Premier Insurance Co. Of Massachusetts v. Empire Fire & Marine Insurance Co.
| Decision Date | 14 January 2002 |
| Docket Number | 2000484 |
| Parties | Premier Insurance Company of Massachusetts v. Empire Fire and Marine Insurance Company |
| Court | Massachusetts Superior Court |
Mass L. Rptr. Cite: 14 Mass. L. Rptr. 97
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): KOTTMYER
Plaintiff Premier Insurance Company of Massachusetts ("Premier"), brings this action against defendant, Empire Fire and Marine Insurance Company ("Empire"), alleging unjust enrichment based upon Empire's failure to pay a claim resulting from a collision involving a rental vehicle insured by Empire. Premier has filed a motion for summary judgment on the question of liability. For the following reasons, plaintiff's motion for summary judgment is ALLOWED.
The record, viewed in the light most favorable to the defendant, is as follows. This action arose out of a motor vehicle accident that occurred on October 10, 1996. Premier insured a vehicle owned by Maria Lugo ("Lugo"). While operating a rental vehicle owned by Policy Rent-A-Car and insured by Empire, Lugo struck a vehicle driven by Robert Turcotte ("Turcotte"). Turcotte sustained injuries as a result of the collision. It is undisputed that Lugo was at fault in the accident.
Turcotte's insurer, Travelers Insurance Company ("Travelers"), demanded payment from both Premier and Empire for damage to Turcotte's vehicle, as well as for bodily injuries. Lugo's personal auto insurance policy from Premier contains an excess clause relating to compulsory bodily injury insurance, which provides:
If someone covered under this part is using an auto he or she does not own at the time of the accident, the owner's auto insurance must pay its limits before we pay. Then, we will pay, up to the limits shown on your Coverage selection Page for any damages not covered by that insurance.
Premier paid for the excess portion of the damage to Turcotte's vehicle and for bodily injuries Turcotte sustained as a result of the collision.
On March 28, 1997, in response to a conversation with Premier/Traveler's claims representative,1 Empire denied coverage based on an escape clause in Policy Rent-A-Car's insurance policy with Empire, entitled "Contingent Insurance for Rentees."2 That clause provides: "This policy does not insure the 'rentee' or any driver designated in a rental agreement if there is any other applicable automobile liability insurance or self-insurance, whether primary, excess, or contingent, with limits of liability or retained limits at least equal to the limits provided by this policy."3
On May 21, 1997, Vigars made a demand on Empire for payment of the $5,000 mandatory coverage for damage to Turcotte's vehicle. At that point, Travelers had paid out $13,073.37 for the loss of which $8,073.37 had been paid by Lugo's policy with Premier. On May 29, 1997, Empire responded citing United States Fidelity & Guaranty Co. v. Hanover Ins. Co., 417 Mass. 651 (1994), for the proposition that because its policy contained a "super escape" clause, "the only applicable policy for this loss" is Lugo's policy with Premier. On December 8, 1997, Travelers again demanded payment of the $5,000 mandatory property coverage and an additional $2525, it had paid in Personal Injury Protection (PIP) payments to Turcotte. Travelers threatened arbitration and Empire paid the $5,000 property damage limit and the PIP payment. In July of 1998, Premier settled Turcotte's claim for bodily injuries. On December 4, 1998, Premier wrote to Empire noting that it had received payment up to the policy limit for damage to Turcotte's vehicle and reimbursement of the PIP for Turcotte's medical bills. It requested payment of $8,500, the amount it paid to settled Turcotte's bodily injury claim. When Empire refused to pay, Premier filed this lawsuit.
I. Summary Judgment
This court grants summary judgment where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. See Cassesso v. Comm'r of Correction, 390 Mass. 419 422 (1983); Mass.R.Civ.P. 56(c). The moving party bears the burden of affirmatively demonstrating that there is no genuine issue of material fact on every relevant issue. See Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). Once the party moving for summary judgment has shown that no genuine issue of material fact exists, the burden switches to the opposing party to respond and allege specific facts showing the existence of a genuine triable issue. See John B. Deary, Inc. v. Crane, 4 Mass.App.Ct. 719, 722 (1976).
