2010-370 Progressive Northern Insurance Company v. Argonaut Insurance Company & a.

No. 2010-370

Merrimack

A.W. Perkins Law Offices, PLLC

Mallory & Friedman, PLLC

Primmer Piper Eggleston & Cramer

Wiggin & Nourie, P.A. ___________________________

Phillips on the memorandum of law), for Martin and Linda Morasse. memorandum of law), and Phillips Law Office, PLLC, of Concord (Roger B.

orally), for Craig Kelly.

THE SUPREME COURT OF NEW HAMPSHIRE Insurance Company. Ann Dempsey on the brief, and Mr. Rehnborg orally), for Progressive Northern

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as the light most favorable to the non-moving party. Furbush v. McKittrick p. 2 affidavits and other evidence, and all inferences properly drawn from them, in In reviewing a trial court’s summary judgment ruling, we consider the

This appeal followed. court also ruled that Progressive must pay its pro rata share of defense costs. $750,000 and that Progressive’s policy provides excess coverage. The trial that Argonaut was obligated to provide primary liability coverage up to limit. Both insurers moved for summary judgment. The trial court concluded Argonaut must defend and indemnify Kelly under Argonaut’s $750,000 policy Kelly in the Morasse lawsuit. Progressive then sued Argonaut, asserting that insurer and contended that Progressive was obligated to defend and indemnify endorsement (endorsement). Argonaut identified Progressive as the primary under the $25,000 limit set forth in the policy’s “Additional Garage Limitations” Accordingly, Argonaut concluded that it would only provide a defense to Kelly vehicle was personal and that he was not a scheduled driver on the policy. Argonaut investigated the accident and concluded that Kelly’s use of the

policy.” Marikar v. Peerless Ins. Co. sufficient facts in the pleadings to bring it within the express terms of the determined by whether the cause of action against the insured alleges “In New Hampshire, an insurer’s obligation to defend its insured is

look to the plain and ordinary meaning of the policy’s words in context. Id. contract language, is ultimately an issue of law for this court to decide. Id. We policy language. Id. The interpretation of insurance policy language, like any omitted). Thus, our analysis begins with an examination of the insurance

$25,000 and $750,000, depending upon the circumstances. law to the facts de novo. Id. judgment as a matter of law. Id garage insurance policy issued by Argonaut with liability insurance limits of. We review the trial court’s application of the issued by Progressive with liability limits of $100,000 per person; Tom’s had a genuine issue of material fact is present, and the moving party is entitled to At the time of the accident, Kelly had a personal automobile insurance policy N.H. 426, 429 (2003). Summary judgment may be granted only where no his wife brought suit against Kelly alleging negligence and loss of consortium., 149 involved in a car accident with Martin Morasse. Subsequently, Morasse and Honda Accord to use while his car was being serviced. The next day, Kelly was Sales (Tom’s), which his parents own and operate. Tom’s loaned Kelly a 1991 by the parties. On June 7, 2006, Kelly left his car for service at Tom’s Auto The following facts were either found by the trial court or are undisputed

affirm. judgment to Progressive Northern Insurance Company (Progressive). We judgment and granting summary judgment to Craig Kelly and partial summary ruling of the Superior Court (Smukler, J.) denying its motion for summary DALIANIS, C.J. Argonaut Insurance Company (Argonaut) appeals a de p. 3 is properly preserved for our review and is a question of law, which we review court. We disagree. The issue of the interpretation of Argonaut’s endorsement because Progressive did not previously make this argument before the trial operations.[’]” Argonaut suggests that we should not consider this element covered auto “for purposes that are not necessary or incidental to [‘]garage We begin by addressing the third element: whether Kelly was using the

dispute whether the third and fourth elements are also met. the named insured and he was not a driver listed on the schedule. The parties dispute as to the first two elements – Kelly was using a covered auto owned by Because the parties agree on this construction, we will apply it. There is no used by a driver who has the “right to frequent use” of the covered auto. purposes that are not necessary or incidental to [‘]garage operations[’]”; and (4) named insured; (2) used by a driver not listed on the schedule; (3) used “for coverage is limited to $25,000 when the covered auto is: (1) owned by the The parties agree that, pursuant to the endorsement, Argonaut’s

“Autos.”

to the persons named in the Schedule of Drivers Furnished incidental to [“]garage operations[.”] This limitation does not apply frequent use of an “auto” for purposes that are not necessary or

