¶ 29. DOOLEY, J., dissenting.

Since Progressive Insurance Company's argument to this Court is based on its claim that it never made a summary judgment motion based on fraudulent inducement, Progressive will immediately capture the thrust of the majority's opinion from the opening sentence: "Progressive Insurance Company appeals from a denial of its motion for summary judgment against its insured, Gregory Wasoka, for fraud in the inducement of an automobile insurance policy." Ante, ¶ 1. I believe the opening sentence is symptomatic of the short shrift that the Court's decision has given to Progressive's action and arguments, and cannot subscribe to it. Accordingly, I dissent.

¶ 30. The main issue in this case was whether Progressive was entitled to thirty days to answer its insured's response to Progressive's motion for summary judgment, hardly an earth shattering issue. In this case, however, the majority has upheld what is de facto a default judgment against Progressive. In doing so, it has denied the thirty days to respond by torturing the language of Progressive's motion for summary judgment to find in it a frivolous and unsupported summary judgment claim that its insured fraudulently induced Progressive to issue the policy by misrepresenting the state of his residency. Any appearance of fairness is further undercut by the trial court's acceptance of Wasoka's response to the summary judgment motion six months after it was filed, when Rule of Civil Procedure 56(c)(1) normally requires that it be filed within thirty days, while denying Progressive even a thirty-day response period. I believe that in cases of serious doubt — and this is at least such a case — we should err on the side of giving every litigant, including an insurance company, an opportunity to present its case on the merits — that is, its day in court. I doubt we would endorse denying that right in this case if the trial court had entered judgment for an insurance company, and we should not do so when the situation is reversed.

¶ 31. Underlying this case, there is a serious question about summary judgment motion procedure. Rule 56(c)(1) gives a party up to thirty days to respond to a motion for summary judgment, but specifies no time limit, and gives no authorization for a rebuttal response by the moving party. Our general motion rule, V.R.C.P. 78(b)(1), also contains no authorization for, and gives no time limit for, a rebuttal response. The trial court has defaulted Progressive for failing to file a rebuttal to Wasoka's response "despite having approximately three full weeks to do so," apparently believing that Progressive's counsel should have known that it had to file a response and three weeks exceeded whatever deadline the court had in mind. As I stated above, this came in a case where the court had just allowed Wasoka six months to respond to the original motion. Even if I agreed with the majority on the main issue of the case, I would hold that Progressive should have been given at least thirty days to respond because it was responding to substantial new facts and law. I also believe that we should refer this issue to the rules committee so this kind of case does not arise again. No system based on a trial judge's power to disclose a deadline after the fact to default a party will appear fair.

¶ 32. My main difference with the majority is over its conclusion that Progressive's motion for summary judgment was based on a theory of fraud in the inducement. Progressive's complaint raises two distinct reasons why it was not required to pay Wasoka's claim: "Mr. Wasoka's insurance policy . . . is void ab initio due to his fraudulent representations" and "there is no coverage under [the] . . . policy for any claims . . . due to Mr. Wasoka's failure to cooperate with Progressive." The latter reason is explained in the complaint: "Mr. Wasoka has failed to cooperate with Progressive by, among other things, refusing to respond to Progressive's requests for additional information and its request for his examination and oath."

¶ 33. Progressive filed for summary judgment only on its second ground for not paying Wasoka's insurance claim — that Wasoka breached the terms of the insurance policy by failing to cooperate with Progressive and submit to an examination under oath as required in the policy. This is explained in one of the opening paragraphs of the motion:

The present matter is an insurance coverage case where Defendant deliberately breached a policy provision that would have enabled his insurer to investigate the issue of fraud in the inducement of the policy, a legal issue that would void coverage. Fireman's Fund Ins. Co. v. Knutsen, 132 Vt. 383 (1974). By this motion, Plaintiff requests judgment from the court that Defendant's breach of contract voids the insurance contract ab initio.

¶ 34. The majority concludes, however, that despite this language in the motion, other language, and the cases cited, show that Progressive was actually relying on a form of fraud in the inducement. The majority fails to distinguish between Progressive's actual argument — that failure to cooperate should have the same remedy as fraud in the inducement — and its characterization of the argument — that Progressive alleged fraud in the inducement. Thus, in its conclusion, Progressive argued from Fireman's Fund that in matters of fraud in the inducement a showing of intent to deceive is unnecessary because "[i]t would be consistent for the Vermont Supreme Court to find that an insured's failure to submit to an examination under oath, the tool of an insurer to investigate issues of fraud, should void coverage." When read in context, all of Progressive's references to fraud in the inducement relate to the need for a similar remedy and not to a claim of fraud in the inducement in this case.

¶ 35. Much of the majority's analysis relates to the weakness of Progressive's argument in its motion for summary judgment and that the cases relied upon were mainly fraud in the inducement cases. Progressive has not appealed the denial of the motion for summary judgment on the merits, and I agree that it should have been denied on the merits of what it presented. I particularly agree that Fireman's Fund Insurance Co. v. Knutsen offered no support for an argument that a policy should be void if the insured fails to cooperate by refusing to submit to an examination under oath. As the majority, the trial court and Wasoka emphasized, the force of Progressive's legal arguments were greatly undermined by this Court's decision in Smith v. Nationwide Mutual Insurance Co., 2003 VT 61, 175 Vt. 355, 830 A.2d 108, a decision issued after Progressive filed its motion for summary judgment and memorandum of law. But all of this is beside the point in this appeal. Weakness in the claim Progressive made does not somehow turn it into a different claim, as the majority finds.

