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Progressive Advanced Insurance Co. v. Corekin

United States District Court, D. Maryland

September 18, 2017




         Presently pending and ready for resolution in this declaratory judgment action are cross motions for summary judgment filed by Plaintiff Progressive Advanced Insurance Company (“Progressive” or “Plaintiff”) (ECF No. 25) and Defendant Jason Corekin (“Mr. Corekin” or “Defendant”). (ECF No. 26). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Plaintiff's motion for summary judgment will be granted, and Defendant's cross motion for summary judgment will be denied.

         I. Background[1]

         Defendant claims that the insurance he had with Plaintiff included $300, 000 in uninsured motorist coverage. Plaintiff contends that he waived full coverage and opted for the lower amount of $100, 000.[2] The genesis of this dispute began on May 24, 2009, when Defendant created an online account and completed his electronic application for an insurance policy with Plaintiff. As part of the application process, Defendant completed a page entitled “Notice Concerning the Waiver of Increased Limits of Uninsured Motorist Coverage in Maryland.” (ECF No. 25-3 (emphasis in the original)). The page contained a word-for-word reproduction of a Maryland Insurance Administration's (“MIA”) model form that authorizes individuals to waive the default amount of uninsured motorist (“UM” or “UIM”) coverage. (See ECF Nos. 25-3; 25-8). On the page, Defendant clicked a box which stated he was “affirmatively waiv[ing] [the default UM coverage] and instead elect[ing] to purchase lower uninsured motorists limits.” (ECF No. 25-4, at 2:02). He then typed his name in the signature space of the page. (Id. at 2:12).

         On May 25, 2009, Plaintiff accepted the application and sent Defendant information about the new policy including the discount he received for using the online system. (ECF No. 2 ¶ 17; ECF No. 2-1; ECF No. 3 ¶ 17). From May 2009 until 2014, Defendant paid each of his policy premiums electronically. (ECF No. 25-5, at 4). Defendant also communicated electronically with Plaintiff, conducted online transactions with Plaintiff, and received electronic copies of documents from Plaintiff. (Id. at 5). The Declarations Page consistently stated that Uninsured Motorist Coverage was $100, 000 each person. (ECF No. 25-7).

         On November 11, 2014, Defendant was in an automobile accident. After the accident, Defendant submitted a claim to Plaintiff for uninsured motorist coverage, and Plaintiff dispersed $100, 000 to Defendant for the accident. On April 5, 2016, Defendant's counsel wrote to Plaintiff alleging that Defendant was entitled to an additional $200, 000 because Defendant never effectively waived his right to the default UM coverage. (ECF No. 2-3).

         On May 5, 2016, Plaintiff commenced this action seeking a declaration that Plaintiff had fulfilled its obligation under the insurance policy and that Defendant waived his right to the default UM coverage. (ECF No. 2). Defendant answered and counterclaimed seeking a declaration that he had not waived his right to the default UM coverage. (ECF No. 6). Plaintiff filed a motion for summary judgment, and Defendant responded and filed a cross motion for summary judgment. (ECF Nos. 25; 26).

         II. Standard of Review

         A motion for summary judgment will be granted only if there exists no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). To prevail on a motion for summary judgment, the moving party generally bears the burden of showing that there is no genuine dispute as to any material fact. Liberty Lobby, 477 U.S. at 248-50. A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. In undertaking this inquiry, a court must view the facts and the reasonable inferences drawn therefrom “in the light most favorable to the party opposing the motion, ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also EEOC v. Navy Fed. Credit Union, 424 F.3d 397, 405 (4th Cir. 2005), but a “party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences.” Shin v. Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001) (citation omitted).

         “When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure.” Desmond v. PNGI Charles Town Gaming, LLC, 630 F.3d 351, 354 (4th Cir. 2011). The court must deny both motions if it finds there is a genuine dispute of material fact, “[b]ut if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render judgment.” 10A Charles A. Wright, et al., Federal Practice & Procedure § 2720 (3d ed. 1998).

         III. Applicable Law

         In diversity actions, a district court applies the substantive law and choice of law rules of the state in which the court sits. Padco Advisors, Inc. v. Omdahl, 179 F.Supp.2d 600, 605 (D.Md. 2002) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). In contract claims, Maryland applies the doctrine of lex loci contractus, meaning that the law of the place where the contract was made applies. Allstate Ins. Co. v. Hart, 327 Md. 526, 529 (1992). “The locus contractus is the place where the last act is performed which makes an agreement a binding contract.” Grain Dealers Mut. Ins. Co. v. Van Buskirk, 241 Md. 58, 65-66 (1965). In an insurance contract, the delivery of the policy and the payment of the premiums constitute the “last act.” Id. at 66 (citing Sun Ins. Office v. Mallick, 160 Md. 71, 81 (1931)). Defendant, a Maryland resident, received the policy in Maryland. Therefore, Maryland substantive law applies to this dispute. Maryland law does not, however, govern procedural rules in this court, even when jurisdiction is based on diversity, and it does not apply when there is conflicting federal law.

