Kimberly Pereira, an employee of R. Squared, provided support services to Dennis Pinto, who had been diagnosed with dementia. Pereira drove Pinto to a restaurant in a car owned by Pinto's wife. At the restaurant Pereira consumed alcohol and became intoxicated. She subsequently crashed the vehicle, and Pinto was seriously injured.
Pinto's family sued Pereira, R. Squared, and R. Squared's principals. The claims included liability under respondeat superior against R. Squared and its principals, and negligent hiring, training, supervision or retention.
FSIC provided general liability coverage to R. Squared. It disclaimed coverage on the basis of an automobile exclusion. That exclusion provided, "This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, training or monitoring of others by that insured, if the 'occurrence' which caused the 'bodily injury' or 'property damage' involved the ownership, maintenance, use or entrustment to others of any . . . 'auto" . . . that is owned or operated by or rented or loaned to any insured."
The FSIC policy also contained a severability clause, under which the policy applied "separately to each insured against who claim is made or suit is brought."
Pilgrim provided auto coverage to R. Squared. It settled the suit. FSIC filed a declaratory judgment action, seeking a declaration that Pilgrim had no right to contribution or subrogation from it.
In First Specialty Ins. Co. v. Pilgrim Ins. Co., 83 Mass. App. Ct. 812 (2013), the court distinguished the FSIC policy from policies interpreted in earlier cases. The earlier cases had similar facts. The court found coverage in those cases because of the severability clauses of the policies.
In First Specialty the court distinguished the policies in those earlier cases, because the FSIC policy stated that the auto exclusion applied even if the claims against any insured allege negligence in the supervision or hiring of others by that insured. That language was sufficient to make the severability clause ineffective with respect to the exclusion. The court speculated that the clause was added to address the earlier cases which had found coverage.