Court Opinion

ID: 9487606
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:21:42.962062+00
Date Added: 2024-06-11T17:52:22.883879
License: Public Domain

PIERCE, Senior Circuit Judge, dissenting:
Vermont’s statutory requirements concerning cancellation, nonrenewal and renewal of commercial risk insurance are set forth at 8 V.S.A. § 4711 et seq. The question before the Court is whether 8 V.S.A. § 4715(a) requires an insurer to give a named additional insured notice of its right to renew. The majority holds that § 4715(a) does not impose such a duty. I respectfully dissent.
This issue is one of first impression under Vermont law., Our role is therefore to carefully predict how Vermont’s highest court would resolve this matter. Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114,119 (2d Cir.1994). In making this determination, we are free to consider all of the resources to which that court could look, including decisions of other jurisdictions on the same or analogous issues. Leon’s Bakery, Inc. v. Grinnell Corp., 990 F.2d 44, 48 (2d Cir.1993). Our primary objective is to give effect to the intent of the Vermont legislature. State v. Papazoni 159 Vt. 578, 580, 622 A.2d 501, 503 (1993).
Section 4715(a) requires an insurer to “confirm in writing at least 45 days prior to expiration its intention to renew [a policy of commercial risk insurance] and the premium at which the policy is to be renewed.” 8 V.S.A. § 4715(a). It further provides that “[t]he insured shall have the right to renew the policy at this premium.”1 Id.
In interpreting § 4715(a), we first look to the plain meaning of the words of the statute, since it is presumed that the language shows the intent of the legislature. Papazoni 159 Vt. at 580, 622 A.2d at 503. Indeed, Vermont has abandoned giving effect to plain meaning only in “narrow and particular circumstances,” Dykstra v. Property Valuation & Review Div., 156 Vt. 215, 218, 591 A.2d 63, 65 (1991), because it is presumed that the legislature “was aware of the words it used and their meaning,” Papazoni 159 Vt. at 580, 622 A.2d at 503. However, if doubts exist or if § 4715(a) is ambiguous, we discern the legislative intent from “‘a consideration of the whole and every part of the statute, the subject matter, the effects and consequences, and the reason and spirit of the law.’ ” Langrock v. Department of Taxes, 139 Vt. 108, 110, 423 A.2d 838, 839 (1980) (per curiam) (quoting Holbrook Grocery Co. v. Commissioner of Taxes, 115 Vt. 275, 278-79, 57 A.2d 118, 120 (1948)). As a general proposition, notice requirements in insurance cases are “strictly construed, necessitating literal compliance on the part of the insurer, with any ambiguities being interpreted in favor of the insured.” State Farm Mut. Auto. Ins. Co. v. Matthews, 74 A.D.2d 875, 426 N.Y.S.2d 30, 31 (App.Div.1980); see also 14A John A. Appleman & Jean Appleman, Insurance Law & Practice § 8162, at 209-10 (Rev. ed. 1985).
Section 4715(a), on its face, states that “the insured” shall have the “right to renew” at a specified premium. See 8 V.S.A. § 4715(a). It requires written confirmation of the insurer’s intention to so renew, as well as confirmation of the renewal premium. Id. We are faced with the question of to whom advance notice must be given; more specifically, we must decide whether a named additional insured also qualifies as “the insured” so that it is entitled to notice of its right to renew at the specified premium. Since the statute does not define “the insured,” this language requires interpretation which, in turn, must be consistent with the purposes of the statute.
In my opinion, the Vermont legislature’s use of “the insured” in § 4715(a) evidences an intent to grant the right of renewal and its required notice to all “insureds” expressly named in the policy, as opposed to limiting such rights to the party specifically designated as the “named insured.” I view this as the better course and the one more likely to *736be adopted by Vermont’s highest court for the reasons which follow.
First, it is telling that the Vermont legislature elected to use the language “the insured” in § 4715(a), rather than “named insured” as is used in the cancellation and nonrenewal statutes. Compare id. (renewal) with id. at § 4712 (cancellation) and id. at § 4713 (nonrenewal). It is well established in our Circuit that “a construction ascribing to two separate statutory provisions the same meaning and scope is disfavored.” United States v. Yip, 930 F.2d 142, 148 (2d Cir.), cert. denied, — U.S. -, 112 S.Ct. 197, 116 L.Ed.2d 157 (1991). Accord Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983) (“We refrain from concluding here that the differing language in the two subsections has the same meaning in each. We would not presume to ascribe this difference to a simple mistake in draftsmanship.”); United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972) (per curiam) (“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”). I therefore refrain from ascribing to the language in § 4715(a) the same meaning as the words used in §§ 4712 and 4713.
