Northland v. NH Insurance et al. CV-95-434-B 03/05/98 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Northland Insurance C o .

v. C-95-434-B

New Hampshire Insurance C o .; Textile Trucking of New Hampshire, Inc., et a l .

MEMORANDUM AND ORDER

New Hampshire Insurance Co. ("New Hampshire Insurance") and

Northland Insurance Co. ("Northland Insurance") issued successive

commercial automobile insurance policies on behalf of Textile

Trucking of New Hampshire, Inc. ("Textile Trucking"). Following

a collision between one of Textile Trucking's vehicles and a

bicyclist. Textile Trucking made demands on both policies for

coverage against any liability resulting from the collision.

Northland Insurance brought this declaratory judgment

action, pursuant to

(West 1993) and

and 2202 (West 1994), seeking a determination of

which insurer, if either, owes coverage to Textile Trucking. New

Hampshire Insurance now moves for partial summary judgment,

asking the court to rule that an endorsement attached to its policy did not extend coverage to Textile Trucking after the

policy's expiration date, which had passed by the time of the

collision.

While not disputing the assertion New Hampshire Insurance

makes in its motion. Textile Trucking has nevertheless filed an

objection. Because this objection is in substance a cross-motion

for summary judgment, I shall treat it as such. Textile Trucking

argues that because of its reliance on certain actions of the

Elliot Insurance Agency ("Elliot Insurance") (New Hampshire

Insurance's putative agent) and New Hampshire Insurance itself,

the court should conclude that coverage did exist through the

time of the collision. For the reasons that follow, I grant New

Hampshire Insurance's motion for partial summary judgment. I

conclude, however, that genuine issues of material fact remain in

dispute as to Textile Trucking's claims. Accordingly, I cannot

grant Textile Trucking the relief it desires.

I. FACTS

Textile Trucking, using Elliot Insurance as its insurance

broker, secured a commercial automobile insurance policy from New

Hampshire Insurance in 1993. The policy covered the period from

August 31, 1993, to August 31, 1994, and provided coverage for

2 five Textile Trucking vehicles, including the vehicle involved in

the collision that gave rise to the current dispute.

Attached to the policy was a cancellation and nonrenewal

endorsement that had the effect of renewing the policy upon its

expiration unless New Hampshire Insurance took certain actions to

prevent renewal. To prevent renewal. New Hampshire Insurance had

to provide Textile Trucking with notice of nonrenewal sixty days

prior to the policy's expiration, except where, inter alia: (1)

New Hampshire Insurance manifested a "willingness to renew;" (2)

New Hampshire Insurance refused to renew "due to [Textile

Trucking's] non-payment of premium;" or (3) Textile Trucking

failed to pay "any advance premium reguired by [New Hampshire

Insurance] for . . . renewal."

It is undisputed that in June 1994, New Hampshire Insurance

sent Textile Trucking two expiration notices, advising the

insured of New Hampshire Insurance's willingness to renew its

policy upon the payment of a specified premium by August 31,

1994. Nor do the parties dispute that by the express terms of

the nonrenewal endorsement and the June 1994 expiration notices.

Textile Trucking had to remit the specified premium payment by

August 31, 1994, to maintain coverage under the New Hampshire

Insurance policy.

3 Textile Trucking alleges, however, that subseguent to its

receipt of the June 1994 notices, Elliot Insurance informed

Textile Trucking that there was a thirty-day "grace period"

between the renewal payment due date and the date coverage would

actually lapse. Textile Trucking also claims it believed that it

could defer payment for an additional thirty days based on New

Hampshire Insurance's practice in other cases of providing an

additional notice of cancellation and an additional thirty days

in which to make the renewal payment. Claiming that it relied on

Elliot Insurance's representations and New Hampshire Insurance's

practice in other cases. Textile Trucking did not make the

renewal payment by September 30, 1994.

On September 15, 1994, acting through Elliot Insurance,

Textile Trucking secured a commercial automobile insurance policy

from Northland Insurance. The policy covered the period from

September 1, 1994, to September 1, 1995, and provided coverage

for four Textile Trucking vehicles, not including the vehicle

involved in the collision at issue. Textile Trucking alleges,

however, that Elliot Insurance entered the wrong policy start

date and that Textile Trucking intended the policy's coverage to

begin on October 1, 1994.

4 On September 21, 1994, a Mack truck driven by a Textile

Trucking employee collided with a bicyclist in Charlestown,

Massachusetts. The bicyclist suffered serious injuries and

brought suit against Textile Trucking in Massachusetts state

court. Subseguently, Textile Trucking made demands on both New

Hampshire Insurance and Northland Insurance for coverage against

any liability resulting from the Massachusetts suit. Northland

Insurance then filed this declaratory judgment action.

II. STANDARD OF REVIEW

Summary judgment is appropriate only "if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law." Fed. R. Civ. P.

