CAMBRIDGE MUTUAL INSURANCE CO. v. PATRIOT MUTUAL INS. CO.

2004 | Cited 0 times | D. Maine | April 30, 2004

MEMORANDUM OF DECISION AND ORDER

Kenneth and Kathleen Strickland's house in Monroe, Maine wascompletely destroyed by fire on December 9, 2002. Cambridge MutualInsurance Company ("Cambridge"), Patriot Mutual Insurance Company ("Patriot"), and Clark& Bennett Insurance d/b/a Cross Insurance — Belfast ("Cross")have each contributed equally to the Stricklands' fire loss, for a totalpayment of $240,026.28. Cambridge contends that it was not responsiblefor the loss and brought this action against Patriot for equitablesubrogation (Count III).1 Patriot counterclaims against Cambridge,arguing that it is entitled to be reimbursed for what it paid into thesettlement under the doctrines of equitable subrogation (Count I) andreformation (Count II). Patriot also brings a Third-Party Complaintagainst Cross for negligence (Count I), breach of the agency agreement(Count II), indemnity (Count III), breach of fiduciary duties (Count IV),and contribution and indemnity (Count V). Third-Party Defendant Crosscounterclaims against Patriot for breach of contract (Count I) andequitable subrogation (Count II) and cross-claims against Cambridge forbreach of contract (Count I) and mutual mistake (Count II).

The Court now has before it Cambridge's Motion for Summary Judgmentwherein it requests that the Court enter summary judgment in its favor,declare that it has no legal liability to cover any portion of theStrickland's fire loss, enter judgment against Patriot for damages in theamount of $80,008.76 together with interest and costs, and enter judgmentin its favor on Cross's cross-claims against it. Also before the Court isPatriot's Motion for Summary Judgment requesting that the Court grantsummary judgment in its favor on Cambridge's Complaint, Patriot'scounterclaims against Cambridge, Patriot's Third-Party Complaint, and thecounterclaims of Cross.

I. FACTS The summary judgment record reveals the following undisputed facts.Cross entered into an agency agreement with Acadia Insurance Company("Acadia") in June 1992, whereby Acadia authorized Cross to act as itsagent in procuring insurance business for it. Affidavit of Royce Cross¶ 9. On September 10, 2002, Cambridge and Cross entered into anagency agreement whereby Cambridge authorized Cross to act as its agentin procuring insurance business for Cambridge.2 Cross Aff. ¶ 3.Effective November 1, 2002, Patriot and Cross entered into an agencyagreement whereby Patriot authorized Cross to act as its agent inprocuring insurance business for Patriot.3 Cross Aff. ¶ 6. Duringthe month of December 2002, Cross was an insurance agent for Acadia,Cambridge, and Patriot. Cross Aff. ¶¶ 5, 8, 10.

Over the course of 2002, Acadia and Patriot had been working ontransferring Acadia's personal lines business to Patriot. Cross receivednotices from Patriot dated March 12, 2002, October 16 and 17, 2002, andOctober 25, 2002, regarding the transfer of Acadia's personal linesbusiness to Partiot. Affidavit of Barri L. Bloom ¶ 4. Startingsometime in May to June of 2002, all of Acadia's personal linesunderwriting staff became employees of Patriot. Affidavit of MichaelSwedo ¶ 6. By December 1, 2002, Acadia did not employ any personallines underwriters. Swedo Aff. ¶ 7.

On November 25, 2002, Acadia sent a letter to each of its agentsenclosing an amendment to the agency agreement regarding personal linesof insurance. Swedo Aff. ¶¶ 3, 4. Cross received the above-referenced letter on November 26,2002.4 Bloom Aff. ¶ 4. The Amendment to the Agency Agreementbetween Acadia and Cross provides in relevant part: This amendment modifies the terms of the Agreement between "The Agent" [Cross] and "The Company" [Acadia] previously signed by both parties, whereby "The Agent's" authority under Paragraph I., B. to solicit, receive, bind, execute and transmit proposals for insurance contracts to "The Company" for any and all Personal Lines of business is hereby withdrawn and cancelled.Royce Cross, President of Cross, signed the amendment to the CrossInsurance Agency Agreement with Acadia providing that the amendment wouldbe effective December 1, 2002.5 Swedo Aff. ¶ 5. As of December 1,2002, Acadia was completely out of the personal lines insurance businessin Maine. Swedo Aff. ¶ 2. However, on December 9, 2002, the agencyagreement between Cross and Acadia remained in effect, and Cross wasgenerally authorized to procure insurance business for Acadia. Cross Aff.¶ 10.