¶ 36. Because I believe that this case represents a trap for the unwary and so much of the disagreement over it depends on the characterization of the motion Progressive made, I have attached Progressive's motion for summary judgment at the end of this dissent. Contrary to the majority's apparent view, this should not be an exercise in trying to find words that support the outcome that Progressive made a motion that Progressive asserts it did not make, but instead in reading the motion overall to determine fairly what were the grounds for its summary judgment motion. The reader can decide which characterization of it is more accurate and whether, as the majority claims, I have quoted "selectively" from it.

¶ 37. I am also persuaded by another very important factor in this case, one ignored by the majority. If Progressive made a motion for summary judgment based on fraud in the inducement, that motion was utterly frivolous. No fact in Progressive's statement of undisputed facts went to fraud in the inducement. See V.R.C.P. 56(c)(2) (requiring movant to attach statement of the "material facts" it claims are undisputed). Put more directly, none of the facts went to the "inducement" of Progressive to write the policy on July 23, 2000 and, other than the statement that plaintiff purchased the policy on that date, all facts described events that occurred after that date and could not have involved inducement for writing the policy. All of the other material attached to the motion went to Wasoka's failure to cooperate in giving a statement under oath or to enter into a reservation-of-rights agreement.

¶ 38. The frivolous nature of the argument the majority claims Progressive made is obvious from the majority's constant description of that argument. Thus, the majority says in a number of places that Progressive argued that Wasoka committed "fraud in the inducement as evidenced by Wasoka's noncooperation." Ante, ¶¶ 1, 6. If that sentence appeared in any other context than this opinion, one would wonder if it were a mistake since the alleged "noncooperation" occurred over a year after the "inducement" of Progressive to issue the policy. In his response, Wasoka seized on this point arguing in support of his position that Progressive had produced no evidence in support of a claim of fraud in the inducement:

Defendant Gregory Wasoka submits that Plaintiff's Motion for Summary Judgment, does not present any evidence of the following:

(1) evidence of an insurance application;

(2) evidence of any misrepresentation made to the insurance agent;

(3) evidence of an alleged misrepresentation that was material to liability coverage;

(4) evidence that defendant Wasoka's intent was anything other than to insure himself in the State of Vermont at the time of the insurance "application"; or

(5) evidence that coverage under the policy required Vermont residency.

Wasoka was right. Progressive's motion and supporting material did not go to any of the elements of fraud in the inducement. Where there is a dispute over the meaning and intent of a motion, construing it in a way to make it frivolous is wrong, particularly where the effect of that construction is to default it from ever having the opportunity to present the main claim in its complaint.

¶ 39. This returns us to what is in issue as a result of the characterization of Progressive's summary judgment motion. Because fraud in the inducement as a result of Wasoka's residency was not raised in Progressive's motion, it was raised for the first time by Wasoka. As a result, Wasoka was the movant on this issue, and Progressive was entitled to thirty days to respond as the nonmovant. V.R.C.P. 56(c)(1). The court erred by not affording Progressive this response time and, consequently, Progressive was prejudiced because it never had an opportunity to submit facts pertaining to the residency issue.

¶ 40. While we have not addressed this procedural issue directly, our decisions are fully consistent with this result. We have demanded that if the trial court enters summary judgment sua sponte it must provide the opposing party with an opportunity to respond. Kelly v. Town of Barnard, 155 Vt. 296, 306, 583 A.2d 614, 620 (1990) ("In Vermont, before the court can grant summary judgment, it must give the opposing party a reasonable opportunity to show the existence of a fact question." (quotations omitted)). Similarly, we "recognize[d] the general rule that summary judgment should not be granted on an issue not raised in the summary judgment motion unless the party against whom summary judgment is granted is given full and fair notice and opportunity to respond to the issue prior to the entry of summary judgment." State v. Therrien, 2003 VT 44, ¶ 23 n. 3, 175 Vt. 342, 830 A.2d 28. Other jurisdictions have held that where a new legal issue is raised in a cross-motion for summary judgment, the original movant becomes the adverse party on the issue and is entitled to a thirty-day response time as set out in Rule 56. See Hill v. Chambless, 757 So. 2d 409, 411 (Ala. 2000) (reversing for failure to provide full response time); In re Persons, 311 N.W.2d 919, 923 (N.D. 1981) (reversing dismissal where opposing party was not accorded full response time). Using the similar Federal Rule of Civil Procedure 56, the federal courts agree that when a party requests summary judgment on a new legal issue, the opposing party is entitled to a renewed response time. See, e.g., Burns v. Gadsden State Cmty. Coll., 908 F.2d 1512, 1516 (11th Cir. 1990) (reversing for failure to provide response time); Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 410 (1st Cir. 1985) (explaining that party should have opportunity to respond); Russell v. Atlas Van Lines, Inc., 411 F. Supp. 111, 115 (E.D. Okla. 1976) (providing party time to respond before it ruled on summary judgment motion).

¶ 41. Even if I accepted that Progressive had raised fraud in the inducement in its complaint, I would hold that Progressive was entitled to thirty days to respond to Wasoka's motion. Under the majority's analysis, this has turned into a form of "magic words" case. That is, the majority has held that if the summary judgment movant raises some form of "fraud in the inducement" by using those words somewhere in its motion, the opposing party is entitled to raise anything with respect to fraud in the inducement without giving the original moving party the right to reply as a nonmovant. This holding distorts the procedure called for in the rules. Here Wasoka responded with additional uncontested material facts going to his residency at the time of the issuance of the policy and extensive discovery materials on this issue. None of this was covered in Progressive's filings that accompanied its summary judgment motion.

