Progressive N. Ins. Co. v. Concord Gen. Mut. Ins. Co.

Decision Date10 January 2005
Docket NumberNo. 2004–050.,2004–050.
Citation864 A.2d 368,151 N.H. 649
CourtNew Hampshire Supreme Court
Parties PROGRESSIVE NORTHERN INSURANCE COMPANY v. CONCORD GENERAL MUTUAL INSURANCE COMPANY and another.

Wadleigh, Starr & Peters, P.L.L.C., of Manchester (John A. Lassey, on the brief and orally), for the plaintiff.

Wiggin & Nourie, P.A., of Manchester (Gordon A. Rehnborg, Jr. and Mary Ann Dempsey, on the brief, and Mr. Rehnborg, orally), for the defendant.

Jeremy Heath, pro se, filed no brief.

Christina Brown, pro se, filed no brief.

Lara J. Saffo, of Orford, for defendant Gary Collins, filed no brief.

BRODERICK, C.J.

The plaintiff, Progressive Northern Insurance Company (Progressive), appeals, and defendant Concord General Mutual Insurance Company (Concord General) cross-appeals, an order of the Superior Court (Burling , J.) partially granting their respective motions for summary judgment. The trial court concluded that an exclusion in the Concord General insurance policy eliminated liability coverage for an unlicensed driver of the insured vehicle, who was allegedly at fault for a motor vehicle accident, but that the New Hampshire Accidents and Financial Responsibility Act (hereinafter referred to as Financial Responsibility Act or law), RSA chapter 264, required Concord General to provide the unlicensed driver with insurance coverage up to the maximum statutory limits. See RSA 264:18, VI (2004). We affirm in part, vacate in part and remand.

The following facts are undisputed. In June 2002, Jeremy Heath was operating a car in Lebanon when he was involved in an accident with a motorcycle driven by Gary Collins. Heath did not have a valid driver's license at the time and was not the owner of the car. Heath's girlfriend, Christina Brown, was a passenger in the car and had given him permission to drive. While Brown was the primary operator of the vehicle, her step-father, John Chestnut, was its registered owner, and had instructed Brown not to let anyone else drive it. Concord General provided liability insurance for the car operated by Heath, with Chestnut as the named insured. The motorcycle was insured by Progressive.

In December 2002, Collins filed suit against both Heath and Brown, seeking damages for his injuries. Progressive then filed a petition for declaratory judgment, naming Concord General, Collins, Brown and Heath as respondents, and sought an order that Concord General was required to defend and indemnify Heath and Brown for the Collins lawsuit, and that it had no obligation to provide uninsured motorist coverage to Collins. In its answer, Concord General contended that because Heath did not hold a valid driver's license at the time of the accident, an exclusion under its policy precluded coverage for him.

Progressive moved for summary judgment on the bases that it owed no obligation to provide uninsured motorist coverage for the accident, that Concord General was obligated to defend and indemnify Heath and Brown, and that even if the Concord General policy excluded Heath from coverage, Concord General was required to provide coverage under the Financial Responsibility Act, RSA 264:18, VI. Concord General objected, and filed a cross-motion for summary judgment, seeking a ruling that it owed no duty to defend, indemnify or otherwise provide Heath with insurance coverage. The trial court partially granted both motions, ruling that an exclusion under the Concord General policy operated to bar liability coverage for Heath but that "Brown's implied consent ... [made] Heath eligible for limited coverage up to the maximum statutory limits provided under [the Financial Responsibility Act]." Both parties appealed.

We review de novo the trial court's application of the law to the facts in its summary judgment ruling. Iannelli v. Burger King Corp., 145 N.H. 190, 193, 761 A.2d 417 (2000). All evidence presented in the record, as well as any inferences reasonably drawn therefrom, must be considered in the light most favorable to the party opposing summary judgment. Id. 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. Id. at 193, 761 A.2d 417.

I

We first consider the exclusion at issue under the Concord General policy. It states: "We do not provide Liability Coverage for any ‘insured’ ... [u]sing a vehicle without a reasonable belief that that ‘insured’ is entitled to do so" (entitlement exclusion). The trial court determined that under this exclusion, Heath could not have had a reasonable belief that he was entitled to use the car, despite Brown's permission, because he knew he did not have a valid driver's license, and thus knew he lacked lawful authority to operate any motor vehicle upon a public way. We agree.

