Zambon v. Schneider CV-94-553-JD 03/15/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Peter D. Zambon

v. Civil No. 94-553-JD

Schneider N a t '1 Carriers, Inc., et al.

O R D E R

The plaintiff, Peter D. Zambon, brought this diversity

action under the New Hampshire declaratory judgment act seeking a

declaration of insurance coverage under his operating agreement

with defendant Schneider National Carriers, Inc. ("Schneider")

and under an insurance policy issued in favor of Zambon by the

Insurance Company of the State of Pennsylvania ("ICOSP"). Before

the court are Zambon's motion for summary judgment against

Schneider and ICOSP (document no. 8)1 and Schneider's motion for

summary judgment against Zambon (document no. 9).

1Although Zambon's motion for summary judgment included specific allegations of coverage under its policy with ICOSP and its agreement with Schneider, its accompanying memorandum of law addressed only its claim against Schneider. Without filing its own motion for summary judgment, ICOSP responded to Zambon's allegations by filing an objection to Zambon's motion, to which Zambon replied. ICOSP in turn filed a response to Zambon's reply, to which Zambon again replied. Both parties have had more than ample opportunity to raise arguments in favor of their respective positions and have submitted supporting materials in accordance with Rule 56. Background

In November 1987, Zambon, a New Hampshire resident, and

Schneider, a Nevada corporation with its principal place of

business in Wisconsin, entered into an "Independent Contractor

Operating Agreement" ("agreement") under which Schneider

subcontracted freight carriage contracts to Zambon, a tractor-

trailer operator.2 Under the agreement, Zambon leased his

tractor to Schneider, which, in turn, leased the tractor and a

trailer back to Zambon. The agreement took effect at the time it

was signed and by its terms was to continue until cancelled by

either party. See Contract 1 5 10; Contract 2 5 11.

The agreement provided that Schneider was "legally obligated

to maintain insurance coverage for the protection of the public

pursuant to

and the regulations of the

[Interstate Commerce] Commission" and reguired Zambon to purchase

"bobtail" insurance, i.e., insurance covering liability Zambon

incurred while not carrying any freight. Contracts 1 & 2 5 7.

2The parties have been unable to produce a copy of the document that formed the contract between Zambon and Schneider, and now dispute whether the standard contract submitted by Zambon with his motion for summary judgment ("contract #1") or the standard contract submitted by Zambon with his objection to Schneider's motion for summary judgment ("contract #2") constitutes the terms of their agreement. The court notes that there are significant differences between these documents and, as such, considers the terms of both documents in analyzing the issues before it.

2 Purportedly pursuant to its obligation under the agreement,

Schneider maintained coverage for Zambon through a $5 million

surety bond, with an effective date of March 1, 1987, that named

Schneider as the principal. Zambon opted to procure bobtail

insurance through Schneider, which had negotiated a policy from

ICOSP specifically for the benefit of its independent

contractors. ICOSP is a Pennsylvania corporation with its

principal place of business in New York.

The ICOSP policy Schneider purchased for the year commencing

on June 30, 1988, provided liability insurance of up to $500,000

per accident or loss on all non-passenger automobiles owned by

Schneider's independent contractors and the trailers Schneider

leased to its independent contractors. The policy also purported

to provide uninsured motorist coverage where such coverage was

reguired by the law of the state in which the vehicle was

licensed. See ICOSP Policy Declarations & Endorsement 10. The

amount of uninsured motorist coverage was limited to "the minimum

liability reguirements under the financial responsibility law of

the state of the [insured's] legal residency [sic] or any

property damage loss [sic]." Endorsement 5.

3 Endorsement 3 to the policy provided:

LIABILITY INSURANCE . . . is changed as follows:

A. The following exclusions are added: This insurance does not apply to: 1. A covered auto while used to carry property in any business.

Neither the uninsured motorist section of the policy nor the

endorsements thereto mention such an exclusion. The certificate

of insurance incorporated into the policy listed uninsured

motorist coverage as a part of the "non-trucking liability"

covered under the policy.

The parties do not dispute that the tractor was registered

in Illinois pursuant to the agreement. However, Zambon

maintained title to the vehicle in New Hampshire and has alleged

that the vehicle was "principally garaged" in New Hampshire

during the 1988-89 policy term.

On June 19, 1989, Zambon was involved in an accident while

transporting property under the agreement in West Virginia.

Zambon filed a state court action in Ohio against the other

driver involved in the accident. The action was settled for

$50,000, the maximum amount available under the other driver's

insurance policy. As the losses Zambon incurred exceeded this

amount, Zambon filed claims with both Schneider and ICOSP to

recover the deficiency. Schneider denied the claim on the ground

that the vehicle was not principally garaged in New Hampshire and

4 thus not subject to the New Hampshire uninsured motorist statute.

ICOSP also apparently denied the claim. Zambon brought this

action against Schneider and ICOSP seeking a declaration of

coverage for the deficiency.

Discussion

Summary judgment is appropriate when material facts are

undisputed and the moving party is entitled to judgment as a

matter of law. Rodriquez-Garcia v. Davila,

(1st

Cir. 1990) (citing Fed. R. Civ. P. 56(c)). The burden is on the

moving party to establish the lack of a genuine, material factual

issue, Finn v. Consolidated Rail Corp.,

(1st Cir.

1986), and the court must view the record in the light most

favorable to the nonmovant, according the nonmovant all

beneficial inferences discernable from the evidence. Caputo v.

