Loiselle v. Barsalow, No. S0730-01 CnC (Katz, J., Dec. 29, 2004)



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STATE OF VERMONT                                    SUPERIOR COURT
Chittenden County, ss.:                         Docket No. S0730-01 CnC



LOISELLE

v.

BARSALOW



                                 ENTRY

       This is a case about insurance coverage. Plaintiff Loiselle had an
auto accident on June 9, 2000. She seeks coverage from her former insurer,
the New Hampshire Indemnity Company, or from her insurance agent
Barsalow. New Hampshire Indemnity disclaims its coverage because it had
cancelled Loiselle’s auto insurance two months prior.

       All parties agree that New Hampshire Indemnity attempted to cancel
Loiselle’s auto insurance in early April of 2000 for nonpayment of
premiums. The issue is whether New Hampshire Indemnity’s notice of
cancellation was effective for the purpose of 8 V.S.A. § 4226, which
requires an insurer to send such notice by certified mail or obtain a
certificate of mailing to prove that notice was sent. Barsalow has moved
for summary judgment on this issue and argues that New Hampshire
Indemnity cannot prove that they mailed the notice to Loiselle, who claims
she never received the notice, and bars any New Hampshire claim that the
policy was terminated. New Hampshire Indemnity has also moved for
summary judgment based on an alternative theory of actual notice that
Loiselle received from Barsalow’s office when she called a few days prior
to the accident.

        As to Barsalow’s motion, New Hampshire Indemnity claims that it
mailed proper notice to Loiselle. For proof, it offers a copy of the
cancellation notice—two photocopied sheets from its facsimile “certificate
of mailing”—and the affidavit of Bill Conlin, an employee who maintains
records at New Hampshire Indemnity. Barsalow argues that the alleged
“certificate of mailing” does not conform to the format required by statute
or the Postal Service. Under § 4226, there is no definition as to what a
“certificate of mailing” entails. But Barsalow’s argument is not really
about the nature of a “certificate of mailing”; rather, it is a question of
content and form. All parties can agree that the statutory term connotes a
form of receipt that the Postal Service issues to prove a letter has been
mailed but not necessarily received, as opposed to a “certified mailing,”
which provides proof of delivery. Under the current Postal Service
guidelines, a “certificate of mailing” for three or more letters require a
Form 3877 or facsimile that “contains the same information as the postal-
provided form.” (Def. Barsalow’s Mot. for Summ. J., Jan. 26, 2004, at ex.
2 (S914 Certificate of Mailing)). These forms “become the sender’s
receipts” and “must be made by typewriter, ink, or ballpoint pen.” Id.
        Barsalow’s argues that the second sheet of New Hampshire
Indemnity’s facsimile of Form 3877, the one where Loiselle’s name and
address is printed, is not signed or postmarked in the same manner as the
first sheet. Barsalow argues that this causes the certificate, and thereby
New Hampshire’s proof of mailing, to fail. The problem with this
argument is that it is not clear from Barsalow’s evidence that a multipage
Form 3877 requires signatures and postmarks on each and every page. The
submitted document, while incomplete, is printed by computer, has
corresponding titles and headers, and a numbering order that creates, at the
very least, a presumption that the two are part of the same form. This is
further bolstered by Conlin’s affidavit that states the forms are part of a
single certificate of mailing receipt that was sent in March and kept as a
normal part of New Hampshire Indemnity’s business records. Barsalow
argues that Conlin’s affidavit is hearsay as he does not establish the proper
foundational information under V.R.E. 803 (6) (business records
exception). This defect, however, was cured by Conlin’s supplemental
affidavit that identified himself and that nature of the business records at
issue. Thus, the affidavit is acceptable and satisfies the foundational
requirments for V.R.E. 803 (6). See, e.g., Olson v Hardware Dealers Mut.
Fire Ins. Co., 156 NW2d 429, 431–33 (Wis. 1968) (business record
affidavit and copies of certificate of mailing establish prima facie evidence
of mailing); Donegal Mut. Ins. Co. v. Pennsylvania Dep’t of Ins., 694 A.2d
391, 394 (Pa. 1997); see also Annotation, Proof of Mailing by Evidence of
Business or Office Custom, 45 A.L.R.4th 476, at § 2 (1986) (“There seems
little question that when a proper foundation is laid, evidence of a business
or office mailing custom is admissible to prove the fact of a particular
mailing.”).

       Since Conlin’s affidavit and the “certificate of mailing” satisfy New
Hampshire Indemnity’s burden of proof in regards to § 4226, the next
question is whether the evidence satisfies New Hampshire’s larger burden
to prove that they sent notice of cancellation as a matter of law. In this
case, notice is governed by 8 V.S.A. § 4224(a), which states:

       No notice of cancellation of a policy of insurance to which section
       4223 of this title applies or of a policy issued under the Vermont
       automobile insurance plan shall be effective unless mailed or
       delivered by the insurer to the named insured at least 45 days prior
       to the effective date of cancellation, provided, however, that where
       cancellation is for nonpayment of premium at least 15 days' notice
       of cancellation shall be given.

