Old Republic Insurance Company v. Stratford Insurance Company

Filing 47

///ORDER granting in part and denying in part 26 Motion for Summary Judgment; granting in part and denying in part 30 Motion for Summary Judgment. Clerk shall enter judgment and close the case. So Ordered by District Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Old Republic Insurance Company
v.

Civil No. 12-cv-256-LM
Opinion No. 2014 DNH 016

Stratford Insurance Company

O R D E R
In a case that has been removed from the New Hampshire
Superior Court, Old Republic Insurance Company (“Old Republic”)
petitions for a declaratory judgment concerning: (1) its
coverage obligations with respect to a motor-vehicle accident
involving its insureds; and (2) the scope of its duty to defend
its insureds in an underlying action that resulted from the
accident.

In the alternative, Old Republic seeks various forms

of equitable relief.

Stratford Insurance Company (“Stratford”),

which also provides coverage for some of Old Republic’s
insureds, has filed a counterclaim for declaratory judgment.
Before the court are cross motions for summary judgment.

For

the reasons that follow, each motion is granted in part and
denied in part.
Summary Judgment Standard
“Summary judgment is warranted where ‘there is no genuine
dispute as to any material fact and the movant is entitled to

judgment as a matter of law.’”

McGair v. Am. Bankers Ins. Co.

of Fla., 693 F.3d 94, 99 (1st Cir. 2012) (quoting Fed. R. Civ.
P. 56(a); citing Rosciti v. Ins. Co. of Penn., 659 F.3d 92, 96
(1st Cir. 2011)).

“The object of summary judgment is to ‘pierce

the boilerplate of the pleadings and assay the parties’ proof in
order to determine whether trial is actually required.’”

Dávila

v. Corp. de P.R. para la Diffusión Púb., 498 F.3d 9, 12 (1st
Cir. 2007) (quoting Acosta v. Ames Dep’t Stores, Inc., 386 F.3d
5, 7 (1st Cir. 2004)).
Background
This action arises out of litigation stemming from a motorvehicle accident.

Specifically, in the United States District

Court for the District of Connecticut, Daniel and Karla Bendor
filed a complaint alleging that Antoine Girginoff jackknifed the
tractor-trailer he was operating, struck their vehicle, and
injured them.

The tractor Girginoff was driving was owned by

Ryder Transportation Services (“Ryder”), and leased by Ryder to
Gary Merrill d/b/a DAM Express Delivery Service (“DAM”).
in turn, employed Girginoff.

DAM,

The trailer he was hauling was

owned by Coca-Cola Bottling Company of Northern New England,
Inc. (“Coca-Cola NE”).

The Bendors are suing Girginoff (for

negligence, loss of consortium, and bystander emotional
distress), DAM (for negligent entrustment, hiring, training,

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supervision, and retention), Ryder (for negligent entrustment,
hiring, training, supervision, and retention), and Coca-Cola NE
(for negligence, loss of consortium, bystander emotional
distress, and negligent hiring, training, supervision, and
retention).

Old Republic is currently providing a defense to

Girginoff, DAM, and Coca-Cola NE in the underlying action.
The lease agreement between DAM and Ryder contains a set of
provisions regarding liability insurance, including the
following:
The party designated on Schedule A (the “Insuring
Party”) [i.e., Ryder] agrees to furnish and maintain,
at its sole cost, a policy of automobile liability
insurance . . . covering both you [i.e., DAM] and
Ryder as insureds for the ownership, maintenance, use,
and operation of each Vehicle (“Liability Insurance”).
If you [i.e., DAM] are the Insuring Party, the terms
of the policy and the insurer must be acceptable to
Ryder. The Liability Insurance must provide that its
coverage is primary and not additional or excess
coverage over insurance otherwise available to either
party . . . . The Insuring Party [i.e., Ryder] agrees
to designate the other party [i.e., DAM] as an
additional insured on the Liability Insurance . . . .
Pet’r’s Mem. of Law, Ex. L. (doc. no. 26-14), at 3.