¶ 42. Wasoka submitted additional new facts in support of a cross-motion for summary judgment. Irrespective of whether the issue was covered in Progressive's original motion, Rule 56(c)(1) applies by its terms to give Progressive thirty days to respond to Wasoka's motion. Indeed, this is the only logical reading of the rule because it does not provide for rebuttal and would not otherwise require Progressive to submit its own version of undisputed facts in response to those raised by Wasoka. See V.R.C.P. 56(c)(2). To hold that the evidence narrowing requirements of Rule 56(c)(2) do not extend to new facts raised by the original opponent greatly undercuts this procedure in a case where the incantation of the magic words was found to be enough to start the process.

¶ 43. The majority responds that the facts were not new to Progressive, and that is all that counts. It is irrelevant whether the facts were new to Progressive; they were new to the court and, in this "magic words" case, went in an entirely different direction from Progressive's filings and raised questions of law that Progressive never briefed. The rule must be administered with a bright line opportunity to respond; under the majority's distinction, litigants would never know how long they had to respond.

¶ 44. Finally, I believe that the only possible remedy for the failure to accord Progressive the proper time to respond is a reversal of the summary judgment so that Progressive can respond to Wasoka's motion and filings. In reaching this conclusion, I disagree with the majority that a harmless error analysis will decide this case for Wasoka. Rule 56 grants an adverse party thirty days to present affidavits and a memorandum in response to a motion for summary judgment, and the superior court had no discretion to shorten this time limit. The court failed to honor this requirement and to issue summary judgment when it did.

¶ 45. The basic federal law, adopted by a majority of federal courts, is that noncompliance with the time provisions of the summary judgment rule deprives the trial court of authority to decide the motion. Osbakken v. Venable, 931 F.2d 36, 37 (10th Cir. 1991) ("It is settled law that noncompliance with the time provisions of Rule 56(c) deprives the court of authority to grant the motion for summary judgment unless the opposing party has waived this requirement."); Winbourne v. E. Air Lines, Inc., 632 F.2d 219, 223, 223 n. 5 (2d Cir. 1980) (citing cases and noting that while a minority of federal courts apply a harmless error analysis for failure to comply with the procedural requirements of Rule 56, the majority of courts hold that "a procedural defect vitiates the entry of summary judgment against the non-moving party"). There is a place for harmless error analysis only if the record shows that the party against whom summary judgment is issued could not have brought forward additional material facts to defeat the motion. This is the holding of Bridgeway Corp. v. Citibank, 201 F.3d 134 (2d Cir. 2000), a case in which the party against which summary judgment was granted had admitted in its filings that the evidence was sufficient to enable the court to decide whether to grant summary judgment on the issue it did. See id. at 140 ("Bridgeway repeatedly claimed to the district court that it had introduced sufficient evidence concerning that very issue."). The majority has taken Bridgeway a large step beyond its rationale by holding that Progressive, as the party contesting the summary judgment procedure, must demonstrate by a post-judgment filing what it would have filed in opposition to Wasoka's motion and that it would have won the summary judgment motion. Federal law does not impose such a requirement.

¶ 46. Bridgeway depends in turn on a line of Second Circuit cases that reversed summary judgment decisions because they were issued without giving the losing party a sufficient opportunity to respond. The main precedent is Ramsey v. Coughlin, 94 F.3d 71 (2d Cir. 1996), which developed the harmless error rule as follows:

Where it appears clearly upon the record that all of the evidentiary materials that a party might submit in response to a motion for summary judgment are before the court, a sua sponte grant of summary judgment against that party may be appropriate if those materials show that no material dispute of fact exists and that the other party is entitled to judgment as a matter of law. Before granting summary judgment sua sponte, the district court must assure itself that following the procedures set out in Rule 56 would not alter the outcome. Discovery must either have been completed, or it must be clear that further discovery would be of no benefit. The record must, therefore, reflect the losing party's inability to enhance the evidence supporting its position and the winning party's entitlement to judgment.

Appellate review of a grant of summary judgment is de novo. The record here, which consists solely of Ramsey's submission in support of his own motion, does not meet the test set out above. Discovery here has been concluded, but we have no way of knowing whether all pertinent materials obtained in discovery are before us. Had the procedures required by Rule 56 been used and had appellees moved for summary judgment, the state of the evidence concerning the crucial issue of appellees' personal involvement would have been clarified.

Id. at 74 (citations omitted). This case is in the same posture as Ramsey; discovery has been completed but only part of it was before the court. Just as the Ramsey court reversed on that basis, without imposing on the losing party to show what was in that discovery, we must also.

¶ 47. Although we have not addressed directly the application of harmless error in a case where the trial court granted summary judgment without providing one party a sufficient opportunity to respond to the motion, we have considered cases where the trial court went outside the pleadings and converted a motion to dismiss into a motion for summary judgment without giving notice to the adverse party. Rule 12(b) requires that the court give all parties "reasonable opportunity to present all material made pertinent to such a motion by Rule 56." V.R.C.P. 12(b). Where the trial court has granted summary judgment without complying with the notice and opportunity to respond requirement of the rule, we have routinely reversed summary judgment without requiring the losing party to show what evidence it would have submitted to the trial court. See Bennett Estate v. Travelers Ins. Co., 138 Vt. 189, 191, 413 A.2d 1208, 1209 (1980) (reversing summary judgment because plaintiff was not given an opportunity to submit material after motion to dismiss was converted to a summary judgment motion); see also Nash v. Coxon, 152 Vt. 313, 315, 565 A.2d 1360, 1361 (1989) (same). Reflecting a similar policy, we recently reversed the dismissal of a complaint under Rule 12(b) because the losing party was not accorded the opportunity to address the grounds for dismissal and that party might have "be[en] able to amend the complaint sufficiently to state a claim entitling the plaintiff to relief." Huminski v. Lavoie, 173 Vt. 517, 519, 787 A.2d 489, 492 (2001) (mem.).

