Jarrell-Henderson v. Barney et al

Filing 43

MEMORANDUM ORDER ADOPTING 40 REPORT AND RECOMMENDATIONS, Denying 27 Motion for Summary Judgment filed by Linda Jarrell-Henderson; Granting in part and Denying in Part 30 Motion to Strike, filed by Linda Jarrell-Henderson; Granting 23 Motion for Summary Judgment filed by Liberty Mutual Fire Insurance Company. Signed by District Judge Raymond A. Jackson on 2/9/09 and filed 2/10/09. Copy mailed 2/10/09.(lwoo) Modified on 2/10/2009 to include "Memorandum" (lwoo).

IN THE UNITED STATES DISTRICT COUR' FOR THE EASTERN DISTRICT OF VIRGINI
Norfolk Division

FILED
FEB 1 0 2003
CLERK. U.S. DISTRICT COURT
NORFOLK VA

LINDA JARRELL-HKNDERSON,

Plaintiff,
V.

CIVIL ACTION NO. 2:07cv432

LIBERTY MUTUAL FIRE INSURANCE COMPANY, el tit.

Defendants.

MEMORANDUM ORDER

This matter is currently before the Court on several objections to the Magistrate Judge's Report and Recommendation.
I. FACTUAL AND PROCEDURAL HISTORY

This action arises out of a motor vehicle accident, in which an uninsured motorist collided with Linda .larrell-Henderson ("Plaintiff"), who was driving a vehicle owned by her employer. Ikon Office Solutions, Inc. ("Ikon"). Daniel Prince was also a passenger in the vehicle driven by Plaintiff Liberty Mutual Fire Insurance Company {"Liberty Mutual") and State Farm
Mutual Automobile Insurance Company ("Slate Farm") (collectively "Defendants") had issued

policies of motor vehicle liability insurance to Ikon and Plaintiff, respectively, both of which
were in effect at the time of the accident. When Plaintiff submitted a claim to Liberty Mutual. Liberty Mutual informed Plaintiff that the available uninsured motorist coverage was limited to $70,000.

Plaintiff filed suit in Norfolk Circuit Court, seeking a declaration regarding the amount of available uninsured motorist insurance coverage. On September 25, 2007, Defendant LibertyMutual removed this action to this Court. Daniel Prince was joined as a parly on March 21, 2008. Cross-motions for Summary Judgment were filed by Liberty Mutual and Plaintiff on July 22, 2008 and July 25, 2008, respectively. The parties stipulated, via a conference call on July 23, 2008, that no facts are in dispute and that the case should be decided on cross-motions for
summary judgment. On August 1, 2008, Plaintiff filed a Motion lo Strike an affidavit supporting Libert)' Mutual's Motion for Summary Judgment. On September 15, 2008, these motions were

referred to a United Slates Magistrate Judge for a report and recommendation pursuant to the
provisions of 28 U.S.C. Section 636(b)(l)(B) and (C). Rule 72(b) of the Federal Rules of Civil

Procedure, and and Rule 72 of the Rules of the United Suites District Court for the Eastern
District of Virginia. A hearing was held on October 21, 2008. On November 1(), 2008, the Magistrate Judge filed his Report and Recommendation, finding that Liberty MuHial's Motion for Summary Judgement should be GRANTED, that Plaintiffs Motion for Summary Judgment should be DENIED, ant! that Plaintiffs Motion to Strike should be GRANTED in part and DENIED in pan. By copy of the Report and Recommendation, each party was advised of the right io file written objections to the findings and recommendations made by the Magistrate Judge. On November 25, 200S, Plaintiff filed objections to the Magistrate Judge's Report and Recommendation, and Liberty Mutual responded on December 4. 2008.