The dispute in this case involves an alleged conflict between an excess clause in Lugo's insurance policy and a so-called "contingent escape" or "escape excess clause" in Policy-Rent-A-Car's insurance policy. The excess clause in Lugo's policy provides that if other insurance is available to the insured, the policy containing the excess clause will pay no benefits until such other insurance is exhausted. See United States Fidelity & Guaranty Co. v. Hanover Ins. Co., 417 Mass. 651, 654 n.2 (1994); see also Mission Ins. Co. v. United States Fire Ins. Co., 401 Mass. 492, 495 n.3 (1988). It thus denies coverage to the insured to the extent other insurance is available. See U.S. Fidelity & Guaranty Co., 417 Mass. at 653-54 n.2. An escape clause denies coverage where other insurance is available and a super escape clause denies coverage when other insurance, either primary or excess, is available. Id. at 655, 656. A composite escape-excess clause is not a standard clause and may take many different forms. See 8A J.A. Appleman, Insurance Law and Practice, 4906, at 349-51 and 4910 at 457 and n.9, 470-73 (rev.ed. 1981). For example, the "Contingent Insurance For Rentees" clause at issue in this case permits escape if the loss is less than the combined limits of all other available insurance, primary and/or excess, and provides excess coverage to the extent that the limits of the policy exceed the combined limits of all other available insurance.4
Premier argues that the Contingent Insurance for Renters clause is a super escape clause and is void. Empire takes the position that it is not a super escape clause because it provides coverage to the extent that the loss exceeds the combined limits of all other available policies, primary or excess. But, in any case in which the driver has compulsory insurance, the effect of the language is the same as a super escape clause.5 The policy excludes "rentees" from the definition of "insured" where there is other applicable insurance, primary or excess. It provides only mandatory coverage and no coverage unless its limits exceed the limits of all other insurance. Because the Empire policy provides only compulsory coverage, there will never be coverage under that policy where both the owner of the vehicle and the driver are insured in Massachusetts. As pointed out by Empire's Claims Specialist, Tonya Truitt, in her May 29, 1997 letter denying coverage: "As our policy only provides the financial responsibility limits required by Massachusetts law, I feel certain Ms. Lugo's policy limits with the Premier are at least equal to ours" and there is therefore no coverage under Empire's policy.
Relying on U.S. Fidelity & Guaranty Co., supra, Empire argues that super escape clauses are enforceable in Massachusetts. In that case, a prospective automobile buyer who was test driving a dealership vehicle hit a telephone pole and injured a passenger. The dealership had a garage policy that contained a super escape clause providing coverage only if "no other valid and collectible automobile liability insurance, either primary or excess,... is available." Id. The driver of the dealership vehicle at the time of the accident had a personal automobile insurance policy which contained an excess clause. The Supreme Judicial Court held that the super escape clause in the dealership's garage policy relieved the insurer of the dealership of liability. Id. at 656-57. In giving effect to the super escape clause, the Court, citing 8A J.A. Appleman, Insurance Law and Practice, supra 4910, at 458, emphasized that the clause did not violate public policy because a garage makes no representations concerning insurance and customers use the vehicles for a brief period of time, usually as "loaners" while their own vehicles are repaired or to test drive. U.S. Fidelity & Guaranty Co., 417 Mass. at 660 n.7.
The Supreme Judicial Court's holding in U.S. Guaranty & Fidelity Co. is not controlling. In contrast to the present case which involves compulsory bodily injury coverage, the "particular coverages" at issue in that case were "optional provisions whose content is not prescribed by statute." U.S. Guaranty & Fidelity Co., supra, 417 Mass. at 657 (citation omitted).6 Like all owners of registered motor vehicles, car rental agencies are required by statute, G.L.c. 90, 1A, 34A, to provide compulsory bodily injury insurance on rental vehicles they own. The statute expressly requires the policy to provide coverage where, as here, "the vehicle is being operated by another person with [the insured's] express or implied consent." G.L.c. 90, 34A.
If enforced, the clause in question denies coverage in every case in which the authorized driver has compulsory liability coverage. Although registered in Massachusetts, the vehicle is not covered unless the authorized driver is not insured to the mandatory limit under any motor vehicle liability policy. But the statute imposes the duty to carry compulsory bodily injury liability insurance "with respect to such motor vehicle" as a condition of registration of the vehicle. G.L.c. 90, 1A, 34A; c. 175, 113A. See O'Brien v....
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