The lease

agreement further provides:
Party Responsible for Liability Insurance: Ryder.
Combined Single Limits $1,000,000 per occurrence.
Customer Deductable: $1,500 per occurrence. You
[i.e., DAM] agree that Ryder shall have the sole right
to conduct accident investigations and administer
claims handling and settlements and you shall adhere
to and accept Ryder’s conclusions and decisions.
Id. at 7.

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To satisfy its obligation as the Insuring Party under the
lease agreement, Ryder relied upon a Commercial Package Policy
issued to it by Old Republic.

With regard to liability

coverage, that policy obligates Old Republic to: (1) “pay all
sums an ‘insured’ legally must pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this insurance applies,
caused by an ‘accident’ and resulting from the ownership,
maintenance or use of a covered ‘auto’,” Pet’r’s Mem. of Law,
Ex. I (doc. no. 26-11), at 23; and (2) “defend any ‘insured’
against a ‘suit’ asking for such damages,” id.
In a section headed “Other Insurance,” the policy Old
Republic issued to Ryder provides, in pertinent part:
When this Coverage Form and any other Coverage Form or
policy covers on the same basis, either excess or
primary, we will pay only our share. Our share is the
proportion that the Limit of Insurance of our Coverage
Form bears to the total of the limits of all the
Coverage Forms and policies covering on the same
basis.
Pet’r’s Mem. of Law, Ex. I (doc. no. 26-11), at 29.

The parties

agree that with respect to the tractor DAM leased from Ryder,
Old Republic’s coverage is primary.

Their dispute concerns

whether a policy Stratford issued to DAM, described below, also
covers any potential losses on a primary basis, which would
trigger Old Republic’s right to pay only its proportional share
of any losses suffered by any insureds covered by both the

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policy it issued and the policy Stratford issued (hereinafter
“mutual insureds”).
At the time of the Bendor accident, DAM was covered by a
Commercial Lines Policy it had obtained from Stratford.

That

policy provided liability coverage for three categories of motor
vehicles: (1) specifically described autos; (2) hired autos; and
(3) non-owned autos.

The policy describes “hired autos” as

“[o]nly those ‘autos’ you lease, hire, rent, or borrow.”
Pet’r’s Mem. of Law, Ex. J. (doc. no. 26-12), at 9.
hired-auto coverage, DAM paid a premium of $400.

For its

See id. at 6.

That premium was based upon DAM’s report to Stratford that it
spent approximately $5,000 per year on hired autos.

Stratford

has produced undisputed evidence that the figure DAM gave for
its estimated cost of hire was based upon its projected rental
of vans to augment the two-vehicle fleet of vans it owned and
used for local deliveries.

It is also undisputed that: (1) when

Stratford issued the policy at issue, it did not know that DAM
leased tractors from Ryder; and (2) DAM spent approximately
$20,000 per month to lease those tractors.
With regard to liability coverage, DAM’s Stratford policy
obligates Stratford to: (1) “pay all sums an ‘insured’ legally
must pay as damages because of ‘bodily injury’ or ‘property
damage’ to which this insurance applies, caused by an ‘accident’

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and resulting from the ownership, maintenance or use of a
covered ‘auto’,” Pet’r’s Mem. of Law, Ex. J (doc. no. 26-12), at
10; and (2) “defend any ‘insured’ against a ‘suit’ asking for
such damages,” id. at 11.

In addition, the Stratford policy

includes a provision pertaining to “other insurance” that
states, in pertinent part:
This Coverage Form’s Liability Coverage is primary for
any covered “auto” while hired or borrowed by you and
used exclusively in your business as a “trucker” and
pursuant to operating rights granted to you by a
public authority. . . . However, while a covered
“auto” which is a “trailer” is connected to a power
unit, this Coverage Form’s Liability Coverage is:
(1)

On the same basis, primary or excess, as for
the power unit if the power unit is a covered
“auto”.

