United States District Court, D. New Hampshire
FINDINGS OF FACT AND RULINGS OF LAW AFTER BENCH
N. LAPLANTE UNITED STATES DISTRICT JUDGE.
insurance coverage case requires the court to determine
whether a named insured validly rejected uninsured motorist
coverage. The dispute arises from a motor vehicle accident in
which plaintiff Brendan Kelly was seriously injured. Kelly,
an employee of Plum Creek Timber Co., was driving a company
truck when an oncoming vehicle crossed a double-yellow line
and caused a head-on collision. After collecting the
liability insurance policy limit from the other driver's
insurance carrier, Kelly sought underinsured motorist (UM)
coverage under an umbrella policy defendant Liberty Mutual
issued to Plum Creek. New Hampshire law requires that
umbrella policies include UM coverage unless rejected by the
named insured. See N.H. Rev. Stat. Ann. §
264:15. Liberty Mutual denied the claim on the basis
that Plum Creek had expressly rejected UM coverage. Claiming
that Plum Creek's rejection is invalid under New
Hampshire law, Kelly filed a petition for declaratory
judgment seeking coverage under the Liberty Mutual policy.
See N.H. Rev. Stat. Ann. 491:22. This court's
subject matter jurisdiction is premised on diversity of
citizenship. U.S.C. § 1332.
granting partial summary judgment to Liberty Mutual on
plaintiff's claim that New Hampshire law required Liberty
Mutual to attach Plum Creek's written rejection of UM
coverage to the policy,  the court held a one-day bench trial on
the remaining issue of whether the Plum Creek representative
who executed the rejection form was properly authorized to do
so. The parties each submitted proposed findings of fact and
rulings of law, pre-trial briefs, as well as a
jointly-submitted statement of agreed facts and a timeline of
events. Relying on these materials, the court makes the
following findings of fact and rulings of law, see
Fed.R.Civ.P. 52(a), resulting in judgment for Liberty
Findings of fact
Underlying accident and insurance
December 2013, plaintiff Kelly, a Plum Creek employee driving
a truck Plum Creek owned, was en route to a job site when a
vehicle driven by George Motard crossed into Kelly's lane
of travel and struck Kelly's truck head-on, killing
Motard and injuring Kelly. The New Hampshire State Police
determined that Motard was entirely at fault for the
the time of the collision, Progressive Casualty Insurance
covered Motard under a policy containing a $100, 000 auto
liability limit. Progressive tendered its policy limits to
Creek carried its primary auto liability insurance through
ACE American Insurance Company ("ACE"), with auto
liability limits of $1, 000, 000.
ACE policy provided UM coverage with limits of $1, 000, 000.
ACE tendered its policy's UM coverage limits, minus
credit for the payment from Progressive, to Kelly.
Liberty umbrella policy
the time of the collision, Plum Creek was also insured under
a Commercial Liability Umbrella policy issued by Liberty,
("the Liberty policy") with effective dates of June
1, 2013 to June 1, 2014.
Kelly is an "insured" under the Liberty policy
because he was acting within the scope of his employment for
the named insured, Plum Creek, at the time of the accident,
and because he was using a "covered auto" with Plum
Liberty Policy provides auto liability umbrella coverage with
limits of $5, 000, 000 for each occurrence and a $5, 000, 000
Kelly sought UM coverage under the Liberty policy. As part of
his claim, he submitted medical records and bills showing the
serious and permanent injuries that resulted from the
collision. The bills exceeded $440, 000.
Liberty denied Kelly's claim for coverage under the
Liberty Policy because Plum Creek had rejected UM coverage.
"New Hampshire Excess Uninsured Motorists Coverage
Selection or Rejection Form" was not attached to the
Authority for rejecting UM coverage
Lisa Duetsch signed the UM rejection form on behalf of Plum
Duetsch began working at Plum Creek in January of 2005. In
2008, she assumed the title of Manager, Risk & Insurance.
Plum Creek provided Duetsch with an office in its corporate
offices in Montana where Duetsch met with Plum Creek's
insurers and insurance brokers.
