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SJC-11706

 COMMERCE INSURANCE CO., INC.   vs.   VITTORIO GENTILE & others.1


                       September 16, 2015.

Insurance, Motor vehicle insurance, Coverage, Misrepresentation.
     Motor Vehicle, Insurance, Permission to operate. Contract,
     Insurance. Practice, Civil, Summary judgment.



     This case concerns the obligation of Commerce Insurance
Company (Commerce) to pay optional bodily injury benefits under
a standard Massachusetts automobile insurance policy. The
defendants Vittorio and Lydia Gentile (Gentiles) were the
policyholders, and their grandson Vittorio Gentile, Jr.
(Junior), was an "excluded operator" under the policy. While
operating one of the Gentiles' vehicles covered by the policy,
Junior caused an accident that seriously injured Douglas and
Joseph Homsi (Homsis).2,3 Commerce sought a judgment declaring
that the Gentiles' violation of the operator exclusion form

     1
       Lydia Gentile; Vittorio C. Gentile, Jr. (Junior); Janice
Silverio, as temporary guardian of Douglas Homsi; and Joseph
Homsi.
     2
       In a separate criminal case arising from the same events,
Junior pleaded guilty to negligent operation of a motor vehicle.
     3
       In a separate negligence action also arising from these
events, the Homsis obtained a favorable judgment against
Vittorio and Lydia Gentile (Gentiles), which was modified and
affirmed by the Appeals Court in an unpublished opinion issued
pursuant to its rule 1:28. See Silverio v. Gentile, 86 Mass.
App. Ct. 1121 (2014).
                                                                 2


relieved it of any duty to pay the Homsis under the optional
bodily injury provisions of the insurance contract.4 A Superior
Court judge ruled that the Gentiles had violated their duty of
"continuing representation" (as to whether Junior was in fact
operating their vehicles), and therefore, Commerce was relieved
of its duty to pay the optional coverage for the Homsis'
injuries. The Appeals Court affirmed the judgment on that basis
and on the basis that the Gentiles had committed a breach of the
insurance contract. Commerce Ins. Co. v. Gentile, 85 Mass. App.
Ct. 67 (2014). We granted further appellate review.

     Facts. The Gentiles purchased through Commerce the
standard Massachusetts automobile insurance policy, seventh
edition, which was approved by the Commissioner of Insurance
(commissioner). The policy insured both the Gentiles and their
vehicles. A section of the policy titled "Our Agreement"
provided that "[t]his policy is a legal contract under
Massachusetts law." It stated further that "[o]ur contract
consists of this policy, the Coverage Selections Page, any
endorsements agreed upon, and your application for insurance."
The policy included a separate operator exclusion form, which
also was approved by the commissioner.

     In 2004, after receiving advice from the insurance agent
that their premium would be significantly higher if Junior
operated their vehicles, Lydia, as the "[p]olicyholder", and
Junior as the "[e]xcluded [o]perator" both executed the operator
exclusion form. The form stated that Junior would not operate
the Gentiles' insured vehicles: "It is agreed that the person
named below [i.e., Junior] will not operate the vehicle(s)
described below, or any replacement thereof, under any
circumstances whatsoever." Another provision of the form
allowed that if the policyholder, or anyone acting on the
policyholder's behalf, provided any "false, deceptive,
misleading or incomplete information in any application or
policy change request," Commerce "may refuse to pay claims under
any or all of the Optional Insurance Parts of this policy."
Essentially identical language was included in the general
policy provisions.



    4
       Commerce Insurance Company (Commerce) paid the compulsory
coverage for bodily injury but denied the optional bodily injury
coverage.
                                                                3


     With the subsequent renewals of the policy, including the
renewal in 2006, which was in effect when the accident occurred,
the declarations page identified Junior as having a status of
"E" for excluded. By excluding Junior based on his prior
driving experience and record, Commerce decreased its risk of
loss, and the Gentiles, in exchange, paid lower premiums for the
policy and its successive renewals.5

     Discussion. An insurance policy is a contractual agreement
between the insurer and insured. G. L. c. 175, § 2. In
addition to the policy itself, an insurance contract also
includes commissioner-approved forms, such as the operator
exclusion form that is at issue in the present case. See G. L.
c. 175, § 192 ("All provisions of law relative to the filing of
policy forms with, and the approval of such forms by, the
commissioner shall also apply to all forms of riders,
endorsements and applications designed to be attached to such
policy forms and when so attached to constitute a part of the
contract").

     In interpreting exclusionary language in an insurance
policy, the reviewing court typically considers whether the
exclusion is contrary to any statutory language or legislative
policy. Heinrich-Grundy v. Allstate Ins. Co., 402 Mass. 810,
811 (1988). At issue here is the relationship between the
exclusionary language and the terms and conditions of the
optional bodily injury coverage; that relationship is entirely a
matter of contract. See id. at 811 n.3 (collecting cases).
Where we are interpreting language in a standard Massachusetts
automobile insurance policy approved by the commissioner, we
construe the language in "its usual and ordinary sense" and
relinquish the rule of construction that requires ambiguities to
be resolved against the insurer. See Chenard v. Commerce Ins.
Co., 440 Mass. 444, 445-446 (2003).

     By executing the operator exclusion form, the Gentiles
specifically agreed that Junior would not operate the insured
motor vehicle "under any circumstances whatsoever." By allowing
Junior to operate their vehicle, or by not preventing him from
doing so, the Gentiles committed a breach of this material term
of their insurance contract with Commerce. As a result of this
breach, the Gentiles relieved Commerce of a duty to pay the

     5
       According to Commerce's underwriter, the Gentiles' premium
would have increased by $929 for the policy that was in effect
at the time of the accident.
                                                                 4


optional coverage for bodily injury. On this basis, the
judgment of the Superior Court is affirmed.

