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Signal Variety, Inc. v. Patriot Insurance Co.

United States District Court, D. New Hampshire

August 12, 2016

Signal Variety, Inc., d/b/a Signal Variety, Plaintiff
Patriot Insurance Company, Defendant Opinion No. 2016 DNH 136

          William P. Rose, Esq., Richard E. Heifetz, Esq., Laura M. Gregory, Esq. Matthew J. Kennedy, Esq. Anthony J. Antonellis, Esq.


          Steven J. McAuliffe United States District Judge.

         In September of 2015, Signal Variety filed suit against Patriot Insurance Company in state court, seeking a declaratory judgment that, under the terms of an insurance policy issued to it by Patriot, Signal Variety is entitled to both a defense in, and coverage for any liability arising from, an underlying state tort action. Signal also sought damages for Patriot’s alleged breach of that insurance policy. Patriot removed the case, invoking this court’s diversity jurisdiction. Pending before the court are the parties’ cross motions for summary judgment.

         For the reasons discussed, Signal Variety’s motion for partial summary judgment (on the coverage issue) is denied, and Patriot’s motion for summary judgment is granted.

         Standard of Review

         I. Summary Judgment.

         When ruling on a motion for summary judgment, the court must “constru[e] the record in the light most favorable to the non-moving party and resolv[e] all reasonable inferences in that party’s favor.” Pierce v. Cotuit Fire Dist., 741 F.3d 295, 301 (1st Cir. 2014). Summary judgment is appropriate when the record reveals “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In this context, “a fact is ‘material’ if it potentially affects the outcome of the suit and a dispute over it is ‘genuine’ if the parties’ positions on the issue are supported by conflicting evidence.” Int’l Ass’n of Machinists & Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 199-200 (1st Cir. 1996) (citations omitted). See also Nolan v. CN8, 656 F.3d 71, 76 (1st Cir. 2011). Nevertheless, if the non-moving party’s “evidence is merely colorable, or is not significantly probative, ” no genuine dispute as to a material fact has been proved, and “summary judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (citations omitted).

         II. Insurance Policy Coverage.

         In a declaratory judgment action to determine the scope of coverage provided by an insurance policy, “the burden of proof is always on the insurer, regardless of which party brings the petition.” Rivera v. Liberty Mut. Fire Ins. Co., 163 N.H. 603, 606 (2012). See also N.H. Rev. Stat. Ann. (“RSA”) 491:22-a (“the burden of proof concerning the coverage shall be upon the insurer whether he institutes the petition or whether the claimant asserting the coverage institutes the petition.”). Interpretation of an insurance policy’s language “is a question of law for [the] court to decide.” Carter v. Concord General Mut. Ins. Co., 155 N.H. 515, 517 (2007). Moreover, “[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.” Cogswell Farm Condo. Ass’n v. Tower Group, Inc., 167 N.H. 245, 248 (2015).

         Whether an insurer is obligated to defend its insured depends upon both the scope of coverage provided by the policy, and the nature of the underlying claim(s) against the insured. As the New Hampshire Supreme Court has noted:

An insurer’s obligation to defend its insured is determined by whether the cause of action against the insured alleges sufficient facts in the pleadings to bring it within the express terms of the policy. In considering whether a duty to defend exists based on the sufficiency of the pleadings, we consider the reasonable expectations of the insured as to its rights under the policy. An insurer’s obligation is not merely to defend in cases of perfect declarations, but also in cases where, by any reasonable intendment of the pleadings, liability of the insured can be inferred, and neither ambiguity nor inconsistency in the underlying writ can justify escape of the insurer from its obligation to defend. In cases of doubt as to whether the writ against the insured alleges a liability of the insurer under the policy, the doubt must be resolved in the insured’s favor.

Northern Sec. Ins. Co. v. Connors, 161 N.H. 645, 650 (2011) (citations and internal punctuation omitted).


         In the fall of 2014, Noah Campbell was an employee of Signal Variety. On November 1 of that year, he was driving an automobile in which Christopher Hall and Evan McLoughlin were passengers. Campbell apparently lost control of the vehicle and struck a tree. Hall and McLoughlin were injured as a result.

         I. The Underlying State Court Action.

         In the wake of that accident, Hall and McLoughlin filed suit in Strafford County Superior Court against several defendants - including Signal Variety - seeking compensation for their injuries. In their complaint, Hall and McLoughlin allege the following facts that are material to the current coverage dispute:

1. On November 1, 2014, McLoughlin drove Hall and three other young men to Rochester, New Hampshire. On the way, they telephoned Noah Campbell, who instructed them to meet him at the Signal Variety Store. Campbell was, at that time, an employee of Signal Variety.
2. When the young men arrived at the store, Campbell came out from behind a dumpster and gave them a cardboard box containing four six-packs of wine coolers and hard lemonade.
3. Signal Variety “allowed” Campbell to take the alcoholic beverages from the store.
4. McLoughlin and the passengers in his car then drove to a house party in Rochester. They arrived at approximately 9:00 PM and ...

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