Mehta v. Ace American Insurance Co
Filing
108
ORDER granting 54 Motion for Summary Judgment. See attached ruling. Signed by Judge Robert N. Chatigny on 3/30/2015. (Saner, K)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
DINESH MEHTA,
Plaintiff,
V.
ACE AMERICAN INSURANCE CO.,
Defendant.
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CASE No. 3:10-CV-1617(RNC)
RULING AND ORDER
Plaintiff Dinesh Mehta seeks to recover underinsured
motorist benefits in his individual capacity and as administrator
of the estate of his late wife, Yamuna Mehta.
He seeks payment
of benefits under a policy issued by defendant Ace American
Insurance Company ("Ace") in connection with his rental of a car
in New York.
His claims for coverage arise out of the death of
his wife, who was struck and killed by an underinsured motorist
in Connecticut.
He asserts claims for breach of contract, breach
of the implied covenant of good faith and fair dealing, and
violations of the Connecticut Unfair Trade Practices Act (CUPTA)
and Connecticut Unfair Insurance Practices Act (CUIPA).
Ace has
moved for summary judgment on all the claims in the complaint.
For reasons that follow, the motion is granted.
I.
Background
On January 1, 2008, plaintiff rented a car from National Car
Rental in New York City.
In connection with the rental, he
purchased supplemental liability insurance ("the policy"), which
included uninsured and underinsured motorists coverage.
The
policy was underwritten by defendant Ace and issued to Vanguard
Car Rental USA Inc.; plaintiff purchased the right to be insured
under the policy for $12.95 per day.
Plaintiff’s spouse, Yamuna
Mehta, was not identified in the rental agreement as an
authorized driver or insured person, although plaintiff argues
that she qualified as a "named insured" under New York law.
The
policy contained several endorsements including the New York
Excess Supplementary Uninsured/Underinsured Motorists Endorsement
("the SUM Endorsement").
Plaintiff drove the rental car to Connecticut.
On January
6, 2008, an underinsured motorist struck and killed Mrs. Mehta
while she was crossing a street after exiting the rental car.
Mr. Mehta was walking next to her and witnessed her death.
He
has testified that she was more than ten feet from the rental car
at the time of the accident.
The underinsured motorist, Abner
Pena, was driving a vehicle owned by Sandra Pena that was covered
under a liability insurance policy issued by Allstate Insurance
Company.
The Allstate policy provided liability indemnification
coverage in the amount of $25,000 per person and $50,000 per
occurrence.
The Penas had no other insurance coverage.
Allstate
has paid the limits of its $25,000 policy to the estate of Yamuna
Mehta; the policy did not provide coverage for plaintiff's
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derivative claims.
Plaintiff submitted a claim under the underinsured motorists
coverage of the Ace policy, which had limits of $100,000 per
person and $300,000 per occurrence.
Rental Insurance Services,
Inc. ("RIS"), a third-party administrator, was responsible for
processing the claim on ACE's behalf.
Ace denied the claim and
this suit followed.
II.
The Policy
The Ace policy provides a schedule of insurance as follows:
A. Automobile liability with limits equal to New York state
minimum financial responsibility requirements of: $25,000 each
person - bodily injury; $50,000 each person - death; $50,000 each
accident - bodily injury; $100,000 each accident - death; $10,000
each accident - property damage.
As provided under the terms of
the rental agreement.
B. Uninsured Motorists with limits equal to New York state
minimum financial responsibility requirements of: $25,000 each
person - bodily injury; $50,000 each person - death; $50,000 each
accident - bodily injury; $100,000 each accident - death.
In addition, the policy provides “(ii) Supplementary
Uninsured/Underinsured Motorist insurance equal to the difference
between underlying insurance and $100,000 per person/$300,000 per
accident.”
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The SUM Endorsement provides: "We will pay all sums the
'named insured' is legally entitled to recover as compensatory
damages from the owner or driver of an 'uninsured motor vehicle.'