II. LEGAL STANDARD

Under Rule 72 of the Federal Rules of Civil Procedure ("Rule 72"), a judge is required
"to make a de novo determination upon the record, or after additional evidence, of any porlion of
the magistrate judge's disposition to which specific written objection has been made in

accordance with this rule." The phrase "de novo determination", as used in Rule 72, means that
a district court judge must give '"fresh consideration" to portions of the magistrate judge's report and recommendation. United States v. Raddatz, 447 U.S. 667. 675 (1980). In other words,'"the Court should make an independent determination of the issues' and should not give any special

weight to the prior determination." Id. (quoting Untied States v. First City Nat 7 Bank, 386 U.S.
361. 368 (1967)). "The district judge may accept, reject, or modify the recommended decision, receive further evidence, or recommit the mailer to the magistrate judge with instructions." Fed.
R. Civ. P. 72.

III. DISCUSSION Plaintiff has several objections. As grounds for these objections, Plaintiff incorporates
her brief in support of her molion for summary judgment and in opposition to defendant's same

motion, and her brief supporting her motion to strike.
A. The Wasson Affidavit

Plaintiff objects to the Magistrate Judge's recommendation that the Plaintiffs Molion to

Strike, with respect to the substantive portion of the affidavit, be denied. At issue is the Affidavit
of Patrick Wasson. Hied by Liberty Mutual in support of its Motion for Summary Judgment. In
the Report and Recommendation, the Magistrate Judge recommended thai Plaintiffs Motion be granted with respect to the schedules of insurance attached as Exhibit A to the Affidavit, because

they were not timely produced or disclosed and Liberly Mutual did not meet its burden to show-

that such failure was substantially justified or harmless, (R&R, 4-6.) However, Plaintiffs only
arguments with respect to the substantive portion of the Affidavit are that (1) it was not sworn under oath, and (2) counsel for Liberty Mutual did not make any inquiry into the subject matter of the Affidavit during Mr. Wasson's deposition. (Pi's Mot. Strike, fl 1-2.) Plaintiff conceded the first argument at the hearing, agreeing that the Affidavit meets the requirements. At issue is the second argument, which the Magistrate Judge found to lack merit. (R&R, 4.) Counsel defending a discovery deposition is not required to elicit testimony on a subject not
covered by counsel taking that deposition. Accordingly. Plaintiffs objection to the Magistrate Judge's recommendation with respect to the Affidavit is without merit.
[J. Ikon's Notification

Plaintiff further objects to the following determinations made by the Magistrate Judge concerning Ikon's notification: (1) that whether or not the 2002 Uninsurcd/Undcrinsurcd

Motorist ("UM") Coverage form was timely for the 2002/2003 policy year, it was timely for
subsequent renewals to the policy; (2) that the 2002 UM notification was not ambiguous and invalid; and (3) that there was clear evidence of mutual intent to sell and purchase uninsured motorist coverage at the statutory minimum. At issue is whether Ikon made a valid notification under Virginia Code § 38.2-2202 of its
decision to purchase the statutory minimum uninsured motorist coverage. Under Ihe statute, the

insurer is required to provide uninsured coverage in limits equal to the limits of liability
insurance provided by the policy, unless the insured chooses to purchase a lesser amount by

notifying the insurer. Va. Code Ann. § 38.2-2202(A). Each new policy must contain a statement

that the insured has twenty days from the mailing of the new policy or premium to notify the

insurer of a desire to reduce coverage or the total premium charge may increase. Id. at § 3S.22202(B). Plaintiff argues that Ikon's UM coverage equaled the limits of the $2,000,000
insurance policy because Ikon's notification was Hawed in two ways: (1) the 2002 UM form was executed more than twenty days after the mailing of the notification form to Ikon; and (2) the 2002 UVI notification was ambiguous because Ikon did not check a certain box to indicate their intention to make an election as to the uninsured motorist coverage.

