Law Court applies "other-owned vehicle" exclusion

 On Thursday, July 14, 2016, the Law Court (Saufley, J.), in Graf v. State Farm Mutual Automobile Insurance Company, 2016 ME 109, declined to disregard “other-owned vehicle” exclusionary language in a UM/UIM policy for motor vehicle coverage, and held that where an injured motorist has settled with an at-fault party, the resulting settlement amount must be backed out of the available coverage limits when determining the available coverage of an applicable UM/UIM policy.




On August 4, 2005, Alberta Graf (hereinafter Graf) was operating her motor vehicle when she was struck from behind by another motorist. Graf sustained injuries as a result of the collision. The other motorist—who was found to be solely responsible for the accident—was insured by a $50,000 motor vehicle policy. At this time, Graf and her husband held two State Farm policies:


·         The first (hereinafter “Policy 1”), in Graf’s husband’s name, provided $1,000,000 of UM/UIM coverage, and $100,000 medical payments coverage, but did not cover Graf’s vehicle. This policy contained an “other-owned vehicle” exclusion stating that coverage would extend only to injuries sustained in vehicles insured under the policy. Graf’s vehicle was not insured under Policy 1.

·         The second (hereinafter “Policy 2”), in Graf’s name, provided $300,000 of UM/UIM coverage, and $100,000 medical payments coverage for services furnished within three years of an accident, and covered Graf’s vehicle. Policy 2 provided that “. . . coverage shall be excess over and shall not pay again any medical expenses paid under the medical payments coverage,” and that medical payments coverage would be denied “to the extent workers’ compensation benefits are required to be payable.” 




In October 2009, Graf settled her claim against the at-fault motorist for the limits of said motorist’s policy—$50,000—with State Farm’s permission. In September 2011, Graf filed a complaint in superior court against State Farm seeking coverage under Policies 1 and 2.


Prior to trial, in March 2014, Graf and State Farm attended an arbitration hearing. The arbitration panel concluded that Graf  had sustained $378,000 in damages, as a result of the accident—$125,000 of which were attributable to unspecified medical bills. Backing out Graf’s $50,000 settlement with the at-fault motorist, the panel awarded Graf net damages totaling $328,000.


On April 28, 2014, State Farm filed a motion in superior court to reduce the panel damage award to available coverage ($300,000), and presented evidence that a portion of Graf’s medical bills had been paid by workers’ compensation or were for services obtained more than three years after the accident (both of which contravened the terms of Policy 2). Upon review, the lower court granted State Farm’s motion to reduce the panel damage award to available coverage under Policy 2. Backing out the $50,000 settlement with the at-fault motorist, the court held that Graf was entitled to a total of $250,000 for State Farm. Graf timely appealed the decision.




Before the Law Court, Graf argued that the lower court erred in determining:


1.)    That Policy 1 excluded coverage for injury sustained in a vehicle not covered by the policy;

2.)    That the UM/UIM statute entitled State Farm to offset any judgment entered by the court by the $50,000 settlement Graf received from the at-fault motorist, after the arbitration panel had already offset its award by this amount; and

3.)    That the language in Policy 2 prevented Graf from recovering both UM/UIM coverage and medical payments coverage.


The Court, addressing each of Graf’s arguments in turn, first examined whether the policy exclusion in Policy 1 for accidents occurring in “other-owned vehicles” was valid, precluding recovery by Graf under its terms. In so doing, the Court reiterated the standing principle that “policy exclusions are enforced as long as they are unambiguous, do not conflict with the UM/UIM statute, and are not against public policy.” Gross v. Green Mountain Ins. Co., 506 A.2d 1139 (Me. 1986). Reviewing the language of Policy 1, the Court determined that it was “almost identical” to other exclusionary language previously before the Court that did not conflict with the UM/UIM statute, and that it was not ambiguous. As such, the Court held that the exclusionary language in Policy 1 was valid, and precluded coverage of Graf’s vehicle.


Examining Graf’s next argument—that it was improper for the lower court to offset available coverage by the $50,000 settlement where the arbitration panel had already offset its damages award by this amount—the Court stated that “[w]hen the total damages are greater than the amount of UM/UIM coverage, we have previously determined that this language mandates that insurers offset the amount of coverage available in the UM/UIM policy, rather than the amount of damages incurred, by the amount actually paid by the tortfeasor.” Citing Farthing v. Allstate Ins. Co., 2010 ME 131, ¶ 7, 10 A.3d 667 (emphasis in original). The Law Court further explained that “the reason for doing so” is to “provide an injured insured the same recovery [that] would have been available had the tortfeasor been insured to the same extent as the injured party.” Tibbetts v. Dairyland Ins. Co., 2010 ME 61, ¶ 12, 999 A.2d 930. Thus, concluded the Court “it was proper to offset the amount of available coverage with the [at-fault] motorist’s payment, with the coverage then applied against the total damages determined by the arbitration panel.”