Id. at 21.
The accident giving rise to the underlying personal-injury
action occurred on April 7, 2010.

The Bendors filed suit

against Girginoff, DAM, and Ryder on December 8, 2010,1 and Old
Republic began providing a defense.

In March of 2011, an

employee in Ryder’s National Liability Claims Office contacted
Stratford to ascertain Stratford’s position regarding coverage
for the Bendor accident.

After learning of that loss, Stratford

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Coca-Cola NE became a defendant later on, but the
circumstances under which it did so have no bearing on the
resolution of the issues before the court.
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drafted, and DAM agreed to, the following retroactive
endorsement to DAM’s Stratford policy:
CHANGES IN LIABILITY COVERAGE
This endorsement changes the policy effective on the
inception date of the policy.
For a covered “auto” leased or rented to you by Ryder
Truck Rental, Inc. DBA Ryder Transportation Services
or any related entity, LIABILITY COVERAGE is excess
over any other collectible insurance.
Pet’r’s Mem. of Law, Ex. K (doc. no. 26-13), at 3.

By letter

dated December 1, 2011, a senior litigation specialist for
Stratford informed Ryder that, under the endorsement quoted
above, “[a]ny coverage provided to either DAM or Mr. Girginoff
by Stratford is excess to the coverage provided by Ryder and/or
Old Republic,” Pet’r’s Mem. of Law, Ex. N (doc. no. 26-16), at
3.

On that basis, Stratford stated that it was “not . . .

obligated to, and [would] not share in the cost of defending or
indemnifying [the] mutual insureds at this time,” id. at 4.
In Count I of its petition, Old Republic seek a declaration
that
[it] and Stratford have a co-primary obligation to
defend Coca Cola, DAM and Girginoff and that [it] and
Stratford will be obligated to share any indemnity
obligation of Coca Cola, DAM and Girginoff on a prorata basis.
Am. Pet. for Dec. J. (doc. no. 15) ¶ 39.

In Count II, Old

Republic seeks “equitable . . . reformation of [DAM’s Stratford]

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policy in order to prevent unjust enrichment to Stratford based
on its post-accident attempt to reduce its coverage obligations
by retroactively amending its policy.”

Id. ¶ 45.

Count III is

a claim for unjust enrichment, and in Count IV, captioned
“Waiver/Estoppel,” Old Republic asks the court to rule that
Stratford: (1) is “estopped from asserting any claims or
defenses relating to insurance coverage that were not
affirmatively asserted in its December 1, 2011 correspondence
and should not be permitted to challenge coverage on any other
basis,” id. ¶ 56; and (2) “should not be permitted to
retroactively amend its policy after learning of its insured’s
accident in order to manipulate the respective obligations of
other insurers providing coverage and should be estopped from
asserting the position that the Change Endorsement is valid
thereby making its coverage excess,” id.
In its one-count counterclaim, Stratford asks the court to
declare that: (1) “Old Republic provides primary coverage for
the liability, if any, of DAM, Girginoff, Ryder and/or Coca-Cola
in the Underlying Action,” Def.’s Answer & Am. Countercl. (doc.
no. 16) ¶ 41; and (2) “Stratford provides excess coverage, if
any, for the liability, if any, of DAM, Girginoff, and/or CocaCola in the Underlying Action,” id. ¶ 42.

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Stratford also asks

the court to declare that Old Republic’s duty to defend is
primary to any such duty it may have.
Discussion
Count I
Both Old Republic’s Count I and Stratford’s counterclaim
arise under New Hampshire’s declaratory judgment statute, which
provides that “[a]ny person claiming a present legal or
equitable right or title may maintain a petition against any
person claiming adversely to such right or title to determine
the question as between the parties, and the court’s judgment or
decree thereon shall be conclusive.”
(“RSA”) § 491:22, I.

N.H. Rev. Stat. Ann.

