United States Court of Appeals For the First Circuit No. 23-1522

MARGARET AND DAVID JESPERSEN,

Plaintiffs, Appellants,

v.

COLONY INSURANCE COMPANY,

Defendant, Third-Party Plaintiff, Appellee,

v.

JPKS MANAGEMENT LLC; PENUCHES SPORTS AND MUSIC COMPLEX LLC,

Third-Party Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph N. Laplante, U.S. District Judge]

Before

Barron, Chief Judge, Howard and Gelpí, Circuit Judges.

Bruce W. Felmly, with whom Benjamin B. Folsom, Graham W. Steadman, and McLane Middleton, Professional Association were on brief, for appellants. William L. Boesch, with whom Sulloway & Hollis PLLC was on brief, for appellee. Peter Chiesa on brief for City of Manchester, amicus curiae.

March 25, 2024 BARRON, Chief Judge. This appeal concerns a suit that

a married couple brought in the District of New Hampshire to

recover from a restaurant owner's insurer for the injuries that

they alleged that they suffered when one of them fell down the

restaurant's stairs. The District Court granted summary judgment

to the insurer and denied the couple's motion for summary judgment.

We affirm.

I.

A.

The suit that underlies this appeal traces back to the

suit that Margaret and David Jespersen, both New Hampshire

residents, brought in New Hampshire state court against JPKS

Management, LLC d/b/a Penuches Music Hall, and Penuches Sports and

Music Complex, LLC d/b/a Penuches Grill. The complaint in that

suit set forth claims against those defendants for negligence,

negligence per se, negligent misrepresentation, and violation of

New Hampshire Revised Statutes Annotated ("RSA") § 354-A.1 It also

alleged the following facts.

On May 28, 2018, the Jespersens were patrons of Penuches

Music Hall in Manchester, New Hampshire, and were eating in that

The complaint also alleged "loss of consortium" as a 1

separate "count," and this "count" appears to derive from New Hampshire RSA § 507:8-a, which provides that, "[i]n a proper action, either a wife or husband is entitled to recover damages for loss or impairment of right of consortium whether caused intentionally or by negligent interference."

- 2 - restaurant's "outdoor dining area," which is "located on the

sidewalk in front of the restaurant." Margaret Jespersen is

"functionally blind," and David Jespersen "is blind in one eye and

severely vision impaired in his other eye."

The Jespersens were "using white probing canes to guide

themselves through the establishment" and "asked a staff member to

direct them to the restrooms." After the staff member "told them

that the restrooms were downstairs," the Jespersens "asked if there

was an elevator that they could use." The staff member responded

"that there was no elevator available and directed them to a

stairway."

Margaret Jespersen proceeded to walk down the stairs,

but "her cane caught on the railing, and she lost her balance and

fell down the stairs." Her fall resulted in "three fractures in

her left ankle and one in her right ankle." When the paramedics

arrived, "another Penuche[]s employee informed them . . . that

there was in fact an elevator and [that] the paramedics could use

it to transport Margaret up to the ground floor."

The complaint alleged that Margaret Jespersen "suffered

severe injuries as a result of the Defendants' negligence in

failing to inform [her] about, or refusal to allow her to use, the

available elevator." The complaint also alleged that the

defendants had "effectively denied Margaret access to the restroom

. . . in violation of RSA [§] 354-A:16 and [§] 354-A:17," which in

- 3 - relevant part concern discrimination "because of . . . physical

. . . disability" in "places of public accommodation."

-A:16 to :17 (2022).

The complaint requested that "judgment be entered

against Defendants, Penuches Sports and Music Complex, LLC d/b/a

Penchues [sic] Grill, as well as JPKS Management, LLC, d/b/a

Penuches Music Hall," that "Margaret Jespersen be awarded direct,

compensatory, and enhanced compensatory damages in the maximum

amount allowed in accordance with the law," that "David Jespersen

be awarded damages for loss of consortium in the maximum amount

allowed in accordance with the law," and that "all costs of this

action be assessed against Defendants, including all reasonable

attorney's fees, costs and expenses." The complaint also requested

that the Jespersens "be awarded all other such relief as . . .

deem[ed] just and proper."

Because the defendants failed to respond to the

complaint, the state court entered a notice of default in August

2019. See Jespersen v. Colony Ins. Co., No. 21-cv-846,

, at *3 (D.N.H. May 22, 2023). The Jespersens then moved

in December 2019 for a final judgment based on the default. The

defendants did not respond to this motion or appear at the hearing

on the motion for entry of final judgment, which was held in August

2020. See

- 4 - Two months later, in October 2020, the state court issued

a final judgment for the Jespersens and awarded them $391,585.21.

