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State Farm Mutual Automobile Insurance Co. v. Morris

United States District Court, D. Hawaii

July 19, 2016

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
IAIN MORRIS, Defendant, and LAWRENCE SCOTT BUCKNELL, Intervenor-Defendant.

         ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT AGAINST DEFENDANT IAIN MORRIS, AND SUMMARY JUDGMENT AGAINST INTERVENOR-DEFENDANT LAWRENCE SCOTT BUCKNELL, AND DENYING INTERVENOR-DEFENDANT’S COUNTER MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM

          ALAN C. KAY United States District Judge.

         For the reasons set forth below, the Court GRANTS Plaintiff State Farm Mutual Automobile Insurance Company’s Motion for Default Judgment or, in the Alternative, for Summary Judgment Against Defendant Iain Morris, and Summary Judgment Against Intervenor-Defendant Lawrence Scott Bucknell, ECF No. 23, and DENIES Intervenor-Defendant Lawrence Scott Bucknell’s Counter Motion for Summary Judgment on Counterclaim, ECF No. 28.

         PROCEDURAL BACKGROUND

         On December 11, 2015, Plaintiff State Farm Mutual Automobile Insurance Company (“State Farm”) filed a Complaint for Declaratory Judgment (“Complaint”) asking this Court for a declaration that State Farm has no duty to defend or indemnify Defendant Iain Morris for claims asserted against him in an underlying lawsuit brought by Intervenor-Defendant Lawrence Scott Bucknell, or for any other claims that may arise out of the subject matter of the underlying lawsuit. Complaint at 9, ECF No. 1.

         On January 22, 2016, State Farm’s counsel filed a declaration stating that a certified copy of the Complaint had been served on Morris by certified mail on January 19, 2016. ECF No. 10. Attached to the declaration was an executed receipt of service. ECF No. 10-1. Morris having failed to file a responsive pleading or otherwise defend against the Complaint, on March 7, 2016, State Farm requested that the Clerk of Court enter Morris’s default. ECF No. 15. Thus, on March 8, 2016, the Clerk of Court filed an Entry of Default against Iain Morris as to the Complaint for Declaratory Judgment. ECF No. 16.

         Meanwhile, on February 22, 2016, the Court approved a stipulation between State Farm and Bucknell permitting Bucknell to intervene in this case as a defendant. ECF No. 11. Bucknell thereafter filed an Answer to State Farm’s Complaint on March 23, 2016. ECF No. 20. Additionally, Bucknell filed a Counterclaim for Declaratory Relief (“Counterclaim”) requesting this Court to declare that State Farm must indemnify Morris for the claims asserted against him in the underlying lawsuit and any other claims that may arise out of the same. ECF No. 20-1 at 5-6. State Farm filed an Answer to Bucknell’s Counterclaim on April 12, 2016. ECF No. 22.

         On April 26, 2016, State Farm filed its Motion for Default Judgment or, in the Alternative, for Summary Judgment Against Defendant Iain Morris, and Summary Judgment Against Intervenor-Defendant Lawrence Scott Bucknell, along with a Memorandum in Support of Motion (“Pl.’s Mot.”). State Farm also filed a Concise Statement of Facts in Support of its Motion (“Pl.’s CSF”). ECF No. 24. State Farm argues that it is entitled to default judgment against Morris due to Morris’s failure to plead in response to or otherwise defend against the Complaint. Pl.’s Mot. at 1. Alternatively, State Farm argues that summary judgment is appropriate against Morris because Morris does not qualify as an “insured” under the subject car insurance policy for any of the claims asserted against him in the underlying lawsuit. Id. at 1-2. Consequently, State Farm asserts that the Court should grant summary judgment in its favor as to Bucknell because State Farm owes no duty to indemnify Morris for claims asserted against him by Bucknell in the underlying lawsuit. Id. at 2.

         On June 27, 2016, Bucknell filed an Opposition to State Farm’s Motion and a Counter Motion for Summary Judgment on Counterclaim, along with a Combined Memorandum in support thereof (“Def.’s MSJ”).[1] Bucknell also filed a Separate and Concise Statement of Facts in Support of his Motion and in Opposition to State Farm’s Motion (“Def.’s CSF”).[2] Bucknell argues that State Farm’s policy is inconsistent with Hawaii law, public policy, and the reasonable expectations of laypersons, and that the Court should therefore deny State Farm’s Motion for Summary Judgment and declare that State Farm is obligated to defend and indemnify Morris in the underlying lawsuit. Def.’s MSJ at 3-4, 13.

         On July 1, 2016, State Farm filed a combined Reply in support of its Motion and Opposition to Bucknell’s Counter Motion (“Pl.’s Reply”). ECF No. 31. Bucknell filed a Reply in support of his Counter Motion (“Def.’s Reply”) on July 11, 2016. ECF No. 34.