“Furnished or available for regular use” means the right to being driven by any driver who is not listed on this endorsement.

arising from an “accident” which occurs while a covered “auto” is compulsory or financial responsibility law limits for any claim 3

operations.[’]” The policy defines “[g]arage operations” as covered vehicle for “purposes that are not necessary or incidental to [‘]garage The endorsement requires us to consider whether Kelly was using a

N.H. 690, 693 (2010). novo. Concord Gen. Mut. Ins. Co. v. Green & Co. Bldg. & Dev. Corp., 160

relatives of yours or any other person are reduced to the

of owners, partners, officers, employees, spouses, children or “autos” owned by you and “furnished or available for regular use”

the financial responsibility law limit of $25,000, see Argonaut’s primary argument is that its liability in this case is limited to

“property damage” or “loss” arising out of the use of covered The limits for Liability Coverage applicable to “bodily injury”,

pursuant to the endorsement. The endorsement states:

insured’s favor and against the insurer. Id. reasonable interpretation favors coverage, we construe the policy in the Id. When an insurance policy’s language is ambiguous, however, and one and unambiguous, we accord the language its natural and ordinary meaning. Policy terms are construed objectively, and when the terms of a policy are clear not challenge the trial court’s ruling in its notice of appeal. See p. 4 Argonaut’s argument that Kelly was a customer of Tom’s because Argonaut did did not intend to pay for the work” done on his car. We decline to address that the customer provision did not apply to Kelly because “he did not pay and when a customer of Tom’s drives a covered auto. The trial court concluded Argonaut policy contains a separate provision, which limits Argonaut’s liability to Tom’s garage business, then Kelly must have been a customer of Tom’s. The Tom’s vehicles and was not using the accident vehicle for a purpose incidental Argonaut asserts that if Kelly did not have the right to frequent use of

operations. not apply because, by definition, Kelly was using the covered auto for garage LaMontagne had a “right to frequent use” of the covered auto, the endorsement would still if we assume that Kelly met the fourth element of the endorsement, in that he the third element of the endorsement is, therefore, not met. Accordingly, even Because Kelly’s use of the accident vehicle fell within “garage operations,”

the “loaner” fits the definition of “garage operations.” Cas. Co., 593 N.W.2d 913, 919 (Wis. Ct. App. 1999). Therefore, Kelly’s use of was incidental to Tom’s garage business. See Henry ex rel. Weis v. General to Kelly as a “loaner” while his car was being repaired at Tom’s; thus, his use applying this definition, Tom’s provided the accident vehicle, a “covered auto,” garage business. There is support for both interpretations. Compare auto for operations that are necessary or incidental to a garage business. Even that a person’s use of a covered auto must be necessary or incidental to a Argonaut’s construction that “garage operations” includes the use of a covered Argonaut appears to argue that the definition should be read as a whole such insurance policy not presumed to be mere surplusage). Accordingly, we accept definition, “garage operations” includes all use of the covered vehicles. Mfgs. & Merchants Mut. Ins. Co. Progressive asserts that, based upon the second sentence of this, 140 N.H. 15, 19 (1995) (language in render exclusion meaningless is not reasonable); Int’l Surplus Lines Ins. Co. v. Cos., 149 N.H. 174, 177-78 (2004) (interpreting policy in manner that would endorsement a nullity, which we will not do. See Weeks v. Co-Operative Ins. 1989). However, adopting Progressive’s construction would render the Lambert v. Northwestern Nat. Ins. Co., 769 P.2d 1152, 1155-56 (Idaho Ct. App. v. Farmers Ins. Exchange, 82 Cal. Rptr. 3d 763, 769-70 (Ct. App. 2008), with

(Emphasis added.)

include all operations necessary or incidental to a garage business. Coverage Form as covered “autos”. “Garage operations” also maintenance or use of the “autos” indicated in Section I of this these locations. “Garage operations” includes the ownership, business and that portion of the roads or other access that adjoin the ownership, maintenance or use of locations for garage appeal that “the trial court err[ed] in finding that the Progressive policy . . . is p. 5 defense costs is a subsidiary question contained in its third issue raised on not properly preserved for our review. Argonaut contends that the issue of the issue of defense costs was not raised in the notice of appeal and thus was shared equally between Argonaut and Progressive. Progressive maintains that Argonaut next asserts that the costs of defense in this case should be

