United States Court of Appeals For the First Circuit No. 23-1522
MARGARET AND DAVID JESPERSEN,
Plaintiffs, Appellants,
v.
COLONY INSURANCE COMPANY,
Defendant, Third-Party Plaintiff, Appellee,
JPKS MANAGEMENT LLC; PENUCHES SPORTS AND MUSIC COMPLEX LLC,
Third-Party Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph N. Laplante, U.S. District Judge]
Before
Barron, Chief Judge, Howard and Gelpí, Circuit Judges.
Bruce W. Felmly, with whom Benjamin B. Folsom, Graham W. Steadman, and McLane Middleton, Professional Association were on brief, for appellants. William L. Boesch, with whom Sulloway & Hollis PLLC was on brief, for appellee. Peter Chiesa on brief for City of Manchester, amicus curiae.
March 25, 2024 BARRON, Chief Judge. This appeal concerns a suit that
a married couple brought in the District of New Hampshire to
recover from a restaurant owner's insurer for the injuries that
they alleged that they suffered when one of them fell down the
restaurant's stairs. The District Court granted summary judgment
to the insurer and denied the couple's motion for summary judgment.
We affirm.
I.
A.
The suit that underlies this appeal traces back to the
suit that Margaret and David Jespersen, both New Hampshire
residents, brought in New Hampshire state court against JPKS
Management, LLC d/b/a Penuches Music Hall, and Penuches Sports and
Music Complex, LLC d/b/a Penuches Grill. The complaint in that
suit set forth claims against those defendants for negligence,
negligence per se, negligent misrepresentation, and violation of
New Hampshire Revised Statutes Annotated ("RSA") § 354-A.1 It also
alleged the following facts.
On May 28, 2018, the Jespersens were patrons of Penuches
Music Hall in Manchester, New Hampshire, and were eating in that
The complaint also alleged "loss of consortium" as a 1
separate "count," and this "count" appears to derive from New Hampshire RSA § 507:8-a, which provides that, "[i]n a proper action, either a wife or husband is entitled to recover damages for loss or impairment of right of consortium whether caused intentionally or by negligent interference."
- 2 - restaurant's "outdoor dining area," which is "located on the
sidewalk in front of the restaurant." Margaret Jespersen is
"functionally blind," and David Jespersen "is blind in one eye and
severely vision impaired in his other eye."
The Jespersens were "using white probing canes to guide
themselves through the establishment" and "asked a staff member to
direct them to the restrooms." After the staff member "told them
that the restrooms were downstairs," the Jespersens "asked if there
was an elevator that they could use." The staff member responded
"that there was no elevator available and directed them to a
stairway."
Margaret Jespersen proceeded to walk down the stairs,
but "her cane caught on the railing, and she lost her balance and
fell down the stairs." Her fall resulted in "three fractures in
her left ankle and one in her right ankle." When the paramedics
arrived, "another Penuche[]s employee informed them . . . that
there was in fact an elevator and [that] the paramedics could use
it to transport Margaret up to the ground floor."
The complaint alleged that Margaret Jespersen "suffered
severe injuries as a result of the Defendants' negligence in
failing to inform [her] about, or refusal to allow her to use, the
available elevator." The complaint also alleged that the
defendants had "effectively denied Margaret access to the restroom
. . . in violation of RSA [§] 354-A:16 and [§] 354-A:17," which in
- 3 - relevant part concern discrimination "because of . . . physical
. . . disability" in "places of public accommodation." N.H. Rev.
Stat. Ann. § 354-A:16 to :17 (2022).
The complaint requested that "judgment be entered
against Defendants, Penuches Sports and Music Complex, LLC d/b/a
Penchues [sic] Grill, as well as JPKS Management, LLC, d/b/a
Penuches Music Hall," that "Margaret Jespersen be awarded direct,
compensatory, and enhanced compensatory damages in the maximum
amount allowed in accordance with the law," that "David Jespersen
be awarded damages for loss of consortium in the maximum amount
allowed in accordance with the law," and that "all costs of this
action be assessed against Defendants, including all reasonable
attorney's fees, costs and expenses." The complaint also requested
that the Jespersens "be awarded all other such relief as . . .
deem[ed] just and proper."
Because the defendants failed to respond to the
complaint, the state court entered a notice of default in August
2019. See Jespersen v. Colony Ins. Co., No. 21-cv-846, 2023 WL
3584607, at *3 (D.N.H. May 22, 2023). The Jespersens then moved
in December 2019 for a final judgment based on the default. The
defendants did not respond to this motion or appear at the hearing
on the motion for entry of final judgment, which was held in August
2020. See id.
- 4 - Two months later, in October 2020, the state court issued
a final judgment for the Jespersens and awarded them $391,585.21.
See id. This amount included $193,688.91 in compensatory damages
for past medical expenses, future medical and counseling bills,
lost wages, loss of consortium, and pain, suffering, and loss of
enjoyment of life; plus an additional $100,000 for enhanced
compensatory damages; plus $97,896.30 for attorney's fees and
costs. See id.
B.
