Wednesday, September 14, 2011

Insurance. Denial of UIM claim affirmed because policy delivered out-of-state. Phrase “with respect to” is a conjunction.

 McGoff v. Acadia Insurance Co., 2011 VT 102 (mem.)

Plaintiffs appeal an order  granting defendant Acadia  summary judgment with respect to plaintiffs’ underinsured motorists (UIM) claim arising from an automobile accident in which Thomas McGoff was injured. Plaintiffs argue that the court erred in ruling that Vermont’s UIM requirements do not apply to the instant policy on grounds that the policy was not delivered or issued for delivery in Vermont. We affirm.

In relevant part, § 941(a) provides that no motor vehicle policy “may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless” UM/UIM coverage is provided for the protection of the insureds. The policy was issued and delivered to Sandri, a Massachusetts company with its principal place of business in Massachusetts, by a Massachusetts agent, for vehicles—including the Plymouth supplied to McGoff—registered in Massachusetts. In short, given § 941(a)’s plain language, the statute does not apply to the subject policy.

Plaintiffs appear to argue that because the Plymouth was garaged in Vermont rather than in Massachusetts, as indicated in the Acadia policy, and thus should have been registered in Vermont rather than Massachusetts, § 941’s UIM requirements should apply, including § 941(c), which requires that UM/UIM coverage in a policy be provided in the same amount as the liability coverage “unless the policyholder otherwise directs.” This position is contrary to the plain language of § 941(a) as well as the nearly unanimous relevant case law, and therefore we decline to adopt it under the present circumstances.

The salient language in § 941(a) limits application of the statute to policies “delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state.” (Emphasis added.) The two key phrases connected by the term “with respect to” are conjunctive rather than disjunctive, thereby requiring both elements to be satisfied for the statute to apply. Whether the issue is framed as one of statutory construction or choice-of-law, the courts construing statutes similar to § 941(a) are nearly unanimous in concluding that insurance policies such as the instant Acadia policy are not subject to that state’s statutory UM/UIM coverage requirements unless the policy was delivered or issued for delivery in that state, even if the subject vehicle was regularly garaged in that state.

Attorney’s fees. Indemnity agreement did not require award of fees incurred to enforce the indemnity clause. Case analogous to denial of fees for suits that establish insurance coverage.

Southwick v. City of Rutland, (II), 2011 VT 105 (Skoglund, J. )


After we held an indemnity clause applies to claims based on the City’s own negligence, Southwick v. City of Rutland, 2011 VT 53, the City filed a motion for attorney’s fees covering all legal expenses associated not only with its defense in the underlying Southwick action, but also for all expenses incurred through the litigation of the indemnity and third-party actions. The trial court entered judgment in favor of the City, awarding the entirety of its requested attorney’s fees. Because the plain language of the contract does not require VSA to pay attorney’s fees incurred by the City in pursuing either indemnity from VSA or other third-party actions, we reverse and remand.


The Agreement’s indemnity clause reads:


"Indemnification and Hold Harmless: [VSA] hereby agrees to defend, indemnify and hold harmless Rutland, . . . its officers, trustees, agents and employees from all claims for bodily injury or property damage arising from or out of the presence of [VSA], including its employees, agents, representatives, guests and others present because of the event or [VSA’s] activities in or about Whites Park, including the entrances, lobbies and exits thereof, the sidewalks, streets and approaches adjoining the campus or any portion of the campus used by [VSA] or any of the above stated. [VSA] shall be responsible for all costs of defense, including reasonable attorney’s fees, and shall pay all fines or recoveries against Rutland."


The costs contemplated in the Agreement do not include the City’s claim to enforce the indemnity clause against VSA, or its claims against P&C and Nautilus. Contrary to the trial court’s conclusion, the indemnification clause is not all encompassing: it limits VSA’s obligation to those costs associated with the City’s defense against claims for bodily injury or property damage. Therefore, there is no contractual basis for departing from the American Rule and awarding attorney’s fees for time expended on work other than for defense in the Southwick action. See Windsor Sch. Dist. v. State, 2008 VT 27, ¶ 28, 183 Vt. 452, 956 A.2d 528 (“An insured is not entitled to recover attorney’s fees incurred in a declaratory-relief action to establish the insurer’s duty to defend or indemnify.”); see also Concord Gen. Mut. Ins. Co. v. Woods, 2003 VT 33, ¶ 18, 175 Vt. 212, 824 A.2d 572 (denying insured attorney’s fees incurred in defense of insurer’s declaratory action).


The Southwicks’ action and the City’s third-party claims might have been set in motion by the same event, they are not based on a “common core of facts” within the rule of L’Esperance v.Benware, where plaintiffs’ lawsuit was not one “which can be viewed as a series of discrete claims so that the hours expended can be divided on a claim by claim basis.” 2003 VT 43, ¶ 24, 175 Vt. 292, 830 A.2d 675. Nor is there an equitable basis for awarding the City attorney’s fees related to its third-party actions under the urle of In re Gadhue, where we upheld an award of attorney’s fees on the basis of bad faith. 149 Vt. 322, 328-29, 544 A.2d 1151, 1154-55 (1987).