On Tuesday, December 3, 2002, Kenneth Strickland met with VirginiaEmery, an authorized insurance agent employed by Cross, to discusschanging the insurance coverage on a house he owned that was located at82 Curtis Road in Monroe, Maine (the "Property"). Affidavit of KennethStrickland ¶¶ 2-3; Deposition of Virginia Emery at 9-10. Ms. Emerywas a licensed agent of the Andover Companies, which includedCambridge,6 and Acadia as of December 3, 2002. Emery Dep. at 7. Mr.Strickland told Ms. Emery that he was renting his home to a third partyand he wanted to ensure that he had proper insurance coverage. Emery Dep.at 10. Mr. Strickland also told Ms. Emery that the primary source of heat for the Property was a combinationwood/oil furnace. Emery Dep. at 17. During her meeting with Mr.Strickland, and at the suggestion of a co-worker, Ms. Emery telephonedCambridge to ascertain whether its underwriting guidelines permitted itto issue a dwelling fire policy on Mr. Strickland's Property.7 EmeryDep. at 18-20, 22; Affidavit of Lucus Cummings ¶ 2.

When she called Cambridge, Ms. Emery attempted to speak with twounderwriters with whom Cross normally worked when placing coverage. EmeryDep. at 20, 22. Because those underwriters were unavailable, Ms. Emeryasked if there was an underwriter at Cambridge to whom she could speak.Emery Dep. at 23. Ms. Emery was connected to a Cambridge underwriternamed Lucas Cummings. Cummings Aff. ¶¶ 2, 6; Emery Dep. at 23, 102-03.Ms. Emery asked Mr. Cummings whether Cambridge could insure a DP3,$260,000 rented dwelling with an wood/oil furnace. Emery Dep. at 23-24;69. Mr. Cummings explained to Ms. Emery that Cambridge could write adwelling fire policy to cover a rented dwelling with a wood/oil furnace,provided it was not within twenty feet of other structures. Cummings Aff.¶ 3. Ms. Emery asked Mr. Strickland whether it was within twenty feetof other structures and Mr. Strickland replied that it was not. EmeryDep. at 24.

When Ms. Emery ended the telephone call with Cambridge on December 3,2002, she did not believe that Cross had an obligation to place theStrickland business with Cambridge; rather, she felt that Cross couldplace the Strickland risk with an insurer other than Cambridge. EmeryDep. at 107-08. In addition, Ms. Emery did not know on December 3, 2002,whether she was going to place the Strickland business with Cambridge or some other company. Emery Dep. at 110-11. At thattime, however, Ms. Emery did not call any other insurance companies afterspeaking with Mr. Cummings at Andover on December 3, 2002. Emery Dep. at29, 32.

After speaking with Cambridge's underwriter on December 3, 2002, andwhile Mr. Strickland was sitting at her desk, Ms. Emery worked with twoother Cross agents, Lisa Archer and Laurene Rich, to calculate a ratepremium for the Property. Dep. of Laurene Rich at 19-21; Emery Dep. at46-47. At that time, Ms. Emery did not know that Ms. Archer and Ms. Richwere using the Acadia Insurance Company rate manual to calculate theProperty's premium. Emory Dep. at 105. Ms. Emery then told Mr. Stricklandthat he needed to provide her with updated photographs of the house aswell as a completed woodstove questionnaire before Cross could bindcoverage for the Property. Emery Dep. at 29-30; Mr. Strickland Aff. ¶5.

Ms. Emery received pictures of the Property during the week of December3, 2002. Emery Dep. at 31-32. On Friday, December 6, 2002, KathleenStrickland delivered the completed woodstove questionnaire to Ms. Emery.Mrs. Strickland Aff. ¶ 2; Emery Dep. at 32, 106. At that time, Ms.Emery informed Mrs. Strickland that because her husband's name was on theexisting homeowner's policy, he would have to sign the policy releaseform before she could issue dwelling fire coverage. Mrs. Strickland Aff.¶ 3.

Mr. Strickland went to the Cross Agency on December 9, 2002, and askedto complete the application for fire insurance on the Property. Mr.Strickland Aff. ¶ 7. Ms. Emery was out of the office sick on December9, 2002. Rich Dep. at 37. Ms. Rich, therefore, met with Mr. Strickland and completed the applicationprocess with him.8 Rich Dep. at 10, 38, 55, 117, 119. Ms. Rich askedMr. Strickland specific underwriting questions about the Property andthen Ms. Rich completed and executed Mr. Strickland's application forinsurance with Acadia. Rich Dep. at 15-21, 65-66, 68, 121, 124-125.