In February 2021, the Jespersens wrote a demand letter
to Colony Insurance Company, which had issued a liability insurance
policy that named "Penuches Music Hall, LLC" as the insured and
that provided the insured with coverage for "sums that the insured
becomes legally obligated to pay as damages because of 'bodily
injury' or 'property damage' to which this insurance applies."
Based on that policy, the demand letter sought the payment of the
award that the state court had granted to them in their suit
against JPKS Management, LLC d/b/a Penuches Music Hall and Pencuhes
Sports and Music Complex, LLC. See id. at *4. Colony responded
to the demand letter, but the parties were unable to come to a
resolution. See id.
The Jespersens initiated the suit against Colony that
underlies this appeal in the District of New Hampshire in October
2021. The complaint sought "an Order compelling [Colony] to pay
- 5 - the judgment rendered against its insured JPKS Management, LLC
d/b/a Penuches Music Hall." Specifically, the Jespersens'
complaint sought a "judgment in favor of [the Jespersens] and
against Colony in the amount of $391,585.21" or, in the
alternative, a "declaratory judgment [pursuant to RSA § 491:22 or
28 U.S.C. § 2201] that Colony is obligated to pay the full amount
of the Judgment," plus attorney's fees, costs and expenses, and
"all other such relief as this Court deems just and proper."
Before discovery, Colony moved for summary judgment,
which the District Court denied. Then, after discovery, the
Jespersens and Colony cross-moved for summary judgment. The
District Court granted summary judgment to Colony and denied
summary judgment to the Jespersens. See id. at *10.
In so ruling, the District Court first agreed with Colony
that, as a matter of law, the insured had "breached the insurance
contract" by failing to "notify [Colony] of Margaret's fall or the
resulting suits 'as soon as practicable'" as Colony's insurance
policy with the insured required it to do. Id. at *4. As the
District Court concluded, "the undisputed facts cannot reasonably
support a finding that [the insured] provided notice as soon as
practicable." Id.
The District Court noted that New Hampshire courts
"consider three factors" under New Hampshire law "in assessing
whether there has been a substantial breach of a notice
- 6 - provision -- 'the length of the delay [in notification], . . . the
reasons for the delay[,] and whether the delay resulted in
prejudice to the insurer.'" Id. (alterations in original) (quoting
Wilson v. Progressive N. Ins. Co., 868 A.2d 268, 271 (N.H. 2005)).
As to the first factor, the District Court pointed out that Colony
"first received notice of Margaret's fall two years and nine months
after the incident occurred," which the District Court concluded
was a "lengthy delay." Id. As to the second factor, the District
Court noted that there was "no reason or excuse for this delay in
the record." Id. at *5. As to the third factor, the District
Court rejected the Jespersens' contention that the lack of notice
had not prejudiced Colony. See id.
Having ruled that the insured had breached the insurance
contract by failing to provide the requisite notice pertaining to
Margaret Jespersen's fall, the District Court turned its attention
to the Jespersens' separate contention that, under what is known
as the "compulsory insurance doctrine," Colony was not entitled to
assert that breach as a ground for denying the Jespersens' attempt
to recover under the policy. See id. at *6. The Jespersens had
based this contention on a City of Manchester ("City") ordinance
that provided in relevant part:
(B) The City Clerk . . . may . . . license businesses . . . to encumber no more than half of the sidewalk area immediately adjacent to the building in which the business is located so that a minimum of half of the sidewalk is
- 7 - maintained free and clear for pedestrian traffic. Each such license shall contain the following provisions:
. . . . (2) Each license shall be subject to the insurance provisions contained in § 115.60 of this code and shall be subject to the restrictions contained in § 115.44 of this code with the exception of times of operation.
Manchester, N.H., Code § 97.34(B) (2023). The "insurance
provisions" referenced by the second subsection of the ordinance
provided that an application for a license shall include:
A certificate of insurance that the applicant has been issued an insurance policy by an insurance company licensed to do business in the state, protecting the licensee and the city from all claims for damages to property and bodily injury, including death which may arise from operations under or in connection with the license. Such insurance shall provide combined primary and excess coverage which meet a $500,000 minimum limit; such policy shall provide for automobile liability insurance for owned, nonowned, and hire vehicles as applicable; and such policy shall provide that the policy shall not terminate or be cancelled prior to the expiration date except with 30 days' advance written notice to the city.
Id. § 115.60.
In pressing this ground for recovery from Colony, the
Jespersens argued that the ordinance triggered the compulsory
insurance doctrine. Under that doctrine, as the District Court
explained, "[w]hen injured parties seek to recover under insurance
policies issued pursuant to compulsory insurance laws . . .
- 8 - 'generally,'" the injured parties "are not subject to defenses
arising out of the breach of conditions subsequent to the accident
even though they would be available to the insurer as against the
insured." Jespersen, 2023 WL 3584607, at *6 (quoting Steven Plitt,
et al., Couch on Insurance § 106:27 (3d ed. 2023)). The District
Court ruled, however, that the doctrine had no application to this
case. Id. at *10. Accordingly, the District Court granted
Colony's summary judgment motion based on Colony's defense that
the insured had breached the insurance contract. See id. The
Jespersens timely appealed.
II.
We review cross-motions for summary judgment de novo.
See Pac. Indem. Co. v. Deming, 828 F.3d 19, 22-23 (1st Cir. 2016).
