Insurance defense attorney describes her own tornado loss

Tricia Murray, an insurance defense attorney with ForbesGallagher, owns property on Cape Cod that suffered fallen trees in a recent tornado.  Luckily the damage was only to the trees and the yard, and the people, pets, and house itself were not harmed.  In her article at the wonderful blog Agency Checklists about dealing with the aftermath, one of the things she discusses is how even she, an experienced insurance litigator, did not really know what was covered and what was not covered under her homeowner's policy.  (She learned that tree damage that does not affect her house is not covered under her policy.) 

That has been my experience as well; after every minor water infiltration into my house from a bad storm or fender bender to my parked car I have to read my policy to figure out what is or is not covered.  The advantage of being an insurance litigator in my own life is not so much that I can make a better argument about coverage than anyone else, as that I can speak to adjusters with an air of polite confidence when I know that they are wrong about coverage. 

Massachusetts Appeals Court holds that verdict against insured does not make liability or damages reasonably clear until appeal is resolved

Surabian Realty Co. and Maja Hospitality Corporation sued Central One Federal Credit Union and two of its officers, David L'Ecuyer and Craig Madonia in connection with a failed attempt to obtain a commercial loan to develop a hotel on property in Shrewsbury.  A jury returned a verdict in favor of the plaintiffs, and the trial judge ruled in favor of the defendants on ch. 93A claims. Both sides appealed.

While the appeals were pending the plaintiffs sent a 93A demand letter to CUMIS, the insurer for Central One and its officers, demanding that it settle the claims against L'Ecuyer (but not the other two parties).  CUMIS responded that the appeal rendered liability unclear, and declined to pay the judgment against L'Ecuyer.  The plaintiffs then sued CUMIS.  Subsequently the trial court decisions in the underlying case were affirmed.

In Surabian Realty Co., Inc. v. CUNA Mutual Group, 95 Mass. App. Ct. 1118, 2019 WL 2591286 (unpublished), the Massachusetts Appeals Court held that the cross-appeal injected uncertainty as to L'Ecuyer's liability and the amount of damages, so that CUMIS did not act in bad faith in refusing to settle.  In particular the court noted that the memorandum of the trial judge on the 93A claim in the underlying case made clear that the judge disagreed with the determination of the jury.  In addition, CUMIS was relying on the advice of counsel in declining to settle. 

US District Court For District of Massachusetts holds that auto exclusion in pedicab's general liability policy excludes injuries caused by car hitting insured's customers in a pedicab

Laura Gentry Reagan and her husband Robert Reagan hired a pedicab that was licensed and registered to Boston Rickshaw and operated by its employee Dennis Suozzi.  During the ride, Suozzi allegedly changed lanes without looking or signaling.  That caused a vehicle to hit the rear of the pedicab, injuring the Reagans.  They sued Suozzi and Boston Rickshaw.

Atain Specialty Insurance provided general liability insurance to Boston Rickshaw.  It denied a duty to defend or indemnify on the basis of an exclusion for bodily injury "arising out of . . . any auto . . . whether or not owned, maintained, used, rented, leased, hired, loaned, borrowed or entrusted to others or provided by another to any insured." 

In Atain Specialty Insurance Co. v. Boston Rickshaw LLC, __ F.3d __, 2019 WL 2766980 (D. Mass.), the United States District Court for the District of Massachusetts first dismissed the argument that the declaratory judgment action was not yet ripe because the underlying lawsuit had not yet resolved, as the declaratory judgment action raised the issue of the duty to defend as well as the duty to indemnify.   

The court then addressed the first part of the auto exclusion, excluding coverage for body injury "arising out of . . . any auto."  It cited the usual definitions for "arising out of," a phrase which "must be read expansively, incorporating a greater range of causation than that encompassed by proximate cause," etc.  It held that the exclusion "therefore, appears to apply to the Reagans' alleged injuries, because the injuries arose directly of the operation of the automobile, and would not have occurred but for the collision."

The Reagans argued that taking the exclusion as a whole, it applies only to autos under the control of the insured, and does not include the auto that struck the pedicab. The court held that such an interpretation was contradicted by the plain meaning of the policy interpreted by the rules of grammar.

