Opinion
C. A. PC-2016-2362
07-23-2020
NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. VICTORIA MULLANEY and RICHMOND MOTOR SALES INC., Defendants.
For Plaintiff: Stephen Adams, Esq. For Defendant: Joseph J. Solomon, Jr., Esq.; William M. Dolan, Esq.; Nicholas L. Nybo, Esq.; William K. Wray, Jr., Esq.
For Plaintiff: Stephen Adams, Esq.
For Defendant: Joseph J. Solomon, Jr., Esq.; William M. Dolan, Esq.; Nicholas L. Nybo, Esq.; William K. Wray, Jr., Esq.
DECISION
Licht, J.
This dispute arises from an underlying lawsuit filed by Richmond Motor Sales, Inc. (Richmond) against co-Defendant Victoria Mullaney for damage sustained to a vehicle that Ms. Mullaney rented from Richmond. See Richmond Motor Sales, Inc. v. Nationwide Mutual Insurance Company, a/k/a Nationwide Assurance, and Victoria Mullaney, PC-2015-5141 (the Underlying Action). The crux of this case is whether Ms. Mullaney's non-owner policy with Nationwide Mutual Insurance Company (Nationwide) covers this accident.
I
Facts & Travel
The facts of this matter are not in dispute. Ms. Mullaney entered into a Rental Agreement with Richmond, paying $317.09 to rent a 2011 Hyundai Santa Fe (the rental vehicle) on October 8, 2014. Def.'s Mem. Supp. of its Obj. to Nationwide's Mot. Summ. J. (Def.'s Mem.), Ex. A (Rental Agreement). The Rental Agreement affirms that Ms. Mullaney agreed "to be responsible for all damage to or loss or theft of the Vehicle." Id. Ms. Mullaney confirmed in writing that she was covered by an insurance policy issued by Nationwide, policy number R38814430-9 (the Policy). The Policy is a non-owner automobile policy issued through the Rhode Island Automobile Insurance Plan for which Nationwide was the servicing carrier with property damage coverage of $25,000. Def.'s Mem., Ex. B (Policy). Generally, the purpose of a non-owner policy is to provide insurance coverage for a driver who does not own his or her own vehicle but who operates vehicles owned by another person or entity.
The Policy states, in pertinent part:
"A. We will pay damages for 'bodily injury' or 'property damage' for which any 'insured' becomes legally responsible because of an auto accident. We will be directly liable for those the 'insured' becomes legally obligated to pay as damages to an injured party to which this insurance applies." Def.'s Mem., Ex. B at 2. . . .
"C. 'Insured' as used in this Part means:
1. You . . . for the ownership, maintenance or use of any auto or 'trailer." Def.'s Mem., Ex. B at 3.
On or about October 20, 2014, the rental vehicle was involved in a motor vehicle accident and sustained damage. Ms. Mullaney was not operating the rental vehicle, nor a passenger in the vehicle, at the time of the accident. Ms. Mullaney authorized non-party Edmir Tavares to operate the rental vehicle on that day, and Mr. Tavares was involved in a motor vehicle accident causing property damage to the rental vehicle. Richmond filed a claim with Nationwide on October 21, 2014 seeking payment for the rental car damage. Nationwide conducted an investigation and denied coverage, because Ms. Mullaney was not operating the vehicle at the time of the accident, and it asserts that the Policy provides property liability coverage only where the policyholder was operating the vehicle at the time of the accident.
In the Underlying Action, Richmond claimed that Ms. Mullaney is financially responsible for the damage to the rental vehicle that occurred when Mr. Tavares was involved in the automobile accident.