In doing so, we "view each motion separately and draw all
reasonable inferences in favor of the respective non-moving
party," id. at 23 (quoting Roman Cath. Bishop of Springfield v.
City of Springfield, 724 F.3d 78, 89 (1st Cir. 2013)), to
"determine whether either of the parties deserves judgment as a
matter of law on facts that are not disputed," Easthampton
Congregational Church v. Church Mut. Ins. Co., 916 F.3d 86, 91
(1st Cir. 2019) (quoting Littlefield v. Acadia Ins. Co., 392 F.3d
1, 6 (1st Cir. 2004)). Because this complaint was "exclusively
grounded in the law of [New Hampshire]" and arises under our
diversity jurisdiction pursuant to 28 U.S.C. § 1332, "we look to
- 9 - [New Hampshire] law for the substantive rules of decision." Halsey
v. Fedcap Rehab. Servs., Inc., No. 23-1351, 2024 WL 911754, at *5
(1st Cir. Mar. 4, 2024).
We begin with the Jespersens' contention that the
District Court erred in holding that, as a matter of law, Colony
had a viable defense to the Jespersens' claims under Colony's
insurance policy based on the insured's breach.2 We do not agree.
The District Court concluded, "as a matter of law, that
[the insured's] delay in notifying Colony was lengthy and
unjustified, and it resulted in prejudice to Colony." Jespersen,
2023 WL 3584607, at *6. The Jespersens do not challenge the
District Court's conclusions that there was a "lengthy delay" and
no "reason or excuse for this delay in the record." Id. at *5-6.
They challenge only the District Court's conclusion that, as a
matter of law, there was prejudice.3
Although the parties dispute whether Margaret Jespersen's 2
fall is a covered "accident" under the insurance policy at all, we assume that the fall is covered under the policy because, even if it is, we conclude that Colony's notice defense precludes the Jespersens from recovering from Colony. 3The parties also dispute who bears the burden of demonstrating whether Colony is obligated to compensate the Jespersens under the insurance policy. But, even assuming that Colony has that burden, we conclude that the record demonstrates that, as a matter of law, Colony has established that it was prejudiced by the delay in notice and that the compulsory insurance doctrine does not apply.
- 10 - The District Court explained that the record established
as a matter of law that Colony was prejudiced, because the record
established beyond dispute that the lack of timely notice
pertaining to Margaret Jespersen's fall deprived Colony of "the
opportunity to engage in settlement discussions prior to (or
instead of) litigation." Id. at *5. The District Court also
concluded that it was indisputable on this record that "[the
insured's] (and thus Colony's) absence from the proceedings was
consequential to the court and factored into its calculation of
damages," as the state court "premised its grant of attorney's
fees -- which amounted to roughly one-quarter of the damages
awarded -- in part on [the insured's] unwillingness to participate
in the case." Id. Indeed, the District Court explained, the lack
of timely notice plainly left Colony "[un]able to defend [the
insured] in the litigation." Id.
The Jespersens contend otherwise in part because they
argue that, at the very least, the record suffices to show that
Colony was at fault for not having received the notice pertaining
to Margaret Jespersen's fall. The Jespersens here reprise an
argument that they made below. They argue in this regard that
Penuches Music Hall had obtained the insurance policy so that it
could comply with the ordinance requiring it to obtain liability
insurance but that the ordinance required the insurer to notify
the City thirty days before the cancellation of any insurance
- 11 - policy obtained pursuant to that ordinance. The Jespersens then
go on to contend that Penuches Music Hall had refused to allow
on-site inspections at the restaurant, which was required "for the
[insurance policy with Colony] to remain in effect," and that, as
a result, there were repeated failed attempts by Colony's insurance
agent to inspect the restaurant in the months after Margaret
Jespersen's fall. They note, too, that, as the District Court had
recounted, the "insurance policy was ultimately cancelled in
September 2018, a few months after the [Jespersens'] visit to
Penuches, for failure to pay the premium." Id. at *3. Moreover,
the Jespersens contend, "given the contentious relationship
between the City and [the insured] and the vigilance with which
the City enforced the compulsory insurance requirement against
[the insured], had Colony actually given notice of the Policy's
cancellation . . . the City would have likely investigated, and in
doing so likely learned about the accident." Thus, they argue,
"Colony contributed to its own prejudice."
This chain of reasoning depends, however, on quite a few
speculative inferences -- namely, that if Colony had notified the
City that the insurance policy had been cancelled (which itself
did not occur until four months after the fall), then the City
would have inspected the restaurant, the inspection would have
uncovered the accident, and notice of the accident at that point
would have been given to Colony. We agree with the District Court,
- 12 - however, that such speculation cannot suffice to create a triable
issue of fact as to whether Colony was at fault for not having
received the notice pertaining to Margaret Jespersen's fall at the
restaurant in a timely manner. See id. at *6; cf. Gomez v. Stop
& Shop Supermarket Co., 670 F.3d 395, 398 (1st Cir. 2012) ("This
sort of purely conjectural assumption, drawn from an empty record,
is insufficient to propel a cause of action beyond the summary
judgment stage.").
