Bristol West Insurance v. Wawanesa Mutual Insurance , 570 F.3d 461 ( 2009 )

United States Court of Appeals
For the First Circuit
No. 08-2269
BRISTOL WEST INSURANCE COMPANY,
Plaintiff, Appellee,
v.
WAWANESA MUTUAL INSURANCE COMPANY,
Intervenor, Appellant,
MELANIE LANDRY; ROLLIN H. SMALL, JR.,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Lynch, Chief Judge,
Farris* and Howard, Circuit Judges.
Peter C. Felmly with whom Melissa A. Hewey and Drummond
Woodsum & MacMahon were on brief for appellant.
Hans H.J. Pijls with whom Plunkett Cooney, P.C., James D.
Poliquin, Norman, Hanson & DeTroy, LLC were on brief for appellee.
July 1, 2009
*
Of the Ninth Circuit, sitting by designation.
LYNCH, Chief Judge. Melanie Landry, a resident of Maine,
was involved in a car accident in New Brunswick, Canada, on
November 28, 2003 in which Keith Savoie, a resident of New
Brunswick, was injured. Landry was driving a vehicle owned by
Rollin H. Small, Jr. when she hit Savoie's pickup truck, which was
owned by Savoie's father, from the rear.
Landry was insured for the accident under a policy which
was issued by Bristol West ("BW") for the six-month period from
November 20, 2003 to May 20, 2004. Savoie filed suit against
Landry and Small in New Brunswick; BW handled the claim. Savoie
claimed injuries to his neck and back and sought damages in excess
of $200,000 (Can.) for, inter alia, wage loss, loss of future
income, medical costs, and pain and suffering. Savoie also filed
an action against Wawanesa Mutual Insurance Company, his insurer,
seeking recovery for damages for what he might be unable to recover
from Landry and Small.
BW brought this related declaratory judgment action
against Landry and Small in federal court in Maine. The purpose of
the declaratory judgment suit, essentially, is to determine the
extent of Landry's coverage under a particular clause in the BW
policy in these circumstances. Wawanesa was allowed to intervene.
The two insurers filed cross motions for summary judgment.
BW's position is that its coverage is limited to the
$50,000 maximum coverage specified in Landry's policy for in-state
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accidents. See Me. Rev. Stat. Ann. tit. 29-A, § 1605(1)(C)(2)
(specifying $50,000 minimum coverage under Maine's compulsory
insurance law for bodily injury). Landry, Small, and Wawanesa take
the position that BW's coverage obligation is for $200,000 (Can.)
under an "Out of State Coverage" clause in the contract, because
the accident occurred in New Brunswick.
The case thus presents a question of insurance contract
interpretation. That is an issue of law for a court under Maine
law. Foremost Ins. Co. v. Levesque, 868 A.2d 244, 246 (Me. 2005).
The district court resolved the case on cross motions for summary
judgment. Independently, for each of those reasons, our review is
de novo. See New Fed Mortg. Corp. v. Nat'l Union Fire Ins. Co. of
Pittsburgh, PA, 543 F.3d 7, 11 (1st Cir. 2008); Liberty Mut. Ins.
Co. v. Greenwich Ins. Co., 417 F.3d 193, 197 (1st Cir. 2005).
The district court made two holdings: First, it held
that the "Out of State" clause coverage language entitled Landry to
out of state coverage only "to the extent required by a financial
responsibility law to which the insured is subject." Bristol West
Ins. Co. v. Landry, 577 F. Supp. 2d 459, 464 (D. Me. 2008). It
then construed the New Brunswick financial responsibility statute
and concluded Landry was not entitled to the extra coverage. Id.
at 465-66. We disagree on the first point and have no need to
reach the second.
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I.
We begin with the plain language of the "Out of State
Coverage" clause:
If an auto accident to which this policy
applies occurs in any state or province other
than the one in which "your covered auto" is
principally garaged, we will interpret your
policy for that accident as follows:
A. If the state or province has:
1. A financial responsibility or similar
law specifying limits of liability for
"bodily injury" or "property damage"
higher than the limit shown in the
Declarations, your policy will provide
the higher specified limit.
2. A compulsory insurance or similar law
requiring a non-resident to maintain
insurance whenever the nonresident uses
a vehicle in that state or province,
your policy will provide at least the
required minimum amounts and types of
coverage.
New Brunswick has both a financial responsibility law and a
compulsory insurance law, with identical $200,000 (Can.) limits.
See R.S.N.B. 1973, ch. M-17, § 271. The parties agree that it is
the financial responsibility provision which is at issue.
The courts of Maine would apply Maine law to the
interpretation of the coverage provided in an automobile insurance
policy for a resident of Maine. See Flaherty v. Allstate Ins. Co.,
822 A.2d 1159, 1165-68 (Me. 2003) (explaining that under Maine law
courts apply the "most significant contacts and relationships" test
and applying Maine law where, inter alia, parties were Maine
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residents and parties entered into insurance contract in Maine);
see also Restatement (Second) of Conflict of Laws § 188 (1971).1
Under Maine insurance law, there are certain well-accepted rules of
construction of such contracts.
The ultimate touchstone of our analysis must be the
parties' intent in entering their bargain. See, e.g., Pine Ridge
Realty, Inc. v. Mass. Bay Ins. Co., 752 A.2d 595, 601 (Me. 2000).
