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Peerless Indemnity Insurance Co. v. Frost

United States Court of Appeals, First Circuit

July 10, 2013

ROBBIN W. FROST, Defendant, Appellee.


Robert H. Furbish, with whom Steven D. Silin and Berman & Simmons, P.A. were on brief, for appellant.

Carol I. Eisenberg, with whom John S. Whitman and Richardson, Whitman, Large, & Badger were on brief, for appellees.

Before Lynch, Chief Judge, Lipez and Thompson, Circuit Judges.

LIPEZ, Circuit Judge.

Dr. Robbin Frost, a licensed podiatrist, was driving alone in her husband's Pontiac Bonneville when she was severely injured in a collision caused by an underinsured motorist. So far, she has collected $250, 000 in insurance proceeds; she seeks further payment from Peerless Indemnity Insurance Co. and Peerless Insurance Co. (together, "Peerless"), who issued business owner's and excess/umbrella policies to Frost's podiatric practice, Lake Region Family Foot and Ankle Center, P.A. ("Lake Region"). Peerless sued in federal district court for a declaratory judgment that it had no duty to pay for any of Frost's injuries or damages. The district court granted summary judgment in favor of Peerless. Frost appeals.

We affirm the district court's decision on the ground that Maine's uninsured/underinsured motorist statute, Me. Rev. Stat. tit. 24-A, § 2902, does not apply to the Peerless policies issued to Lake Region.


On appeal from the district court's summary judgment order, we review the relevant facts in the light most favorable to the party against whom judgment was granted (here, Frost) and draw all reasonable inferences in her favor. Kelley v. Corr. Med. Servs., Inc., 707 F.3d 108, 110 (1st Cir. 2013). The facts here are drawn from the pleadings and statements submitted by Frost to the district court, as well as the undisputed documentary evidence.

A. The Accident

Frost is the sole stockholder and executive officer of Lake Region, a Maine professional association with a surgical practice office in Windham, Maine. On May 25, 2007, Frost set out from Lake Region's office in Windham to the Mercy Hospital in Portland, where she was scheduled to perform several podiatric surgical procedures. The car she was driving, a Pontiac Bonneville, was titled to her husband, but Frost was the primary user of the automobile and the vehicle registration showed both Frost and her husband as co-registrants.

While traveling east along Route 202, Frost brought the Pontiac to a stop at a traffic light in the town of Gray, Maine. The driver of a second vehicle stopped behind her. As Frost and the second driver waited at the traffic light, the driver of a third vehicle came from behind at an unsafe speed and failed to bring his vehicle to a halt, colliding with the second car and pushing it violently into the rear of the Pontiac Bonneville.

Frost suffered severe injuries as a result of the collision, including permanent disfigurement and near-total loss of her eyesight. The injuries have forced Frost to discontinue her podiatric practice. Frost has stated in her pleadings that her injuries and damages as a result of the collision are "well in excess" of $2.25 million. Peerless concedes that Frost's injuries and damages are at least in excess of $1.25 million.

B. The Insurance Policies

Frost and the driver of the second vehicle both sought to recover damages from the driver of the third vehicle, whose negligence appears to have been the sole proximate cause of the collision. The driver of the third vehicle was covered under an automobile insurance policy issued by AIU Insurance Co. ("AIU"). That policy provided coverage for bodily injury and property damage of up to a maximum of $125, 000 per accident. Frost herself was covered under an automobile insurance policy issued by Progressive Northwestern Insurance Co. ("Progressive"), which provided uninsured/underinsured motorist coverage of up to a maximum of $250, 000 per person.

AIU agreed to pay $99, 745.98 to Frost in connection with the accident; this sum represented the full amount of coverage remaining under the negligent driver's liability policy after the second driver was compensated for his injuries. Meanwhile, Progressive agreed to pay Frost $150, 254.02, which represented the maximum underinsured motorist coverage under the policy minus the amount Frost already had received from AIU.

Frost's podiatric practice, Lake Region, also had two insurance policies in effect at the time of the accident: a business owner's policy issued by Peerless Indemnity Insurance Co. and a commercial umbrella policy issued by Peerless Insurance Co. The business owner's policy provided coverage to Lake Region for liability and medical expenses of up to $1 million per occurrence; the umbrella policy provided additional coverage for up to $1 million.

1. Business Owner's Policy.

The business owner's policy explicitly excluded liability coverage for "'bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any . . . 'auto' . . . owned or operated by or rented or loaned to any insured." (An exception to that exclusion, however, effectively provided liability coverage for bodily injury or property damage arising out of valet parking on the business premises.)

Despite this explicit exclusion of automobile liability coverage, the business owner's policy was subject to an endorsement for "Hired Auto and Non-Owned Auto Liability, " which applied to bodily injury and property damage arising out of the use of a "hired auto" or "non-owned auto" by an employee of Lake Region in the course of business. The endorsement explicitly deleted the exclusion of automobile liability coverage "[f]or insurance provided by this endorsement only."

The endorsement included a section entitled "Who Is An Insured, " which read, in ...

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