The application lists "Kenneth A. Strickland, Jr." and "KathleenThompson [Strickland]" as the applicants, "Cross Insurance —Belfast" as the "producer," and "Acadia Insurance Company" as the"Co/Plan." Then Mr. Strickland wrote out a check for $206 payable to the"Acadia Insurance Company" as a down payment for the Acadia Dwelling FirePolicy. Rich Dep. at 133-34; Mr. Strickland Aff. ¶ 7, Ex. C. Ms. Richaccepted a check made payable to Acadia from Mr. Strickland and issuedinsurance binder # 466527 to Mr. Strickland to insure his Property. RichDep. at 55; Mr. Strickland Aff. ¶ 7.9 The binder lists "CrossInsurance — Belfast" as "Producer," Acadia Insurance Company" asthe "Company" and Kenneth Strickland and Kathleen Thompson"10 as the"Insured." After completing Mr. Strickland's application, processing thedown payment and issuing Mr. Strickland the binder, Ms. Rich placed thecompleted Acadia application on Ms. Emery's desk so that Ms. Emery couldsend in the application upon her return. Rich Dep. at 60. On December 9,2002, after the Acadia binder had issued, Ms. Rich completed acancellation request policy release form, signed it, and then had Mr.Strickland endorse it to cancel his homeowner's insurance coverage withPatrons Oxford Insurance Company. Rich Dep. at 134-36; Mr. Strickland Aff. ¶7, Ex. D. Then Ms. Rich faxed a copy of the binder to Banknorth, theholder of the second mortgage on the Property. Rich Dep. at 138-39.

On December 9, 2002, after Mr. Strickland had paid for the Acadiabinder and canceled his Patrons Oxford homeowners' policy, a firecompletely destroyed the dwelling at 82 Curtis Road, Monroe, Maine. Mr.Strickland Aff. ¶ 9. Cambridge, Patriot, and Cross have eachcontributed $80,008.76 to the Stricklands' fire loss and obtained arelease and an assignment of the Stricklands' claims against Acadia.Release and Assignment of Claims attached to Plaintiff's Statement ofMaterial Facts as Exhibit G.

II. DISCUSSION

Summary judgment is appropriate only if the record shows "that there isno genuine issue as to any material fact and that the moving party isentitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c);United States Steel v. M. DeMatteo Constr. Co., 315 F.3d 43, 48(1st Cir. 2002). "In this regard, `material' means that a contested facthas the potential to change the outcome of the suit under the governinglaw if the dispute over it is resolved favorably to the nonmovant. Bylike token, `genuine' means that `the evidence about the fact is suchthat a reasonable jury could resolve the point in favor of the nonmovingparty.'" Navarro v. Pfizer Corp., 261 F.3d 90, 93-94 (1st Cir.2001) (quoting McCarthy v. Northwest Airlines, Inc.,56 F.3d 313, 315 (1st Cir. 1995)). The party moving for summary judgment mustdemonstrate an absence of evidence to support the nonmoving party's case.Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Indetermining whether this burden is met, the court must view the record inthe light most favorable to the nonmoving party and give that party thebenefit of all reasonable inferences in its favor. Nicolo v. PhilipMorris, Inc., 201 F.3d 29, 33 (1st Cir. 2000). Once the moving partyhas made a preliminary showing that no genuine issue of material factexists, the nonmovant must "produce specific facts, in suitableevidentiary form, to establish the presence of a trialworthy issue."Triangle Trading Co. v. Robroy Indus., Inc., 200 F.3d 1, 2 (1stCir. 1999) (citation and internal punctuation omitted); Fed.R.Civ.P.56(e). "As to any essential factual element of its claim on which thenonmovant would bear the burden of proof at trial, its failure to comeforward with sufficient evidence to generate a trialworthy issue warrantssummary judgment to the moving party." In re Spigel,260 F.3d 27, 31 (1st Cir. 2001) (citation and internal punctuation omitted).