The essential facts in this case are undisputed. Ikon's broker provided Liberty Mutual

with an insurance submission requesting minimum or statutory benefits in all states allowed, and
that in April 2002, Liberty Mutual sent Ikon coverage forms for the policy period of April 2002 April 2003 and a letter stating "you have indicated that you would like to reject and/or select the
stale minium for which I have preselected in pencil for your convenience." Mr. W. J. I lope, Jr. executed the Virginia UVI form on behalf of Ikon more than twenty days later. He checked the

box labeled "570,000 Single Limits" but left blank the box above, which slated "I wish to elect
Uninsured/Undersured Motorist Coverage at." Ikon renewed this policy each year through at least April 1, 2007. For the April 2006 renewal, Liberty Mutual prepared a coverage proposal indicating the statutory minimum limits for UM coverage, and sent the forms to Ikon on May 31, 2006, notifying Ikon of its right to reject increased UM coverage. On June 12, 2006, Mr. Hope executed the UM form, checking the box stating "I wish to elect Uninsured/Undersured Motorist

Coverage at" and a subsequent box stating "570,000 Single Limits.7' The declarations page for
the 2006-2007 policy indicates that the UM coverage in Virginia is $70,000. Plaintiffs accident
occurred on November 7, 2006.

The Magistrate Judge found that even if the 2002 UM notification was not timely for the
2002-2003 policy year, it was timely for subsequent renewals of the policy, including the 2006

renewal which was in effect at the time of the accident. (R&R. 11.) Virginia Code § 38.2-2202,

which requires notice within twenty days of mailing to reduce uninsured motorist coverage, does
not apply to renewal policies. See GEICO v. Hall, 533 S.E. 2d 615, 618 (Va. 2000); Ins, Co, of N. Amur. v. MacMillan, 945 F.2d 729. 731-32 (4lh Cir. 1991). Therefore, the 2002 UM notification was timely for renewals of Ikon's policy, including the 2006 renewal.

The Magistrate Judge also found that the 2002 UM notification was not ambiguous. (R&R. 12-13.) Plaintiff cites two cases in support, but the Court finds neither case analogous to
the facts at issue here. In While v. Nai 7 Union Fire Ins. Co. of Pittsburgh Pa.t the insured
completed a Virginia notification form without selecting any option for coverage, but completed

forms for other states choosing the minimum uninsured motorist coverage, and the Court held
thai the insured did not reject the default coverage in Virginia. 913 F.2d 165, 166 (4th Cir.

1990). inDrayv. Ins. Co. of the State of Pa., the insured was not notified of uninsured motorist coverage options and made no specific rejection, and the Court found that the insured's
acceptance of a policy with lower uninsured motorist coverage was not an actual rejection of higher coverage. 917 F.2d 130, 133 (4th Cir. 1990).

In this case, Ikon explicitly rejected higher uninsured motorist coverage by checking the

box on the 2002 UM notification indicating the S70.000 limit. Even though Ikon did not check
the preceding box staling "I wish to elect Uninsured/Undersured Motorist Coverage at:", its intentions are clear from its checking the following box staling "S70,000 Single Limits." Thus,

Ikon substantially complied with the statute's notification requirement, and its coverage form is

not ambiguous. See, e.g., Arnold v. LibertyMut. Ins. Co., 866 F. Supp. 955, 957 (W.D. Va. 1994) (holding notification valid because substantial compliance with the law, rather than
"hypertcchnical compliance," is all thai is required). Moreover, even if there were a defect, the

subsequent 2006 waiver form cured any such defect.
The Magistrate Judge also found that there was clearly mutual intent for Liberty Mutual

to sell, and Ikon to buy, reduced uninsured motorist coverage. (R&R, 13.) Such mutual intent is
instructive in determining whether a notification has effectively reduced uninsured motorist

coverage. See, e.g., GEICO, 533 S.E.2d at 618; Price v. Zurich Amer. Ins. Co., No. CL02-1009,
2003 WL 24179583 (Va. Cir. Ct. Dec. 17,2003). The record reflects that Ikon notified Liberty Mutual of Ikon's intent to reduce the uninsured motorist coverage on multiple occasions, verbally and in writing, in conjunction with both the initial 2002 policy and the 2006 renewal. In

response. Liberty Mutual issued a policy for the 2006-2007 term listing uninsured motorist
coverage in Virginia for $70,000 Single Limits. Accordingly, the Court finds that Ikon effectively notified Liberty Mutual and reduced its UM coverage for the policy in effect at the time of Plaintiffs accident. Plaintiffs objections to

the Magistrate Judge's recommendation based on Ikon's notification are without merit.
C. Evidence of Reduced Premiums

