IDS Prop. Cas. Ins. Co. v. Gov't Emps. Ins. Co.

• Decision Date: 13 January 2021
• Docket Number: No. 20-1407,20-1407
• Citation: 985 F.3d 41
• Parties: IDS PROPERTY CASUALTY INSURANCE CO. d/b/a Ameriprise Auto & Home Insurance, Plaintiff, Appellee, v. GOVERNMENT EMPLOYEES INSURANCE CO., INC., Defendant, Appellant, Philip L. Feldberg, Claudia B. Feldberg, Dawn Fasani-Feldberg, K.F. a minor by and through her mother Dawn Fasani-Feldberg, Jonathan D. Simms, Alyna Phromsopha, Withlacoochee River Electric Cooperative, Inc., Defendants.
• Court: U.S. Court of Appeals — First Circuit

985 F.3d 41

IDS PROPERTY CASUALTY INSURANCE CO. d/b/a Ameriprise Auto & Home Insurance, Plaintiff, Appellee,

v.GOVERNMENT EMPLOYEES INSURANCE CO., INC., Defendant, Appellant,Philip L. Feldberg, Claudia B. Feldberg, Dawn Fasani-Feldberg, K.F. a minor by and through her mother Dawn Fasani-Feldberg, Jonathan D. Simms, Alyna Phromsopha, Withlacoochee River Electric Cooperative, Inc., Defendants.

No. 20-1407

United States Court of Appeals, First Circuit.

January 13, 2021

Jeffrey H. Katzenstein, with whom Halaby Law Group, P.C. was on brief, for the Appellee.

Michael D. Schollard, with whom Ronald E. Harding, Boston, MA, and Harding Gurley, LLP, were on brief for the Appellant.

Before Howard, Chief Judge, Lipez and Thompson, Circuit Judges.

THOMPSON, Circuit Judge.

An accident in Florida damaged a Toyota Highlander -- insured by the plaintiff IDS Property Casualty Insurance Co. d/b/a Ameriprise Auto & Home Insurance ("Ameriprise") -- and a Lamborghini -- insured by defendant Government Employees Insurance Company ("GEICO") -- while also injuring the driver of the Highlander. Instead of helping pay for the bulk of the personal and property damage, Ameriprise rescinded coverage, alleging that its insureds Philip and Claudia Feldberg had breached their obligations under the policy by making material misrepresentations when they renewed coverage in 2017. Ameriprise then took to federal court to certify its decision, naming GEICO and the Feldbergs, among others, as defendants.¹ The district court granted summary judgment to Ameriprise, leaving GEICO to foot a larger share of the insurance bill than it had hoped (the Lamborghini was worth over $100,000). GEICO appeals the summary judgment decision as well as the court's decision to limit discovery and to grant Ameriprise's motion for reconsideration. Finding GEICO's arguments non-starters, we affirm.

Background

We review the summary judgment materials in the light most favorable to GEICO, the nonmoving party, "drawing all reasonable inferences in [its] favor" to sketch the factual background, while reserving some details for the discussion. Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 90 (1st Cir. 1996).

Although the Feldbergs are not a party to this appeal, GEICO's legal claims depend largely on how the Feldbergs handled their insurance policy, so we focus on their story and the details of Ameriprise's insurance policy in describing the factual background.

Covering Massachusetts Snowbirds

On November 8, 2011, the Feldbergs purchased an auto insurance policy through Ameriprise in Massachusetts, which automatically renewed every year until 2018. The policy always listed Philip and Claudia Feldberg as the only customary drivers of the various vehicles covered by the policy and only described the principal place of garaging for the various vehicles as Peabody, Massachusetts.² Ameriprise's Massachusetts Auto Eligibility Guidelines, which the company claimed to enforce strictly, contained what an Ameriprise underwriter titled the "snowbird clause"; vehicles principally garaged in Massachusetts, but which remain at a second home for part of the year, are covered by Ameriprise so long as the vehicles spend at least half of the year in the Commonwealth. With this Massachusetts insurance policy in place, the Feldbergs would depart from their home in Peabody around December of each year, starting around 2015, for their condo in Naples, Florida where the couple stayed until late May or early June to avoid the famous (yet increasingly mild) New England winters.

The policy contained certain compulsory coverages -- including bodily injury to others,³ personal injury protections (such as medical expenses and lost wages), bodily injury caused by an uninsured vehicle, and damage to someone else's property -- all of which Massachusetts law required Ameriprise to extend in the event of a claim. The policy also included optional coverages, including for rental vehicles and bodily injuries, above and beyond the baseline compulsory insurance.