Second, cases from other states interpreting the language “the insured” have held that a legislature’s use of such language requires that any requisite notice be given to all “insureds” under a policy, including “additional insureds.” See Lease Car of Am., Inc. v. Rahn, 419 Mich. 48, 347 N.W.2d 444 (1984) (per curiam) (in a factually similar case, the Michigan Supreme Court ruled that a statute requiring notice of cancellation to “the insured” required the insurer to notify each party who qualified as an “insured” under the policy, which it found included “additional insureds”); Haft v. Charter Oak Fire Ins. Co., 262 Ill.App.3d 933, 200 Ill.Dec. 504, 635 N.E.2d 843 (1994) (an Illinois court held that a statute requiring notice of cancellation to “the insured” was not limited to the “named insured,” but applied to anyone who was insured under the poHcy). Although these cases are not binding in Vermont, they are certainly persuasive authority on this issue.
Third, I do not view it as unreasonable that the Vermont legislature would require notice solely to the “named insured” in cases involving cancellation or nonrenewal, and to “the insured” — interpreted to include a named additional insured — in instances of renewal. It is evident that the legislative intent behind notice statutes is to provide an insured with a reasonable opportunity to maintain continuous coverage, if desired. See, e.g., Strickland v. Motors Ins. Corp., 970 F.2d 132, 137 (5th Cir.1992) (per curiam), cert. denied, — U.S. -, 113 S.Ct. 1272, 122 L.Ed.2d 667 (1993); Omar v. St. Paul Fire & Marine Ins. Co., 175 Ill.App.3d 77, 82, 124 Ill.Dec. 705, 707, 529 N.E.2d 686, 688 (1988). Where the insurer unilaterally decides that it will cancel or not renew a policy, as in cases of cancellation or nonrenewal, it must furnish appropriate notice to the named insured in sufficient time for it to obtain coverage elsewhere. The decision as to continuation of coverage rests with the insurer. Once the insurer has decided to discontinue coverage, the notified named insured no longer has any control over maintaining its coverage with that particular insurer. With regard to renewal, on the other hand, the decision whether to continue coverage ultimately rests with the insured.2 The insured may choose to simply allow the policy to lapse by nonpayment of the premium. See Roman v. State Farm Mut. Auto. Ins. Co., 505 So.2d 445, 451 (Fla.Dist.Ct.App.) (recognizing that public policy supports the insured’s right to cancel a policy merely by nonpayment of the premium), review denied, *737509 So.2d 1119 (Fla.1987). Absent notice to an insured of its right to renew, the right of renewal granted by § 4715(a) would have no meaning. Thus, I do not view it as inconsistent that the three sections provide for different notice requirements.
Fourth, it seems clear that this more inclusive construction of § 4715(a) is consistent with the spirit and purposes of notice statutes, since requiring that all insureds named in a policy are informed of their rights would tend to prevent inadvertent lapses in coverage. See, e.g., Rahn, 419 Mich, at 54, 347 N.W.2d at 446-47 (“The obvious objective of [the] statute is to make certain that all of those who are insured under a policy are afforded a period of time, ... either to satisfy whatever concerns have prompted cancellation and thus revive the policy or to obtain other insurance, or simply to order their affairs so that the risks of operating without insurance will not have to be run. That objective cannot be achieved if the insurer, pursuant to policy language, need only notify a designated insured.... ”); Omar, 175 Ill.App.3d at 82, 124 Ill.Dec. at 707, 529 N.E.2d at 688. This interpretation likewise serves the interest of the public at-large. See, e.g., National Auto. & Casualty Ins. Co. v. California Casualty Ins. Co., 139 Cal.App.3d 336, 340, 188 Cal.Rptr. 670, 672 (1983) (“Public policy certainly favors a system under which motorists will not be operating their vehicles without the benefit of public liability coverage.”); United Farm Bureau Mut. Ins. Co. v. Adams, 145 Ind.App. 516, 519, 251 N.E.2d 696, 698 (1969) (“It is for the benefit of every driver and passenger on our roads today, as well as ourselves, that we carry liability insurance.”). The very existence of the subject Vermont statutes implies that continuation of coverage is favored in Vermont.