This statute requires notice to be mailed or given 45 days prior to an
effective cancellation, but it also provides a shorter period of notice (15
days) when the cancellation is for nonpayment. In this case, New
Hampshire Indemnity cancelled Loiselle’s insurance because of
nonpayment. Therefore, the shorter period applies, and the question
becomes what the phrase “cancellation shall be given” means.

       The answer to this question is dependent on how we interpret the
standards of § 4224(a). Barsalow urges us to interpret this phrase as
analogous to the phrase “give receipt” that has been found to create a duty
of actual receipt. Rocque v. Cooperative Fire Ins. of Vermont, 140 Vt. 321,
325 (1981) (finding that “giving notice” created a duty of “actual receipt”
when the policy did not stipulate to the form of notice). The Rocque case,
however, is not applicable to the present situation. First, the discussion in
the case is about rebuttable presumptions and not statutory or contract
language. Id. at 325–26. Second, the facts of the case deal with fire
insurance and not liability insurance. The two areas are treated differently
in insurance law, which leads to the third and arguably most important
difference. As a fire insurance case, Rocque did not have the statutory
requirements of § 4224 to govern the form and requirements of notice.

        Still, the word “given” is not exactly clear when taken apart from the
statute. It could, if used alone, suggest a default application of the “general
rule” quoted in Rocque, which would raise the burden on the insurer to do
more than simply mail notice. But, “given” is not without context. As the
statute reads, cancellation maybe effected by “mail or delivery” 45 days
prior. The statute allows for an exception in non-payment cancellations.
There, the insurer need only provide 15 days notice. Thus, the 15 day
provision must be read within the context of the larger rule of cancellation
notices for liability insurance. In this case “mailed or delivered” informs
the term “given” and limits its possible meaning. “Mail or delivery”
defines the method of notice. “[Fifteen] days notice . . . given” merely
shortens the time requirement in cases of nonpayment.

        To read the term “given” otherwise would mean that the legislature
set up a more difficult and time consuming process for giving notice in a
period affording less time to carry it out. Such an absurd result makes for a
disfavored interpretation. E.g. Smith v. Tn. of St. Johnsbury, 150 Vt. 351,
355 (1988). Nonpayment cases are presumably—on the whole—those
involving less responsible insureds; yet, we would be giving that group
greater leeway to defeat cancellation after an insurable occurrence merely
by testifying that they never received notice. While this might not lead to
greater coverage, it would spread its cost to policyholders in general. More
telling, such a reading would tip the evidentiary balance away from
concrete business records—positive evidence—and toward self-serving,
sometimes fraudulent and incapable-of-being-corroborated statements—
negative evidence. Finally, this interpretation would afford an ambiguous
term (“given”) precedence over a specific one (“mailed or delivered”).
This is inconsistent with the rules of statutory interpretation. In re Estate of
Cote, 2004 VT 17 (“All relevant parts of the applicable statutory scheme
are to be construed together to create, if possible, a harmonious whole.”);
Rutland Cable T.V., Inc. v. City of Rutland, 122 Vt. 1, 4 (1960) (when
statutory language specifically enumerates, but is then followed by more
general wording, latter held to include only those concepts similar in
character to the specifically defined). We conclude that the term “given”
cannot require anything more from insurers beyond “mailed or delivered.”
While it may require less, it certainly requires no more.

        If there is any presumption created by §§ 4224 and 4226, it is in
favor of New Hampshire Indemnity’s mailing that satisfied the terms of §§
4224 and 4226. Estey v. Leverille, 119 Vt. 438, 439 (1957) (“When a
letter, properly addressed, is mailed there is a presumption of its receipt in
due course.”). This is consistent with other jurisdictions. 2 Couch on Ins. §
32:19 (3d ed. Supp. 2004) (“Even where proof of mailing is considered
evidence of notice of cancellation, such proof is not conclusive and an
insured can offer proof of nonreceipt for the purpose of refuting the
hypothesis of mailing.”). Most jurisdictions, though, require some
affirmative evidence of non-receipt, such as the notice being returned or
evidence of other claims of non-delivery. Id.; see also Donegal, 694 A.2d
at 394 (“A mere denial that the item was received is not sufficient to
overcome the presumption that the item was received.”). Here Loiselle
does not have any affirmative evidence other than the non-receipt of her
notice to contest the proof offered by New Hampshire Indemnity. This
cannot, as a matter of law, be enough to overcome the presumption and
evidence that New Hampshire properly mailed notice of cancellation
according to §§ 4224, 4226. Without acceptable evidence to rebut, New
Hampshire Indemnity mailed notice of cancellation to Loiselle, and it was
not a insurer at the time of her accident.

       As summary judgment is proper in New Hampshire Indemnity’s
favor based on its compliance with the statutory requirements of notice, the
remaining issue, New Hampshire Indemnity’s motion for summary
judgment based on “actual notice,” is moot. Based on the foregoing,
defendant Barsalow’s motion for summary judgment is denied. Defendant
New Hampshire Indemnity’s motion for summary judgment is granted.

      Dated at Burlington, Vermont________________, 2004.
