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Dennis v. Liberty Mutual Group

United States District Court, W.D. Washington, Seattle

March 14, 2014

TRACY DENNIS, Plaintiff,


JAMES P. DONOHUE, Magistrate Judge.


On May 26, 2009, plaintiff Tracy Dennis was seriously injured while on business in a motor vehicle accident involving an underinsured motorist. After settling for the inadequate policy limits of the driver at fault, she seeks declaratory relief that she is covered under the terms of the uninsured/underinsured motorist ("UIM") provisions of her employer's insurance plan. The insurance carriers who issued the employer's policy, Liberty Mutual Group, Safeco Insurance Company of North America, and General Insurance Company of America (collectively "Liberty Mutual, or "defendants") seek declaratory relief that the terms of the policy do not extend to provide coverage for Ms. Dennis' injuries. Both parties have filed motions for summary judgment on their claims. Dkts. 10, 12-13. Diversity jurisdiction is proper. For the reasons set forth below, plaintiff's motion for summary judgment is GRANTED, and defendants' motion for summary judgment is DENIED.


At oral argument, the parties agreed that the facts material to the interpretation of the policy are not in dispute. On the day of the accident, plaintiff and another employee of Truck Trails Northwest, LLC ("Truck Trails") drove a to-be-rented Budget vehicle to a customer, and were returning to work together in another Budget rental vehicle, a 2009 Chrysler minivan, when a car behind them failed to stop in time, causing a collision and injuries to plaintiff. At the time of the accident in question, plaintiff was employed by Truck Trails. Dkt. 13, Ex. 4 (Navone Dep. at p.13) (hereinafter "Navone Dep."). Truck Trails is an auto repair and service business owned by Keith Navone. Navone Dep. at 11. Sometime prior to the plaintiff's accident, Mr. Navone started a side business from the same business premises, operating as an agency operator for Budget rental vehicles. Budget supplied the office equipment and vehicles necessary for the business, but Truck Trails provided the personnel necessary to staff the car rental location. Navone Dep. at 17.[1]

In 2007, Liberty Mutual issued policy No. 24-CC-216073-2, which identified Truck Trails as the named insured. Dkt. 13, Exs. 1-3, 5, 6-9 (Wong Decl.) (hereinafter "the policy"). The policy provided business auto coverage protection, including a $1 million liability limit for "specifically described autos'" and "nonowned autos, '" as well as a $1 million UIM limit for "specifically described autos.'" Id. , Exs. 1-2. Under the policy, coverage restricted to "specifically described autos'" was designated by a symbol "7, " and defined in relevant part as "only those autos' described in Item Three of the Declarations[.]" Id. , Ex. 2 at 1. Coverage restricted to "nonowned autos' only" was designated by a symbol "9, " and defined in relevant part as "only those autos' you do not own, lease, hire, rent or borrow that are used in connection with your business." Id. at 2. The declarations page of the policy identified two specifically designated covered vehicles - a 1993 Ford 4x2 truck and a 1992 Ford F-250. Id. , Ex. 1 at 1.

In December 2008 and January 2009, Truck Trails made changes to the policy by adding and deleting vehicles identified as the "specifically described autos'" in the policy. Id. , Ex. 5-6. Specifically, a 1993 Ford vehicle was added in December 2008, but deleted the next month, when a 1999 jeep vehicle was added. The type and extent of coverage, however, remained unchanged.[2]

Most significantly, Truck Trails altered the policy a third time in May 2009 by extending its liability coverage from "specifically described autos'" and "nonowned autos'" (designations 7 and 9) to "any autos" (designation 1). Id. , Ex. 8. The $1 million coverage limit for liability remained unchanged, and the $1 million coverage limit for UIM for "specifically described autos'" (designation 7) remained unchanged. Id.

Finally, the policy also included a "Washington Underinsured Motorists Coverage" endorsement, which states that "this endorsement modifies insurance provided under the following... business auto coverage." Id. , Ex. 9. The endorsement Schedule states that "this endorsement provides bodily injury' and property damage' underinsured motorist coverage unless an X' is entered [in a box] below." Id. The endorsement was left blank, and therefore no "X" was entered in the box. Id. Similarly, no amount of coverage for "bodily injury" or "property damage" was specified on the endorsement. However, the Schedule also states that " [i]nformation required to complete this Schedule, if not shown above, will be shown in the Declarations. " Id. (emphasis added).

Under the headings "Description of Autos'" and "Coverage, " the endorsement provided that "we will pay all sums the insured' is legally entitled to recover as compensatory damages from the owner or driver of an uninsured motor vehicle'" resulting from bodily injury or property damage sustained by the "insured" in an accident. Under the heading "Who Is An Insured, " the endorsement provided that if the named insured designated in the declarations is a limited liability company, an "insured" includes "anyone occupying' a covered auto.'" Id.


A. Legal Standard for Summary Judgment

A moving party is entitled to summary judgment when there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). An issue of fact is "genuine" if it constitutes evidence with which "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). That genuine issue of fact is "material" if it "might affect the outcome of the suit under the governing law." Id.

Here, the parties stipulated during oral argument that there are no genuine issues of material fact regarding the policy. Thus, the sole issue before the Court concerns the proper interpretation of the insurance policy, which the Court may decide as a matter of law.

B. Legal Issues

1. Does the plain language of the policy provide UIM coverage to plaintiff?
2. Is UIM coverage available to plaintiff by operation of RCW 48.22.030 because material changes were made to the policy in May 2009 and Liberty Mutual did not receive a written waiver or rejection of UIM coverage by the named insured?

C. The Plain Language of the Policy Does Not Provide UIM Coverage to Plaintiff

As a threshold matter, the Court notes that during oral argument, the parties agreed that the vehicle plaintiff was driving at the time of the accident was covered by the plain language of the policy's liability provisions. In other words, had plaintiff been the driver at fault in the accident, the liability provisions of the policy, as amended in May 2009 to extend liability coverage to "any autos, " would have applied. However, defendants assert that unlike the liability coverage provisions of the policy, the May 2009 amendment of the policy did not alter the portion of the declarations limiting UIM coverage to a "symbol 7, " defined as only "specifically described autos.'" Dkt. 18 at 2. It is undisputed that the "specifically described autos'" listed in the declarations did not include the Chrysler minivan that plaintiff was driving. Defendants argue that if the Court were to interpret the policy, and in particular the endorsement, as extending UIM coverage to plaintiff, such an interpretation "would render the policy declarations and insuring agreement forms that describe the application of symbol 7' meaningless." Id. at 1. Defendants further point out that "Liberty Mutual included a provision in the UIM endorsement that states that "[i]nformation required to complete this Schedule, if not shown above, will be shown in the Declarations." Id. at 2. As a result, the fact that the Schedule in the UIM endorsement was left blank evinces the parties' intention that UIM coverage to be governed by the coverages listed in the Declarations. Id.

Relying on the endorsement, plaintiff argues that the plain language of the policy extends liability coverage to plaintiff, despite the fact that the policy's declarations limited such coverage to "specifically described autos'" (designation 7). Specifically, plaintiff argues that the endorsement "states that bodily injury and property damage coverage is provided unless an X' is entered in the box shown on the first page of the endorsement page. Clearly, the box is not marked at all." Dkt. 15 at 6. Plaintiff asserts that "if Liberty Mutual had specifically wanted only certain vehicles to have UIM coverage, then it should have marked the box with an X' and listed the specific vehicles in the designated section." Id. at 7. "Consequently, this UIM endorsement section provides UIM coverage to all covered autos' under the policy, " and "[i]n this instance, when Truck Trails changed ...

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