UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
Brendan Kelly
v. Civil No. 15-cv-234-JL Opinion No. 2018 DNH 106 Liberty Insurance Corp., d/b/a Liberty Mutual
ORDER ON SUMMARY JUDGMENT
This insurance coverage case requires the court to
determine whether a named insured validly rejected uninsured
motorist coverage. The dispute arises from a motor vehicle
accident in which plaintiff Brendan Kelly was seriously injured.
Kelly, an employee of Plum Creek Timber Co., was driving a
company truck when an oncoming vehicle crossed a double-yellow
line and collided head-on with Kelly. After collecting the
liability insurance policy limit from the other driver’s
insurance carrier, Kelly sought underinsured motorist (UM)
coverage under an umbrella policy defendant Liberty Mutual
issued to Plum Creek. New Hampshire law requires that umbrella
policies include UM coverage unless rejected by the named
insured. See N.H. Rev. Stat. Ann. § 264:15. Liberty Mutual
denied the claim on the basis that Plum Creek had expressly
rejected UM coverage. Claiming that Plum Creek’s rejection is
invalid under New Hampshire law, Kelly filed a petition for
declaratory judgment seeking coverage under the Liberty Mutual policy. See N.H. Rev. Stat. Ann. 491:22. This court’s subject
matter jurisdiction is premised on diversity of citizenship. 28
U.S.C. § 1332.
The parties filed cross-motions for summary judgment. Two
issues were central to the dispute: 1) whether Liberty Mutual
was required to physically attach a statutorily-required
rejection notice1 to Plum Creek’s policy or notify Plum Creek
employees of the rejection; and 2) whether a particular Plum
Creek employee had the requisite authority to reject UM
coverage. After reviewing the parties’ motions, memoranda and
exhibits and hearing argument, the court denied plaintiff’s
motion and granted defendant’s motion, thereby rejecting
plaintiff’s claim regarding attachment of the rejection notice.2
The court also ruled that material factual disputes remained as
to the Plum Creek employee’s authority, and that issue proceeded
to a bench trial. This order -- issued the same day as the
court’s bench trial rulings -- explains the court’s reasoning as
to its earlier partial grant of summary judgment. The court
1 N.H. Rev. Stat. Ann. § 264:15. 2 See Endorsed Order, March 28, 2017.
2 issues findings of fact and rulings of law from the bench trial
in a separate order.
I. Summary judgment
Summary judgment is properly granted when the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law. See Fed. R.
Civ. P. 56(a). The court “views all facts and draws all
reasonable inferences in the light most favorable to the non-
moving” parties. Estrada v. Rhode Island, 594 F.3d 56, 62 (1st
Cir. 2010). On cross-motions for summary judgment, “the court
must consider each motion separately, drawing inferences against
each movant in turn.” Merchants Ins. Co. of N.H., Inc. v. U.S.
Fid. & Guar. Co., 143 F.3d 5, 7 (1st Cir. 1998) (quotation marks
omitted). Here, the parties’ arguments mirror each other. For
example, Kelly claims he is entitled to summary judgment because
New Hampshire law requires an insurer to attach the UM rejection
form to the policy in order to be valid, while Liberty’s summary
judgment motion argues that Plum Creek’s rejection is valid and
conclusive. Thus, while the court treats the motions
separately, it analyzes the arguments in the same intertwined
manner in which they are presented to the court.
3 II. Background
The basic facts are not in dispute. On December 10, 2013,
a car driven by George Motard crossed into Kelly’s lane of
travel and struck the truck Kelly was driving head-on. Motard
was killed in the accident; Kelly was seriously injured. Kelly
claims permanent injury and medical bills to date in excess of
$450,000. At the time of the accident, Kelly was acting in the
course of his employment for Plum Creek, which owned the truck
he was driving. Progressive Casualty Insurance provided
coverage for decedent Motard under a liability policy with a
$100,000 limit. Plum Creek’s primary automobile insurance
carrier was ACE American Insurance Co, with liability and
underinsured motorist coverage limits of $1 million. Both
Progressive and ACE tendered their respective policy limits to
Kelly, who claims that his damages exceed the tendered amount.3
During the relevant time period, Liberty insured Plum Creek
under a commercial umbrella policy with a $5 million limit.