     The Homsis did not raise timely, and therefore waived,
various claims that the operator's exclusion was not a valid
term of Commerce's insurance contract with the Gentiles. They
claim, for example, that the operator's exclusion was not part
of the initial insurance policy where one, and not both
insureds, executed the form;6 was immaterial to the insurer's
calculation of the risk of loss and rate of premium;7 and that it
was not part of the renewed policy that was in effect at the
time of the accident.8 We do not decide these issues.

     The Homsis also argue that the operator's exclusion does
not limit coverage for optional bodily injury, although they
accept that it limits other forms of optional insurance

     6
       On this point, the Appeals Court reasonably concluded that
the operator exclusion would not be invalid in circumstances
where Lydia signed the operator exclusion form, but Vittorio
Gentile did not, given that the Gentiles jointly owned the
vehicle that was involved in the accident and insured it through
Commerce, and both were identified as policyholders: Vittorio
was the named insured on the policy, and Lydia was the
"[p]olicyholder" on the operator exclusion form. See Commerce
Ins. Co. v. Gentile, 85 Mass. App. Ct. 67, 71 n.6 (2014).
     7
       In addition to not preserving this claim, the Homsis
agreed with Commerce's assertion that, if the Gentiles did not
exclude Junior, it would have calculated significantly higher
premiums for the Gentiles.
     8
       There is support in the record that Commerce and the
Gentiles agreed to exclude Junior as an operator when it renewed
the policy that was in effect at the time of the accident.
Commerce automatically renewed the policy and operator exclusion
form without any changes to the exclusion of Junior. It
provided notice to the Gentiles on the declarations page that
Junior was an excluded operator, and charged them a lower
premium for his exclusion. When the policy was renewed, the
Gentiles did not object to the exclusion of Junior. See Epstein
v. Northwestern Nat'l Ins. Co., 267 Mass. 571, 574–575 (1929)
("[I]nsured is presumed to have assented to the terms of [a] new
policy if it is retained without reading or read without
complaint and rejection").
                                                               5


coverage, i.e., collision and limited collision. The Homsis,
however, have failed to demonstrate that the operator's
exclusion did not apply to optional bodily injury coverage. The
form does not contain any express provisions that limit the
operator's exclusion to particular types of optional coverage.
It unequivocally states: "It is agreed that the person named
below [i.e., Junior] will not operate the vehicle(s) described
below, or any replacement thereof, under any circumstances
whatsoever." By approving the supplemental operator exclusion
form, the commissioner appears to have allowed insurers to
exclude named operators from being covered under the standard
automobile insurance policy. See Chenard v. Commerce Ins. Co.,
supra at 449 n.6.

     As stated previously, we affirm the judgment in this case
on the ground that the Gentiles committed a breach of a material
term of the insurance contract. It is therefore unnecessary for
us to decide whether the Gentiles also committed a breach of a
duty of "continuing representation," as the Appeals Court held.
Gentile, 85 Mass. App. Ct. at 72-73. Under common-law
principles and G. L. c. 175, § 186,9 when an insured makes a
material misrepresentation during the application or renewal
period for an insurance policy, the insurer may be able to deny
coverage on that basis. See Barnstable County Ins. Co. v. Gale,
425 Mass. 126, 128 (1997) (recognizing that § 186 "is
declaratory of long-standing common law principles defining the
sort of false representations that can serve to avoid an
insurance policy"); Hanover Ins. Co. v. Leeds, 42 Mass. App. Ct.
54, 57 (1997) ("Statements made in an application for insurance
are in the nature of continuing representations and speak from
the time the application is accepted or the policy is issued"
[citations omitted]).

     Here, the Appeals Court appears to have concluded that this
duty extends into the coverage period. See Gentile, 85 Mass.

    9
        General Laws c. 175, § 186 (a), provides:

         "No oral or written misrepresentation or warranty made
    in the negotiation of a policy of insurance by the insured
    or in his behalf shall be deemed material or defeat or
    avoid the policy or prevent its attaching unless such
    misrepresentation or warranty is made with actual intent to
    deceive, or unless the matter misrepresented or made a
    warranty increased the risk of loss."
                                                                  6


App. Ct. at 72 ("[A]n insured, at a minimum, has a duty to
inform the company of a material change during the application
period. It does not relieve the policyholder of a duty to do
the same during the coverage period"). Such an application of
the duty would seem to impose on an insured the responsibility
to identify any changes occurring during the coverage period
that are material to the insurer's risk of loss, and to notify
the insurer accordingly. We leave for another day the issue
whether the duty of continuing representation applies within the
coverage period. In this highly regulated area, any expansion
of the insured's duties under a standard automobile insurance
policy might be better left to the Division of Insurance.10

                                  Judgment affirmed.


     Brian P. Burke for the defendants.
     Richard R. Eurich (John P. Graceffa with him) for the
plaintiff.
     Charlotte E. Glinka, J. Michael Conley, & Thomas R. Murphy
for Massachusetts Academy of Trial Attorneys, amicus curiae,
submitted a brief.
     E. Michael Sloman, for Automobile Insurers Bureau, amicus
curiae, submitted a brief.




    10
       Although inapplicable to present case, it appears that a
later version of the Massachusetts automobile insurance policy
approved by the Commissioner of Insurance includes a provision
requiring an insured to notify the insurer of certain material
changes during the policy period: "You must inform us of any
changes which may have a material effect on your insurance
coverage or premium charges, including the . . . individuals who
customarily operate your auto."
