Progressive Ins. Co. v. Wasoka

• Decision Date: 08 July 2005
• Docket Number: No. 03-451.,03-451.
• Parties: PROGRESSIVE INSURANCE COMPANY v. Gregory WASOKA and Robert Cerdeira.
• Court: Vermont Supreme Court

885 A.2d 1166

PROGRESSIVE INSURANCE COMPANY v. Gregory WASOKA and Robert Cerdeira.

No. 03-451.

Supreme Court of Vermont.

July 8, 2005.

Motion for Reargument Denied August 17, 2005.

Laurie LeClair and Susan J. Flynn of Clark, Long, Werner & Flynn, P.C., Burlington, for Plaintiff-Appellant.

Mark E. Furlan of Abatiell Associates, P.C., Rutland, for Defendant-Appellee Wasoka.

John E. Brady and Brendan P. Donahue of Brady & Callahan, P.C., Springfield, for Defendant-Appellee Cerdeira.

Present: AMESTOY, C.J.,¹ DOOLEY, JOHNSON, SKOGLUND and REIBER, JJ.

JOHNSON, J.

¶ 1. Progressive Insurance Company appeals from a denial of its motion for summary judgment against its insured, Gregory Wasoka, for fraud in the inducement of an automobile insurance policy. Progressive claims on appeal that the trial court misunderstood its motion for summary judgment and erroneously dismissed the entire case when Progressive had filed its motion based on only one of its claims. Progressive contends the trial court also erred by treating Wasoka's response as a cross-motion for summary judgment, which it claims raised new matters, without giving Progressive thirty days to respond. We affirm because we agree the motion asked the court to void the policy for fraud in the inducement as evidenced by Wasoka's noncooperation, defendant's response was directly related to fraud in the inducement, and the court's decision nineteen days later indicated that the undisputed facts did not show that Progressive was entitled to judgment on this issue. As a result, no further issues were left and the complaint was dismissed. Moreover, if there was prejudice as a result of the procedure the trial court followed, Progressive failed to come forward with any evidence of it, other than the unsubstantiated claims of counsel, despite filing two post-judgment motions.

¶ 2. The agreed facts are as follows. In July 2000, Gregory Wasoka purchased a Vermont automobile insurance policy from agent Steve Shortle of C.G. McCullough Insurance Agency, Inc., of Killington, Vermont. In May 2001, Wasoka was involved in an automobile/bike accident in Connecticut with Robert Cerdeira. After informing Progressive of the accident, Wasoka agreed to be interviewed by Progressive agents on May 10, 2001 and May 22, 2001 respectively as part of the investigation. Progressive made no request that either of these first two interviews be given under oath. In a letter dated August 15, 2001, Progressive requested that Wasoka submit to a third interview, this time under oath. Wasoka received the letter but did not reply. In August 2002, Wasoka submitted to deposition by Progressive's counsel.

¶ 3. In the course of investigating the accident, Progressive learned the following uncontested facts that it submitted for consideration with its motion: (1) at the time of the accident, Wasoka was a student at Naugatuck Valley Community College in Connecticut, (2) at the time of both of the May 2001 investigatory interviews Wasoka was staying with his parents in Connecticut, (3) at the time of the second interview Wasoka was employed by Gary Industries in Connecticut, and (4) while Wasoka received limited mail at his brother's residence in Killington, Vermont, including his Progressive insurance bills, he received mail at his parent's house in Connecticut.²

¶ 4. Additionally, the following facts were submitted by Wasoka in the course of the investigation and deposition. During his second May interview, Wasoka stated he worked at the Killington Ski Resort in the fall and winter of 2000 while staying at his brother's condo in Killington. In August 2002 Wasoka testified in deposition that he lived in four different places at the time he purchased his insurance policy including his brother's residence in Killington, Vermont, his grandmother's cottage on Lake Bomoseen in Vermont, a friend's house in Winchester, New Hampshire, and his parent's house in Connecticut. Wasoka also testified in deposition that all that was required to obtain his Vermont insurance policy was his Vermont driver's license and a mailing address. He testified that he had known agent Shortle all his life as a family friend and that Shortle was aware, from conversations with Wasoka's father, that Wasoka traveled between many different places when he purchased the policy.

¶ 5. Progressive filed suit against Wasoka and Cerdeira in January 2002 seeking a declaratory judgment that Wasoka's insurance contract "is void ab initio due to [Wasoka's] fraudulent representations, and that there is no coverage under its policy for any claims arising out of the incident with Mr. Cerdeira due to Mr. Wasoka's failure to cooperate with Progressive and misrepresentations made in the course of presenting his claim." The contract contains the following cooperation clause: "[a] person claiming coverage under this policy must ... allow us to take signed or recorded statements, including statements under oath, and answer all reasonable questions we may ask, when and as often as we may reasonably require."