Kelly sought benefits under the Liberty policy, but Liberty
3 Kelly received $100,000 from Progressive and $900,000 from ACE, which permissibly set off the Progressive coverage from its limit. See, e.g., Deyette v. Liberty Mut. Ins. Co., 142 N.H. 560, 563 (1997) (“Recovery by an insured from an underinsured motorist tortfeasor triggers an insurer’s right to reduce payment under underinsured motorist coverage . . . ”).
4 denied the claim, explaining that Plum Creek had expressly
rejected UM coverage under the umbrella policy. This suit
followed.
III. Analysis
The parties agree that New Hampshire law controls this
dispute. Therefore, the insurer, Liberty, bears the burden of
proving that Kelly’s claim is not covered. N.H. Rev. Stat Ann.
§ 491:22-a (2010); Carter v. Concord. Gen. Mut. Ins. Co., 155
N.H. 515, 517 (2011).4
A. Authority to reject UM coverage
New Hampshire law requires that umbrella policies
“provide [UM] coverage equal to the limits of liability purchased, unless the named insured rejects such coverage in writing. Rejection of such coverage by a named insured shall constitute a rejection of coverage by all insureds . . . and shall remain effective upon policy amendment or renewal, unless the named insured requests such coverage in writing.”
4 The parties also disagree as to whether the umbrella policy, as written, provides UM coverage. Because New Hampshire law requires umbrella policies to include UM coverage (unless rejected), this argument is largely academic. Given the statutory mandate of UM coverage and the fact that the statute also allows the named insured to reject such coverage for all insureds, the court declines to resolve this issue, as it will not advance the case of this matter. The outcome turns solely on whether Plum Creek validly rejected the UM coverage mandated by § 264:15.
5 N.H. Rev. Stat. Ann. § 264:15 (emphasis added). The parties
agree that Plum Creek is the “named insured,” and that Kelly is
“an insured” by virtue of the fact that he was operating the
truck in the course of his employment at the time of the
accident.
Liberty argues that Plum Creek rejected UM coverage. It
supports this claim with a copy of a rejection form signed by
Lisa Duetsch, Plum Creek’s Manager of Risk and Insurance.5 In
response, plaintiff argues that the record lacks any evidence
that Duetsch was authorized by Plum Creek to reject the
coverage. As previously noted, on March 28, 2017, the court
orally denied summary judgment on that issue, and the parties
proceeded to a bench trial on the question of Duetsch’s
authority.
B. Notification of UM rejection
In addition to the authority issue, plaintiff argues that
Plum Creek’s UM rejection is invalid -- even if Duetsch had
proper authority -- because the rejection form was not attached
to the policy, thus depriving Kelly, an insured, of written
5 Weitzel Decl., Exhibits C and D (Doc. Nos. 30-3, 30-4).
6 notice of his employer’ coverage rejection. This argument is
premised on both the language of the statute and the language of
the policy. As explained below, however, plaintiff’s argument
finds no support in the language of § 264:15, the policy, or
cases from New Hampshire and elsewhere. The court turns first
to the statute.
1. N.H. Rev. Stat. Ann. § 264:15
Under New Hampshire law, the interpretation of a statute is
a question of law. Carlisle v. Frisbie Mem. Hosp., 152 N.H.
762, 773 (2005). The court “first examines the language of the
statute, and, where possible, ascribes the plain and ordinary
meaning to the words used.” Id. If the statute’s language “is
plain and unambiguous, [the court] does not look beyond it for
further indication of legislative intent and [does] not consider
what the legislature might have said or add language that the
legislature did not see fit to include.” Id. Applying these
principles, the court finds that New Hampshire law does not
require the notice that Kelly demands.
