Have you ever ridden in one of the ubiquitous pedicabs operating all around Boston during the Spring and Summer? I have and enjoyed the ride. However, I am not sure I will do so again unless the pedicab can show an insurance certificate for auto accidents.
A July 2, 2019 decision by Judge David Saylor in federal district court ruled on whether a pedicab’s insurance policy involving a pedicab company in a suit by injured passengers arising out on auto accident. The Decision Atain Specialty Insurance Co. v. Boston Rickshaw LLC, Dennis Suozzi, Laura Gentry Reagan. and Robert Reagan may also give you pause before contemplating a pedicab in Boston’ traffic.
No requirement in Boston for Pedicabs to have insurance
Since 2007, the Boston Police Hackney Carriage Unit has been charged with licensing pedicabs within the city. Even though this unit’s primary function is to regulate taxicabs, there have been several pedicabs that have sprung up as businesses, thereby requiring some form of regulation.
As of today, the regulations are minimal; registration of a pedicab and a designation of the area in which the pedicab will operate. Any operator of a pedicab must also have a valid drivers’ license.
The Boston Police regulations, as they stand, have no current requirement for liability insurance, including any insurance covering a potential auto accident.
The Reagans’ pedicab accident with a driver who did not stop
The instant case involved a September 8, 2013 collision on Charles Street in Boston. According to court documents, while riding down the historic street in a pedicab, owned and operated by the Boston Rickshaw LLC, the couple suffered injuries from an accident their pedicab was involved in. Dennis Suozzi, an employee and subsequent manager and co-owner of the company was the operator of the pedicab involved.
During the ride, Mr. Suozzi apparently changed lanes on the street without looking to see whether the new lane was unoccupied or not. According to the Reagans, the lane was not free of cars, with Mr. Suozzi segueing into the new lane without looking and without signaling properly. As a result of his actions, the vehicle in the new lane “struck the rear of the pedicab”. Neither the owner nor the vehicle involved in the pedicab accident was identified in the court documents.
Almost three years later, on August 30, 2016, the Reagans filed a complaint against both Boston Rickshaw and Dennis Suozzi in Suffolk Superior Court alleging that they suffered serious injuries as a result of the collision caused by Mr. Suozzi’s handling of the pedicab.
Boston Rickshaw’s insurer, Atain Specialty Insurance, defended the lawsuit on behalf of its insureds under a full reservation of right for a year-and-half.
A look at the policy Boston Rickshaw bought from excess and surplus insurer Atain Specialty Insurance
At the center of the litigation between the pedicab company and the Reagans is the insurance coverage the pedicab company had obtained for its business. Boston Rickshaw purchased the excess and surplus policy from a local agent that markets coverage for pedicabs.
The policy defined an “auto” as either “[a] land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment” or “[a]ny other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged.”
However, the policy also had a lengthy amended endorsement titled “Amendment – Aircraft, Auto or Watercraft Exclusion,”
This endorsement stated: “This insurance does not apply to:
* * *
“Bodily injury” or “property damage” arising out of or in connection with any “auto” unless as outlined below; or
The “loading or unloading” of any aircraft, “auto” or watercraft by any insured.
This exclusion applies to “bodily injury” or “property damage” arising out of any aircraft, “auto” or watercraft, whether or not owned, maintained, used, rented, leased, hired, loaned, borrowed or entrusted to others or provided to another by any insured.
This exclusion applies even if the claims allege negligence or other wrongdoing in the supervision, hiring, employment, entrustment, permitting, training, or monitoring of others by an insured.
This exclusion applies even if the claims against any insured allege direct or vicarious liability.
Atain files a declaratory judgment to seek a ruling that the policy’s auto exclusion bars coverage
On March 20, 2018, while the Reagans’ personal injury suit was still pending, Atain filed a declaratory judgment in the United States District Court based upon diversity jurisdiction. It claimed that diversity jurisdiction was warranted since the defendants involved were from different states, and the matter in contention involved a claim in excess of $75,000.00.
Atain moves for judgment on the pleadings based on the language of the auto exclusion
The Reagans attempted to defer any decision regarding the determination of the case for coverage under the policy until the underlying lawsuit in Superior Court was resolved.
The federal court, however, elected to go forward because the case involved Atain having a potential duty to defend. The rule is that in the first instance if the court finds there is no duty to defend, as a logical consequence, the insurer has no obligation to indemnify. The particular exclusion in question and of central interest to the federal judge was whether the Reagans suffered a bodily injury “arising out of… any auto.”
In making its determination with respect to this question, the federal court reiterated pertinent Massachusetts case law stating that the interpretation of an unambiguous insurance contract is generally a question of law. It requires the courts to construe the words of the policy according to the fair meaning of the language employed and to apply it to the particular subject matter of the complaint. If the court finds that the words of the insurance contract are plain and free from any ambiguity, the court is then bound to construe them in their usual and ordinary course.
Turning to the facts of the present case, the federal court stated that Atain Insurance would have a duty to defend its insureds, if the allegations in the underlying lawsuit brought by the Reagans in Suffolk Superior Court, had any reasonable interpretation of the claims that might be covered under the policy.
The court also opined that the exclusions ought to be construed narrowly, and the insurer bears the burden of establishing that an exclusion, in fact, applies.
The phrase “arising out of” must be read expansively, the court rules
Under Massachusetts law, the language in the exclusion “arising out of” suggests causation that is analogous to “but for.” When used in an insurance exclusionary provision, it requires the examining court to determine whether the exclusion inquires whether there would have been personal injuries and a basis for the plaintiff’s suit in the absence of the objectionable underlying conduct.
Here, the court found that the amended exclusion appeared to apply to the Reagans’ alleged injuries because the injuries arose directly out of the operation of the automobile. Although the automobile did not stop and was unidentified throughout the case, the court did not address that issue, rationalizing that the accident would not have occurred, “but for” the collision.
Continuing with the same logic, the court noted that the alleged damages or injuries to the Reagans also would not have occurred, “but for” the collision between the motor vehicle, and the pedicab in which the Reagans were riding.
The court says prior decision finding exclusion does not apply
Ultimately, in this case, the court determined the policy language, in question with regards to the exclusion, was only susceptible to one rational interpretation.
The judge determined that in order to have the exclusion not apply, the court would have to add words to the policy and change the meaning of the exclusion. Based upon the language of the exclusion, the Court reasoned that the only rational interpretation was that the exclusion excluded coverage for injuries arising from an auto.
Furthermore, it did not matter that Boston Rickshaw did not own, use, or maintain the auto involved in the accident.
Of note, the Atain Insurance policy’s exclusion language has been the subject of a reported Missouri federal district case finding the exclusion did not apply.
In the Missouri case, the court concluded that a lay-person could reasonably have thought that the auto exclusion only excluded coverage for injuries arising out of an auto somehow connected to the insured. The federal appeals court for the Missouri circuit affirmed the district court’s decision on appeal.
The district judge in Massachusetts distinguished his decision by stating it was decided under Missouri law. Under Massachusetts law, that a lay-person or insured could reasonably think or expect what an exclusion barred cannot apply until a judge has found the policy language ambiguous. When the plain language of an exclusion unambiguously excludes coverages as the judge determined here, the rule of the reasonable expectations of the insured has no application.
The judge then found that the allegations in the underlying lawsuit were not “susceptible to an interpretation that stated a claim covered by the policy.”
As a result, the court found that Atain had no duty to defend either Boston Rickshaw or Dennis Suozzi, nor indemnify them, because the Reagans’ injuries “arose out of an auto and the exclusion applied to the claim.”