U.S. Court of Appeals points out that duty to defend is determined by allegations of the complaint

In Narragansett Jewelry Co., Inc. v. St. Paul Fire and Marine Ins. Co., 555 F.3d 38 (1st Cir. 2009), the United States Court of Appeals for the First Circuit court reaffirmed that the "eight corners test" still determines the duty to defend under Rhode Island law.

Slane was a jewelry design company that contracted with Narragansett to develop jewelry models and molds based on Slane designs, and to produce jewelry ordered by Slane.

Slane sued Narragansett, alleging that Slane "owned certain models which it entrusted to [Narragansett] for use in the production of jewelry," and that Narragansett "caused physical damage to such models."

Narragansett sought defense and indemnity from its insurer, St. Paul. St. Paul denied coverage based on an exclusion for property damage to "[p]ersonal property that's in the care, custody, or control of [Narragansett]."

Narragansett filed a declaratory judgment action in Rhode Island. It argued that the alleged loss or damage "possibly" occurred during the shipment process, and thus not while the models were in Narragansett's care, custody or control.

The United States Court of Appeals for the First Circuit affirmed summary judgment for St. Paul, stating, "Regardless of what might be 'possible,' there are no allegations in the Slane lawsuit that support Narragansett's hypothesis." The court pointed out that the complaint specifically alleges that Narragansett caused the damages at issue.