Plaintiff further objects to the finding that even if evidence of reduced premiums is not

considered, the remaining evidence conclusively shows lhat Ikon effectively notified Liberty
Mutual of its desire to reduce UM coverage in Virginia. The Magistrate Judge found that even if
the Wasson Affidavit, which states that Ikon's premium was calculated based on Ikon's request

for minimum coverage and would have been increased if Ikon requested limits or coverages

7

above the statutory minimum, were stricken in its entirety, the remaining evidence is sufficient to
find an effective UM notification. (R&R. 14.) Virginia Code § 38.2-2202 provides that, unless a reduced coverage is selected by the insured, the insurer may increase the premium charged.

Thus, the statutory minimum uninsured motorist coverage is the default for determining the
premium cost, which may be increased if the insured does not opt out of additional coverage.

The reverse is not true, and Plaintiff's argument thai Liberty Mutual did not provide evidence
that Ikon paid a reduced premium in exchange for reduced coverage is irrelevant. The Court has already found that Ikon effectively notified Liberty Mutual of its desire to reduce UM coverage in
Virginia, and that the UM coverage during the 2006-2007 policy term was 570,000 single limits. Accordingly, Plaintiffs objection to the Magistrate Judge's recommendation with respect to ihe evidence of reduced premiums is without merit.

D. Motion for Summary Judgment
Finally, Plaintiff objects to the recommendation that this Court grant Libert;' Mulual's Motion for Summary Judgment and deny Plaintiffs Motion for Summary Judgment. Ihe parties

already stipulated that there is no factual dispute. The Magistrate Judge found that the evidence

conclusively shows that Ikon effectively notified Liberty Mutual of its desire to reduce UM coverage in Virginia to $70,000 single limits by complying with the requirements of Virginia Code §38.2-2202, such that Liberty Mutual is entitled to judgment as a matter of law. (R&R,
14.) Summary judgment should be granted when there is no genuine issue of material fact and

the moving parly is entitled to judgment as a mailer of law. See Fed. R. Civ. P. 56(c). In this
case, there is no genuine issue of fact and the Court has found thai Ikon complied with the
requirements of Virginia Code §38.2-2202 and effectively waived higher UM coverage at least

for the 2006-2007 term, thus entitling Liberty Mutual to judgment as a matter of law.

Accordingly, the Court finds that Plaintiffs objection to the Magistrate Judge's recommendation

to grant summary judgment in favor of Liberty Mutual and against Plaintiff is without merit.
This Court has carefully and independently reviewed the record in this case and the

objections to the Report. Having clone so, the Court finds that there is no meritorious reason to sustain Plaintiffs objections. Therefore, the Court accepts the findings and recommendations set
forth in the Report and Recommendation.
IV. CONCLUSION

The Courl hereby accepts the findings and recommendalions set forth in the Report and

Recommendation of the United Slates Magistrate Judge filed November 19, 2008. His therefore ORDERED that Liberty Mutual1 s Motion for Summary Judgement is GRANTED, that

Plaintiff's Motion for Summary Judgment is DENIED, and that Plaintiffs Motion to Strike is
GRANTED in part and DENIED in part. The Clerk of the Court is DIRECTED to send a copy of this Memorandum Order to
counsel for the parties. IT IS SO ORDERED.

Raymond A. Jackson

United States District Judge

Norfolk. Virginia

February $ .2009