A. Cambridge's Motion for Summary Judgment and Patriot's Motion for Summary Judgment Against Cambridge

Cambridge asserts that it is not responsible for any of theStricklands' loss because Cross bound Acadia to the Strickland risk onDecember 9, thus resulting in a temporary contract of insurance betweenAcadia and the Stricklands. The agreement between the parties in thiscase to dismiss Acadia provides, in part, that "if Acadia was legallyobligated to provide insurance coverage to the Stricklands, then Patriotis obligated to pay the Stricklands to the same extent that Acadia wouldhave been." Stipulation of Dismissal Without Prejudice (Docket Item No.22) ¶ 3. On this basis Cambridge moves for summary judgment on itsclaim against Patriot for equitable subrogation. Equitable subrogation"is a device adopted by equity to compel the ultimate discharge of anobligation by him who in good conscience ought to pay it." Unity Tel.Co. v. Design Serv. Co., 160 Me. 188, 192, 201 A.2d 177, 179 (1964).The doctrine requires that the equities of the parties be weighed andbalanced. Id. at 193, 201 A.2d at 179. Equitable subrogation is itself based on principles of unjust enrichment andrestitution.11 North East Ins. Co. v. Concord Gen. Mut. Ins.Co., 433 A.2d 715, 719 (Me. 1981).

Patriot and Cross disagree with Cambridge, arguing that, althoughAcadia is the named insurer on the binder in effect at the time of theloss, Cambridge is responsible for the Stricklands' loss because a mutualmistake of the parties made the binder ineffective and further that animplied contract of insurance between Cambridge and Mr. Strickland aroseon December 3, when Ms. Emery contacted Cambridge and that contractremained in effect on the date of the fire. In addition, Patriot allegesthat Cross lacked the authority to bind Acadia to the Strickland risk asof December 9, 2002, because as of December 1, Cross was no longerauthorized to sell Acadia's personal lines of insurance. The Court agreeswith Cambridge and concludes that Acadia was bound by Cross to insure theProperty on December 9 and that Acadia, and thus Patriot, is responsiblefor the part of the Stricklands' loss paid by Cambridge.

1. Existence of a Temporary Contract of Insurance with Acadia

Patriot contends that Cross did not have actual or apparent authorityto bind Acadia to insure the Property. Specifically, Patriot points outthat through the last few months of 2002, Acadia had been workingdiligently to place all of its agents on notice that they no longer hadauthority to bind Acadia in any personal lines of insurance. Patriotargues that, in the absence of evidence of any manifestation by Acadia tothe Stricklands that Cross was authorized to bind dwelling coverage inDecember of 2002, Cross did not have authority to bind Acadia. Cambridge disagrees,relying on section 2422 of the Maine Insurance Code.

Section 2422 of Maine Insurance Code provides: 1. An agent authorized by an insurer, if the name of such agent is borne on the policy, is the insurer's agent in all matters of insurance. Any notice required to be given by the insured to the insurer or any of its officers may be given in writing to such agent. 2. The authorized agent of an insurer shall be regarded as in the place of the insurer in all respects regarding any insurance effected by him. The insurer is bound by his knowledge of the risk and all matters connected therewith. Omissions and misdescriptions known to the agent shall be regarded as known to the insurer and waived by it as if noted in the policy.24-A M.R.S.A. § 2422 (2003).12 Interpreting this statute,the Law Court has stated that "the undoubted purpose of [the] statute isto make it as safe for persons seeking insurance to `deal with theagents, with whom they ordinarily transact their business, as if theywere dealing with companies themselves.'" County Forest Products,Inc. v. Green Mountain Agency, Inc., 2000 ME 161, ¶ 23,758 A.2d 59, 65 (quoting Hurd v. Maine Mut. Fire Ins. Co., 139 Me. 103,113, 27 A.2d 918, 924 (Me. 1942)). The Court notes that as of December 1,2002, Acadia had not revoked Cross's authority to serve as its agentaltogether; rather, Acadia had simply withdrawn Cross's authority towrite personal lines of insurance for Acadia. Unlike other provisions ofthe Maine Insurance Code, section 2422 does not make a distinctionbetween personal lines and commercial lines. The statute simply states"An agent authorized by an insurer, if the name of such agent is borne onthe policy, is the insurer's agent in all matters of insurance." 24-AM.R.S.A. § 2422 (2003). Therefore, pursuant to section 2422, Cross hadstatutory authority as Acadia's insurance agent to bind Acadia to theStricklands' dwelling fire policy.

Moreover, Cross did bind Acadia to the Strickland risk on December 9,2002. Here, it is undisputed that on December 9, 2002, Cross was Acadia'sagent and that Ms. Rich was a licensed agent for Acadia. The recordindicates that on December 9, 2002, Ms. Rich completed the dwelling fireapplication and binder that contained the names of both Cross and Acadia.As explained above, Cross, as an insurance agent, had statutory authorityto bind Acadia to the Stricklands dwelling fire policy even in theabsence of contractual authority to procure personal lines of insurancefor Acadia. Therefore, the Court concludes that on December 9, 2002,Cross bound Acadia to a temporary contract of insurance between Acadiaand the Stricklands to cover the Property. See, e.g., SoutheasternColorado Homeless Ctr. v. West, 843 P.2d 117, 118 (Colo.App.1992)("A binder has been defined as a temporary or preliminary contractof insurance . . ."); Terry v. Mongin Ins. Agency,105 Wis.2d 575, 581 (Wis. 1982)("A binder is a contract of insurance incontemplation of a subsequent and more formal agreement; a binder is acontract for temporary insurance.").

