United States District Court, D. Rhode Island
MEMORANDUM AND ORDER
MARY M. LISI, Senior District Judge.
The Plaintiff, Joseph Arruda ("Arruda") seeks a declaration that the automobile insurance policy issued to him by Defendant United Financial Casualty Company ("United") (1) had not been canceled prior to October 18, 2014; (2) was in effect on that date; and that (3) United must provide coverage for a motor vehicle accident loss that occurred on October 18, 2014.
Both parties have moved for summary judgment. For the reasons set forth below, Arruda's motion for summary judgment is denied and United's motion for summary judgment is granted.
Arruda owns and operates Allied Investments, Inc. ("Allied"), a real estate business that owns and manages rental properties. ASF ¶ 1. Arruda exclusively makes insurance decisions for Allied and also for his personal insurance needs. ASF ¶ 5. For the past ten years, Arruda's insurance agent for all of his and Allied's insurance needs has been Dave Herbst ("Herbst"), the owner of Burns & Cotter, a general insurance agent that places insurance with a number of carriers. ASF ¶¶ 6, 7. During that time, Arruda obtained insurance coverage with limits of $1, 000, 000 on vehicles owned by himself and by Allied. ASF ¶ 8.
Prior to October 9, 2014, Arruda had purchased two commercial insurance policies:
(1) the "Travelers Policy, " issued by Travelers Insurance company, effective June 25, 2014 to June 25, 2015, naming Allied as the insured, and providing $1, 000, 000 in coverage for a 2010 Chevrolet Silverado owned by Allied and driven by Arruda's nephew Michael, who owns 7% of Allied; and
(2) the "Progressive Policy, " issued by United, effective February 15, 2014 to February 15, 2015, naming Arruda as the insured and providing $1, 000, 000 in coverage for a 2011 Toyota Tacoma (the "Toyota") driven by Arruda. ASF ¶¶ 9-12.
In early October 2014, Herbst learned that the Toyota was owned by Allied, not by Arruda. Concerned that the Toyota might not be validly covered, Deb Kenney ("Kenney"), a Burns & Cotter customer representative, added the Toyota to the Travelers Policy. ASF ¶¶ 22-25. It is undisputed that Arruda, who had repeatedly expressed his displeasure at high premium costs, approved the change from the Progressive Policy to the Travelers Policy, which resulted in a significantly lower premium at the same or better coverage level. ASF ¶¶ 25-27. The Travelers Policy coverage for the Toyota was effective as of October 9, 2014 and included Arruda as a named driver. ASF ¶¶ 25.
It is undisputed that Arruda understood that "with the change in coverage from the Progressive Policy to the Travelers Policy, the Progressive Policy would go away and there would no longer be a Progressive Policy." ASF ¶¶ 28. Likewise, it is undisputed that Arruda did not intend to have two polices for the Toyota and did not intend to pay two premiums for two policies for the Toyota;" rather, he "intended to have one policy and pay one premium." ASF ¶¶ 28, 29.
After binding coverage for the Toyota on the Travelers Policy, Kenney did not notify Progressive of the cancellation of the Progressive Policy on that date. ASF ¶ 30. It was Burns & Cotter's business practice to wait until it received written confirmation of the new coverage before notifying the prior carrier of the cancellation. Id.
On October 18, 2014, Arruda was involved in a motor vehicle accident (the "Accident") while driving the Toyota; Arruda reported the accident to Progressive directly. ASF ¶¶ 37, 38.
On October 20, 2014, Burns & Cotter prepared an Automobile Loss Notice regarding the Accident, which it sent to Travelers. ASF ¶¶ 37. On the same date, Burns & Cotter received confirmation that the Toyota had been added to the Travelers Policy. ASF ¶ 31.
The following day, Kenney prepared a Cancellation Request/Policy Release ("Form 35"), advising Progressive that coverage under the Progressive Policy had been "rewritten" with Travelers effective October 9, 2014. ASF ¶¶ 31, 32. Kenney also informed ...