See

This amount included $193,688.91 in compensatory damages

for past medical expenses, future medical and counseling bills,

lost wages, loss of consortium, and pain, suffering, and loss of

enjoyment of life; plus an additional $100,000 for enhanced

compensatory damages; plus $97,896.30 for attorney's fees and

costs. See

B.

In February 2021, the Jespersens wrote a demand letter

to Colony Insurance Company, which had issued a liability insurance

policy that named "Penuches Music Hall, LLC" as the insured and

that provided the insured with coverage for "sums that the insured

becomes legally obligated to pay as damages because of 'bodily

injury' or 'property damage' to which this insurance applies."

Based on that policy, the demand letter sought the payment of the

award that the state court had granted to them in their suit

against JPKS Management, LLC d/b/a Penuches Music Hall and Pencuhes

Sports and Music Complex, LLC. See

. Colony responded

to the demand letter, but the parties were unable to come to a

resolution. See

The Jespersens initiated the suit against Colony that

underlies this appeal in the District of New Hampshire in October

2021. The complaint sought "an Order compelling [Colony] to pay

- 5 - the judgment rendered against its insured JPKS Management, LLC

d/b/a Penuches Music Hall." Specifically, the Jespersens'

complaint sought a "judgment in favor of [the Jespersens] and

against Colony in the amount of $391,585.21" or, in the

alternative, a "declaratory judgment [pursuant to RSA § 491:22 or

] that Colony is obligated to pay the full amount

of the Judgment," plus attorney's fees, costs and expenses, and

"all other such relief as this Court deems just and proper."

Before discovery, Colony moved for summary judgment,

which the District Court denied. Then, after discovery, the

Jespersens and Colony cross-moved for summary judgment. The

District Court granted summary judgment to Colony and denied

summary judgment to the Jespersens. See

.

In so ruling, the District Court first agreed with Colony

that, as a matter of law, the insured had "breached the insurance

contract" by failing to "notify [Colony] of Margaret's fall or the

resulting suits 'as soon as practicable'" as Colony's insurance

policy with the insured required it to do.

. As the

District Court concluded, "the undisputed facts cannot reasonably

support a finding that [the insured] provided notice as soon as

practicable."

The District Court noted that New Hampshire courts

"consider three factors" under New Hampshire law "in assessing

whether there has been a substantial breach of a notice

- 6 - provision -- 'the length of the delay [in notification], . . . the

reasons for the delay[,] and whether the delay resulted in

prejudice to the insurer.'"

(alterations in original) (quoting

Wilson v. Progressive N. Ins. Co.,

(N.H. 2005)).

As to the first factor, the District Court pointed out that Colony

"first received notice of Margaret's fall two years and nine months

after the incident occurred," which the District Court concluded

was a "lengthy delay."

As to the second factor, the District

Court noted that there was "no reason or excuse for this delay in

the record." Id. at *5. As to the third factor, the District

Court rejected the Jespersens' contention that the lack of notice

had not prejudiced Colony. See id.

Having ruled that the insured had breached the insurance

contract by failing to provide the requisite notice pertaining to

Margaret Jespersen's fall, the District Court turned its attention

to the Jespersens' separate contention that, under what is known

as the "compulsory insurance doctrine," Colony was not entitled to

assert that breach as a ground for denying the Jespersens' attempt

to recover under the policy. See id. at *6. The Jespersens had

based this contention on a City of Manchester ("City") ordinance

that provided in relevant part:

(B) The City Clerk . . . may . . . license businesses . . . to encumber no more than half of the sidewalk area immediately adjacent to the building in which the business is located so that a minimum of half of the sidewalk is

- 7 - maintained free and clear for pedestrian traffic. Each such license shall contain the following provisions:

. . . . (2) Each license shall be subject to the insurance provisions contained in § 115.60 of this code and shall be subject to the restrictions contained in § 115.44 of this code with the exception of times of operation.

Manchester, N.H., Code § 97.34(B) (2023). The "insurance

provisions" referenced by the second subsection of the ordinance

provided that an application for a license shall include:

A certificate of insurance that the applicant has been issued an insurance policy by an insurance company licensed to do business in the state, protecting the licensee and the city from all claims for damages to property and bodily injury, including death which may arise from operations under or in connection with the license. Such insurance shall provide combined primary and excess coverage which meet a $500,000 minimum limit; such policy shall provide for automobile liability insurance for owned, nonowned, and hire vehicles as applicable; and such policy shall provide that the policy shall not terminate or be cancelled prior to the expiration date except with 30 days' advance written notice to the city.

Id. § 115.60.

In pressing this ground for recovery from Colony, the

Jespersens argued that the ordinance triggered the compulsory

insurance doctrine. Under that doctrine, as the District Court

explained, "[w]hen injured parties seek to recover under insurance

policies issued pursuant to compulsory insurance laws . . .