Finally, the Reagans argued that a reasonable insured that operates pedicabs would not expect the auto exclusion to apply to autos outside of their control or use, or to autos that strike pedicabs.  The court responded to that argument in part by pointing out that it is commonplace for insureds to have separate automobile and general liability policies.  I find that comment troubling.  After all, insureds who don't own or use automobiles generally don't have automobile policies, but that doesn't mean that their customers or visitors can't get hit by cars in a variety of circumstances under which the insured could be found liable. 

That led me to wonder whether a standard homeowner's policy, which I know excludes coverage generally for motor vehicle accidents, would exclude coverage if an unknown person drove a car through the wall of a house (and then drove away).  The standard ISO homeowner's policy form (a form used by many insurers) does not exclude coverage in those circumstances:

·       The property damage coverage (covering damage to the house itself) excludes coverage to motor vehicles themselves, but does not exclude coverage for damage to the house caused by a motor vehicle. 

·       The liability coverage (covering claims against the homeowner brought by an injured person) excludes "motor vehicle liability," which is defined in the policy as liability arising out the ownership or use of the vehicle by an insured. 

It's worthwhile to note that the exclusion interpreted in the case is also not a standard exclusion (or at least is not in the first general liability ISO form that I grabbed).  I’m not going to speculate about the insurance policy negotiations of a company whose business involves being a part of traffic, or whether that company has an auto policy that is providing coverage. 

US District Court for District of Massachusetts allows motion to transfer insurance coverage case to New York because of forum selection clauses in underlying contracts

Wegmans Food Markets entered into two contracts relevant to an accident at a supermarket under construction in Burlington, Massachusetts.  The first contract was a staffing agreement with Aerotek, under which Aerotek provided Thomas Story to Wegmans as a construction supervisor at the site. The second contract was a construction subcontract with MP Masonry.

Both contracts had forum selection clauses.  The Aerotek contract provided that New York courts would have exclusive jurisdiction over the parties and subject matter of proceedings with respect to any matter arising under the contract. The MP Masonry contract provided that any litigation brought by MP Masonry based on or arising out of the contract shall be brought only in New York. 


Joseph Holgun, an employee of MP Masonry, was injured when a scaffold collapsed at the construction site.  He sued Wegmans and Story.  Wegmans demanded that MP Masonry defend and indemnify it under an indemnification clause in the construction contract. 

Firemen's Insurance Company of Washington insured MP Masonry.  It agreed to defend Wegmans. ACE American Insurance Company insured Aerotek.

Firemen's sued ACE, Story, and Aerotek in the United States District Court for the District of Massachusetts.  It sought a declaratory judgment that they must contribute to the costs of defending Wegmans.  Specifically, Firemen's asked the court to rule that:

·       Story is not an insured under the Firemen's policy and Firemen's has no duty to defend or indemnify him; 

·       Story is not an intended beneficiary of contractual defense and indemnity obligations owed by MP Masonry to Wegmans under the terms of the construction contract; 

·       Wegmans is an additional insured under the ACE policy; and 

·       ACE is required to defend and indemnity Wegmans under the indemnity clause of the Aerotek contract.  

Aerotek and Story moved to transfer the case to New York under the contractual forum selection clauses. In Firemen's Insurance Co. of Washington, D.C. v. ACE American Insurance Co., __ F.Supp. 3d __, 2019 WL 2914159, the court granted the motion. 


Firemen's argued that it was not a party to either the the construction contract or the staffing contract, so most of its claims were not subject to the forum selection clauses.  It conceded that its claim that the ACE policy had to cover Wegmans because of the contractual indemnity clause of the staffing agreement was subject to the forum selection clause in that contract, but argued that transferring only one claim to New York courts would be unreasonable. 

The United States District Court  provided an overview of federal law on motions to transfer on the basis of contractual forum selection clauses.  The analysis boils down to:  when a contract has a mandatory forum selection clause, it can be defeated only rarely and only based on public interest factors such as the administrative difficulties flowing from court congestion, the importance of having local controversies decided at home, and the interests in having the trial of a case that will be decided on the basis of state law in the federal jurisdiction that most understands the law of that state. A non-party to a contract may be bound by a forum selection clause if the party is so closely related to the dispute that is foreseeable that it will be bound. 

The court held that it was foreseeable that Firemen's and ACE would have to indemnify Wegmans under the construction and staffing contracts.  All the declarations Firemen's sought required interpretation of the underlying contracts.  The insurers were therefore closely enough related to the dispute that the forum selection clauses applied. 

