Peerless Indem. Ins. Co. v. Brennan

• Decision Date: 20 July 2021
• Docket Number: Case No. 4:19-cv-00101-DN-PK
• Citation: Peerless Indem. Ins. Co. v. Brennan, Case No. 4:19-cv-00101-DN-PK (D. Utah Jul 20, 2021)
• Parties: PEERLESS INDEMNITY INSURANCE COMPANY, Plaintiff, v. CARLA L. BRENNAN, an individual, LESLEE B. HENSON, individually and as Legal Heir and Personal Representative of the Heirs of DAVID LEE HENSON, Defendants.
• Court: U.S. District Court — District of Utah

PEERLESS INDEMNITY INSURANCE COMPANY, Plaintiff, v. CARLA L. BRENNAN, an individual, LESLEE B. HENSON, individually and as Legal Heirand Personal Representative of the Heirs of DAVID LEE HENSON, Defendants.

Case No. 4:19-cv-00101-DN-PK

UNITED STATES DISTRICT COURT DISTRICT OF UTAH

July 20, 2021

MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

District Judge David Nuffer

Magistrate Judge Paul Kohler

This case arises out of a car accident involving Defendant Carla Brennan ("Brennan") and David and Leslee Henson (the "Accident"). David Henson was killed in the Accident, and Leslee Henson was injured. The automobile (the "Vehicle") that Brennan was driving at the time had been recently purchased from St. George Auto Gallery ("SGAG"), which is commercially insured by Peerless Indemnity Insurance Company ("Peerless"). In a state court action brought by Leslee Henson against Brennan and SGAG, the court ruled that Brennan, not SGAG, was the legal owner of the vehicle at the time of the accident.

Based on the state court judgment, Peerless filed this action for a declaratory judgment that it has no duty to defend Brennan in connection with the accident. Peerless now moves for summary judgment (the "Motion").¹ Leslee Henson filed a memorandum in opposition to theMotion,² and Peerless filed a memorandum in reply.³ The parties' memoranda have been reviewed and the arguments made therein have been considered. For the reasons stated below, the Motion will be GRANTED.

UNDISPUTED MATERIAL FACTS ............................................................................................ 2

DISCUSSION ................................................................................................................................. 5

Peerless has no coverage obligation under the Policy ....................................................... 6

Coverage is available only if SGAG was the owner of the Vehicle ....................... 6

Ownership of the Vehicle at the time of the Accident has been established .......... 7

Peerless has no duty to defend Brennan ........................................................................... 10

The alleged promise made by SGAG to Brennan about insurance does not obligate Peerless to provide coverage ................................................................................. 11

ORDER ......................................................................................................................................... 14

UNDISPUTED MATERIAL FACTS

1. On February 22, 2013, Brennan purchased the Vehicle from SGAG and thereafter took immediate possession of it.⁴

2. At the time Brennan purchased the Vehicle, SGAG maintained a commercial automobile insurance policy issued by Peerless (the "Policy").⁵

3. On March 3, 2013, Brennan was involved in a car accident that killed David Henson and severely injured Leslee Henson.⁶

4. On March 2, 2015, Leslee Henson and the estate of David Henson sued Brennan for negligence and wrongful death in the case captioned Henson v. Brennan, Case No.

150500101, Fifth Judicial Court, Washington County, State of Utah (the "Underlying Litigation").⁷

5. The Hensons also sued SGAG, Peerless's insured, in the Underlying Litigation, alleging that SGAG was the owner of the Vehicle at the time of the accident because SGAG had not formally transferred ownership of the Vehicle to Ms. Brennan. The Hensons, therefore, contended that SGAG was legally responsible for insuring the Vehicle.⁸

6. The Policy states that Peerless "will pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies... involving the ownership, maintenance or use of covered 'autos.'"⁹

7. The Policy further defines "insureds" to include "[a]nyone . . . using with [the insured's] permission a covered 'auto' [the insured] own[s], hire[s] or borrow[s]."¹⁰

8. Based on the Hensons' allegations that SGAG owned—and was therefore required to insure—the Vehicle at the time of the Accident, Peerless tendered a defense to Brennan subject to a complete reservation of its rights (the "ROR Letter").¹¹

9. The only allegation in the Complaint in the Underlying Litigation that implicated coverage under the Policy was the Hensons' allegation that SGAG owned the Vehicle.¹²

10. SGAG filed a motion for summary judgment in the Underlying Litigation in which it argued that it did not own the Vehicle at the time of the Accident because it sold the Vehicle to Brennan. Therefore, SGAG maintained it had no obligation to insure the Vehicle.¹³

