Summary
finding "regular use" exception did not apply
Summary of this case from Cook v. Cigna Ins. Co.Opinion
No. 86-1035.
Submitted May 8, 1986.
Decided September 4, 1986.
Mark L. Mallory, Linda E. Fraas and Law Offices of Kenneth G. Bouchard, P.A., Manchester, N.H., on brief, for defendant, appellant.
Steven E. Hengen and Ransmeier Spellman, Concord, N.H., on brief, for plaintiff, appellee Brien Volpe.
Appeal from the United States District Court for the District of New Hampshire.
Defendant Prudential Property and Casualty Insurance Company (Prudential) appeals from the district court's declaratory judgment that it must provide liability coverage for its insured, Carolyn Blondeau, for an accident claim made against her by Brien Volpe. Prudential also appeals the district court's award to Blondeau of attorneys' fees for the declaratory judgment action. For the reasons that follow, we affirm the district court's decision as to coverage but we reverse its decision about attorneys' fees.
I.
Volpe and Blondeau are fellow plaintiffs in the declaratory judgment now on appeal but are opponents in a pending tort action in federal court in New Hampshire. Volpe, a passenger in a vehicle driven by David Federichi, was injured in a collision with a Chevrolet Camaro driven by Tommy Briggs and formally owned by, and registered to, Tommy's father, Frank Briggs. At the time of the accident, Blondeau was a passenger in the Camaro. Volpe alleges that Blondeau negligently entrusted the Camaro to Tommy Briggs, then her boyfriend, whom she knew to be a reckless and dangerous driver.
Volpe and Blondeau brought this declaratory judgment action to determine their rights under an "easy reading" insurance policy issued to Blondeau by Prudential. Prudential denied Blondeau coverage for Volpe's claim, citing the following paragraph:
You're insured while using a car you don't own. Relatives living in your household are insured while using a passenger car or trailer which is owned by someone else or any organization when it is reasonable to expect that the owner has given permission to use it and it is used in the way intended by the owner. This non-owned passenger car or trailer has the same coverages as any one of your cars. But there is no coverage for cars regularly used by you or such relatives.
(Emphasis added.) Prudential acknowledged that Blondeau was using the Briggs' car when she was merely a passenger, but it argued that Blondeau "regularly used" the Briggs' car and that she therefore fell within the exclusion quoted in the last sentence.
The district court, after considering the parties' cross-motions for summary judgment, did not decide whether or not the underlined phrase deprived Blondeau of coverage. Instead the court accepted a different argument that Volpe had made to show coverage. Volpe quoted a paragraph contained in a section on "losses we won't pay for." The paragraph is titled "cars for hire" and says:
We won't pay for any accident that happens while a car this part covers is being used as a taxi or car for hire. You're covered, though, if you're responsible for an accident while you're a passenger in a car you don't own.
The court read the second sentence of the "cars for hire" paragraph in light of New Hampshire's policy of construing ambiguities against the insurer. It found that the sentence could reasonably be interpreted to provide coverage for Blondeau when she is responsible for an accident while a passenger in any car she doesn't own, including Briggs' car. The court therefore ordered Prudential to defend Blondeau in the underlying tort action brought by Volpe. It also held that Blondeau was entitled to attorneys' fees pursuant to New Hampshire Rev.Stat.Ann. § 491:22-b (1983). Prudential has appealed.
II.
We agree with the district court that in New Hampshire "an ambiguous insurance policy will be construed in favor of the insured and against the insurer." Trombly v. Blue Cross/Blue Shield of New Hampshire-Vermont, 120 N.H. 764, 771, 423 A.2d 980, 985 (1980). We also agree with its conclusion regarding coverage. We are not able to agree with the court, however, (nor have we agreed among ourselves) about whether the sentence to which the court pointed is ambiguous. While one of us is in substantial agreement with the district court's construction of the policy, two of us believe that the position of the sentence in a paragraph entitled "cars for hire" would prevent any reasonable person from thinking that the sentence affirmatively extends coverage beyond what the remaining paragraphs of the policy provide. See Appendix. The purported ambiguity arises only if the sentence is read out of context, disregarding its place in the policy as a whole. We hesitate to push the insurance industry toward spelling out each qualification every time a policy mentions a qualified term — as we might do by insisting that the second sentence here say "in a taxi or car for hire you don't own." Unnecessary verbiage interferes with easy reading no less than ambiguity, and we ought not gratuitously to encourage it.