¶ 48. Our rules impose upon Progressive no duty to file any post-judgment motion once it was denied summary judgment. It chose to do so based on the procedural unfairness of a ruling that defaulted it on the central claim in its suit. The trial court gave no indication in response to Progressive's motion that it expected Progressive to demonstrate what facts it would have offered in response to Wasoka's motion had it been given the opportunity or that it would have considered any additional facts. Under the guise of defining Progressive's obligation to show prejudice, the majority has now created new procedural requirements to file a post-judgment motion and with that motion to file the evidentiary material that demonstrates it would have prevailed on the summary judgment motion if it had been allowed to make the filing.

¶ 49. The majority has responded that it really did not require Progressive to file any post-judgment motion, it simply held that if Progressive filed a post-judgment motion, it cannot squander its opportunity to show prejudice by failing to demonstrate the facts it would have filed in opposition to the summary judgment against it. I believe that this response goes in the wrong direction. It says to the members of the bar that they can avoid making a bad prediction about what to put in a motion to vacate by filing no post-judgment motion and instead appealing to this Court without giving the trial court an opportunity to correct its error. We should endorse exactly the procedure Progressive used here when it brought to the superior court's attention its assertion that the court made a procedural error in defaulting it.

¶ 50. If we are to create new procedural requirements, we should do so prospectively by rule, rather than blaming a litigant for failing to meet requirements of which it had no warning. The waste of judicial resources is caused by the failure to give Progressive an opportunity to respond to Wasoka's summary judgment motion and not by the inadequacy of Progressive's attempts to emerge from the box in which it was placed. Refusal to reverse the decision to default Progressive "appears . . . inconsistent with substantial justice" and is not harmless error. V.R.C.P. 61.

¶ 51. In summary, we should afford Progressive its day in court on its main claim that its insured misrepresented his place of residency and that misrepresentation should void the policy. Whatever we may think about its case, it is entitled to be treated fairly and evenhandedly and pursuant to our rules. It was not treated so in this case.

EXHIBIT 5

THIS IS AUDRA DYCKMAN SPEAKING I AM CALLING FROM TELEPHONE NUMBER 203-267-2416. I AM SPEAKING WITH GREG WASOKA AT TELEPHONE NUMBER 203-723-8038 WE ARE DISCUSSING A MOTOR VEHICLE ACCIDENT THAT OCCURRED ON MAY 9, 2001 IN NAUGATUCK CONNECTICUT. TODAY'S DATE IS MAY 22, 2001 AND THE TIME IS APPROXIMATELY 2:10

AD: GREG DO YOU UNDERSTAND THAT I AM RECORDING THIS INTERVIEW

GW: YES I DO

AD: DO I HAVE YOUR PERMISSION TO RECORD IT

GW: YES YOU DO

AD: STATE YOUR FULL NAME AND SPELL YOUR LAST NAME

GW: GREGORY A. W-A-S-O-K-A

AD: YOUR DATE OF BIRTH

GW: 11-1-79

AD: AND YOUR HOME ADDRESS

GW: KILLINGTON, VERMONT 05751, P.O. BOX 79 OR DO YOU WANT MY HOME ADDRESS

AD: I WANT YOUR PHYSICAL ADDRESS

GW: PHYSICAL ADDRESS IS KILLINGTON ROAD, MOUNTAIN GREEN APARTMENTS, APARTMENT 1B9

AD: KILLINGTON ROAD

GW: YES

AD: KILLINGTON GREEN APARTMENTS YOU SAID

GW: NO MOUNTAIN GREEN

AD: MOUNTAIN GREEN

GW: APARTMENT 1B9

AD: AND HOW LONG HAVE YOU RESIDED AT THAT ADDRESS

GW: HOW LONG SINCE UM ABOUT SEPTEMBER OF LAST YEAR

AD: SEPTEMBER OF LAST YEAR

GW: OF 2000 YES

AD: AND WHERE DID YOU LIVE PRIOR TO THAT

GW: PRIOR TO THAT I LIVED WITH MY PARENTS

AD: WHAT IS THEIR ADDRESS

GW: IN NAUGATUCK, 37 PHYLLIS DRIVE

AD: AND HOW LONG DID YOU LIVE THERE

GW: TEN YEARS

AD: AND WHO RESIDES WITH YOU AT THE MOUNTAIN GREEN APARTMENT

GW: IT'S MY BROTHERS APARTMENT IT'S A CONDO TO BE SPECIFIC IT'S A RESORT

AD: AND YOUR BROTHER OWNS IT

GW: YES MY BROTHER OWNS IT

AD: WHAT IS HIS NAME

GW: WHY DO YOU NEED TO KNOW THAT

AD: DOES HE RESIDE WITH YOU THERE

GW: I RESIDE WITH HIM THERE

AD: THEN I NEED TO KNOW OF ALL THE NAMES OF ALL THE PEOPLE WHO LIVE THERE

GW: OKAY, HIS NAME IS CHARLES DAVID WASOKA SAME SPELLING AS MY NAME WASOKA

AD: AND HOW LONG HAS HE OWNED THE CONDO

GW: A NUMBER OF YEAR NOW I AM NOT TOO SURE

AD: DID YOU MOVE UP THERE TOGETHER

GW: NO WE DIDN'T

AD: AND WE ARE YOU EMPLOYED

GW: RIGHT KNOW I AM EMPLOYED AT GARY INDUSTRIES

AD: WHAT DO YOU DO THERE

GW: A NUMBER OF THINGS

AD: SUCH AS

GW: SUCH AS

AD: DO YOU WORK A SPECIFIC DEPARTMENT

GW: NO I WORK IN THE WHOLE THING I WORK A LITTLE BIT MAINTENANCE I WORK ON THE GRINDING WHEEL, SURFACE GRINDER, BRIDGEPORT MILLING MACHINE THINGS OF THAT NATURE

