Blake v. Nationwide Insurance Co., No. 120-3-03 Wmc v (Carroll, J., Jan. 13, 2005)

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STATE OF VERMONT WINDHAM COUNTY, SS. CLIFTON BLAKE, Plaintiff,

v. WINDHAM SUPERIOR COURT DOCKET NO. 120-3-03 Wmcv NATIONWIDE INSURANCE CO., Defendant.

ORDERS ON MOTION FOR SUMMARY JUDGEMENT, MOTION TO E NFORCE

JUDGMENT AND MOTION TO RECONSIDER

Plaintiff Clifton Blake was seriously injured in a n automobile accident on a public highway for which, in a previous law suit, he recei ved a default judgment against Clifford Riddle, the automobile driver. At the time of the accident, both Blake and Riddle were employees of Donald Harlow d/b/a Harlow’s Sugar Hou se and Blake is currently receiving workers’ compensation benefits for his injuries. I n this action, Blake seeks to enforce the default judgment against Defendant Nationwide, Harlow’s aut omobile insurer, on account of Riddle’s insolvency. Nationwide moves for summary judgment asserting that coverage is barred by applicable employment-related exclusions in Harlow’ s policy. Concluding that it cannot

determine as a matter of law whether those exclusio ns apply, the Court DENIES Nationwide’smotion. Blake moves for the second time to enforce judgment. Because the facts related to

Nationwide’s defense remain disputed and because Ri ddle’s insolvency has not yet been established beyond dispute, as well as those reason s previously applied to Plaintiff’s first motion to enforce, the Court again DENIES the Motion to Enforce Judgment. At the commencement of this litigation, Nationwide moved to dismiss for failure to state a claim for relief. In a September 4, 2003 Order d enying the motion, the Court determined that Blake had standing to enforce the underlying judgme nt against Nationwide up to the amount of the policy limits so long as he was able to establi sh that Riddle is insolvent. It also determined,

based on a failure of communication between Blake a nd Nationwide regarding Blake’s initial dispute of Nationwide’s decision not to provide cov erage, that Nationwide was not estopped from raising a defense to the instant claim based o n the employment related exclusions in Harlow’s policy. To the extent that Blake had cla imed a right to damages for Nationwide’s alleged bad faith in refusing to defend Riddle, the Court found no applicable cause of action. Nationwide’s Motion for Summary Judgment Summary judgment is appropriate if, viewing the ev idence favorably to the non-moving party and giving it the benefit of all reasonable d oubts and inferences, the Court determines that there are no genuine questions of material fact and the moving party is entitled to judgment as a matter of law. See Select Designs, Ltd. v. Union M ut. Fire Ins. Co. , 165 Vt. 69, 72 (1996). In the instant M (5) It [the Nationwide Policy] does not cover bodil y injury to others for which any insured may be held liable under a workmen’s compen sation, unemployment compensation, disability benefits or similar law. (6) It does not cover bodily injury to an employee of any insured, while the employee is engaged in activities of employment. H owever, it does cover any occurrence involving a household employee who is no t covered or is not required to be covered by any workmen’s compensation law.3

According to Nationwide it is undisputed both that Blake’s injuries were compensable under Vermont’s worker’s compensation scheme and that Bla ke was engaged in activities of his employment for Harlow when the accident occurred. While the Court agrees that Nationwide would be entitled to judgment as a matter of law if these facts were undisputed and that there is evidence to support both factual conclusions, givin g Blake the benefit of reasonable doubt and inferences the Court does not agree that the factua l issues are beyond dispute. Although Plaintiff concedes that he is receiving w orkers’ compensation benefits for the injuries incurred in the automobile accident there is no indication that those benefits were the result of any contested process. Pursuant to 21 V. S.A. § 662, an employer may enter into an agreement with an injured employee with regard to c ompensation that represents a compromise

of interests. Id . (“[A] compromise agreement may be approved by the commissioner when h is clearly of the opinion that the best interests of s uch employee or such dependents will be served thereby.”) 1 As this section makes clear, an employer who has a viable defense to liability might, in its own self-interest elect to settle a w orker’s compensation claim rather than face litigation. Since a contract is the drafting prod uct of the insurer, its provisions are construed most strongly against the company in questionable c ases. American Fidelity v. Elkins , 125 Vt. 313, 315 (1965). Because of its drafting, section (5) depends on an insured’s liability rather than the insured’s voluntary decision to settle a claim. Had it wished, Nationwide’s policy could have expressly excluded coverage not only in situations where any insured was liable but also in