The rights in dispute in this case are:

(1) Old Republic’s purported rights to pay only a proportional
share of any losses suffered by the mutual insureds as a result
the underlying action and to have Stratford assume a
proportional share of the costs of defending that action; and
(2) Stratford’s purported rights not to provide coverage and a
defense on a co-primary basis.
The facts underlying the parties’ competing requests for
declaratory judgment are complicated by a number of factors, not
the least of which is the fact that at the time of the Bendor
accident, Girginoff was driving a tractor-trailer composed of:
(1) a tractor that Ryder owned and leased to DAM; and (2) a

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trailer owned by Coca-Cola NE.

In an effort to clarify things,

the court begins with a proposition on which both parties agree,
namely, that with respect to insurance coverage, a tractortrailer should be treated as a single unit.

See Am. Pet. (doc.

no. 15) ¶ 26; Resp’t’s Mem. of Law (doc. no. 30-1) 19.

That

issue has been thoughtfully addressed in an order from the
Superior Court of Maine, in which Judge Pierson explained:
In analyzing carrier liability arising out of the
operation of a tractor-trailer rig, it is impossible
to distinguish between that part of the liability that
“arises out of” the use of the tractor unit and that
part of the liability that “arises out of” the use of
the trailer unit. The liability “arises out of” both
equally, and the tractor-trailer rig is treated as an
indivisible unit. See, e.g., Ryder Truck Rental v.
United States Fidelity and Guaranty Co., 527 F. Supp.
666, 669-70 (E.D. Mo. 1981). Where different insurers
provide primary coverage to a particular insured with
respect to his use of components of the tractortrailer rig, the primary coverages are in conflict and
the insurers generally share the loss. Where
different insurers provide excess coverage to a
particular insured with respect to his use of
components of the tractor-trailer rig and no insurer
provides primary coverage, the conflicting excess
insurance clause provisions are disregarded as
mutually repugnant and each policy is considered
primary. Cf. Carriers Insurance Company v. American
Policyholders’ Insurance Co., 404 A.2d 216, 220 (Me.
1979). However, when only one carrier provides
primary coverage on either component of the tractortrailer rig, this carrier is considered primary with
respect to the entire tractor-trailer unit. See
Contrans, Inc. v. Ryder Truck Rental, Inc., 836 F.2d
163, 171 (3rd Cir. 1987).
U.S. Fid. & Guar. Co. v. Ledger, No. CV-91-049, 1993 Me. Super.
LEXIS 411, at *6-7 (Me. Super. Ct. Jan. 6, 1993).

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To resolve

the coverage dispute in this case under the principles described
in Ledger, it is necessary to determine the nature of the
coverage, i.e., primary or excess, that is provided by each of
the two policies to each of the two components of the tractortrailer that Girginoff was operating at the time of the Bendor
accident.
A. Coverage for the Tractor
According to Old Republic: (1) the policy Stratford issued
to DAM requires Stratford to provide primary coverage for the
Ryder tractor; (2) the endorsement describing Stratford’s
coverage as excess to Old Republic’s coverage is ineffective;
and (3) the “Other Insurance” provision in the Old Republic
policy makes the primary coverage provided by that policy coprimary with the coverage provided by the Stratford policy.

Old

Republic’s argument on this point follows from a faulty premise;
the Stratford policy, as initially issued, did not require
Stratford to provide primary coverage for any losses that may
ensue in the underlying action.

Thus, notwithstanding the

amount of attention the parties have paid to the validity of the
endorsement, there is no need for the court to reach that issue.
Under the common law of New Hampshire, it is well
established that “[t]he fundamental goal of interpreting an
insurance policy . . . is to carry out the intent of the

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contracting parties.”

Great Am. Dining, Inc. v. Phila. Indem.

Ins. Co., 164 N.H. 612, 616 (2013) (quoting Bates v. Phenix Mut.
Fire Ins. Co., 156 N.H. 719, 722 (2008)).