Lastly, the Court examined whether Graf was entitled to any of the $100,000 medical payments coverage under Policy 2, separate from the UM/UIM coverage provided thereunder. Reviewing the language of Policy 2, the Law Court determined that the policy required medical payments coverage to be determined first, and precluded the duplication of payment.  Therefore, concluded the Court “any damages that fall within the $100,000 medical payments coverage should be paid first and remaining damages should be paid from the UM/UIM coverage.” Where the superior court did not determine the amount of medical expenses incurred within three years of the accident or whether any expenses were payable by workers’ compensation, the Court remanded the matter for consideration to determine how much, if any, of the $125,000 of the panel award for medical expenses were incurred within three years of the accident and were not payable by workers’ compensation.


Judgment affirmed in part, remanded in part.


N. Laurence Willey, Jr., Esq. for Graf

James Main, Esq. for State Farm

Law Court Upholds Judgment in Wrongful Death Case

On Tuesday, July 12, 2016, the Law Court (Saufley, J.), in Estate of Kay v. Estate of Wiggins, 2016 ME 108, upheld summary judgment in favor of defendants Budget Truck Rental, LLC and the Estate of Douglas Wiggins in a wrongful death action maintained by the Estate of Dennis Kay for his death in a work-related motor vehicle accident. In its ruling, the Law Court concluded that Wiggins—and through principles of vicarious liability, Budget Truck Rental, LLC—was in compliance with the Maine Workers’ Compensation Act at the time of the accident and that, therefore, the Act’s exclusivity provisions barred any claims against Wiggins. 

In 2008, Dennis Kay began working for Option Rentals—a furniture rental business owned by Douglas Wiggins. As part of its regular business, Option Rentals maintained an agreement with Budget Truck Rental, LLC (hereinafter “Budget”) to transfer Budget vehicles from one destination to another in exchange for payment. As part of his employment with Option Rentals, Kay regularly transported Budget vehicles at Wiggins’ instruction. On December 30, 2011, Kay was instructed to complete a Budget transfer, but informed Wiggins that he “felt uncomfortable” doing so due to inclement weather. Wiggins then instructed Kay to perform the transfer sometime on the morning of December 31, 2011. On the morning of December 31, 2011, Kay began transport of the Budget vehicle. Sadly, the Budget truck he was operating hit a patch of ice and slid off of the roadway, ejecting Kay, who died from his injuries. Wiggins died of unrelated causes in 2013. 

In July 2013 the Estate of Kay (hereinafter “Kay”) filed a complaint against the Estate of Wiggins (hereinafter “Wiggins”) and Budget alleging wrongful death caused by Wiggins and Budget, and punitive damages. The complaint repeatedly alleged that Kay was “an employee” of Wiggins. 

In October 2014, Wiggins filed a motion to dismiss the complaint as barred by Maine’s Workers’ Compensation Act (hereinafter “the Act”), attaching proof that Wiggins had a State-accepted workers’ compensation insurance policy in December 2011. Following a hearing the lower court ruled summarily in favor of Wiggins’ motion to dismiss, stating that there was no genuine issue of material fact as to whether Wiggins had obtained worker’s compensation insurance sufficient to invoke the immunity and exclusivity provisions of the Act, and because Kay had argued exclusively that he was an employee, not an independent contractor. Additionally, the lower court granted Budget’s motion for summary judgment on the ground that there was no genuine issue of material fact regarding proximate cause. Kay then timely appealed. 

Upon review, the Law Court first addressed whether the lower court properly dismissed Kay’s claim against Wiggins. In so doing, the Court reiterated that an employer who has secured the payment of workers’ compensation for its employees is exempt from civil actions for death resulting from injuries sustained by an employee incurred during the course of employment. 39-A M.R.S. §§ 104, 403(1) (2015). The Court further noted that where an employer is exempt from civil actions due to compliance with the Act, an employee’s only remedy is to pursue a claim for workers’ compensation benefits. Ultimately the Court concluded that where Wiggins provided “competent evidence” of compliance with the Act—and Kay failed to rebut said evidence, and even argued that he was an employee of Wiggins—the lower court properly found that Wiggins was in compliance with, and the claim was barred by, the Act.

Next, the Court examined whether the lower court properly granted Budget’s motion for summary judgment. Before the Court, Kay argued that Budget was vicariously liable for Wiggins’ actions because Budget had control over Wiggins. Oddly, Kay also argued that the Act’s exclusivity provision does not apply to Budget because Wiggins was an independent contractor. Declining to determine whether Wiggins was indeed an employee or independent contractor of Budget, the Court ruled that it need only consider that if Budget were vicariously liable for Kay’s death, it stood in the shoes of Wiggins against whom any claims were barred by his compliance with the Act, as discussed supra

Judgment Affirmed


Caleb J. Gannon, Esq. for Kay

Brendan O’Rourke, Esq. for Budget

Elizabeth Germani, Esq. for Wiggins