related to ‘you’ by blood, marriage, or adoption.” ( Id.)

Grossberg was not driving a “covered auto” at the time of the accident. (Stips. at ¶ 3.) However, her husband is the sole shareholder of Buzz and Ned's, thus rendering her a member of his family. ( Id. at ¶ 2.) Accordingly, she seeks underinsured motorist coverage for the unpaid amount of the Judgment based upon her status as a “family member” of the insured. (Compl. at ¶¶ 9–14.) ³ To that end, Grossberg argues that the Policy provides her with coverage as a “family member” of the insured or, alternatively, that the inclusion of the phrase “family members” renders the Policy ambiguous such that it should be construed against the insurer as the “scrivener.”

To enforce her claim, Grossberg initiated this breach of contract action in the Circuit Court for the City of Richmond, seeking damages in the amount of $380,865.00 and continuing post-judgment interest. (Compl. at 4.) Travelers removed the case to this Court pursuant to 28 U.S.C. § 1441(a) because the parties are completely diverse and the amount in controversy exceeds $75,000.00, therefore vesting this Court with jurisdiction pursuant to 28 U.S.C. § 1332(a). Having stipulated to the material facts, the parties have filed cross motions for summary judgment, which are presently before the Court for resolution.

II. STANDARD OF REVIEW

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “When faced with cross-motions for summary judgment, the court must review each motion separately on its own merits ‘to determine whether either of the parties deserves judgment as a matter of law.’ ” Rossignol, 316 F.3d at 523 (quoting Philip Morris, Inc. v. Harshbarger, 122 F.3d 58, 62 n. 4 (1st Cir.1997)). “When considering each individual motion, the court must take care to ‘resolve all factual disputes and any competing, rational inferences in the light most favorable’ to the party opposing that motion.” Id. (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir.1996)). Summary judgment is particularly well-suited for resolution of insurance coverage disputes because the construction of insurance contracts is a legal question. St. Paul Fire & Marine Ins. Co. v. Jacobson, 826 F.Supp. 155, 157 (E.D.Va.1993), aff'd 48 F.3d 778 (4th Cir.1995).

III. DISCUSSION

The sole dispositive issue before the Court is the construction of the Policy term “family member” where, as here, the named insured is a corporate entity. According to Grossberg, such a term necessarily includes the family members of the sole shareholder in a small, family owned corporation such as Buzz and Ned's. Otherwise, Grossberg argues that the inclusion of the phrase “family members” in a policy sold to a corporate entity would be ambiguous, thus requiring the Court to construe the Policy against Travelers and in favor of coverage. Either way, Grossberg argues that coverage exists. Relying principally on a decision by the Supreme Court of Connecticut, Ceci v. Nat'l Indem. Co., 225 Conn. 165, 622 A.2d 545 (1993), Grossberg sets forth a well-reasoned, persuasive argument in favor of coverage.

However, as a federal court sitting in diversity, it is not the role of this Court to develop a state's common law, no matter how convincing an argument in favor of such developments may appear. See Compton v. Nationwide Mut. Ins. Co., 480 F.Supp. 1254, 1256 (W.D.Va.1979) (citing Kline v. Wheels by Kinney, Inc., 464 F.2d 184 (4th Cir.1972)). Rather, if no state case is directly on point, the court must determine what rule the state supreme court “would probably follow, not fashion a rule which we, as an independent federal court, might consider best.” Kline, 464 F.2d at 187 (internal quotation marks omitted) (quoting Lowe's North Wilkesboro Hdwre. v. Fidelity Mut. Life Ins. Co., 319 F.2d 469, 472 (4th Cir.1963)). To that end, decisions of a state's lower courts ought to be given due consideration in the analysis. Compton, 480 F.Supp. at 1256 (citing Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967)).

A. Applicable Rules of Construction

Because the Court's jurisdiction is based on diversity, the court must apply the choice of law rules of Virginia as the forum state. Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1937). In Virginia, “the law of the place where an insurance contract is written and delivered controls issues as to its coverage.” Buchanan v. Doe, 246 Va. 67, 431 S.E.2d 289, 291 (1993). The parties agree that the Policy in this case was completed and delivered in Virginia, so Virginia law governing the interpretation of insurance policies shall apply.

In Virginia, an insurance policy is treated in the same manner as any other contract, and so the words used in the policy are given “their ordinary and usual meaning when they are susceptible of such construction.” State Farm Fire and Cas. Co. v. Walton, 244 Va. 498, 423 S.E.2d 188, 191 (1992) (citation omitted). The Court must “construe the contract as a whole, and no word or clause is to be treated as meaningless if any reasonable meaning consistent with the other parts of the contract can be given to it.” Hutter v. Heilmann, 252 Va. 227, 475 S.E.2d 267, 270 (1996) (citations and internal quotation marks omitted). If the terms are unambiguous, the court need not apply any other rules of construction. Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612, 614 (1989). However, if the language is ambiguous, “[t]he rule of construction consistently applied in [Virginia] is that ambiguous language in insurance policies must be interpreted most strongly against the scrivener and in favor of the insured.” Cuna Mut. Ins. Soc'y v. Norman, 237 Va. 33, 375 S.E.2d 724, 725 (1989) (citations omitted).

As Travelers has correctly demonstrated, the issue now before the Court is not entirely novel among Virginia's courts, although the Supreme Court of Virginia has yet to directly address the policy language at issue here. (Def.'s Br. Sup. Mot. Sum. J. (“Def.'s Br.”) at 9–13.) In Elkins v. Erie Ins. Exchange, a Virginia trial court construed identical language to that at issue in this case and found that there was no ambiguity. 77 Va.Cir. 344, 347 (2008). The court in that case emphasized the need to construe the language “as a whole,” holding that “the ‘you’ in the UM/UIM endorsement is the named insured”; that is, the corporation. Id. Because a corporation cannot have “family members” as defined in the policy, no coverage existed for the family members in that case. Accord Parnell v. Nationwide Mut. Ins. Co., 46 Va.Cir. 232, 233 (1998).

B. Split of Authorities

After reaching...