Opinion ID: 202449
Heading Depth: 2
Heading Rank: 3

Heading: The evidence of mutual mistake

Text: 18 The parties have both asserted that the facts are undisputed, and Travelers has offered no evidence beyond the policy language concerning the intent of OneBeacon and LAI at the time they entered into that agreement. Consequently, in reviewing the grant of summary judgment for Travelers, our inquiry must focus on whether the court properly concluded that the undisputed facts on intent presented by OneBeacon were insufficient to establish full, clear, and decisive proof of mistake, Polaroid, 610 N.E.2d at 917; in other words, given the undisputed facts, did the district court err in concluding that OneBeacon fell short of meeting the legal standard for reformation? 19 OneBeacon submitted various forms of evidence, including affidavits, the Agreement for Judgment, and lease documents that reflected the course of conduct between LAI and its lessees. Together, they paint a consistent picture showing that LAI intended to shift responsibility for liability coverage on its vehicles to the long-term lessees of those vehicles and that OneBeacon also operated on the assumption that it provided such coverage only when a lessee individually applied and was approved. 20 Paragraph 12 of LAI's standard lease agreement, labeled Insurance, states that Lessee shall at its sole cost keep each vehicle insured against liability for bodily injury, death and property damage. The provision then goes on to set minimum coverage limits and to require that LAI be named as an additional insured and the first loss payee, and that the coverage be with insurers acceptable to LAI. Paragraph 12 also addresses the option of obtaining insurance through LAI, at Lessor's sole discretion. If insurance is so provided, the lessee must agree to pay the premium as may from time to time be established by Lessor as Additional Rent. The record also contains a document entitled Lease Supplement—Insurance, which states that the lessor will obtain insurance coverage only for specifically identified vehicles and that the monthly rent payable under the lease may be increased in the sole discretion of the lessor to cover a premium increase. 21 The logical inference from these documents—that insurance under LAI's OneBeacon policy was limited to lessees who chose that option and paid for it—is reinforced by affidavits from the vice chairman of the insurance brokerage that handled LAI's coverage, Jane Calley, and from a OneBeacon underwriter, William Keen. Calley explained in detail the process by which LAI lessees obtained insurance under the OneBeacon policy by applying through her company, Brewer & Lord, and a copy of the application was attached to her affidavit. She reported that none of the application procedures had been followed by Capform, and she stated unequivocally that no coverage was afforded if the lessee did not apply for insurance, meet the underwriting criteria and receive acceptance into the LAI Insurance Program. 22 To be approved for coverage, a lessee was required to provide Brewer & Lord with information on the driver or drivers and the vehicle to be insured, and the broker would check driving records and review vehicle-type information. Approved vehicles would be included on lists that LAI provided monthly to Brewer & Lord, and which were then submitted to OneBeacon with premium calculations. Calley said it was her understanding that lessees were required to complete the lease supplement if approved for coverage under the OneBeacon policy. She further averred that OneBeacon and LAI 23 did not intend that the . . . policies would afford coverage to lessees under long-term lease agreements where the lessee did not apply for such coverage under the LAI Insurance Program, did not meet [OneBeacon's] underwriting criteria and where the lessee was not accepted for coverage and did not pay a premium for the coverage. 24 Keen's much briefer affidavit repeated Calley's assertion that Capform did not apply for coverage through OneBeacon and also reiterated that, when the relevant policy was issued, OneBeacon intended that it would afford coverage only to lessees who had applied and been approved for coverage. He further stated that, to the extent the policy language did not reflect OneBeacon's intent, it was a mistake. 25 Essentially the same representations were contained in the Agreement for Judgment between LAI and OneBeacon. It included an assertion that lessees were provided coverage through LAI's policies with OneBeacon only if the lessee executed, in addition to the Standard Form Lease Agreement, the LEASE SUPPLEMENT—INSURANCE and a DRIVER APPLICATION, and if the application was accepted by or on behalf of OneBeacon or Pennsylvania General. The Agreement further stated that Capform executed neither the lease supplement nor the driver application and that OneBeacon and Pennsylvania General at no time undertook to provide coverage to Capform for the vehicle involved in the Pedreira accident. 26 Travelers disparages virtually all of this evidence—challenging the basis for the affiants' knowledge and criticizing the self-serving judgment against LAI as unworthy of the court's consideration. We note initially that while Travelers properly may debate the potency of OneBeacon's proffered evidence on the issue of mutual mistake, arguing that it does not constitute full, clear, and decisive proof of mistake, Polaroid, 610 N.E.2d at 917, Travelers' representation to the court that no material factual disputes existed forecloses it from challenging the factual assertions made by the affiants and contained in the Agreement for Judgment. Indeed, in keeping with this protocol, Travelers does not offer conflicting evidence, but attempts only to diminish the significance of OneBeacon's offerings. 