New London Cnty. Mut. Ins. Co. v. Fontaine

• Decision Date: 21 June 2012
• Docket Number: No. 2010–49–Appeal.,2010–49–Appeal.
• Citation: 45 A.3d 551
• Parties: NEW LONDON COUNTY MUTUAL INSURANCE COMPANY v. Karolyn FONTAINE, Individually, and in her capacity as administratrix of the Estate of Leo Fontaine.
• Court: Rhode Island Supreme Court

45 A.3d 551

NEW LONDON COUNTY MUTUAL INSURANCE COMPANY

v.Karolyn FONTAINE, Individually, and in her capacity as administratrix of the Estate of Leo Fontaine.

No. 2010–49–Appeal.

Supreme Court of Rhode Island.

June 21, 2012.

Lauren D. Wilkins, Esq., for Plaintiff.

Joseph J. Altieri, Esq., Warwick, for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice INDEGLIA, for the Court.

In this case, we are called upon to determine the extent of uninsured motorist coverage provided under an automobile insurance policy issued to a husband and wife, both of whom suffered injuries at the hands of an uninsured motorist while riding on a motorcycle owned by the husband but not expressly identified in the policy at issue. The insurer, New London County Mutual Insurance Company (NLC or plaintiff), filed this action for declaratory relief seeking clarification of the rights and obligations of the parties pursuant to the policy it had issued to the defendants. Arguing that the policy language unambiguously excluded the defendants' claim for uninsured motorist benefits, NLC filed a motion for summary judgment, which was granted by the Superior Court. The defendants, Karolyn Fontaine, individually, and Karolyn Fontaine on behalf of the estate of her husband, Leo Fontaine, who died as a result of his injuries, appeal the grant of summary judgment and contend that the pertinent policy provision is ambiguous and should be construed in favor of coverage in this case.¹ For the reasons set forth in this opinion, we hold that the policy language explicitly excludes defendants' claims from coverage, and we affirm the judgment of the Superior Court.

IFacts and Travel

The material facts in this case are not in dispute. On August 31, 2008, Leo Fontaine (Mr. Fontaine) was involved in a collision with a motor vehicle while operating his Harley Davidson motorcycle along Aliens Avenue in Providence, with his wife, Karolyn Fontaine (Mrs. Fontaine), as a passenger. Both Mr. and Mrs. Fontaine were injured; however, Mr. Fontaine's injuries ultimately resulted in his death. Mr. Fontaine owned the motorcycle, which he insured under a policy issued by Foremost Insurance Company (Foremost). Neither the automobile involved in the collision nor the operator of that vehicle was insured. Consequently, Foremost paid to Mr. Fontaine's estate its policy limit of $100,000, the per-person limit for underinsured/uninsured bodily injury benefits under that policy (the Foremost policy).

At the time of the collision, Mr. and Mrs. Fontaine held a separate automobile insurance policy for two other vehicles—a 2005 Dodge Magnum and a 2004 Ford F–250. That policy, issued by NLC, provided both liability and uninsured motorist (UM) coverage ² for the period of August 4, 2008, to August 4, 2009 (the NLC policy). Subsequent to the collision, Mrs. Fontaine and the estate of Mr. Fontaine submitted a UM claim under the NLC policy, seeking to recover for Mrs. Fontaine's loss of consortium and for Mr. Fontaine's injuries. As a result of this claim, NLC initiated an investigation of the accident; it revealed that the Harley Davidson motorcycle owned and operated by Mr. Fontaine was not listed as a “vehicle covered” under the NLC policy. Based on this circumstance, NLC determined that both the estate's claim and Mrs. Fontaine's derivative claim fell within an exclusion ³ that removed from UM coverage any bodily injury suffered by an insured “[w]hile ‘occupying,’ or when struck by, any motor vehicle owned by that ‘insured’ which is not insured for this coverage.” Accordingly, NLC disclaimedUM coverage for any loss stemming from Mr. Fontaine's injuries.⁴

On January 23, 2009, NLC filed an action for declaratory relief in the Superior Court in an effort to clarify its obligations, if any, to Mrs. Fontaine and the estate, who continued to maintain a right to collect under the NLC policy. Given that no genuine issues of fact were in dispute, NLC filed a motion for summary judgment on May 22, 2009, requesting that the court (1) declare Mr. Fontaine as the owner of the Harley Davidson motorcycle; (2) find that, at the time of the collision, Mr. Fontaine was operating a motor vehicle owned by him and not insured under the NLC policy; (3) determine the “owned but not insured” exclusion to preclude UM coverage under the circumstances; and (4) declare that NLC had no duty to indemnify the estate for the loss or Mrs. Fontaine for any derivative damages. In opposition, defendants contended that the “owned but not insured” exclusion within the NLC policy was unclear and ambiguous and thus should be construed against the insurer to permit UM coverage.

