Carr v. Peerless Insurance Co.
Annotate this Case
Carr v. Peerless Insurance Co. (97-404); 168 Vt. 465; 724 A.2d 454
[Filed 20-Nov-1998]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
No. 97-404
Gregory Carr d/b/a Carr Electric Supreme Court
On Appeal from
v. Addison Superior Court
Peerless Insurance Co. and June Term, 1998
New England Acceptance Corporation
Matthew I. Katz, J.
Kevin E. Brown of Langrock, Sperry & Wool, Middlebury for
Plaintiff-Appellant.
Michael J. DiRusso, Keene, New Hampshire, for Defendant-Appellee
Peerless Insurance Co.
James Runcie of Ouimette & Runcie, Vergennes, and Robert B. Lucic of
Sheehan, Phinney, Bass and Green, Manchester, New Hampshire, for
Defendant-Appellee New England Acceptance Corp.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
DOOLEY, J. Plaintiff Gregory Carr appeals from a judgment entered in
the Addison superior court declaring that neither defendant Peerless
Insurance Company nor defendant New England Acceptance Corporation (NEAC)
are obligated to defend and/or to indemnify him in connection with a suit
against him that arose out of a fire at a residence at which he performed
work as an electrician. We conclude that the superior court properly
rendered summary judgment in favor of Peerless as plaintiff's liability
insurer. However, because the record demonstrates that NEAC, an insurance
premium financing company, failed to comply with the insurance policy
cancellation procedures enumerated in 8 V.S.A. § 7009, we further conclude
that plaintiff is entitled to recover against NEAC. We affirm in part and
reverse in part.
The case was decided in the trial court on a series of summary
judgment motions. In an appeal of a summary judgment, we apply the same
standard that was applicable in the trial court
and determine whether there are genuine issues of material fact and, if
not, whether the moving party is entitled to judgment as a matter of law.
See City of St. Albans v. Northwest Reg'l Planning Comm'n, ___ Vt. ___,
___, 708 A.2d 194, 196-97 (1998). In the case of cross-motions for summary
judgment, "both parties are entitled to the benefit of all reasonable
doubts and inferences when the opposing party's motion is being judged."
Id., 708 A.2d at 197 (citation omitted).
The relevant facts as developed in the summary judgment record are not
in dispute. Plaintiff is an electrician who purchased a contractor's
liability policy from Peerless covering a one-year period commencing on
October 25, 1989. To finance this acquisition of insurance, plaintiff also
executed a premium financing agreement with NEAC, pursuant to which NEAC
paid the annual premium to Peerless and plaintiff was obligated to make
monthly payments to NEAC. The premium financing agreement included
language granting NEAC power of attorney with authority to cancel the
insurance policy in question, "to give or to receive such notice of
cancellation as is required by law, [and] to do all things necessary to
effect cancellation."
There were three incidents of premium non-payment and policy
cancellation. The last is central to this action. Plaintiff failed to pay
a premium installment due on July 25, 1990. As a result, on August 16,
1990, NEAC sent him a notice of cancellation, with a copy to Peerless,
which read as follows:
You are hereby notified that the policy described above is
canceled for nonpayment of an installment in accordance with
the conditions and terms of the Premium Finance Agreement which
incorporates a power of attorney. This cancellation is effective
on [August 31, 1990] at 12:01 A.M. This cancellation is to be
effected in accordance with the terms of [] Vermont Sec. 1. 8
V.S.A., Chapter 143, § 7009 . . . . [which] recognize[s] this as
a valid legal NOTICE OF CANCELLATION and provide[s] that the gross
unearned premium be returned to the premium insurance company within
60 days after the effective date of cancellation.
Vermont's insurance premium financing law sets out a two-step process for
an insurance premium financing company to initiate cancellation of a
policy. The first step is a ten-day notice
of intent to cancel stating "the intent of the insurance premium finance
company to cancel the insurance contract unless the default is cured within
such ten day period." 8 V.S.A. § 7009(b). The second step is the actual
notice of cancellation which is required to state an effective date no
earlier than ten days after the mailing of the notice. Id. § 7009(c). The
notice NEAC sent met the requirements for the second step, but NEAC failed
to send a notice of intent to cancel, the required first step in the
cancellation process.
