North Pacific Ins. Co. v. Gardner

Decision Date06 August 2012
Docket NumberCase No. 4:11-CV-00147-EJL
PartiesNORTH PACIFIC INSURANCE COMPANY, a Massachusetts Corporation, Plaintiff - Counterdefendant, v. RICHARD GARDNER, an individual, and DIXIE GARDNER, an individual, Defendants - Counterclaimants.
CourtU.S. District Court — District of Idaho

Pending before the Court in the above-entitled matter are Plaintiff's Motion for Summary Judgment and related Motion to Strike. (Dkt. 14, 24.) Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, these Motions shall be decided on the record before this Court without oral argument.


On April 7, 2011, the Plaintiff North Pacific Insurance Company ("North Pacific") filed a Complaint initiating this action for Declaratory Judgment against the Defendants Mr. Richard Gardner and Mrs. Dixie Gardner. (Dkt. 1.) North Pacific had issued to Mr. Gardners, d/b/a "Dick's Mobile Catering," a Business Auto Coverage Policy, Form LCA 4055 01-09 and LCA 4056 01-09, Policy No. C12 145273 (hereinafter the "Policy"). (Dkt. 1 at ¶ 4.) The Policy was for a period of one year effective July 3, 2009. (Dkt. 1 at 3.) The questions raised in this case concern the Gardner's request for insurance coverage from North Pacific for damages arising from a car accident occurring on July 2, 2010. (Dkt. 1 at 2.)

On that day at approximately 9:00 p.m., Mr. Gardner was driving the insured vehicle, a 1979 Chevrolet box van, covered by the Policy when the accident in question occurred. (Dkt. 1 at 3.) Just prior to the accident, Mr. Gardner has stated that he saw traffic behind him in his rear-view mirror and another vehicle approaching his van from a hill in front of him. Mrs. Gardner states that she saw a vehicle accelerate past their catering van on the left across a double yellow line. That vehicle then veered back into the right-hand lane in which the Gardner's catering van was traveling. Mr. and Mrs. Gardner both state they heard a loud bang and Mr. Gardner felt an impact right before their vehicle went off the road. Neither Mr. nor Mrs. Gardner have stated that they recall seeing the passing vehicle strike their catering van. (Dkt. 14-2 at ¶¶ 2, 3.) The Gardner's van left off the road and crashed into a parked tractor and hay rake causing damage to thevan and injuring both Mr. and Mrs. Gardner. (Dkt. 1 at ¶ 4.)

Following the accident, the Gardners made a claim under the Policy to recover damages suffered in the accident. Mr. and Mrs. Gardner allege the accident was the result of a hit-and-run driver and, therefore, covered under the uninsured/underinsured motorist provision of the Policy. North Pacific conducted interviews of both Mr. and Mrs. Gardner and investigated their claim for coverage. Based on its investigation, North Pacific determined there was no physical contact between another vehicle and the insured vehicle and denied coverage. North Pacific then filed the Complaint in this case seeking a declaratory judgment finding that the accident does not fall within the uninsured/underinsured motorist coverage of the Policy; specifically, that there is no uninsured/under insured coverage under the Policy unless there is a "hit-and-run" vehicle that made "physical contact" with the insureds' vehicle. (Dkt. 1 at ¶ 5.) In addition, North Pacific contends the Gardners did not comply with the Policy's other condition requiring them to promptly notifying the police of a hit-and-run and, on that basis, are also not covered by the Policy. (Dkt. 14-1 at ¶ 9-11.) Mr. and Mrs. Gardner counter that the Policy is ambiguous as to whether physical contact is required for coverage and that they satisfied the notification provision. (Dkt. 15.) The Gardners have also filed counterclaims for breach of contract and breach of good faith and fair dealing. (Dkt. 4.) North Pacific filed the pending Motion for Summary Judgment and Motion to Strike which the Court now takes up and finds as follows.

1. Motion for Summary Judgment
A. Standard of Review

Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 provides, in pertinent part, that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion." Fed. R. Civ. P. 56(a). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1).

