Terry Ann Bartlett v. The Commerce Insurance Company & a.

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2015-0537, Terry Ann Bartlett v. The
Commerce Insurance Company & a., the court on December 22,
2016, issued the following order:

Having considered the briefs and oral arguments of the parties, the court
concludes that a formal written opinion is unnecessary in this case. The
Commerce Insurance Company (Commerce) appeals an order of the Superior
Court (Garfunkel, J.) denying its motion for summary judgment and granting
the cross-motion for summary judgment of the petitioner, Terry Ann Bartlett,
as to when coverage is “triggered” under a personal umbrella endorsement to
the petitioner’s homeowner’s insurance policy issued by Commerce (the UIM
Umbrella Policy). Commerce also appeals the trial court’s ruling partially
granting and partially denying its motion for summary judgment as to whether
the excess uninsured/underinsured motorist (UIM) coverage in a separate
Commerce policy insuring the petitioner’s vehicles (the Auto Policy) applies
proportionately with certain other UIM coverage. We affirm the trial court’s
ruling with respect to the amount at which coverage is triggered under the UIM
Umbrella Policy and, as a result, we need not address whether the trial court
erred in its ruling regarding the excess UIM coverage under the Auto Policy.

This is the second time this case has reached us on appeal. See Bartlett
v. Commerce Ins. Co., 167 N.H. 521 (2015). The following pertinent facts are
taken from the summary judgment record or our prior decision. The petitioner
was injured in New York in August 2004 when the motorcycle on which she
was a passenger was struck by a motor vehicle. Id. at 523-24. The operator of
the motor vehicle was insured by Allstate Insurance Company (Allstate). Id. at
524. In July 2009, the petitioner received the policy limit of $100,000 from
Allstate. Id. The owner and operator of the motorcycle was insured by
Foremost Insurance Company (Foremost). Id. The Foremost policy was issued
in New Jersey and provided UIM coverage of up to $250,000 per person. Id.

The petitioner owned a motorcycle, which was registered and garaged in
New Hampshire, and was insured by Progressive Northern Insurance Company
(Progressive) under a policy that also provided UIM coverage of up to $250,000
per person. Id. The petitioner owned other vehicles, which were registered and
garaged in New Hampshire, and were insured by Commerce under the Auto
Policy that provided UIM coverage of up to $250,000 per person. Id. The
petitioner’s home was also insured through Commerce under a homeowner’s
insurance policy, modified by the UIM Umbrella Policy, which provided
$1,000,000 of single limit UIM coverage. Id.
 The parties agree that each policy provides UIM coverage and that the
accident and the petitioner’s injuries fall within the UIM provisions of each
policy. Id. In addition, it is undisputed that Foremost is the primary insurer of
UIM coverage, that Progressive and Commerce (through the Auto Policy) are the
“excess” or secondary insurers, and that Commerce (through the UIM Umbrella
Policy) provides umbrella coverage. Id. at 524-25. It is also undisputed that, if
all policies are available to the petitioner, each layer of coverage must be
exhausted before a subsequent layer of coverage is triggered. Id. at 525.

In 2012, the petitioner filed the instant petition for declaratory judgment.
She moved, and Foremost, Progressive, and Commerce cross-moved, for
summary judgment. Id. at 524. The trial court addressed the claims involving
each insurer, determining that: (1) the petitioner was precluded from suing
Foremost because her declaratory judgment petition was untimely pursuant to
the New Jersey statute of limitations for UIM claims, which the court
determined applied; (2) although Commerce was an excess insurer under the
Auto Policy, it was required to “drop down” and provide primary coverage to the
petitioner—that is, to provide coverage for her first $250,000 of damages; (3)
Progressive was not required to “drop down” to provide primary coverage, and
the petitioner had forfeited her entitlement to excess insurance coverage by
Progressive when she settled with Allstate without Progressive’s prior consent;
and (4) Commerce, under the UIM Umbrella Policy, was required to provide
coverage once the petitioner’s damages exceeded the limits of all underlying or
primary coverage that was actually available. Id. at 525.

Commerce appealed, and the petitioner cross-appealed. Id. at 523. We
upheld the trial court’s rulings regarding the petitioner’s claims against
Foremost and Progressive. Id. at 525-29. With regard to Commerce, we
concluded that the “other insurance” provision of the UIM part of the Auto
Policy did not require Commerce to “drop down” to provide primary coverage.
Id. at 529-35. Rather, we determined that Commerce continues to be an
excess insurer and has no obligation to pay UIM benefits under the Auto Policy
until the petitioner’s damages exceed $250,000. Id. at 535. We declined to
address, in the first instance, whether the coverage available under the Auto
Policy applies proportionately with the coverage that would have been available
to the petitioner under the Progressive policy had she not forfeited her rights to
coverage. Id. We further declined to decide when coverage under the UIM
Umbrella Policy is triggered. Id.

