-JFA Jones v. Nationwide Mutual Insurance Company, No. 1:2010cv00521 - Document 31 (E.D. Va. 2010)
Court Description: MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 12/14/2010. (jall)
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. 2007). Virginia follows the general principle that an insurance contract is interpreted pursuant to the law of the place where the policy was delivered. S.E.2d 289, 291 (1993). Buchanan v. Doe, 246 Va. 67, 70, 431 The Policy was issued by the Defendant’s representative issuing office in Lynchburg, Virginia, by an agent located in Fairfax, Virginia. Therefore, the Policy is governed by Virginia law, and in Virginia, “[c]ourts interpret insurance policies, like other contracts, in accordance with the intention of the parties gleaned from the words they have used in the document.” Copp v. Nationwide Mut. Ins. Co., 279 Va. 675, 681, 692 S.E.2d 220, 223 (2010) (internal citation marks and quotations omitted). As to the Settlement Agreement, it contains a choice of law provision designating District of Columbia law as governing its construction, interpretation, and enforcement. (D. Exs. C, D.) Accordingly, this Court will apply the substantive law of the District of Columbia in interpreting the Settlement Agreement, as “[t]he law of Virginia favors contractual choice of law provisions, giving them full effect except in unusual circumstances.” Ettinger v. Milvets Sys. Tech., Inc., 38 F. App’x 962, 965 (4th Cir. 2002) (citing Tate v. Hain, 181 Va. 402, 410 25 S.E.2d 321, 324 (1943)). 7 The D.C. court has recently “reiterated [its] ‘adhere[nce] to the doctrine that releases are contracts and should be construed according to established rules of contract interpretation.’ In that regard, [D.C. courts] “look to ‘the parties’ intentions as paramount’ in interpreting the release.”3 Convit v. Wilson, 980 A.2d 1104, 1114-115 (D.C. 2009) (quoting Noonan v. Williams, 686 A.2d 237, 240 (D.C. 1996)). “If the release is facially unambiguous, we must rely solely upon its language as providing the best objective manifestation of the parties’ intent.” Noonan v. Williams, 686 A.2d 237, 241 (D.C. 1996) (citation omitted). B. Legally Obligated to Pay Defendant’s argument has two prongs. First, that any rights Jones has under the Policy would arise from the assignment to Jones of Jun and Park’s rights under the Settlement Agreement, and the Policy prohibits the assignment of rights without Defendant’s written consent. Second, that Jones released Jun and Park from any legal obligation to pay the Judgment, and thus Defendant is not obligated by the Policy to pay any coverage to anyone on their behalf. The Court will address each of these arguments in turn. 3 For clarity’s sake, the Court notes that this method of interpretation applies equally to “settlement agreements” as well as “releases.” See Convit, 980 A.2d at 1120. 8 i. Jones’s Rights Under the Policy Jones is not a party to the Policy. “Under well- settled principles of contract law, a stranger to a contract ordinarily has no rights under the contract and cannot sue to enforce it.” Verosol B.V. v. Hunter Douglas, Inc., 806 F. Supp. 582, 586 (E.D. Va. 1992) (citing 2 Samuel Williston A Treatise on the Law of Contracts § 347 (3d ed. 1959). The issue the Court considers, then, is whether Jones has rights under the Policy as a result of the assignment provided in the Settlement Agreement. The Settlement Agreement certainly provides that Jun and Park would assign their rights to Jones. Paragraph 3 of the Settlement Agreement provide that Jun and Park would “transfer and assign to [Jones] all claims, rights, Causes of Action they may have against any . . . insurers which [sic] arise from or are related to the facts set forth in the [Tort Action].” Exs. C, D at 5.) (D. Assuming, arguendo, that Jun and Park would have rights against Defendant arising from or related to the facts set forth in the Tort Action, they plainly agreed to assign those rights to Jones. The Policy, however, expressly bars ABC’s assignment of its rights or duties without Defendant’s written consent. (D. Ex. B at 31 [Dkt. 23-2]). Specifically, the Policy states that “[ABC’s] rights and duties under this policy may not be 9 transferred without our written consent,” except in the case of death of a named insured, not relevant here.4 Id. Nothing