1st Circuit holds that reasonable expectations doctrine does not trump unambiguous policy language

I posted here about the United States District Court case of Clark School for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., 2012 WL 6771835 (D. Mass.).  In that decision the court held that an exclusion for known circumstances revealed in a financial statement applied to a claim that a school had misused a donation.  The exclusion excluded claims "arising out of, directly or indirectly resulting from or in consequence of, or in any way involving" any circumstances disclosed in a financial statement that was attached to the policy.  The financial statement referenced the gift at issue.

 In Clark School for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., __ F.3d __, 2013 WL 57337339 (1st Cir.) the United States Court of Appeals has affirmed the ruling. 

The court held that the plain language of the exclusion excluded coverage because the loss "involved" the gift disclosed in the financial statement. 

The court rejected the school's argument that the reasonable expectations of the parties were that the exclusion would not apply to a lawsuit over the gift, but only to lawsuits over the school's financial difficulties discussed in the financial statement.  The court held that even if the school could have reasonably expected coverage, the reasonable expectations doctrine does not apply when policy language is unambiguous.