Specifically, defendants argued that the exclusion lent itself to more than one reasonable interpretation based on the language “this coverage.” The “owned but not insured” exclusion at issue constituted one provision of a three-page endorsement to the NLC policy, copyright-dated 2002, and specific to Rhode Island (the 2002 Rhode Island endorsement). This endorsement, titled “UNINSURED MOTORISTS COVERAGE–RHODE ISLAND,” read in pertinent part as follows:

“I. Part C–Uninsured Motorist Coverage

“Part C is replaced by the following:

“INSURING AGREEMENT

“A. We will pay compensatory damages which an ‘insured’ is legally entitled to recover from the owner or operator of an ‘uninsured motor vehicle’ because of ‘bodily injury’:

“1. Sustained by an ‘insured’; and

“2. Caused by an accident.

“The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the ‘uninsured motor vehicle’.

“ * * *

“B. ‘Insured’ as used in this Part means:

“1. You or any ‘family member’.

“2. Any other person ‘occupying’ ‘your covered auto’.

“3. Any person for damages that person is entitled to recover because of ‘bodily injury’ to which this coverage applies sustained by a person described in 1. or 2. above.

“ * * *

“EXCLUSIONS

“A. We do not provide Uninsured Motorists Coverage for ‘bodily injury’ sustained by any ‘insured’:

“1. While ‘occupying’, or when struck by, any motor vehicle owned by that ‘insured’ which is not insured for this coverage.”

The 2002 Rhode Island endorsement replaced “Part C” of the NLC policy and, specific to the exclusion at issue, replaced what originally read as:

“A. We do not provide Uninsured Motorists Coverage for ‘bodily injury’ sustained:

“1. By an ‘insured’ while ‘occupying’, or when struck by, any motor vehicle owned by that ‘insured’ which is not insured for this coverage under this policy.”

To support their opposition, defendants relied on the absence of the words “under this policy” in the 2002 Rhode Island endorsement version of the “owned but not insured” exclusion and argued that the phrase “this coverage,” without the qualification of “under this policy,” rendered the exclusion “improperly drafted and ambiguous.” The defendants asserted that this language lacked “clarity and specificity,” in that the exclusion could be read to apply to motor vehicles owned but not insured under the NLC policy or to vehicles owned but not insured under UM coverage in general. Urging an interpretation of the exclusion in the latter form based on this alleged ambiguity, defendants contended that any claims arising from Mr. Fontaine's injuries indeed were covered by the NLC policy because Mr. Fontaine had UM coverage for his motorcycle—the Foremost policy.

On July 21, 2009, a Superior Court justice heard arguments on NLC's motion for summary judgment. At that time, the hearing justice reserved ruling on the motion to review the policy language at issue. On September 22, 2009, the hearing justice issued a bench decision on the matter, deeming “[t]he policy language [as] clear and unambiguous” in view of the “context” and “surrounding policy framework,” and noting that “[r]espectfully, * * * the defendant[s] * * * work[ed] hard to create an ambiguity where there [wa]s none.” The hearing justice also concluded that the exclusion did not contravene public policy, particularly in light of precedential authority from this Court dictating that “the coverage follows the vehicle and not the individual.” Based on these determinations, the hearing justice granted NLC's motion for summary judgment.

As raised on appeal and as discussed infra, the hearing justice, in her decision, quoted language of the “owned but not insured” exclusion residing in the original NLC policy, and not the exclusion specified in the 2002 Rhode Island endorsement.

Final judgment was entered in favor of NLC on September 28, 2009. The defendants filed a notice of appeal on that same date.⁵ On appeal, defendants challenge the hearing justice's determination that the exclusionary language upon which NLC based its disclaimer of coverage is clear and unambiguous.

IIStandard of Review

We review de novo a hearing justice's decision granting summary judgment. Nunes v. Meadowbrook Development Co., 24 A.3d 539, 542 (R.I.2011) (citing Papudesu v. Medical Malpractice Joint Underwriting Association of Rhode Island, 18 A.3d 495, 497 (R.I.2011)). “In such a review, this Court applies the same standards as the motion justice, and we will affirm summary judgment ‘if, when viewing the evidence in the light most favorable to the nonmoving party, there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.’ ” Henderson v. Nationwide Insurance Co., 35 A.3d 902, 905 (R.I.2012) (quoting Trust of McManus v. McManus, 18 A.3d 550, 552 (R.I.2011)). “The party opposing summary judgment bears the burden of proving, by competent evidence, the existence of facts in dispute.” Higgins v. Rhode Island Hospital, 35 A.3d 919, 922 (R.I.2012) (quoting McManus, 18 A.3d at 552). Here, however, the material facts of this case are undisputed, and the issue before us is one of contract interpretation. This Court employs a de novo review of such questions of law. See Irene Realty Corp....