Upon remand, Commerce moved, and the petitioner cross-moved, for
summary judgment as to: (1) whether the excess UIM coverage available to the
petitioner under the Auto Policy applies proportionately with the forfeited
Progressive UIM coverage; and (2) when coverage under the UIM Umbrella
Policy is triggered. The trial court determined that, pursuant to the Auto
Policy, Commerce is proportionately responsible with Progressive “for 50
percent of the damages that must be paid on an excess basis, up to its limit of
liability of $250,000.” The court further determined that coverage is triggered
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under the “insuring agreement” in the UIM Umbrella Policy when the
petitioner’s damages exceed $250,000. Commerce appeals these rulings.

“In reviewing the trial court’s rulings on cross-motions for summary
judgment, we consider the evidence in the light most favorable to each party in
its capacity as the nonmoving party and, if no genuine issue of material fact
exists, we determine whether the moving party is entitled to judgment as a
matter of law.” Todd v. Vt. Mut. Ins. Co., 168 N.H. 754, 758 (2016) (quotation
omitted); see RSA 491:8-a, III (2010). If our review of that evidence discloses
no genuine issue of material fact, and if the moving party is entitled to
judgment as a matter of law, we will affirm the grant of summary judgment.
Todd, 168 N.H. at 758. We review the trial court’s application of the law to the
facts de novo. Id.

“In a declaratory judgment action to determine the coverage of an
insurance policy, the burden of proof is always on the insurer, regardless of
which party brings the petition.” Cogswell Farm Condo. Ass’n v. Tower Group,
Inc., 167 N.H. 245, 248 (2015) (quotation omitted); see RSA 491:22-a (2010).
The interpretation of insurance policy language is a question of law for this
court to decide. Bartlett, 167 N.H. at 530. “We review questions of law de
novo.” Cogswell Farm Condo. Ass’n, 167 N.H. at 248 (quotation omitted). “The
fundamental goal of interpreting an insurance policy, as in all contracts, is to
carry out the intent of the contracting parties.” Bartlett, 167 N.H. at 530
(quotation omitted).

Our analysis “begins with an examination of the insurance policy
language rather than upon the general purpose of a certain type of insurance
policy.” Cogswell Farm Condo. Ass’n, 167 N.H. at 251 (quotation and citation
omitted). We look to the plain and ordinary meaning of the policy’s words in
context, “and we construe the terms of the policy as would a reasonable person
in the position of the insured based upon more than a casual reading of the
policy as a whole.” Id. at 248 (quotation omitted). Policy terms are construed
objectively, and where the terms of a policy are clear and unambiguous, we
need not examine the parties’ reasonable expectations of coverage; absent
ambiguity, our search for the parties’ intent is limited to the words of the
policy. Bartlett, 167 N.H. at 531. The fact that the parties may disagree on the
interpretation of a term or clause in an insurance policy does not necessarily
create an ambiguity. Id. For an ambiguity to exist, the disagreement must be
reasonable. Id.

“In determining whether an ambiguity exists, we will look to the claimed
ambiguity, consider it in its appropriate context, and construe the words used
according to their plain, ordinary, and popular definitions.” Id. (quotation
omitted). “If one of the reasonable meanings of the language favors the
policyholder, the ambiguity will be construed against the insurer in order to
honor the insured’s reasonable expectations.” Id. (quotation and citation
omitted).
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 We first address whether the trial court erred in determining that
coverage under the UIM Umbrella Policy is triggered when damages exceed
$250,000. The UIM Umbrella Policy is an endorsement to the petitioner’s
homeowner’s policy providing “excess uninsured motorists coverage.”
(Capitalization and bolding omitted.) The homeowner’s policy sets forth
definitions that are intended to apply throughout the policy. In addition, each
of the relevant endorsements to the policy includes a list of defined terms that
are intended to apply throughout that endorsement. Defined terms are
identified with quotation marks to notify the reader which terms have a specific
definition.

The “insuring agreement” in the UIM Umbrella Policy provides in relevant
part:

We will pay compensatory damages, in excess of the “retained
limit”, which an “insured” is legally entitled to recover from the
owner or operator of an “uninsured motor vehicle” or
“underinsured motor vehicle” because of “bodily injury”:
A. sustained by an “insured”; and
B. caused by an accident.

(Capitalization and bolding omitted.) The term “retained limit” is not defined in
the UIM Umbrella Policy.

The trial court found that the “insuring agreement” governs “the
triggering point of the policy.” The court interpreted this provision to obligate
“Commerce to pay damages once the damages exceed the amount equal to the
‘retained limit.’” Because the term “retained limit” is not defined in the policy,
the court found it to be ambiguous. The court then adopted the petitioner’s
interpretation of the term, determining it to mean the amount of underlying
UIM coverage the petitioner was required to maintain under the UIM Umbrella
Policy—$250,000.