2. Mutual Mistake

Patriot and Cross seek the extraordinary remedy of having the Courtrewrite the Stricklands' insurance binder to name Cambridge as theirinsurer based on the doctrine of mutual mistake. Patriot contends thatMr. Strickland and Ms. Rich each were mistaken about facts that arerelevant to the transaction. Specifically, Patriot argues that Mr.Strickland's affidavit establishes that he mistakenly believed that Crosshad apparent authority to bind Acadia, that Acadia had agreed to insurethe Property, and that the Property was insured by Acadia. Patriot also theorizes that anotherCross agent, Virginia Emery, "intended" to bind coverage with Cambridge,but a different Cross agent, Laurene Rich, mistakenly wrote theapplication and binder and accepted a check to Acadia in Ms. Emery'sabsence. Ms. Rich mistakenly assumed, Patriot alleges, that Acadia wouldallow her to place dwelling coverage with it in December of 2002.Ultimately Patriot states that because Ms. Rich treated the transactionas belonging to Ms. Emery, and since Ms. Emery intended to place thecoverage with Cambridge, Ms. Rich should have carried out Ms. Emery'sintent and that her failure to do so was a mistake.

The doctrine of mutual mistake is based on the premise that, in certaincircumstances, when both parties to a contract are mistaken about amaterial term of a contract, a court can reform the contract to meet theactual mutual understanding of the parties. See Sinclair v. HomeIndem. Co., 159 Me. 367, 373, 193 A.2d 177, 180 (Me. 1963).According to the Law Court, a mutual mistake is "reciprocal and common toboth parties, where each alike labors under the misconception in respectto the terms of the written instrument." Yaffle v. Lawyers Title Ins.Corp., 1998 ME 77, ¶ 8, 710 A.2d 886, 888 (citing Bryan v.Breyer, 665 A.2d 1020, 1022 (Me. 1995) (quoting Horton &McGehee, MAINE CIVIL REMEDIES § 14.16 at 14-19, 20 (1994)). "Themistake `must be material to the transaction' and must `touch the subjectmatter of the bargain and not merely be collateral to it.'"Yaffle, 710 A.2d at 888 (quoting Interstate Indus. Unif.Rental Inc. v. Couri Pontiac, Inc., 355 A.2d 913, 918 (Me. 1976)).Mutual mistake of fact must exist at the time the parties enter into thetransaction. See Nadeau v. Pitman, 1999 ME 104, ¶ 16,731 A.2d 863, 867 ("Events which occur subsequent to execution of a contractand are not contemplated by the parties at the time of execution of thecontract, are not a mutual mistake rendering a contract unenforceable."). The partyseeking to reform the contract must prove the existence of mutual mistakeby clear and convincing evidence. Id.

In order for Cross and Patriot to prevail on their claims of mutualmistake, it must be evident that the insertion of Acadia as the insurerrather than Cambridge was a mistake of fact common to both parties to thecontract: Cross and Mr. Strickland. The remedy of reformation is notavailable to Patriot and Cross, however, because the undisputed factsshow that Mr. Strickland was not mistaken when he purchased insurancewith Acadia. Here, the undisputed facts demonstrate that Mr. Stricklanddid not believe that Cambridge was actually his insurer; rather, hebelieved he was purchasing insurance with Acadia. First, as the Courtfound above, Cross had the authority to bind Acadia under Maine law, andthe binder given to Mr. Strickland on December 9 listed Acadia, notCambridge, as the insurer. Mr. Strickland understood what he was beingoffered: dwelling fire insurance through Acadia subject to the terms setforth in the binder. Mr. Strickland accepted this offer by signing thebinder and giving Cross a check payable to Acadia. None of the Crossagents ever told the Stricklands that Cambridge was going to be theirinsurer; rather, Ms. Rich told Mr. Strickland that Acadia was going toinsure the Property. Mr. Strickland never believed that he was insured byCambridge on December 3 or 6. However, on December 9, 2002, Mr.Strickland reasonably believed that Acadia was insuring the Propertythrough a temporary contract of insurance, and he canceled hishomeowner's policy with Patrons Oxford on that same day in reliance onthe belief that he was insured with Acadia. Thus, the Court concludes theundisputed facts indicate that Mr. Strickland was not "laboring under a mistake of fact" at thetime that he purchased his insurance binder with Acadia.