- 8 - 'generally,'" the injured parties "are not subject to defenses

arising out of the breach of conditions subsequent to the accident

even though they would be available to the insurer as against the

insured." Jespersen,

, at *6 (quoting Steven Plitt,

et al., Couch on Insurance § 106:27 (3d ed. 2023)). The District

Court ruled, however, that the doctrine had no application to this

case. Id. at *10. Accordingly, the District Court granted

Colony's summary judgment motion based on Colony's defense that

the insured had breached the insurance contract. See id. The

Jespersens timely appealed.

II.

We review cross-motions for summary judgment de novo.

See Pac. Indem. Co. v. Deming,

(1st Cir. 2016).

In doing so, we "view each motion separately and draw all

reasonable inferences in favor of the respective non-moving

party,"

at 23 (quoting Roman Cath. Bishop of Springfield v.

City of Springfield,

(1st Cir. 2013)), to

"determine whether either of the parties deserves judgment as a

matter of law on facts that are not disputed," Easthampton

Congregational Church v. Church Mut. Ins. Co.,

(1st Cir. 2019) (quoting Littlefield v. Acadia Ins. Co.,

(1st Cir. 2004)). Because this complaint was "exclusively

grounded in the law of [New Hampshire]" and arises under our

diversity jurisdiction pursuant to

, "we look to

- 9 - [New Hampshire] law for the substantive rules of decision." Halsey

v. Fedcap Rehab. Servs., Inc., No. 23-1351,

, at *5

(1st Cir. Mar. 4, 2024).

A.

We begin with the Jespersens' contention that the

District Court erred in holding that, as a matter of law, Colony

had a viable defense to the Jespersens' claims under Colony's

insurance policy based on the insured's breach.2 We do not agree.

The District Court concluded, "as a matter of law, that

[the insured's] delay in notifying Colony was lengthy and

unjustified, and it resulted in prejudice to Colony." Jespersen,

, at *6. The Jespersens do not challenge the

District Court's conclusions that there was a "lengthy delay" and

no "reason or excuse for this delay in the record."

.

They challenge only the District Court's conclusion that, as a

matter of law, there was prejudice.3

Although the parties dispute whether Margaret Jespersen's 2

fall is a covered "accident" under the insurance policy at all, we assume that the fall is covered under the policy because, even if it is, we conclude that Colony's notice defense precludes the Jespersens from recovering from Colony. 3The parties also dispute who bears the burden of demonstrating whether Colony is obligated to compensate the Jespersens under the insurance policy. But, even assuming that Colony has that burden, we conclude that the record demonstrates that, as a matter of law, Colony has established that it was prejudiced by the delay in notice and that the compulsory insurance doctrine does not apply.

- 10 - The District Court explained that the record established

as a matter of law that Colony was prejudiced, because the record

established beyond dispute that the lack of timely notice

pertaining to Margaret Jespersen's fall deprived Colony of "the

opportunity to engage in settlement discussions prior to (or

instead of) litigation."

. The District Court also

concluded that it was indisputable on this record that "[the

insured's] (and thus Colony's) absence from the proceedings was

consequential to the court and factored into its calculation of

damages," as the state court "premised its grant of attorney's

fees -- which amounted to roughly one-quarter of the damages

awarded -- in part on [the insured's] unwillingness to participate

in the case."

Indeed, the District Court explained, the lack

of timely notice plainly left Colony "[un]able to defend [the

insured] in the litigation."

The Jespersens contend otherwise in part because they

argue that, at the very least, the record suffices to show that

Colony was at fault for not having received the notice pertaining

to Margaret Jespersen's fall. The Jespersens here reprise an

argument that they made below. They argue in this regard that

Penuches Music Hall had obtained the insurance policy so that it

could comply with the ordinance requiring it to obtain liability

insurance but that the ordinance required the insurer to notify

the City thirty days before the cancellation of any insurance

- 11 - policy obtained pursuant to that ordinance. The Jespersens then

go on to contend that Penuches Music Hall had refused to allow

on-site inspections at the restaurant, which was required "for the

[insurance policy with Colony] to remain in effect," and that, as

a result, there were repeated failed attempts by Colony's insurance

agent to inspect the restaurant in the months after Margaret

Jespersen's fall. They note, too, that, as the District Court had

recounted, the "insurance policy was ultimately cancelled in

September 2018, a few months after the [Jespersens'] visit to

Penuches, for failure to pay the premium."

. Moreover,

the Jespersens contend, "given the contentious relationship

between the City and [the insured] and the vigilance with which

the City enforced the compulsory insurance requirement against

[the insured], had Colony actually given notice of the Policy's

cancellation . . . the City would have likely investigated, and in

doing so likely learned about the accident." Thus, they argue,

"Colony contributed to its own prejudice."