Setting aside questions of Colony's fault for not having
received the notice sooner than it did, the Jespersens separately
argue that the District Court's prejudice ruling cannot be
sustained because Colony "failed to submit any admissible evidence
establishing that they were prejudiced as to all of the Jespersens'
damages" (emphasis in original), particularly compensatory
damages. But the Jespersens provide no reason for us to conclude
that the insurer must prove prejudice as to all damages to prove
prejudice, as they identify no precedent supporting such a
surprising proposition. Moreover, the District Court's
determination that there was some prejudice accords with the state-
court judgment, which not only relied on the insured's "flagrant
indifference to the plaintiffs' disabilities and the ready
availability of an accommodation" to justify the enhanced
compensatory damages but also, in justifying the award of
attorney's fees, relied in part on the fact that the defendants
- 13 - had "been totally unresponsive to this litigation" and showed
"utter disregard of this case." Thus, we reject this ground for
challenging the District Court's prejudice ruling.4
Finally, the Jespersens contend that the fact that there
was a final judgment entered against the insured cannot, in and of
itself, provide the basis for sustaining the finding of prejudice.
But they of course do not dispute that the final judgment was part
of the record or that a lower amount might have been given in that
judgment had Colony been given timely notice. They contend instead
that Colony cannot show prejudice based on the final judgment
because Colony was required to submit evidence "establishing that
it sought to strike or reopen the Final Judgment" rendered in state
court but failed to do so. But to the extent that the Jespersens
mean to argue that the possibility that Colony could have moved to
strike or reopen the final judgment in and of itself made the
District Court's prejudice ruling erroneous, we cannot agree.
After all, the Jespersens point to nothing to indicate that Colony
would have been able to have the final judgment set aside,
4 Because we conclude that the lack of timely notice prejudiced Colony given the basis for the state court's award of enhanced compensatory damages and attorney's fees, we need not address the Jespersens' separate contention that Colony was required to have "submitted . . . evidence suggesting that conditions of the accident scene materially changed so that it could not determine whether Plaintiffs' injuries were covered by the Policy" such that the delay in notice "prejudiced [Colony's] investigation of [the Jespersens'] claims."
- 14 - stricken, or vacated. See Nautilus Ins. Co. v. Gwinn Design &
Build, No. 18-cv-633-JD, 2018 WL 6519071, at *1, *3 (D.N.H. Dec.
11, 2018) (finding prejudice where the state court denied a motion
by the insurer to set aside a default judgment against the insured,
which the insured had not provided notice of to the insurer, and
where there was "no suggestion that an earlier motion to reconsider
or to set aside the judgment would have been successful"); Hudson
v. Musor, 519 A.2d 319, 321 (N.H. 1986) (explaining that the
"decision to strike a default is ordinarily within the trial
court's discretion").
Thus, on this record, we see no basis for overturning
the District Court's determination that "no reasonable person
could find that notice was given as soon as was reasonably
possible" by the insured to Colony. Jespersen, 2023 WL 3584607,
at *4 (quoting Dover Mills P'ship v. Com. Union Ins. Cos., 740
A.2d 1064, 1066 (N.H. 1999)). We therefore agree with the District
Court that, as a matter of law, the lack of notice constituted a
breach of the insurance contract, thereby releasing Colony from
payment of the award that the Jespersens received from the final
judgment.
Given our conclusion as to the District Court's
prejudice ruling, we next must address the Jespersens' contention
that the District Court erred in ruling that, as a matter of law,
- 15 - the compulsory insurance doctrine does not apply here. That
ruling, too, turns on a question of New Hampshire law. See
Peerless Indem. Ins. Co. v. Frost, 723 F.3d 12, 18 (1st Cir. 2013)
("When a state's highest court has yet to rule definitively on a
question of state law, our task is to predict how that court likely
would decide the issue."); Nw. Airlines, Inc. v. Pro. Aircraft
Line Serv., 776 F.3d 575, 582 (8th Cir. 2015) (predicting how
Minnesota's highest court would apply the compulsory insurance
doctrine). And, once again, our review is de novo. See Pac.
Indem. Co., 828 F.3d at 23.
The Jespersens contend that the District Court erred in
concluding that the rationale that underlies the compulsory
insurance doctrine -- to better effectuate the purpose of
compulsory insurance laws that "are for the benefit of members of
the public and not of the insured" -- has no application to this
case due to the text of the ordinance at issue. Jespersen, 2023
WL 3584607, at *6-7 (quoting Plitt, Couch on Insurance § 106:27
(emphasis in original)). And the Jespersens are right that,
although the ordinance at no point expressly states that it has
the purpose of benefiting the public, it does require that the
insurance that is obtained "protect[] the licensee and the city
from all claims." Manchester, N.H., Code § 97.34(B) (2023)
(emphasis added). In addition, the Jespersens make the point that,
although the District Court reasoned that the phrase "protecting
- 16 - the licensee and the city from all claims" in § 115.60 compels the
conclusion that the ordinance is intended to protect only the
licensees and the City, see Jespersen, 2023 WL 3584607, at *8
(emphasis added), "the persons at risk of injury or death would
logically be members of the public" and that the ordinance requires
insurance policies to cover "all claims." As a result, the
Jespersens contend that the ordinance indicates an intention to
benefit the public and that, as a result, the rationale for the
compulsory insurance doctrine supports applying the doctrine here.