1 The Court acknowledges that Plaintiff has not produ ced any evidence that workers’ compensation benefits in his case were the result o f a negotiated settlement. Nor has Defendant,4

situations where any insured agreed to accept a fi nancial settlement without admitting liability. Given this drafting omission, Plaintiff has the opp ortunity to dispute the fact of Harlow’s liability in this proceeding. In prior pleadings, Blake raised two issues which his employer might have invoked to contest liability. See Plaintiff’s Reply to Defendant’s Opposition to Moti on to Compel , filed

7/2/04 . The first issue concerns the possible role of al cohol consumption in the accident and is presumably based on 21 V.S.A. § 649. 2 As the Court interprets this statute only to bar workers’ compensation recovery to an employee who was injure d by or during his own alcohol consumption and there is only evidence that Riddle may have been drinking before the accident occurred, no reasonable inference of viable defens e is raised by this issue. The second possible defense for Harlow’s liability depends on 21 V.S.A. § 618, in which workers’ compensation is limited to accidents “aris ing out of and in the course of employment” under what Blake has termed a “coming and going” ex clusion. Assuming for lack of explanation that this invokes the premises rule adopted in Mill er v. IBM Corp. , 161 Vt. 213, 216 (1993), limiting liability for commuting injuries to those occurring within the physical area of an employer’s control, the Court acknowledges that nei ther party has attempted to resolve what Blake and Riddle were doing when the accident occur red. Until this fact is undisputed, Harlow’s workers’ compensation liability remains uncertain. Similarly, with regard to Nationwide’s claim that Plaintiff admits he was engaged in activities of employment at the time of accident, t here is merely evidence but not a undisputed

who bears the burden of proving that the exclusion is applicable, introduced proof that it was not.5 2 Plaintiff’s effort to explain possible defenses did not include any legal citations.6

fact. In all the citations to the record which Na tionwide has brought to the Court’s attention, Plaintiff only goes so far as to admit that both he and Riddle were employed by Harlow at the relevant time. To equate this admission with a fin ding that the exclusionary language quoted above in section (6) applied, the Court would have to conclude that an employee is at all times during their period of employment engaged in the ac tivities of employment. Clearly this cannot be the case. The intent of section (6), like 21 V. S.A. § 618, is to delineate work related injuries from those which merely befall one who is employed. Plaintiff’s admissions only reach the fact of employment but do not concede the substance of B lake’s engagement at the time of injury. As explained above, at this time there are insuffic ient facts available from which the Court can conclude whether Blake was engaged in the activitie s of his employment or whether he was otherwise occupied. Therefore, the Court concludes that Nationwide has not yet established that coverage is excluded under policy terms nor that it is entitled to judgment as a matter of law.

Blake’s Motion to Enforce Blake filed its second Motion to Enforce Judgment as part of his opposition to Nationwide’s Motion for Summary Judgment. A review of Blake’s memorandum reveals that it fails to raise any substantive legal arguments whic h were not already raised and rejected in the Court’s September 4 th Order. Moreover, it represents what can better be described as a Cross Motion for Summary Judgment. As the Court has alre ady determined the presence of material, factual disputes central to Nationwide’s defense an d in light of Plaintiff’s concession that Riddle’s solvency has yet to be resolved as a quest ion of fact, the motion cannot be granted.

Motion for Reconsideration7

The Court previously ordered that Nationwide produ ce for inspection its file relating to

the instant claim. The Court made this order in re liance on Nationwide’s prior agreement to produce the materials. However, now that the Court has been able to more clearly determine the pending issues in this case, after a review of the filings relating to Nationwide’s Motion for Summary Judgment, the Court will reconsider this or der and not require Nationwide to produce

the files. Judge Wesley’s previous order has narrowed the iss ues in this case. He determined that Plaintiff had no applicable cause of action against Nationwide based upon alleged bad faith in refusing to defend Riddle. Judge Wesley further de lineated the issue in this case was whether the employment related exclusion applied to Plainti ff’s claim. Further production of Nationwide’s files would not be relevant nor lead to relevant material, given that the sole issue left to be reso lved in this case is the scope of employment of

Plaintiff at the time of the accident and whether t he exclusion in the insurance policy applies. Nationwide’s motives in denying the claim are not a t issue. Therefore, the Court reconsiders its previous order and denies the Motion to Compel file d by Plaintiff.

ORDER Nationwide’s Motion for Summary Judgment is DENIED

. Blake’s Motion to Enforce Judgment is DENIED

. Nationwide’s Motion for Reconsideration is GRANTED. Dated at Brattleboro, Vermont, this ___ day of Jan uary, 2004.

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Karen R. Carroll Presiding Judge