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Lumbermens Mutual Casualty Co. v. RGIS Inventory Specialists

January 21, 2009


The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge


On April 8, 2003, nonparty Robert Shore ("Shore") was walking down a snowy Connecticut highway when he was hit by a minivan driven by Defendant Robert Birardi ("Birardi") in the course of his employment with Defendant RGIS Inventory Specialists, LLC ("RGIS"). The impact of the collision threw Shore to the side of the road, and he sustained serious injuries. The minivan was owned by Defendant Camrac, doing business as Enterprise Rent-A-Car ("Camrac"). Defendants were covered under a primary insurance policy issued by United States Fidelity & Guaranty ("Primary Insurer"), as well as an excess insurance policy issued by Plaintiff Lumbermens Mutual Casualty Company ("Lumbermens") to RGIS, the policyholder.

Shore's brother and conservator, David Shore, filed suit in Connecticut state court against Defendants ("Shore Action"), and on January 30, 2008, a jury returned a verdict for Shore finding Defendants 100% liable. On February 13, 2008, following the conclusion of the damages phase of the trial, the jury returned a verdict of more than $11 million in damages. After the trial court entered judgment for Shore, Defendants filed a notice of appeal to the Connecticut state appellate court on June 6, 2008. That appeal remains pending.

On February 8, 2008, Lumbermens filed an action in this Court seeking a declaratory judgment to the effect that Defendants are not entitled to coverage under Lumbermens' Excess Policy for any of the claims in the Shore Action, on the ground that Defendants failed to give timely notice of the accident, claim or suit to Lumbermens. The parties have filed cross motions for summary judgment. For the reasons set forth below, summary judgment is granted in favor of Defendants.


The following facts are undisputed.*fn1 On April 8, 2003, the date of the accident, RGIS and Birardi were insured under a Business Automobile Liability Policy issued by RGIS's Primary Insurer ("Primary Policy"). The Primary Policy had insurance limits of $2 million. RGIS and Birardi were also insured under the Excess Commercial Catastrophic Liability Policy ("Excess Policy"), issued by Lumbermens to RGIS as the policyholder. Lumbermen's Excess Policy provides coverage for bodily injury and property damage in excess of the Primary Policy up to $25 million. Camrac was qualified as an additional insurer under both policies.

Lumbermens Excess Policy required the insureds to notify Lumbermens "as soon as practicable of an 'occurrence' or an offense whenever it appears likely it will result in a claim involving this [Excess Policy]." (McGregor Aff. Ex. B at 12 (emphasis added).) "Occurrence" is defined in pertinent part as "an accident." (Id. at 15.) Similarly, the Excess Policy required the insureds to provide written notice to Lumbermens of a "claim or 'suit' as soon as practicable whenever it appears likely that such claim or 'suit' will involve this [Excess Policy]." (Id. at 12 (emphasis added).) While "claim" is not defined, "suit" is defined in pertinent part as "a civil proceeding in which damages because of 'bodily injury,' 'property damage,' 'personal injury' or 'advertising injury' to which this [excess] insurance applies are alleged." (Id. at 16.)

Birardi, the driver of the vehicle, notified RGIS, his employer, of the accident at 8:30 a.m. on April 8, 2003, within a few hours after the accident. By 8:50 a.m., RGIS reported the incident to its Primary Insurer and Gallagher Bassett Services, Inc. ("Gallagher Bassett"), the third-party administrator for the Primary Insurer. RGIS notified Camrac of the accident later in the day on April 8, 2003. By April 15, 2003, RGIS, Camrac and Birardi were aware that Shore was in critical condition. Birardi received a letter of representation from Shore's counsel on or about April 21, 2003, concerning Shore's intent to pursue a claim, which Birardi facsimiled to RGIS on April 25, 2003. Elco Administrative services ("Elco"), Camrac's claims administrator, received a letter of representation from Shore's counsel on or about April 23, 2003. Elco's May 23, 2003 excess claim report states that Shore was paralyzed on one side, on life support and would have permanent physical deficits. RGIS received a brief overview of Shore's injuries on May 8, 2003.

The Primary Insurer retained Cella, Flanagan & Weber, P.C. ("Cella") to provide Defendants with an assessment of the potential value of Shore's claim and thereafter to defend Defendants in the Shore Action.

On May 11, 2003, a Middlebury, Connecticut Police Officer, Anthony Quicquaro, who witnessed the accident while he was on patrol, submitted an official Accident Report. His report stated that

[i]n the course of the investigation, this officer interviewed . . . snow plow operators [who] were acting in that capacity that morning. All 3 had seen Shore walking west . . . in the hour preceding the accident. . . . According to the snow plow operators, he was seen, at times, walking in 'the middle of the road.' When he saw (or heard) a vehicle approaching, he would then step off to the side.

As this officer [Officer Quicquaro] was traveling westbound he observed Shore walking. Shore was walking in the bare pavement (plowed) portion of the roadway. . . .

The snow had fallen throughout the previous evening. The middle of the roadway was scraped down to bare pavement approximately 1 plow blade wide (12 feet) on the eastbound side of the double yellow line. When this officer observed Shore, he was walking on the part of the pavement that had been scraped clean. When this officer and Sgt. Williams examined the scene, there were no footprints or any other impressions which would lead to the conclusion that Shore could have been walking elsewhere besides the paved portion. . . .

Final Analysis: Primary responsibility rested on Shore who should have been walking as far to the side of the roadway as possible. Because of the snow on the side of the roadway, the bare pavement section of the roadway was restricted to approximately 7 -- 7.5 feet. . . . [T]here left very little room for safe passage. Shore chose to walk on the bare pavement. As a result, the minivan struck Shore while the van was still operating within all legal parameters. This officer personally witnessed the collision and saw that the minivan did not have enough reaction time to perform any type of evasive maneuver. In conclusion, Shore was in violation of [Connecticut General Statutes] 53-182, Reckless Use of the Highway by a Pedestrian. (Weber Aff. Ex. 1 (emphasis added).)

The complaint against Defendants in the Shore Action, filed February 10, 2005, alleged that Shore sustained grave injuries as a result of the accident, including severe and massive head trauma resulting in a comatose state and prolonged unconsciousness, intestinal injuries, pneumonia and infection, closed fracture of second and third cervical vertebra, missing and damaged teeth, compound fracture of left clavicle, neurological impairment and impairment and/or loss of comprehension and cognitive abilities. (Ritzert Aff. Ex. 1.)

On June 15, 2005, Cella and Gallagher Bassett received a copy of Shore's Life Care Plan, which estimated Shore's continued medical and future damages to be approximately $3.7 million, as of about June 15, 2005. A mediation conference took place on June 21, 2007, and Shore's counsel made two settlement demands: $9.5 million and $7.5 million. Cella made two settlement offers: $50,000 and $100,000. The parties did not reach a settlement.

Defendants gave their first notice to Lumbermens of the occurrence, claim and suit on January 14, 2008, the day before jury selection began on January 15. The trial was bifurcated, and following the completion of the liability phase on January 30, 2008, the jury found that Birardi was 100% responsible for the accident. On February 13, 2008, following the conclusion of the damages phase of the trial, the jury returned its verdict totaling $11,131,539.85 ($6,850,000 for non-economic damages and $4,281,539.85 for economic damages). On or about May 28, 2008, RGIS's post-trial motion to set aside the jury's verdict was denied by the ...

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