A federal district court in Maine, relying in large measure on the deposition of the insured, has interpreted a “regular use” exclusion clause in an automobile insurance policy as precluding coverage for claims arising from the death of a pedestrian.
The Case
Carolyn Lee, driving a 2003 Chevrolet Suburban owned by Lee Tree Company, struck and killed a pedestrian, Emily Zarnoch.
Ms. Lee's father, Michael Lee, an officer of Lee Tree Company, had given Ms. Lee permission to drive the vehicle on this occasion because the car she usually drove was having mechanical difficulties.
Hartford Insurance Company provided coverage on the 2003 Chevrolet Suburban under a commercial insurance policy that Hartford had issued to Lee Tree Company. A different car, the car that Ms. Lee primarily used, was listed and covered on a $250,000 personal automobile policy that Progressive Northwestern Insurance Company had issued to Mr. Lee.
Hartford retained an attorney to represent the interests of Ms. Lee and her family. The estate of Ms. Zarnoch eventually settled its claim against Ms. Lee and others, but Progressive refused to participate. A stipulated judgment was filed in a Maine state court.
The estate obtained rights to pursue claims under the Progressive policy with respect to the outstanding unpaid balance of $2,311,053.75 on the stipulated judgment. Progressive then filed a lawsuit against Ms. Lee and the estate seeking a judgment that it had no duty to defend or indemnify under the policy it had issued to Mr. Lee.
Ms. Lee and the estate counterclaimed, asserting counts of unfair claims practices and negligence and seeking a declaration that Progressive had breached its duties to defend and indemnify.
At heart, the issue underlying the dispute between the parties was whether, under Exclusion 11, the Chevrolet Suburban had been “furnished or available for [Mr. Lee's] regular use.”
Ms. Lee and the estate argued that Mr. Lee did not regularly use Lee Tree Company's 2003 Chevrolet Suburban (he used a separate company vehicle) and that he (as distinguished from Lee Tree Company) seldom if ever used it for himself or his family. Therefore, they contended, Exclusion 11 did not apply.
For its part, Progressive argued that Exclusion 11 applied because the Chevrolet Suburban had been “furnished or available for [Mr. Lee's] regular use” and was not listed as a covered auto under the Progressive policy.
The Progressive Policy
The Progressive policy excluded 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.
The policy defined:
you
and
your
to mean:
a person shown as a named insured on the declarations page.The Deposition Testimony
Progressive pointed to Mr. Lee's deposition testimony, where he testified about his complete control of the vehicle's use:
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, correct?
A. It's my vehicle I would use it for whatever I needed it for. . . . It's pretty clear. I use the vehicle for whatever I need it for.
Q. In fact, you seldom, if ever, used that vehicle yourself at the time of the accident, correct?
A. The vehicle was used for company business.
Q. But you personally didn't use that vehicle, you used a different vehicle, didn't you?
A. I used every vehicle that we own.
Q. Okay. But on a regular basis you wouldn't use the GMC that was in – the day of the accident?
A. It depended on what the work process would be for the day.
. . . .
Q. It was not your personal vehicle, was it?
A. I drive all the vehicles that are owned by Lee Tree.
Q. But you only drive the vehicle involved in the accident occasionally or once in a while, correct?
A. I can't tell you how many times I drove the – what the frequency is or when I drove it. I drove it when it was necessary.
Q. But in general, if you wanted to use the Suburban, you could decide how you wanted to use the Suburban at the time.
A. Who could and who couldn't, yes.
Q. It was available for your use.
A. Right.
Q. Was it available for whatever use you decided to put it to?
A. For whatever use I had.
Q. And whether that be with the company or personally.
A. Correct.
Q. Okay. And whether that be somebody you wanted to allow to use it as well.
A. Correct. That policy was pretty strict, though.
Q. You mostly – you almost always used it with the company.
A. Either a family member or an employee. Nobody else drove those vehicles. That is a strict policy of mine.
The District Court's Decision
The district court granted Progressive's motion.
In its decision, the district court explained that, with respect to the Chevrolet Suburban, Mr. Lee had blanket permission, keys, and the ability to use the car for all purposes. In the district court's view, he also would reasonably have expected to pay an extra premium to have Progressive coverage of this vehicle, which already was covered under the Hartford policy. Although he did not engage in a “continuous, steady, methodical use as opposed to occasional or special use,” he certainly had the right to do so, the district court found.
The district court determined that Mr. Lee certainly had the right to use the Chevrolet Suburban at whatever times and for whatever purposes he chose, because he had complete and unilateral control over it. He also had coverage for the vehicle through the Hartford policy issued to Lee Tree Company. Accordingly, it concluded that, under Maine law, Exclusion 11 resulted in no Progressive insurance coverage for the 2003 Chevrolet Suburban at the time of the accident.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].