Motorists Commercial Mut. Ins. Co. v. Hartwell

53 F.4th 730

MOTORISTS COMMERCIAL MUTUAL INSURANCE COMPANY, Plaintiff, Appellee,

v.Roger HARTWELL; Lynnway Auto Auction, Inc., Defendants, Appellants,Safety Insurance Company; Ruben D. Espaillat, as Personal Representative of the Estate of Ruben Dario Espaillat; Tammy L. Berio, as Personal Representative of the Estate of Elliott Rowlands, Jr.; Giovanni Santiago ; Kenneth Vincent; Maureen Vincent ; Steven Sarkis; Sandra Ortiz, as Personal Representative of the Estate of Leezandra Aponte; Bresmil Robles; Fanny Ramirez ; Mark Lee ; Shirley Meza Lopez, as Personal Representative of the Estate of Brenda Lopez; Emelly Colon-Santos; Edris M. Santos, as Personal Representative of the Estate of Pantaleon Santos; Flavio Januario, Defendants.

Motorists Commercial Mutual Insurance Company, Plaintiff, Appellee,

v.Ruben D. Espaillat, as Personal Representative of the Estate of Ruben Dario Espaillat; Tammy L. Berio, as Personal Representative of the Estate of Elliott Rowlands, Jr.; Giovanni Santiago ; Kenneth Vincent; Maureen Vincent ; Steven Sarkis; Sandra Ortiz, as Personal Representative of the Estate of Leezandra Aponte; Flavio Januario, Defendants, Appellants,Roger Hartwell; Lynnway Auto Auction, Inc.; Safety Insurance Company; Bresmil Robles; Fanny Ramirez ; Shirley Meza Lopez, as Personal Representative of the Estate of Brenda Lopez; Emelly Colon-Santos; Edris M. Santos, as Personal Representative of the Estate of Pantaleon Santos; Mark Lee, Defendants.

No. 21-1603

No. 21-1636

United States Court of Appeals, First Circuit.

November 23, 2022

Louis J. Muggeo, with whom Jared J. Muggeo and Muggeo & Associates were on brief, for appellants Roger Hartwell and Lynnway Auto Auction, Inc.

J. Michael Conley, with whom Kenney & Conley, P.C. was on brief, for appellants Ruben D. Espaillat, Tammy L. Berio, Giovanni Santiago, Kenneth Vincent, Maureen Vincent, Steven Sarkis, Sandra Ortiz, and Flavio Januario.

Patrick F. Hofer, with whom Jared K. Clapper, Clyde & Co US LLP, Ben N. Dunlap, and Freeman Mathis & Gary, LLP were on brief, for appellee.

Before Kayatta, Thompson, and Gelpí, Circuit Judges.

KAYATTA, Circuit Judge.

This insurance-coverage dispute arises from an auction at which a motor vehicle being displayed for bidding suddenly accelerated into a group of attendees, killing five and injuring many others. Motorists Commercial Mutual Insurance Company ("Motorists"), which insured the dealership that owned the vehicle, brought this action seeking a declaration that its policies do not cover the auctioneer or its employee who was behind the wheel of the vehicle when it struck the victims. Defendants in this action include those who claim an interest in Motorists' coverage: the victims, the auctioneer, and its employee. Both sides moved for summary judgment, which the district court granted in favor of Motorists. Motorists Com. Mut. Ins. Co. v. Hartwell, 549 F. Supp. 3d 220, 231 (D. Mass. 2021). After a fresh look at defendants' arguments spanning several policies and provisions, we agree with the district court that Motorists' policies do not cover this accident. Our reasoning follows.

I.

A.

We draw the following facts primarily from the parties' statements of material facts, the responses to each, and the Motorists policies at issue.

Nashua Automotive, LLC is a New Hampshire car dealership that sells new and used cars. It is owned by a dealership group called AutoFair, Inc. and operates under the name "AutoFair Volkswagen of Nashua." We will refer to Nashua Automotive, LLC as "Nashua."

While AutoFair dealerships, like Nashua, sell most of their vehicles "retail" (to the public), about 8% or 9% of their revenues come from vehicles sold "wholesale" (online or at an auction). For its vehicles sold wholesale, Nashua primarily engages with a company called Lynnway Auto Auction, Inc., which operates an auction facility in Billerica, Massachusetts. Neither AutoFair nor Nashua owns Lynnway, and Lynnway does not own Nashua or AutoFair.