3. Implied Contract of Insurance

Patriot and Cross both claim that Cambridge is responsible for theStrickland loss because of an implied contract of insurance thatallegedly existed between Cambridge and the Stricklands as a result ofMs. Emery's December 3 telephone conversation with Mr. Cummings.Specifically, Patriot and Cross argue that in order to demonstrate thatthere was an implied contract of insurance between Cambridge and theStricklands, they must show only that: (1) Cross had the authority tobind Cambridge to the Strickland risk, and (2) it is certain thatCambridge would have accepted the Strickland risk had Cross submitted aproper request. See Attleboro Mutual Ins. Co. v. Grange Mutual Ins.Co., 611 A.2d 76, 78 (Me. 1992) (citing Utica Mut. Ins. Co. v.St. Paul Fire & Marine Ins. Co., 519 A.2d 185, 186 (1986)).Patriot and Cross contend that Ms. Emery's authority to bind Cambridgeand Mr. Cummings's alleged agreement over the telephone that Cambridgewould bind coverage are sufficient for the creation of an impliedcontract. Cambridge does not challenge that Ms. Emery had authority tobind it to an insurance contract, but, rather, argues that it would notnecessarily have accepted the risk. As the parties asserting the claimagainst Cambridge, Patriot and Cross have the burden of proving thatthere was an implied contract of insurance between Cambridge and theStricklands.

Patriot and Cross contend that the evidence in the record indicatesthat Mr. Cummings told Ms. Emery during their December 3 telephoneconversation that he would bind the Property. However, there is an issueof fact as to whether Mr. Cummings agreed that he would bind the Property. Assuming that Mr. Cummingsdid tell Ms. Emery in the December 3 telephone conversation thatCambridge would bind coverage on the Property, the Court neverthelessfinds that there is no implied contract in this case.

A contract of insurance cannot be implied in fact by simply meeting theUtica Mutual test. While a party wanting to establish theexistence of an implied contract of insurance in Maine must show theagent's authority to bind the insurer and that the insurer would havecertainly accepted the risk, general principles of contract law alsoprovide that in order to establish the existence of an implied contract,a party must establish a meeting of the minds. See Stanton v.University of Maine System, 2001 ME 96, ¶ 16, 773 A.2d 1045,1050 (Me. 2001) ("An implied contract `refers to that class ofobligations which arises from mutual agreement and intent to promise,when the agreement and promise have simply not been expressed in words.'"1 Samuel Williston & Richard A. Lord, A TREATISE ON THE LAW OFCONTRACTS § 1:5, at 20 (4th ed. 1990)). The contract may be impliedfrom conduct, but the need for an agreement or an understanding on thepart of the contracting parties is indispensable.

Although the understanding of the parties was not discussed inUtica Mutual — the case setting out the test for animplied contract of insurance in Maine — the facts of that casesupport that the parties believed that the insureds were covered by aninsurance policy. In Utica Mutual, the insurance agent issued afire insurance policy from St. Paul to the insureds for their business,and that policy was renewed each year for fourteen years. Due to aclerical error, the policy was not renewed for the year in which thebusiness suffered a fire loss. The Law Court concluded that an impliedcontract of insurance existed between St. Paul and the insureds becauseSt. Paul's agent had the authority to bind it and St. Paul would have accepted the risk ifrequested (as it had in the prior fourteen years). The facts indicate,however, that both St. Paul's agent and the insureds believed that thepolicy had been renewed and the Property was insured by St. Paul at thetime of the fire.

Here, there was never a meeting of the minds between the agents atCross and Mr. Strickland that the Property was insured prior to December9. The undisputed record indicates that neither Mr. Strickland nor Ms.Emery believed that the Property was insured on December 3. After Crossended the telephone call with Cambridge on December 3, 2002, it did nottake any actions to bind Cambridge to the Strickland risk, such as askingMr. Strickland to complete an application of insurance for Cambridge,accepting any money from Mr. Strickland as a down payment for insurancewith Cambridge, or issuing Mr. Strickland a binder for insurance withCambridge. Further, Ms. Emery communicated, and Mr. Stricklandunderstood, that the prospect of insuring the Property was based on thefulfillment of two conditions: providing up-to-date pictures andcompleting the woodstove questionnaire. Those conditions were notsatisfied in full until December 6, when Mrs. Strickland delivered thewoodstove questionnaire to Cross. The record also indicates that animplied contract of insurance did not arise on December 6, because Ms.Emery expressly told Mrs. Strickland that it would be necessary for Mr.Strickland to sign the documents before the insurance could be obtained.Finally, Mr. Strickland did not cancel his Patrons Oxford insurancepolicy on December 3 or 6, but rather on December 9.

