          United States Court of Appeals
                     For the First Circuit


No. 08-2269

                 BRISTOL WEST INSURANCE COMPANY,

                      Plaintiff, Appellee,

                               v.

               WAWANESA MUTUAL INSURANCE COMPANY,

                     Intervenor, Appellant,

              MELANIE LANDRY; ROLLIN H. SMALL, JR.,

                           Defendants.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF MAINE

          [Hon. George Z. Singal, U.S. District Judge]


                             Before

                        Lynch, Chief Judge,
               Farris* and Howard, Circuit Judges.



     Peter C. Felmly with whom Melissa A. Hewey and Drummond
Woodsum & MacMahon were on brief for appellant.
     Hans H.J. Pijls with whom Plunkett Cooney, P.C., James D.
Poliquin, Norman, Hanson & DeTroy, LLC were on brief for appellee.


                          July 1, 2009



     *
          Of the Ninth Circuit, sitting by designation.
           LYNCH, Chief Judge. Melanie Landry, a resident of Maine,

was involved in a car accident in New Brunswick, Canada, on

November   28,   2003   in    which   Keith   Savoie,   a   resident   of   New

Brunswick, was injured.         Landry was driving a vehicle owned by

Rollin H. Small, Jr. when she hit Savoie's pickup truck, which was

owned by Savoie's father, from the rear.

           Landry was insured for the accident under a policy which

was issued by Bristol West ("BW") for the six-month period from

November 20, 2003 to May 20, 2004.             Savoie filed suit against

Landry and Small in New Brunswick; BW handled the claim.               Savoie

claimed injuries to his neck and back and sought damages in excess

of $200,000 (Can.) for, inter alia, wage loss, loss of future

income, medical costs, and pain and suffering.              Savoie also filed

an action against Wawanesa Mutual Insurance Company, his insurer,

seeking recovery for damages for what he might be unable to recover

from Landry and Small.

           BW    brought     this   related   declaratory    judgment action

against Landry and Small in federal court in Maine.            The purpose of

the declaratory judgment suit, essentially, is to determine the

extent of Landry's coverage under a particular clause in the BW

policy in these circumstances.         Wawanesa was allowed to intervene.

The two insurers filed cross motions for summary judgment.

           BW's position is that its coverage is limited to the

$50,000 maximum coverage specified in Landry's policy for in-state

                                      -2-
accidents.    See Me. Rev. Stat. Ann. tit. 29-A, § 1605(1)(C)(2)

(specifying   $50,000   minimum   coverage   under   Maine's   compulsory

insurance law for bodily injury). Landry, Small, and Wawanesa take

the position that BW's coverage obligation is for $200,000 (Can.)

under an "Out of State Coverage" clause in the contract, because

the accident occurred in New Brunswick.

            The case thus presents a question of insurance contract

interpretation.     That is an issue of law for a court under Maine

law.   Foremost Ins. Co. v. Levesque, 868 A.2d 244, 246 (Me. 2005).

The district court resolved the case on cross motions for summary

judgment.    Independently, for each of those reasons, our review is

de novo.    See New Fed Mortg. Corp. v. Nat'l Union Fire Ins. Co. of

Pittsburgh, PA, 543 F.3d 7, 11 (1st Cir. 2008); Liberty Mut. Ins.

Co. v. Greenwich Ins. Co., 417 F.3d 193, 197 (1st Cir. 2005).

            The district court made two holdings:        First, it held

that the "Out of State" clause coverage language entitled Landry to

out of state coverage only "to the extent required by a financial

responsibility law to which the insured is subject."       Bristol West

Ins. Co. v. Landry, 577 F. Supp. 2d 459, 464 (D. Me. 2008).            It

then construed the New Brunswick financial responsibility statute

and concluded Landry was not entitled to the extra coverage.         Id.

at 465-66.    We disagree on the first point and have no need to

reach the second.




                                   -3-
                                        I.

           We begin with the plain language of the "Out of State

Coverage" clause:

           If an auto accident to which this policy
           applies occurs in any state or province other
           than the one in which "your covered auto" is
           principally garaged, we will interpret your
           policy for that accident as follows:

           A.     If the state or province has:

           1.        A financial responsibility or similar
                     law specifying limits of liability for
                     "bodily injury" or "property damage"
                     higher than the limit shown in the
                     Declarations, your policy will provide
                     the higher specified limit.

           2.        A compulsory insurance or similar law
                     requiring a non-resident to maintain
                     insurance whenever the nonresident uses
                     a vehicle in that state or province,
                     your policy will provide at least the
                     required minimum amounts and types of
                     coverage.

New   Brunswick    has   both   a   financial    responsibility    law    and   a

compulsory insurance law, with identical $200,000 (Can.) limits.

See   R.S.N.B. 1973, ch. M-17, § 271.           The parties agree that it is

the financial responsibility provision which is at issue.

           The    courts   of   Maine    would    apply   Maine   law    to   the

interpretation of the coverage provided in an automobile insurance

policy for a resident of Maine.         See Flaherty v. Allstate Ins. Co.,

822 A.2d 1159, 1165-68 (Me. 2003) (explaining that under Maine law

courts apply the "most significant contacts and relationships" test

and applying Maine law where, inter alia, parties were Maine

                                      -4-
residents and parties entered into insurance contract in Maine);

see also Restatement (Second) of Conflict of Laws § 188 (1971).1

Under Maine insurance law, there are certain well-accepted rules of

construction of such contracts.

          The ultimate touchstone of our analysis must be the

parties' intent in entering their bargain.       See, e.g., Pine Ridge

Realty, Inc. v. Mass. Bay Ins. Co., 752 A.2d 595, 601 (Me. 2000).

