Suchoski v. Redshaw

Annotate this Case

SUCHOSKI_V_REDSHAW.94-344; 163 Vt 620; 660 A.2d 290

[Filed 24-Mar-1995]

ENTRY ORDER

SUPREME COURT DOCKET NO. 94-344

FEBRUARY TERM, 1995

Alison Suchoski & Linda Newton } APPEALED FROM:
}
}
v. } Chittenden Superior Court
}
Robert Redshaw, Derick Redshaw }
& Andy Redshaw } DOCKET NO. S1415-92CnC
}
v. }
}
The Travelers Insurance Company, }
Inc. and The Phoenix Insurance }
Company }

In the above entitled cause the Clerk will enter:

On April 24, 1990, plaintiff Alison Suchoski was injured while riding a
bicycle owned by defendant Derick Redshaw and loaned to her by defendant Andy
Redshaw. The only issue on appeal is whether the homeowners policy issued to
Derick and Andy's parents by Phoenix Insurance Company was in effect on the
date of the accident.

In 1989, Phoenix issued a homeowners policy to defendant Robert Redshaw
and his then wife Rhonda Redshaw.(FN1) The insurance contract provided
coverage for losses occurring "during the policy period shown in the
Declarations." The declarations stated that the policy period ran for twelve
months beginning March 13, 1989 to March 13, 1990. The contract further
provided:

If we elect to continue this insurance, we will renew this policy if
you pay the required renewal premium for the successive policy
period, subject to our premiums, rules and forms then in effect.
You must pay us prior to the end of the current policy period or
else this policy will not continue.

(Emphasis added.)

In January 1990, defendant Robert Redshaw received a renewal notice from
Phoenix, notifying him to make payment of the premium by March 13, 1990 to
ensure coverage after that date. He did not pay the required premium, but,
instead, purchased insurance from another company.

On April 12, 1990, Phoenix mailed defendant a document entitled, "Offer
to Reinstate." The bottom portion of the "Offer to Reinstate" read:

*IMPORTANT NOTICE - OFFER TO REINSTATE*

YOUR POLICY EXPIRED ON 03/13/90 AT THE TIME STATED IN
YOUR POLICY OR THE DECLARATIONS PAGE BECAUSE WE DID
NOT RECEIVE THE PAYMENT DUE ON YOUR PREMIUM BY THE
DUE DATE. HOWEVER, WE WILL BE HAPPY TO REINSTATE
THIS POLICY WITHOUT INTERRUPTION IF YOU PAY THE
"TOTAL AMOUNT" BY 05/02/90.

(Emphasis added.) Again, defendant did not pay the stated premium amount or
take any action to reinstate the policy with Phoenix.

Also on April 12, Phoenix mailed to defendant's mortgagee a document
entitled "Certificate of Mailing." This document stated:

NOTICE OF CANCELLATION . . .

WE ARE PLEASED TO HAVE YOU AS A CUSTOMER AND
WOULD LIKE TO BE ABLE TO CONTINUE TO PROVIDE
YOUR INSURANCE. UNFORTUNATELY, WE HAVE NOT
RECEIVED THE PREMIUM PAYMENT DUE ON THIS
POLICY. THEREFORE, YOUR POLICY DESIGNATED
ABOVE IS CANCELLED IN ACCORDANCE WITH ITS
TERMS ON THE EFFECTIVE DATE OF CANCELLATION
SHOWN ABOVE, AND AT THE TIME ON WHICH THE
POLICY BECAME EFFECTIVE. . . . WE . . . WILL BE
PLEASED TO REINSTATE THIS COVERAGE IF WE
RECEIVE YOUR PAYMENT ON OR BEFORE THE
EFFECTIVE DATE OF CANCELLATION.

The "effective date of cancellation" shown on the certificate was May 2,
1990. In response to this notice, the mortgagee wrote to defendant informing
him that it received a notice of cancellation of insurance.

Plaintiffs claim that defendant's insurance policy was in effect on
April 24, 1990 because the "Certificate of Mailing" unequivocally indicated
that the policy would not be cancelled until

May 2, 1990. We disagree.

We must interpret an insurance contract by looking at its provisions
together and viewing them in their entirety. Sanders v. St. Paul Mercury
Ins. Co., 148 Vt. 496, 501, 536 A.2d 914, 917 (1987). We interpret the
contract according to its terms and the parties' intent as expressed in the
contract language. Peerless Ins. Co. v. Wells, 154 Vt. 491, 493, 580 A.2d 485, 487 (1990). While we will strictly construe an insurance contract
against the insurer, resolving any ambiguity in the insured's favor, the
insurer is "not to be deprived of unambiguous provisions placed in a policy
for its benefit." Id. at 494, 580 A.2d at 487.

