On September 12, 2019, a federal court judge decided a case over whether a commercial auto policy applied to bodily injury claims arising out of a husband allegedly “borrowing” his wife’s motor vehicle while she was a passenger in the vehicle at the time of a serious accident. In the case, NGM Insurance Company v. Marc Pillsbury et al. the judge, Timothy S. Hillman, ruled that to “borrow” a vehicle the driver must receive the vehicle with an intent to return it and with the owner relinquishing control. As a result of the decision, the $1,000,000 policy limit of the commercial auto policy will not apply to the following loss.
The facts surrounding a tragic accident in Spencer
About 10:30 PM on August 3, 2013, Thomas Mansfield (58) (Mr. Mansfield) was operating his Harley-Davidson motorcycle on Meadow Road in Spencer. He had his wife, Jane Mansfield (54) (Mrs. Mansfield) as a passenger on the back of the motorcycle.[pullquote]In the case, NGM Insurance Company v. Marc Pillsbury et al. the judge, Timothy S. Hillman, ruled that to “borrow” a vehicle the driver must receive the vehicle with an intent to return it and with the owner relinquishing control.[/pullquote]
At the same time, Marc Pillsbury (41) (Mr. Pillsbury) was driving a Ford Flex SUV traveling eastbound on Smithville Road. The registered owner of the Ford Flex, Mr. Pillsbury’s wife, Jennifer (Mrs. Pillsbury) was a passenger in the car. Mr. and Mrs. Pillsbury were returning from a wedding at Zukas Hilltop Barn in Spencer. At the wedding, Mr. Spenser had drunk an undetermined amount of alcohol before he got behind the wheel of the Ford Flex.
At the intersection of Meadow Road and Smithville Road, there was a traffic control sign requiring vehicles traveling on Smithville Road to stop. Mr. Pillsbury did not stop, according to a witness. Instead, he drove through the stop sign and struck the Mansfield motorcycle killing Mr. Mansfield and causing Mrs. Mansfield serious injuries.
Mr. Pillsbury’s breathalyzer test at the accident showed an impairment reading of .07, two percentage points over the legal limit.
After an investigation, the police charged Mr. Pillsbury with motor vehicle homicide, motor vehicle homicide-negligent driving, negligent driving, drunken driving causing serious bodily injury, driving under the influence and failing to stop for a stop sign. At trial, a judge found Mr. Pillsbury guilty of negligent operation of a motor vehicle and failure to stop at a stop sign. The judge sentenced Mr. Pillsbury to probation for two years and a one-year loss of license.
The judge based his not guilty finding on the other charges based on a video reconstruction of the crash having shown how difficult it was to see the stop sign at the Smithville and Meadow intersection.
Mrs. Mansfield and the estate of Mr. Mansfield’s damage claims
The Ford Flex Mr. Pillsbury was driving had a liability policy with Commerce Insurance with a primary limit of $100,000 per person.
Mrs. Mansfield’s claim far exceeded the Commerce limit. In the accident, she suffered a broken neck, fractured hip, fractured shoulder, legs, and arm. Her initial medical and rehabilitation expenses as of five months after the accident were more than $413,000.00 with further treatment scheduled.
Mr. Mansfield’s estate had a separated statutory wrongful death claim against Mr. Pillsbury that also exceeded Commerce’s coverage.
Commerce offered to pay the policy limits of $100,000.00 in consideration of of a release of Marc and Jennifer Pillsbury and Commerce Insurance. Mrs. Mansfield requested Commerce obtain an affidavit of coverage from Marc Pillsbury detailing his knowledge of any additional insurance coverage available. Commerce provided an “Affidavit of Excess or Umbrella Insurance.” The Affidavit stated, “Jennifer Pillsbury/Marc Pillsbury on the date of the accident had an excess and/or umbrella insurance policy with NGM Insurance, Policy Number MIT5266D.”
Mrs. Mansfield advised NGM of her claim against Mr. Pillsbury. NGM acknowledged the claim and confirmed a policy with a bodily injury limit of $1,000,000.00 with a named insured, Mark Pillsbury. Also, NGM indicated they were investigating the claim and coverage.
On March 25, 2014, NGM denied coverage because the vehicle involved [the Ford Flex] “was not an insured vehicle …nor would it be covered under [Mr. Pillsbury’s] commercial policy.
State court bodily injury and wrongful death suits
On July 13, 2015, Mrs. Mansfield filed a lawsuit against Mr. and Mrs. Pillsbury, the estate of her husband, the town of Spenser, Liberty Mutual, and NGM. The suits again the first four defendants alleged negligence in causing her injuries. The suits against the insurers alleged unfair claim practices in failing to pay her claim with Liberty Mutual having the insurance on her husband’s motorcycle and NGM the commercial auto policy in Mr. Mansfield’s name.
The same day, July 13, 2015, the estate of Mr. Mansfield filed a suit wrongful death suit against the Town of Spenser arising out of the placement of the stop sign and an unfair claim suit against NGM arising out of its denial of coverage under Mr. Pillsbury’s commercial auto policy.
NGM files in federal court for a declaration of rights and obligations under its auto policy
On December 17, 2017, NGM filed a declaratory judgment in the United States District Court in Worcester seeking a court declaration of its rights, duties, and status under its $1,000,000 commercial auto policy with Mr. Pillsbury as its named insured. NGM suit named as defendants Mr. and Mrs. Pillsbury and Mrs. Mansfield and the estate of Mr. Mansfield.
Mrs. Mansfield and the estate of Mr. Mansfield answered the lawsuit, but Mr. and Mrs. Pillsbury did not answer, and the court defaulted them.