Plum Creek also provided Duetsch with a company email
address, which she used to communicate with insurers and
insurance brokers. The email address and her business cards
included her title.
Duetsch executed UM coverage forms on behalf of Plum Creek so
as to reject coverage annually from 2005 to 2015.
May 30, 2013, Duetsch completed and signed the New Hampshire
UM selection/rejection form, rejecting UM coverage. Duetsch
likewise rejected UM coverage in Florida, Louisiana and West
Virginia. Duetsch completed and signed UM coverage forms for
the same states the previous year.
Duetsch's supervisor, Kent Jones, issued Duetsch
delegation of authority memoranda throughout her employment.
The memoranda authorized Duetsch to sign "contracts,
agreements, statements" including "Auto Ul/Underl
forms." Duetsch regularly referred to the delegation
memoranda to ensure she was acting within the scope of her
or about June 1, 2005, Jones verbally instructed Duetsch to
complete the UM forms associated with Plum Creek's
casualty insurance policy renewals. Jones reviewed the forms
before Duetsch sent them to Plum Creek's insurer(s).
During a scheduled weekly meeting with Duetsch the following
year, Jones verbally instructed Duetsch to complete the UM
forms. He indicated that he was comfortable not reviewing
them, given Duetsch's demonstrated comprehension of Plum
Creek's intent to reject UM coverage, as well as the
accuracy of the prior years' forms. Until Jones updated
the delegation of authority memorandum explicitly to grant
Duetsch authority to complete the UM forms, she always
notified Jones of her intent to complete the UM forms and
received his verbal authority to do so. After Jones updated
the delegation memorandum, Duetsch informed Jones of the
status of her completion of these forms during their
Based on conversations with Jones, Duetsch understood that
Plum Creek wished to reject UM coverage in states in which it
was permitted to do so because Plum Creek had already secured
insurance coverage for its employees in the form of
workers' compensation insurance.
Duetsch understood that the delegation of authority memoranda
she received, together with Jones's verbal instructions,
authorized her to reject UM coverage where permitted by law.
Duetsch understood that Jones was aware of her execution of
UM forms because it was one of her job responsibilities for
over 10 years.
Duetsch understood that failure to reject UM coverage on
behalf of Plum Creek would have been inconsistent with Plum
Creek's judgment and with Jones's instructions.
Duetsch and Jones met annually with Plum Creek's primary
casualty insurer's underwriter. During these meetings
Duetsch and the underwriter discussed the execution of the UM
rejection forms in Jones's presence.
Kent Jones began working at Plum Creek in May of 1999 as a
Resource Accounting Manager.
2001, Jones assumed the role of Director of Accounting-Shared
Services, Manufacturing and Risk Management. He reported
directly to David Brown, Plum Creek's Vice President and
Chief Accounting Officer.
Brown authorized Jones to decide whether to accept UM
coverage on behalf of Plum Creek.
Beginning in 2002, and based on Jones's understanding of
Plum Creek's past practice and his own professional
judgment, Jones annually rejected UM coverage on behalf of
Plum Creek in each state in which such rejection was
Thereafter, Jones delegated the responsibility of executing
UM rejection forms to Lisa Duetsch. Jones furnished Duetsch
with a written delegation of authority memorandum.
Jones maintained similar memoranda in his files delegating
authority to Duetsch for the years 2004, 2005, 2007, 2010,
2011, 2012, 2013, 2014 and 2015. He updated them as needed.
delegation of authority memorandum in effect in May 2013
stated in paragraph five that the Risk Manager, Duetsch, was
authorized to sig\n "contracts, agreements,
statements" including "Auto Ul/Underl
When Jones first assigned Duetsch the responsibility of
executing UM coverage selection/rejection forms on behalf of
Plum Creek, he verbally instructed Duetsch to reject such
coverage where permitted by law.