AD: HOW LONG HAVE YOU WORKED THERE

GW: ON AND OFF FOR ABOUT TWO YEARS

AD: WHEN DID YOU COME BACK TO CONNECTICUT FROM VERMONT

GW: SOMETIME IN MARCH I'M NOT TO SURE OH IT WAS LIKE MARCH 29TH I GOT MY LAST PAY CHECK FROM KILLINGTON RIGHT HERE

AD: AM I TO UNDERSTAND THAT YOU WORKED AT THE KILLINGTON RESORT

GW: YES THAT'S WHY I LIVED THERE THIS FALL AND WINTER

AD: AND WHEN WILL YOU BE RETURNING TO VERMONT

GW: WHEN WILL I BE RETURNING TO VERMONT UM NEXT FALL

AD: WHAT DO YOU DO AT THE KILLINGTON RESORT

GW: I SELL TICKETS

AD: LIFT TICKETS OR

GW: YES LIFT TICKETS

AD: OKAY, AND WHO IS YOUR SUPERVISOR THERE

GW: IT WAS RAY JOHNSON HE GOT FIRED HIS JOB IS NO LONGER THERE

AD: ABOUT WHO IS HIS SUPERVISOR

GW: UM I AM NOT SURE JERRY SOMETHING I AM NOT REALLY SURE

AD: HOW MANY YEARS HAVE YOU WORKED AT KILLINGTON PRIOR TO

GW: THIS IS MY FIRST YEAR RAY JOHNSON WAS A FRIEND OF MY BROTHER FROM THERE FROM COLLEGE MY BROTHER LIVED IN VERMONT AROUND KILLINGTON FOR ABOUT TEN YEARS AND FINALLY I GOT THE CHANCE TO GO UP THERE AND WORK FOR A SEASON

AD: DO YOU RECEIVE MAIL UP THERE

GW: NO JUST THINGS FROM KILLINGTON JUST PAY CHECKS FROM KILLINGTON AND STUFF NOTHING THAT'S ABOUT IT

AD: AND WHEN YOU FILE YOUR TAXES WHAT ADDRESS IS ON YOUR TAX RETURN

GW: WHAT ADDRESS IS ON MY TAX RETURN

AD: YES

GW: FOR MY JOB AT GARY INDUSTRIES THIS ONE IS

AD: DO YOU HAVE TO FILE A VERMONT STATE TAX RETURN TO THEY DON'T HAVE A INCOME TAX DO THEY

GW: WHAT'S THAT NO

AD: IN VERMONT

GW: NO

AD: HOW ABOUT YOUR FEDERAL TAX RETURN WHERE DOES YOUR CHECK COME

GW: I DID IT ALL FROM HOME I HAD IT ALL SENT HERE BECAUSE MY FATHER TAKES CARE OF IT FOR ME I BRING IT TO HIM AND HE HELPS ME WITH IT

AD: WHO IS YOUR INSURANCE AGENT IN VERMONT

GW: I REALLY FORGET HIS NAME LET ME LOOK IT UP

AD: OR IF YOU REMEMBER THE NAME OF THE AGENCY

GW: OH IT'S McCULLOUGH INSURANCE IT'S IN KILLINGTON

AD: OKAY, AND WHERE YOU DID YOU HAVE AUTO INSURANCE ON THE VEHICLE THE FORD EXPLORER PRIOR TO OBTAINING PROGRESSIVE

GW: YES

AD: WHO WERE YOU INSURED WITH

GW: SAFECO

AD: AND WHO WAS YOUR AGENT ON THAT POLICY DO YOU KNOW

GW: NO I DON'T

AD: WAS THAT A CONNECTICUT POLICY OR VERMONT POLICY

GW: IT WAS CONNECTICUT WHEN I SWITCHED TO VERMONT I SWITCHED TO PROGRESSIVE BECAUSE MY BROTHER HAS THIS AGENT SO I USED MY BROTHERS

AD: HOW LONG WERE YOU INSURED WITH SAFECO DO YOU REMEMBER

GW: A COUPLE OF YEARS, WHY DOES THAT MATTER

AD: AND

GW: WHY, WHY DOES THAT MATTER

AD: JUST TRYING TO VERIFY WHO YOUR PRIOR INSURANCE WAS SAME REASON WHY ASKED YOU WHERE YOU LIVED PRIOR TO KILLINGTON THE MOUNTAIN GREEN APARTMENT EXCUSE ME YOU INTERRUPTED ME SO I LOST MY TRAIN OF THOUGHT

GW: YES

AD: DO YOU KNOW WHEN YOUR REGISTRATION EXPIRES ON THE EXPLORER

GW: IT'S NOT AN EXPLORER

AD: THE FORD RANGER

GW: YES IT EXPIRES SOMETIME IN JULY

AD: ARE YOU GOING TO BE REGISTERING THAT VEHICLE IN VERMONT

GW: YES

AD: AND HOW LONG HAVE YOU HAD A VERMONT DRIVER'S LICENSE.

