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Progressive Hawaii Insurance Corp. v. Skiba

United States District Court, W.D. Tennessee, Eastern Division

May 16, 2017




         Plaintiff Progressive Hawaii Insurance Corp. (“Progressive”) brought this declaratory judgment action seeking a declaration that it is not obligated to provide coverage under a policy held by Defendants Joshua Skiba and Steven Holmes for injuries allegedly sustained by Defendant Tiffany Gamble in an automobile accident. (ECF No. 1.) Before the Court is Plaintiff's Motion for Summary Judgment filed on September 6, 2016. (ECF No. 31.) Tiffany Gamble has filed a response (ECF No. 35), to which Plaintiff has replied (ECF No. 36), making the matter ripe for adjudication.[1] For the reasons set forth below, the Motion is GRANTED. The parties have also filed a joint motion to continue the trial date. (ECF No. 42.) Because the grant of summary judgment dispenses with this case without a trial, that motion is DENIED AS MOOT.

         I. BACKGROUND

         The following facts are undisputed unless otherwise noted. (See ECF Nos. 35-2 & 36 at 1-6.) On March 3, 2015, Steven Holmes and Joshua Skiba of Union City, Tennessee purchased an automobile insurance policy, underwritten by Plaintiff, through the Alexander Insurance Group. (See ECF No. 1-1.) Alexander Insurance Group is an independent insurance agency that sells policies for multiple insurance companies. (Alexander Dep., ECF No. 35-2 at 37:14-24.) The terms, conditions, and limitations of the policy were set forth in a policy agreement. (ECF No. 1-1 at 2-37.) Both Skiba and Holmes were listed on the policy, the latter as an excluded driver. The effective dates of coverage for the policy ran from March 3, 2015, through September 3, 2015, subject to renewal. The premiums for the policy were to be paid in monthly installments on the fourth day of each month by automatic electronic funds transfer from the insureds' bank account.

         This arrangement progressed without incident until July 15, 2015, when Plaintiff received a notice of insufficient funds after it attempted to debit Holmes and Skiba's account for the monthly premium payment. The next day, Plaintiff sent an email to Joshua Skiba informing him that the insurance policy would be canceled on July 27, 2015. (See ECF No. 1-1 at 45.) Plaintiff also prepared a written notice of cancellation, but Defendant disputes whether this and several other documents were ever mailed to Skiba and Holmes, asserting that their address had changed from the one Plaintiff had on file. (ECF No. 35-2 at 2-4.) Plaintiff also created a “final bill, ” dated July 28, 2015, stating that the policy was canceled but an outstanding balance of $76.92 remains. (ECF No. 1-1 at 44.) Defendant also disputes that this document was ever mailed to and received by the insureds.

         On August 11, 2015, Holmes or Skiba[2] went to the office of the Alexander Insurance Group to reinstate the policy, armed with a check for $121.60. There he spoke with Roger Alexander, who accepted the payment on Plaintiff's behalf. Alexander and Skiba both apparently believed that the payment had successfully reinstated the canceled policy. Once the payment had been entered into Plaintiff's online system, however, Plaintiff credited the outstanding balance of $76.92 and refunded the remainder back to Holmes and Skiba's account.[3]Neither Holmes nor Skiba made any subsequent payments to Plaintiff, and Plaintiff did not attempt to withdraw any more payments from their account via electronic funds transfer.

         On November 12, 2015, Joshua Skiba and Tiffany Gamble were involved in an auto accident in Fulton County, Kentucky. Gamble was a passenger in an automobile driven by Skiba. Gamble filed a claim with Plaintiff soon after, seeking compensation for injuries she allegedly suffered in the accident, under the policy held by Holmes and Skiba. Plaintiff contends that it is not obligated to provide coverage for this claim because the policy had been previously canceled. Defendant argues that the policy had been successfully reinstated and was in effect on the date of the accident. On February 4, 2016, Plaintiff filed this action under the Federal Declaratory Judgment Act seeking a declaration of rights, obligations, and legal relations vis-à-vis itself and all three Defendants. (ECF No. 1; see 28 U.S.C. §§ 2201-02.)


         Summary judgment is proper “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). In reviewing a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmoving party, and it “may not make credibility determinations []or weigh the evidence.” Laster v. City of Kalamazoo, 746 F.3d 714, 726 (6th Cir. 2014). The Court must also draw all reasonable inferences in favor of the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). When the motion is supported by documentary proof such as depositions and affidavits, the nonmoving party may not rest on its pleadings but, rather, must present some “specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); see Eastham v. Chesapeake Appalachia, L.L.C., 754 F.3d 356, 360 (6th Cir. 2014).

         These facts must be more than a scintilla of evidence and must meet the standard of whether a reasonable juror could find by a preponderance of the evidence that the nonmoving party is entitled to a verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). When determining if summary judgment is appropriate, the Court should ask “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52. The Court must enter summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

         III. ANALYSIS

         A district court sitting in diversity must apply the law of the state in which it sits. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). In this case, “[j]urisdiction is based on diversity of citizenship and the law of Tennessee controls.” Rolane Sportswear, Inc. v. U.S. Fid. & Guar. Co., 407 F.2d 1091, 1094 (6th Cir. 1969). In Tennessee, “[a]n insurance policy is a contract of adhesion drafted by the insurer, ” Bill Brown Constr. Co., Inc. v. Glens Falls Ins. Co., 818 S.W.2d 1, 12 (Tenn. 1991), and is subject to the same rules and canons of construction as other contracts, Clark v. Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn. 2012) (citations and internal quotation marks omitted). A policy “should be construed as a whole in a reasonable and logical manner.” Travelers Indem. Co. of Am. v. Moore & Assocs., Inc., 216 S.W.3d 302, 306 (Tenn. 2007) (internal quotation marks omitted). In this case, the controlling insurance contract is the Tennessee Auto Policy Insuring Agreement, drafted by Plaintiff and agreed to by Holmes and Skiba. (ECF No. 1-1 at 2-37.) “‘[T]he insured is conclusively presumed to have knowledge of, and to have assented to, all the terms, conditions, limitations, provisions or recitals in the policy, ' irrespective of whether the insured actually read, or could read, the insurance contract.” Webber v. State Farm Mut. Auto. Ins. Co., 49 S.W.3d 265, 274 (Tenn. 2001) (quoting Gen. Am. Life Ins. Co. v. Armstrong, 185 S.W.2d 505, 507 (Tenn. 1945)) (emphasis omitted).

         A. Initial Cancellation of the Policy

         The policy terms make clear that Plaintiff “may cancel this policy during the policy period by mailing a notice of cancellation to the named insured shown on the declarations page at the last known address appearing in [its] records.” (ECF No. 1-1 at 32.) If the reason for the cancellation be nonpayment of a premium, the agreement requires ten days' notice. (Id.) Plaintiff adhered to this time period by ...

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