Jones's view, Duetsch's failure to reject coverage
would have been a direct deviation from Jones's
instructions and would have reflected poorly on Duetsch's
Jones was aware that Duetsch rejected UM coverage on behalf
of Plum Creek in each of the years in which she was
authorized to do so.
Jones was aware of Duetsch's execution of the UM coverage
forms because an electronic file so indicating was placed in
a shared access folder, and because the invoice or premium
cost for the Liberty policy reflected a cost which did not
include uninsured or underinsured motorist coverage for any
of the four applicable states.
2012 and 2013, Brown was Plum Creek's Vice President and
Chief Accounting Officer. He began working for Plum Creek in
1994. Brown earned Bachelor's and Master's Degrees in
accounting, and Master's Degrees in Business and
Between 1994 and 2016, Brown held multiple titles with Plum
Creek, including Controller; Vice President, Controller; Vice
President, Controller (Chief Accounting Officer); and Vice
President and Chief Accounting Officer. Regardless of his
title, in Brown's view, he was responsible for the Plum
Creek's accounting. Brown retired following
Weyerhaeuser's acquisition of Plum Creek in 2016. He was
never on the Plum Creek Board of Directors (the
During the relevant time period, the Plum Creek Board of
Directors elected Brown to the position of Vice President and
Chief Accounting Officer. Brown signed Plum Creek's Form
10-K filing with the United States Securities and Exchange
Commission ("SEC") in his capacity as Vice
President and Chief Accounting Officer.
Plum Creek was the largest private landowner in the United
States, deriving revenue from selling trees, manufacturing
wood products, selling and/or developing its land, and
mineral rights. Brown understood that, as a publicly-traded
company, Plum Creek was subject to oversight by the SEC.
Plum Creek's Vice President and Chief Accounting Officer,
Brown's primary job responsibility was to oversee the
Company's annual disclosure of financial information in
order to meet various SEC requirements. He worked with
various accountants, attorneys, and board members to make
sure "we got it right."
Brown was also responsible for internal controls at Plum
Creek. Those controls included protocols and practices to
prevent material misstatements in earnings reports and to
ensure that all material transactions were properly approved
in accordance with the requirements of Plum Creek's Board
of Directors. The board and Chief Financial Officer
("CFO") David Lambert gave Brown these
After implementation of the Sarbanes-Oxley Act of 2002, the
SEC issued guidance to public companies regarding internal
controls. The SEC directed management of public companies to
focus on verifying that all accounting transactions were
properly recorded and executed in accordance with delegations
of authority. Delegations of authority were specifically
included in the SECs definition of proper internal controls.
Brown spent approximately 25 percent of his time ensuring
that Plum Creek had proper internal controls in place and
approximately 75 percent of his time ensuring that "the
numbers were correct."
Based on his knowledge of federal regulations governing
public companies and his educational and professional
experience, Brown understood that adequate internal controls
over financial reporting, specifically those intended to
ensure all material transactions are properly authorized,
required that Plum Creek have adequate delegations of
authority in place.
Beginning in approximately 2004 and continuing through the
relevant time period, Plum Creek's Audit Committee met
nine times per year. Brown attended each meeting. Brown
provided the committee with an update on his responsibilities
related to financial reporting, including internal controls
and delegations of authority.
all relevant times, Brown understood that his authority came
from his direct superior, CFO Lambert.
Lambert delegated to Brown the primary responsibility of
ensuring that "all of the accounting was correct"
for the Company. Brown also understood that, based on the
BOD Delegation of Authority, he had a "specific level of
authority for certain transactions that he was allowed to
Brown had different levels of financial authority depending
on the category of payment involved, and he maintained a file
to review whenever he was asked to approve a payment in order
to ensure the payment was within his authority.
Brown met weekly with his direct supervisor, Lambert. During
these meetings, Brown discussed "basically anything and
everything that [Brown] thought was important to [Lambert]
relating to financial reporting, " which included
accounting for transactions, the annual audit, internal
controls, and personnel-related matters.
Brown was Kent Jones's direct supervisor. Insurance was
within Jones's job description and the ...