Atl. Cas. Ins. Co. v. Connection Auto Sales, Inc.

508 F.Supp.3d 10

ATLANTIC CASUALTY INSURANCE COMPANY, Plaintiff,

v.CONNECTION AUTO SALES, INC., et al., Defendants.

Civil Action No. 3:20cv275–HEH

United States District Court, E.D. Virginia, Richmond Division.

Signed December 22, 2020

Brian Nelson Casey, Taylor Walker PC, Virginia Beach, VA, for Plaintiff.

John Ray Newby, Tronfeld West & Durrett, Richmond, VA, for Defendants.

MEMORANDUM OPINION

(Granting Plaintiff's Motion for Summary Judgment)

Henry E. Hudson, Senior United States District Judge On May 29, 2019, Defendant Antonio Mendoza ("Mendoza") was involved in a motor vehicle accident with Defendant Larry Smith ("Smith"). Smith filed suit in the Circuit Court for the City of Richmond on February 3, 2020, bringing damages claims resulting from the accident against Mendoza and others, including Defendant Connection Auto Sales, Inc. ("CAS"). Plaintiff Atlantic Casualty Insurance Company ("Plaintiff") issued an insurance policy to CAS covering a time period including May 29, 2019. Plaintiff filed this declaratory judgment action seeking this Court's construction of the pertinent terms and provisions at issue, and a determination that Plaintiff has no duty to defend or indemnify CAS and Mendoza in the underlying state action.

The parties have filed memoranda supporting their respective positions (ECF Nos. 23-25), and the Court heard oral argument on December 15, 2020. For the reasons stated herein, Plaintiff's Motion for Summary Judgment will be granted.¹

The material facts are largely undisputed. On May 29, 2019, Mendoza was driving a 2006 Toyota Tacoma ("the Tacoma") when he was involved in an accident with Smith. (Pl.'s Mem. Supp. Summ. J. 2, ECF No. 23 [hereinafter Pl.'s Mem.].) At the time of the accident, the Tacoma was titled in the name of Sergio Castillo Olivo ("Olivo"), and Mendoza was a lienholder. (Id. at 1–2.) Mendoza and Olivo worked together at a drywall company, and at Olivo's request Mendoza bought the Tacoma at a dealer auction. (Mendoza Dep. 16:18–17:9, 44:20–45:8, Def.'s Mem. Opp. Ex. 1, ECF No. 24-1.) Mendoza obtained auction credentials through the president of CAS, Lillian Garcia ("Garcia"), to attend car auctions for dealers. (Id. at 11:16–13:13.) Garcia also provided Mendoza with dealer plates so that he could move the cars he bought at auction. (Garcia Dep. 14:7–16, ECF No. 24-2.) In exchange, Mendoza paid Garcia a monthly fee of $350.00 as well as a fee based on the model of vehicle purchased, averaging approximately $300.00 per vehicle. (Mendoza Dep. 15:1–20.) He purchased the Tacoma at a dealer auction with his own money, but used a cashier's check issued by CAS. (Id. at 70:16–72:19.)

On March 22, 2016, CAS sold the Tacoma to Olivo with Mendoza as lienholder. (Pl.'s Mem. Ex. 3, ECF No. 23-3.) After March 22, 2016, CAS no longer held any interest in the Tacoma. (Mendoza Dep. 54:9–56:22.) Mendoza repeatedly made similar transactions, selling cars bought at auction through CAS to other friends or acquaintances. (Id. at 15:17–16:5.) Before the accident, Olivo advised Mendoza that he could no longer make payments on the lien and Mendoza repossessed the Tacoma. (Pl.'s Mem. 1.) When Mendoza repossessed the Tacoma from Olivo, it was damaged and in need of repairs so he had it towed to Best Auto Sale, LLC ("Best Auto"). (Id. ) The collision occurred after Mendoza picked the Tacoma up from Best Auto. (Id. at 2.) Smith thereafter filed the underlying suit in state court, alleging in part that Mendoza and CAS are jointly and severally liable to Smith for injuries and damages caused by the accident in the amount of $500,000.00, plus interest and costs. (Id. ) Plaintiff issued an insurance policy ("the Policy") to CAS with a policy period covering March 29, 2019 to March 29, 2020. (Id. )

After Smith filed the underlying suit in state court, Plaintiff filed the instant action seeking a declaration that the Tacoma was not covered by the Policy at the time of the accident. In its Motion, Plaintiff asserts that the Policy did not cover the Tacoma because Mendoza was not a CAS employee and he was not using the Tacoma in connection with CAS when the accident occurred. Smith, in his opposition brief, argued that the Tacoma was covered by the Policy because a reasonable fact finder could conclude that, at the time of the accident, Mendoza was a CAS employee and that, when the collision occurred, he was using the Tacoma in connection with Defendant CAS. However, at oral argument, counsel for Smith conceded that the evidence in the record is insufficient to support that Mendoza was a CAS employee or agent, and argued only that on May 29, 2019, Mendoza was using the Tacoma in connection with CAS.