         “In an action for declaratory judgment, the burden of proof is not put on the plaintiff merely because he has filed the action, rather the Court must examine the underlying issues to determine the burden of proof.” Reasor v. City of Norfolk, Va., 606 F.Supp. 788, 793 (E.D. Va. 1984); (citing Royal Indemnity Co. v. Wingate, 353 F.Supp. 1002, 1004 (D.Md.), aff'd. 487 F.2d 1398 (4th Cir.1973); Medtronic Inc. v. Mirowski Family Ventures, LLC, 134 S.Ct. 843, 849-50 (2014) (holding that a declaratory judgment action did not shift the burden of proof for patent infringement related actions). Here, the parties' dispute involves a possible breach of an insurance contract.

         In an insurance coverage dispute, the insured has the initial burden “of proving all elements of a prima facie case including the existence of a policy, payment of applicable premiums, compliance with policy conditions, the loss as within policy coverage, and the insurer's refusal to make payment when required to do so by the terms of the policy.” 17A Couch on Ins. § 254:11 (3rd ed. 2017). Thereafter, the insurer must prove the applicability of an exclusion or limitation, or other affirmative defenses. Couch, § 254:12; see Hartford Acc. and Indem. Co. v. Sherwood Brands, Inc., 111 Md.App. 94 (1996), vacated on other grounds, 347 Md. 32 (1997). Furthermore, “UM/UIM liability limits contained in the declarations page generally cap the insurer's total liability per claim.” 12 Couch, § 171:13. In a contract action for recovery of uninsured motorist coverage, the insured would have “to prove the amount of [] contract damages, i.e., establish the amount of her underinsured motorist coverage . . .” Allstate Ins. Co. v. Kponve, 225 Md.App. 370, 388 (2015).

         IV. Analysis

         The parties transacted all aspects of this insurance relationship electronically, beginning in 2009. Plaintiff asserts that the resulting contract is valid, including the UM waiver. Defendant, on the other hand, somewhat curiously, contends that he did not agree to transact business electronically, making his UM waiver invalid. Carried to its logical conclusion, however, that argument would undermine the validity of the entire contract, not simply the UM waiver, and he would be unable to prove that he had a policy with Progressive at all.

         The parties have framed their differences based exclusively on a provision in Maryland law, “Maryland Uniform Electronic Transactions Act” (“MUETA”), Md.Code Ann., Com. Law § 21-101 et seq. One section of that Act, Section 21-104(b)(3), provides: “Except for a separate and optional agreement the primary purpose of which is to authorize a transaction to be conducted by electronic means, a provision to conduct a transaction electronically may not be contained in a standard form contract unless that provision is conspicuously displayed and separately consented to.”

         Based on that section, Defendant contends that his “signature” on the UM waiver form was invalid. Plaintiff, of course, disagrees. Before addressing that precise issue, it is helpful to recount the history of Maryland's enactment of the statute, and the parallel federal statute, “Electronic Signatures in Global and National Commerce Act” (“E-SIGN”), 15 U.S.C. § 7001 et seq., which is not mentioned by the parties. As will be seen, Defendant's arguments are unavailing and the court will declare that Progressive has no further obligation to Mr. Corekin concerning UM benefits.

         A. Electronic Contracts

         In the latter part of the 20th century, as electronic transactions became more and more prevalent and allowed for agreements to be reached across vast geographic expanses, policy makers and commercial actors recognized that the law needed to be updated to accommodate the new technology. Moreover, to encourage further e-commerce, the law needed to be uniform. In light of this new reality, the National Conference of Commissioners on Uniform State Laws (NCCUSL) approved a project to create a proposal for a uniform model act. Anthony M. Balloon, From Wax Seals to Hypertext: Electronic Signatures, Contract Formation, and A New Model for Consumer Protection in Internet Transactions, 50 Emory L.J. 905, 908-909 (2001); Robert A. Wittie & Jane K. Winn, Electronic Records and Signatures Under the Federal E-SIGN Legislation and the UETA, 56 Bus. Law. 293, 294-97 (2000).

         In 1999, NCCUSL approved the Uniform Electronic Transactions Act (“UETA”). Patricia Brumfield Fry, Introduction to the Uniform Electronic Transactions Act: Principles, Policies and Provisions, 37 Idaho L. Rev. 237, 248 (2001). UETA is designed “to facilitate electronic transactions consistent with other applicable law.” UETA § 6(1) (Nat'l Conference of Comm'rs on Unif. State Law 1999). UETA is technology-neutral. It does not require, prefer, or discourage one type of technology but rather allows for parties to choose the technology they desire. UETA is also minimalist. UETA “applies only to transactions between ...

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