This chain of reasoning depends, however, on quite a few

speculative inferences -- namely, that if Colony had notified the

City that the insurance policy had been cancelled (which itself

did not occur until four months after the fall), then the City

would have inspected the restaurant, the inspection would have

uncovered the accident, and notice of the accident at that point

would have been given to Colony. We agree with the District Court,

- 12 - however, that such speculation cannot suffice to create a triable

issue of fact as to whether Colony was at fault for not having

received the notice pertaining to Margaret Jespersen's fall at the

restaurant in a timely manner. See

; cf. Gomez v. Stop

& Shop Supermarket Co.,

(1st Cir. 2012) ("This

sort of purely conjectural assumption, drawn from an empty record,

is insufficient to propel a cause of action beyond the summary

judgment stage.").

Setting aside questions of Colony's fault for not having

received the notice sooner than it did, the Jespersens separately

argue that the District Court's prejudice ruling cannot be

sustained because Colony "failed to submit any admissible evidence

establishing that they were prejudiced as to all of the Jespersens'

damages" (emphasis in original), particularly compensatory

damages. But the Jespersens provide no reason for us to conclude

that the insurer must prove prejudice as to all damages to prove

prejudice, as they identify no precedent supporting such a

surprising proposition. Moreover, the District Court's

determination that there was some prejudice accords with the state-

court judgment, which not only relied on the insured's "flagrant

indifference to the plaintiffs' disabilities and the ready

availability of an accommodation" to justify the enhanced

compensatory damages but also, in justifying the award of

attorney's fees, relied in part on the fact that the defendants

- 13 - had "been totally unresponsive to this litigation" and showed

"utter disregard of this case." Thus, we reject this ground for

challenging the District Court's prejudice ruling.4

Finally, the Jespersens contend that the fact that there

was a final judgment entered against the insured cannot, in and of

itself, provide the basis for sustaining the finding of prejudice.

But they of course do not dispute that the final judgment was part

of the record or that a lower amount might have been given in that

judgment had Colony been given timely notice. They contend instead

that Colony cannot show prejudice based on the final judgment

because Colony was required to submit evidence "establishing that

it sought to strike or reopen the Final Judgment" rendered in state

court but failed to do so. But to the extent that the Jespersens

mean to argue that the possibility that Colony could have moved to

strike or reopen the final judgment in and of itself made the

District Court's prejudice ruling erroneous, we cannot agree.

After all, the Jespersens point to nothing to indicate that Colony

would have been able to have the final judgment set aside,

4 Because we conclude that the lack of timely notice prejudiced Colony given the basis for the state court's award of enhanced compensatory damages and attorney's fees, we need not address the Jespersens' separate contention that Colony was required to have "submitted . . . evidence suggesting that conditions of the accident scene materially changed so that it could not determine whether Plaintiffs' injuries were covered by the Policy" such that the delay in notice "prejudiced [Colony's] investigation of [the Jespersens'] claims."

- 14 - stricken, or vacated. See Nautilus Ins. Co. v. Gwinn Design &

Build, No. 18-cv-633-JD,

, at *1, *3 (D.N.H. Dec.

11, 2018) (finding prejudice where the state court denied a motion

by the insurer to set aside a default judgment against the insured,

which the insured had not provided notice of to the insurer, and

where there was "no suggestion that an earlier motion to reconsider

or to set aside the judgment would have been successful"); Hudson

v. Musor,

(N.H. 1986) (explaining that the

"decision to strike a default is ordinarily within the trial

court's discretion").

Thus, on this record, we see no basis for overturning

the District Court's determination that "no reasonable person

could find that notice was given as soon as was reasonably

possible" by the insured to Colony. Jespersen,

,

at *4 (quoting Dover Mills P'ship v. Com. Union Ins. Cos.,

(N.H. 1999)). We therefore agree with the District

Court that, as a matter of law, the lack of notice constituted a

breach of the insurance contract, thereby releasing Colony from

payment of the award that the Jespersens received from the final

judgment.

B.

Given our conclusion as to the District Court's

prejudice ruling, we next must address the Jespersens' contention

that the District Court erred in ruling that, as a matter of law,

- 15 - the compulsory insurance doctrine does not apply here. That

ruling, too, turns on a question of New Hampshire law. See

Peerless Indem. Ins. Co. v. Frost,

(1st Cir. 2013)

("When a state's highest court has yet to rule definitively on a

question of state law, our task is to predict how that court likely

would decide the issue."); Nw. Airlines, Inc. v. Pro. Aircraft

Line Serv.,

(8th Cir. 2015) (predicting how

Minnesota's highest court would apply the compulsory insurance

doctrine). And, once again, our review is de novo. See Pac.

Indem. Co.,

.