¶ 6. Progressive filed a "Motion for Summary Judgment" on January 28, 2003, claiming that "[d]efendant deliberately breached a policy provision that would have enabled his insurer to investigate the issue of fraud in the inducement of the policy, a legal issue that would void coverage.... By this motion, Plaintiff requests judgment from the court that Defendant's breach of contract voids the insurance contract ab initio." The motion goes on to say, some pages later, that Wasoka's actions, refusal to submit to an examination under oath and his refusal to sign a bilateral reservation of rights/nonwaiver agreement, must be viewed as "admissions of fraud in the inducement of the policy, voiding coverage ab initio." At all times, the motion asked the trial court to find that the policy was void for fraudulent inducement as evidenced by Wasoka's alleged noncooperation.

¶ 7. By the time Progressive filed the motion for summary judgment, it had deposed Wasoka under oath, exactly the result it was seeking prior to filing the declaratory judgment action. Not surprisingly, Wasoka used this deposition in filing his "Opposition to Summary Judgment" to show that, regardless of the circumstantial evidence that Progressive sought to rely on for voiding the policy, he had not, in fact, committed fraud in the inducement of the insurance policy. Wasoka devoted five full pages to why Progressive had failed to present sufficient evidence of residence fraud. He argued that he had not failed to cooperate under the terms of the contract, that Progressive had failed to produce evidence of prejudice resulting from his alleged noncooperation as is required under Smith v. Nationwide Mutual Insurance Co., 2003 VT 61, ¶ 10, 175 Vt. 355, 830 A.2d 108,³ and that he had an absolute right to refuse an examination under oath where the purpose of the examination was to further Progressive's fraud claim against Wasoka. Wasoka asked for summary judgment in his favor pursuant to V.R.C.P. 56(c)(3) ¶ 8. Progressive did not respond to Wasoka's memorandum. On August 4, 2003, the trial court denied summary judgment for Progressive and instead granted judgment in favor of Wasoka. The trial court analyzed the issues by referencing the case that Progressive's own motion identified as the "law applicable to the present matter," Fireman's Fund Insurance Co. v. Knutsen, 132 Vt. 383, 324 A.2d 223 (1974), and 8 V.S.A. § 4205 cited therein. Pl.'s Mot. at 6. It concluded, based on Fireman's Fund, that under 8 V.S.A. § 4205 an automobile liability policy may not be voided for false statements in the application unless the insurer shows that the statements were made with actual intent to deceive or that the false statements materially affected the insurer's risk. 132 Vt. at 387-88,324 A.2d at 227. Because Progressive had not produced evidence capable of satisfying those requirements, it was not entitled to summary judgment on its fraud in the inducement claim. Likewise, the trial court found that the policy could not be void, on the same theory, for the refusal to cooperate because Progressive had not met the prejudice standard as reaffirmed in our recent decision in Nationwide. See 2003 VT 61, ¶ 10, 175 Vt. 355,830 A.2d 108 (affirming summary judgment against insurer on noncooperation claim because insurer failed to "adduce any evidence that its insured's breach placed the insurer in a substantially less favorable position than it would have been had the insured fully cooperated").

¶ 9. Progressive subsequently filed a "Motion to Vacate the Court's Opinion and Order of August 4, 2003" in which it argued that the court had committed a "procedural impossib[ility]" in ruling against Progressive on the issue of fraud, an issue it claimed it did not raise.⁴ No additional documents were attached to this motion. The trial court denied the motion in September 2003. Towards the end of September 2003, nearly two months after the summary judgment order, Progressive filed a "Motion for Reconsideration or Clarification and Submission of Counsel's Affidavit Regarding the Subjective Intent of Counsel in Filing Summary Judgment Motion." There, Progressive argued it was entitled to relief pursuant to V.R.C.P. 60(b)(1) as the attached affidavit of Progressive's counsel stated that it was not her subjective intent to raise the issue of residency fraud in her motion. The court also denied this motion on two grounds: (1) Progressive's summary judgment motion did not state it was seeking partial summary judgment on only one aspect of its claim for declaratory relief, and (2) the subjective intent of Progressive's counsel did not trump the objective language of the motion including the motion's closing sentences which read: "In the present matter, Defendant's failure to allow Progressive to investigate the fraud must be viewed as circumstantial evidence of fraud, as well as a clear breach of contract. Thus,...