Court: District Court, Virgin Islands; August 14, 2009; Federal District Court
USAA Casualty Insurance Company has filed a motion for summary judgment against plaintiffs Forest Edwin Bell and Jesse Miller, who allege that their insurance policy should have included underinsured motorist coverage. The accident occurred on December 8, 2005, when Bell was struck by an underinsured driver in St. Thomas, U.S. Virgin Islands. The plaintiffs claim that USAA failed to provide the required coverage and did not inform them of its absence. Three claims are asserted: breach of contract, breach of the duty of good faith and fair dealing, and bad faith. The court interprets USAA's motion as seeking partial summary judgment since it does not address the bad faith claim. Summary judgment is warranted if there are no material facts in dispute, shifting the burden to the plaintiffs to demonstrate otherwise. The court, while assessing the evidence, must favor the non-moving party. Additionally, the court must determine which jurisdiction's law applies to the policy interpretation, involving both Virgin Islands and Massachusetts laws due to the case's connections to these locations. The court will apply the Virgin Islands' choice-of-law rules as the basis for jurisdiction is diversity of citizenship. No specific choice-of-law rules for contract interpretation exist under the Virgin Islands Code.
In the Virgin Islands, when there is no specific provision in a contract regarding applicable law, the Virgin Islands Code directs courts to refer to the Restatement of the Law for guidance. The Restatement outlines two scenarios for choice-of-law: (1) where parties have explicitly or implicitly selected a governing law, and (2) where no law has been chosen. In the first scenario, a contract is interpreted under the chosen law unless its application contravenes a fundamental policy of another state with a greater interest in the issue. In the second scenario, determining the applicable law involves a balancing of factors such as the places of contracting, negotiation, performance, and the parties' respective domiciles.
USAA claims that a Massachusetts policy should apply, indicating that the policy is "subject to the laws of Massachusetts," yet it does not provide a clear choice-of-law provision. The court finds no explicit statement in the policy asserting that Massachusetts law governs. The Third Circuit's decision in Assicurazioni Generali, S.P.A. v. Clover serves as a precedent, where the lack of an explicit choice-of-law provision did not prevent the court from determining that Indiana law applied based on the policy's references to Indiana law. Similarly, while the current policy does not explicitly dictate any state's law, it is titled a "Massachusetts Automobile Insurance Policy" and contains numerous references to Massachusetts law, suggesting an implicit choice of Massachusetts law by the parties.
The Policy outlines four mandatory components of Compulsory Insurance required by Massachusetts law for all registered vehicles. It also mandates the sale of any desired Optional coverages within specified limits and deductibles. Massachusetts law necessitates pre-insurance inspections for certain vehicle coverages, and it is agreed that Massachusetts law governs the Policy’s interpretation. The Court determines that the applicability of Massachusetts law does not conflict with Virgin Islands policy, as both jurisdictions require basic auto insurance and UIM coverage is optional in both.
In Count One, Plaintiffs claim USAA breached the Policy by not providing its coverage limit. To prove breach under Massachusetts law, Plaintiffs must demonstrate a valid agreement, their readiness to perform, USAA's breach, and resultant damages. USAA argues it fulfilled its obligations by paying the $10,000 medical payments limit to Bell and asserts that UIM coverage was not included as Bell opted not to purchase it. Evidence from a claims manager's affidavit supports USAA's position, confirming payment of medical expenses and the absence of UIM in the Policy. The Court finds USAA has met its summary judgment burden by showing compliance with the contract and concludes it is not liable for UIM limits since Bell did not select that coverage. The Plaintiffs failed to provide evidence to counter USAA's claims, leading the Court to grant summary judgment in favor of USAA regarding the breach of contract claim.
Count Three of the plaintiffs' complaint alleges that USAA breached the duty of good faith and fair dealing, though the specifics of this breach are not clearly articulated. Under Massachusetts law, every contract includes an implied covenant of good faith and fair dealing, which ensures that parties adhere to the contract's intended expectations and do not undermine each other's rights. USAA argues that it owed no duty to offer underinsured motorist (UIM) limits to Bell since Bell did not purchase UIM coverage. The court finds that the covenant's scope is confined to the terms of the contract, and since USAA has already tendered the policy limits to Bell and owed no further duty, it is entitled to summary judgment on Count Three.
Additionally, the court will grant USAA's motion regarding Count One's breach of contract claim, while Count Two's bad faith claim remains unresolved. The allegation that Miller suffered loss of consortium due to witnessing Bell's accident is noted but not treated as a separate cause of action. USAA argues that Miller cannot recover for loss of consortium, but the court treats this allegation as surplusage.
The plaintiffs failed to respond to USAA's motion by the initial deadline, requesting an extension which was granted, but not retroactively applicable to the original due date. USAA's reference to Virgin Islands law regarding insurance policy interpretation is deemed irrelevant since the policy was not issued in that territory. The court clarifies that the counts in the complaint are misnumbered and will refer to them as labeled. Furthermore, the court cites a precedent indicating that USAA had no obligation to inform the plaintiffs about the availability of UIM coverage without special circumstances, which are not present in this case. The court aligns its reasoning with the Massachusetts Appeals Court decision in *Robinson v. Charles A. Flynn Ins. Agency*, rejecting the plaintiffs' expansive interpretation of USAA's duties.