The Jespersens contend that the District Court erred in

concluding that the rationale that underlies the compulsory

insurance doctrine -- to better effectuate the purpose of

compulsory insurance laws that "are for the benefit of members of

the public and not of the insured" -- has no application to this

case due to the text of the ordinance at issue. Jespersen,

, at *6-7 (quoting Plitt, Couch on Insurance § 106:27

(emphasis in original)). And the Jespersens are right that,

although the ordinance at no point expressly states that it has

the purpose of benefiting the public, it does require that the

insurance that is obtained "protect[] the licensee and the city

from all claims." Manchester, N.H., Code § 97.34(B) (2023)

(emphasis added). In addition, the Jespersens make the point that,

although the District Court reasoned that the phrase "protecting

- 16 - the licensee and the city from all claims" in § 115.60 compels the

conclusion that the ordinance is intended to protect only the

licensees and the City, see Jespersen,

, at *8

(emphasis added), "the persons at risk of injury or death would

logically be members of the public" and that the ordinance requires

insurance policies to cover "all claims." As a result, the

Jespersens contend that the ordinance indicates an intention to

benefit the public and that, as a result, the rationale for the

compulsory insurance doctrine supports applying the doctrine here.

In assessing this contention, we emphasize that we do

not understand the District Court to have rested its holding that

the compulsory insurance doctrine has no application here solely

on either the determination that the doctrine is unavailable

because the ordinance expressly disclaims any intent to benefit

the public or the determination that the doctrine is unavailable

merely because the ordinance failed to state expressly that it is

for the benefit of the public. Rather, we understand the District

Court to have relied as an independent ground for its ruling on

the more nuanced determination that a "public safety purpose" was

not "particularly salient in the[] ordinances [at issue], such

that it would justify deviating from longstanding New Hampshire

precedent to extend the compulsory insurance doctrine to this novel

set of circumstances" beyond the automobile liability insurance

context.

. And, reviewing de novo, see Baker v. Smith

- 17 - & Wesson, Inc.,

(1st Cir. 2022) (reviewing question

of statutory interpretation de novo), we see no error in that

conclusion, given that a federal court must "take care not to

extend state law beyond its well-marked boundaries in an area . . .

that is quintessentially the province of state courts," Markham v.

Fay,

(1st Cir. 1996); see also Santiago v.

Sherwin Williams Co.,

(1st Cir. 1993) (explaining

that "a plaintiff who 'selects a federal forum in preference to an

available state forum may not expect the federal court to steer

state law into unprecedented configurations.'" (quoting Martel v.

Stafford,

(1st Cir. 1993))).

1.

As Colony correctly highlights, the only New Hampshire

state court cases that apply the compulsory insurance doctrine

under New Hampshire law concern automobile insurance policies.

Those rulings are premised, moreover, on a provision of the New

Hampshire Financial Responsibility Act, which expressly provides

that motor vehicle liability policies shall be subject to the

following provision:

I. Absolute Liability. The liability of any company under a motor vehicle liability policy shall become absolute whenever loss or damage covered by said policy occurs, and the satisfaction by the insured of a final judgment for such loss or damage shall not be a condition precedent to the right or duty of the company to make payment on account of said loss or damage. No agreement between the

- 18 - company and the insured after the insured has incurred liability for loss or damage covered by the policy shall operate to defeat the company’s liability to pay for such loss or damage. Upon the recovery of a final judgment against any person for any loss or damage specified in this section, if the judgment debtor was, at the accrual of the cause of action, protected against liability therefor under a motor vehicle liability policy, the judgment creditor shall be entitled to have the insurance money applied to the satisfaction of the judgment.

(2022).

Furthermore, New Hampshire courts have relied on the

explicit language in this provision to find the compulsory

insurance doctrine to be applicable. For example, in Farm Bureau

Automobile Insurance Co. v. Martin,

(N.H.

1951), the New Hampshire Supreme Court pointed to the

mandate -- under a prior version of this provision -- that an

insurer's "liability . . . become[s] absolute" upon the occurrence

of a covered loss to hold that the provisions of an insurance

policy obtained pursuant to the Act "cannot be used to defeat or

avoid coverage" because "the liability of the insurer became

absolute upon the happening of the accident."

We add, too, that it is hardly anomalous that the

doctrine has thus far had such limited application under New

Hampshire law. Every case cited in the insurance treatise sections

on which the Jespersens rely for the proposition that there is a

compulsory insurance doctrine concerns an automobile liability

- 19 - insurance policy. See Plitt, Couch on Insurance §§ 106:27-:28.5

In addition, in a majority of states today, compulsory insurance

and financial responsibility statutes in the automobile liability

context explicitly deprive insurers of certain defenses or

explicitly impose absolute liability.6 Indeed, courts in several

5 See Gillard v. Mfr.'s Ins. Co. of Phila., Pa.,

(N.J. 1919) (same); Kruger v. Cal. Highway Indem. Exch.,

(Cal. 1927) (same); Ott v. Am. Fidelity & Cas. Co.,

(S.C. 1931) (same); Goldberg v. Preferred Accident Ins. Co. of N.Y.,

(Mass. 1932) (same); West v. Monroe Bakery, Inc.,

(La. 1950) (same), abrogated on other grounds by Home Ins. Co. v. Highway Ins. Underwriters,