GW: SINCE THE SAME TIME I GOT INSURANCE SINCE JUST BEFORE I WAS GOING TO MOVE TO VERMONT

AD: WHEN DID YOU KNOW YOU WERE GOING TO MOVE TO I KNOW THAT YOU MOVED IN SEPTEMBER 2000

GW: IN LATE AUGUST I KNEW I WAS GOING TO MOVE

AD: AND WHAT DID YOU DO WENT UP THERE AND APPLIED FOR A LICENSE OR WENT THROUGH THE NORMAL COURSE OF EVENTS THAT YOU HAVE TO

GW: YES

AD: WHEN DOES YOUR DRIVER'S LICENSE EXPIRE DO YOU KNOW

GW: I HAVE TO GET IT I JUST HAD IT I DON'T KNOW WHERE I PUT IT OH IT EXPIRES IN 2003

AD: WHAT MONTH

GW: 11/1/2003

AD: OKAY, AND JUST YOU AND YOUR BROTHER ARE IN THE APARTMENT CORRECT

GW: CORRECT

AD: ALL RIGHT, ARE YOU ALSO IN SCHOOL IN VERMONT OR IN CONNECTICUT

GW: NO

AD: OKAY, I THINK I HAVE EVERYTHING THAT I NEED THANKS VERY MUCH FOR YOUR HELP AND AS I SAID IF YOU HEAR ANYTHING FROM THE NAUGATUCK POLICE DEPARTMENT LET ME KNOW AND IN THE MEAN TIME IF I HAVE YOUR PERMISSION I WILL TURN OFF THE RECORDER

GW: OKAY

AD: THE TIME IS APPROXIMATELY 2:20

GW: YES

STATE OF VERMONT COUNTY OF RUTLAND

PROGRESSIVE INSURANCE COMPANY, ) RUTLAND SUPERIOR COURT Plaintiff, ) ) v. ) DOCKET NO. 48-1-02 Rdcv ) GREGORY WASOKA, and ) ROBERT CERDEIRA, ) Defendants. )

PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Plaintiff Progressive Insurance Company (Hereinafter, "Progressive") moves for summary judgment pursuant to V.R.C.P. 56, on the grounds that there are no disputed material facts, and judgment is appropriate as a matter of law. In support of its motion, Plaintiff files the following Memorandum and the attached Statement of Undisputed Facts.

MEMORANDUM

Summary Judgment is appropriate when there are no genuine issues of material fact and he is entitled to judgment as a matter of law, after giving the benefit of all reasonable doubts and inferences to the nonmoving party. V.R.C.P. 56; Samplid Enterprises, Inc. v. First Vermont Bank, 165 Vt. 22, 25 (1996); and Sabia v. Neville, 165 Vt. 515, 523 (1996).

The present matter is an insurance coverage case where Defendant deliberately breached a policy provision that would have enabled his insurer to investigate the issue of fraud in the inducement of the policy, a legal issue that would void coverage. Fireman's Fund Ins. Co. v. Knutsen, 132 Vt. 383 (1974). By this motion, Plaintiff requests judgment from the court that Defendant's breach of contract voids the insurance contract ab initio.

On July 23, 2000, Gregory Wasoka purchased an automobile insurance policy from agent Steve Shortle of C.G. McCullough Insurance Agency, Inc., of Killington, Vermont. The automobile insurance policy was a Vermont policy issued by Progressive Insurance Company, to insure Mr. Wasoka's 1999 Ford Ranger. On May 9, 2001, Gregory Wasoka was involved in an automobile/bicycle accident in Connecticut while driving the 1999 Ford Ranger.

Plaintiff informed Progressive of the accident, and Progressive began its investigation of the accident facts. During its investigation of the accident, Progressive became aware of information strongly suggesting that Mr. Wasoka was a resident of Connecticut at the time he purchased the Vermont automobile insurance policy, prior, and since.

On May 10, 2001, Kathy McIntyre of Progressive, Connecticut, took the first recorded interview of Greg Wasoka. During the recorded interview, which occurred on a Tuesday, Mr. Wasoka was still at his parent's home in Connecticut, near where the accident had occurred. During that recorded interview, Mr. Wasoka stated that the accident in Connecticut occurred on May 9, 2001, while he was on his way to Naugatuck Valley Community College, where he was taking classes. On May 22, 2001, Audra Dyckman of Progressive, Connecticut, took a second recorded interview of Greg Wasoka. During the recorded interview, which occurred on a Wednesday, Mr. Wasoka was still at his parent's home in Connecticut. During the second interview, Mr. Wasoka stated that he was currently working at Gary Industries, a business in Connecticut. Thus, following the second recorded interview, Progressive knew that Mr. Wasoka was working and going to college in Connecticut at the time of the accident.

Soon thereafter, Ms. Dykman, learned that Gary Industries had continually employed Mr. Wasoka for 35 hours per week since 1999, prior to the date Mr. Wasoka purchased the Vermont automobile insurance policy from Progressive, representing himself as a Vermont resident. At deposition in the present matter, which occurred on August 16, 2002, Progressive learned that Mr. Wasoka's parents' Connecticut address was and continues to be where Mr. Wasoka receives all of his mail with the exception of correspondence from Progressive related to his automobile coverage, which was sent to his brother's mailing address in Vermont. Mr. Wasoka's ties with Vermont amounted to a seasonal weekend job at Killington, during which time Mr. Wasoka slept on the living room couch at his brother's condo.

The facts learned by Progressive in the investigation of the automobile accident supported the notion that Mr. Wasoka was in fact a Connecticut resident who represented himself as a Vermont resident in order to obtain favorable insurance rates. These facts go to the issue of fraud in the inducement of the policy; fraud in the inducement of an insurance policy voids coverage ab initio. Fireman's Fund Ins. Co. v. Knutsen, 132 Vt. 383 (1974). Thus, Progressive had a good faith reason to investigate Mr. Wasoka for fraud in the inducement of the subject insurance policy.

As a result of Progressive's suspicion that Mr. Wasoka lied about his residency in order to obtain favorable rates, Progressive looked to its insurance contract for investigatory tools. The Progressive automobile insurance policy at issue requires Mr. Wasoka to submit to an examination under oath, and Progressive chose this method to investigate the issue of fraud in the inducement of the policy. The subject motion is based on Mr. Wasoka's breach of policy for failure to submit to an examination under oath, a tool that would have allowed Progressive to further investigate the issue of fraud. The relevant section of the Progressive policy states: "A person claiming coverage under this policy must . . . allow us to take signed or recorded statements, including statements under oath, and answer all reasonable questions we may ask, when and as often as we may reasonably require."