The party moving for summary judgment has the initial burden of showing that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, 477 U.S. 242, 247-48 (1986). Once the moving party has met this initial burden, the nonmoving party has the subsequent burden of presenting evidence to show that a genuine issue of fact remains. The party opposing the motion for summary judgment may not rest upon the mere allegations or denials of herpleading, but must set forth specific facts showing that there is a genuine issue for trial. Id. at 248. If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial" then summary judgment is proper as "there can be no 'genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)1

Moreover, under Rule 56, it is clear that an issue, in order to preclude entry of summary judgment, must be both "material" and "genuine." An issue is "material" if it affects the outcome of the litigation. An issue, before it may be considered "genuine," must be established by "sufficient evidence supporting the claimed factual dispute . . . to require a jury or judge to resolve the parties' differing versions of the truth at trial." Hahn v. Sargent, 523 F.3d 461, 464 (1st Cir. 1975) (quoting First Nat'l Bank v. Cities Serv. Co. Inc., 391 U.S. 253, 289 (1968)). The Ninth Circuit cases are in accord. See, e.g., British Motor Car Distrib. V. San Francisco Automotive Indus. Welfare Fund, 883 F.2d 371 (9th Cir. 1989).

According to the Ninth Circuit, in order to withstand a motion for summary judgment, a party

(1) must make a showing sufficient to establish a genuine issue of fact with respect to any element for which it bears the burden of proof; (2) must show that there is an issue that may reasonably be resolved in favor of either party; and (3) must come forward with more persuasive evidence than would otherwise be necessary when the factual context makes the non-moving party's claim implausible.

Id. at 374 (citation omitted). Of course, when applying the above standard, the court must view all of the evidence in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255; Hughes v. United States, 953 F.2d 531, 541 (9th Cir. 1992).

B. Hit-and-Run Provision

The language in the Policy concerning a hit-and-run accident states:

'"Uninsured motor vehicle' means a land motor vehicle or 'trailer': ...
c. That is a hit-and-run vehicle and neither the driver nor owner can be identified. The vehicle must hit an 'insured,' a covered 'auto' or a vehicle an 'insured' is 'occupying."'

(Dkt. 1 at Ex. 1; Dkt. 14-2 at ¶¶ 3-5.) It is not disputed that the Gardner's catering van and Mr. and Mrs. Gardner are all "insured" under the definitions in the Policy. (Dkt. 1 at ¶ 3.)2 It is also undisputed that the Policy covers damages caused by uninsured motorists; specifically, hit-and-run vehicles. What is at issue in this case are the specific requirements for obtaining uninsured/underinsured coverage in a hit-and-run accident.

North Pacific contends the Policy is clear based on the use of the word "hit" that "physical contact" is required for uninsured motorist coverage. The Gardners argue that the Policy's language is ambiguous because the word "hit" does not seem to be defined in the policy.

When interpreting insurance policies, Idaho courts apply "the general rules of contract law subject to certain special canons of construction." Arreguin v. Farmers Ins. Co. of Idaho, 180 P.3d 498, 500 (Idaho 2008) (citing Clark v. Prudential Prop. & Cas.Ins. Co., 66 P.3d 242, 244 (Idaho 2003)). "The general rule is that, because insurance contracts are adhesion contracts, typically not subject to negotiation between the parties, any ambiguity that exists in the contract 'must be construed most strongly against the insurer.'" Id. (quoting Farmers Ins. Co. of Idaho v. Talbot, 987 P.2d 1043, 1047 (Idaho 1999) (citation omitted). Where a contract's language is clear and unambiguous, its interpretation and legal effect are questions of law. Bondy v. Levy, 829 P.2d 1342 (Idaho 1992). If, however, the language in the insurance contract is "reasonably subject to differing interpretations," then it is ambiguous and will be construed strongly against the insurer. See Clark, 66 P.3d at 244; see also Mutual of Enumclaw Ins. Co. v. Roberts, 912 P.2d 119, 122 (Idaho 1996). It is up to the...

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