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Potter v. American Alternative Insurance Corp.

United States District Court, E.D. Virginia, Norfolk Division

July 8, 2016



          Henry Coke Morgan, Jr. Senior United Stales District Judge.

         This insurance-related action stems from a car accident between Plaintiffs Russell Lloyd Potter ("Potter") and Alverta Vanessa Davis ("Davis"). It comes before the Court following a two-day bench trial on Potter's declaratory judgment action, which seeks a declaration of the parties' rights and obligations. Specifically, the parties dispute whether Defendant American Alternative Insurance Corporation ("AAIC"), which issued a claims-made professional and general liability policy to Davis's employer, Defendant HNH Virginia, Inc. d/b/a Hand 'N Heart ("HNH"), should afford excess liability coverage to Davis for the accident. Following the bench trial, the Court took this matter under advisement. The Court now sets forth its findings of fact and conclusions of law, thereby resolving all outstanding issues in this matter, and enters judgement in favor of AAIC.

         I. Jurisdiction

         This Court possesses removal jurisdiction pursuant to 28 U.S.C. § 1441. On September 8, 2015, this Court granted AAIC's unopposed Motion to Realign the Parties. Doc. 23. The Court ordered that Davis, Progressive Northern Insurance Co. ("Progressive"), and State Farm Mutual Automobile Insurance Co. ("State Farm") be considered Plaintiffs. Id. at 5. Because HNH represents a nominal party, the Court must disregard its citizenship for purposes of diversity jurisdiction. See Doc. 23; see also Navarro Sav. Ass'n v. Lee. 446 U.S. 458, 461 (1980). Since the amount in controversy exceeds $75, 000.00, realigning the parties endowed this Court with diversity jurisdiction, as it established complete diversity of citizenship between Plaintiffs Potter, Davis, Progressive, and State Farm and Defendant AAIC. See 28 U.S.C. §§ 1441, 1332.

         II. Factual Findings

         A. The Accident

         On December 28, 2012, at approximately 1:00 p.m., Potter and Davis were involved in a car accident on Little Neck Road in Virginia Beach, Virginia. The accident occurred when Davis attempted to exit a parking lot and turn on to Little Neck Road. However, when she started to exit the parking lot, her vehicle struck the side of Potter's vehicle. Potter is seeking $500, 000.00 compensatory damages in state court. It is undisputed that Davis owned the vehicle she was driving at the time of the accident. At that time, Davis worked as a companion aide for HNH, a home care agency. Potter did not sue HNH in the underlying state-court lawsuit.

         Davis's Provider Aide Record, or timesheet, reveals that she worked from 9.00 a.m. to 11:30 a.m. on December 28, 2012. See Pl. Ex. 8. On the Provider Aide Record, Davis checked that she performed the following tasks on December 28, 2012: clean kitchen/wash dishes, make/change bed linen, and listing supplies/shopping. Id. Davis testified that, at the time of the accident, she had just picked up medication from the pharmacy for a client, Maxine Cole. After the accident, Davis called HNH and spoke to a receptionist named Kayla, who informed Davis that no one at HNH would be able to deliver the medication to Ms. Cole. Therefore, after the accident, Davis's brother, William Jones, drove Davis to Ms. Cole's home so that Davis could deliver the medication. Davis's call to HNH apparently went unreported, and Mary Gavin ("Gavin"), HNH's Vice President of Operations, did not learn of the accident until after Potter instituted the underlying lawsuit against Davis.

         Davis testified that obtaining the medication constituted a "favor, " as she had clocked out of work for the day and since she needed to perform errands for herself anyway. She described the errand as "personal." She clarified that her duties were encompassed by the two and one-half hours she spent on the job on December 28, 2012. She differentiated this situation from a situation in which she ran an errand for a client during her designated work hours, noting that "that would be like on the job." Indeed, Davis testified that when she first told Gavin that she had been sued due to a car accident, she did not originally believe HNH had been implicated, because the accident occurred on her own time when she was running personal errands and merely performing a favor for a client.

         B. Companion Aides' Duties

         HNH's Companion Aide Job Description lists companion aides' duties as the following: housekeeping, meal preparation and serving meals; wash and dry dishes; daily interaction with client and client family; completion of monthly in-service training programs; compliance with Hand 'n Heart universal precautions; is on time for client assignments as scheduled and/or provides at least 24 hours advance notice of cancellation. Def. Ex. 2. HNH does not limit companion aides' duties to those described in the job description. Indeed, it presumably allows its companion aides to perform errands such as grocery shopping. See Pl. Ex. 8. Employees are not to work more than six (6) minutes after their scheduled quitting time without a manager's approval. See Def. Ex. 3 at 19-20. Their timesheets must be submitted without error. Id. ; see also Def. Ex. 7. HNH's written Medication Administration Policy Statement 9.4 ("Statement 9.4") does not allow staff members to transport clients' medications to clients "except in extenuating circumstances, " see Def. Ex. 4, though Gavin testified that she could think of no set of circumstances in which she would allow an employee - even a registered nurse - to retrieve a client's prescription.

         Evidence exists that HNH did not enforce its written policies. For example, even though Gavin eventually became aware that Davis claimed she picked up medication for Ms. Cole, see Pl. Ex. 13, and even though Davis reported the fact that she was in possession of medication to HNH on the day of the accident, Gavin never disciplined Davis for her alleged infraction. Gavin testified that she did not discipline Davis because she did not know whether to believe Davis's claims concerning the medication, especially considering the fact that Davis already had informed Gavin that the accident did not involve HNH and that records included no incident report detailing Davis's call to HNH on the day of the accident. However, even if Gavin truly disbelieved Davis, Gavin still failed to reprimand Davis for lying about her activities on the day of the accident. If Davis's statements concerning the medication were true, then Davis not only violated Statement 9.4, but she also worked outside of her reported shift. Yet, Davis never received a reprimand. On the contrary, HNH promoted her to a personal care aide.

         C. Relevant Insurance Policies

         Progressive issued a personal automobile liability policy to Davis's husband with a per person liability limit of $25, 000. Progressive has made an irrevocable offer of $25, 000 to settle Potter's claims in the underlying lawsuit, and it is providing Davis with a defense in that suit. State Farm issued a personal automobile liability insurance policy to Potter. This policy affords up to $250, 000 in Underinsured Motorist Coverage. AAIC issued a claims-made professional and ...

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