Fifth, the appellant in this case is identified in the endorsement by name and address. Even assuming that the majority’s interpretation of § 4715(a) is correct, I submit that the appellant here — a named additional insured — is a “named insured” because this insured is actually named in the policy. See generally Note, Recognizing the Unique Status of Additional Named Insureds, 53 Fordham L.Rev. 117, 139 (1984) (advancing an argument that additional named insureds should be treated as named insureds for the purpose of receiving advance notice of cancellation); cf. Canedy v. Liberty Mut. Ins. Co., 853 F.Supp. 123, 125 (D.Vt.1994) (Billings, J.) (under Vermont law, an automobile rental customer who purchased liability insurance coverage when agreeing to rent an automobile from a rental company was found to be a “named insured” for purposes of the policy). In a case where an insurer has knowledge of the name and address of an additional insured, it is reasonable to require that the insurer notify such party of its rights or of the insurer’s intentions with respect to the policy. Such a requirement would not impose a heavy burden on the insurer given the widespread use of computer technology in the insurance industry. See Barbara Corp. v. Bob Maneely Ins. Agency, 197 N.J.Super. 339, 346, 484 A.2d 1292, 1295 (1984) (noting that notice obligations on insurers are not heavy burdens due to the existence of computers). To be sure, this certainly would be a lesser burden on the insurer who would simply have to mail out an additional notice, than it would be on the insured which might inadvertently lose its coverage.
Finally, the endorsement identifies the appellant’s interest as the lessor. Some states have required insurers to notify additional insureds of their intentions regarding a policy when the insurer, as in this case, is aware of the actual ownership interest of the additional insured with respect to the insured property. See generally 8B John A. Appleman & Jean Appleman, Insurance Law & Practice § 5014, at 456 (Rev. ed. 1981) (footnote omitted) (“[Wjhere it is known that there are multiple parties in interest, notice should be given to all.”). For instance, in Hansen v. U.S.A.A. Casualty Ins. Co., 206 Neb. 147, 156, 291 N.W.2d 715, 720 (1980), the Nebraska Supreme Court ruled that where an insurer has knowledge that there are multiple owners of an insured motor vehicle, though not all are shown as “named insureds,” the company may not cancel the policy, either at the request of a named insured or at the company’s initiative, until notice is given to all persons known to have an ownership interest in the vehicle in enough time to afford them a reasonable *738opportunity to obtain other insurance. The court noted that to hold less would be to ignore the realities of life since “[flew owners of motor vehicles concern themselves with whether they are shown upon the policy as a ‘named insured’ as long as they believe they have coverage.” Id. See also Safeco Ins. Co. of Am. v. Green, 260 Md. 411, 417, 272 A.2d 383, 386 (1971); Government Employees Ins. Co. v. Employers Commercial Union Ins. Co., 88 Misc.2d 132, 387 N.Y.S.2d 52, 54 (Sup.Ct.1976), aff'd, 62 A.D.2d 123, 404 N.Y.S.2d 652 (1978).3 The endorsement in the present case indicates that the insurer was actually aware of the appellant’s interest as the lessor. I believe that the spirit of § 4715(a) is promoted by requiring notice to the lessor in such an instance.
In sum, I conclude that given the circumstances of this case, the better course and the one more likely to be adopted by Vermont’s highest court, is an interpretation of 8 V.S.A. § 4715(a) that imposes a duty upon an insurer to notify a named additional insured of its right to renew. Accordingly, I would reverse and remand this matter to the district court for application of the statute in a manner consistent with this dissent. In view of my position on this threshold issue, I will not address the other question that has been decided by the majority.

. The consequence in Vermont for failure to comply with 8 V.S.A. § 4715(a) is set forth at 8 V.S.A. § 4715(b), which requires the insurer to "grant its insured renewal coverage at the rate or premium in effect under the expiring or expired policy or at rates lawfully in effect on the expiration date ... for 45 days after the insurer confirms renewal coverage and premium.” 8 V.S.A. § 4715(b).

. In the event that the insured elects not to renew the policy by nonpayment of the required premium, the policy lapses by its own terms. See, e.g., Lopez v. New Jersey Auto. Full Ins. Underwriting Ass’n, 239 N.J.Super. 13, 16-17, 570 A.2d 994, 995 (App.Div.) ("where an offer to renew ... is made by the insurer ... and the offer is not accepted by timely payment of the premium, the policy lapses on the expiration date”), certification denied, 122 N.J. 131, 584 A.2d 206 (1990); 18 George J. Couch, Cyclopedia of Insurance Law § 68:11, at 14 (Rev.2d ed. 1983) ("Even where notice is required for nonrenewal, there may be no duty to notify where the insured fails to pay the renewal premium after receiving a bill for such premium.”).

. Although these cases involve cancellation rather than renewal, their discussion of notice and to whom notice should be given is equally persuasive in the renewal context.