In this case, the record demonstrates that the insureds certainly didnot think they had secured a dwelling fire policy until December 9, whenthey entered into an express contract with Acadia. Moreover, the actions of the agents at Crossshow without dispute that they did not believe that any contract fordwelling fire insurance had been created on December 3 or 6. In theabsence of any evidence to support a conclusion that there was a meetingof minds between Cross and the Stricklands on the question of whether theStricklands were actually insured by Cambridge prior to December 9, therecord does not permit this Court to imply the existence of a contract.

The Court will grant Cambridge's claim for summary judgment againstPatriot for equitable subrogation and will deny Patriot's Motion forSummary Judgment against Cambridge on its claims for equitablesubrogation and reformation. In addition, the Court will grantCambridge's Motion for Summary Judgment on Cross's cross-claims againstCambridge for breach of implied contract and mutual mistake.

B. Patriot's Third-Party Claims

Patriot has brought Third-Party claims against Cross for negligence(Count I), breach of agency agreement (Count II), indemnity (Count III),breach of fiduciary duty (Count IV), and contribution and indemnity(Count V). In its Motion for Summary Judgment, Patriot raises only itsclaims for breach of agency agreement (Count II) and breach of fiduciaryduty (Count IV). With respect to Patriot's claims for negligence andindemnity and contribution, Cross responds by noting that Patriot failedto make any specific arguments in its motion on these claims. In itsreply memorandum, Patriot points to factual evidence in its originalmotion that, Patriot argues, supports its negligence claim. This Courtwill not consider arguments first presented in a reply memorandum.See In re One Bancorp. Sec. Litig., 134 F.R.D. 4, 10 n.5 (D. Me.1991). By failing to draw attention to the facts that support theseclaims and put forth any legal arguments supporting these claims in its original memorandum, Patriot hasdeprived Cross of the ability to make cogent arguments to counter itsmotion for summary judgment. The Court will, therefore, deny Patriot'sMotion for Summary Judgment on its claims for negligence (Count I),indemnity (Count III) and contribution and indemnity (Count V).13

With respect to its third-party claim for breach of agency agreement,Patriot contends that because Cross had no authority to bind Acadia tothe Strickland Property, Cross breached its agency agreement with Acadia.Cross responds by arguing that Patriot has failed to produce any evidencethat Cross breached its agency agreement with Patriot and that the issueof whether Cross may have breached its agency agreement with Acadia hasnot been properly pled in the Third-Party Complaint. Patriot believesthat the language contained in the "Stipulation of Dismissal WithoutPrejudice" wherein the parties agreed to dismiss Acadia from this suit,provides that Patriot stands in the shoes of Acadia as to bothobligations and rights, so it does not matter whether Cross breached itsduties to Acadia, to Patriot, or to both. The Court disagrees withPatriot.

The stipulation relied upon by Patriot provides that "if Acadia waslegally obligated to provide insurance coverage to the Stricklands, thenPatriot is obligated to pay the Stricklands to the same extent thatAcadia would have been." Stipulation of Dismissal Without Prejudice ¶3. This provision of the Stipulation of Dismissal simply states thatPatriot will pay if Acadia is obligated. It does not pronounce thatPatriot has the right to sue on Acadia's claims. Cross bound Acadia, notPatriot, to the temporary contract of insurance with the Stricklands.After reviewing the entire Stipulation of Dismissal agreement, the Courtconcludes that it contains no assignment-type provision that would permit Patriot to bring a claim of Acadia's on its ownbehalf. Although Patriot and Acadia had an agreement whereby Patriotwould take over Acadia's personal lines, the record does not provide anybasis upon which Acadia authorized Patriot to sue on its rights orclaims. The Court will, therefore, deny Patriot's Motion for SummaryJudgment on its third-party claim for breach of agency agreement.