First, the plaintiff does not dispute that the statute
lacks a requirement that the rejection form be attached to the
policy. Thus, an attachment requirement would impermissibly
“redraft [the] statute” to include a requirement “not fairly
7 expressed.” Ellis v. Royal Ins. Cos., 129 N.H. 326, 334 (1987)
(internal quotations omitted); see also Gisonni v. State Farm
Mut. Ins. Co., 141 N.H. 518, 520 (1996) (rejecting claim that
statutorily-required insurance coverage for accidents in Canada
also extend to Mexico because to do so would “add words which
the lawmakers did not see fit to include.”). This alone
substantially undermines plaintiff’s argument that New Hampshire
law requires an insurer to attach the UM rejection form to the
policy.
While not binding, the court also finds persuasive that
courts in other jurisdictions with similar statutes have held
that a UM rejection form need not be attached to a policy to be
valid. See, e.g., Mitchell v. Liberty Mut. Ins. Co., 24 P.3d
711, 722-23 (Kan. 2001) (“Once a valid rejection is written, the
statute has been complied with.”); Ortiz v. State Farm. Mut.
Ins. Co., 955 S.W.2d 353, 357 (Tex. Ct. App. 1997) (rejecting
insured’s request to “interpret the written rejection language
in [the relevant state statutes] as requiring that the writing
be attached to or in some other way incorporated in the
policy.”); Koenig v. Mission Ins. Co., 471 P.2d 271, 273 (Ariz.
1970) (holding that insured’s written waiver of uninsured
motorist coverage in her application for automobile liability
8 coverage was sufficient to reject uninsured motorist coverage).
By way of contrast, it is noteworthy that New Mexico insurance
regulations expressly require that a UM rejection form be
incorporated and made part of the insurance policy. Jordan v.
Allstate Ins. Co., 245 P.3d 1214, 1220 (N.M. 2010). No similar
provision in New Hampshire’s statute or its insurance
regulations provides for such a requirement.
Plaintiff cites no legal authority -- statutory,
regulatory, judicial or scholarly -- for his position. Instead,
he argues that the failure to attach the UM rejection form to
the policy or otherwise notify him of the coverage rejection
defeats the legislative “intent” of § 264:15 to “promote a
public policy of placing insured persons in the same position
that they would have been if the offending uninsured motorist
has possessed comparable liability insurance by broadening
protection for those insured in accidents involving uninsured
motorists.”6 The New Hampshire Supreme Court commands, however,
that “[u]nless [the court] find[s] that the statutory language
is ambiguous, [the court] need not look to legislative intent.”
In re Union Tel. Co., 160 N.H. 309, 317 (2010). Here, the
6 Pltf. Mem., doc. no. 27-1, at 6-7 (quoting Rivera v. Liberty Mut. Fire Ins. Co., 163 N.H. 603, 608 (2012)).
9 statute unambiguously requires only “written rejection” by the
named insured to validly reject an umbrella policy’s UM coverage
on behalf of “all insureds.” The statute requires no more.
Relatedly, plaintiff argues that Liberty’s failure to
attach the rejection form to Plum Creek’s policy harms him
because “he would have no way to know whether the automatic UM
coverage of RSA 264:15 applies to him.”7 This argument does
little to advance plaintiff’s case. On one hand, he asks the
court to assume that he is familiar enough with New Hampshire
insurance law to understand that, pursuant to statute, UM
coverage is “automatic” (unless rejected) in his employer’s
umbrella policy. On the other, he asks to freely ignore the
portion of the same statute that permits his employer to reject
that coverage and that such a rejection would apply to him.
In addition, plaintiff’s theory would require that an
insurer in Liberty’s position notify all of its named insureds’
employees that their employer has rejected UM coverage.8 Yet
plaintiff cites no authority for the proposition that this
7 Pltf. Mem., doc. no. 33, at 11. 8 Plum Creek alone has 1300 employees in 19 states and presumably adds and subtracts employees on a regular basis. Def. Mem., doc. no 34-1, at 17.