(La. 1952); Royal Indem. Co. v. Olmstead,

(9th Cir. 1951) (same); Pan-Am. Cas. Co. v. Basso,

(Tex. Civ. App. 1952) (same); Milwaukee Ins. Co. v. Morrill,

(N.H. 1956) (same); Am. Emps. Ins. Co. v. Sterling,

(N.H. 1958) (same); Karp v. Aetna Cas. & Sur. Co.,

(Mun. Ct. 1959) (same); Sandoval v. Chenoweth,

(Ariz. 1967) (same); Jones v. State Farm Mut. Auto. Ins. Co.,

(N.C. 1967) (same); Lumbermens Mut. Ins. Co. v. Grayson,

(Tex. Civ. App. 1967) (same); Anderson v. Aetna Cas. & Sur. Co.,

(Tex. Civ. App. 1968) (same); Strickland v. Hughes,

(N.C. 1968) (same); Evans v. Am. Home Assurance Co.,

(S.C. 1969) (same); Kahla v. Travelers Ins. Co.,

(Tex. Civ. App. 1972) (same); Young v. Allstate Ins. Co.,

(Ga. 1981) (same); Chennault v. Dupree,

(La. Ct. App. 1981) (same); Johnson v. R & D Enters.,

(Ill. App. Ct. 1982) (same); Ratcliff v. Nat'l Cnty. Mut. Fire Ins. Co.,

(Tex. App. 1987) (same); Kambeitz v. Acuity Ins. Co.,

(N.D. 2009) (same). 6 See

(f)(1) (2023);

(f)(1) (2023);

(C)(5)(a) (2023);

(2)(a) (2024);

(f)(1) (2023);

(1) (2023); 625 Ill. Comp. Stat. 5/7-317(f)(1) (2023); Iowa Code § 321A.21(6)(a) (2023);

(F)(1) (2024); Me. Stat. tit. 24-A, § 2903 (2024); Minn. Stat. § 65B.49(3)(3)(a) (2023);

(3)(a) (2024);

(6)(1) (2023);

(5)(a) (2023);

(2023);

(5)(a)

- 20 - of these states have applied the compulsory insurance doctrine

precisely because of those explicit provisions. See, e.g., Torres

v. Nev. Direct Ins. Co.,

, 1207 (Nev. 2015) (relying

on a Nevada statute's clear statement that "no violation of the

policy defeats or voids the policy" to hold that "no post-injury

violation of a policy will release the insurer under the

absolute-liability provision"). Conversely, in one state that

does not have such explicit provisions, the state's highest court

has declined to apply the compulsory insurance doctrine because of

that lack of explicit provisions. See Warren v. Com. Standard

Ins. Co.,

(Ark. 1951).

(2023);

(I) (2023);

(a) (2023);

(i)(1) (Consol. 2024);

(f)(1) (2023);

(6)(a) (2023); Okla. Stat. tit. 47 § 7-324(f)(1) (2023);

(2023);

(f)(1) (2023);

(5)(b)(1) (2023);

(1) (2023);

(e)(1) (2023);

(c) (2023);

(2024) ("Waiver of defenses against injured party");

(1), (6) (2023);

(6)(a) (2023); W. Va. Code § 17D-4-12(f)(1) (2023); cf.

(2023) (containing "absolute liability" language but providing that an insurer "shall not deny insurance coverage to an insured because of failure of an insured to seasonably notify an insurance company of an occurrence, incident, claim or of a suit . . . unless the insurance company has been prejudiced");

(f)(1), (6) (2023) (containing "absolute liability" language but providing that the insurer "shall not be liable on any judgment if it has not had prompt notice of and reasonable opportunity to appear in and defend the action in which such judgment was rendered").

- 21 - True, there are cases that apply the compulsory

insurance doctrine in the automobile liability context even in the

absence of any express statutory bar to a notice defense. See

Olmstead,

; Allen v. Canal Ins. Co.,

(Ky. 1968). But the Jespersens have identified only one

case outside the automobile liability context -- Northwest

Airlines -- that applies the doctrine based on a statute or

ordinance that requires a party to obtain insurance but that does

not expressly render null an insurer's notice defense. See Nw.

Airlines,

. And, while the Jespersens appear to

contend that we may fairly prophesy that the New Hampshire Supreme

Court would follow Northwest Airlines and apply New Hampshire law

as the Eighth Circuit there applied Minnesota law, we cannot agree.

Cf. Butler v. Balolia,

(1st Cir. 2013)

("This . . . case requires a Boston-based federal court to make an

informed prophesy . . . .").