Our views concerning the existence of ambiguity make no legal difference in this case, however, for we conclude on other grounds that Prudential must provide coverage. The parties agree that Blondeau's policy insures her while "in someone else's car" unless the car is one she or her relatives "regularly used." On the basis of the record, even if we read it in a light most favorable to Prudential, Early v. Eastern Transfer, 699 F.2d 552, 554 (1st Cir.), cert. denied, 464 U.S. 824, 104 S.Ct. 93, 78 L.Ed.2d 100 (1983); Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir. 1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976), the "regular use" exception does not apply.
Some form of the "regular use" exclusion is commonly found in automobile insurance policies. It implicitly recognizes that:
a policy which would give to an insured who simply took out a policy on a single owned car, coverage on any number of cars not owned by him, but furnished for his regular use, just as if he owned them, would be ruinous to an insurance company. . . . [W]here more than one owned automobile is included, as a rule the insurance premium is larger.
Globe Indemnity Co. v. Teixeira, 230 F. Supp. 451, 455 (D.Hawaii 1964), aff'd, 349 F.2d 502 (9th Cir. 1965). The exclusion therefore protects the insurer from multiple exposure to liability for which the insured pays only one premium. See United Services Automobile Ass'n v. Couch, 643 S.W.2d 668, 672 (Tenn.Ct.App. 1982); Kenilworth Ins. Co. v. Cole, 587 S.W.2d 93, 100 (Mo.Ct.App. 1979). Its purpose and effect
is to give coverage to the insured while engaged in the only infrequent or merely casual use of an automobile other than the one described in the policy, but not to cover him against personal liability with respect to his use of another automobile which he frequently uses or has the opportunity to do so. More specifically the evident intention of the limitation with respect to other automobiles is to prevent a situation in which the members of one household may have two or more automobiles actually or potentially used interchangeably but with only one particular automobile insured.
Aler v. Travelers Indemnity Co., 92 F. Supp. 620, 623 (D.Md. 1950); see also 12A Couch on Insurance 2d § 45:1074 (1981 Supp. 1985); Annot., 8 A.L.R.4th 387 (1981). It prevents "abuse, by precluding the insured and his family from regularly driving two or more cars for the price of one policy." Highlands Ins. Co. v. Universal Underwriters Ins. Co., 92 Cal.App.3d 171, 176, 154 Cal.Rptr. 683, 687 (1979).
Both parties rely on Blondeau's deposition to support their conflicting interpretations of the contested term. Prudential emphasizes Blondeau's testimony that she sometimes used the Camaro for her own errands; that she asked for permission to use the car as a courtesy, and that she was never denied permission; that she drove the car three or four times a week, including twice a week alone; and that she drove the car 60 percent of the time when she and Tommy used the Camaro together. On these grounds, Prudential asserts that Blondeau's use of the Camaro was "steady," "methodical," "constant," and "systematic." See, e.g., Winterwerp v. Allstate Ins. Co., 277 Md. 714, 357 A.2d 350 (1976); Motorists Mut. Ins. Co. v. Sandford, 8 Ohio App.2d 259, 221 N.E.2d 596 (1966). Volpe emphasizes Blondeau's testimony that she owned her own vehicle, a Chevrolet Citation, and that she drove the Citation to work each day; that her own car was her primary means of transportation; that Tommy Briggs was the most frequent user of the Camaro; that she always asked permission to use the car; and that for two of the seven months Tommy owned the car — when their relationship temporarily soured — she did not use the Camaro at all. On these bases, Volpe says that Blondeau's use of the Camaro satisfies neither the "principal use" nor the "control" tests adopted by some courts as determinants of regular use. See, e.g., Highlands Ins. Co. v. Universal Underwriters Ins. Co., 92 Cal.App.3d 171, 154 Cal.Rptr. 683 (1979); Southern Railway Co. v. State Farm Mut. Auto. Ins. Co., 357 F. Supp. 810 (N.D.Ga. 1972), aff'd, 477 F.2d 49 (5th Cir. 1973).
