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Santos v. Metropolitan Property and Casualty Insurance Co.

Supreme Court of New Hampshire, Rockingham

January 17, 2019

JOSEPH A. SANTOS
v.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY

          Argued: September 27, 2018

          Parnell, Michels & McKay, PLLC, of Londonderry (Rory J. Parnell on the brief and orally), for the plaintiff.

          Desmarais Law Group, PLLC, of Manchester (Debra L. Mayotte on the brief and orally), for the defendant.

          HANTZ MARCONI, J.

         The defendant, Metropolitan Property and Casualty Insurance Company (Metropolitan), appeals an order of the Superior Court (Schulman, J.) partially granting and partially denying its summary judgment motion as well as a cross-motion filed by the plaintiff, Joseph A. Santos. Santos held a personal excess liability policy with Metropolitan that included excess underinsured motorist (UIM) coverage. After Metropolitan denied a claim made by Santos for excess UIM benefits, he brought this declaratory judgment action. The trial court ruled that Metropolitan was liable to Santos for excess UIM benefits. Metropolitan argues that the trial court erred in so holding because Santos's policy requires, as a precondition to receiving excess UIM benefits, that he carry a certain amount of underlying insurance coverage, and Santos did not do so. Santos argues that his lack of sufficient underlying coverage allows Metropolitan to reduce its excess UIM liability but not escape it altogether. We affirm.

         The trial court determined that the following material facts are undisputed. Santos alleges that he was driving his motorcycle when he was struck by an SUV. He claims that the collision was the result of the other driver's negligence and that he suffered debilitating injuries in the accident. Santos further claims that, although the other driver carried insurance, his damages exceed the other driver's policy limits. Santos insured his motorcycle with a policy from Allstate Insurance Company. That policy insured Santos's motorcycle for $25, 000 per person and $50, 000 per accident. He claims that the Allstate policy also is insufficient to fully compensate him for the injuries he suffered in the accident.

         Santos also held the policy with Metropolitan that is at issue. It provided Santos with excess personal liability coverage as well as excess UIM coverage. Santos submitted a claim to Metropolitan for excess UIM benefits pursuant to this policy. Metropolitan denied his claim, asserting that the endorsement in the policy that grants excess UIM coverage contains a precondition requiring Santos to maintain a certain amount of underlying insurance on his motorcycle, which Santos did not maintain.

         Santos then filed this declaratory judgment action to determine his coverage under the Metropolitan policy. The parties filed cross-motions for summary judgment. The trial court ruled that, notwithstanding Santos's failure to maintain the underlying insurance coverage specified in the excess UIM endorsement, Metropolitan was required to provide Santos with excess UIM benefits for the alleged injuries he suffered as a result of the accident. The trial court further ruled that Metropolitan was liable to Santos for excess UIM benefits only to the extent and in the amount it would have been liable had he maintained the amount of underlying coverage specified in the excess UIM endorsement. This appeal followed.

         In an appeal from the disposition of cross-motions for summary judgment, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law. Newell v. Markel Corp., 169 N.H. 193, 195 (2016). If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment. Id. We review the trial court's application of the law to the facts de novo. Id.

         In a declaratory judgment action to determine the coverage of an insurance policy, the burden of proof is always on the insurer, regardless of which party brings the petition. Exeter Hosp. v. Steadfast Ins. Co., 170 N.H. 170, 174 (2017). The interpretation of insurance policy language is a question of law that this court decides de novo. Id. The fundamental goal of interpreting an insurance policy, as in all contracts, is to carry out the intent of the contracting parties. Id. To discern the parties' intent, we begin with an examination of the insurance policy language. Id. In interpreting policy language, we look to the plain and ordinary meaning of the policy's words in context. Id. We construe the terms of the policy as would a reasonable person in the position of the insured based upon more than a casual reading of the policy as a whole. Id. This is an objective standard. Id.

         Insurers are free to contractually limit the extent of their liability provided that they violate no statutory provision by doing so. Russell v. NGM Ins. Co., 170 N.H. 424, 429 (2017). Limitations must be stated in such clear and unambiguous terms, however, that the insured can have no reasonable expectation that coverage exists. Id. In determining whether an ambiguity exists, we look to the claimed ambiguity and consider it in its appropriate context. Id. If one of the reasonable meanings of the language favors the policyholder, the ambiguity will be construed against the insurer, in order to honor the insured's reasonable expectations. Id. This doctrine is rooted in the fact that insurers, as drafters of their policies, have a superior understanding of the terms they employ. Exeter Hosp., 170 N.H. at 174. However, when the policy language is clear, this court will not perform amazing feats of linguistic gymnastics to find a purported ambiguity simply to construe the policy against the insurer and create coverage where it is clear that none was intended. Russell, 170 N.H. at 429.

         We turn to an examination of the policy itself. The Metropolitan policy issued to Santos may be broken into three parts for the sake of analysis. The first part consists of declarations. The declarations state the amount of excess personal liability coverage as well as excess UIM coverage available under the policy, in addition to the required amounts of underlying insurance. Automobile insurance is listed as a type of required underlying insurance. The declarations further state that the policy was "issued and rated" based in part on the respective years, manufacturers, models, and body types of Santos's vehicles. (Capitalization omitted.) The second part of the policy consists of the policy form itself. Section I of the policy form is the grant of excess personal liability coverage. Section II contains exclusions from coverage. Section III establishes conditions of coverage. Section IV provides definitions of certain terms used elsewhere in the policy. Of importance to this case is Section III, paragraph 7 of the policy form, which provides:

This policy requires you to have the types and amounts of insurance shown in the declarations pages. If you fail to maintain the required underlying policies for any reason, or if no insurance is available because an insured has breached a term or condition of any underlying policy, we will be liable only for the amount that we would have been liable for had you maintained the required insurance. You will be liable for the amount that would have been covered by the underlying policy.

         This paragraph establishes that, should Santos fail to maintain the amount of underlying insurance specified in the declarations pages, Metropolitan will only be liable for the amount it would have had to pay ...


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