Tudor Insurance Company v. Becham et al

Filing 69

ORDER DENYING 51 Motion for Summary Judgment; DENYING 53 Motion for Summary Judgment. Ordered by Judge Marc Thomas Treadwell on 6/14/2011. (tlh)

IN THE UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
TUDOR INSURANCE COMPANY,

)
)
Plaintiff,
)
)
v.
)
)
David R. BECHAM, et al.,
)
)
Defendants.
)
_________________________________)

CIVIL ACTION NO. 5:10-CV-81(MTT)

ORDER
This matter is before the Court on Plaintiff Tudor Insurance Company’s Motion
for Summary Judgment (Doc. 51) and the Defendants’ Motion for Summary Judgment
(Doc. 53).1 For the following reasons, both motions are DENIED.
I. PROCEDURAL AND FACTUAL BACKGROUND
This is a declaratory judgment action arising out of an automobile collision on
June 30, 2009, involving Defendant Lonnie Razz Lavender, Jr. and Defendants Walbert
Lee Lawton, Linda Lawton, and Heather Toomer. Plaintiff Tudor Insurance Company
insures Defendant David Becham, d/b/a Duramax Recovery, LLC (hereafter
“Duramax”). Tudor seeks a declaration that its policy does not cover claims arising from
the collision. Defendant Auto-Owners Insurance Company, which insures Punie Junie,
Inc. a/k/a Paradise Auto Sales (hereafter “Paradise”) and is providing coverage to
Duramax and Lavender pursuant to a reservation of rights, has filed a counterclaim and
1

Defendant Heather Toomer has not filed responsive pleadings and there is no evidence she
was served with process. Accordingly, “Defendants” shall refer to the other defendants,
collectively.

crossclaim seeking a declaration that Tudor has coverage and that its policy is excess
to Tudor’s policy. Although the Defendants’ Joint Motion for Summary Judgment only
addresses the issue of whether Tudor’s policy covers the collision, the Defendants’
initial brief argues that Auto-Owners is entitled to judgment as a matter of law on its
claim that Tudor’s policy is primary. Tudor has responded to this argument in its brief.
In subsequent briefing, Auto-Owners filed a separate brief and again addressed this
issue. The other defendants’ subsequent briefs did not address this issue and they
perhaps have no stake in the determination of which policy is primary. Although AutoOwners did not raise this issue in its motion, the Court will address it because it has
been briefed by both Tudor and Auto-Owners.
At the time of the collision, Lavender was employed by Duramax, which is in the
business of repossessing motor vehicles. The collision occurred while Lavender was
delivering a repossessed vehicle to Paradise, a used-car dealer.
Tudor issued its policy to Duramax through its agent, the Walter P. Geoghan
Agency. The policy contains an exclusion for “autos,” but the exclusion does not apply
to any “repossessed auto” while used in the conduct of “garage operations.” (Doc. 51-3,
at 50). However, the policy contains a Scheduled Driver Limitation Endorsement that
states:
The coverage provided by this policy does not apply:
1.
2.

To any claim or “suit” caused by the operation of a “repossessed
auto” by your “employee(s)”; or
To any “loss” to a “repossessed auto” while being operated by your
“employee(s)”;

unless the “employee(s)” are scheduled below:

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(Doc. 51-3, at 55). When the policy was issued, Lavender was not employed by
Duramax and thus was not listed as a scheduled driver. Surprisingly, the policy is silent
with regard to adding scheduled drivers. Apparently, Tudor delegated to the Geoghan
Agency the responsibility of adding drivers, but there is no evidence that Tudor provided
the Geoghan Agency with any guidance with regard to how this was to be done.
When the Geoghan Agency sent the policy to Duramax, it also sent a Privacy
Statement & Disclosure Statement, which states, in part:
This policy contains a scheduled driver limitation endorsement. I hereby
agree that all drivers will be disclosed and reported to the company prior
to being granted driving privileges. Company program underwriting must
approve drivers. Undisclosed drivers will not be insured.
(Doc. 51-2). The statement does not define “company” or “company program
underwriting.”
The Geoghan Agency had a form for adding drivers to the policy that asked for
the driver’s name, date of birth, driver’s license number and issuing state, years of
experience, and position with the business. However, the Geoghan Agency did not
require Duramax to submit requests using the form. Rather, when David Becham
sought to add a driver, he would call Robin Gertner, formerly Robin Ryan, of the
Geoghan Agency, and provide her with the name of the driver. Ryan would then
instruct Becham to send an email or facsimile to the agency with the driver’s name, date
of birth, and driver’s license number. Prior to June 30, 2009, Becham was able to
successfully add drivers to the policy by following this procedure.
Upon receipt of the information from Becham, the Geoghan Agency would
request the driver’s driving record. A driver would be added to the policy if he was at
least 23 years old, had fewer than three violations in the prior three years, had no
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driving under the influence violations, and had no reckless driving violations. According
to John Geoghan of the Geoghan Agency, these are “guidelines.” (Doc. 54, John
Geoghan Dep. at 60). However, these “guidelines” are not in the policy and are not
even in writing. While it is not clear that these “guidelines” came from Tudor, John
Geoghan testified that if a driver was denied, the agency would contact Tudor when “the
insured asked [the agency] to make an exception for that particular driver.” (Doc. 54,
John Geoghan Dep. at 59).
If the driver met these “guidelines,” the Geoghan Agency would prepare an
endorsement that would add the driver to the policy effective 12:01 a.m. on the day
Duramax disclosed the driver to the Geoghan Agency. However, the Parties dispute
what information had to be disclosed for the driver to be covered. The Defendants
argue that a driver was covered when his name was first disclosed to the Geoghan
Agency. Tudor argues that coverage commenced when Duramax provided the
information needed to determine whether the driver met the “guidelines” for coverage.
On June 29, 2009, Duramax located a vehicle for its client Paradise. Deena
Becham, David Becham’s wife, and Lavender, then a new employee handling business
development, rode in Deena’s car to pick up the vehicle. Because of the potential risk,
Lavender repossessed the vehicle even though he was not a scheduled driver.
However, he only drove it to a nearby gas station. He and Deena then switched cars
and Deena drove the vehicle to Duramax’s office.
The following morning, June 30, Deena called the Geoghan Agency to add
Lavender as a scheduled driver. This was the first time Deena had called to add a
driver. Because Ryan was on vacation, Deena talked with a receptionist. Deena

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informed the receptionist that she wanted to add Lavender to the policy. The
receptionist informed Deena that she needed to send an email or facsimile with
“[Lavender’s] personal information for Robin so that she could run whatever she does to
… put him on [the] insurance.” (Doc. 57, Deena Becham Dep. at 51).
After the telephone conversation, Deena began to type Lavender’s personal
information, but was interrupted by a call from Paradise instructing Duramax to deliver
the vehicle because the person from whom the vehicle had been repossessed was on
the way to talk about getting his vehicle back. It seems Paradise wanted the vehicle in
case the parties resolved their differences. According to Deena, she thought Lavender
was “covered” and she instructed Lavender to deliver the vehicle to Paradise. (Doc. 57,
Deena Becham Dep. at 23). However, the collision with the Lawtons occurred before
Lavender made it to Paradise.
Later that day, Deena called the Geoghan Agency to report the collision, and she
was instructed by the receptionist with whom she spoke earlier to provide a formal
statement. Deena included Lavender’s name, date of birth, and driver’s license number
with her statement, which she sent via facsimile on July 1.
The Geoghan Agency did not request Lavender’s driving record or add Lavender
to the policy. If it had checked Lavender’s driving record, the Geoghan Agency would
have found that Lavender was 34 years old, had fewer than three violations in the prior
three years, had no driving under the influence violations, and had no reckless driving
violations. Thus, Lavender met the unwritten “guidelines” for adding a scheduled driver.
If Tudor’s policy does provide coverage, Auto-Owners argues that its policy is
excess over Tudor’s coverage. The policies contain similar “other insurance” sections

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that state that the insurance is excess if the loss arises out of the maintenance or use of
a covered aircraft, auto, or watercraft. However, Auto-Owners’ policy contains an
additional auto-specific clause that states:
4. This insurance shall be, with respect to any auto to which this insurance
applies:
a.

Primary insurance for any auto owned by you except when
such auto is in the care, custody or control of a garage
customer;

b.

Excess insurance over any other collectible insurance for
any auto you do not own; and

c.

Excess insurance over any other collectible insurance
available to a garage customer when an auto owned by you
is in the care, custody or control of such garage customer.

(Doc. 53-4, at 39-40).2 Garage customer is defined as “[a]ny person while using an
auto owned, maintained or used in your garage business.” Id. at 12. Auto-Owners
argues that this additional clause “expressly shows its intent to be excess over Tudor’s
coverage under the specific facts of this loss.” (Doc. 53-1, at 11).
II. DISCUSSION
Summary judgment must be granted if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to
any material facts and that the movant is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(c). “A factual dispute is genuine only if ‘a reasonable jury could return a
verdict for the nonmoving party.’” Info. Sys. & Networks Corp. v. City of Atlanta, 281
F.3d 1220, 1224 (11th Cir. 2002) (quoting United States v. Four Parcels of Real Prop.,
941 F.2d 1428, 1437 (11th Cir. 1991)). The burden rests with the moving party to prove
that no genuine issue of material fact exists. Info. Sys. & Networks Corp. v. City of
2

You or your refers to Paradise, the named insured.
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Atlanta, 281 F.3d at 1224. The district court must “view all evidence in the light most
favorable to the nonmoving party, and resolve all reasonable doubts about the facts in
its favor.” Id.
A.

