Newell v. Markel Corp.

• Decision Date: 28 June 2016
• Docket Number: No. 2015–0477,2015–0477
• Citation: 145 A.3d 127,169 N.H. 193
• Parties: Michael NEWELL v. MARKEL CORPORATION & a.
• Court: New Hampshire Supreme Court

169 N.H. 193

145 A.3d 127

Michael NEWELL

v.MARKEL CORPORATION & a.

No. 2015–0477

Supreme Court of New Hampshire.

Argued: January 13, 2016

Opinion Issued: June 28, 2016

Matthew J. Lahey, P.A., of Laconia (Matthew J. Lahey on the brief and orally), for the plaintiff.

Morrison Mahoney LLP, of Boston, Massachusetts (Kevin Truland on the brief and orally), for the defendants.

HICKS, J.

The defendants, Markel Corporation, Markel Services, Inc. (Markel Services), and Essex Insurance Company (Essex), appeal an order of the Superior Court (O'Neill, J.) denying their motions for summary judgment and granting summary judgment to the plaintiff, Michael Newell, in this insurance coverage action. We affirm in part, reverse in part, and remand.

The following facts were recited in the trial court's order or appear in the record before us. On or about June 12, 2010, Newell was allegedly injured in a slip and fall accident at a property owned by Brames, Inc. (Brames) in Laconia. Brames was insured under an Amusement Park General Liability Policy (the Policy) issued by Essex. Essex is a subsidiary of Markel Corporation and Markel Services is Markel Corporation's claims handling branch.

Newell's alleged injury occurred when he slipped on a wet bathroom floor on Brames's property during Motorcycle Week 2010. The floor had recently been washed by Ivy Banks (Banks) of I & L Cleaning Services. Banks had been cleaning the bathrooms at the Brames's property during the annual Motorcycle Week for several years up to and including 2010 under an arrangement that he had entered into with Brames's co-owner and treasurer, Robert Ames. Under this arrangement, Banks maintained the bathrooms on the Brames property during Motorcycle Week in exchange for tips he received from patrons using the bathrooms. Banks estimated that he would receive between $75 and $100 in tips per day during Motorcycle Week, and he neither sought nor received any other payment for his services. Banks offered similar services at other motorcycle shows and events throughout the country.

Newell filed two personal injury actions arising from his slip and fall. In the first (the Brames action), he sued Brames for negligence in leaving the floor wet without a warning. That action concluded with an out-of-court settlement.

In the second lawsuit (the Banks action), Newell sued Banks. The defendants received notice of the Banks action, but declined to defend Banks or intervene. Banks, although properly served, filed neither an appearance nor an answer and was defaulted. A default judgment was entered against Banks for $300,000, the full amount of damages sought by Newell.

Newell then brought the instant action to recover the $300,000 default judgment from the defendants. In his complaint, Newell alleged that "Banks was an insured under a liability insurance policy issued by Markel/Essex to Brames, and that Markel/Essex breached the insurance contract by failing to defend and indemnify Banks after receiving notice of the suit." Newell alleged that he was "a third party beneficiary under the contract."

In ruling on the parties' cross-motions for summary judgment, the court noted that the only issue before it was whether Banks was an insured under Brames's policy with Essex at the time of Newell's slip and fall. The court concluded: "[U]nder a reasonable interpretation of the relevant language in the Essex policy, Mr. Banks qualified as a ‘volunteer worker.’ Because more than one reasonable interpretation is possible, and one interpretation provides coverage, the Court construes this language against the defendants and in favor of the plaintiff." (Quotation, citation, and brackets omitted.)

On appeal, the defendants argue that the trial court erred in determining that the language of the Policy is ambiguous and that Banks was a "volunteer worker" under the Policy. In addition, Markel Corporation and Markel Services claim that they are entitled to summary judgment because "they did not issue the policy in dispute and the plaintiff did not object to their motion for summary judgment." Newell counters that Banks is a "volunteer worker" as defined under the Policy and that Essex is barred from denying the same under the doctrine of judicial estoppel.

In this appeal from the disposition of cross-motions for summary judgment, we employ the following standard of review:

We consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law. If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment. We review the trial court's application of the law to the facts de novo.

Conant v. O'Meara , 167 N.H. 644, 648, 117 A.3d 692 (2015) (quotations, citations, and brackets omitted).