Plaintiff did nothing to cure his arrearage with NEAC, and Peerless
cancelled the policy as instructed by NEAC. On the morning of August 31,
1990, less than 12 hours after the cancellation was effective, a fire
occurred in a trailer where plaintiff had performed electrical work two
days earlier, and the tenant eventually blamed plaintiff for the damage.
Plaintiff paid the past-due premium installment to NEAC on September
4, 1990. NEAC, in turn, requested that Peerless reinstate the policy, but
the insurance company refused to do so. Nearly three years later, in July
1993, the tenant of the trailer where the fire had occurred filed suit
against plaintiff in the Chittenden Superior Court, alleging that he had
performed his work on the trailer in a negligent manner. Peerless refused
to defend or to indemnify plaintiff.
Plaintiff thereupon filed the instant declaratory judgment action,
asking the trial court to determine that Peerless was obligated under the
insurance policy to defend and indemnify in connection with the tenant's
claims. When it emerged that plaintiff claimed that NEAC had failed to
give notice of intent to cancel the policy, as required by 8 V.S.A. §
7009(b), Peerless brought a third-party complaint against NEAC alleging
that Peerless is entitled to indemnification from NEAC in the event the
court found that its cancellation of the plaintiff's policy was
ineffective. Plaintiff thereafter asserted a claim directly against NEAC,
alleging that NEAC is liable to the plaintiff for failing to comply with
the notice provisions of 8 V.S.A. § 7009. See V.R.C.P. 14(a) (when
defendant acts as third-party plaintiff to bring in third-party defendant,
plaintiff "may assert any claim against the third-party defendant arising
out of the transaction or occurrence that is the subject matter of the
plaintiff's claim against the third-party plaintiff").
In the third-party complaint, plaintiff sought an order determining that
NEAC must provide all the rights and benefits plaintiff would have received
under the Peerless policy and pay any other damages caused by the illegal
cancellation.
Both Peerless and plaintiff moved for summary judgment and, on May 17,
1996, the trial court found for Peerless, holding that the cancellation of
the policy was effective. However, NEAC filed a cross-claim against
Peerless, and the court denied a request by Peerless under V.R.C.P. 54(b)
to enter final judgment in its favor against the plaintiff. Peerless and
plaintiff each moved for summary judgment against NEAC. The trial court
ruled on September 2, 1997 that NEAC's failure to comply fully with the
notice provisions of 9 V.S.A. § 7009(b) did not proximately cause
plaintiff's loss of insurance coverage and, therefore, that NEAC was
entitled to summary judgment in its favor on plaintiff's claim against it.
The court also ruled that, to the extent its resolution of plaintiff's
claim against NEAC did not render the remaining dispute between Peerless
and NEAC moot, Peerless was entitled to summary judgment on NEAC's
cross-claim. This appeal followed.
Plaintiff argues on appeal that (1) the failure of NEAC to provide a
preliminary notice of intent to cancel, as required by § 7009(b), made the
cancellation ineffective so that Peerless remained responsible to defend
and indemnify him up to the end of policy; (2) if the policy was properly
cancelled by Peerless, NEAC is liable to him for the benefits that would
have been provided under the policy because it failed to comply with the
cancellation requirements of 8 V.S.A. § 7009; and (3) NEAC's actions were
the proximate cause of plaintiff's loss of its insurance policy rights. We
begin with plaintiff's claim against Peerless.