The standard of review for summary judgment motions is well settled in the Fourth Circuit. Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The relevant inquiry in the summary judgment analysis is "whether the evidence presents a sufficient disagreement to require submission to a [trier of fact] or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine factual dispute exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 585–86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson , 477 U.S. at 247–48, 106 S.Ct. 2505 (emphasis in original). A material fact is one that might affect the outcome of a party's case. Id. at 248, 106 S.Ct. 2505 ; JKC Holding Co. LLC v. Wash. Sports Ventures, Inc. , 264 F.3d 459, 465 (4th Cir. 2001). A genuine issue concerning a material fact only arises when the evidence, viewed in the light most favorable to the non-moving party, is sufficient to allow a reasonable trier of fact to return a verdict in the party's favor. Anderson , 477 U.S. at 248, 106 S.Ct. 2505.

To defeat an otherwise properly supported motion for summary judgment, the non-moving party must rely on more than conclusory allegations, mere speculation or the building of one inference upon another or the mere existence of a scintilla of evidence concerning a material fact. Stone v. Liberty Mut. Ins. Co. , 105 F.3d 188, 191 (4th Cir. 1997) (internal citations omitted). Accordingly, to deny a motion for summary judgment, "[t]he disputed facts must be material to an issue necessary for the proper resolution of the case, and the quality and quantity of the evidence offered to create a question of fact must be adequate ...."

Thompson Everett, Inc. v. Nat'l Cable Adver., L.P. , 57 F.3d 1317, 1323 (4th Cir. 1995) (citing Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ). "Thus, if the evidence is ‘merely colorable’ or ‘not sufficiently probative,’ it may not be adequate to oppose entry of summary judgment." Id. (citing Anderson , 477 U.S. at 249–50, 106 S.Ct. 2505 ). The Court cannot weigh the evidence or make credibility determinations in its summary judgment analysis. See Williams v. Staples, Inc. , 372 F.3d 662, 667 (4th Cir. 2004).

The parties agree that Virginia law governs this dispute.² Under Virginia law, courts must construe the language of a contract as written; courts cannot make a new contract for the parties different from that plainly intended. Pilot Life v. Crosswhite , 206 Va. 558, 145 S.E.2d 143, 146 (1965). This is particularly so when a contract involves an insurance policy because,

in the absence of constitutional or statutory barriers, the parties thereto are at liberty to make their own agreement. It needs no citation of authority to assert that where there is ambiguity in the terms of an insurance policy, they should be liberally construed in favor of the insured and against the drafter of the policy; but this does not mean that a strained or unjustified construction of the policy is to be adopted, which disregards the plain meaning and intent of the parties.

Quesenberry v. Nichols , 208 Va. 667, 159 S.E.2d 636, 672 (1968). "[A] court must adhere to the terms of a contract of insurance as written, if they are plain and clear and not in violation of law or inconsistent with public policy." Nat'l Hous. Bldg. Corp. v. Acordia of Va. Ins. Agency, Inc. , 267 Va. 247, 591 S.E.2d 88, 90–91 (2004) (quoting Blue Cross & Blue Shield v. Keller , 248 Va. 618, 450 S.E.2d 136, 140 (1994) ).

In an insurance contract dispute, Virginia courts place the burden on the policyholder "to bring himself within the policy." TRAVCO Ins. v. Ward , 715 F. Supp. 2d 699, 706 (E.D. Va. 2010) (quoting Md. Cas. Co. v. Cole , 156 Va. 707, 158 S.E. 873, 876 (1931) ). If the policyholder does so, the burden shifts to the insurer to prove that an exclusion applies, as policy exclusions constitute an affirmative defense. Transcon. Ins. v. RBMW, Inc. , 273 Va. 416, 641 S.E.2d 101, 104 (2007).

CAS is the named insured on the Policy, but the Tacoma was not a covered auto at the time of the accident. The Policy provides liability coverage for "insureds" for "covered ‘autos.’ " (Pl.'s Mem. Ex. 7 at 50, ECF No. 23-7.) The Policy states that: "[t]hroughout this policy the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations ...." (Id. at 48.) CAS was the "named insured" under the Policy. (Id. at 6) (altered capitalization). Thus, "you" and "your" in the Policy refers to CAS. Covered autos are defined as "owned ‘autos’ " and "non-owned ‘autos’ used in your ‘auto’ dealership." (Id. at 48) (altered capitalization). The parties agree that the Tacoma was an auto...