The expiration date of defendant's policy with Phoenix was unambiguously
expressed in the contract. The policy period began on March 13, 1989 and
ended on March 13, 1990. Further, the contract required that defendant pay
the premium "prior to the end of the current policy period or else [the]
policy [would] not continue." In other words, renewal of the policy was
conditioned upon payment of the premium before March 13, 1990. Defendant did
not pay Phoenix the premium amount prior to March 13, 1990, or any time
thereafter. Thus, the policy expired by its own terms on March 13, 1990.

The subsequent notices Phoenix sent to defendant and his mortgagee do
not change this result. The April 12, 1990 "Offer to Reinstate"
unambiguously stated that the policy had expired on March 13, 1990. It
extended an offer to defendant to reinstate the policy if defendant remitted
the premium to Phoenix by May 2, 1990. This notice was merely an offer,
which defendant rejected, and did not extend Phoenix's obligations under the
prior contract. See McClure v. State Farm Auto. Ins. Co., 148 S.E.2d 475,
477 (Ga. Ct. App. 1966) (insurer's offer to provide continuous coverage if
premium paid within ten days after expiration date of policy does not bind
insurer to pay loss occurring during ten-day period unless insurer's offer is
accepted by insured by actual payment of premium, or part thereof); Leide v.
Jacy Painting Co., 125 N.Y.S.2d 115, 116 (N.Y. App. Div. 1953) (per curiam)
(issuing policy to renew for subsequent term is merely offer to continue
coverage; insured rejected offer, and thus, no new insurance contract was
created); 18 M. S. Rhodes, Couch Cyclopedia of Insurance Law 69:31, at
97-98 (2d rev. ed. 1983) (to bind insurer, offer to renew policy must be
accepted by insured before loss has occurred); cf. J.C. Durick Ins. v.
Andrus, 139 Vt. 150, 152, 424 A.2d 249, 250 (1980) (insurer not entitled to
premium merely by sending insured new policy with clause providing that
insured could cancel new policy by returning it; new policy was offer and
insured's silence did not constitute acceptance to form contract of
insurance).

Plaintiffs argue that the April 12, 1990 notice sent to defendant's
mortgagee shows that the policy remained in effect at the time of plaintiff
Alison Suchoski's injury. Although this notice stated that the effective
date of cancellation for the policy would be May 2, 1990, it also stated that
the policy would be reinstated upon payment of a premium. Plaintiffs urge us
to find an ambiguity in the insurance contract from the ambiguity in this
notice. We decline to do so.

The contract language was clear that the policy would end on March 13,
1990, and the subsequent notices sent to defendant were consistent with that
language. The April 12, 1990

notice to defendant's mortgagee was merely an offer to reinstate the lapsed
insurance contract. This notice neither revived the expired contract nor
conferred any rights on defendant. See Laustrup v.Bankers Life co., 196 S.W.2d 260, 264 (Mo. 1946) (mailing of premium notice after notice advising
insured that policy had lapsed did not revive or reinstate lapsed policy).

Plaintiffs also argue that the policy was in effect on April 24, 1990
because Phoenix did not provide defendant with the proper cancellation notice
required by statute. See 8 V.S.A. 3880 (specifying procedure for notice
of cancellation). But 3880 does not apply to nonrenewals of insurance
contracts. Id. 3880(c). This case did not involve the cancellation of
defendant's policy, but involved defendant's choice not to renew the policy
with Phoenix; thus, Phoenix was not required to provide the notice set forth
in 3880. Cf. Lumbermens Mut. Casualty Co. v. Haynes, 293 S.E.2d 744, 745
(Ga. Ct. App. 1982) (because policy not renewed and no premiums paid, policy
expired and cancellation statute not applicable); Sampson v. State Farm Mut.
Ins. Co., 286 N.W.2d 746, 749 (Neb. 1980) (cancellation statute by its own
terms does not apply to nonrenewal).

Plaintiffs argue, however, that the 3880 does apply to the present
case because an amendatory endorsement to the contract provided that the
policy would not lapse automatically at the end of the policy period if
Phoenix expressed its willingness to renew the policy. Although this argument
is creative, it has little merit. The "notice of cancellation" mentioned in
3880 refers to unilateral action by an insurer to terminate a policy
before the end of the policy period. See Sampson, 286 N.W.2d at 749. No
such action occurred here. Moreover, the contract and the reinstatement
notices stated clearly that the policy had expired on March 13, 1990 and
could be reinstated or renewed only by paying the required premiums. Simply
stated, there was no insurance contract to cancel after March 13, 1990 and
3880 did not apply.

Affirmed.

BY THE COURT:

_______________________________________
Frederic W. Allen, Chief Justice

_______________________________________
Ernest W. Gibson III, Associate Justice

_______________________________________
John A. Dooley, Associate Justice

_______________________________________
James L. Morse, Associate Justice

_______________________________________
Denise R. Johnson, Associate Justice

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Footnotes

FN1. Defendant and Rhonda Redshaw were divorced in early 1990.

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