The Vermont Legislature has enacted a comprehensive scheme for the
regulation, under the aegis of the Vermont Commissioner of Banking,
Insurance and Securities, of those engaged in the business of financing the
payment of insurance premiums in this state. See 8 V.S.A. §§ 7001-7011
(providing for licensing of premium finance companies, establishing
requirements for form of financing contracts, limiting interest and fees
thereunder and establishing fines and/or
imprisonment for violations, inter alia). The statutes regulate insurance
premium finance agreements, which are defined as
agreement[s] by which an insured or prospective insured
promises to pay to an insurance premium finance company the
amount advanced or to be advanced under the agreement to an
insurer or to an insurance agent or broker in payment of premiums
of an insurance contract together with interest and a service
charge as authorized and limited by this chapter.
8 V.S.A. § 7001(2). As part of this regulatory scheme, the statute
specifically authorizes such agreements to include a provision granting the
insurance premium finance company a power of attorney for purpose of
cancelling the underlying insurance policies in appropriate circumstances.
The agreement between plaintiff and NEAC contains such a power of attorney.
The finance company's exercise of cancellation authority is subject,
in relevant part, to the following detailed statutory requirements:
(a) When an insurance premium finance agreement contains a power of
attorney enabling the insurance premium finance company to cancel any
insurance contract or contracts listed in the agreement, the insurance
contract or contracts shall not be cancelled by the insurance premium
finance company unless such cancellation is effectuated in accordance with
this section.
(b) Not less than ten days' written notice shall be mailed to the
insured, at his last known address as shown on the records of the insurance
premium finance company, of the intent of the insurance premium finance
company to cancel the insurance contract unless the default is cured within
such ten day period.
(c) After expiration of such ten day period, the insurance premium
finance company may thereafter cancel such insurance contract or contracts
by mailing to the insurer a notice of cancellation. The insurance contract
shall be cancelled as if such notice of cancellation had been submitted by
the insured himself, but without requiring the return of the insurance
contract or contracts. Such cancellation shall be effective no less then
10 days after mailing of the notice to the insurer. The insurance premium
finance company shall also mail at least 10 days' notice of cancellation to
the insured at his last known address as shown on the records of the
insurance premium finance company.
Id. at § 7009. The statutory scheme contains no private remedy for
violation of § 7009 beyond that which may be implied in the wording of the
section. It does provide for criminal penalties.
Id. § 7011.
It is undisputed that the notice of cancellation NEAC sent plaintiff
and Peerless is the one set forth in § 7009(c) and that NEAC never sent
plaintiff a notice of intent to cancel as required by § 7009(b).(FN1) The
plaintiff here maintains, as he did without success in the trial court,
that NEAC's failure to comply with § 7009(b) entitles him to relief as
against both Peerless and NEAC. With respect to Peerless, his position is
that § 7009(a) specifically provides that the insurance policy "shall not
be canceled" except "in accordance with this section" and that Peerless's
cancellation violated this direction.
We agree with Peerless, and with the trial court, that there is no
basis for holding an insurance company directly liable to its insured in
these circumstances. Nothing suggests that Peerless violated the terms of
the contract of insurance it made with plaintiff. Neither plaintiff nor
NEAC contend that Peerless violated any statute or regulation governing the
cancellation of its policy, other than § 7009. Nor can we agree with
plaintiff that § 7009 has the effect of rendering the cancellation
ineffective, thus making Peerless liable under the policy, because NEAC
failed to comply fully with the notice requirements enumerated therein.
We note that the issue before us has been resolved by a number of
courts based on identical or similar statutory language. A leading case
for plaintiff's position is Kende Leasing Corp. v. A.I. Credit Corp., 524 A.2d 1306 (N.J. Super. Ct. App. Div. 1987), in which both the facts and the
statutory language are virtually identical to those in the case before us.
The court reasoned that if the insurer could effectively cancel the policy
despite the failure of the finance company to send the notice of intent to
cancel, the notice requirement would be meaningless. Id. at 1311. The
court also reasoned that the premium finance company's ability
to use the power of attorney was conditional on it acting consistently with
the statute. Thus, in the court's view, if the finance company failed to
comply with the statute, its request to cancel was ineffective and made the
cancellation also ineffective. Id. at 1313. Finally, the court concluded
that a remedy against the premium finance company would be less effective
because the purpose of the law was to allow the insured to prevent a
cancellation rather than to give the insured a remedy if a cancellation
occurred. Id. at 1311-12. For these reasons, the court held that the
insurer remained responsible to defend and indemnify the insured as if the
cancellation had not occurred.