Progressive argues that the so-called entitlement exclusion is ambiguous because the term "entitled" is reasonably susceptible of more than one meaning, and thus the policy must be interpreted in favor of providing coverage. It urges us to follow the reasoning of the Georgia Supreme Court in Hurst v. Grange Mutual Casualty Co., 266 Ga. 712, 470 S.E.2d 659, 663 (1996), where a similar exclusion was interpreted to have at least three different meanings:

that the user must be authorized by law to drive in order to reasonably believe he is entitled to use a vehicle; that the user must have the consent of the owner or apparent owner in order to reasonably believe he is entitled to use the vehicle; or, that the user must have both consent and legal authorization in order to be entitled to use the vehicle.

Concord General contends, however, that no ambiguity exists because an unlicensed driver who knows he lacks a valid driver's license cannot as a matter of law reasonably believe he is entitled to use a motor vehicle upon a public way, regardless of consent given by the owner or apparent owner of the vehicle.

"The interpretation of insurance policy language is a question of law for this court to decide." Godbout v. Lloyd's Ins. Syndicates, 150 N.H. 103, 105, 834 A.2d 360 (2003). Insurers are free to contractually limit the extent of their liability through use of a policy exclusion, Curtis v. Guaranty Trust Life Ins. Co., 132 N.H. 337, 340, 566 A.2d 176 (1989), provided it violates no statutory provision, see O'Neill v. Long, 54 P.3d 109, 114 (Okla.2002). "Such language must be so clear, however, as to create no ambiguity that might affect the insured's reasonable expectations." Contoocook Valley Sch. Dist. v. Graphic Arts Mut. Ins. Co., 147 N.H. 392, 393, 788 A.2d 259 (2001). "In determining whether an ambiguity exists, we look to the claimed ambiguity, consider it in its appropriate context, and construe the words used according to their plain, ordinary, and popular definitions." Curtis , 132 N.H. at 342, 566 A.2d 176 (ellipsis omitted). Policy terms create an ambiguity when the parties may reasonably differ about the interpretation of the language. Contoocook Valley Sch. Dist. , 147 N.H. at 393–94, 788 A.2d 259. Ultimately, we interpret exclusion language to mean "what a reasonable person would construe it to mean." Curtis , 132 N.H. at 341, 566 A.2d 176. The insurer asserting an exclusion of coverage, Concord General in this case, bears the burden of proving that the exclusion applies. See id. at 340, 566 A.2d 176. Given these parameters, we examine the language of the contested entitlement exclusion in this case.

The Concord General policy excludes coverage for an insured who uses an insured vehicle without "a reasonable belief" that he is "entitled to do so." The term "reasonable belief" requires both that the driver have a subjective belief that he is "entitled" to use the car and that such belief is objectively sound. See Omaha Prop. & Cas. Ins. Co. v. Peterson, 865 S.W.2d 789, 790 (Mo.Ct.App.1993) ; General Accident v. Perry, 75 Md.App. 503, 541 A.2d 1340, 1350 (1988). The term "entitled" is not defined in the policy.

When disputed terms are not defined in the policy, we construe them objectively, in context, and in light of what a more than casual reading of the policy would reveal to an ordinarily intelligent insured. Weeks v. St. Paul Fire & Marine Ins. Co., 140 N.H. 641, 644, 673 A.2d 772 (1996). Dictionary definitions may be used in the interpretive process and " are of some value ... to the extent they inform us of the common understanding of terms." Hudson v. Farm Family Mut. Ins. Co., 142 N.H. 144, 147, 697 A.2d 501 (1997).

The term "entitle" commonly means, "to give a right or legal title to: qualify (one) for something: furnish with proper grounds for seeking or claiming something." Webster's Third New International Dictionary 758 (unabridged ed. 2002). Our laws governing motor vehicles prohibit any person from driving any motor vehicle upon the ways of this State without a valid driver's license. RSA 263:1 (2004). Our laws also prohibit any person from knowingly permitting "a motor vehicle owned or controlled by him to be driven by a person who is not properly licensed or otherwise entitled to drive." RSA 263:1–a (2004); see also RSA 263:14 (Supp. 2004) (provision concerning youth operator's license); RSA 263:25 (2004) (provision creating exception for persons learning to drive). Thus, in the context of operating a motor vehicle, consent of the owner or apparent owner of the vehicle, standing alone, is not sufficient for a person to reasonably believe he is entitled to drive a vehicle upon the public ways when that person knows he lacks a valid driver's license. See Huggins v. Bohman, 228 Mich.App. 84, 578 N.W.2d 326, 329 (1998).

We acknowledge that a split exists among the jurisdictions concerning whether entitlement exclusions are ambiguous, or otherwise operate to bar coverage, when the driver lacks a valid driver's license. Compare, e.g. , Farm and City Ins. Co. v. Gilmore, 539 N.W.2d 154, 157 (Iowa 1995) (entitlement exclusion...

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