10 burden has been assigned to insurers. More importantly, it is
countered by the language in the statute, which unambiguously
allows the named insured (Plum Creek) to reject UM coverage for
all insureds (including plaintiff). Another factor weighing
against plaintiff’s theory is that a UM rejection under § 264:15
remains in effect in policy renewals -- without a new rejection
form -- until the named insured later requests such coverage in
writing. N.H. Rev. Stat. Ann. § 264:15, I. Thus, plaintiff’s
theory would require the insurer to notify not just present
employees of their employer’s rejection of UM coverage, but
those hired after the inception of the policy. Once again, the
plaintiff presents no authority to suggest that the New
Hampshire legislature passed this responsibility to insurers.
Finally, the plaintiff asserts that Liberty tacitly agreed
to attach any signed rejection forms when it submitted the blank
form (as well as its entire commercial umbrella policy form) to
the New Hampshire Insurance Department for approval.9 See N.H.
Rev. Stat. Ann. § 412:5. But the record evidence (submitted by
the plaintiff himself) undermines this claim. In an affidavit
attached to plaintiff’s memorandum of law, the plaintiff’s
9 Pltf. Mem., doc. no. 33, at 17-18.
11 expert witness, Atty. Melinda Gehris, stated that “It is not the
Insurance Department’s role to determine how a form should be
used or what any specific form means in a particular set of
factual circumstances.”10 Atty. Gehris further stated that
“[a]pproval of the language of the form in isolation does not
constitute any approval of how Liberty intended to use the form,
or how it did use the form in this case . . . .”11 Although
Kelly submitted the expert affidavit for the purpose of
countering what he describes as Liberty’s claim that the
Insurance Department’s approval of the form indicated its
approval of Liberty’s decision not to attach it to policies, the
court concludes from the affidavit that the Insurance
Department’s approval of forms advances the arguments of neither
side in this case.
2. Policy language
Kelly next argues that language in the umbrella policy
required Liberty to add a policy endorsement reflecting Plum
Creek’s UM rejection. This argument is based on a clause in
Liberty’s policy, in a section titled, “Changes,” which states
10 Gehris Aff., doc. no. 33-9 at ¶ 6. 11 Id. at ¶ 7.
12 that the “policy contains all of the agreements between you and
[Liberty] concerning the insurance afforded. This policy’s
terms can be amended or waived only by endorsement issued by
[Liberty] and made part of this policy.”12 Rejection of UM
coverage, Kelly argues, is such an amendment or waiver.
The interpretation of insurance policy language is a
question of law for the court to determine. Rivera v. Liberty
Mut. Fire Ins. Co., 163 N.H. 603, 606 (2012). “Policy terms are
construed objectively; where the terms are clear and
unambiguous, [the court] accord[s] the language its natural and
ordinary meaning.” Barking Dog, Ltd. v. Citizens Ins. Co. Of
Am., 164 N.H. 80, 83 (2012). Where disputed terms are not
defined in the policy, the court construes them “in context, and
in the light of what a more than casual reading of the policy
would reveal to an ordinarily intelligent insured.” Great Am.
Dining v. Philadelphia Indem. Ins. Co., 164 NH 612, 625 (2013).
If policy terms are clear and unambiguous, the “search for the
parties’ intent is limited to the words of the policy.” White
v. Vt. Mut. Ins. Co., 167 N.H. 153, 157 (2014). “Ambiguity
exists if reasonable disagreement between contracting parties
12 Coverage Form, doc. no. 33-3, at 65.
13 leads to at least two interpretations of the language.” Id.
(quoting Colony Ins. Co. v. Dover Indoor Climbing Gym, 158 N.H.