The starting point

for determining the intent of the parties is the language of the
policy.

See Great Am. Dining, 164 N.H. at 616 (citing Pro Con

Constr., Inc. v. Acadia Ins. Co., 147 N.H. 470, 472 (2002)).
Here, the Stratford policy provided primary coverage for hired
autos and defined the term “hired autos” to include autos that
DAM leased.

And, it is undisputed that DAM leased the tractor

that Girginoff was driving at the time of the Bendor accident.
Thus, read in isolation, the policy’s coverage provision and its
definition of “hired auto” would appear to provide primary
coverage for the tractor that Girginoff was driving.
But, those two parts of the policy, on their own, do not
fully express the intent of Stratford and DAM.
necessary to examine “the policy as a whole.”

Rather, it is
Great Am. Dining,

164 N.H. at 616 (quoting Deyette v. Liberty Mut. Ins. Co., 142
N.H. 560, 561 (1997)).

The rest of the policy reveals that it

was the intent of the contracting parties to provide coverage
for autos that cost $5,000 per year to hire.

It is undisputed

that DAM spent approximately $5,000 per week to rent tractors
from Ryder.

Thus, there is no basis, in the language of the

policy, for a determination that DAM intended to seek coverage

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for the Ryder tractors from Stratford, or that Stratford
intended to provide coverage, much less primary coverage, for
those tractors.

Such an interpretation of the policy is

entirely consistent with provisions in Ryder’s lease agreement
with DAM that: (1) made Ryder, and Ryder alone, the party
responsible for liability insurance; and (2) gave Ryder “the
sole right to conduct accident investigations and administer
claims handling and settlements,” Pet’r’s Mem. of Law, Ex. L
(doc. no. 26-14), at 7.
Based upon the undisputed evidence, it is clear that the
Stratford policy includes language that could be construed as
providing coverage for the tractors DAM leased from Ryder
precisely because neither DAM nor Stratford gave any thought at
all to those tractors when they came to terms on the policy.
When providing information on the scope of the coverage it
needed for hired autos, DAM knew that Ryder was responsible for
liability insurance on the tractors it leased to DAM, and DAM
said nothing to Stratford about those tractors.

Stratford, in

turn, knew nothing about those tractors when it issued the
policy to DAM.

In sum, it cannot have been the intent of the

parties for Stratford to provide primary coverage on a risk that
DAM never sought to insure and that, by Old Republic’s own
admission, Stratford knew nothing about when it issued DAM its

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policy and set the premium for it.

Thus, Old Republic stands

alone in providing primary coverage for the tractor Girginoff
was driving at the time of the Bendor accident.

Having made

that determination, the court turns to the question of coverage
for the trailer Girginoff was hauling.

See Ledger, 1993 Me.

Super. LEXIS 411, at *6-7.
B. Coverage for the Trailer
Old Republic argues that “[c]overage for the trailer is
primary under the Stratford policy and excess under the [Old
Republic] policy.”

Pet’r’s Mem. of Law (doc. no. 26-1) 24.

Stratford contends that its policy “provides no coverage at all
for the trailer.”

Resp’t’s Mem. of Law (doc. no. 30-1) 18.

If

Old Republic is correct, then its primary coverage for the
tractor and Stratford’s primary coverage for the trailer would
be in conflict, with the result that both insurers would be
obligated to share the loss.
411, at *7.

See Ledger, 1993 Me. Super. LEXIS

But, if Stratford does not provide primary coverage

for the trailer, then Old Republic’s primary coverage for the
tractor is primary for the entire rig.

See id.

According to Old Republic, the Stratford policy provides
primary coverage for the trailer because that policy: (1)
provides primary coverage for the tractor; and (2) covers any
trailer on the same basis that it covers the power unit to which

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that trailer is attached.

But, as explained above, the

Stratford policy does not provide primary coverage for the
tractor.

Thus, Old Republic’s argument fails.