Boston Edison Co.,

(1st Cir. 1991) .

Zambon has asserted his claims for uninsured motorist

coverage under New Hampshire statutory law and under the ICOSP

policy. The court addresses these theories seriatim.

I. Zambon's Claim Under

Zambon argues that summary judgment is warranted against

both Schneider and ICOSP because New Hampshire's uninsured

5 motorist statute, N.H. Rev. Stat. Ann. ("RSA") § 264:15, requires

motor vehicle insurance policies covering vehicles principally

garaged in New Hampshire to provide coverage for claims against

uninsured and underinsured motorists. Schneider and ICOSP

contend for a variety of reasons that neither the Zambon-

Schneider agreement, the surety bond posted by Zambon, nor the

ICOSP policy constitute a motor vehicle insurance policy

triggering uninsured motorist coverage under the New Hampshire

statute. Both defendants have contested Zambon's allegation that

the vehicle was principally garaged in New Hampshire, and

Schneider has noted that the "principally garaged" language of

the uninsured motorist statute was added in 1988, after Zambon

and Schneider signed their agreement.

The New Hampshire uninsured motorist statute provides in

pertinent part that

no policy shall be issued under the provisions of RSA 264:14, with respect to a vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto at least in amounts or limits proscribed for bodily injury or death for a liability policy under this chapter, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or drivers of uninsured motor vehicles.

RSA § 264:15(1) (1993). In 1988, the New Hampshire legislature

added the words "or principally garaged" to the first sentence of

the statute.

:2. This amendment became

6 effective on January 1, 1989.

. The statute's use of

prospective language, 1.e , "no policy shall be issued," clearly

indicates that it does not apply to insurance policies issued

before January 1, 1989, covering vehicles principally garaged but

not registered in New Hampshire.3

The parties agree that the vehicle in guestion was

registered in Illinois pursuant to the agreement. Although there

is a dispute as to whether the vehicle was principally garaged in

New Hampshire during the relevant time period, this issue would

be material only if any of the policies giving rise to Zambon's

claim for uninsured motorist coverage were issued after January

1, 1989. The record before the court indicates that all of the

documents that Zambon claims constitute a policy triggering

coverage under RSA § 264:15 were "issued" before that date.

Indeed, the agreement between Schneider and Zambon and the surety

bond under which Schneider maintained insurance coverage for the

3Zambon's argument that the statute should be given retrospective application is unavailing. Under New Hampshire law, statutes cannot operate retroactively if they "create any new obligations []or establish[] any new duties." Eldridae v. Eldridae.

;

(1993) (construing N.H. Const, p t . I, art. 23). Application of the uninsured motorist statute to policies issued prior to the statute's effective date would impose a new reguirement on insurance carriers -- the obligation to provide coverage for accidents caused by uninsured motorists.

7 vehicle both were executed in 1987,4 and the ICOSP policy in

effect at the time of the accident became effective in June 1988.

Accordingly, the court finds that the uninsured motorist

statute does not apply to any of the documents that Zambon claims

constitute an insurance policy covering his vehicle. As Zambon's

statutory claim fails as a matter of law, the court denies

Zambon's motion for summary judgment, grants Schneider's motion

for summary judgment, and enters judgment in favor of ICOSP on

this issue.

II. Zambon's Claim Under the ICOSP Policy

Relying on what he claims is an ambiguity in the ICOSP

policy, Zambon argues that "the policy provides for uninsured

motorist coverage in the amount reguired by law in the state

41he court notes that the bond was posted prior to the date of the agreement. However, even if the bond is deemed to have been "issued" with respect to Zambon's tractor on the date the agreement was executed, it still would not have been issued after the effective date of the statute.

Zambon has argued that under the terms of the agreement, Schneider was obligated to purchase insurance rather than merely posting a bond, and that had Schneider fulfilled its obligations, it would have had to procure an insurance policy at some point in 1989. The argument is unavailing. The agreement did not reguire Schneider to purchase insurance, but "to maintain insurance coverage for the protection of the public pursuant to

and the regulations of the [Interstate Commerce] Commission." Accordingly, Schneider's decision to post a surety bond in compliance with

did not violate his duties under the agreement. where the vehicle is principally garaged -- in this case. New

Hampshire." Zambon's Reply to ICOSP's Objection to Zambon's

Motion for Summary Judgment at 4. However, even assuming

arguendo that the policy is ambiguous and that New Hampshire law

provides the baseline amount of uninsured motorist coverage

reguired under the ICOSP policy, Zambon's argument does not

support his claim that he is entitled to coverage. As discussed

in Part I, supra, New Hampshire law did not reguire motor vehicle

insurance policies issued prior to January 1, 1989, to provide

uninsured motorist coverage to vehicles not registered in New

Hampshire. Thus, even if it incorporated New Hampshire's

uninsured motorist statute, the ICOSP policy in effect at the

time of the accident would not have provided any coverage to

Zambon, whose vehicle was registered in Illinois. Zambon's claim

based on the terms of the policy fails as a matter of law.

Conclusion

Zambon's motion for summary judgment (document no. 8) is

denied. Schneider's motion for summary judgment (document no. 9) is granted. Judgment is entered in favor of ICOSP. The clerk is

ordered to close the case.

SO ORDERED.

Joseph A. DiClerico, Jr, Chief Judge March 15, 1996

cc: Edward M. Van Dorn Jr., Esguire Robert G. Whaland, Esguire Andrew D. Dunn, Esguire

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