Of particular interest to this appeal, the auto policy included several paragraphs that purported to limit Ameriprise's exposure to risk by reserving the right to cancel or rescind portions of the policy if the company discovered the Feldbergs provided "false, deceptive, misleading or incomplete information in any application or policy change request" or "were responsible for fraud or material misrepresentation when [they] applied for [their] policy or any extensions or renewal of it." (Emphases added.) Specifically, Paragraph 18 of the policy empowered Ameriprise to "refuse to pay claims under any or all of the Optional Insurance Parts of this policy" if the Feldbergs did not accurately report "the description and the place of garaging of the vehicles to be insured, [and] the names of all ... customary operators ...."⁴ The "Coverage Selections Page" within the auto policy extended Paragraph 18's warning for any "changes that have occurred prior to the renewal of this policy and during the policy period." Paragraph 19⁵ of the policy also gave Ameriprise "the right to adjust [the Feldbergs'] premium" for the same reasons.⁶

On September 16, 2016, Philip added a Toyota Highlander to this auto policy, under which he already covered a Toyota RAV4 and a Honda Accord. The paperwork formalizing the addition lists Peabody as the Highlander's principal place of garaging and identifies only Philip and Claudia as its customary drivers.

Massachusetts Renewals in the Florida Sun

The Feldbergs received an annual renewal notice from Ameriprise on September 23, 2017, which included a cover letter enclosing the "Massachusetts Renewal Form." The letter instructed the Feldbergs that they "only need[ed] to return [the renewal form] if the information" contained within "has changed" and it more precisely guided the Feldbergs to "[p]lease review the Coverage Selections Page." The enclosed Coverage Selections Page for the Highlander, as well as for the RAV4 and Accord, listed Peabody as the principal place of garaging and recognized only Philip and Claudia as the customary drivers.

The renewal forms (one for the RAV4 and Accord, and one for the Highlander) built upon the cover letter and reiterated the theme of the initial auto policy: "It will not be necessary to return this form to your agent or company representative unless you wish to make any changes or unless the information contained on the Coverage Selections Page and in this form," including the principal place of garaging and the customary drivers, "is inaccurate or obsolete." The form instructed the Feldbergs to check the information for accuracy, and to return the form if it was incorrect, warning them that the failure to do so "may have very serious consequences." The Feldbergs did not return the 2017 renewal form.⁷

Accidents in Florida + Massachusetts Insurance = Investigation

The Feldbergs' vehicles had a rough year in 2018, enduring three incidents leading to claims with Ameriprise. The first occurred in January when the Feldbergs' RAV4 suffered some damage in a Florida Walmart parking lot. It was in the course of covering the claim when Ameriprise learned the Feldbergs owned a condo in Naples, Florida; however the company did not investigate the details of the Feldbergs' Florida life further because, as far as the company knew, the couple only dwelled in Florida for less than half of the year and the RAV4 returned to Massachusetts with them, conditions which satisfied Ameriprise's policy guidelines (remember, individuals who own a second home outside of the Commonwealth can be covered by Ameriprise so long as their cars stay in the Bay State for 6 months or more each year). Ameriprise also learned from its constrained investigation that the Highlander (the added vehicle) likewise spent some time tanning in the Sunshine State.

Later, in March or April of 2018, the Feldbergs' grandson borrowed their Honda Accord in Massachusetts and promptly got into an accident within the Commonwealth's boundaries.

Continuing the bad luck streak of other drivers damaging the Feldbergs' cars, a speeding Lamborghini hit their Highlander in Wesley Chapel, Florida on July 24, 2018 while their daughter-in-law, Dawn Fasani-Feldberg, was at the wheel. The crash totaled the Highlander, damaged the Lamborghini, and injured Dawn. Fault was disputed (Dawn says she got cited for a right of way violation and the Lamborghini driver got cited for speeding). The Feldbergs were not in Florida at the time of the accident, but they filed a claim with Ameriprise; meanwhile, GEICO got involved to deal with the Lamborghini. The day after the accident, Ameriprise extended five days of rental car coverage to the Feldbergs, which was an optional coverage under the policy. The company also later paid for certain medical care for Dawn's injuries as per the compulsory portions of the auto policy. The accident, however, spurred Ameriprise to investigate where the Highlander was actually garaged and who customarily drove it.

The investigation included a number of recorded calls with Philip and Dawn, as well as an examination under oath of Philip, in which both admitted key details. Philip told Ameriprise's investigator he brought the Highlander to Florida "almost immediately" after leasing it in Massachusetts and adding it to the auto policy in September 2016. Philip's kids had encouraged him to lease the Highlander so that there would be an extra car in Florida: in case Philip could not make the return drive to the frigid north due to his poor health, he could fly to Florida the next winter and have the Highlander waiting for him at Dawn's house, which, in Philip's words "[was] what we did." Philip intended to drive the Highlander back to Peabody, but he never ended up feeling well enough to do so.

As for information regarding the customary drivers of the Highlander, Philip informed Ameriprise's investigator about Dawn's "standing permission ... to use the...