As there appears

to be no other basis for ruling that the Stratford policy
provides primary coverage for the trailer, the court concludes
that it does not.
C. Coverage for the Tractor-Trailer Rig
Because the Old Republic policy provides primary coverage
for the tractor, and the Stratford policy does not provide
primary coverage for the trailer, Old Republic’s primary
coverage for the tractor applies to the entire tractor-trailer
unit.

See Ledger, 1993 Me. Super. LEXIS 411, at *6-7.

Accordingly, Old Republic is not entitled to a declaratory
judgment that Stratford must share the mutual insureds’ losses
in the underlying action on a pro rata basis, and Stratford is
entitled to a declaratory judgment that Old Republic’s coverage
for those losses is primary, as opposed to co-primary.
D. Stratford’s Duty to Defend
Old Republic asks the court to declare that Stratford is
obligated to share equally in the costs of defending the
underlying action, while Stratford asks the court to declare
that Old Republic’s duty to defend is primary to any such duty

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it may have.
side.

On this point, Old Republic has the law on its

In Universal Underwriters Insurance Co. v. Allstate

Insurance Co., the New Hampshire Supreme Court explained that
“the duty of an insurer to defend is the same whether its
potential liability is either as a primary or as an excess
carrier,” 134 N.H. 315, 319 (1991) (citing Zurich Ins. Co. v.
New Amsterdam Cas. Co., 160 S.E.2d 603, 605 (Ga. App. 1868); 14
Couch on Insurance 2d § 51:148 (rev. ed. 1982); Liberty Mut.
Ins. Co. v. Home Ins. Indem. Co., 116 N.H. 12, 18 (1976)).
Here, because Stratford concedes that its policy provides excess
coverage, it is obligated to share equally in the costs of
defending its insureds in the underlying action.
Count II
Count II is Old Republic’s request that the court reform
the insurance policy that Stratford issued DAM to exclude the
endorsement that purports to make Stratford’s coverage for the
Ryder trucks excess.

Because the court’s determination of

coverage does not rely upon that endorsement, Count II is
dismissed as moot.
Count III
Count III is a claim for unjust enrichment in which Old
Republic asserts that

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Stratford wrongly secured a benefit or passively
received one which it would be unconscionable for it
to retain by retroactively amending its policy after
learning of the occurrence of the underlying accident
in order to include an endorsement purporting to make
its coverage excess over coverage afforded under the
policy issued by [Old Republic] to Ryder.
Am. Pet. (doc. no. 15) ¶ 50.

As with Count II, the problem with

Count III is that it presumes a determination on coverage that
is based upon the endorsement to the Stratford policy.

Because

the court does not rely upon that endorsement, Count III is also
dismissed as moot.
Count IV
Count IV is titled “Waiver/Estoppel.”

However, that Count

does not appear to identify a cause of action or assert a claim
based thereon.

Old Republic seems to acknowledge as much, as it

does not treat Count IV as asserting a claim in its motion for
summary judgment.

Accordingly, to the extent that Count IV

requires judicial resolution at all, it is dismissed.

Conclusion
For the reasons detailed above, Old Republic’s motion for
summary judgment, document no. 26, is granted, to the extent
that the court declares that Stratford is obligated to share
equally in the cost of defending DAM, Girginoff, and Coca-Cola
NE, but is otherwise denied.

Similarly, Stratford’s motion for

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summary judgment, document no. 30, is granted, to the extent
that the court declares that Stratford’s obligation to cover any
losses incurred by the mutual insureds is not co-primary with
Old Republic’s obligation to provide coverage, but is otherwise
denied.

The clerk of the court shall enter judgment in

accordance with this order and close the case.
SO ORDERED.

__________________________
Landya McCafferty
United States District Judge

January 27, 2014
cc:

Philip A. Bramson, Esq.
Naomi L. Getman, Esq.
Richard C. Nelson, Esq.
Laurence J. Rabinovich, Esq.

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