This matter was consolidated with other declaratory judgment actions filed by various insurers involving property damage claims to vehicles rented by Richmond. Notably, a portion of this matter has already been decided on summary judgment, where two discrete issues were raised. See Richmond Motor Sales, Inc. v. Nationwide Mutual Insurance Co., No. PC-2015-5141, 2019 WL 4640494, at *5 (R.I. Super. Sept. 18, 2019). In that decision, the Court first considered:
"Do G.L. 1956 §§ 27-7-6 and 27-7-3 require an insurer to extend property damage coverage under an insured's private passenger automobile insurance policy for property damage to a rental motor vehicle, without regard to negligence, irrespective of policy provisions, defenses to coverage, and exclusions that the insurer may have with respect to its insured and/or the operator of the vehicle"? Id. at *1.
To that question, the Court answered in the negative, finding "that provisions and exclusions under the liability section of an insurance policy apply to coverage of rental vehicles . . . with one caveat: as Insurers have already conceded, coverage must be provided irrespective of negligence. Id. at *5. The second question the Court considered was "is a Non-Owner policy a 'private passenger automobile insurance policy' subject to G.L. 1956 § 27-7-6"? Id. at *1. To that question, the Court found in the affirmative, "also with one caveat: the policy limits, terms, and exclusions of non-owner policies apply to coverage of rented automobiles." Id. at *6.
Nationwide brought the present declaratory judgment action seeking the Court to declare that Nationwide has no duty to defend and no duty to indemnify Ms. Mullaney in the Underlying Action filed by Richmond against Nationwide and Ms. Mullaney. Specifically, Nationwide asserts that Ms. Mullaney's Policy does not cover the property damage sustained by the rental car because Ms. Mullaney was not operating the vehicle at the time of the accident. Nationwide also asserts that the allegations pled against Ms. Mullaney in the Underlying Action do not trigger Nationwide's duty to defend or duty to indemnify. As such, Nationwide submits there are no genuine issues of material fact and now moves this Court for summary judgment in its favor.
II
Standard of Review
"It is a fundamental principle that '[s]ummary judgment is a drastic remedy, and a motion for summary judgment should be dealt with cautiously.'" Takian v. Rafaelian, 53 A.3d 964, 970 (R.I. 2012) (quoting Employers Mutual Casualty Co. v. Arbella Protection Insurance Co., 24 A.3d 544, 553 (R.I. 2011)). With that in mind, in ruling on a motion for summary judgment, the Court is instructed to "review[] the evidence and draw[] all reasonable inferences in the light most favorable to the nonmoving party," id. (citation omitted) (internal quotation marks omitted), and to "'look for factual issues, not determine them.'" Steinhof v. Murphy, 991 A.2d 1028, 1032-33 (R.I. 2010) (quoting Steinberg v. State, 427 A.2d 338, 340 (R.I. 1981)) (emphasis added). However, summary judgment is appropriate if the Court "determines that there are no issues of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Delta Airlines, Inc. v. Neary, 785 A.2d 1123, 1126 (R.I. 2001) (emphasis added).
III
Analysis
A
Principles of Insurance Policy Interpretation
Since the parties agree that there are no factual disputes, the charge of the Court in this instance is to dive deep into the various provisions of an insurance contract and determine what the policy means and whether there is coverage or not for Ms. Mullaney in the Underlying Action. In so doing, this Court must adhere to the principles enunciated by our Supreme Court for determining what an insurance contract means, namely:
1. "An insurance policy is contractual in nature," Papudesu v. Medical Malpractice Joint Underwriting Association of Rhode Island, 18 A.3d 495, 498 (R.I. 2011), and the Court "interprets the terms of an insurance policy according to the same rules of construction governing contracts." Town of Cumberland v. Rhode Island Interlocal Risk Management Trust, Inc., 860 A.2d 1210, 1215 (R.I. 2004).
2. The Court will not deviate from a policy's literal language unless it determines it is ambiguous. Sjogren v. Metropolitan Property and Casualty Insurance Co., 703 A.2d 608, 610 (R.I. 1997).