Although demanded numerous times by Progressive, Mr. Wasoka has still failed to submit to an examination under oath. The request for an examination under oath was made in writing on August 15, 2001, and sent by receipt return mail to Mr. Wasoka's Vermont and Connecticut addresses. It appears that the correspondence sent by Progressive to Mr. Wasoka's purported Vermont address was forwarded by the postal service to Mr. Wasoka's parent's home in Connecticut. Mr. Wasoka received the correspondence sent to Connecticut. In the letter demanding an examination under oath, Progressive informed Mr. Wasoka of the contractual language compelling him to provide an examination under oath. On August 16, 2002, at the deposition in the present matter, Mr. Wasoka acknowledged receiving at least one of the letters demanding an examination under oath. He also acknowledged ignoring it.

Interestingly, and consistent with his failure to submit to an examination under oath, Mr. Wasoka, for over a year, ignored Progressive's request that he sign a bilateral reservation of rights/non-waiver agreement. Reservation of rights/non-waiver agreements must be bilateral under Vermont law. American Fidelity Co. v. Kerr, 138 Vt. 363. An executed reservation of rights/non-waiver agreement would allow Progressive to defend Mr. Wasoka in the underlying tort claim while continuing to investigate the issue of fraud in the inducement of the policy.

Thus, the subject motion is based on Mr. Wasoka's breach of contract and failure to cooperate with Progressive's legitimate investigation regarding the issue of his residency. Plaintiff Progressive moves for summary judgment on the grounds that Mr. Wasoka's acknowledged contractual breach — his failure to submit to an examination under oath — voids the insurance contract ab initio since an examination under oath is a condition precedent to coverage. Further, Progressive moves for summary judgment on the grounds that Mr. Wasoka's two breaches of duty, his refusal to submit to an examination under oath and his extended refusal to sign a bilateral reservation of rights/non-waiver agreement must be viewed as admissions of fraud in the inducement of the policy, voiding coverage ab initio.

To be clear, this motion is unrelated to Mr. Wasoka's cooperation or failure to cooperate with the underlying liability claim. The examination under oath was demanded regarding the issue of insurance coverage; the insurer's request and Defendant's failure are not directly related to the accident investigation or defense of the underlying liability claim. The Vermont Supreme Court has stated that prejudice to the underlying liability case is required when an insurer looks to void coverage based on an insured's failure to cooperate with the defense of the liability case. American Fidelity Co. v. Kerr, 138 Vt. 359, 362 (1980). Progressive is not currently making this claim; thus, that case law is inapplicable to the present matter. Further, the Vermont Supreme Court has not yet distinguished an insured's failure to submit to an examination under oath from general contract and breach of contract law as it did in Kerr with regard to an insured's failure to cooperate.

In this case, Mr. Wasoka's breach of contract is his failure to submit to an examination under oath. An examination under oath is a tool typically used by an insurer to investigate an insured, and is considered a condition precedent to coverage. Zaida Valentin v. Premier Insurance Company, 14 Mass.L.Rptr. 654 (2002). By failing to submit to an examination under oath and failing to sign the non-waiver agreement, Defendant apparently hopes Progressive is forced to simply provide coverage — a defense and indemnity in the underlying tort case. Apparently, he believes ignoring Progressive's legitimate requests will effectuate a positive result for him. A breach of the policy provision requiring an insured to submit to an examination under oath, in this context, will not prejudice the underlying liability claim. Thus, prejudice to the underlying liability case must not be the determining factor regarding whether the breach of this important policy provision voids coverage. To require such would make the policy provision meaningless, would encourage breach of the provision, and would encourage fraud. For public policy reasons, the court should not sanction Mr. Wasoka's behavior.

The law applicable to the present matter is found in Fireman's Fund Ins. Co. v. Knutsen, Id. In Fireman's Fund, the Vermont Supreme Court examined the question of whether a material misrepresentation by the insured in the inducement of an automobile insurance policy voids the policy from inception. Id.

The Vermont Supreme Court has stated that fraudulent misrepresentation voids insurance coverage ab initio:

It is a general rule of Vermont law that material or fraudulent misrepresentations in applications for life insurance are grounds for declaring the policy void ab initio. (Citation omitted). Although we have no decision of this Court applying the above rule to applications for automobile liability insurance, we see no reason why the same principle should not apply, as codified in 8 V.S.A. Sec. 4205, which reads: "The falsity of a statement in the application for a policy covered by such provisions shall not bar the right to recovery thereunder unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer."

Id. at 387-388.

Mr. Wasoka has breached the contractual provision that allows Progressive to investigate the issue of coverage. A breach of this provision, generally considered to be a condition precedent to coverage, logically should void coverage.

The Superior Court of Massachusetts has distinguished a policy-holder's breach of the contract provision requiring an examination under oath from the general duty to cooperate. Commerce Insurance Company v. Angelina Flores, 11 Mass.L.Rptr. 587, 2000 WL 782006 (Mass.Super.) (2000). In Flores, the insured claimed injury in a pedestrian/auto accident, and demanded PIP benefits. When her story lacked consistency, her insurer, Commerce, demanded an examination under oath pursuant to the policy. Id. Flores was represented, and her attorney did not allow her to answer questions during the scheduled examination because the insurer would not guarantee coverage following her submission to the examination. The court ruled that while an insured's failure to cooperate requires the insurer to show prejudice before coverage is voided, the "failure to submit [to an examination under oath] is a material and substantial breach of the policy as a matter of law and excuses Commerce from liability under the policy." Id. at 3. Further, courts have held that an insured's submission to a deposition (given during cases such as the present matter) is not equivalent to an examination under oath, and does not fulfill an insured's obligations under the policy. (See Nationwide Insurance Company v. David B. Nilsen, 745 So.2d 264 (1999).