11. On January 12, 2018, the state district court in the Underlying Litigation granted summary judgment in favor of SGAG, holding that SGAG "was not the 'owner' of the Vehicle...and there is therefore no legal basis to impose on it the requirement of maintaining liability insurance at the time of the collision."¹⁴

12. On July 26, 2018, the district court certified its summary judgment decision as final.¹⁵

13. On August 29, 2019, the Utah Court of Appeals affirmed the district court's ruling, holding that "Brennan was the legal owner [of the Vehicle] at the time of the very unfortunate accident and . . . SGAG did not have any duty to maintain liability insurance on the Vehicle after it was sold."¹⁶

15. Brennan testified under oath, in the Underlying Litigation that the salesperson from SGAG agreed to provide her with automobile insurance for a period of 30 days after the sale.¹⁷

16. Counsel for SGAG, Jonathon Hawkins, was present when Brennan testified under oath, and he asked Brennan regarding her claims.¹⁸

17. In SGAG's summary judgment motion in the underlying action, SGAG did not claim that Ms. Brennan was not extended auto insurance coverage, but only moved for summary judgment based on the ownership of the vehicle.¹⁹

DISCUSSION

Summary judgment is appropriate if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."²⁰ A factual dispute is genuine when "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way"²¹ or "if a reasonable jury could return a verdict for the nonmoving party."²² A fact is material if "it is essential to the proper disposition of [a] claim."²³ And in ruling on a motion for summary judgment, the factual record and all reasonable inferences drawn therefrom are viewed in a light most favorably to the nonmoving party.²⁴

The moving party "bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law."²⁵ The movant "need not negate the nonmovant's claim, but need only point out . . . that there is an absence of evidence to support the nonmoving party's case."²⁶ If the moving party carries this initial burden, the nonmoving party "may not rest upon mere allegations or denials of [the] pleading[s], but must set forth specific facts showing that there is a genuine issue for trial as tothose dispositive matters for which it carries the burden of proof."²⁷ "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient to defeat a properly supported motion for summary judgment."²⁸

Peerless has no coverage obligation under the Policy

Peerless is entitled to a declaration that no coverage for the Accident is available under the Policy because coverage only is available under the Policy if SGAG was the owner of the Vehicle at the time of the Accident, and it has been judicially established in state court that SGAG was not the owner of the Vehicle at the time of the Accident. And since the Hensons are precluded from challenging the state court's findings and conclusions regarding ownership of the Vehicle, the Hensons have no claim for coverage under the Policy.

Coverage is available only if SGAG was the owner of the Vehicle

"An insurance policy is merely a contract between the insured and the insurer."²⁹ Thus, "an insurance policy is governed by contract law and the interpretation of its unambiguous terms is a matter of law."³⁰

Under the plain language of the Policy, bodily injury damages are covered only when an "insured" becomes legally obligated to pay the damages.³¹ An "insured," as defined in the Policy, includes "[a]nyone [who is] using with [the insured's] permission a covered 'auto' [the insured] own[s], hire[s] or borrow[s]."³² Thus, for Brennan to qualify as an "insured" under thePolicy, SGAG was required to have "own[ed], hire[d] or borrow[ed]" the Vehicle at the time of the Accident. As detailed below, SGAG did not own, hire, or borrow the Vehicle at the time of the Accident.

Ownership of the Vehicle at the time of the Accident has been established

The district court in the Underlying Litigation determined that SGAG was not the owner of the Vehicle and that it had no obligation to maintain liability insurance on the Vehicle at the time of the Accident.³³ The Utah Court of Appeals summarily affirmed the district court's decision, again confirming that Brennan "was the legal owner" of the Vehicle, not SGAG.³⁴ Therefore, under both the district court and court of appeals' rulings, Brennan does not qualify as an "insured" under the Policy because SGAG did not own the Vehicle at the time of the Accident.

The Hensons are precluded from contesting ownership of the Vehicle

Because the state courts have definitively determined that Ms. Brennan, not SGAG, owned the Vehicle at the time of the Accident, the Hensons are estopped from challenging those decisions in this case. "[I]ssue preclusion, or collateral estoppel, . . . prevents parties or their privies from relitigating particular issues that have been contested and resolved."³⁵ "In effect, once a party has had his or her day in court and lost, he or she does not get a second chance to prevail on the same issues."³⁶ Courts apply a "four-part test" to determine the applicability of issue...