You should take good notes after a loss

As difficult as it is when you have lost your house to a fire or been seriously injured in a car accident, taking notes about what happened and your interactions with the insurer is worth the effort.  This blog post from Merlin Law Group explains why. 

Massachusetts Appeals Court holds that "your work" exclusion does not exclude damage to two layers of floor where insured contractor installed third layer

Dacon Corporation was the general contractor on the construction of Beverly Hospital, owned by Northeast Hospital Corporation (NHC). 

The first floor of the hospital consisted of three layers: a bottom vapor barrier, a concrete slab, and a top layer of tile or carpet.  Subcontractor Lampasona Concrete Corporation installed the concrete slab.  Other subcontractors installed the other two layers. 

NHC sued Dacon, alleging property damage to the finished first floor.  Dacon filed a third-party complaint against Lampasona. It alleged that Lampasona made multiple errors in installing the concrete slab, including puncturing the vapor barrier, which allowed moisture to pass through into the concrete slab,  and improperly mixing fiber reinforcement into the concrete, which contributed to moisture wicking to the surface. 

Lampasona sought coverage from its general liability insurer, All America Insurance Company.  All America asserted that five builder's risk exclusions excluded coverage. 

In All America Ins. Co. v. Lampasona Concrete Corp., 95 Mass. App. Ct. 79 (2019), the Massachusetts Appeals Court held that the trial court judge had erred in granting summary judgment to All America. It focused its analysis on exclusion j(6), which excludes damages to "that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it."  The court held that exclusion did not apply because the damage was to the vapor barrier and top layer of the floor, not to the concrete slab installed by Lampasona. 

First Circuit finds no coverage under personal and advertising injury for manufacturer's use of trademark similar to competitor's trademark

Sterngold Dental manufactures and sells dental products.  Intra-Lock International alleged that it had infringed Intra-Lock's trademark (literally the mark itself) on a product called OSSEAN, by using a nearly identical marks, OSSEO and OSSEOS, for a nearly identical product.  Sterngold's insurer, HDI Global Insurance Company, denied coverage under the personal and advertising coverage of the policy.


In Sterngold Dental, LLC v. HDI Global Ins., __ F.3d __, 2019 WL 2754185 (1st Cir.), a decision full of puns and phrases requiring both a Latin and an English dictionary that could only have been written by Judge Selya, the court agreed with HDI that there was no coverage.

The court first examined the definition of "personal and advertising injury" in the policy.  That definition included the use of "another's advertising idea" or "infringing upon another's copyright, trade dress or slogan in an advertisement."  The policy provided that publication on the internet may constitute an advertisement. 

The meaning of the phrase "advertising idea," the court noted, "is somewhat nebulous."  It includes "if the insured took an idea for soliciting business or an idea about advertising."  But if the underlying complaint merely alleges that the insured "wrongfully took a product and tried to sell that product," that is not a injury stemming from another's advertising idea.

In the claim before the court. Intra-Lock had alleged that Sterngold's use of "confusingly similar marks . . . in internet advertising . . . was likely to cause confusion, mistake, and deceive third parties." 

The court punted on whether the mark was an advertising idea.  It assumed that it was so that it could move on to analysis of an exclusion to the personal and advertising injury coverage.

The exclusion excluded coverage for injury "arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.  Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in an advertisement."

The exclusion had an exception for "infringement, in your advertisement, of copyright, trade dress, or slogan." 

The court examined whether the advertising injury claim arose out of the claimed infringement of Intra-Lock's trademark, which would trigger the exclusion.

The court noted that the phrase "arising out of" indicates a wide range of causation, and means "originating from," "growing out of," "flowing from," "incident to," or "having connection with."  The court held that under that definition the exclusion was triggered because the claim was alleged to have arisen out of infringement of Intra-Lock's trademark.  

Sterngold argued that the exclusion did not apply because it provided that "other such intellectual property rights do not include the use of another's advertising idea in your advertisement."  The court held that, based on the language of the exclusion and common grammatical rules, that phrase applied only to "other intellectual property rights." 

Finally, the court rejected Sterngold's argument that the marks were actually slogans, so that the claim came within the exception to the exclusion.  A "slogan is certainly not by definition a trademark."