In assessing this contention, we emphasize that we do
not understand the District Court to have rested its holding that
the compulsory insurance doctrine has no application here solely
on either the determination that the doctrine is unavailable
because the ordinance expressly disclaims any intent to benefit
the public or the determination that the doctrine is unavailable
merely because the ordinance failed to state expressly that it is
for the benefit of the public. Rather, we understand the District
Court to have relied as an independent ground for its ruling on
the more nuanced determination that a "public safety purpose" was
not "particularly salient in the[] ordinances [at issue], such
that it would justify deviating from longstanding New Hampshire
precedent to extend the compulsory insurance doctrine to this novel
set of circumstances" beyond the automobile liability insurance
context. Id. at *7. And, reviewing de novo, see Baker v. Smith
- 17 - & Wesson, Inc., 40 F.4th 43, 47 (1st Cir. 2022) (reviewing question
of statutory interpretation de novo), we see no error in that
conclusion, given that a federal court must "take care not to
extend state law beyond its well-marked boundaries in an area . . .
that is quintessentially the province of state courts," Markham v.
Fay, 74 F.3d 1347, 1356 (1st Cir. 1996); see also Santiago v.
Sherwin Williams Co., 3 F.3d 546, 549 (1st Cir. 1993) (explaining
that "a plaintiff who 'selects a federal forum in preference to an
available state forum may not expect the federal court to steer
state law into unprecedented configurations.'" (quoting Martel v.
Stafford, 992 F.2d 1244, 1247 (1st Cir. 1993))).
1.
As Colony correctly highlights, the only New Hampshire
state court cases that apply the compulsory insurance doctrine
under New Hampshire law concern automobile insurance policies.
Those rulings are premised, moreover, on a provision of the New
Hampshire Financial Responsibility Act, which expressly provides
that motor vehicle liability policies shall be subject to the
following provision:
I. Absolute Liability. The liability of any company under a motor vehicle liability policy shall become absolute whenever loss or damage covered by said policy occurs, and the satisfaction by the insured of a final judgment for such loss or damage shall not be a condition precedent to the right or duty of the company to make payment on account of said loss or damage. No agreement between the
- 18 - company and the insured after the insured has incurred liability for loss or damage covered by the policy shall operate to defeat the company’s liability to pay for such loss or damage. Upon the recovery of a final judgment against any person for any loss or damage specified in this section, if the judgment debtor was, at the accrual of the cause of action, protected against liability therefor under a motor vehicle liability policy, the judgment creditor shall be entitled to have the insurance money applied to the satisfaction of the judgment.
N.H. Rev. Stat. Ann. § 264:18 (2022).
Furthermore, New Hampshire courts have relied on the
explicit language in this provision to find the compulsory
insurance doctrine to be applicable. For example, in Farm Bureau
Automobile Insurance Co. v. Martin, 84 A.2d 823, 825-26 (N.H.
1951), the New Hampshire Supreme Court pointed to the
mandate -- under a prior version of this provision -- that an
insurer's "liability . . . become[s] absolute" upon the occurrence
of a covered loss to hold that the provisions of an insurance
policy obtained pursuant to the Act "cannot be used to defeat or
avoid coverage" because "the liability of the insurer became
absolute upon the happening of the accident."
We add, too, that it is hardly anomalous that the
doctrine has thus far had such limited application under New
Hampshire law. Every case cited in the insurance treatise sections
on which the Jespersens rely for the proposition that there is a
compulsory insurance doctrine concerns an automobile liability
- 19 - insurance policy. See Plitt, Couch on Insurance §§ 106:27-:28.5
In addition, in a majority of states today, compulsory insurance
and financial responsibility statutes in the automobile liability
context explicitly deprive insurers of certain defenses or
explicitly impose absolute liability.6 Indeed, courts in several