5 6(c); accord Lehman v. Prudential Ins. Co. of America,

, 327 (1st Cir. 1996). A "genuine" issue is one "that

properly can be resolved only by a finder of fact because [it]

. . . may reasonably be resolved in favor of either party."

Anderson v. Liberty Lobby, Inc.,

(1986). A

"material" fact is one that "affect[s] the outcome of the suit."

.

5 In ruling on a motion for summary judgment, the court

construes the evidence in the light most favorable to the

non-movant and determines whether the moving party is entitled to

judgment as a matter of law. See Oliver v. Digital Equip. Corp.,

(1st Cir. 1988). Where the moving party bears

the burden of persuasion at trial, the movant must support its

position with materials of evidentiary guality. See Desmond v.

Varrasso (In re Varrasso),

, 763 n.l (1st Cir. 1994).

Further, "[The] showing must be sufficient for the court to hold

that no reasonable trier of fact could find other than for the

moving party." Lopez v. Corporacion Azucarera de Puerto Rico,

938 F .2d 1510, 1516 (1st Cir. 1991).

Because this case arises in diversity, I must apply New

Hampshire's substantive law. See Mottolo v. Fireman's Fund Ins.

C o .,

, 726 n.2 (1st Cir. 1995) (a federal court

sitting in diversity must apply the substantive law that would be

applied by the state in which it sits).

III. DISCUSSION

A. New Hampshire Insurance's Motion

New Hampshire Insurance asserts that it took sufficient

steps -- pursuant to the express terms of the nonrenewal

6 endorsement -- to prevent the endorsement from extending coverage

past August 31, 1994, the policy's expiration date. Specifi­

cally, New Hampshire Insurance claims that it advised Textile

Trucking that its coverage would not be renewed unless it paid

the specified premium by August 31, 1994. Textile Trucking does

not dispute this claim, conceding that in June 1994, it twice

received such notice.

Conseguently, I grant New Hampshire Insurance's motion for

partial summary judgment as to the limited issue of whether the

nonrenewal endorsement operated to extend coverage to Textile

Trucking after the policy's expiration date. As a matter of law,

the endorsement at issue, by itself, did not extend coverage past

August 31, 1994. See Lehman, 74 F.3d at 327.

B. Textile Trucking's Motion

Textile Trucking contends, however, that because of its

reliance on Elliot Insurance's representations and New Hampshire

Insurance's past practices concerning coverage, I should rule

that coverage existed at least through September 30, 1994. Such

claims sound in eguity and, specifically, in eguitable estoppel.

Eguitable estoppel is a doctrine that "forbid[s] one to

speak against his own acts, representations, or commitments to

the injury of one to whom they were directed and who reasonably

7 relied thereon." Great Lakes Aircraft Co. v. City of Claremont,

(1992). In other words, a "wrongdoer may be

estopped from making assertions, even if true, which are contrary

to acts and representations previously made."

Thus, as

Textile Trucking asserts, an insurer can be estopped from

applying the terms of a contract to deny an insured coverage in

light of the insurer's prior representations and actions to the

contrary. See Olszak v. Peerless Ins. Co.,

(1979), cited in Great Lakes Aircraft Co.,

.

The four essential elements of eguitable estoppel are: (1) a

representation of material facts made by a party with knowledge

of their falsity; (2) ignorance of the truth of the matter on the

part of the party to whom the representation was made; (3) the

intention on the part of the first party that the second party

should act upon the representation; and (4) the detrimental

reliance of the second party on the representation. See

Hawthorne Trust v. Maine Sav. Bank,

(1992).

The party asserting a claim of eguitable estoppel has the burden

of proof as to each of these elements. See Healev v. Town of New

Durham Zoning Bd. of Adjustment,

(1995).

Here, Textile Trucking is both the party moving for summary

judgment and the party that would bear the burden of proving an

8 equitable estoppel claim at trial. Thus, to receive relief on

such a claim at summary judgment. Textile Trucking must introduce

evidence as to each element of its claim sufficient to

demonstrate that no reasonable fact finder could find other than

for Textile Trucking. Using this standard, I examine Textile

Trucking's contention that because it relied to its detriment on

Elliot Insurance's representations and New Hampshire Insurance's

past practices concerning coverage. New Hampshire Insurance

should now be estopped from denying coverage. I look at each

claim of reliance in turn.

1. Reliance on Elliot Insurance's Representations

Textile Trucking claims Elliot Insurance represented that

there was a thirty-day grace period between the renewal payment

due date of August 31, 1994, and the date coverage would actually

lapse, here purportedly on September 30, 1994. Textile Trucking

asserts that because it reasonably relied to its detriment on the

existence of coverage during this period and because Elliot

Insurance was acting as New Hampshire Insurance's agent. New

Hampshire Insurance should be estopped from denying Textile

Trucking coverage against liability that arose during the grace

period.