The opposing view is represented by Universal Fire & Cas. Ins. Co. v.
Jabin, 16 F.3d 1465 (7th Cir. 1994), another case with a virtually
identical fact pattern and statutory scheme to that in this case. The
court held that to construe the premium finance act to protect insureds by
"giving them recourse against insurers as well, would torture the Act's
ordinary meaning." Id. at 1468. Thus, the court noted that the language
prohibiting cancellation without compliance with the notice requirements
specifically applied to the premium finance company, and not the insurer.
Id. It reasoned that if the insurer's cancellation was ineffective because
of the finance company's failure to give notice, the burden of notice was
effectively reallocated to the insurer, a reallocation the Legislature did
not intend. Id. at 1469. It specifically disagreed with Kende's
conclusions that the lack of a remedy against the insurer made the notice
provisions meaningless or that a remedy against the finance company was
ineffective to implement the legislative purpose. Id. at 1470.
We are more persuaded by the court's analysis in Jabin. "We must
construe a statute according to the ordinary meaning of the words the
legislature has chosen." In re Villeneuve, ___ Vt. ___, ___, 709 A.2d 1067, 1072 (1998). Nothing in the statutory scheme suggests that the
insurer is responsible for the improper actions of the finance company.
The insurance premium finance agreement is between the insured and the
finance company, and the insurer is not a party to it. There is no
supervisory or monitoring relationship between the insurer and the finance
company. When the Legislature has deemed it appropriate to regulate or
limit an insurance company's ability to cancel a policy it has issued, the
Legislature has enacted statutes that plainly say so. See, e.g., 8 V.S.A.
§§ 3879-80 (cancellation of fire and casualty insurance); id. at §§
4223-24 (same, automobile insurance); id. at §§ 4711-12 (same, commercial
risk insurance). There is no such limitation in section § 7009 -- a
statute which, after all, covers not a situation in which an insurance
company is acting unilaterally to cancel a policy but is simply following
cancellation instructions it has received from an agent of the insured. See
-Avery v. Bender, 119 Vt. 313, 332, 126 A.2d 99, 111-12 (1956) (power of
attorney confers agency powers upon grantee "to do any act which the
grantor might himself lawfully perform"); Neet v. Silver Street
Partnership, 148 Vt. 99, 105, 528 A.2d 1117, 1120 (1987) (under doctrine of
apparent authority, agent binds principal when third-party reasonably
relies on representations by agent that agent acting within scope of
authority).
As the Jabin court emphasized, the statutory language restricting
cancellation without compliance with the statute specifically restricts
cancellation "by the insurance premium finance company."(FN2) 8 V.S.A. §
7009(a). Thus, we find that Jabin comports with the proper construction of
the statute.
We also do not find controlling the policy considerations relied upon
in Kende. We do not believe the notice requirements are ineffective as
long as there is an adequate remedy against the finance company. Nor can
we conclude that a remedy against the finance company will be less
effective than a remedy against the insurer in discouraging improper
cancellations in the
future.
It follows logically that any wrong here was committed by the premium
finance company, and it is therefore the party to whom the insured should
turn for recovery. See Illinois Ins. Guar. Fund v. Evanston Paper & Paper
Shredding Co., 649 N.E.2d 568, 569 (Ill. App. 1995). We believe that
plaintiff can recover against the premium finance company on either of two
theories.
First, we conclude that we should infer the existence of a private
right of action in favor of the insured and against the premium finance
company. In determining whether to infer a private right of action based
on a statutory claim, most states have used the factors similar to those
set out by the United States Supreme Court in Cort v. Ash, 422 U.S. 66
(1975): (1) whether plaintiff is one of a class for whose "especial
benefit" the statute was enacted; (2) whether there is any indication of
legislative intent, express or implied, to allow or deny a remedy; and (3)
whether it is consistent with the legislative scheme to imply a remedy for
the plaintiff.(FN3) Id. at 78; see Corgan v. Muehling, 574 N.E.2d 602, 609
(Ill. 1991); Marquay v. Eno, 662 A.2d 272, 277-78 (N.H. 1995); Carrier v.