The Massachusetts case law as represented in Flores is consistent with the law already established in Vermont.

Although insurance policies are viewed on contracts of adhesion, and generally construed against the insurer, the enforcement of this provision does not expose an insured to the risk of an inappropriate penalty. See Cooperative Fire Insurance Assn. of Vermont v. White Caps, Inc., City of Burlington and David Stancil, 166 Vt. 355, 360 (1997). The provision that Progressive is looking to enforce is not one that requires the insured to act on his or her own prior to contact with the insurer, such as providing prompt notice of a loss. Id. In the case of providing prompt notice, an insured must act alone, without the direction of the insurer. In the case of an insured's failure to provide an examination under oath, there is significant contact between an insurer and an insured before an insurer requests the examination. In other words, unlike the prompt notice provision, an insured is already in contact with the insurer when enforcement of the contract provision is being raised. Thus, the insured has an opportunity to comply.

In Fireman's Fund, the Court said that in matters of fraudulent misrepresentation in the inducement of insurance contracts, "positive proof" of intent is unlikely, and that the law allows circumstantial evidence to be considered. Id. The Court stated: "Circumstances inconclusive in themselves if separately considered may, by their number and joint operation, be sufficient to constitute conclusive proof in matters involving fraudulent intent. Id., citing Castle v. Bullard, 23 How. (64 U.S.) 172, 187 (1859).

It would be consistent for the Vermont Supreme Court to find that an insured's failure to submit to an examination under oath, the tool of an insurer to investigate issues of fraud, should void coverage. In the present matter, Defendant's failure to allow Progressive to investigate the fraud must be viewed as circumstantial evidence of fraud, as well as a clear breach of contract. Thus, Mr. Wasoka's policy should be void ab initio.

STATE OF VERMONT COUNTY OF RUTLAND

PROGRESSIVE INSURANCE COMPANY, ) RUTLAND SUPERIOR COURT Plaintiff, ) ) v. ) DOCKET NO. 48-1-02 Rdcv ) GREGORY WASOKA, and ) ROBERT CERDEIRA, ) Defendants. )

UNDISPUTED FACTS

1. On July 23, 2000, Gregory Wasoka purchased an automobile insurance policy from agent Steve Shortle of C.G. McCullough Insurance Agency, Inc., of Killington, Vermont. (Complaint/Wasoka Answer at 4) (Exhibits 1 2)

2. The automobile insurance policy was a Vermont policy issued by Progressive Insurance Company, to insure Mr. Wasoka's 1999 Ford Ranger (Hereinafter, "Insurance Policy"). (Complaint/Wasoka Answer at 4) (Exhibits 1 2)

3. On May 9, 2001, Gregory Wasoka was involved in an automobile/bicycle accident in Connecticut while driving the 1999 Ford Ranger. (Complaint/Wasoka Answer at 7) (Exhibits 1 2)

4. The day of the accident, May 9, 2001, was a Monday. (Calendar attached; Plaintiff requests that the court take judicial notice of this fact). (Exhibit 3)

5. On May 10, 2001, Kathy McIntyre of Progressive, Connecticut, took a recorded interview of Greg Wasoka. (Recorded Interview I, at 1). (Exhibit 4)

6. During the recorded interview, which occurred on a Thursday, Mr. Wasoka was still at his parent's home in Connecticut. (Recorded Interview I, at 1). (Exhibit 4)

7. During that recorded interview, Mr. Wasoka stated that the accident in Connecticut occurred on May 9, 2001, while he was on his way to Naugatuck Valley Community College, where he was taking classes.

8. On May 22, 2001, Audra Dyckman of Progressive, Connecticut, took a second recorded interview of Greg Wasoka. (Recorded Interview II at 1). (Exhibit 5)

9. During the recorded interview, which occurred on a Wednesday, Mr. Wasoka was still at his parent's home in Connecticut. (Recorded Interview II at 1). (Exhibit 5)

10. During the interview, Mr. Wasoka stated that he was currently working at Gary Industries, a business in Connecticut. (Recorded Interview II at 2). (Exhibit 5)

11. The Connecticut address was and continues to be where Mr. Wasoka received his mail other than the bills for the subject insurance (Deposition at 60). (Exhibit 6)

12. Following the second recorded interview, Progressive had reason to believe that Mr. Wasoka was a Connecticut resident when he purchased the Vermont automobile insurance policy. Progressive suspected fraud in the inducement of the policy.

13. The subject Progressive automobile insurance policy requires Mr. Wasoka to submit to an examination under oath if requested by Progressive.

14. Progressive requested that Mr. Wasoka submit to a statement under oath through correspondence dated August 15, 2001. (Exhibit 7)

15. At deposition, Mr. Wasoka acknowledged receiving at least one letter from Progressive requesting that he submit to an examination under oath. Mr. Wasoka acknowledged ignoring Progressive's requests for an examination under oath.

16. Because fraud in the inducement of an insurance policy may void coverage, and because Mr. Wasoka failed to submit to the requested examination under oath, Progressive sought to properly reserve it's rights under Vermont law by having Mr. Wasoka sign a bilateral reservation of rights/nonwaiver agreement. (Exhibit 8)

17. Mr. Wasoka has failed to cooperate with the legitimate contract provisions afforded Progressive, which allow Progressive to investigate Mr. Wasoka himself.

18. The applicable provision of the Progressive insurance policy reads: "A person claiming coverage under this policy must . . . allow us to take signed or recorded statements, including statements under oath, and answer all reasonable questions we may ask, when and as often as we may reasonably require."