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Progressive Northwestern Insurance Co. v. Lee

United States District Court, D. Maine

August 1, 2017

PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Plaintiff
v.
CAROLYN LEE, and JOHN ZARNOCH, as Personal Representative of the ESTATE OF EMILY ZARNOCH, Defendants

          DECISION AND ORDER ON STIPULATED RECORD

          D. Brock Hornby United States District Judge

         The issue in this case is the interpretation of a “regular use” exclusion clause in an automobile insurance policy. The parties have presented their dispute as a “case stated, ” i.e., with stipulated facts and documents.[1]

         Summary of Facts

         Carolyn Lee, driving a 2003 Chevrolet Suburban, struck and killed a pedestrian, Emily Zarnoch. Statement of the Case ¶¶ 1-2 (ECF No. 20) (SOC). Lee Tree Company owned the vehicle. SOC ¶ 2. Carolyn Lee's father, Michael Lee, an officer of Lee Tree Company, gave Carolyn Lee permission to drive the vehicle on this occasion because the car she usually drove was having mechanical difficulties. Michael Lee Dep. Tr. 31:12-25, SOC, Ex. 12 (ECF No. 20-12) (Lee Dep. Tr.). Hartford Insurance Company (Hartford) provided coverage on the 2003 Chevrolet Suburban under a commercial insurance policy that Hartford issued to Lee Tree Company. SOC ¶¶ 3-5. A different car, the car that Carolyn Lee primarily used, was listed and covered on a personal automobile policy that Progressive Northwestern Insurance Company (Progressive) issued to her father Michael Lee. SOC ¶¶ 6-7.

         Hartford retained an attorney to represent the interests of Carolyn Lee and her family. SOC ¶ 13. The Estate of Ms. Zarnoch eventually settled its claim against Carolyn Lee and others, but Progressive refused to participate. SOC ¶ 15. A stipulated judgment was filed in Maine Superior Court. SOC ¶ 16. There is an outstanding unpaid balance of $2, 311, 053.75 on the consent judgment, and the Estate obtained rights to pursue claims under the $250, 000 Progressive policy. Defs.' Mot. Summ. J. 2-3 (ECF No. 24) (Defs.' Mem.); see also SOC ¶ 15.

         Procedural History

         Progressive has brought this lawsuit against Carolyn Lee and the Estate of Emily Zarnoch seeking judgment that it has no duty to defend or indemnify under the policy it issued to Michael Lee. Am. Compl. ¶¶ 15, 17 (ECF No. 3). The defendants have counterclaimed, asserting counts of unfair claims practices and negligence, and seeking a declaration that Progressive breached its duties to defend and indemnify. Defs.' Countercl. ¶¶ 11-20 (ECF No. 5).

         Analysis

         The Progressive insurance policy excludes from its coverage:

11. bodily injury or property damage arising out of the ownership, maintenance, or use of any vehicle owned by you or furnished or available for your regular use, other than a covered auto for which this coverage has been purchased.

         Progressive Maine Auto Policy, SOC, Ex. 7, at 4 (ECF No. 20-7). The policy defines “you” and “your” to mean “a person shown as a named insured on the declarations page.” Id. at 2. Carolyn Lee's father, Michael Lee, is the named insured on the declarations page. Progressive Declarations Page, SOC, Ex. 3 (ECF No. 20-3). The Estate of Emily Zarnoch's claims arose out of the “use” of the Chevrolet Suburban because it is the vehicle that struck and killed Emily Zarnoch. SOC ¶¶ 1-2. But, as previously stated, Michael Lee did not own the vehicle (it was owned by Lee Tree Company), and he did not list it on his personal Progressive policy (it was listed on Lee Tree Company's commercial Hartford Policy). SOC ¶¶ 2-4. The question about which the parties disagree under Exclusion 11 is whether the Chevrolet Suburban was “furnished or available for [Michael Lee's] regular use.”

         Insurance policy “regular use” exclusions have appeared in Maine Law Court decisions as early as 1970, Allstate Ins. Co. v. Government Employees Ins. Co., 263 A.2d 78 (Me. 1970), and as recently as this year, Estate of Mason v. Amica Mut. Ins. Co., 2017 ME 58, ¶ 11, 158 A.3d 495. See also Acadia Ins. Co. v. Mascis, 2001 ME 101, ¶ 4, 776 A.2d 617. The Maine Law Court is clear that “whether the underlying facts bring the claim within the [‘regular use'] policy exclusion is . . . a matter of law.” Estate of Mason, 2017 ME 58, ¶ 9, 158 A.3d 495 (quoting Allstate, 263 A.2d at 81). According to the Law Court's most recent decision:

We interpret “regular use” exclusions consistent with their “obvious contractual purpose, ” which “is to cover occasional or incidental use of other cars without the payment of an additional premium, but to exclude the habitual use of other cars, which would increase the risk on the insurance company without a corresponding increase in the premium.” Acadia Ins. Co. v. Mascis, 2001 ME 101, ¶ 4, 776 A.2d 617. Stated another way, “The general purpose and effect of [a ‘regular use' exclusion] is to give coverage to the insured while engaged in the only infrequent or merely casual use of an automobile other than the one described in the policy, but not to cover him against personal liability with respect to his use of another automobile which he frequently uses or has the opportunity to do so.”

Estate of Mason, 2017 ME 58, ¶ 11, 158 A.3d 495 (quoting Allstate, 263 A.2d at 82).

         The defendants argue that Michael Lee did not regularly use Lee Tree Company's 2003 Chevrolet Suburban (he used a separate company vehicle). Instead, they argue, he (as distinguished from Lee Tree Company) seldom if ever used it for himself or his family.[2] Defs.' Mem. 2. Therefore, they say, Exclusion 11 does not apply. Id. at 3-6. Progressive argues that Exclusion 11 does apply because the Chevrolet Suburban was “furnished or available for [Michael Lee's] regular use” and it was not listed as a covered auto under the Progressive policy. Pl.'s Mot. Summ. J. 6-10 (ECF No. 23) (Pl.'s Mem.). Progressive points to Michael Lee's deposition testimony where he testified forcefully about his complete control of the vehicle's use. Id. at 9-10. For example:

Q. You did not regularly use the vehicle for your own personal business, did you?
A. I used it for whatever I needed the vehicle for.
Q. But it was always for company business, ...

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