Salvation Army, 667 N.E.2d 328, 329 (N.Y. 1996); Walker v. Chouteau Lime
Co., 849 P.2d 1085, 1086-87 (Okl. 1993); Reed v. Phillips, 452 S.E.2d 708,
709 (W. Va. 1994). We have not specifically adopted the Cort factors, but
our decisions are not inconsistent with them. See Rowe v. Brown, 157 Vt.
373, 378, 599 A.2d 333, 336 (1991) (no private right of action for damages
for violation of open meeting law because there is no indication of
legislative intent, express or implied, to create private remedy, citing
Cort); Cronin v. State, 148 Vt. 252, 255, 531 A.2d 929, 931 (1987) (no
private right of action for violation of a personnel regulation because
regulation was not promulgated for special benefit of plaintiff, citing
Cort). Most recently, in Murray v. St.
Michael's College, 164 Vt. 205, 208-09, 667 A.2d 294, 298 (1995), we
inferred a private right of action for damages where an employee alleged
that an employer had violated 21 V.S.A. § 710(b) by discriminating against
the employee in retaliation for filing a workers' compensation claim. We
held that such a cause of action was necessary to ensure that the workers'
compensation system worked as the Legislature intended; otherwise the
public policy objectives of the workers' compensation system would be
defeated because of fear of reprisal. Id. at 209-10, 667 A.2d at 298. We
adopt the Cort factors to determine whether to infer a private right of
action based on a statutory violation.(FN4)
In this case, at least two of the Cort factors strongly support
adoption of a private right of action. The notice requirements of 8 V.S.A.
§ 7009(b) were specifically adopted to provide protections to persons in
plaintiff's position. The ten day notice period was created to give the
insured the opportunity to make the overdue payment and avoid cancellation.
Second, creation of a private remedy is necessary to enforce the
prohibition on the cancellation of the insurance by the premium finance
company without giving proper notice. The only potential statutory
consequence of failing to give proper notice is a criminal prosecution if
the violation is willful and knowing. See 8 V.S.A. § 7011. The statute
also provides that premium finance agreements made in violation of the
statute shall be void, but that provision offers no protection if a valid
agreement is improperly administered to the detriment of the insured.
Finally, we believe that the legislative intent to allow a private remedy
against the premium finance company is at least implied in the specific
prohibition on cancellation without following the notice provisions of the
statute. See 8 V.S.A. § 7009(a).
The Illinois courts have found a private right of action against the
premium insurance company for violation of the notice requirements of their
statute, which in all relevant aspects
is identical to the Vermont statute. See Haft v. Charter Oak Fire Ins.
Co., 635 N.E.2d 843, 846 (Ill. App. Ct. 1994). We agree with their
analysis and reach the same conclusion.
We can also find the insurance premium finance company liable on a
theory of breach of its contractual obligation to plaintiff. In its
agreement with plaintiff, and pursuant to 8 V.S.A. § 7009(a), NEAC took a
power of attorney that gave it the power to cancel plaintiff's policy with
Peerless. By its terms, the power of attorney empowered it to give notice
as required by law and "to do all things necessary to effect cancellation."
The power of attorney created an agency relationship that placed NEAC
in a fiduciary relationship with plaintiff. See Restatement (Second) of
Agency §§ 13, 34 cmt. h (1958). The agent had the duty to abide by the
terms of the contract with the principal, id. § 377; to act "in the
principal's affairs ... in accordance with the principal's manifestation of
consent," id. § 383; and to act for the benefit of the principal except as
otherwise agreed, id. § 387 (duty of "loyalty"). When the agent violates a
legal duty, the principal has an action for violation of the agency
contract and "for losses." Id. § 399(a), (b); see also Fuller v. Ellis, 39
Vt. 345, 349 (1867) (principal may sue agent for breach of duty).