In our view, it does not matter whether one characterizes the proper legal test as one of "steady," "methodical" use or of "principal" use or "control." The facts here — which are basically undisputed — cannot in any event justify invoking the "regular use" exception. Blondeau did not use the car to go to or come from work; she did not use it at work; she did not have exclusive use of the car for any significant part of the day or week; she did not have unrestricted use of the car; she did not use it interchangeably with a car of her own; and the car did not belong to a member of her household. These facts taken together show that Blondeau would not reasonably have expected to pay an extra premium to cover her use of the Briggs' car. See Commercial Union Assurance Cos. v. Gollan, 118 N.H. 744, 745, 394 A.2d 839, 841 (1978); Commercial Union Assurance Cos. v. Derry, 118 N.H. 469, 471, 387 A.2d 1171, 1172 (1978); Brown v. Laconia, 118 N.H. 376, 378, 386 A.2d 1276, 1277 (1978). We also doubt that Frank Briggs would have expected to pay an additional premium for her use, as she was not a member of his household. We do not see how the insurer (given the present policy) can have reasonably expected to collect an extra premium for Blondeau's use of the Briggs' car. Thus, when we consider these facts in light of the purposes of the "regular use" provision, we find that provision inapplicable. This finding is, if anything, strengthened by New Hampshire's adoption of the majority rule that ambiguous policies are to be construed in favor of the insured. See Trombly, 120 N.H. at 771, 423 A.2d at 985 (remarking that the rule of construction favoring the insured goes "one step further" than the reasonable expectations test used in Gollan, Derry, and Brown).
New Hampshire case law on "regular use" provisions supports this view. When facts have shown use sufficiently frequent, systematic or authoritative as to have made it reasonable for an insurer to expect an extra premium to insure an additional car, the New Hampshire Supreme Court has found "regular use." See Spaulding v. Concord Gen. Mut. Ins. Co., 122 N.H. 515, 446 A.2d 1172 (1982) (holding that a car owned by a jailed friend was furnished for the insured's regular use when he had free use of the car, used it often for his own purposes, parked it in his driveway, and contributed to its upkeep); Davy v. Merchants Mut. Cas. Co., 97 N.H. 236, 85 A.2d 388 (1952) (holding that cars provided by the insured's employer for use during the insured's work as a full-time taxi driver were furnished for his regular use). When facts have made it unreasonable to expect the premium, the New Hampshire court has held the exception not to apply. See Allstate Ins. Co. v. Chatigny, 103 N.H. 81, 166 A.2d 122 (1960) (holding that a friend's car was not furnished for regular use when the insured did not take the car home, did not generally use it for himself, and used it only with permission). We have no reason to believe that the New Hampshire Supreme Court would extend the scope of the "regular use" exclusion beyond what is needed to satisfy its basic purposes. Hence we conclude that the exclusion does not apply to the facts described in Blondeau's deposition — the facts at issue here. Prudential therefore must provide coverage.
III.
The district court, relying on N.H. Rev.Stat.Ann. § 491:22-b (1983), awarded Blondeau reasonable attorneys' fees. The statute provides:
In any action to determine coverage of an insurance policy pursuant to RSA 491:22, if the insured prevails in such action, he shall receive court costs and reasonable attorneys' fees from the insurer.
This action, however, was not commenced "pursuant to RSA 491:22," the New Hampshire declaratory judgment statute. Rather, the action was brought under the federal declaratory judgment statute, 28 U.S.C. § 2201 (1982), which does not provide for awards of attorneys' fees to the prevailing insured. The New Hampshire Supreme Court has declared that the State declaratory judgment remedy, with its accompanying attorneys' fees, is not available to litigants proceeding in federal court. Jackson v. Federal Ins. Co., 127 N.H. 230, 498 A.2d 757, 759 (1985) ("the legislature did not intend to avail litigants in the federal courts of our State declaratory judgment remedy for resolving insurance coverage questions"). Since Blondeau could not have invoked § 491:22, she cannot claim the attorneys' fees that that statute makes available to a prevailing insured. Jackson v. Federal Ins. Co., supra. And, the district court erred in holding the contrary.
For the foregoing reasons, the district court's judgment that Blondeau is entitled to insurance coverage is affirmed; the award of attorneys' fees is reversed.
Affirmed as modified.