The issue of the applicability of the compulsory

insurance doctrine arose in Northwest Airlines in connection with

an aircraft maintenance company that had obtained a liability

insurance policy pursuant to a local ordinance requiring it to

carry such insurance in order to operate at an airport.

. After an accident occurred between the maintenance

company and an airline, the airline informed the insurer about the

accident, sued the insured maintenance company, received a default

- 22 - judgment in its favor, then filed a garnishment suit against the

insurer, who argued that the insured's "failure to provide notice

and to cooperate extinguished [the insurer's] payment obligation."

.

The Eighth Circuit held that, under Minnesota law, the

compulsory insurance doctrine applied because it "is not

necessarily limited to" the "context of statutes requiring auto

liability insurance," and because, even though the ordinance at

issue there lacked explicit language stating that the insurer was

subject to absolute liability, the ordinance was "intended at least

in part to protect injured third parties such as [the

airline-claimant]."

(cleaned up). The court went on

to explain, however, that the compulsory insurance doctrine

"exists at a balance point between the interests of the injured

party in recovering and the insurer in obtaining prompt notice and

cooperation."

. And the court then emphasized in

relationship to that balance that two factors were "certainly

relevant in [its] assessment of this unusual scenario."

. Those two factors were that: "(1) beginning soon after [the

airline-claimant] learned of the . . . policy and over a year

before [the airline-claimant] filed suit, [the airline-claimant]

gave [the insurer] actual notice of its claim, the lawsuit, and

the possibility of a default judgment, and (2) it was [the insurer]

who spurned the notice from [the airline-claimant], discontinued

- 23 - communications, and, despite its actual knowledge, chose not to

participate in the . . . litigation."

Given the qualified nature of the Northwest Airlines

ruling, we find it significant that neither of the two special

features given such emphasis there obtains here. In addition to

the fact that Colony "had no notice of the incident, the claim, or

the litigation, nor any opportunity to participate in the matter,

prior to the default judgment," there is nothing in the record to

suggest that it was Colony that "spurned" notice or "chose not to

participate" in the litigation notwithstanding actual knowledge of

the claims. In fact, unlike in Northwest Airlines, where the

claimant had notified the insurer prior to moving for default

judgment, see

, here the record shows that the

Jespersens, at least by October 2019 when they obtained a copy of

the certificate of insurance that listed Colony as the insurer,

knew that Colony was the insurer but did not provide Colony with

notice prior to their motion for the entry of final judgment on

the default in December 2019.

Moreover, although the court in Northwest Airlines

stated that "courts have applied the [compulsory insurance]

doctrine where the ordinance's clear purpose was to protect a class

of the public to which the injured party belongs,"

, and

that even an ordinance "intended at least in part to 'protect[]

injured third parties'" can trigger that doctrine,

(alteration

- 24 - in original), each of the four cases cited in Northwest Airlines

to support that extension of the compulsory insurance doctrine

itself concerned automobile liability insurance, see Olmstead,

; Young,

; Allen,

; Ott,

.

As a result, we cannot deduce from the Eighth Circuit's

application of Minnesota law in the specific circumstances of that

case that the New Hampshire Supreme Court would extend the

compulsory insurance doctrine beyond the automobile liability

insurance context in the differing circumstances of this case, at

least given the terms of the ordinance at hand. As we have

explained, the ordinance is far more oblique in purporting to

dispense with an otherwise bargained-for notice defense than the

only New Hampshire law that New Hampshire state courts have thus

far held to have that consequence: the Financial Responsibility

Act, which, as we have explained, expressly dispenses with a notice

defense. Nor, unlike some ordinances from other states requiring

the procurement of insurance outside the automobile liability

context, does the Manchester ordinance even expressly state that

the purpose of its requirement to obtain insurance "protecting the

licensee and the city from all claims for damages to property and

bodily injury, including death which may arise from operations

under or in connection with the license," is to benefit not only

the city and the insured but also the public more generally. See

- 25 - Freehold, N.J., Code § 5.80.080(A) ("Any person obtaining a

license for a sidewalk cafe or restaurant shall submit, for the

protection of the borough and its representatives as well as the

general public a comprehensive policy of liability insurance

protecting the licensee and borough against any liability

whatsoever occasioned by accident on or about the licensed property

or any appurtenances thereto." (emphasis added)); Marietta, Ga.,

Code § 8-12-27-030(C) (requiring mobile-retail-food-establishment

licensees to obtain insurance "protecting the licensee, the public

and the city from all claims for damage to property and bodily

injury, including death, which may arise from operation under or

in connection with the permit" (emphasis added)).