We first address the contention that summary judgment should have been granted to Markel Corporation and Markel Services. Those entities moved for summary judgment asserting that because Newell's action was for breach of contract, and neither Markel Corporation nor Markel Services had a contractual relationship with Brames, the complaint failed to state a claim against them. Newell specifically noted in his own motion for summary judgment and objection to the summary judgment motion of defendant Essex that he did not object to Markel Corporation and Markel Services's motion. Newell's counsel at oral argument confirmed that this case concerns only Essex. Accordingly, we reverse the trial court's summary judgment rulings with respect to Markel Corporation and Markel Services and remand for the entry of summary judgment in favor of those entities. The remainder of this opinion concerns only defendant Essex.

We now turn to the issue of coverage under the Policy. "The interpretation of insurance policy language is a question of law for this court to decide." Great Am. Ins. Co. v. Christy, 164 N.H. 196, 200, 53 A.3d 538 (2012).

"We construe the language of an insurance policy as would a reasonable person in the position of the insured based upon a more than casual reading of the policy as a whole." Colony Ins. Co. v. Dover Indoor Climbing Gym, 158 N.H. 628, 630, 974 A.2d 399 (2009).

"Policy terms are construed objectively, and where the terms of a policy are clear and unambiguous, we accord the language its natural and ordinary meaning." Id. "If more than one reasonable interpretation is possible, and an interpretation provides coverage, the policy contains an ambiguity and will be construed against the insurer." Great Am. Dining v. Philadelphia Indem. Ins. Co., 164 N.H. 612, 616, 62 A.3d 843 (2013) (quotation omitted).

The issue before us is whether Banks is an insured under the Policy as a volunteer worker. The Policy provides:

And your Volunteer Workers are Insureds only for activities or work they conduct or perform:

• at your direction; and

• within the scope of their duties for you.

(Emphasis omitted.) The Policy defines the term volunteer worker as follows:

Volunteer Worker means any person who:

• isn't an employee or a leased temporary worker;

• donates his or her work; and

• isn't paid a fee, salary or other compensation for that work.

(Emphasis omitted.)

Essex argues that "Banks fails to qualify as a ‘volunteer worker’ " for three reasons: (1) he "did not donate his services"; (2) he "did receive compensation in the form of tips"; and (3) he "did not act at Brames's direction." We will address each in turn, beginning with the contention that Banks "did not ‘donate’ his work under the common meaning of that term." Essex asserts that "[t]he common meaning of the term ‘donate’ is to present a gift or give property or money without consideration," and argues that "Banks did not donate or bestow a gift of his services to Brames" because "Banks benefited from his use of" Brames's property.

Newell counters that the term "donates" cannot mean "to give without compensation" when "the definition already includes ‘isn't paid ... other compensation’ in the conjunctive." As Newell points out, "the usual rule[ ] of construction [is] that effect is to be given to all the clauses of a contract if it reasonably may be." Shelby & c. Co. v. Lynch, 89 N.H. 510, 512, 2 A.2d 307 (1938).

Construing a similar definition of "volunteer worker," the court in North Carolina Farm Bureau Mutual Insurance v. Burns, 238 N.C.App. 72, 767 S.E.2d 109 (2014), concluded that "the term ‘donate’ must encompass more than working without receiving payment. Otherwise, the policy language that the work must be without ‘fee, salary or other compensation’ would be superfluous and the term ‘donate’ would have no effect." N. Carolina Farm Bureau Mut. Ins., 767 S.E.2d at 112. The court then reasoned:

Having determined that the term "donate" as used in the policy must mean more than "without compensation," and in order to give effect to every provision of the policy definitions, we consider the context in which the term is used: defining "volunteer worker." We note that the common everyday meaning of the word "volunteer" is characterized by not only lack of compensation, but also choice and free will. Therefore, considering its common definitions, its use in the context of working as a volunteer, and the policy language as a whole, we conclude that to "donate" one's work under the terms of the policy at issue necessitates the presence of choice and free will.

Id . at 112–13 (footnote omitted). Relying upon North Carolina Farm Bureau Mutual Insurance , Newell contends that "[a] reasonable interpretation of ‘donates’ in the context of this policy is to act by choice, free will and voluntarily, which Banks did."

We conclude that the foregoing arguments demonstrate a "reasonable disagreement between [the] contracting parties lead[ing] to at least two interpretations of the [Policy's] langu...