3. "In assessing the clarity of the relevant policy language, we view the policy in its entirety, affording its terms their 'plain, ordinary and usual meaning.'" American Commerce Insurance Co. v. Porto, 811 A.2d 1185, 1192 (R.I. 2002) (quoting Amica Mutual Insurance Co. v. Streicker, 583 A.2d 550, 552 (R.I. 1990)). "We look not at what the insurer may have intended the policy to cover or exclude, but rather what an ordinary reader of the policy would have understood the policy's terms to mean if he or she had read them." Id.
4. "If the terms of an insurance contract are subject to more than one reasonable interpretation, the policy will be construed in favor of the insured to avoid forfeiture." Campbell v. Norfolk & Dedham Mutual Fire Insurance Co., 682 A.2d 933, 935 (R.I. 1996) (citing Mallane v. Holyoke Mutual Insurance Company in Salem, 658 A.2d 18, 20 (R.I. 1995)).
5. However, the Court will not engage in "mental or verbal gymnastics to hurdle over the plain meaning of the policy's language." Porto, 811 A.2d at 1193 (citing Mallane, 658 A.2d at 20).
B
The Terms of the Policy
Nationwide argues that it has no duty to defend or indemnify Ms. Mullaney in the Underlying Action because Ms. Mullaney's non-owner policy provides property damage liability insurance coverage only for auto accidents when Ms. Mullaney is using the vehicle and is legally responsible, and not for accidents caused by other individuals. Richmond counters that coverage is afforded for the property damage to Richmond's rental vehicle, contending that Nationwide's Policy does not preclude coverage for property damage to a rental vehicle merely because the renter was not the driver. G.L. 1956 § 31-32-24(c) defines an operator's policy:
"The operator's policy of liability insurance shall insure the person named as insured in it against loss from the liability imposed upon him or her by law for damages arising out of the use by him or her of any motor vehicle not owned by him or her, within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner's policy of liability insurance." (emphasis added).
Nationwide posits that, in order for coverage to be triggered under a non-owner policy, the insured must be using a motor vehicle not owned by him or her at the time of the loss and, consistent with the statute, Ms. Mullaney's non-owner policy considers her "insured" only "for the ownership, maintenance or use of any auto or 'trailer.'" Nationwide concludes that there is no coverage available for Ms. Mullaney because the Policy defines "insured" to mean Ms. Mullaney, and the subject property damage was not caused by her ownership, maintenance, or use of that automobile. Richmond argues that the statute's use of the phrase "arising out of use" in § 31-32-24(c) is critical, as it reasonably extends actual use to allow coverage for activities within a causal relationship to the operator's use of the vehicle. Richmond contends that Ms. Mullaney loaning the rental vehicle to Mr. Tavares arises out of her use of the vehicle and should be covered by the operator's policy. Richmond also cites the language of the Policy, which covers Ms. Mullaney for "use of any auto." Richmond submits that Ms. Mullaney's "use" of the rental vehicle could reasonably be interpreted to mean her allowing another individual to drive the vehicle.
Turning to the Policy, Nationwide's coverage is limited to Ms. Mullaney, the insured, "for the ownership, maintenance or use of any auto . . . ." The breach of contract claim against Ms. Mullaney, as alleged in the Underlying Action, does not allege that she owned, maintained, or used the subject rental vehicle at the time of the subject accident. Rather, it alleges that Ms. Mullaney failed to compensate Richmond for damage to the vehicle that occurred during the rental period. Pl.'s Mem. Supp. of Mot. Summ. J. (Pl.'s Mem.), Ex. B ¶¶ 31-33. Ms. Mullaney did not own the subject vehicle, nor was she maintaining it during the time of the accident. Therefore, the only possibility for coverage to apply would be for Ms. Mullaney's "use" of the rental vehicle.