5 See Gillard v. Mfr.'s Ins. Co. of Phila., Pa., 107 A. 446 (N.J. 1919) (same); Kruger v. Cal. Highway Indem. Exch., 258 P. 602 (Cal. 1927) (same); Ott v. Am. Fidelity & Cas. Co., 159 S.E. 635 (S.C. 1931) (same); Goldberg v. Preferred Accident Ins. Co. of N.Y., 181 N.E. 235 (Mass. 1932) (same); West v. Monroe Bakery, Inc., 46 So. 2d 122 (La. 1950) (same), abrogated on other grounds by Home Ins. Co. v. Highway Ins. Underwriters, 62 So. 2d 828, 831 (La. 1952); Royal Indem. Co. v. Olmstead, 193 F.2d 451 (9th Cir. 1951) (same); Pan-Am. Cas. Co. v. Basso, 252 S.W.2d 505 (Tex. Civ. App. 1952) (same); Milwaukee Ins. Co. v. Morrill, 123 A.2d 163 (N.H. 1956) (same); Am. Emps. Ins. Co. v. Sterling, 146 A.2d 265 (N.H. 1958) (same); Karp v. Aetna Cas. & Sur. Co., 201 N.Y.S.2d 421 (Mun. Ct. 1959) (same); Sandoval v. Chenoweth, 428 P.2d 98 (Ariz. 1967) (same); Jones v. State Farm Mut. Auto. Ins. Co., 155 S.E.2d 118 (N.C. 1967) (same); Lumbermens Mut. Ins. Co. v. Grayson, 422 S.W.2d 755 (Tex. Civ. App. 1967) (same); Anderson v. Aetna Cas. & Sur. Co., 432 S.W.2d 151 (Tex. Civ. App. 1968) (same); Strickland v. Hughes, 160 S.E.2d 313 (N.C. 1968) (same); Evans v. Am. Home Assurance Co., 166 S.E.2d 811 (S.C. 1969) (same); Kahla v. Travelers Ins. Co., 482 S.W.2d 928 (Tex. Civ. App. 1972) (same); Young v. Allstate Ins. Co., 282 S.E.2d 115 (Ga. 1981) (same); Chennault v. Dupree, 398 So. 2d 169 (La. Ct. App. 1981) (same); Johnson v. R & D Enters., 435 N.E.2d 1233 (Ill. App. Ct. 1982) (same); Ratcliff v. Nat'l Cnty. Mut. Fire Ins. Co., 735 S.W.2d 955 (Tex. App. 1987) (same); Kambeitz v. Acuity Ins. Co., 772 N.W.2d 632 (N.D. 2009) (same). 6 See Ala. Code § 32-7-22(f)(1) (2023); Alaska Stat. § 28.20.440(f)(1) (2023); Ariz. Rev. Stat. Ann. § 28-4009(C)(5)(a) (2023); Colo. Rev. Stat. § 42-7-414(2)(a) (2024); Del. Code Ann. tit. 21, § 2902(f)(1) (2023); Haw. Rev. Stat. § 287-29(1) (2023); 625 Ill. Comp. Stat. 5/7-317(f)(1) (2023); Iowa Code § 321A.21(6)(a) (2023); La. Stat. Ann. § 32:900(F)(1) (2024); Me. Stat. tit. 24-A, § 2903 (2024); Minn. Stat. § 65B.49(3)(3)(a) (2023); Miss. Code Ann. § 63-15-43(3)(a) (2024); Mo. Rev. Stat. § 303.190(6)(1) (2023); Mont. Code Ann. § 61-6-103(5)(a) (2023); Neb. Rev. Stat. § 60-538 (2023); Nev. Rev. Stat. § 485.3091(5)(a)
- 20 - of these states have applied the compulsory insurance doctrine
precisely because of those explicit provisions. See, e.g., Torres
v. Nev. Direct Ins. Co., 353 P.3d 1203, 1207 (Nev. 2015) (relying
on a Nevada statute's clear statement that "no violation of the
policy defeats or voids the policy" to hold that "no post-injury
violation of a policy will release the insurer under the
absolute-liability provision"). Conversely, in one state that
does not have such explicit provisions, the state's highest court
has declined to apply the compulsory insurance doctrine because of
that lack of explicit provisions. See Warren v. Com. Standard
Ins. Co., 244 S.W.2d 488, 490 (Ark. 1951).
(2023); N.H. Rev. Stat. Ann. § 264:18(I) (2023); N.J. Stat. Ann. § 39:6-48(a) (2023); N.Y. Veh. & Traf. Law § 345(i)(1) (Consol. 2024); N.C. Gen. Stat. § 20-279.21(f)(1) (2023); N.D. Cent. Code § 39-16.1-11(6)(a) (2023); Okla. Stat. tit. 47 § 7-324(f)(1) (2023); Or. Rev. Stat. § 742.456 (2023); 31 R.I. Gen. Laws § 31-32-34(f)(1) (2023); S.C. Code Ann. § 56-9-20(5)(b)(1) (2023); S.D. Codified Laws § 32-35-74(1) (2023); Tenn. Code Ann. § 55-12-122(e)(1) (2023); Tex. Transp. Code Ann. § 601.073(c) (2023); Vt. Stat. Ann. tit. 23, § 805 (2024) ("Waiver of defenses against injured party"); Va. Code Ann. §§ 46.2-479(1), (6) (2023); Wash. Rev. Code § 46.29.490(6)(a) (2023); W. Va. Code § 17D-4-12(f)(1) (2023); cf. Mass. Gen. Laws ch. 175, § 112 (2023) (containing "absolute liability" language but providing that an insurer "shall not deny insurance coverage to an insured because of failure of an insured to seasonably notify an insurance company of an occurrence, incident, claim or of a suit . . . unless the insurance company has been prejudiced"); Mich. Comp. Laws §§ 257.520(f)(1), (6) (2023) (containing "absolute liability" language but providing that the insurer "shall not be liable on any judgment if it has not had prompt notice of and reasonable opportunity to appear in and defend the action in which such judgment was rendered").
- 21 - True, there are cases that apply the compulsory
insurance doctrine in the automobile liability context even in the
absence of any express statutory bar to a notice defense. See
Olmstead, 193 F.2d at 454; Allen v. Canal Ins. Co., 433 S.W.2d
352, 354 (Ky. 1968). But the Jespersens have identified only one
case outside the automobile liability context -- Northwest
Airlines -- that applies the doctrine based on a statute or
ordinance that requires a party to obtain insurance but that does
not expressly render null an insurer's notice defense. See Nw.