628, 630 (2009)). “If one of the reasonable meanings of the
language favors the policyholder, the ambiguity will be
construed against the insurer.” Colony, 158 N.H. at 630.
However, the court will not “perform amazing feats of linguistic
gymnastics to find a purported ambiguity[,]” id. at 630-31, and
will “enforce a policy provision that limits the insurance
company’s liability when the policy language is clear and
unambiguous.” Merch. Mut. Ins. Co. v. Laighton Homes, Inc., 153
N.H. 485, 487 (2006).
Kelly’s argument fails to persuade the court for several
reasons. Initially, plaintiff argues that “[n]othing in the
policy discloses that RSA 264:15’s automatic coverage was
rejected.”13 This is less a policy language-based argument than
a variation of plaintiff’s argument that the statute requires
the UM rejection form to be attached to the policy, an argument
the court already rejected. By its plain terms, § 264:15 makes
UM coverage mandatory unless rejected by the named insured; it
13 Pltf. Mem., doc. no. 27-1, at 13.
14 does not make it mandatory unless rejected by the named insured
and with notice to all insureds.
Next, the court finds that the policy provision upon which
Kelly relies does not require attachment of the UM rejection
form to the policy. While the New Hampshire Supreme Court has
not spoken directly to this issue, the court is persuaded by a
decision from the Seventh Circuit Court of Appeals involving an
employee seeking UM coverage from his employer’s insurer.
Applying an Indiana statute similar to New Hampshire’s and
similar policy language to Liberty’s, the Court in Emp’rs Ins.
of Wausau v. Stopher, 155 F.3d 892, 897-98 (7th Cir. 1998), held
that a rejection of UM coverage was effective upon the named
insured’s execution of the rejection document. Thus, the court
concluded, an endorsement was not necessary to effect the
rejection, despite the policy provision that “terms can be
amended or waived only by endorsement.” Id. at 895.
As here, the party seeking UM coverage in Stopher claimed
that rejection of UM coverage constituted a change that was not
effective without an endorsement. Id. at 897. The court
disagreed, stating: “Unlike a change in the Policy, both
parties need not agree to [the named insured’s] cancellation of
part of its coverage . . . [which] does not require any act by
15 the insurer.” Id. at 898. In so ruling, the court agreed with
the insurer that “requiring [the insurer] to issue change
endorsements was intended to prevent the insurer from
unilaterally changing the Policy without providing prior notice
to [the named insured].” Id. at 897; cf. Ins. Comm’r v.
People’s Fire Ins. Co., 68 N.H. 51 (1894) (holding that insured
can cancel policy without advance notice to insurer), cited in
Kobilsek v. Hartford Acc. & Indem. Co., 95 N.H. 324, 327 (1949).
The Seventh Circuit Court of Appeals concluded: “An insurer
cannot bind an insured to coverage it does not want. Nor is an
insured entitled to the benefit of coverage that it clearly
intended to reject.” Id. at 898. The court finds Stopher’s
reasoning applicable here -- especially where plaintiff has
provided no contrary authority -- and finds that Plum Creek
intentionally rejected UM coverage, its rejection was effective
upon submission to Liberty Mutual, and that no endorsement was
necessary to effectuate the rejection.
IV. Conclusion
The court finds that Plum Creek’s rejection of UM coverage
in the umbrella policy issued by Liberty was valid to the
extent that neither New Hampshire law nor the insurance policy
language require the rejection form to be attached to the policy 16 or for an insured in plaintiff’s position to be given notice of
the rejection. Accordingly, plaintiff’s14 motion for summary
judgment is DENIED, and defendant’s motion for summary judgment15
is GRANTED, in part.
SO ORDERED.
____________________________ Joseph N. Laplante United States District Judge
Dated: May 18, 2018
cc: Robert A. Stein, Esq. Diane P. Hock, Esq. Nancy D. Adams, Esq. Lavinia M. Weizel, Esq. John B. Schulte, Esq.
14 Doc. no. 27. 15 Doc. no. 28.