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Selective Way Ins. Co. v. Apple

United States District Court, W.D. Virginia, Charlottesville Division

December 1, 2014

ROSEANNE BROWNING APPLE., et al., Defendants

For Selective Way Insurance Company, Plaintiff, Counter Defendant: Johneal Moore White, Melissa Walker Robinson, LEAD ATTORNEY, GLENN ROBINSON & CATHEY PLC, ROANOKE, VA.

For Roseanne Browning Apple, Building Industries, Inc., Defendants: Marc A. Peritz, LEAD ATTORNEY, Morin & Barkley LLP, Charlottesville, VA; Paul Erik Wilke, ERIK WILKE, P.C., CHARLOTTESVILLE, VA.

For Earl Eugene Hoar, Defendant, Counter Claimant: Jason Wade Konvicka, Allen, Allen, Allen & Allen, Richmond, VA; John J. Rasmussen, INSURANCE RECOVERY LAW GROUP, PLC, RICHMOND, VA.

For Progressive Gulf Insurance Company, Defendant: Christopher Lee Rathlev, Erick Frank Seamster, LEAD ATTORNEY, Fitzgerald, Lane & Williams, Richmond, VA.



Selective Way Insurance Company (" Plaintiff, " or " Selective") filed this action on October 3, 2013, seeking a declaratory judgment under 28 U.S.C. § 2201. Selective asks me to declare that it has no duty to defend or indemnify defendant Roseanne Browning Apple (" Mrs. Apple") in connection with any claim or lawsuit brought against her by Earl Eugene Hoar (" Mr. Hoar") or to pay subrogation to his insurer, Progressive Gulf Insurance Company (" Progressive"). The case arises from a May 18, 2012 motor vehicle accident between Mrs. Apple and Mr. Hoar. Selective had insured the vehicle that Mrs. Apple was driving under a commercial policy (the " Policy"), and now argues that she is not entitled to coverage because she does not qualify as an insured.

The matter is now before me upon consideration of the parties' cross motions for summary judgment. I construe both Mr. Hoar's motion for joinder and Progressive's motion for joinder as motions to join and adopt Mrs. Apple and Building Industries' motion for summary judgment. Mr. Hoar's motion will be GRANTED and Progressive's motion will be GRANTED. I have heard argument on the fully-briefed motions. I find that there are genuine disputes of material fact relating to Mrs. Apple and Building Industries' claims for reformation and for coverage under a permissive use theory. Accordingly, Plaintiff's motion for summary judgment on its complaint will be DENIED. For the same reason, Mrs. Apple and Building Industries' motion for summary judgment will be DENIED. Defendants' arguments for estoppel and coverage under the plain language of the Policy both fail as a matter of law. Therefore, Plaintiff's motion for summary judgment on Defendants' counterclaims will be GRANTED in part, and DENIED, in part.

I. Background

In 2011, Mrs. Apple's husband, Clevius Carr Apple, Jr. (" Mr. Apple"), obtained a commercial insurance policy from Selective for a 2004 Lincoln Town Car (the " Town Car"), which is principally garaged and used in the Commonwealth of Virginia. The Policy listed Building Industries, Inc. (" Building Industries") as the named insured. Building Industries is a Virginia corporation owned by Mr. Apple and his son, John Apple. Mr. Apple purchased the Policy from BB& T Insurance Services Inc. (" BB& T"), which gathered information and issued the Policy on Selective's behalf. After Selective received Mr. Apple's information from BB& T, it issued a Commercial General Liability Policy to Building Industries. The Policy listed the Town Car in the " Schedule of Covered Autos You Own" and attributed to it a specific dollar amount as the premium. The Policy listed Building Industries as both the named insured and the owner of the Town Car, although the vehicle was actually titled to Mr. and Mrs. Apple individually.[1]

On May 18, 2012, Mrs. Apple was taking Mr. Apple home from a hospital in the Town Car when she was involved in a motor vehicle accident with Mr. Hoar. Mr. Hoar was injured and filed a claim, which Selective unsuccessfully attempted to negotiate to settlement in the summer of 2012. At some point in time after the accident--the parties dispute when exactly--Selective learned that the Town Car was titled to Mr. and Mrs. Apple rather than to Building Industries. As a result, Selective issued the Apples a reservation of rights letter on July 15, 2013. The letter stated that the accident may not be covered under the Policy because the Town Car was not titled to Building Industries, nor was Mrs. Apple an employee of that corporation. The relevant portion of the Policy reads as follows:

1. Who Is An Insured

The following are " insureds":
a. You for any covered " auto" .
b. Anyone else while using with your permission a covered " auto" you own, hire or borrow except:
The owner or anyone else from whom you hire or borrow a covered " auto" . This exception does not apply if the covered " auto" is a " trailer" connected to a covered " auto" you own.
Your " employee" if the covered " auto" is owned by that " employee" or a member of his or her household.
Someone using a covered " auto" while he or she is working in a business of selling, servicing, repairing, parking or storing " autos" unless that ...

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