We agree with plaintiff that there was a clear violation of the
agent's duties in this case. NEAC used its power of cancellation without
complying with legal requirements of notice imposed to protect the
interests of the principal. Thus, it acted outside the limits of the power
of attorney and failed to discharge its fiduciary duty of loyalty to
plaintiff. It is liable for plaintiff's consequential damages.
In reaching the conclusion that NEAC can be liable for damages caused
by its failure to comply with its statutory notice obligation, we are
agreeing with the conclusion reached by the trial court. That court went
on, however, to hold that as a matter of law plaintiff had no provable
damages, and this is the main issue that has divided the parties on appeal.
In rendering summary judgment for defendant on damages, the trial
court particularly relied upon the fact that plaintiff had twice before
failed to pay installments when due. On each
of these occasions, plaintiff failed to pay after receiving notice of
cancellation, and the insurance was canceled. On each occasion, plaintiff
tendered the overdue amount and sought reinstatement, and Peerless
reinstated the policy on request of NEAC. The cancellation at the center
of this action followed the same pattern, but Peerless refused to reinstate
the insurance on this third occasion. The record does not reflect whether
Peerless was aware of the claim against plaintiff when it decided not to
reinstate the policy.
The trial court reasoned that the record showed that plaintiff would
not have paid the premium even if he had received the notice required by §
7009(b), and the insurance would have been canceled. Further, the trial
court found that Peerless would not reinstate the policy, whether or not
notice had been given. Thus, it concluded that the lack of notice was
irrelevant to the policy cancellation, and plaintiff suffered no damages
from NEAC's non-compliance with § 7009(b).
Plaintiff argues that the court adopted a standard of causation that
was too narrow, and, in any event, went beyond its limited role in deciding
a motion for summary judgment and found disputed facts. We agree on both
points.
Summary judgment is inappropriate if there is a disputed issue of
material fact. See V.R.C.P. 56(c). In determining whether there is a
disputed issue of material fact, the party opposing summary judgment is
entitled to the benefit of all reasonable doubts and inferences. See
Pierce v. Riggs, 149 Vt. 136, 139, 540 A.2d 655, 657 (1987).
Even based on the theory that NEAC must prevail unless plaintiff can
prove that he would have avoided cancellation, or obtained reinstatement,
we believe that plaintiff showed enough to avoid summary judgment. The
record does not show that NEAC provided notice of intent to cancel, as
required by 8 V.S.A. § 7009(b), for either of the prior cancellations.
Thus, the trial court's conclusion that the notice of intent to cancel
would have had no effect goes too far on this record. However, even if
proper notice had been given on the earlier occasions, we do not believe
that the payment history conclusively establishes that the notice would
have been
ineffective on this occasion. Certainly, the trial court could give great
weight to the payment history evidence in a trial on the merits, but we do
not believe it shows that the lack of a disputed issue of material fact.
In any event, there is another view of the evidence by which plaintiff
could prevail, even adopting the trial court's theory of causation. This
case deals only with a single claim against plaintiff, based on a fire that
occurred only eleven and one half hours after the effective date and time
of cancellation. If the cancellation had occurred only one day later, the
claim would have been covered. If NEAC had started the process of
cancellation on the day that it did, and fully complied with § 7009(b), the
cancellation would have been delayed for a week, well beyond the time
necessary to cover the claim. Nothing in the record tells us when NEAC
would have started the notification process of cancellation if it followed
the statute. Irrespective of how we might predict plaintiff's behavior in
response to the notices he would have received, we cannot say that the
additional notice time required by the statute would have expired when the
fire occurred.
Because of the speculation involved in determining causation through
hindsight, we are convinced that a narrow view of causation is inadequate
in fashioning an appropriate remedy. In finding a private right of action
against the premium finance company, we presume the availability of all
appropriate remedies unless the statute expressly limits the remedies
available. See Franklin v. Gwinnett County Pub. Schools, 503 U.S. 60, 66
(1992).