Simply put, even accepting that the insurance policies

obtained pursuant to the ordinance must cover claims brought by

injured members of the public, it does not follow that the New

Hampshire Supreme Court would construe the ordinance, based on

that fact alone, to trump any notice defense that the insurer

otherwise would have under a policy that would cover claims brought

by such persons. And nothing in Northwest Airlines nor any other

precedent from New Hampshire or elsewhere of which we are aware

suffices to persuade us that the New Hampshire Supreme Court would

conclude, on the strength of the ordinance, that the compulsory

insurance doctrine should be extended to a realm in which it has

not previously been applied in New Hampshire. Rather, we see no

- 26 - error in the District Court's conclusion that a "public safety

purpose" is not "particularly salient in the[] ordinances [at

issue], such that it would justify deviating from longstanding New

Hampshire precedent to extend the compulsory insurance doctrine to

this novel set of circumstances." Jespersen,

, at

*7.

2.

The Jespersens do argue that "New Hampshire law

requir[es] insurance policies -- and the ordinances integral to

them -- to be construed liberally in favor of coverage and against

the insurer" (emphasis in original). And it is true that the New

Hampshire Supreme Court has said that "[i]f more than one

reasonable interpretation is possible, and an interpretation

provides coverage, the policy contains an ambiguity and will be

construed against the insurer." Great Am. Dining, Inc. v. Phila.

Indem. Ins. Co.,

(N.H. 2013) (quoting Brickley v.

Progressive N. Ins. Co.,

(N.H. 2010)). But the

insurance policy at issue here is unambiguous in stating that "[n]o

person . . . has a right . . . [t]o . . . bring [Colony] into a

'suit' asking for damages from an insured; or . . . [t]o sue

[Colony] on this Coverage Part unless all of its terms have been

fully complied with," including the policy term requiring the

insured to "notify [Colony] as soon as practicable" about any claim

or suit brought against the insured.

- 27 - Thus, we are not faced here with a question of

insurance-policy interpretation. We are faced with a question of

interpretation of New Hampshire law concerning when, if ever, an

ordinance triggers the compulsory insurance doctrine outside the

automobile liability context. The rule of liberal insurance policy

construction on which the Jespersens rely has no application to

that question.

The Jespersens do also rely on New Hampshire cases

supporting the idea that provisions of insurance policies obtained

pursuant to compulsory insurance statutes cannot conflict with

those statutes. See Santos v. Metro. Prop. & Cas. Ins. Co.,

(N.H. 2019); Universal Underwriters Ins. Co. v.

Allstate Ins. Co.,

(N.H. 1991); Partridge v.

USAA Life Ins. Co., No. 14-cv-170,

, at *4 (D.N.H.

Mar. 19, 2015). Those cases simply stand for the proposition,

however, that a statutory insurance requirement trumps contrary

language in a policy. They do not address the issue of concern

here, which pertains to when a state statute or local ordinance

suffices to trigger the compulsory insurance doctrine itself. As

a result, they lend no support to the Jespersens' position.

3.

The Jespersens' final argument for applying the

compulsory insurance doctrine here rests on statements by

officials of the City. The Jespersens first point to a declaration

- 28 - from the City Clerk -- filed in the District Court -- stating that

the City's "compulsory insurance requirements are meant to protect

the public and the City from acts or omissions committed by

licensees."

As the District Court explained, though, the City Clerk

had no special reason to know the legislative intention or purpose

of the ordinance, as he is not a member of the City's Board of

Aldermen and plays no role in the approval of City ordinances.

And although the City Clerk issues the licenses that require the

insurance policies to be obtained, see Manchester, N.H., Code

§ 97.34(B), that task does not require the Clerk to make

determinations about whether a notice defense contained in an

insurance policy obtained pursuant to the ordinance is enforceable

or even whether the purpose of requiring the insurance policies is

to benefit the public.

The Jespersens do also point to an amicus brief filed by

the City. The brief argues that the public-benefitting purpose of

the ordinance is apparent when construing the ordinance "as part

of a comprehensive scheme protecting the public" rather than as an

"isolat[ed]" measure. But we do not find in that assertion a

persuasive reason to reject the District Court's ruling that the

compulsory insurance doctrine does not apply here. Given the

ordinance's text relative to the text of the New Hampshire

Financial Responsibility Act and the texts of similar ordinances

- 29 - from around the country requiring certain establishments to obtain

insurance, the absence of any legislative history that would allow

us to construe the ordinance's text to nullify an insurer's

contractual notice defense, the fact that the ordinance is

unrelated to the automobile liability context, and the absence of

the circumstances deemed significant in Northwest Airlines, we

cannot agree that the New Hampshire Supreme Court would extend the

compulsory insurance doctrine here based on the City's contention

about the ordinance's purpose.

III.

For the foregoing reasons, the District Court's ruling

granting summary judgment to Colony and denying summary judgment

to the Jespersens is affirmed. Each party shall bear its own

costs.

- 30 -