Kelly v. Liberty Insurance Corp. ( 2019 )

United States Court of Appeals
For the First Circuit
No. 18-1614
BRENDAN KELLY,
Plaintiff, Appellant,
v.
LIBERTY INSURANCE CORPORATION,
D/B/A LIBERTY MUTUAL,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph N. Laplante, U.S. District Judge]
Before
Kayatta, Circuit Judge,
Souter, Associate Justice,*
and Selya, Circuit Judge.
Robert A. Stein, with whom Diane L. Perin and The Stein Law
Firm, PLLC, were on briefs, for appellant.
Nancy D. Adams, with whom Lavinia M. Weizel and Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., were on brief, for appellee.
February 22, 2019
* Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
SOUTER, Associate Justice. In this diversity case,
Brendan Kelly sought a declaratory judgment against Liberty Mutual
Insurance Corporation, on his claim that Liberty was bound to
provide uninsured (or underinsured) motorist coverage for his
benefit. See N.H. RSA 259:117. The insurance contract in question
was an umbrella policy issued to Plum Creek Timber Company, Kelly's
employer and the named insured. The District Court granted summary
judgment for Liberty Mutual. We affirm.
The policy was issued in New Hampshire, whose law
controls. Thus the insurer bears the burden of proof, N.H. RSA
491:22-a, and policy language is to be construed as a reasonable
person would understand it upon more than a casual reading of the
policy as a whole, Russell v. NGM Ins. Co., 176 A.3d 196, 200 (N.H.
2017).
Liberty's policy was one of two issued to Plum Creek
that provided benefits to its employees as additional insureds
when acting within the scope of employment, as Liberty recognizes
that Kelly was doing when injured in a two-party highway collision
while driving a Plum Creek truck. Terms of the umbrella policy,
like those of the underlying basic policy, were regulated by RSA
264:15, which included the following mandate relevant here:
"[U]mbrella or excess policies . . . shall
also provide uninsured motorist coverage equal
to the limits of liability purchased, unless
the named insured rejects such coverage in
writing. Rejection of such coverage by a
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named insured shall constitute a rejection of
coverage by all insureds . . . ."
There is no dispute that Plum Creek, the named insured,
did reject uninsured motorist coverage and did so in writing. The
writing itself, however, was not incorporated into the policy. It
was not attached to the other policy papers, nor was it mentioned
in the text of the policy or in any incorporated attachment. It
is this absence from the policy materials of an express mention of
the rejection that is the point on which Kelly's coverage claim
turns: Kelly claims that the want of an explicit reference to
Plum Creek's written rejection renders the rejection inoperative
against an additional insured like Kelly, with the consequence
that RSA 264:15 requires provision of uninsured motorist coverage
under the statute's general rule.
The apparently fatal flaw undermining this position is
the absence from RSA 264:15 of any requirement that the policy
materials explicitly speak of the rejection of uninsured motorist
coverage. Rather, it is the requirement that the rejection be "in
writing" that ostensibly regulates the contractual relationship
between the insurer and the named insured and, derivatively, an
additional insured. Thus, the apparent statutory objective is
protection against an act of rejection that is not well considered
and a failure of the insurer to provide the coverage that the named
insured has reason to expect. See Angela Spradling, Hearing on SB
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38 Before the S. Comm. on Commerce, Labor, and Consumer Protection
(Comm. Print 2007) (statement of Sen. Lou D'Allesandro).
Because the statute does not contain an explicit
reference requirement, Kelly is left to argue that his position is
implicit in the statute, on the ground that its object is also to
protect additional insureds who need to know whether they should
procure insurance independently in order to obtain adequate
protection against uninsured motorists. But even assuming that
the statute implicitly protects additional insureds, the statute
does not support Kelly's argument because the additional insureds
are not left in the dark under this umbrella policy as it is. This
is clear from three policy provisions that a reasonable and
attentive reader would find:
1. "This policy contains all the agreements
between you and us concerning the insurance
afforded. This policy's terms can be amended
or waived only by endorsement issued by us and
made a part of this policy." Umbrella Policy
§ IV.15.
2. "We will pay those sums . . . that the
insured becomes legally obligated to pay as
damages because of: (1) 'Bodily injury'; (2)
'Property damage'; or (3) 'Personal and
advertising injury'; to which this insurance
applies." Id. § I.1.a.1
1 Though not on point here, this provision is elsewhere
limited. A different provision of the policy states: "This
insurance does not apply to: . . . '[b]odily injury' or 'property
damage' arising out of the ownership, maintenance, use or
entrustment to others . . . of any 'auto.'" Umbrella Policy
§§ I.2, I.2.f.1.
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3. "This insurance does not apply to: . . .
[a]ny loss, cost or expense payable under or
resulting from a[n] . . . uninsured or
underinsured motorist law, except to the
extent coverage is specifically provided by
endorsement to this policy." Id. §§ I.2,
I.2.f.2.
These provisions amount to a belt-and-suspenders
approach to omission of uninsured motorist coverage in the Plum
Creek policy. The integration clause (1) says clearly that there
are no relevant agreements outside the policy. The statement of
basic coverage (2) describes the policy's scope as covering sums
that "the insured becomes legally obligated to pay." Id. § I.1.a.
That is, it describes what insureds are liable to pay to someone
else for damage insureds caused or are responsible for, not what
insureds could claim as recompense for harm inflicted on them by
someone else, which uninsured motorist coverage provides. We have
been directed to no policy language that could be construed to
provide the latter. And finally, lest there be any doubt about it
in the mind of the reasonable reader, the statement of exclusions
(3) expressly indicates that the policy does not cover any "loss,
cost or expense payable under or resulting from a[n] . . .
uninsured or underinsured motorist law, except to the extent
coverage is specifically provided by endorsement to this policy."
Id. § I.2.f.2.
It is the certain impact of these policy terms in
providing no uninsured motorist coverage and, for good measure,
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expressly excluding it, that answers Kelly's arguments for looking
beyond the fact that the statute does not require a coverage
rejection to be incorporated into the policy. If Plum Creek
employees, who are additional insureds, wish to assess the extent
of their protection against an uninsured or underinsured driver
under the umbrella policy, all they have to do is read it. If
they have any reason to suspect some failure to satisfy the
statutory written rejection requirement, they can ask the named
insured or the insurer for a copy of the written instrument. While
it is true that a state whose law does require the rejection to be
made part of the policy as such would save him the trouble, see
Romero v. Dairyland Ins. Co., 803 P.2d 243, 244 (N.M. 1990), that
possible convenience is a far cry from any statutory ambiguity or
a clear implication requiring judicial expansion of the plain
statutory text.
In particular we see no such implication in the
integration clause, quoted above, providing that the policy states
the complete agreement of the insurer and named insured.
"Agreement" is readily understood as referring to the substance or
content of the parties' contract, and on the point at issue in
this case we have already seen that the policy incorporates the
agreement that the policy provides no uninsured motorist coverage.
Indeed, on a straightforward reading of the integration clause,
the "policy's terms" can be modified only by an "endorsement issued
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by [the insurer] and made a part of this policy." Umbrella Policy
§ IV.15.
Thus, Kelly's position must be seen as a request for
judicial action to add to the statute an optional provision that
the legislature was satisfied to omit. New Hampshire law forbids
this. See Carlisle v. Frisbie Memorial Hosp., 888 A.2d 405, 416
(N.H. 2005). The judgment is accordingly affirmed.
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