Airlines, 776 F.3d 575. And, while the Jespersens appear to
contend that we may fairly prophesy that the New Hampshire Supreme
Court would follow Northwest Airlines and apply New Hampshire law
as the Eighth Circuit there applied Minnesota law, we cannot agree.
Cf. Butler v. Balolia, 736 F.3d 609, 610 (1st Cir. 2013)
("This . . . case requires a Boston-based federal court to make an
informed prophesy . . . .").
The issue of the applicability of the compulsory
insurance doctrine arose in Northwest Airlines in connection with
an aircraft maintenance company that had obtained a liability
insurance policy pursuant to a local ordinance requiring it to
carry such insurance in order to operate at an airport. 776 F.3d
at 576-77. After an accident occurred between the maintenance
company and an airline, the airline informed the insurer about the
accident, sued the insured maintenance company, received a default
- 22 - judgment in its favor, then filed a garnishment suit against the
insurer, who argued that the insured's "failure to provide notice
and to cooperate extinguished [the insurer's] payment obligation."
Id. at 578.
The Eighth Circuit held that, under Minnesota law, the
compulsory insurance doctrine applied because it "is not
necessarily limited to" the "context of statutes requiring auto
liability insurance," and because, even though the ordinance at
issue there lacked explicit language stating that the insurer was
subject to absolute liability, the ordinance was "intended at least
in part to protect injured third parties such as [the
airline-claimant]." Id. at 580 (cleaned up). The court went on
to explain, however, that the compulsory insurance doctrine
"exists at a balance point between the interests of the injured
party in recovering and the insurer in obtaining prompt notice and
cooperation." Id. at 582. And the court then emphasized in
relationship to that balance that two factors were "certainly
relevant in [its] assessment of this unusual scenario." Id. at
582. Those two factors were that: "(1) beginning soon after [the
airline-claimant] learned of the . . . policy and over a year
before [the airline-claimant] filed suit, [the airline-claimant]
gave [the insurer] actual notice of its claim, the lawsuit, and
the possibility of a default judgment, and (2) it was [the insurer]
who spurned the notice from [the airline-claimant], discontinued
- 23 - communications, and, despite its actual knowledge, chose not to
participate in the . . . litigation." Id.
Given the qualified nature of the Northwest Airlines
ruling, we find it significant that neither of the two special
features given such emphasis there obtains here. In addition to
the fact that Colony "had no notice of the incident, the claim, or
the litigation, nor any opportunity to participate in the matter,
prior to the default judgment," there is nothing in the record to
suggest that it was Colony that "spurned" notice or "chose not to
participate" in the litigation notwithstanding actual knowledge of
the claims. In fact, unlike in Northwest Airlines, where the
claimant had notified the insurer prior to moving for default
judgment, see id. at 577, here the record shows that the
Jespersens, at least by October 2019 when they obtained a copy of
the certificate of insurance that listed Colony as the insurer,
knew that Colony was the insurer but did not provide Colony with
notice prior to their motion for the entry of final judgment on
the default in December 2019.
Moreover, although the court in Northwest Airlines
stated that "courts have applied the [compulsory insurance]
doctrine where the ordinance's clear purpose was to protect a class
of the public to which the injured party belongs," id. at 580, and
that even an ordinance "intended at least in part to 'protect[]
injured third parties'" can trigger that doctrine, id. (alteration
- 24 - in original), each of the four cases cited in Northwest Airlines
to support that extension of the compulsory insurance doctrine
itself concerned automobile liability insurance, see Olmstead, 193
F.2d 451; Young, 282 S.E.2d 115; Allen, 433 S.W.2d 352; Ott, 159
S.E. 635.
As a result, we cannot deduce from the Eighth Circuit's
application of Minnesota law in the specific circumstances of that
case that the New Hampshire Supreme Court would extend the
compulsory insurance doctrine beyond the automobile liability
insurance context in the differing circumstances of this case, at
least given the terms of the ordinance at hand. As we have
explained, the ordinance is far more oblique in purporting to
dispense with an otherwise bargained-for notice defense than the
only New Hampshire law that New Hampshire state courts have thus
far held to have that consequence: the Financial Responsibility
Act, which, as we have explained, expressly dispenses with a notice
defense. Nor, unlike some ordinances from other states requiring
the procurement of insurance outside the automobile liability
context, does the Manchester ordinance even expressly state that
the purpose of its requirement to obtain insurance "protecting the
licensee and the city from all claims for damages to property and
bodily injury, including death which may arise from operations
under or in connection with the license," is to benefit not only
the city and the insured but also the public more generally. See
- 25 - Freehold, N.J., Code § 5.80.080(A) ("Any person obtaining a
license for a sidewalk cafe or restaurant shall submit, for the
protection of the borough and its representatives as well as the
general public a comprehensive policy of liability insurance
protecting the licensee and borough against any liability
whatsoever occasioned by accident on or about the licensed property
or any appurtenances thereto." (emphasis added)); Marietta, Ga.,
Code § 8-12-27-030(C) (requiring mobile-retail-food-establishment
licensees to obtain insurance "protecting the licensee, the public
and the city from all claims for damage to property and bodily
injury, including death, which may arise from operation under or
in connection with the permit" (emphasis added)).