         The Court held a hearing regarding the Motions on July 18, 2016.

         FACTUAL BACKGROUND

         I. The Underlying Lawsuit

         On December 2, 2013, Bucknell filed a complaint against Morris in the Circuit Court of the First Circuit, State of Hawaii for injuries Bucknell allegedly sustained when a rental car Morris was driving collided with Bucknell’s motorcycle. Pl.’s CSF ¶ 1; Bucknell v. Morris, Civil No. 13-1-3140-12 VLC, Circuit Court of the First Circuit, State of Hawaii, Decl. of Counsel Ex. A, ECF No. 24-2.

         The complaint alleges that on July 22, 2013, Morris was driving a rental car in the eastbound lane of Kamehameha Highway when he attempted to execute a left turn into a parking area just as Bucknell was approaching from the opposite direction on his motorcycle. Decl. of Counsel Ex. A ¶¶ 6-10. The complaint states that Morris, in failing to yield the right-of-way to Bucknell, caused the vehicles to collide, resulting in “serious and permanent injuries to [Bucknell], including but not limited to head injury, spinal injury, internal injuries, lower leg paralysis, multiple abrasions, contusion, and lacerations.” Id. ¶¶ 11-13. Bucknell asserts that, as a result, he has incurred medical and therapeutic expenses in excess of $522, 595.50, which expenses continue to accrue. Id. ¶ 14.

         The complaint alleges two causes of action: 1) negligence and 2) punitive damages. Id. ¶ 2. Bucknell prays for special, general, and punitive damages, as well as prejudgment interest from July 22, 2013 until judgment is entered, attorney’s fees and costs, and such other relief as the court deems just and equitable. Id. ¶ 4.

         State Farm is currently providing a defense to Morris in the underlying lawsuit subject to a full reservation of rights. Pl.’s CSF ¶ 12.

         II. The Rental Transaction

         Morris entered into a rental agreement with Advantage Rent A Car (“Advantage”) for the rental of a 2012 Toyota Corolla on June 11, 2013. Id. ¶ 5. On July 22, 2013 - the date of the collision - Morris had been in possession of the rental car for 41 consecutive days. Id. ¶ 6.

         On the rental agreement Morris listed a home/business address in Hollister, California. Id. ¶ 7. Alternatively, Morris resides in Colorado Springs, Colorado. Id. ¶ 7.

         III. State Farm’s Insurance Policy

         William G. Morris and Judith A. Morris are listed as the named insureds on a State Farm Car Policy, Policy No. 147 0655-C17-06D (the “Policy”). Id. ¶ 10; Decl. of Counsel Ex. H at 2, ECF No. 24-10. William G. Morris and Judith A. Morris are Defendant Morris’s parents. See Complaint ¶ 17; Def.’s MSJ at 2. The Policy is written on Colorado Policy Form 9806B and insures a 2009 Subaru Outback. Pl.’s Mot. at 4.

         The Policy states that State Farm “will pay damages an insured becomes legally liable to pay because of . . . bodily injury to others . . . caused by an accident that involves a vehicle for which that insured is provided Liability Coverage by this policy.” Policy at 7. Relevant here, an “insured” is defined in the Policy to include “resident relatives” for “the maintenance or use of . . . a non-owned car[] or . . . a temporary substitute car.” Id. at 6. The Policy further provides:

         Non-Owned Car means a car that is in the lawful possession of you or any resident relative and that neither:

1. is owned by:

a. you;
b. any resident relative;
c. any other person who resides primarily in your household; or
d. an employer of any person described in a., b., or c. above; nor

2. has been operated by, rented by, or in the possession of:

a. you; or
b. any resident relative during any part of each of the 31 or more consecutive days immediately prior to the date of the accident or loss.

         Temporary Substitute Car means a car that is in the lawful possession of the person operating it and that:

         1. replaces your car for a short time while your car is out of use due to its:

a. breakdown;
b. repair;
c. servicing;
d. damage; or
e. theft; and
2. neither you nor the person operating it own or have registered.
If a car qualifies as both a non-owned car and a temporary substitute car, then it is considered a temporary substitute car only.
Resident Relative means a person, other than you, who resides primarily with the first person shown as a named insured on the Declarations Page and who is:
1. related to that named insured or his or her spouse by blood, marriage, or adoption, including an unmarried and unemancipated child of either who is away at school and otherwise maintains his or her primary residence with that named insured; or
2. a ward or a foster child of that named insured, his or her spouse, or a person described in 1. above.

Id. at 4-5.

         IV. Advantage ...


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