The damages must result from 'bodily injury' sustained by the
'insured' caused by a 'loss' involving a 'rental vehicle' during
the term of the 'rental agreement.'”
The uninsured motorist’s
liability for these damages must result from the “ownership,
maintenance or use of the 'uninsured motor vehicle.'"
"Named
insured" is defined to include: "(1) the 'named insured' or (2)
any person permitted by the 'authorized used/driver' to occupy
the 'rental vehicle.’"
"Occupying" is defined as "in, upon,
entering into, or exiting from a motor vehicle."
In addition,
"bodily injury" as defined to mean “bodily harm, including
sickness, disease or death resulting therefrom."
Finally, the policy also states that coverage shall conform
to the requirements of the applicable New York insurance laws and
regulations.
III. Legal Standard
Summary judgment may be granted when there is no genuine
issue as to any material fact and the movant is entitled to
judgment as a matter of law.
Fed. R. Civ. P. 56(c).
A genuine
issue of fact exists "if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party."
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Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
In determining
whether summary judgment is proper, the record must be viewed in
the light most favorable to the nonmovant.
See Sheppard v.
Beerman, 317 F.3d 351, 354 (2d Cir. 2003).
Under New York law, which the parties agree applies to the
interpretation of the policy, “an insurance contract is
interpreted to give effect to the intent of the parties as
expressed in the clear language of the contract.”
Morgan Stanley
Group Inc. v. New England Ins. Co., 225 F.3d 270, 275 (2d Cir.
2000).
If the language of the policy is doubtful or uncertain,
any ambiguity must be construed in favor of the insured and
against the insurer.
See Parks Real Estate Purchasing Grp. v.
St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 42 (2d Cir. 2006).
IV.
Discussion
Defendant argues that it is entitled to summary judgment
because neither plaintiff nor his decedent is entitled to recover
under the Ace policy as a matter of law.
Specifically, defendant
argues: (1) plaintiff’s decedent was not a named insured under
the policy, was not occupying the rental vehicle at the time of
the incident, and the incident was not caused by a loss involving
the rental vehicle; (2) plaintiff’s claims are derivative and
also are not caused by a loss involving the rental vehicle; and
(3) plaintiff’s claims alleging bad faith and violations of CUTPA
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and CUIPA must fail because coverage under the policy was
properly denied.
Plaintiff responds that New York law provides
portable supplemental underinsured motorists coverage to the
resident spouse of a named insured and that any provisions
restricting such coverage in the policy are void.
I agree with the defendant that Mrs. Mehta was not protected
by the policy at the time of the accident.
Mrs. Mehta was not a
“named insured” as defined by the SUM Endorsement to include “the
named insured” and “‘any person permitted by the ‘authorized
user/driver’ to occupy the ‘rental vehicle.’”
The SUM
Endorsement defines “occupying” to include “in, upon, entering
into, or exiting from a motor vehicle.”
Plaintiff argues that under the plain language of the
policy, a person permitted to occupy the rental vehicle is
covered even if that person is not occupying the vehicle when
injured.
Reading the SUM Endorsement as a whole, however,
coverage is limited to those named as insureds under the policy –
here, the renter Dinesh Mehta – and others permitted to occupy
the vehicle if injured while “in, upon, entering into, or exiting
from” the vehicle.
Mrs. Mehta was not “occupying” the rental
vehicle within the meaning of the policy when she was struck
crossing the street more than ten feet from the rental car.
See,
e.g., Travelers Ins. Co. v. Wright, 202 A.D.2d 680, 680-81 (1994)
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(appellant, who was walking away from the car at the time of the
incident, was not “occupying” the insured vehicle - defined in
the policy as “in or upon or entering into or alighting from” –
notwithstanding her intent to return and reenter the vehicle).
Accordingly, she does not qualify as an insured person under the
plain language of the SUM Endorsement.
