Opinion
15-P-1714
04-21-2017
James KELLEHER, coadministrator,& another v. COMMERCE INSURANCE COMPANY.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This case arises from the denial of underinsured motorist coverage benefits by the defendant, Commerce Insurance Company (Commerce), in a claim by the estate of John H. Kelleher (Kelleher). A judge of the Superior Court granted summary judgment in favor of Commerce on the ground that Kelleher was not a named insured under the policy in question. We affirm.
Background. In November 2010, Commerce issued a garage policy (policy) to Alby's Salvage, Inc. (Alby's). The policy's two named insureds were Alby's Salvage Inc. and Zeph 87 Trust (Zeph). Alby's was an automobile repair business, and Kelleher was one of its officers, directors, and shareholders. Zeph was a nominee trust, which owned the real estate used for Alby's garage and salvage yard. Kelleher was a trustee and a beneficiary of the trust, holding a fifty percent interest. The policy included underinsured motorist coverage. Kelleher was not listed on the policy as an insured.
Madeline Kelleher, also as coadministrator of the estate of John H. Kelleher .
On July 11, 2011, Kelleher was struck and killed by a car as he was crossing a street in Quincy. The coadministrators of Kelleher's estate settled for the full policy limits with the insurer of the vehicle that struck Kelleher and sought underinsured benefits from Commerce under the policy. Commerce denied the claim on the ground that Kelleher was not a named insured covered by the policy.
The car that struck Kelleher was covered by insurance with a policy limit of $25,000.
The coadministrators of Kelleher's estate filed an action seeking a declaratory judgment that Commerce was obligated to pay the underinsured benefits and seeking damages for unfair settlement practices. In its answer, Commerce filed a counterclaim seeking a declaratory judgment that Kelleher was not an insured and that the plaintiffs are not entitled to underinsured benefits under the policy. Commerce also sought a declaration that, should the court determine Kelleher was an insured, the plaintiffs breached the terms of the policy by failing to seek Commerce's consent before settling their claim against the operator of the car that struck Kelleher. On cross motions for summary judgment, the judge found that Kelleher was not an insured pursuant to the policy and that the plaintiffs breached the policy for failing to obtain Commerce's consent prior to settling with the operator of the car that struck Kelleher. Judgment was entered for the defendant, and the plaintiffs filed this timely appeal.
Discussion. 1. Standard of review. "Summary judgment is appropriate where there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law." Barron Chiropractic & Rehabilitation, P.C. v. Norfolk & Dedham Group, 469 Mass. 800, 804 (2014). "We review a grant of summary judgment de novo," viewing the evidence in the light most favorable to the nonmoving party. Miller v. Cotter, 448 Mass. 671, 676 (2007).
2. Policy interpretation. Here, there are no material facts in dispute relevant to whether the terms of Commerce's policy afford coverage for the underinsured motorist benefits. The resolution of the issue before us depends on the proper interpretation of the term "named insured" as it is used in the policy, and, therefore, raises solely a question of law. Massachusetts Bay Transp. Authy. v. Allianz Ins. Co., 413 Mass. 473, 476 (1992), citing Nelson v. Cambridge Mut. Fire Ins. Co., 30 Mass. App. Ct. 671, 673 (1991).
This policy provided underinsured motorist coverage of $250,000 to the named insured if injured as a pedestrian. The plaintiffs argue that as a nominee trust, Zeph is not a legal entity and acts only through its trustees, which should result in the trustees being treated as an insured. They contend to do otherwise "renders the inclusion of Zeph in the policy meaningless."
The plaintiffs support this claim by arguing that in construing the policy "[e]very word and phrase must be presumed to have been employed with a purpose and must be given meaning and effect whenever practicable[,]" Wrobel v. General Acc. Fire& Life Assur. Corp., 288 Mass. 206, 209-210 (1934), and that "[a]n interpretation which gives a reasonable meaning to all of the provisions of a contract is to be preferred to one which leaves a part useless or inexplicable." Sherman v. Employers'Liab. Assur. Corp., 343 Mass 354, 357 (1961).
This argument was rejected in Jacobs v. United States Fid. & Guar. Co., 417 Mass. 75 (1994). In Jacobs, the court held that these principles do not apply when the party is essentially asking the court to "write a new paragraph into the policy" which "goes beyond merely giving effect to policy provisions." Id. at 77-78.
"[I]nsurance contracts are to be construed according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed. A policy of insurance whose provisions are plainly and definitely expressed in appropriate language must be enforced in accordance with its terms." Cody v. Connecticut Gen. Life Ins. Co., 387 Mass. 142, 146, (1982) (quotations and citations omitted). When interpreting the provisions of an insurance policy, we "consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered." Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 635 (2013), quoting from Hazen Paper Co. v. United States Fid. & Guar. Co., 407 Mass. 689, 700 (1990).
Limiting the interpretation of this policy to its precise wording, even where equitable considerations might favor a broader definition, is consistent with our case law. In Tatarian v. Commercial Union Ins. Co., 41 Mass. App. Ct. 731 (1996), the policy's named insured was a nominee trust, and the claimant was both the trustee and beneficiary of the named nominee trust. The Tatarian claimant argued that he should be covered as a named insured. This court held that the trust itself was the only named insured and ruled that uninsured motorist benefits were unavailable to a trustee. Id. at 734.
In this policy, "named insured" has a clear and explicit meaning. It is the two entities listed in the policy, specifically Alby's and Zeph. There is no need to consider the trustee's role or legal capacity to provide " ‘a reasonable meaning to’ or explain the provision." Jacobs, supra at 78, quoting from Sherman v. Employers' Liab. Assur. Corp., 343 Mass. at 357. The policy is not ambiguous. The named insureds are Alby's and the trust, and our prior rulings have made it clear that in such circumstances the trustee is not entitled to coverage. The plaintiffs cannot reasonably have had an expectation of coverage here, where the policy clearly lists Zeph as the named insured.
"[A]n ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other." Lumbermens Mut. Cas. Co. v. OfficesUnlimited,Inc., 419 Mass. 462, 466 (1995).
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We determine that Kelleher in his capacity as a trustee was not an insured under the policy. Accordingly, summary judgment is appropriate for the defendant.
3. Breach of policy. In light of our rulings, we find nothing in the plaintiffs' final argument regarding whether there was a breach of the policy that requires discussion. Department of Rev. v. Ryan R., 62 Mass. App. Ct. 380, 389 (2004).
Judgment affirmed.