coverage on a pro rata basis. provision are mutually repugnant and, thus, both insurers must provide Argonaut’s assertion that its pro rata provision and Progressive’s excess Because Argonaut’s pro rata provision does not apply, we need not address

coverage for the accident and Progressive’s policy affords excess coverage. of Argonaut’s policy is not triggered. Argonaut’s policy affords primary on the same basis as the Argonaut policy. Accordingly, the pro rata provision was driving the accident vehicle. Thus, the Progressive policy does not cover by its named insured. The basis for Progressive’s coverage is that its insured Here, the basis for Argonaut’s coverage is that the accident vehicle was owned exists “any other Coverage form or policy” that covers “on the same basis.” However, the language upon which Argonaut relies is only triggered when there that, under certain circumstances, Argonaut will pay “only [its] share.” by way of the second sentence of its “other insurance” clause, which states Argonaut attempts to convert its primary coverage into pro rata coverage

primary coverage. that Tom’s owned the accident vehicle. Therefore, the Argonaut policy provides Sales, Inc.” is the “Named Insured” listed in the Declarations. It is undisputed “[Y]ou” refers to the “Named Insured shown in the Declarations.” “Tom’s Auto Argonaut clause provides that its coverage is primary for any auto “you” own. asserts, primary coverage, or, as Argonaut maintains, pro rata coverage. The Therefore, we consider whether Argonaut’s coverage is, as Progressive

insurance.” other than a covered vehicle . . . will be excess over any other collectible Progressive clause provides that “any insurance we provide for a . . . vehicle, the same basis, either excess or primary, we will pay only our share.” The “When this Coverage Form and any other Coverage Form or policy covers on this Coverage Form provides primary insurance.” The clause further states, clauses. The Argonaut clause states that, “[f]or any covered ‘auto’ you own, Both the Argonaut and the Progressive policies contain “other insurance”

that its coverage is excess over Argonaut’s coverage. Progressive acknowledges that it must provide coverage to Kelly, but maintains to any settlement or judgment in favor of the Morasses on a pro rata basis. Argonaut next argues that Argonaut and Progressive should contribute

(arguments not included in notice of appeal are deemed waived). Builders v. Bowman Brook Purchase Group, 150 N.H. 270, 276 (2003) p. 6 DUGGAN and LYNN, JJ., concurred.

Affirmed

briefed, are deemed waived. In re Estate of King, 149 N.H. 226, 230 (2003). The remaining issues raised by Argonaut in its notice of appeal, but not

error. is settled. Accordingly, we decline to hold that the trial court committed plain other jurisdictions to support its ruling, we cannot say that the law in this area insurer and an excess insurer, and the trial court relied upon authority from under our plain error analysis. See addressed the precise issue of allocation of defense costs between a primary court cannot be plain error.” Id Argonaut contends that we may still consider the issue of defense costs. (quotation omitted). As we have never time of trial, and remains unsettled at the time of appeal, a decision by the trial contrary.” Id. (quotation omitted). “Generally, when the law is not clear at the been ‘obvious’ in the sense that the governing law was clearly settled to the 220, 225 (2008) (quotation omitted). “An error is plain if it was or should have proceedings.” Clark & Lavey Benefits Solutions v. Educ. Dev. Ctr., 157 N.H. Sup. Ct. R. seriously affect the fairness, integrity or public reputation of judicial be plain; (3) the error must affect substantial rights; and (4) the error must For the plain error rule to apply: “(1) there must be an error; (2) the error must every subsidiary question fairly comprised therein. trial court erroneously allocated defense costs, we do not find the error plain. The statement of a question presented will be deemed to include same as the question previously set forth in the appeal document. Sup. Ct. R. 16-A. Even assuming that the was in the appeal document, the question presented shall be the While the statement of a question need not be worded exactly as it 16(3)(b). argument regarding defense costs. Lassonde, 157 N.H. at 587-88; Sup. Ct. R. subsumed in that question. Therefore, we decline to address Argonaut’s to the coverage afforded by each insurer; we do not find that defense costs are

16(3)(b). The issue raised in Argonaut’s notice of appeal is limited

(2008). considered waived by this court.” Lassonde v. Stanton, 157 N.H. 582, 587 basis.” “Appellate questions not presented in a notice of appeal are generally policies require Progressive and Argonaut to share any coverage on a pro-rata excess to the Argonaut policy” and that “the ‘other insurance’ clauses of the