We view the policy from the standpoint of "an average person,

untrained in either the law or the insurance field, in light of

what a more than casual reading of the policy would reveal to an

ordinarily intelligent insured."        Peerless Ins. Co. v. Wood, 685

A.2d 1173, 1174 (Me. 1996).    Additionally, "[i]nsurance policies

are liberally construed by [the] court in favor of the insured."

Id.; see also Found. for   Blood Research v. St. Paul Marine & Fire

Ins. Co., 730 A.2d 175, 180 (Me. 1999); Union Mut. Fire Ins. Co. v.

Commercial Union Ins. Co., 521 A.2d 308, 310 (Me. 1987).         Under

Maine law, "[a]ny ambiguity in the [insurance] contract is resolved

against the insurer."   Union Mut. Fire Ins. Co., 521 A.2d at 310;

see also Allstate Ins. Co. v. Elwell, 513 A.2d 269, 271 (Me. 1986).

          Read literally, the Out of State Coverage clause states

that it will provide coverage for an accident which occurs out of

state up to the limits of liability provided for by a financial


     1
          Although a complete copy of the BW policy was not
submitted to the district court, all parties agreed that Maine law
governed the case, and the district court accepted that agreement.

                                  -5-
responsibility law of the place of the accident.            It is undisputed

that New Brunswick, the place of the accident, has a financial

responsibility law that requires nonresident motorists to satisfy

a judgment of up to $200,000 (Can.), and to provide proof of

financial responsibility in the amount of $200,000 (Can.), to avoid

suspension   of   their    driving   privileges    following    an   accident

causing personal injury or $1000 (Can.) in damages.            See R.S.N.B.

1973, ch. M-17, §§ 276(1)(a), 282.               The contract provision's

language,    which   was   crafted   by    the   insurer,   then   is   easily

understood to increase the coverage amount in this instance to

$200,000 (Can.).

            BW essentially argues that the provision should be read

not as an expansion of coverage for the insured, but only as a

potential expansion subject to a limitation.            The limitation BW

wishes to read into the policy language is that the insured gets

the benefit of the increased coverage amount if and only if New

Brunswick's financial responsibility law would actually apply to

these facts.   It argues that the New Brunswick law would not apply.

Without our going into a long exegesis on the New Brunswick

financial responsibility law, at the heart of BW's argument is that

this was a first accident and under financial responsibility laws,

as Couch on Insurance recognizes, usually the first accident is

essentially free.     7A L.R. Russ & T.F. Segalla, Couch on Insurance

§ 109:34, at 109-47 (3d ed. 2005) ("The terms required by such


                                     -6-
[financial responsibility] statutes apply only after the operator

of a vehicle has been involved in one accident and only to

accidents which occur after the effective date of the requirement

of proof of financial responsibility.").         We do not need to test

the assumption that the New Brunswick law has that effect.

            We think BW is wrong to focus on the limits of the New

Brunswick financial responsibility law, and not on its own policy

language.    First, the Out of State Coverage clause does not read

the way BW would like it to read, although it could have been

written that way.         Second, the proper focus is on the insured's

reasonable expectations, given the policy language.           We doubt any

insured    would   have    reasonably   understood   this   "out   of   state

coverage" clause to be not an expansion of coverage, as it says,

but also to contain an unstated limitation on an expansion of

coverage. Further, the insured certainly would not have understood

the expansion of coverage to have an exception for first accidents

outside of Maine in jurisdictions with financial responsibility

laws.     The language of the "Out of State Coverage" clause makes

specific reference to any accident, whether first or not, out of

state: the preamble to the financial responsibility clause states,

"[i]f an auto accident to which this policy applies occurs" out of

state, then "we will interpret your policy for that accident as

follows"; the financial responsibility clause then promises to

"provide the higher specified limit."


                                    -7-
          Our conclusion would be the same regardless, but it is

buttressed by the fact that BW itself initially read the clause as

we do and so represented to the insured.      On September 13, 2007,

two months prior to the filing of the complaint in the instant

action, a BW Claims Analyst, Curtis M. Lemmerbrock, wrote a letter

to Landry stating that "since this accident happened in Canada,

your [bodily injury] policy limits automatically deem to the

minimum amounts of liability limits as outlined via Canadian law,

which is $200,000CA per person."      The letter advised Landry that

she would be covered up to the $200,000 (Can.) limit, but that

damages from the injury claim pending against her could exceed that

limit.   Whether or not this is an admission, it is evidence BW's

own agent read the clause that way.      To the extent the clause is

ambiguous, it must be read against the insurer.

          The meaning of the clause is squarely presented and has

not been waived.    Wawanesa has argued both in the district court

and on appeal that under the plain language of the policy the Out

of State Coverage clause necessarily expands the coverage to

$200,000 (Can.).2   It is true that on appeal the parties largely

viewed this case as a question about the meaning of the New

Brunswick financial responsibility law.       At oral argument, the



     2
          In the district court, Wawanesa characterized the
language of the clause as "clear and unambiguous" and argued that
BW's clause included no words of limitation that the policy applied
only after the first accident.

                                -8-
panel asked questions about interpretation of the Out of State

Coverage clause.    And logically, the question we have answered is

the prior one about the contractual language.    We have no need to

reach the questions as to the meaning of New Brunswick law; we are

particularly disinclined to opine on foreign law when we do not

need to do so.     The principles of Maine law on which we rely are

unexceptional and were briefed to the district court.

                                II.

          For these reasons, we reverse and order entry of judgment

for Wawanesa.




                                 -9-