Simply put, even accepting that the insurance policies
obtained pursuant to the ordinance must cover claims brought by
injured members of the public, it does not follow that the New
Hampshire Supreme Court would construe the ordinance, based on
that fact alone, to trump any notice defense that the insurer
otherwise would have under a policy that would cover claims brought
by such persons. And nothing in Northwest Airlines nor any other
precedent from New Hampshire or elsewhere of which we are aware
suffices to persuade us that the New Hampshire Supreme Court would
conclude, on the strength of the ordinance, that the compulsory
insurance doctrine should be extended to a realm in which it has
not previously been applied in New Hampshire. Rather, we see no
- 26 - error in the District Court's conclusion that a "public safety
purpose" is not "particularly salient in the[] ordinances [at
issue], such that it would justify deviating from longstanding New
Hampshire precedent to extend the compulsory insurance doctrine to
this novel set of circumstances." Jespersen, 2023 WL 3584607, at
*7.
2.
The Jespersens do argue that "New Hampshire law
requir[es] insurance policies -- and the ordinances integral to
them -- to be construed liberally in favor of coverage and against
the insurer" (emphasis in original). And it is true that the New
Hampshire Supreme Court has said that "[i]f more than one
reasonable interpretation is possible, and an interpretation
provides coverage, the policy contains an ambiguity and will be
construed against the insurer." Great Am. Dining, Inc. v. Phila.
Indem. Ins. Co., 62 A.3d 843, 846 (N.H. 2013) (quoting Brickley v.
Progressive N. Ins. Co., 7 A.3d 1215, 1217 (N.H. 2010)). But the
insurance policy at issue here is unambiguous in stating that "[n]o
person . . . has a right . . . [t]o . . . bring [Colony] into a
'suit' asking for damages from an insured; or . . . [t]o sue
[Colony] on this Coverage Part unless all of its terms have been
fully complied with," including the policy term requiring the
insured to "notify [Colony] as soon as practicable" about any claim
or suit brought against the insured.
- 27 - Thus, we are not faced here with a question of
insurance-policy interpretation. We are faced with a question of
interpretation of New Hampshire law concerning when, if ever, an
ordinance triggers the compulsory insurance doctrine outside the
automobile liability context. The rule of liberal insurance policy
construction on which the Jespersens rely has no application to
that question.
The Jespersens do also rely on New Hampshire cases
supporting the idea that provisions of insurance policies obtained
pursuant to compulsory insurance statutes cannot conflict with
those statutes. See Santos v. Metro. Prop. & Cas. Ins. Co., 201
A.3d 1243, 1253 (N.H. 2019); Universal Underwriters Ins. Co. v.
Allstate Ins. Co., 592 A.2d 515, 517 (N.H. 1991); Partridge v.
USAA Life Ins. Co., No. 14-cv-170, 2015 WL 1268193, at *4 (D.N.H.
Mar. 19, 2015). Those cases simply stand for the proposition,
however, that a statutory insurance requirement trumps contrary
language in a policy. They do not address the issue of concern
here, which pertains to when a state statute or local ordinance
suffices to trigger the compulsory insurance doctrine itself. As
a result, they lend no support to the Jespersens' position.
3.
The Jespersens' final argument for applying the
compulsory insurance doctrine here rests on statements by
officials of the City. The Jespersens first point to a declaration
- 28 - from the City Clerk -- filed in the District Court -- stating that
the City's "compulsory insurance requirements are meant to protect
the public and the City from acts or omissions committed by
licensees."
As the District Court explained, though, the City Clerk
had no special reason to know the legislative intention or purpose
of the ordinance, as he is not a member of the City's Board of
Aldermen and plays no role in the approval of City ordinances.
And although the City Clerk issues the licenses that require the
insurance policies to be obtained, see Manchester, N.H., Code
§ 97.34(B), that task does not require the Clerk to make
determinations about whether a notice defense contained in an
insurance policy obtained pursuant to the ordinance is enforceable
or even whether the purpose of requiring the insurance policies is
to benefit the public.
The Jespersens do also point to an amicus brief filed by
the City. The brief argues that the public-benefitting purpose of
the ordinance is apparent when construing the ordinance "as part
of a comprehensive scheme protecting the public" rather than as an
"isolat[ed]" measure. But we do not find in that assertion a
persuasive reason to reject the District Court's ruling that the
compulsory insurance doctrine does not apply here. Given the
ordinance's text relative to the text of the New Hampshire
Financial Responsibility Act and the texts of similar ordinances
- 29 - from around the country requiring certain establishments to obtain
insurance, the absence of any legislative history that would allow
us to construe the ordinance's text to nullify an insurer's
contractual notice defense, the fact that the ordinance is
unrelated to the automobile liability context, and the absence of
the circumstances deemed significant in Northwest Airlines, we
cannot agree that the New Hampshire Supreme Court would extend the
compulsory insurance doctrine here based on the City's contention
about the ordinance's purpose.
III.
For the foregoing reasons, the District Court's ruling
granting summary judgment to Colony and denying summary judgment
to the Jespersens is affirmed. Each party shall bear its own
costs.
- 30 -