Brendan Kelly v. Libert Insurance Corporation

In this diversity case,

Brendan Kelly sought a declaratory judgment against Liberty Mutual

Insurance Corporation, on his claim that Liberty was bound to

provide uninsured (or underinsured) motorist coverage for his

benefit. See N.H. RSA 259:117. The insurance contract in question

was an umbrella policy issued to Plum Creek Timber Company, Kelly's

employer and the named insured. The District Court granted summary

judgment for Liberty Mutual. We affirm.

The policy was issued in New Hampshire, whose law

controls. Thus the insurer bears the burden of proof, N.H. RSA

491:22-a, and policy language is to be construed as a reasonable

person would understand it upon more than a casual reading of the

policy as a whole, Russell v. NGM Ins. Co., 176 A.3d 196, 200 (N.H.

2017).

Liberty's policy was one of two issued to Plum Creek

that provided benefits to its employees as additional insureds

when acting within the scope of employment, as Liberty recognizes

that Kelly was doing when injured in a two-party highway collision

while driving a Plum Creek truck. Terms of the umbrella policy,

like those of the underlying basic policy, were regulated by RSA

264:15, which included the following mandate relevant here:

"[U]mbrella or excess policies . . . shall

also provide uninsured motorist coverage equal

to the limits of liability purchased, unless

the named insured rejects such coverage in

writing. Rejection of such coverage by a

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named insured shall constitute a rejection of

coverage by all insureds . . . ."

There is no dispute that Plum Creek, the named insured,

did reject uninsured motorist coverage and did so in writing. The

writing itself, however, was not incorporated into the policy. It

was not attached to the other policy papers, nor was it mentioned

in the text of the policy or in any incorporated attachment. It

is this absence from the policy materials of an express mention of

the rejection that is the point on which Kelly's coverage claim

turns: Kelly claims that the want of an explicit reference to

Plum Creek's written rejection renders the rejection inoperative

against an additional insured like Kelly, with the consequence

that RSA 264:15 requires provision of uninsured motorist coverage

under the statute's general rule.

The apparently fatal flaw undermining this position is

the absence from RSA 264:15 of any requirement that the policy

materials explicitly speak of the rejection of uninsured motorist

coverage. Rather, it is the requirement that the rejection be "in

writing" that ostensibly regulates the contractual relationship

between the insurer and the named insured and, derivatively, an

additional insured. Thus, the apparent statutory objective is

protection against an act of rejection that is not well considered

and a failure of the insurer to provide the coverage that the named

insured has reason to expect. See Angela Spradling, Hearing on SB

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38 Before the S. Comm. on Commerce, Labor, and Consumer Protection

(Comm. Print 2007) (statement of Sen. Lou D'Allesandro).

Because the statute does not contain an explicit

reference requirement, Kelly is left to argue that his position is

implicit in the statute, on the ground that its object is also to

protect additional insureds who need to know whether they should

procure insurance independently in order to obtain adequate

protection against uninsured motorists. But even assuming that

the statute implicitly protects additional insureds, the statute

does not support Kelly's argument because the additional insureds

are not left in the dark under this umbrella policy as it is. This

is clear from three policy provisions that a reasonable and

attentive reader would find:

1. "This policy contains all the agreements

between you and us concerning the insurance

afforded. This policy's terms can be amended

or waived only by endorsement issued by us and

made a part of this policy." Umbrella Policy

§ IV.15.

2. "We will pay those sums . . . that the

insured becomes legally obligated to pay as

damages because of: (1) 'Bodily injury'; (2)

'Property damage'; or (3) 'Personal and

advertising injury'; to which this insurance

applies." Id. § I.1.a.1

1 Though not on point here, this provision is elsewhere

limited. A different provision of the policy states: "This

insurance does not apply to: . . . '[b]odily injury' or 'property

damage' arising out of the ownership, maintenance, use or

entrustment to others . . . of any 'auto.'" Umbrella Policy

§§ I.2, I.2.f.1.

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3. "This insurance does not apply to: . . .

[a]ny loss, cost or expense payable under or

resulting from a[n] . . . uninsured or

underinsured motorist law, except to the

extent coverage is specifically provided by

endorsement to this policy." Id. §§ I.2,

I.2.f.2.

These provisions amount to a belt-and-suspenders

approach to omission of uninsured motorist coverage in the Plum

Creek policy. The integration clause (1) says clearly that there

are no relevant agreements outside the policy. The statement of

basic coverage (2) describes the policy's scope as covering sums

that "the insured becomes legally obligated to pay." Id. § I.1.a.

That is, it describes what insureds are liable to pay to someone

else for damage insureds caused or are responsible for, not what

insureds could claim as recompense for harm inflicted on them by

someone else, which uninsured motorist coverage provides. We have

been directed to no policy language that could be construed to

provide the latter. And finally, lest there be any doubt about it

in the mind of the reasonable reader, the statement of exclusions

(3) expressly indicates that the policy does not cover any "loss,

cost or expense payable under or resulting from a[n] . . .

uninsured or underinsured motorist law, except to the extent

coverage is specifically provided by endorsement to this policy."

Id. § I.2.f.2.

It is the certain impact of these policy terms in

providing no uninsured motorist coverage and, for good measure,

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expressly excluding it, that answers Kelly's arguments for looking

beyond the fact that the statute does not require a coverage

rejection to be incorporated into the policy. If Plum Creek

employees, who are additional insureds, wish to assess the extent

of their protection against an uninsured or underinsured driver

under the umbrella policy, all they have to do is read it. If

they have any reason to suspect some failure to satisfy the

statutory written rejection requirement, they can ask the named

insured or the insurer for a copy of the written instrument. While

it is true that a state whose law does require the rejection to be

made part of the policy as such would save him the trouble, see

Romero v. Dairyland Ins. Co., 803 P.2d 243, 244 (N.M. 1990), that

possible convenience is a far cry from any statutory ambiguity or

a clear implication requiring judicial expansion of the plain

statutory text.

In particular we see no such implication in the

integration clause, quoted above, providing that the policy states

the complete agreement of the insurer and named insured.

"Agreement" is readily understood as referring to the substance or

content of the parties' contract, and on the point at issue in

this case we have already seen that the policy incorporates the

agreement that the policy provides no uninsured motorist coverage.

Indeed, on a straightforward reading of the integration clause,

the "policy's terms" can be modified only by an "endorsement issued

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by [the insurer] and made a part of this policy." Umbrella Policy

§ IV.15.

Thus, Kelly's position must be seen as a request for

judicial action to add to the statute an optional provision that

the legislature was satisfied to omit. New Hampshire law forbids

this. See Carlisle v. Frisbie Memorial Hosp., 888 A.2d 405, 416

(N.H. 2005).

The judgment is accordingly affirmed.