The Policy does not define the term "use," so the Court will afford the word its "plain, ordinary and usual meaning." Porto, 811 A.2d at 1192. Miriam Webster's Dictionary defines "use" as "to put into action or service; avail oneself of." Black's Law Dictionary (11th ed. 2019) defines "use" as "to employ for the accomplishment of a purpose; to avail oneself of." Ms. Mullaney was not putting the subject vehicle into action or service at the time of the accident as she was not physically present at that time. It is far-fetched to say that Ms. Mullaney could avail herself of the vehicle without it being in her possession at the time. "Use" could reasonably mean operating the vehicle, riding in the vehicle, or even parking the vehicle somewhere and leaving it there. Rather, giving the word "use" its plain meaning, Mr. Tavares was the individual using the vehicle at the time of the accident. He had physical possession and exercised control of it and was actively transporting himself through his use of the vehicle. Ms. Mullaney could not have been using the rental car when someone else was driving it and she was not present.
Richmond contends that lending the car to Mr. Tavares is using it. To conclude that would require some mental gymnastics because it would not only ignore the plain meaning of use, but it would require the Court to overlook other provisions of the Policy. For example, the Non-Owner Endorsement states: "If the Schedule or Declarations indicate that the Named Non-Owner Coverage applies only to the named individual, the definition of 'insured' is amended by deleting reference to 'family member.'" Pl.'s Mem., Ex. B, Section II, Part A. The Schedule so states. Id. at 10. Would Richmond have the Court believe that Ms. Mullaney would be insured when lending the vehicle to a stranger but not insured when lending to someone in her family? Furthermore, the Policy also excludes "Using a vehicle without a reasonable belief that 'insured' is entitled to do so." Id. Exclusions A.8 at 4. So, even if lending the vehicle to Mr. Tavares constituted "use" by Ms. Mullaney (an argument the Court does not accept), then coverage would still be excluded because Ms. Mullaney could not have reasonably believed that she could "use" the car in that manner because Mr. Tavares was not an authorized driver under her rental agreement with Richmond.
C
Legal Responsibility for the Property Damage
Richmond asserts that regardless of who the driver was at the time of the accident, Ms. Mullaney is legally responsible for the property damage to Richmond's vehicle and that such damage arose because of an automobile accident; therefore, the Policy provides coverage. Richmond contends that Ms. Mullaney's legal responsibility arises under two legal theories: contract and vicarious liability. While the Court finds that Ms. Mullaney was not using the vehicle at the time of the accident, it will "not read a policy's terms in isolation; instead, [it] read[s] the policy 'in its entirety, giving words their plain, ordinary, and usual meaning.'" Empire Fire & Marine Insurance Companies v. Citizens Insurance Company of American/Hanover Insurance, 43 A.3d 56, 60 (R.I. 2012) (quoting Irene Realty Corp. v. Travelers Property Casualty Company of America, 973 A.2d 1118, 1122 (R.I. 2009)). The Policy provides property damage liability insurance coverage when any "insured" becomes "legally responsible because of an auto accident." As such, in this case, the Court will not limit its reading of the Policy to its "ownership, maintenance or use of any auto" provision and must consider whether Ms. Mullaney is "legally responsible" for the damage within the terms of the Policy.
Richmond asserts that Ms. Mullaney assumed contractual liability for such property damages when she executed the Rental Agreement with Richmond, agreeing "to be responsible for all damage to or loss or theft of the Vehicle." Def.'s Mem., Ex. A. Additionally, Richmond argues Ms. Mullaney is legally responsible under a theory of vicarious liability for the property damage under § 31-33-6, entitled "Owner's liability for acts of others," stating:
"Whenever any motor vehicle shall be used, operated, or caused to be operated upon any public highway of this state with the consent of the owner, lessee, or bailee, expressed or implied, the driver of it, if other than the owner, lessee, or bailee, shall in the case of an accident be deemed to be the agent of the owner, lessee, or bailee, of the motor vehicle unless the driver shall have furnished proof of financial responsibility in the amount set forth in chapter 32 of this title, prior to the accident. For the purposes of this section, the term "owner" includes any person, firm, copartnership, association, or corporation having the lawful possession or control of a motor vehicle under a written sale agreement." Section 31-33-6.