Commerce contends that the court erroneously construed “retained
limit.” It maintains that, although the term is not defined in the UIM Umbrella
Policy, it is reasonable to use the definition of “minimum retained limit” in a
separate Personal Umbrella Liability Endorsement (Liability Endorsement) to
the petitioner’s homeowner’s insurance policy. The Liability Endorsement
defines “minimum retained limit” to mean, as relevant here, “[t]he total limits of
any other insurance that applies to the ‘occurrence’ which . . . [a]re available to
an ‘insured’.” Reading the policies together, Commerce maintains that it is
obligated to provide UIM coverage in excess of the UIM limit of $250,000 under
the Foremost policy and the UIM limit of $250,000 under the Progressive
policy. Thus, Commerce contends that it is not obligated to provide coverage
under the UIM Umbrella Policy until the petitioner has exhausted the total
combined limits available under those policies—$500,000.

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 The petitioner counters that, because “minimum retained limit” and
“retained limit” are referred to in quotation marks in the respective policies, it
is reasonable to conclude that they do not share the same meaning. She
contends that if Commerce had intended for the meaning of “minimum
retained limit” in the Liability Endorsement to apply to the term “retained limit”
in the UIM Umbrella Policy, it “would not have used two different phrases.”
She argues that, in the absence of a definition of “retained limit” in the UIM
Umbrella Policy, it is reasonable for the insured to interpret the term as
referring to the specified amount of underlying insurance the petitioner was
required to maintain under the UIM Umbrella Policy. Because Schedule A of
the Liability Endorsement required the petitioner to maintain $250,000 per
person of UIM coverage as the “Underlying Insurance-Deductible,” she
contends that the trial court correctly determined that the UIM Umbrella Policy
is triggered when the petitioner’s damages exceed $250,000. (Bolding omitted.)

Assuming, without deciding, that Commerce’s interpretation of “retained
limit” as meaning “minimum retained limit” is reasonable, we conclude that the
petitioner has articulated another reasonable construction of the term as
referring to the specified amount of insurance the petitioner was required to
maintain under the UIM Umbrella Policy. See 15 L. Russ & T. Segalla, Couch
on Insurance 3d § 220:33, at 220-39 (1999) (explaining that “[t]rue excess
insurance generally applies only where a loss exceeds a specified level of
liability” which “may be expressed in terms of the obligation of the insured to
maintain primary insurance at a specified amount, or the obligation of the
insured to self-insure for up to a specified amount, called a ‘retained level’”).
Because there are two reasonable interpretations, we hold that the term
“retained limit” as used in the UIM Umbrella Policy is ambiguous. In view of
the ambiguity, we will read the policy against the insurer in order to honor the
reasonable expectations of the policyholder. See Great Am. Ins. Co. v. Christy, 164 N.H. 196, 203 (2012). We, therefore, conclude that the UIM Umbrella
Policy is triggered when the petitioner’s damages exceed the “retained limit” of
$250,000.

Commerce argues, however, that the UIM Umbrella Policy is a true
excess policy, and that we must interpret the policy as a whole in that context.
In doing so, Commerce urges us to consider the “other insurance” provision in
the policy. Commerce contends that the “other insurance” provision
“unambiguously provides that” any insurance it provides with respect to a
vehicle not owned by the insured “will be excess to the total limits of any
‘underlying insurance’ or any other primary insurance that applies.”
(Quotation omitted.) Thus, Commerce asserts that the UIM Umbrella Policy
makes clear that it “will be excess to the total limits of any other primary
insurance” and that, here, the Foremost and Progressive policies constitute any
other primary insurance.

The “other insurance” provision states: “Any insurance we provide under
this endorsement with respect to a vehicle you do not own will be excess to the
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total limits of any ‘underlying insurance’ or any other primary insurance that
applies.” (Emphasis added.) This provision establishes the priority of coverage
under the UIM Umbrella Policy when the insured is in “a vehicle [the insured
does] not own.”