We view the policy from the standpoint of "an average person,
untrained in either the law or the insurance field, in light of
what a more than casual reading of the policy would reveal to an
ordinarily intelligent insured." Peerless Ins. Co. v. Wood, 685
A.2d 1173, 1174 (Me. 1996). Additionally, "[i]nsurance policies
are liberally construed by [the] court in favor of the insured."
Id.; see also Found. for Blood Research v. St. Paul Marine & Fire
Ins. Co., 730 A.2d 175, 180 (Me. 1999); Union Mut. Fire Ins. Co. v.
Commercial Union Ins. Co., 521 A.2d 308, 310 (Me. 1987). Under
Maine law, "[a]ny ambiguity in the [insurance] contract is resolved
against the insurer." Union Mut. Fire Ins. Co., 521 A.2d at 310;
see also Allstate Ins. Co. v. Elwell, 513 A.2d 269, 271 (Me. 1986).
Read literally, the Out of State Coverage clause states
that it will provide coverage for an accident which occurs out of
state up to the limits of liability provided for by a financial
1
Although a complete copy of the BW policy was not
submitted to the district court, all parties agreed that Maine law
governed the case, and the district court accepted that agreement.
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responsibility law of the place of the accident. It is undisputed
that New Brunswick, the place of the accident, has a financial
responsibility law that requires nonresident motorists to satisfy
a judgment of up to $200,000 (Can.), and to provide proof of
financial responsibility in the amount of $200,000 (Can.), to avoid
suspension of their driving privileges following an accident
causing personal injury or $1000 (Can.) in damages. See R.S.N.B.
1973, ch. M-17, §§ 276(1)(a), 282. The contract provision's
language, which was crafted by the insurer, then is easily
understood to increase the coverage amount in this instance to
$200,000 (Can.).
BW essentially argues that the provision should be read
not as an expansion of coverage for the insured, but only as a
potential expansion subject to a limitation. The limitation BW
wishes to read into the policy language is that the insured gets
the benefit of the increased coverage amount if and only if New
Brunswick's financial responsibility law would actually apply to
these facts. It argues that the New Brunswick law would not apply.
Without our going into a long exegesis on the New Brunswick
financial responsibility law, at the heart of BW's argument is that
this was a first accident and under financial responsibility laws,
as Couch on Insurance recognizes, usually the first accident is
essentially free. 7A L.R. Russ & T.F. Segalla, Couch on Insurance
§ 109:34, at 109-47 (3d ed. 2005) ("The terms required by such
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[financial responsibility] statutes apply only after the operator
of a vehicle has been involved in one accident and only to
accidents which occur after the effective date of the requirement
of proof of financial responsibility."). We do not need to test
the assumption that the New Brunswick law has that effect.
We think BW is wrong to focus on the limits of the New
Brunswick financial responsibility law, and not on its own policy
language. First, the Out of State Coverage clause does not read
the way BW would like it to read, although it could have been
written that way. Second, the proper focus is on the insured's
reasonable expectations, given the policy language. We doubt any
insured would have reasonably understood this "out of state
coverage" clause to be not an expansion of coverage, as it says,
but also to contain an unstated limitation on an expansion of
coverage. Further, the insured certainly would not have understood
the expansion of coverage to have an exception for first accidents
outside of Maine in jurisdictions with financial responsibility
laws. The language of the "Out of State Coverage" clause makes
specific reference to any accident, whether first or not, out of
state: the preamble to the financial responsibility clause states,
"[i]f an auto accident to which this policy applies occurs" out of
state, then "we will interpret your policy for that accident as
follows"; the financial responsibility clause then promises to
"provide the higher specified limit."
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Our conclusion would be the same regardless, but it is
buttressed by the fact that BW itself initially read the clause as
we do and so represented to the insured. On September 13, 2007,
two months prior to the filing of the complaint in the instant
action, a BW Claims Analyst, Curtis M. Lemmerbrock, wrote a letter
to Landry stating that "since this accident happened in Canada,
your [bodily injury] policy limits automatically deem to the
minimum amounts of liability limits as outlined via Canadian law,
which is $200,000CA per person." The letter advised Landry that
she would be covered up to the $200,000 (Can.) limit, but that
damages from the injury claim pending against her could exceed that
limit. Whether or not this is an admission, it is evidence BW's
own agent read the clause that way. To the extent the clause is
ambiguous, it must be read against the insurer.
The meaning of the clause is squarely presented and has
not been waived. Wawanesa has argued both in the district court
and on appeal that under the plain language of the policy the Out
of State Coverage clause necessarily expands the coverage to
$200,000 (Can.).2 It is true that on appeal the parties largely
viewed this case as a question about the meaning of the New
Brunswick financial responsibility law. At oral argument, the
2
In the district court, Wawanesa characterized the
language of the clause as "clear and unambiguous" and argued that
BW's clause included no words of limitation that the policy applied
only after the first accident.
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panel asked questions about interpretation of the Out of State
Coverage clause. And logically, the question we have answered is
the prior one about the contractual language. We have no need to
reach the questions as to the meaning of New Brunswick law; we are
particularly disinclined to opine on foreign law when we do not
need to do so. The principles of Maine law on which we rely are
unexceptional and were briefed to the district court.
II.
For these reasons, we reverse and order entry of judgment
for Wawanesa.
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