Plaintiff urges that Mrs. Mehta is nonetheless entitled to
coverage under New York’s statutory scheme, which he claims
provides portable SUM coverage for a resident spouse of a named
insured.
New York Vehicle and Traffic Law § 370 requires rental
vehicle insurance policies to provide "uninsured motorists
coverage in the minimal amount and in the form provided for in
subsection (f) of section three thousand four hundred twenty of
the insurance law."
N.Y. Veh. & Traf. Law § 370.
New York
Insurance Law § 3420(f)(1) mandates that every motor vehicle
liability insurance policy contain uninsured motorist coverage of
$25,000/$50,000 for bodily injury caused by an accident with an
uninsured motorist in New York.
See Morris v. Progressive Cas.
Ins. Co., Inc., 662 F. Supp. 1489, 1495 (S.D.N.Y. 1987).
Section
3420(f)(2) requires the issuance of coverage in amounts greater
than $25,000/$50,000, at the option of the insured.
1494.
See id. at
Plaintiff argues that New York Vehicle and Traffic Law §
370 requires that a rental vehicle insurer offer supplemental §
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3420(f)(2) coverage.
Cf. ELRAC, Inc. v. Edwards, 270 A.D.2d 414,
414-15 (2000) (self-insured automobile rental company obligated
by law to provide uninsured motorist benefits to renter); Morris,
662 F. Supp. at 1494. (describing § (f)(2) as "a special kind of
uninsured motorists coverage — one that protects against
underinsurance if the SUMI holder is involved in an accident with
an insured vehicle, in the § (f)(1) sense of 'insured,' with
lower coverage maxima than the SUMI holder"); Allstate Ins. Co.
v. Shaw, 52 N.Y.2d 818, 826 (1980) (self-insured car rental
company required to provide uninsured motorist coverage).
Ordinarily, if an insured elects § 3420(f)(2) coverage, the
terms of the policy must conform to the requirements of New York
Insurance Department Regulation 35-D.
Regs. tit. 11, § 60-2.3(a)(2).
See N.Y. Comp. Codes R. &
Regulation 35-D provides that the
definition of an "insured" includes the named insured as well as
a resident spouse.
Therefore, if Regulation 35-D applies, Mrs.
Mehta would qualify as an insured person under the SUM
Endorsement.
Moreover, SUM coverage of this nature - for a named
insured and resident spouse - is usually portable and does not
require that the injury occur while the insured is occupying the
insured vehicle.
E.g., Widiss & Thomas, Uninsured and
Underinsured Motorist Insurance, (3d Ed., 2005) § 4.2, p. 68-72
(explaining that "clause (a)" insureds, including a named insured
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and resident spouse, are protected whether or not they are
operating or are passengers in a motor vehicle, as well as when
they are engaged in any other activity such as walking); Opinion
of the New York State Insurance Department Re. Personal Lines
Automobile Insurance UM/SUM Coverage, Ex. A, Pl.'s Supp. Auth.
(ECF No. 105).
On this basis, plaintiff argues that Mrs. Mehta
was protected by SUM coverage when she was struck in the
crosswalk and any restrictions to the contrary in the SUM
Endorsement are void.
After considering the parties’ submissions, I agree with
defendant that it was not required by New York Vehicle and
Traffic Law § 370 to provide supplemental coverage under §
3240(f)(2).
None of the cases cited by plaintiff explicitly
require rental car companies to provide this coverage.
In the
absence of such cases, I conclude that "Vehicle and Traffic Law §
370 requires rental car companies to provide primary insurance to
their renters up to the minimum liability limits provided by the
statute," ELRAC, Inc. v. Ward, 96 N.Y.2d 58, 78 (2001), as well
as minimum uninsured motorist coverage in the form provided in §
3240(f), which the policy did, as demonstrated by the "Schedule
of Underlying Insurance.”
