United Statesa Cas. Ins. Co. v. Smith

• Decision Date: 12 September 2013
• Docket Number: Civil Action No. 1:10CV115.
• Citation: 971 F.Supp.2d 599
• Parties: USAA CASUALTY INSURANCE COMPANY, as subrogee of Arthur Ammermuller, Suzanne Cerabone, Jeanne Ammermuller, Erica Ammermuller, Allison Ammermuller, and Christopher Woood, Plaintiff, v. Paul Garrett SMITH, d/b/a P.H. One Trucking, P.H. One Trucking, David S. Gilb, John Doe Mechanic, and John Doe Brake Repair Shop, Inc., Defendants.
• Court: U.S. District Court — Northern District of West Virginia

971 F.Supp.2d 599

USAA CASUALTY INSURANCE COMPANY, as subrogee of Arthur Ammermuller, Suzanne Cerabone, Jeanne Ammermuller, Erica Ammermuller, Allison Ammermuller, and Christopher Woood, Plaintiff,

v.Paul Garrett SMITH, d/b/a P.H. One Trucking, P.H. One Trucking, David S. Gilb, John Doe Mechanic, and John Doe Brake Repair Shop, Inc., Defendants.

Civil Action No. 1:10CV115.

United States District Court, N.D. West Virginia.

Sept. 12, 2013.

Bradley K. Shafer, P. Joseph Craycraft, Swartz Campbell LLC, Wheeling, WV, for Plaintiff.

C. Michael Bee, Douglas A. Spencer, Hill, Peterson, Carper, Bee & Deitzler, PLLC, Charleston, WV, R. Gregory McDermott, McDermott & Bonenberger, PLLC, Wheeling, WV, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S RENEWED MOTION FOR SUMMARY JUDGMENT [DKT. NO. 71] AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DKT. NO. 74]

IRENE M. KEELEY, District Judge.

Pending before the Court are the parties' competing motions for summary judgment. (Dkt. Nos. 71, 74). The plaintiff, USAA Casualty Company (“USAA”), seeks a declaration that it has a legal right of subrogation against the defendants, Paul Garrett Smith (“Smith”), P.H. One Trucking (“P.H. Trucking”), David S. Gilb (“Gilb”), and Northland Insurance Company (“Northland”) (collectively, the “defendants”) for personal injury protection (“PIP”), wage loss, and property damage payments it made to its insureds. (Dkt. No. 71 at 1). Conversely, the defendants seek a declaration that USAA does not have a legal right to reimbursement for PIP payments made to its insureds. (Dkt. No. 74). For the reasons that follow, the Court GRANTS USAA's motion (dkt. no. 71) and DENIES the motion of the defendants (dkt. no. 74).

I.

This case arises from a vehicle collision that occurred in West Virginia, which injured New Jersey residents insured under motor vehicle liability policies that had been issued by USAA in New Jersey. At bottom, the case presents two questions. First, does the law of West Virginia or New Jersey apply to the subrogation dispute arising from the various insurance payments made in the wake of the collision? Second, if New Jersey law does apply, does N.J.S.A. § 39:6A–9.1 preclude subrogation of the carrier, USAA, to its insureds?

The facts giving rise to this dispute are not contested. See (Dkt. No. 72 at 1). On July 30, 2008, a tractor trailer operated by Gilb and owned by Smith drove into the rear of a 2003 BMW 325 on Interstate 68, near Morgantown, West Virginia. The BMW contained five occupants: Arthur Ammermuller (“Ammermuller”), driver; Suzanne Cerabone (“Cerabone”), owner of the vehicle and Ammermuller's wife; Erica and Allison Ammermuller, their daughters; and Christopher Wood (collectively, the “insureds”). (Dkt. No. 66 at 4). The collision injured the occupants and damaged the BMW. A USAA motor vehicle liability insurance policy, number 4436891, issued to Cerabone, covered the BMW (the “Cerabone policy”). Id. Erica and Allison Ammermuller were covered by a different USAA policy that was issued to Jeanne Ammermuller, number 4436891 (“the Ammermuller policy”). (Dkt. No. 72 at 2). Both USAA policies contained a standard clause subrogating USAA to the interests of its insureds. (Dkt. Nos. 72–1 at 55; 72–3 at 50).¹ All occupants of the BMW were residents of New Jersey, and, as already noted, USAA had issued both insurance policies in that state, as well.

Following the collision, Ammermuller, Cerabone, and Wood submitted claims to USAA for payment under the Cerabone policy. Likewise, Eric and Allison Ammermuller submitted claims for payment under the Ammermuller policy. USAA adjusted the claims and has, to date, made the following payments to its insureds stemming from the July 2008 collision: to Ammermuller, $47,788.03 in PIP payments; to Ammermuller and Cerabone, $17,113.46 in vehicle payments; to Ammermuller, $42,054.00 in personal property payments; to Erica Ammermuller, $66,055.21 in PIP payments; and to Allison Ammermuller, $3,781.48 in PIP payments. (Dkt. No. 72 at 3). USAA thus has paid $117, 320. 72 in PIP payments, and $136, 792. 18 in total payments.²Id.