in the record shows that Defendant provided such written consent. As a result, any rights Jun and Park had pursuant to the Policy have not been assigned to Jones. Jones, therefore, does not have any rights under the Policy. As Jones does not have rights under the Policy, whether as a party or an assignee, there are not any that Defendant could have breached. Accordingly, no reasonable trier of fact could find for Jones with respect to his breach of contract claim, and summary judgment in favor of Defendant is appropriate. ii. The Effect of the Settlement Agreement on Jun and Park’s Liability As to Jun and Park’s claim of breach of contract, the Court must determine whether, considering the Settlement Agreement, Jun and Park had any rights to collect from the Policy. Assuming, arguendo, that Jun and Park could collect under the Policy in absence of the Settlement Agreement, the issue is whether their execution of the Settlement Agreement in the Tort Action affected those rights. 4 That Jun and Park could not assign to Jones any rights under the Policy is of no moment, as the Settlement Agreement expressly provides for such a circumstance. Paragraph 3(f), the operative assignment provision, assigns to Jones all rights under the Policy, but contains a second sentence: “[Jun and Park] make no representations, warranties, or promises about the existence or related viability of any such rights.” (D. Exs. C, D.) Although the Settlement Agreement could have provided that Jun and Park represented that they, in fact, could assign Jones the relevant rights, it did not. As a result, Jones is without recourse in precisely this situation. 10 Pursuant to Paragraph 3(b) of the Settlement Agreement, Jones expressly agreed “not to execute on [the Judgment] against [Jun and Park] except to the extent that such execution may be satisfied by other insurers or entities as part of those claims, rights, or causes of actions [sic] transferred and assigned to [Jones] as part of [the Settlement Agreement].” (D. Exs. C, D). By its plain terms, then, the Settlement Agreement bars Jones from executing the Judgment, with a limited exception. That limited exception applies only when the Judgment may be paid by third parties, and then only if pursuant to any rights transferred to Jones by Jun and Park under the Settlement Agreement. That limited exception is not present here--as set forth above, Jun and Park did not transfer their rights under the Policy to Jones. Thus, the “execution [of the Judgment] may” not “be satisfied by other insurers or entities as part of those claims, rights, or causes of actions [sic] transferred and assigned to [Jones] as part of [the Settlement Agreement].” (D. Exs. C, D) (emphasis added). Accordingly, the exception to Jones’s release of Jun and Park does not apply, and Jones released Jun and Park from any liability resulting from the Tort Action, pursuant to the first clause of Paragraph 3(b). The Policy provides coverage to the insured only in certain instances. Relevant here, the Policy states that Defendant “will pay those sums that the insured becomes legally 11 obligated to pay as damages because of ‘bodily injury,’ ‘property damage,’ [or] ‘personal injury’ . . . to which this insurance applies. . . . No other obligation or liability to pay sums or perform acts or services is covered,” with certain exceptions not applicable here. (D. Ex. B at 16 [Dkt. 23-2]) The insured must be legally obligated to pay a sum before the insured has a right to coverage under the Policy, as provided by its terms. As set forth above, Jones released Jun and Park from any legal obligation to pay the Judgment. Because Jun and Park were not legally obligated to pay, Defendant is not obligated to do so either, pursuant to the Policy. Thus, Jun and Park have no rights against Defendant stemming from the Tort Action. As such, no reasonable trier of fact could find that Defendant has breached such a non-existing right. Accordingly, summary judgment in favor of Defendant as to Plaintiffs Jun and Park is appropriate. IV. Conclusion For these reasons, the Court will grant Defendant’s Motion for Summary Judgment. An appropriate Order will issue. December 14, 2010 Alexandria, Virginia /s/ James C. Cacheris UNITED STATES DISTRICT COURT JUDGE 12
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