Commerce’s interpretation of the provision reads the phrases “any
‘underlying insurance’” and “any other primary insurance that applies”
together such that any coverage it provides under the UIM Umbrella Policy
when the insured is in “a vehicle [the insured does] not own,” will be excess to
the total limits of both “any ‘underlying insurance’” and “any other primary
insurance that applies.” We recognize that, in certain circumstances, the word
“or” may be construed to mean “and” to carry out the intent of the parties. See
Noell v. American Design, Inc., Profit Sharing Plan, 764 F.2d 827, 833 (11th
Cir. 1985) (“It is an established [principle] that the word ‘or’ is frequently
construed to mean ‘and,’ and vice versa, in order to carry out the evident intent
of the parties.” (quotation and brackets omitted)); 4518 S. 256th, LLC v. Karen
L. Gibbon, P.S., 382 P.3d 1, 10 (Wash. Ct. App. 2016) (stating that “in certain
circumstances, the conjunctive ‘and’ and the disjunctive ‘or’ may be
substituted for each other if it is clear from the plain language” (quotation and
brackets omitted)). We cannot say, however, that Commerce’s interpretation of
“or” as meaning “and” is the only reasonable interpretation of the provision.
We conclude that it is equally reasonable that the word “or” means “or”—that
is, that it means that any coverage provided “will be excess to the total limits of
any ‘underlying insurance’ or any other primary insurance that applies.”
(Emphasis added.) Cf. Appeal of Niadni, Inc., 166 N.H. 256, 261 (2014)
(explaining that use of disjunctive in statute meant only one of two alternatives
need be shown); Unit Owners Assoc. of Summit Vista v. Miller, 141 N.H. 39, 45
(1996) (finding that use of disjunctive “or” in New Hampshire Consumer
Protection Act manifests clear intent to award damages for either knowing or
willful acts).

“Although an insurer has a right to contractually limit the extent of its
liability, it must do so through clear and unambiguous policy language.”
MacLearn v. Commerce Ins. Co., 163 N.H. 241, 244 (2012) (quotation omitted).
In electing to use the word “or” in the “other insurance” provision, Commerce
has created a provision that is reasonably susceptible of different
interpretations. Accordingly, we adopt the interpretation that favors the
policyholder. See Brickley v. Progressive N. Ins. Co., 160 N.H. 625, 629 (2010);
see also U.S. Automobile Assoc. v. Wilkinson, 132 N.H. 439, 442-43 (1989)
(construing policy against insurer where policy contained two different per
person limit of liability figures).

We recognize that the general rule is that umbrella policies are regarded
as true excess over and above any type of primary coverage and excess
provisions arising in a primary insurer’s policy. See CNA Ins. Co. v. Hartford
Ins. Co., 129 N.H. 243, 247-48 (1987); see also Monroe Guar. Ins. Co. v.
Langreck, 816 N.E.2d 485, 493 (Ind. Ct. App. 2004). Nonetheless, whether
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coverage exists “begins with an examination of the insurance policy language
rather than . . . the general purpose of a certain type of insurance policy.”
Cogswell Farm Condo. Ass’n, 167 N.H. at 251 (quotation and citation omitted).

In this case, the “other insurance” provision is ambiguous because there
are at least two reasonable interpretations as to the amount of excess coverage
when an insured is in a vehicle not owned by the insured. Similarly, the
“insuring agreement” is ambiguous because there at least two reasonable
interpretations as to when coverage is triggered. If Commerce intended for
coverage under the UIM Umbrella Policy to be triggered, for example, at only
the greater of any underlying or other primary insurance or only after the
exhaustion of “any other primary insurance that applies,” it was incumbent
upon Commerce to do so using clear and unambiguous language. See Great
Am. Ins. Co., 164 N.H. at 203-04 (“Of course, an insurance company can
preclude interpretation of language against it by including clear and
unambiguous policy language.” (quotation omitted)). Because it failed to do so,
we adopt the construction of those provisions that favors the policyholder. See
id. at 203. Accordingly, we affirm the trial court’s determination that coverage
under the UIM Umbrella Policy is triggered at $250,000.

Finally, the petitioner states that, if we agree with the trial court that the
UIM Umbrella Policy is triggered once her damages exceed $250,000, we need
not address Commerce’s argument that the court erred in its ruling regarding
the Auto Policy. She stipulates that her damages “do not justify a recovery in
excess of $1,250,000.” (Bolding omitted.) The UIM Umbrella Policy provides
single limit UIM coverage in the amount of $1,000,000. Bartlett, 167 N.H. at
524. Thus, the petitioner asserts that, in light of her stipulation, if we
conclude that coverage under the UIM Umbrella Policy is triggered when her
damages exceed $250,000, we need not address whether the excess UIM
coverage in the Auto Policy applies proportionately with the forfeited
Progressive UIM coverage because the coverage amount under the Auto Policy
“will have no practical effect on the parties in this case.” Because Commerce
does not dispute this assertion, we accept it. Accordingly, because we hold
that the trial court did not err in determining that coverage under the UIM
Umbrella Policy is triggered when Bartlett’s damages exceed $250,000, we need
not address Commerce’s argument that the court erred in finding it
proportionately liable with Progressive for excess UIM coverage under the Auto
Policy.

Affirmed.

DALIANIS, C.J., and CONBOY, LYNN, and BASSETT, JJ., concurred.

Eileen Fox,
Clerk

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