In May, 2010, the insureds sued Gilb, Smith, P.H. Trucking and other defendants for personal injuries sustained in the July 2008 collision. See Complaint, Ammermuller et al v. Smith et al., No. 1:10CV93 (N.D.W.Va. June 21, 2010), ECF No. 7–2. On November 23, 2011, Northland,a Connecticut firm and the carrier for Gilb, Smith, and P.H. Trucking, settled the insureds' claims for $600,000. See (dkt. no. 72–8). That settlement resulted in a written agreement (the “2011 settlement agreement”) stating, in pertinent part:

It is also understood and agreed that RELEASORS' ³ insurer, USAA, has filed suit against the RELEASEES in a subrogation action to collect the personal property and PIP payments that it paid under its policy of insurance with RELEASORS. It is understood and agreed that there is no indemnification by RELEASORS to RELEASEES for that suit or claim. It is further understood and agreed that RELEASEES shall be solely liable for and shall satisfy any and all valid claims on PIP and other first party benefits asserted by USAA.

(Dkt. No. 72–8 at 6). Subsequently, on November 30, 2011, the Court dismissed the plaintiffs' negligence claims with prejudice. See Order, Ammermuller et al. v. Smith et al, No. 1:10CV93 (N.D.W.Va. Nov. 30, 2011), ECF No. 205.

USAA filed this suit for subrogation on July 28, 2010. Following the settlement in the underlying negligence case at the end of 2011, it joined Northland as a defendant in order to pursue its subrogation claims directly against it. See (Dkt. No. 57).⁴ On February 25, 2013, USAA moved for summary judgment, seeking a declaration that, as a matter of law, it is entitled to reimbursement of PIP payments from Northlands. (Dkt. No. 71). Northlands also filed a motion for summary judgment on March 8, 2013. (Dkt. No. 74).

USAA contends that, as its insureds' subrogee, it has a valid contractual and equitable right to recover PIP payments, wage loss, and property damage payments stemming from the July 2008 collision from Northlands and its insureds. Conversely, Northlands contends that a particular provision of New Jersey's no-fault law, N.J.S.A. § 39:6A–9.1, precludes USAA's recovery of those payments. The cross motions for summary judgment are fully briefed, and the matter is ripe for review.

II.

Summary judgment is appropriate where the “depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials” show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed R. Civ. P. 56(c)(1)(A), (a). When ruling on a motion for summary judgment, the Court reviews all the evidence “in the light most favorable” to the nonmoving party. Providence Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.2000). The Court must avoid weighing the evidence or determining the truth and limit its inquiry solely to a determination of whether genuine issues of triable fact exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of informing the Court of the basis for the motion and of establishing the nonexistence of genuine issues of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has made the necessary showing, the nonmoving party “must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505 (internal quotation marks and citation omitted). The “mere existence of a scintilla of evidence” favoring the nonmoving party will not prevent the entry of summary judgment; the evidence must be such that a rational trier of fact could reasonably find for the nonmoving party. Id. at 248–52, 106 S.Ct. 2505. Where, as is the case here, both parties have moved for summary judgment, “the court must consider each party's motion individually to determine if that party has satisfied the summary judgment standard.” Lucas v. Curran, 856 F.Supp. 260, 264 (D.Md.1994) (citing 10A Charles A. Wright et al., Federal Practice and Procedure, § 2720 (1983)).

III.

While the Court must consider each party's motion for summary judgment on its own merits, both motions present common questions of law, the first of which is whether the law of West Virginia or New Jersey should apply to USAA's claim for subrogation. The Court will begin its analysis there.

A.

Pursuant to Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), the applicable law in a diversity case such as this is determined by the substantive law of the state in which a district court sits. ⁵ This includes the forum state's prevailing choice of law rules. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). USAA argues that, because its subrogation claim stems from an automobile collision that occurred in West Virginia, West Virginia's choice of law rule for tort, lex loci delicti, requires that the substantive law of West Virginia should control this case. Syl. pt. 1, Paul v. Nat'l Life, 177 W.Va. 427, 352 S.E.2d 550 (1986). Northlands contends that the substantive law of New Jersey—the state in which USAA issued the Cerabone and Ammermuller policies, and the state in which USAA's insureds reside—should control. See Johnson v. Neal, 187 W.Va. 239, 418 S.E.2d 349, 351–52 (1992) ( citing Paul v. Nat'l Life, 177 W.Va. 427, 352 S.E.2d 550 (1986)).

For the reasons that follow, the Court concludes that the substantive law of New Jersey controls this action. USAA seeks to enforce a putative right to subrogation arguably created by the subrogation clauses in the Cerabone and Ammermuller policies. See (Dkt. No. 72 at 9) (USAA is “contractually...