27 In our view, however, the affiants were sufficiently involved in LAI's acquisition of insurance from OneBeacon to be considered reliable. Calley was a high level administrator for the insurance broker, and her statements conveyed a depth of knowledge about the relevant coverage procedures. She stated without qualification that the LAI insurance program did not provide coverage to lessees such as Capform, who had not applied to and been approved by OneBeacon. 28 Keen likewise had a basis for personal knowledge because he oversaw the underwriting of the relevant policy. Given Calley's and Keen's roles, we believe that both affidavits, at least in the parts relevant here, satisfied the standards of Fed. R.Civ.P. 56(e), which provides that affidavits submitted in support of summary judgment must set forth admissible facts based on personal knowledge. 4 Moreover, the affiants' statements are consistent with the undisputed documentary evidence— the standard lease forms—showing that LAI and OneBeacon operated in the belief that the policy extended only to lessees who specifically applied for coverage. 29 As for the Agreement for Judgment, Travelers argues in its brief that the court should not consider any of its content, claiming that Travelers cannot be bound by the agreement because it was not a party to it. Travelers further argues that the Agreement's content does not constitute admissible evidence by individuals with personal knowledge of LAI's intent, and it emphasizes that the Agreement does not speak to LAI's intent concerning coverage at the time it obtained the policy at issue. Travelers' argument that it is not bound by the statements contained in the Agreement is beside the point. The Agreement nevertheless is relevant on the question of the parties' intent. LAI is bound by the representations it made in the Agreement, see BIW Deceived v. Local S6, Indus. Union of Marine And Shipbldg. Workers, 132 F.3d 824, 828 (1st Cir.1997); Coughlin v. Regan, 768 F.2d 468, 469-70 (1st Cir.1985) ([A] party to a consent judgment is thereby deemed to waive any objections it has to matters within the scope of the judgment.), 5 and LAI's assertions about the operation of its insurance program are—like the supporting documents—revealing on LAI's and OneBeacon's expectations regarding the policy. 30 Travelers also attempts to discredit the Agreement by declaring in its brief that it stretches the boundary of believability that LAI would agree that too much coverage was afforded under the polic[y] and that it had an intent to obtain less coverage than was explicitly afforded under the unambiguous language . . . . We find nothing inherently implausible about LAI's declarations, however. LAI's representation is that its leased vehicles were fully insured in ways other than under the policy language on which Travelers relies—and, indeed, the Travelers coverage purchased by Capform met LAI's stated requirement that lessees insure their vehicles independently if they chose not to apply for the OneBeacon coverage. 31 In our view, LAI's lease agreement, particularly when taken together with the lease supplement specifically addressing insurance, is compelling evidence that LAI intended that its own insurance coverage for a particular vehicle would terminate once the vehicle was leased. The process put in place to ensure continuing coverage by the lessee—either through another insurer or through OneBeacon—supports the inference that OneBeacon also assumed the policies would cover LAI-owned vehicles after they were leased only if the requisite application steps had been completed. 6 Thus, the course of conduct revealed by LAI's standard forms, together with the elaboration and affirmation provided by knowledgeable individuals, persuades us that the parties shared an intent to exclude vehicles from coverage once they were leased—unless the lessee followed the requisite procedures for obtaining coverage under LAI's policy. 32 Travelers has identified no evidence that undermines the uniform picture painted by OneBeacon's evidentiary submissions. It asserts that OneBeacon has not pointed to any specific endorsement, exclusion or other limiting language that they contend was mistakenly omitted when these policies were issued to LAI, noting that [t]his is hardly surprising, inasmuch as the language in the policies providing coverage to specified insureds is part of the boilerplate contained in standard auto industry policies. However, OneBeacon does, in fact, claim a critical omission of limiting language that would have excluded from coverage vehicles operated by long-term lessees who had not directly sought and obtained coverage under the policy. 33 In sum, the evidence submitted by OneBeacon is both ample and persuasive, and we therefore conclude that it has met its burden to provide full, clear, and decisive proof of mistake, Polaroid, 610 N.E.2d at 917. Accordingly, barring any equitable concerns, OneBeacon is entitled to reformation of the relevant policies to exclude coverage for LAI-owned vehicles on long-term leases, unless the lessee has followed the requisite application procedures and obtained its own coverage under the OneBeacon policy.