The suit focused on whether Mr. Pillsbury’s use of his wife’s Ford Flex could in any way have brought that vehicle within the NGM policy’s definition of a covered auto.
The autos covered under the policy were those described under Symbols 7, 8, and 9 of the policy’s Business Auto Coverage Form.
- Symbol 7 only applied to those “autos” described in the policy declarations with a premium charge is shown.
- Symbol 8 applied to “Hired Autos,” which were “Only those autos you lease, hire, rent or borrow. This does not include any auto you lease, hire, rent or borrow from any of your employees, partners (if you are a partnership), members (if you are a limited liability company) or members of their households.”
- Symbol 9 extended coverage to “Non-owned Autos” which meant “Only those autos you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes autos owned by your employees, partners (if you are a partnership), members (if you are a limited liability company) or members of their households but only while used in your business or your personal affairs.”
Mrs. Mansfield argued the Ford Flex was, at the time of the accident, being borrowed by Mr. Pillsbury from his wife based on his deposition testimony.
The term “borrowed” in the policy is undefined
Both parties agreed to disagree over the term “borrowed.” They did both agree that the policy did not define the word and that the court had to look to the common meaning of the word. However, beyond that, there was no agreement. Mrs. Mansfield argued that:[pullquote]Both parties agreed to disagree over the term “borrowed. They did both agree that the policy did not define the word and that the court had to look to the common meaning of the word.”[/pullquote]
Because Mr. Pillsbury was in full control of the direction and operation of the Ford Flex on the night of loss, and routinely in the past, he was “borrowing” the ford flex and coverage should be found under Symbol 8 of the policy.
In opposition, NGM argued that:
In this case, Mr. Pillsbury was not “borrowing” the Ford Flex as he did not take possession of the auto. Mr. Pillsbury was driving a vehicle which belonged to Mrs. Pillsbury, who was a passenger in the auto…Therefore, Mr. Pillsbury cannot be said to be actually exercising the requisite dominion and control over the Ford Flex, as its actual titled and registered owner was occupying and possessing it.”
The judge finds Mr. Pillsbury did not “borrow” his wife’s vehicle
After conducting depositions of Mr. and Mrs. Pillsbury, NGM moved for summary judgment. Based upon Mrs. Mansfield and the estate not properly contravening NGM’s required statement of undisputed facts, the judge accepted for purposes of the decision, the statement of facts filed by NGM.
The judge first focused on the non-business aspects of Mr. Pillsbury’s use of the Ford Flex on the night of the accident.
On the night of the accident, Mr. Pillsbury was a self-employed sign installer and drove a 2012 Nissan which NGM insured for him under a commercial auto policy.
He attended the wedding with his wife and would not have attended otherwise. At the wedding, there were approximately one hundred people, of which he knew “five or six.” He had never done any business with those five or six people and never had any business relationship with the bride or groom. Also, he did not see anyone at the wedding that he interacted with through the course of any prior employment. He had no business purposes in attending the wedding, and he was not operating the Ford Flex in connection with his business or employment.
Also, the facts accepted by the judge were that Mr. Pillsbury never rented or leased the Ford Flex from his wife, never hired the vehicle to do any work for his company and had no recollection of Mrs. Pillsbury ever using her Ford Flex to run any company errands. Mr. Pillsbury rarely used the Ford Flex, but when he did so, he would not use it for company business. Mr. Pillsbury’s business never gave Mrs. Pillsbury any money in exchange for the use of the Ford Flex.
The judge then focused on NGM’s position that it has no duty to defend or indemnify Mr. Pillsbury in the underlying state court actions because there was no coverage for the Ford Flex under the policy because it:
(1) was not expressly listed as a “covered auto” under the Policy;
(2) was not a vehicle that was “hired” by Mr. Pillsbury since he did not rent, lease or borrow it: and
(3) was not a vehicle which Mr. Pillsbury used in his business.
The judge noted that NGM argued that Mr. Pillsbury did not “borrow” the Ford Flex from Mrs. Pillsbury because, under the common meaning of the word “borrow” did not apply to the vehicle because Mr. Pillsbury’s wife, who was a passenger in the car and its owner, maintained control over the vehicle.
Although the judge did not find any cases “defining the term ‘borrow’ under similar circumstances,” he did agree with NGM that:
Many courts also hold that in the context of ‘automobile lending,’ the term ‘borrow … requires that the borrower acquire substantial possession, dominion, control, or the right to direct the use of the vehicle, and not merely that the use of the vehicle by another person redound by chance to the benefit of a purported borrower.’” (Emphasis in original).
The judge then concluded that Mr. Pillsbury did not “borrow” his wife’s car. He ruled, “More specifically, Mr. Pillsbury never ‘received’ his wife’s car with an intent to return it because she never relinquished the vehicle to him. Accordingly, the underlying allegations are not ‘reasonably susceptible’ of an interpretation that asserts a claim [that NGM must defend].”
Final order defers on duty to indemnify pending resolution of state court actions
The final order of the judge allowed NGM’s summary judgment request that the court rule that it had no duty to defend Mr. Pillsbury in the suit by Mrs. Mansfield. However, the judge noted that under Massachusetts law, although a finding of no duty to defend generally “negates a duty to indemnify,” a final decision on a duty to indemnify must await until the underlying action has terminated.
Accordingly, he found that “it is not clear whether NGM’s request for a declaratory judgment regarding that matter is ripe for adjudication” and postponed any decision until November to await the underlying suit resolving.
Based on the judge’s decision on NGM having no duty to indemnify, the deferment is strictly a matter of proper court procedure in resolving all open issues.