Although not altogether clear, it seems that Patriot asserts twoarguments to support its breach of fiduciary duty claim. First, Patriotcontends that Cross breached the fiduciary duty it owed to Patriot byacting beyond its authority to bind Acadia. Patriot also asserts thatCross breached its fiduciary duty to both Acadia and Patriot when itbreached its agency agreements because both the Acadia and Patriotagreements required that the agent call the underwriting departmentbefore binding coverage. Like Patriot's claim for breach of agencyagreement, Patriot's claim for breach of fiduciary duty appears to beAcadia's to bring. Here again, Cross bound Acadia, not Patriot. The Courtfinds no basis in this record to support a finding that Acadia hasassigned to Patriot its right to recover on its claims against Cross. TheCourt will, therefore, deny Patriot's Motion for Summary Judgment on itsthird-party claim for breach of fiduciary duty.

Finally, on this factual record, the Court will deny Patriot's Motionfor Summary Judgment on Cross's counterclaims for breach of contract andequitable subrogation.

III. CONCLUSION

Accordingly, it is ORDERED that Cambridge's Motion forSummary Judgment against Patriot be, and it is hereby, GRANTEDon its claim for equitable subrogation (Count III) and it isORDERED that Patriot pay Cambridge Eighty Thousand EightDollars and Seventy-Six Cents ($80,008.76) plus interest. It is furtherORDERED that Cambridge's Motion for Summary Judgment against Cross'scross-claims for breach of contract (Count I) and mutual mistake (CountII) be, and it is hereby, GRANTED.

It is further ORDERED that Patriot's Motion for SummaryJudgment against Cambridge be, and it is hereby, DENIED on itsclaims for equitable subrogation (Count I) and reformation (Count II). Itis further ORDERED that Patriot's Motion for Summary Judgmentagainst Cross on its Third-Party claims be, and it is herebyDENIED. Finally, it is ORDERED that Patriot's Motionfor Summary Judgment on Cross's Counterclaims for breach of contract(Count I) and equitable subrogation (Count II) be, and it is hereby,DENIED.

The claims that remain for trial are Patriot's third-party claimsagainst Cross for negligence (Count I), breach of agency agreement (CountII), indemnity (Count III), breach of fiduciary duty (Count IV), andcontribution and indemnity (Count V) as well as Cross's counterclaimsagainst Patriot for breach of contract (Count I) and equitablesubrogation (Count II).

1. Initially, Cambridge also brought this action against AcadiaInsurance Company for breach of contract (Count I) and equitablesubrogation (Count II). In August 2003, the parties filed a "Stipulationof Dismissal Without Prejudice" wherein the parties agreed to dismissAcadia. See Docket Item No. 22.

2. The agency agreement between Cross and Cambridge remains ineffect, and Cross remains an authorized agent of Cambridge. Cross Aff.¶ 5.

3. The agency agreement between Cross and Patriot remains in effect,and Cross remains an authorized agent of Patriot. Cross Aff. ¶8.

4. In addition to the November 25, 2002, letter, Cross received aPersonal Lines Agent Bulletin from Acadia on November 21, 2002. BloomAff. ¶ 4.

5. Mr. Cross did not communicate the transition of personal linesbusiness from Acadia to Patriot to his agents because he was told not todisclose that information. Deposition of Royce Cross at 84-85.

6. For the purposes of this opinion, the Court will refer to"Cambridge" to designate either the Andover Companies or the CambridgeMutual Insurance Company.

7. Mr. Strickland and his wife had never purchased any insurancefrom the Andover Companies or Cambridge Mutual prior to December 2002.Mr. Strickland Aff. ¶ 10; Affidavit of Kathleen Strickland ¶¶ 4-5;Emery Dep. at 104.

8. Laurene Rich was, and still is, a licensed agent of Cambridge andAcadia. Rich Dep. at 5, 129.

9. The application and binder that Mr. Strickland and Ms. Richcompleted on December 9, 2002, were Acord forms into which Ms. Richentered information — including the name of the insurance company— on the computer. Rich Dep. at 116-17, 121-24, 127; Mr.Strickland Aff. ¶ 7 and Exhibit B to Mr. Strickland's Affidavit.

10. On various documents in the record, Kathleen Strickland isreferred to as Kathleen Thompson. See Release and Assignment ofClaims attached to Complaint as Ex.G.

11. RESTATEMENT OF RESTITUTION § 162 (1937) provides: Where Property of one person is used in discharging an obligation owed by another . . . under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder.

12. "Policy" is defined in the Maine Insurance Code as "the writtencontract of or written agreement for or effecting insurance, by whatevername called, and includes all clauses, riders, endorsements and paperswhich are a part thereof." 24-A M.R.S.A. § 2402. Therefore, thebinder issued by Cross to the Stricklands satisfies the statutorydefinition of a "policy."

13. The Court notes that Patriot's third-party claims forcontribution and indemnity are remedial in nature and as such do not formthe basis for a separate claim.

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