Richmond submits that Mr. Tavares was the agent of Ms. Mullaney at the time that he caused the property damage and, thus, Ms. Mullaney, the principal, is responsible for those acts of her authorized agent.
Nationwide argues that they are not required to defend/indemnify Ms. Mullaney in the Underlying Action because Nationwide only agreed to pay damages for "'property damage' for which any 'insured' becomes legally responsible because of an auto accident." According to Nationwide, the underlying complaint alleges that Ms. Mullaney breached her Rental Agreement with Richmond, leaving the only substantive claim against Ms. Mullaney arising out of a contractual relationship and not an automobile accident for which she is legally responsible. Nationwide concludes it has no duty to defend or indemnify Ms. Mullaney because contractual claims fall outside of the Policy's scope of coverage.
First, Richmond's reliance on § 31-33-6 is misplaced. Not only did Richmond not allege vicarious liability in the Underlying Action, but the issue of whether Ms. Mullaney may be vicariously liable for the damage to the rental car is distinct from whether insurance coverage is available. The availability of insurance coverage is gleaned from the terms of the Policy, which does not contemplate vicarious liability for acts of third parties.
Next, the Policy states that Nationwide will pay damages for "'property damage' for which any 'insured' becomes legally responsible because of an auto accident." The Policy defines "insured" as "you . . . for the ownership, maintenance or use of any auto." Thus, to trigger coverage under the Policy, being "legally responsible because of an auto accident" must relate to the insured's, i.e., Ms. Mullaney's, "ownership, maintenance or use" of the rental car. Legal responsibility for the auto accident must be connected to or arise from the insured's use of the auto. As previously discussed, Ms. Mullaney was not using the vehicle at the time of the accident. She did not cause the accident and was not in any way involved in the accident.
In the Underlying Action, Count III, "Breach of Contract," alleges that Ms. Mullaney breached her Rental agreement with Richmond, which required her to pay for any damage to the rental vehicle. Pl.'s Mem., Ex. A(1) ¶¶ 30-34. Specifically, in the Collision Damage Waiver section of the Rental Agreement, Ms. Mullaney agreed "to be responsible for all damage to or loss or theft of the Vehicle." Def.'s Mem., Ex. A. Her responsibility is purely contractual, and it covers any damage to the vehicle, no matter what the cause. This claim arises from the contractual relationship between Richmond and Ms. Mullaney, not an auto accident for which Ms. Mullaney is legally responsible through her use of the vehicle. As such, this contractual claim falls outside the scope of the Policy's coverage.
Ms. Mullaney's Rental Agreement stated "You are responsible for all damage to. or loss or theft of. the Vehicle, including damage caused by weather, road conditions and acts of nature, whether or not you are at fault." Underlying Action Compl., Ex. A(4).
This Court noted in its previous decision that "[n]on-owner automobile insurance policies provide liability insurance to drivers who do not own a vehicle." Richmond Motor Sales, Inc., 2019 WL 4640494, at *5 (emphasis added). To require coverage under the Policy for an auto accident caused by a third-party who was not insured under the Policy would defeat the purpose of a non-owner policy. To do so would enable someone to get a non-owner insurance policy, obtain a rental vehicle, and then give that vehicle to someone else to use who could not get insurance.
IV
Conclusion
For these reasons, the Court declares that the property damage liability section of Ms. Mullaney's non-owner automobile insurance policy does not provide coverage for property damage caused by someone other than the insured operating the vehicle at the time of the accident. Since Ms. Mullaney was not using the rental vehicle at the time of the accident, the Court further declares that the Nationwide has no duty to defend or indemnify Ms. Mullaney in the Underlying Action. Accordingly, there are no genuine issues of material fact, and judgment shall enter in favor of Nationwide, Counsel shall prepare an order and judgment consistent with this Court's Decision.