Because the SUM Endorsement exceeded
the minimum statutory requirements for rental vehicles, Ace could
limit the scope of the coverage provided by the Endorsement to
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persons occupying the rental vehicle and to bodily injury
resulting from a loss involving the vehicle.
See Pfoh v. Elec.
Ins. Co., 14 A.D.3d 777, 788 (N.Y. App. Div. 2005)(residentrelative exclusion in excess liability policy, which provided
coverage beyond that required by statute, permissible because
"insurers are prohibited from limiting their contractual
liability only as to statutorily mandated coverage").
Mrs. Mehta
was not occupying the rental vehicle at the time of the incident.
Therefore, her estate is not entitled to recover.
Plaintiff's loss of consortium and bystander emotional
distress claims also are unavailing.
The Ace Policy defines
"bodily injury" to include "bodily injury, sickness, or disease
including death from any of these."
Courts interpreting nearly
identical policy language have determined that claims for
bystander emotional distress are not covered.
See, e.g., Taylor
v. Mucci, 288 Conn. 379, 385 (2008) (bystander emotional distress
not a separate and distinct bodily injury under the policy defined as "any bodily injury, sickness, disease or death
sustained by any person" - notwithstanding accompanying physical
manifestations of the distress).
Finally, defendant argues that plaintiff has not established
bad faith in connection with the denial of coverage under
Connecticut law.
Plaintiff counters that “[i]f the opinion of
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New York counsel advised the defendant of the application of
Regulation 35-D and the defendant persisted in denying this
claim, a jury could well determine that the defendant is liable
for bad faith.”
Pl.’s Opp’n (ECF No. 77) at *33.
Plaintiff
relies on an email exchange involving defendant’s counsel
indicating an initial impression from counsel for the Defendant
that “we may owe it” and noting that New York rather than
Connecticut law applied.
See id. at 33-34; Pl.’s Ex. G (ECF No.
77-7).
To prove a claim for bad faith under Connecticut law,
plaintiff must prove that the defendant engaged in conduct
designed to mislead or deceive; “bad faith is not simply bad
judgment or negligence, but rather it implies the conscious doing
of a wrong because of dishonest purpose or moral obliquity.”
Chapman v. Norfolk & Dedham Mut. Fire Ins. Co., 39 Conn. App.
306, 320 (1995) (citations omitted).
“A mere coverage dispute or
negligence by an insurer in conducting an investigation is not
sufficient to state a claim of bad faith against an insurer.”
Emmelmann v. Am. & Foreign Ins. Co., CIV.A303CV02144 AWT, 2006 WL
861015, at *2 (D. Conn. Mar. 31, 2006) (internal quotation marks
omitted).
Plaintiff’s allegations, as described above, are
insufficient to meet either standard.
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Plaintiff's allegations of violations of CUTPA and CUIPA are
similarly insufficient.
To prevail on the CUTPA claim, plaintiff
must prove that Ace engaged in unfair or deceptive acts that
caused plaintiff to suffer an ascertainable loss.
Stat. §§ 42–110b(a) & 42–110g(a).
Conn. Gen.
Viewing the record in a light
most favorable to the plaintiff, a jury could not reasonably find
that the defendant committed such a practice.
Walsh v. Seaboard
Sur. Co., 94 F. Supp. 2d 205, 212-13 (D. Conn. 2000).
Nor has
plaintiff shown that Ace engaged in specific unfair acts with
such frequency as to indicate a general business practice as
required for a CUIPA claim.
229 Conn. 842, 847 (1994).
E.g., Lees v. Middlesex Ins. Co.,
Defendant is therefore entitled to
summary judgment on plaintiff's bad faith, CUTPA and CUIPA
claims.
IV. Conclusion
Accordingly, the motion for summary judgment is hereby
granted.
The Clerk may close the file.
So ordered this 30th day of March 2015.
/s/RNC
Robert N. Chatigny
United Stated District Judge
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