The opinion of the court was delivered by: REVERCOMB
GEORGE H. REVERCOMB, UNITED STATES DISTRICT JUDGE.
Plaintiff Colonial Penn Insurance Company filed a complaint for declaratory judgment against Defendant Sonya Laraye Owens to determine whether it is liable to defend and cover Defendant for a death claim arising out of an automobile accident which occurred in the Third Street Tunnel in the District of Columbia at 5:30 on the morning of July 23, 1988. This matter is before the court pursuant to Plaintiff's Motion for Summary Judgment.
On July 20, 1988, Defendant came to the Keystone Insurance Agency in Hillcrest Heights, Maryland and applied for automobile liability insurance coverage through the Assigned Risk Program of the District of Columbia Automobile Insurance Plan (the Plan) which had been promulgated pursuant to the Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 (the Act). D.C.Code § 35-2101 et seq. Defendant spoke with Brent Molovinsky, president of Keystone, and applied for coverage with a $ 500 deductible. After taking Defendant's application Molovinsky accepted Defendant's premium check for $ 365 and in turn issued a binder to Defendant bearing number DC0720B88. The last five digits of the binder number reflected the date the application for insurance was signed. However, on the following day, July 21, 1988, before Molovinsky mailed Defendant's application for insurance coverage to the Manager of the Plan for assignment, the Defendant called Molovinsky and told him that she wanted to change the terms of her policy application, specifically, to eliminate Personal Injury Protection (PIP) benefits, and that she would come into the agency to effect those changes.
Molovinsky's affidavit states that the Defendant instructed him not to deposit or cash the check and to "hold the application." Although Defendant in her deposition denies that she told Molovinsky to "hold the application," she does not dispute that she told him not to deposit or cash the check. Molovinsky did not mail the application of July 20 but held it on his desk awaiting Defendant's return to the Insurance Agency.
The Defendant was involved in a fatal automobile accident before she ever returned to the Keystone Insurance Agency to change her policy application. At approximately 5:25 a.m. on Saturday, July 23, 1988, the Defendant was involved in an automobile accident in the Third Street Tunnel in the District of Columbia in which her vehicle struck and fatally injured James Ward who had been changing a tire on a disabled vehicle in the tunnel.
Approximately nine hours after the accident, at 2:45 p.m. on July 23, 1988, the Defendant returned to the Keystone Agency where she met with John Dao, a licensed insurance broker and one of the Agency's salaried salespersons. Dao provided the Defendant with an application for automobile insurance coverage under the Plan which the Defendant was required to complete. Dao filled out the application with the information that the Defendant provided him.
In taking the information from the Defendant, Dao specifically asked Defendant the following question which was contained in section 9 of the application: "Has the applicant or anyone who usually uses the applicant's motor vehicle, been involved, either as owner or operator, in any motor vehicle accident during the past 36 months?" In response to this question the Defendant answered "none" and Dao accordingly wrote "None" in the appropriate blank provided on the application. In Dao's presence, the Defendant then read and signed the application form without ever having disclosed to Dao that she had been involved in the automobile accident with Ward nine hours earlier. Directly above the Defendant's signature the application form stated, under the heading "Applicant's Statement," that
I declare and certify that . . . (2) To the best of my knowledge and belief that all statements contained in this application are true and that these statements are offered as an inducement to the company to issue the policy for which I am applying (3) I realize that any misleading information or failure to disclose required information will not be considered good faith on my part and will prejudice my application for insurance.
The coverage terms of the application provided for bodily injury limits of $ 25,000/$ 50,000 per occurrence, $ 10,000 for property damage, and a $ 250 deductible for collision coverage. The application form which the Defendant had signed stated in bold faced print, on page 2, that the effective date and time of coverage was July 23, 1988, at 2:45 p.m., and further stated in bold-faced print that "IN NO EVENT SHALL COVERAGE BE EFFECTIVE PRIOR TO THE DATE AND HOUR OF COMPLETION OF THIS APPLICATION."
The Defendant then gave Dao a check from her Sovran Bank account, numbered 475 and dated July 23, 1988, in the amount of $ 413.00 as an installment payment on the annual premium under the policy coverage for which the Defendant applied. Dao gave Defendant a document entitled "Insurance Binding Memorandum and Receipt." The issued binder bore the number 01693 72388 and stated that the effective date of coverage was July 23, 1988. (Again, the last five digits of the binder reflected the date the application for insurance was signed.)
Molovinsky forwarded Defendant's July 23, 1988 application and her premium check to the Manager of the Plan in Richmond, Virginia, and discarded the Defendant's July 20, 1988 application along with a copy of the binder that he had issued to Defendant on that date. Neither the Plan nor the Plaintiff ever received the July 20, 1988 application or its $ 365 premium check.
On July 25, 1988, Defendant telephoned Molovinsky and apprised him that she had been in the Keystone office on July 23, 1988, and had filled out an application and been issued a binder by Dao with an effective coverage date of July 23, 1988. She told Molovinsky that she had lost the original binder which he had given her pursuant to the first application and repeatedly requested that Molovinsky issue her a binder retroactive to July 20, 1988 because she was required by her employer to show that she had coverage in effect since that date. Molovinsky specifically asked the Defendant if she had been involved in an automobile accident. The Defendant denied any accidents and again insisted that she only needed a retroactive binder for job purposes. Accordingly, Molovinsky prepared a third binder on either July 25 or 26, 1988, which he signed and mailed to the Defendant. This binder bore identification number DC0720B88 and had an effective date of July 20, 1988, at 12:00 p.m.
The July 23, 1988 application and $ 413 premium check which Molovinsky had mailed to the Plan were received in the office of the Plan Manager who assigned the Defendant's application to Plaintiff.
On or about August 3, 1988, Plaintiff received from the Plan Manager the July 23, 1988 application that Defendant had completed, her premium check, and an Assignment Notice which informed Plaintiff that the effective date of coverage for the policy that Plaintiff was to issue to Defendant was that on the application, July 23, 1988, at 2:45 p.m.
Plaintiff then issued policy No. 51935642 to Defendant on August 11, 1988. Plaintiff sent a copy of the policy to Defendant with a declaration sheet which stated that the policy period would run from July 23, 1988, through July 23, 1989, effective at 12:01 a.m.
After Defendant received the policy she informed Plaintiff that she had been involved in a fatal accident with Ward in the early morning hours of July 23, 1988. Plaintiff's agents inquired of Defendant why she did not disclose the accident in the application form which she signed on July 23, 1988, at 2:45 p.m. The Defendant replied that she possessed a binder providing her with coverage effective July 20, 1988, and mailed a copy of the retroactively-dated binder to Plaintiff, along with a copy of Sovran Bank Check No. 475 which Defendant had used to pay her installment premium on the July 23, 1988 insurance application. The Defendant altered the date on check No. 475 from July 23, 1988, to July 20, 1988. The Defendant subsequently produced yet another check dated July 20, 1988, in the amount of $ 413.00, which Defendant claimed she had given to Molovinsky at the time she filled out her original application. This check, which was purportedly written three days prior to check No. 475, was check No. 500.
Molovinsky acknowledges that he received a check from the Defendant on July 20, 1988, but denies that it was check No. 500. Molovinsky states that the check that he received from the Defendant on July 20, 1988 was in the amount of approximately $ 365.00 which reflects the premium that was assessed pursuant to her original application which contained a $ 500 collision deductible. The figure of $ 413 reflects the higher ...