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Encompass Independent Insurance Co. v. Dombrosky

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

February 10, 2017

TANYA N. DOMBROSKY, Defendant/Crossdefendant
MATTHEW T. GREEN Defendant/Crossclaimant/Counterclaimant


          Hon. Glen E. Conrad Chief United States District Judge.

         In this insurance coverage dispute, Encompass Independent Insurance Company ("Encompass") seeks a declaratory judgment that it has no obligation to defend or indemnify Tanya Dombrosky ("Dombrosky") in connection with a personal injury action that Matthew Green ("Green") filed against Dombrosky in Virginia state court. The case is presently before the court on cross-motions for partial summary judgment filed by Encompass, Dombrosky, and Green. For the reasons set forth below, each motion will be granted in part and denied in part.


         I. Statement of Facts

         The facts in this case are not heavily disputed. In 2007, Dombrosky and her mother, Jo Ann Dunn ("Jo Ann"), moved in with Dombrosky's grandparents, Betty Dunn ("Betty") and Joe Dunn ("Joe"). At that time, Joe, who had a career in insurance, emailed a representative from Encompass inquiring about their existing policies. Jo Ann Dep. 45:15-46:23. Joe received an email stating, "According to Policy definitions the daughter/granddaughter are considered family members/resident relatives and therefore coverage will extend to them as long as they are residing in the household at the time of a loss." Email from RMC-East to Peggy Pettrey, Wed. Oct. 31, 2007, Docket No. 17-5. Joe gave the email chain to Jo Ann, told Jo Ann that she and Dombrosky were covered, and told Jo Ann that she should keep the email exchange for her records. See Jo Ann Dep. 45:15-46:23. Joe passed away prior to the events giving rise to the instant dispute.

         On June 5, 2015, Dombrosky and Betty visited First Team Hyundai in Roanoke, Virginia, where Betty purchased a 2013 Hyundai Veloster (the "Veloster") for Dombrosky. Betty paid the full purchase price, which included the vehicle's first oil change and a limited warranty. See Harstock Dep., Ex. 1, p. 0000069, Docket 21-4. Jo Ann picked up the Veloster from First Team Hyundai three days later, on June 8, 2015.

         Over the next nine days, Betty drove the vehicle two, possibly three times. Each time she used the Veloster, she drove it to the grocery store, which was about four or five miles away. See Betty Dunn Dep. 9:3-10:2, Docket No. 21-6. Betty also paid to put gas in the car once or twice. See id. 8:9-9:2. Jo Ann put gas in the vehicle once. See Jo Ann Dep. 26:19-20, Docket No. 21-3. At some point, Jo Ann drove the Veloster to West Virginia. Betty paid for the gas used on that trip. See id. 58:6-19. When not in use, the vehicle was kept in the garage, and the keys were kept in the car. See Id. 21:21-22:20.

         No one felt that Betty needed permission to drive to Veloster, but Betty did inform Dombrosky of any planned use. See Jo Ann Dunn Dep. 54:2-6; Betty Dunn Dep. 29:6-8; Dombrosky Dep. 31:14-19. Despite Betty purchasing the Veloster for Dombrosky's use, and Betty considering the Veloster to be Dombrosky's vehicle, Dombrosky needed permission to drive the Veloster. See Betty Dunn Dep. 16:4-6; Jo Ann Dep. 54:13-15. Dombrosky drove the vehicle at least three times prior to the accident. See Dombrosky Dep. 19:8-22:24. In addition to the Veloster, a Toyota RAV4 titled in Jo Ann's name and a Toyota Avalon titled in Betty's name were kept in the garage. See Jo Ann Dunn Dep. 13:16-22. The family considered the RAV4 to be Jo Ann's vehicle and the Avalon to be Betty's vehicle. See Betty Dunn Dep. 15:22-16:3.

         On June 17, 2015, nine days after her mother picked up the Veloster from First Team Hyundai, Dombrosky was involved in a motor vehicle accident while driving the Veloster. The accident left Green permanently paralyzed from the chest down. He subsequently commenced a personal injury suit in Virginia state court, claiming $7.5 million in damages. At the time of the accident, the Veloster was titled in Jo Ann's name and insured by an USAA auto policy. When USAA paid for the totaled Veloster, Jo Ann specified that the check be paid to Betty. Id. 64:1-2.

         II. The Insurance Policies

         At all times relevant, Betty maintained a $2.5 million personal umbrella policy (the "Umbrella Policy") and a $250,000 auto policy (the "Auto Policy"), which included an "Extended Non-Owned Coverage" endorsement (the "Endorsement"). The Umbrella Policy obligates Encompass to "pay damages for which a covered person becomes legally liable due to an occurrence resulting in personal injury, bodily injury, or property damage, up to the limit of liability shown in the Coverage Summary . . . ." Encompass Umbrella Policy Insuring Agreement 3, Docket No. 1-1 (emphasis omitted). The Umbrella Policy enumerated certain losses that the policy does not cover. In pertinent part, the Umbrella Policy does not cover:

12. Bodily injury or property damage arising out of the ownership; maintenance; use; occupancy; renting; loaning; entrusting; loading or unloading of any motor vehicle ..., other than: . ..
e. A motor vehicle you maintain or regularly use which is:
(1) Owned by a family member and not shown in the Coverage Summary; or
(2) Furnished or available for the regular use of any family member.

         Encompass Umbrella Policy Insuring Agreement 6 (emphasis denotes defined terms). There is no debate that Dombrosky is a "family member" or that the Veloster is a "motor vehicle" as defined by the policy.

         The Auto Policy states, in relevant part:

A. We will pay damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident. We will settle or defend, as we consider appropriate, any claim or suit asking for damages which are payable under the terms of this policy ....
B. We do not provide Liability Coverage for the ownership, maintenance ...

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