In April 2017, Nashua received a 2006 Jeep Grand Cherokee as a trade-in for a new vehicle it sold. Nashua arranged for Lynnway to auction the Jeep. On May 3, 2017, while that Jeep was being put up for auction inside Lynnway's Billerica facility, it accelerated into a crowd, causing multiple serious injuries and five deaths. At the time of the accident, Lynnway employee Roger Hartwell was seated in the driver's seat of the Jeep, though he claims that the vehicle accelerated uncontrollably despite his efforts to stop it. Hartwell was subject to a long series of suspensions of his driver's license, although the parties dispute whether Hartwell's license was suspended at the time of the accident.

In due course, the victims and their estates filed a series of lawsuits in Massachusetts state court, alleging several theories of liability against Lynnway, Hartwell, Nashua and AutoFair, as well as other related individuals and entities.

B.

Of the various insurance companies whose policies may be implicated by those underlying claims, this case concerns only one: Motorists Commercial Mutual Insurance Company. Motorists provided a liability policy (the "Primary Policy") that covered AutoFair, Nashua, and other AutoFair-affiliated dealerships as named insureds, but did not name Lynnway or Hartwell among the insureds. Motorists also provided a so-called "Commercial Umbrella" policy (the "Umbrella Policy"), which provided supplemental insurance above the Primary Policy's limits to many of the same named insureds, including Nashua and AutoFair.

The Primary Policy includes a "Garage Coverage Form" that provides that Motorists "will pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from ‘garage operations’ involving the ownership, maintenance or use of covered ‘autos.’ " This form was modified by a New Hampshire Changes in Policy endorsement (the "New Hampshire Endorsement"). We train our attention on two provisions giving rise to the parties' dispute. First, the New Hampshire Endorsement changed the definition of "Who Is An Insured" such that it includes "[a]nyone else while using with your permission a covered ‘auto’ you own ... except ... [s]omeone using a covered ‘auto’ while he or she is working in a business of selling, servicing or repairing ‘autos’ unless that business is yours." Following the parties' lead, we refer to this provision as the "auto business exclusion."¹ Second, the New Hampshire Endorsement added an exclusion that provides that the insurance does not apply to "[a]ny ‘insured’ for ‘bodily injury’ or ‘property damage’ arising out of the operation of any vehicle by that ‘insured’ and while that ‘insured's’ driver's license is under suspension or revocation." We call this the "suspended license exclusion."

The Umbrella Policy, in turn, provides further coverage for bodily injuries, but contains an "Automobile Liability -- Following Form" endorsement, which provides:

Except as coverage is available to you in the underlying policies as set forth in the Schedule of Underlying Insurance, this policy does not apply to the ownership, maintenance, operation, [or] use ... of any automobile while away from premises owned by, rented to, or controlled by you.²

Finally, as relevant here, the Umbrella Policy also defines "who is an insured" for that policy, which specifically excludes "[a]ny person employed by or engaged in the duties of an auto sales agency ... that you do not operate."

C.

Motorists initiated this federal action in the District of Massachusetts on the basis of diversity jurisdiction, seeking a declaratory judgment that its policies do not provide coverage for the victims' claims against Lynnway and its employee. Defendants include Lynnway and Hartwell (the "Lynnway defendants") and the accident victims who brought the state-court suits (the "victim defendants"). All defendants moved for summary judgment below, prompting a cross-motion from Motorists. Motorists pointed to both the auto business exclusion and the suspended license exclusion described above, each of which Motorists contended foreclosed coverage under the Primary Policy. It also argued that its Umbrella Policy's Following Form Endorsement provides auto coverage that is no broader than that provided for in the Primary Policy.

The district court agreed with Motorists on all three scores, granting summary judgment in its favor. Motorists, 549 F. Supp. 3d at 229–31. Defendants took timely appeals that we consolidated for briefing and argument.

II.

We review de novo the district court's grant of summary judgment. AJC Int'l, Inc. v. Triple-S Propiedad, 790 F.3d 1, 3 (1st Cir. 2015). A district court awards summary judgment when "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). For a factual dispute to be "genuine," there must be "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[O]n an appeal from cross-motions for summary judgment, the standard does not change; we view each motion separately and draw all reasonable inferences in favor of the respective non-moving party." Pac. Indem. Co. v. Deming, 828 F.3d 19, 23 (1st Cir. 2016) (quoting Roman Cath. Bishop of Springfield v. City of Springfield, 724 F.3d 78, 89 (1st Cir. 2013) ).

The parties agree that New Hampshire substantive law governs the insurance contracts because the policies were issued to New Hampshire insureds. We therefore look to that state's law for the insurance-law principles that will guide our review. See Merch. Ins. Co. of N.H. v. U.S. Fid. & Guar. Co., 143 F.3d 5, 8 (1st Cir. 1998) (forgoing independent choice-of-law analysis where the parties agreed Massachusetts law applied and there was "at least a ‘reasonable relation’ between the dispute...