The trial court assumed that the remedy would be an award of damages
under the standards applicable to a breach of contract. Although that
remedy would often be adequate, the statutory action allows us to consider
equitable remedies that are a blend of what is necessary, what is fair and
what is workable. See American Trucking Ass'ns v. Conway, 152 Vt. 363,
378, 566 A.2d 1323, 1332 (1989) (quoting Lemon v. Kurtzman, 411 U.S. 192,
200 (1973)). We agree with those courts that have held the insurer
responsible in concluding that the appropriate remedy is to declare the
cancellation ineffective and to leave the parties as if the
cancellation had not occurred. See Kende, 524 A.2d at 1312 (purpose of
statute is "to help an insured keep his policy from lapsing, not to give
him recourse against a finance company once the hardships of not having
coverage have already befallen him"). We impose that remedy on the premium
finance company, rather than the insurer, so that company must provide to
the insured all the benefits of the policy as if the cancellation did not
occur.
This remedy is necessary to implement the statutory prohibition on the
premium finance company using the power of attorney to cancel the policy,
except pursuant to the § 7009 procedures. It places the plaintiff in the
same position as if the illegal cancellation had not occurred. It avoids
the expensive, difficult and ultimately speculative process of trying to
determine what would have happened if the premium finance company had
complied with the law. It provides a strong incentive for the company to
comply with the statute and avoid what could be extensive liability
exposure. Like the rule we have applied in an analogous situation --
failure to comply with notice provisions governing failure of a secured
party to notify a debtor of the sale of repossessed collateral under
Article 9 of the Uniform Commercial Code -- such a remedy for misuse of a §
7009 power of attorney is "simple, certain, and easily administered."
Chittenden Trust Co. v. Andre Noel Sports, 159 Vt. 387, 395, 621 A.2d 215,
220 (1992).
Under this remedy, plaintiff must prevail against NEAC and should have
been awarded summary judgment. Plaintiff's policy had not been effectively
canceled when the fire occurred which gave rise to the claim against
plaintiff. NEAC is obligated to provide plaintiff the benefits under the
policy.
The award of summary judgment to Peerless Insurance Company is
affirmed. The award of summary judgment to New England Acceptance
Corporation is reversed. The matter is remanded for the award of summary
judgment to plaintiff, Gregory Carr, against New England
Acceptance Corporation and for such further proceedings as are consistent
with this opinion.
FOR THE COURT:
_______________________________________
Associate Justice
---------------------------------------------------------------------------
Footnotes
FN1. Peerless sought in its initial summary judgment motion to
generate a genuine issue of material fact as to whether NEAC mailed
plaintiff a notice of intent to cancel. When the trial court ruled in
favor of Peerless, it simply assumed that the notice of intent to cancel
was never sent. On appeal, plaintiff asserts that NEAC never sent the
intent notice, a factual position not contested by either Peerless or NEAC.
FN2. The language of our statute serves to distinguish some of the
cases that find the insurer's cancellation ineffective. For example, the
Florida statute construed in Insurance Co. of North America v. Cooke, 624 So. 2d 252 (Fla. 1993), provides that when the premium financing company has
acquired a power of attorney for cancellation purposes, "the insurance
contract shall not be canceled unless cancellation is in accordance with
[notice provisions substantially similar to Vermont's]." Id. at 254 n.2
(quoting Section 627.848, Florida Statutes (1987)). In contrast, the
language of the Vermont statute specifically prohibits cancellation "by the
insurance premium finance company." 8 V.S.A. § 7009(a) (emphasis added).
FN3. The Court added a fourth factor, not relevant here: whether the
cause of action is one traditionally relegated to state law, in an area of
concern of the states, so it would be inappropriate to infer the existence
of a federal cause of action. Id.
FN4. The analysis of whether to recognize a private right of action
for violations of the Vermont Constitution will continue to be governed by
Shields v. Gerhart, 163 Vt. 219, 231-35, 658 A.2d 924, 932-34 (1995).
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