42 Mass. App. Ct. 538 | Mass. App. Ct. | 1997
On December 1, 1989, Jason Fedele drove his parents’ automobile head-on into another vehicle, killing himself and seriously injuring the driver of the other vehicle, Kevin M. Connors. Liability was established, and Connors was paid $455,000 from the Fedeles’ automobile insurance liability coverage — an amount that apparently fell short of Connors’ actual damages. For further recovery, Connors looks to an umbrella liability policy issued by Commercial
The judge predicated his ruling on the following facts, established by the summary judgment record. Until mid-1989 the Fedeles had purchased their casualty insurance coverages through the Rogers & Gray Insurance Agency, Inc., which had placed the Fedeles’ automobile, boat, homeowners, and umbrella coverages with the plaintiff, CU. In the early summer of 1989, Stephen Fedele, Jason’s father, decided to make new arrangements for insurance. He brought his CU policies to the Mahoney & Wright Insurance Agency, Inc., and that agency undertook to replace the CU policies with other insurance. As to the boat policy, Mahoney & Wright arranged for a replacement policy, written by Commerce Insurance Co. (Commerce), and for cancellation of the CU policy as of November 6, 1989. The automobile policy was replaced by a Commerce policy running from January 1, 1990.
Two of the CU policies — the homeowners and the umbrella, were to expire November 30, 1989. The coverage periods were intentionally identical; it was the practice of CU, one that was common in the industry and known to insurance agents, that it would not write umbrella coverage for an insured unless it also wrote the insured’s homeowners coverage.
On October 11, 1989, CU, having not then been notified of
The summary judgment record leaves no doubt that Steven Fedele intended Mahoney & Wright to obtain all new policies to replace his CU policies and that he was concerned that there be no lapse. By late November — apparently either November 28 or 29 — Stephen Fedele telephoned Mahoney & Wright to make sure that provision had been made for replacing his umbrella coverage. He was told that the umbrella coverage was in the process of being applied for and that it would be effective — if necessary retroactively — November 30, the expiration of the existing CU policy. On November 29, Phyllis Jones of Rogers & Gray telephoned Mahoney & Wright because the Fedeles’ umbrella policy was on an internal checklist of policies not being renewed. The purpose of the call was to verify that Mahonby Sc Wright understood that CU, no longer having the homeowners coverage, would not be renewing the umbrella coverage. Phyllis Jones supplied information to Claire Ball of Mahoney & Wright necessary for her to apply for the replacement policy. On November 29, Mahoney & Wright sent the application for the replacement umbrella policy to Commerce, but the application had not been acted on at the time of Jason’s accident and was in fact subsequently denied.
“Section 11. Non-Renewal
We may elect not to renew this policy. We may do so by delivery to you or mailing to you at your mailing address shown in the Declarations, written notice at least 30 days before the expiration date of this policy. Proof of mailing shall be sufficient proof of notice.”
Commercial Union takes the position — fundamentally sound, in our view — that the thirty-day notice of a decision not to renew comes into play only where it is CU that decides not to renew and is inapplicable where, as here, it is the insured who decides not to renew. The purpose of the notice clause, in other words, is to alert the insured of an impending termination of coverage so that he or she will have reasonable time to procure a replacement policy. Stephen Fedele was fully aware of the impending expiration of the policy and had instructed Mahoney & Wright to apply for its replacement. In these circumstances, the notice would have served no purpose.
Connors, suing as assignee of the Fedeles, takes the position that a failure by the insurer to send the notice of non-renewal has the effect of leaving the policy coverage in place after the expiration of the policy period. That reading would make the clause the practical equivalent of an automatic extension or renewal clause, whereby a contract period is automatically extended for a further period unless one party or the other gives timely notice of a decision to terminate, as in Lewenberg v. Friedstein, 259 Mass. 146, 147-148 (1927), and cases cited. The clause does not read like one providing for an automatic renewal or extension. Compare Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202, 206-208 (1991). The terminal date of the policy coverage was stated, without qualification, to be November 30, 1989.
Comparable cases from other jurisdictions suggest that, where, as here, the insured has no intention of continuing coverage beyond the policy term, he is not covered beyond that term even if the insurer, ignorant of the insured’s intention not to renew, issues a renewal policy. A policy so issued
Another line of reasoning leads to the same conclusion. On the summary judgment record, Mahoney & Wright was acting as agent for Stephen Fedele with respect to obtaining new policies to replace the expiring or terminated CU policies. When it advised Rogers & Gray that it would obtain a replacement homeowners policy for the Fedeles, it knew, or should have known as one familiar with CU’s practice not to write an umbrella policy unless it also wrote the homeowners policy to which the umbrella coverage was excess, that CU would not renew the Fedeles’ umbrella policy at the end of the coverage period. On the record before us, it is not suggested that Mahoney & Wright was relying on a CU renewal; rather, it simply neglected to apply in timely fashion for the replacement umbrella policy. Under standard agency principles, Mahoney & Wright’s knowledge of CU’s practice is imputed to Stephen Fedele. See Suit v. Woodhall, 113 Mass. 391, 395 (1873); Stetson Press, Inc. v. Bunsen Oil Burner Corp., 285 Mass. 291, 293 (1934); DeVaux v. American Home Assur. Co., 387 Mass. 814, 818 (1983); Restatement (Second) of Agency § 272 (1958).
On this record, Mahoney & Wright in effect informed CU (through Rogers & Gray) of the Fedeles’ decision not to renew the two related policies. In these circumstances, a notice by CU that it would not be renewing the policies would have been superfluous.
Judgment affirmed.
The CU automobile policy was, thus, still in effect at the time of the accident on December 1, 1989, and it is this policy that paid $455,000 of the Fedeles’ liability to Connors.
An exception to this practice might be made if the insured’s homeowners policy was to expire in the reasonably near future, and CU was assured of writing the replacement policy.
Phyllis Jones of Rogers & Gray agency correctly interpreted the letter of October 19 to mean that Mahoney & Wright would be placing the homeowners coverage with a company other than CU. She explained that if Mahoney & Wright had intended to keep the Fedeles’ homeowners coverage with CU, it would have sent instead a “broker of record” letter to obtain possession of the renewal policy.