9 I cannot grant the relief requested, however, because

Textile Trucking has not supported its assertion with materials

of evidentiary quality sufficient to demonstrate that no

reasonable fact finder could find other than for Textile

Trucking. See Lopez, 938 F.2d at 1516; see also LeBlanc v. Great

American Ins. Co.,

(1st Cir. 1993) (quoting

Anderson,

) (a party cannot meet its summary

judgment burden by merely resting on the allegations contained in

its complaint).

Textile Trucking's showing is deficient as to at least two

of the elements needed to sustain a claim of equitable estoppel.

First, it has not submitted any evidence tending to prove either

that Elliot Insurance actually made any representations about the

existence of a grace period or that New Hampshire Insurance was

Elliot Insurance's principal and, therefore, that a court could

properly charge New Hampshire Insurance with having made the

representation at issue. See Hodge v. Allstate Ins. Co.,

(1988) (where a principal-agent relationship is

shown to exist, an agent's knowledge may be imputed to the

principal for the purpose of applying equitable estoppel against

the principal); see also Carrier v. McLlarkv,

(1997) (whether an agency agreement exists is a question of

10 fact) .

Second, Textile Trucking has not introduced any evidence

tending to show that it actually relied on Elliot Insurance's

representation. Viewing the facts in the light most favorable to

New Hampshire Insurance, the non-movant, and absent an affidavit

to the contrary, it is entirely possible to conclude from the

evidence either that Textile Trucking decided to let its coverage

lapse for a month or that it agreed its new insurer would begin

providing liability coverage as of September 1, 1994, the date by

which the New Hampshire Insurance policy would expire. Thus,

because I am unable to say that no reasonable fact finder could

find other than for Textile Trucking, I cannot grant summary

judgment on its behalf.

2. Reliance on New Hampshire Insurance's Past Practices

_____ Textile Trucking also claims that upon the failure of an

insured to make a reguired renewal payment, before canceling

coverage. New Hampshire Insurance had the practice of providing

notice of cancellation, reminding the insured that it had thirty

days from the policy expiration date in which to remit the

reguired renewal payment. Textile Trucking claims that it did

not receive such a reminder on this occasion and that, as a

result, it did not make the renewal payment within thirty days of

11 the policy's expiration date -- i.e., by September 30, 1994.

Textile Trucking asserts that because it reasonably relied to its

detriment on New Hampshire Insurance's practice of sending a

reminder. New Hampshire Insurance should be estopped from denying

Textile Trucking coverage against liability that arose prior to

the end of September 1994.

While an insured's reasonable reliance on an insurer's past

practices can support a claim of eguitable estoppel, see Bovce v.

Concord Gen. Mut. Ins. Co.,

(1981), in the

instant case, I am unable to grant Textile Trucking's reguest for

relief. Textile Trucking has failed to support its claim with

materials of evidentiary guality sufficient to demonstrate that

no reasonable fact finder could find other than for Textile

Trucking. See LeBlanc,

; Lopez, 938 F.2d at 1516.

As with its claim regarding Elliot Insurance's

representations. Textile Trucking's showing regarding this claim

is also deficient as to at least two of the elements needed to

sustain a claim of eguitable estoppel. First, it has not

submitted any evidence tending to prove that New Hampshire

Insurance actually engaged in the practice of sending out

cancellation reminders. Second, Textile Trucking has not

introduced any evidence tending to show that it actually relied

12 on such a practice in this instance. As stated above, viewing

the facts in the light most favorable to New Hampshire Insurance

and absent an affidavit to the contrary, it is entirely possible

to conclude from the evidence either that Textile Trucking

decided to let its coverage lapse for a month or that it agreed

its new insurer would begin providing liability coverage as of

September 1, 1994, the date by which the New Hampshire Insurance

policy would expire. Thus, because I am unable to say that no

reasonable fact finder could find other than for Textile

Trucking, I cannot grant summary judgment on its behalf.1

IV. CONCLUSION

For the foregoing reasons, I grant New Hampshire Insurance's

motion for partial summary judgment, ruling that, as a matter of

law, the endorsement at issue did not extend New Hampshire

Insurance's obligation to provide coverage to Textile Trucking

past the policy's August 31, 1994 expiration date. I deny.

1 In its objection. Textile Trucking also asserts that because New Hampshire Insurance did not notify the Interstate Commerce Commission of its decision to cancel Textile Trucking's policy until September 27, 1994, coverage continued under the policy at least through the date of the collision. Because such an assertion is not the subject of the instant motion for partial summary judgment and because neither party has adeguately briefed the subject, I do not address it herein.

13 however, the relief that Textile Trucking requests in its

objection, concluding that genuine issues of material fact remain

in dispute.

SO ORDERED.

Paul Barbadoro Chief Judge

March 5, 1998

cc: Russell Hilliard, Esq. Roger Phillips, Esq. Andrew Dunn, Esq. R. Matthew Cairns, Esq. Ira Lipsius, Esq.

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