Tudor’s Duty to Provide Coverage

Tudor’s Motion for Summary Judgment can be disposed of easily. Having
provided no guidance in its policy to its insured with regard to the procedure for adding
additional drivers to the policy, it can hardly claim that Duramax failed to follow
appropriate procedures. Clearly Tudor, implicitly or expressly, delegated to the
Geoghan Agency the authority to add drivers. Just as clearly, the Geoghan Agency
allowed coverage to be effective retroactive to the date Duramax first provided
information about a new driver to the agency, assuming that the Geoghan Agency
subsequently determined the new driver met the “guidelines” for coverage. The
question, and it is a factual question, is what information Duramax needed to provide to
trigger coverage. Having provided no guidance on this question in its policy, Tudor
cannot now argue that it is undisputed that coverage would only be effective from the
time when Duramax first provided the information necessary to request the driver’s
driving record.
The Defendants’ Motion for Summary Judgment presents a slightly closer
question. The Geoghan Agency’s Privacy Statement & Disclosure Statement states
that new drivers must be “disclosed and reported to the company prior to being granted
driving privileges.” Construing this language against Tudor, it perhaps would be
reasonable to conclude that Deena sufficiently disclosed Lavender to the Geoghan
Agency to trigger coverage. Again, the relation back of coverage to 12:01 a.m. on June

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30, 2009 would depend upon the Geoghan Agency subsequently determining that
Lavender met these “guidelines” for coverage. The Defendants argue that it is
undisputed that Lavender met those “guidelines” and therefore coverage for Lavender
was in force at the time of the collision. However, even giving the Defendants the
benefit of a favorable construction of the Geoghan Agency’s statement, there still are
issues of disputed fact with regard to precisely what Duramax and the Geoghan Agency
understood to be necessary for coverage to commence.
B.

Priority of Coverage

In this action, the excess insurance clauses of the “other insurance” sections in
the policies are nearly identical except that Auto-Owners’ policy contains an additional
auto-specific clause. Tudor’s policy states that its insurance is excess if the loss arises
out of the use of a covered auto. Auto-Owners’ policy states that its insurance is excess
over any collectible insurance for any auto Paradise does not own and over any
collectible insurance available to a customer when an auto owned by Paradise is in a
garage customer’s care, custody, or control.
Here, coverage would be excess under both the Tudor and Auto-Owners policy.
Tudor’s insurance would be excess because the loss arose out of the use of a
repossessed vehicle, which is covered under the policy. Auto Owners’ insurance would
be excess because Paradise did not own the vehicle or if Paradise did own the vehicle,
it was in the care, custody, or control of Duramax, a garage customer as defined by the
policy. Thus, under these facts, both policies would be excess insurance.
Tudor cites State Farm Fire & Casualty Co. v. Holton, 131 Ga. App. 247, 248,
205 S.E.2d 872, 874 (1974) for the proposition that if “both insurers attempt to limit their

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liability to excess coverage if there is other insurance, then the clauses are
irreconcilable, cancel each other out, and the liability is to be divided equally between
them.” Holton arose out of a motor boat collision. The insurers had “substantially
identical” excess coverage clauses that applied to the use of watercrafts. The Georgia
Court of Appeals held that both excess coverage clauses applied because the collision
involved a watercraft. Accordingly, the court determined that the parties had to divide
liability equally.
Auto-Owners argues that because its policy contains an additional auto-specific
clause, the policies are not identical and thus are not irreconcilable and its other
insurance clause trumps Tudor’s. However, Auto-Owners does not cite any authority
for this proposition. Indeed, in Holton, the policies were deemed irreconcilable even
though they were not identical. Here, as in Holton, both insurers attempted to make
their insurance excess through clauses that were not identical. Under these facts, both
policies would be excess and thus cancel each other out pursuant to Holton.
Because the clauses would cancel each other out, there must be a determination
of each insurer’s contribution. Tudor and Auto-Owners have identical “method of
sharing” clauses that state, “[i]f all the other insurance permits contribution by equal
shares, we will follow this method also. Under this approach each insurer contributes
equal amounts until it has paid its applicable limit of insurance or none of the loss
remains, whichever comes first.” (Doc. 51-3, at 21; Doc. 53-4, at 39).
Accordingly, if it is determined that Tudor has coverage for the collision, the
“method of sharing” clause shall govern each insurer’s contribution.

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III.

CONCLUSION

For the foregoing reasons, Tudor’s Motion for Summary Judgment is DENIED
and the Defendants’ Motion for Summary Judgment is DENIED.

SO ORDERED, this the 14th day of June, 2011.

S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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