A & W Maint., Inc. v. First Mercury Ins. Co.

• Decision Date: 17 March 2015
• Docket Number: Civil Action No. 1:14–cv–10169–WGY.
• Citation: 91 F.Supp.3d 113
• Parties: A & W MAINTENANCE, INC., Plaintiff, v. FIRST MERCURY INSURANCE COMPANY, Defendant, The Charter Oak Fire Insurance Company, Intervenor–Defendant, Excelsior Insurance Company, Intervenor–Defendant.
• Court: U.S. District Court — District of Massachusetts

91 F.Supp.3d 113

A & W MAINTENANCE, INC., Plaintiff

v. FIRST MERCURY INSURANCE COMPANY, DefendantThe Charter Oak Fire Insurance Company, Intervenor–DefendantExcelsior Insurance Company, Intervenor–Defendant.

Civil Action No. 1:14–cv–10169–WGY.

United States District Court, D. Massachusetts.

Signed March 17, 2015.

Carlin J. Phillips, Phillips & Garcia, LLP, North Dartmouth, MA, for Plaintiff.

Peter G. Hermes, Alexandra L. Geiger, Hermes, Netburn, O'Connor & Spearing, Boston, MA, for Defendant.

Gerald P. Dwyer, Jr., Jonathan E. Small, Robinson & Cole, LLP, Hartford, CT, John P. Ryan, Myles W. McDonough, Ryan B. MacDonald, Sloane & Walsh, Boston, MA, for Intervenor–Defendant.

FINDINGS OF FACT, RULINGS OF LAW, AND DECLARATORY JUDGMENT

YOUNG, District Judge.

I. INTRODUCTION

This action arises out of an accident (the “Underlying Accident”) that occurred on February 23, 2011, when an employee of A & W Maintenance, Inc. (“A & W”) sustained injuries after falling into an open clarifier tank while performing services at a water treatment facility pursuant to a contract with Hart Engineering Corp. (“Hart”). The plaintiff, A & W, had two relevant insurance policies at that time.¹

The first is a commercial general liability insurance policy (the “CGL Policy”) with the defendant, First Mercury Insurance Co. (“First Mercury”). The second is a commercial auto insurance policy (the “Excelsior Auto Policy”) with Excelsior Insurance Company (“Excelsior”). The Charter Oak Fire Insurance Co. (“Charter Oak”) provides general liability insurance to Hart.

A & W made claims with both First Mercury and Excelsior requesting defense and indemnification of third-party claims. Both insurers denied coverage under their respective policies. A & W filed this action against First Mercury challenging its denial of coverage. A & W has also challenged Excelsior's denial of coverage in a related lawsuit filed before this Court.²

First Mercury filed a motion for summary judgment against A & W on grounds that the claims set forth in the underlying tort action for which A & W seeks defense and indemnity fall squarely within Clause 2(g) of the CGL Policy, which excludes coverage for bodily injury arising out of the use of an automobile. A & W filed a cross-motion opposing First Mercury's motion and seeking partial summary judgment in its favor.

Charter Oak and Excelsior have both intervened as defendants in the present proceeding. All four parties agreed to proceed on a case-stated basis to resolve questions of liability. For reasons stated in greater detail in this opinion, this Court holds that First Mercury has a duty to defend and indemnify both A & W and Hart for third-party claims arising out of the Underlying Accident.

II. PROCEDURAL HISTORY

A & W filed an initial action against First Mercury on January 23, 2014, for its failure to provide insurance coverage under the CGL Policy with regard to a third-party complaint filed against A & W; it then amended its complaint on July 24, 2014. Compl., ECF No. 1; First Am. Compl. (“A & W Am. Compl.”) ¶¶ 5–9, ECF No. 24. A & W raised claims for (i) declaratory judgment, (ii) breach of contract, and (iii) violations of Massachusetts General Laws Chapter 93A. A & W Am. Compl. 1.

In its answer to the amended complaint, filed on July 30, 2014, First Mercury raised affirmative defenses against each of the counts and sought declaratory judgment stating that it has no obligation to defend or indemnify either A & W or Hart with respect to the third-party complaint. Answer Def. First Mercury Ins. Co. Pl.'s First Am. Compl. (“First Mercury Answer”), ECF No. 25. A & W filed an answer to First Mercury's counter-claim on August 4, 2014 denying that First Mercury is entitled to declaratory judgment. Pl. A & W Maint., Inc.'s Answer & Defenses Countercl. First Mercury Ins. Co., ECF No. 32.

On July 30, 2014, First Mercury moved for summary judgment against A & W on all the counts present in A & W's original complaint. Def. First Mercury Ins. Co. Mot. Summ. J., ECF No. 26. First Mercury also offered arguments supporting its counterclaim for a declaratory judgment that it has no obligation to defend or indemnify either A & W or Hart with respect to the allegations of the third-party complaint and the A & W complaint. Id.; Def. First Mercury Ins. Co.'s Mem. Law Supp. Mot. Summ. J. (“First Mercury Mem.”), ECF No. 27. A & W then filed a cross-motion on August 29, 2014, for partial summary judgment as to its declaratory judgment and breach of contract claims. Pl.'s Cross–Mot. Partial Summ. J., ECF No. 43; Pl.'s Mem. Law Supp. Opp'n Def. Mot. Summ. J. & Pl.'s Cross–Mot. Partial Summ. J. (“A & W Mem.”), ECF No. 41. First Mercury filed a memorandum in opposition to A & W's cross-motion on September 19, 2014. Def. First Mercury Ins. Co.'s Opp'n Pl.'s Cross-mot. Partial Summ. J. (“First Mercury Opp'n”), ECF No. 51.

On August 27, 2014, Charter Oak filed a motion to intervene as a defendant, Charter Oak Fire Ins. Co.'s Mot. Intervene & Stay Adjudication Mot. Summ. J., ECF No. 39, which was granted. Elec. Notice, Sept. 4, 2014, ECF No. 44. Charter Oak then filed a memorandum in opposition to First Mercury's motion for summary judgment. Intervenor Charter Oak Fire Ins. Co.'s Mem. Law Opp'n Def.'s Mot. Summ. J. (“Charter Oak Mem.”), ECF No. 53. Charter Oak argues that this Court should deny First Mercury's motion for summary judgment insofar as it relates to Hart's claims for coverage. Id. at 12.

This case was referred to an alternative dispute resolution hearing set for October 1, 2014 before Chief Magistrate Judge Jennifer C. Boal. Elec. Notice, Aug. 18, 2014, ECF No. 38. First Mercury filed a motion to postpone the ADR hearing on grounds that the case was not ripe for mediation until this Court had ruled on the parties' motions for summary judgment. Assented-to Mot. Def. First Mercury Ins. Co. Postpone ADR Hr'g, ECF No. 49. Chief Magistrate Judge Boal granted this motion. Elec. Order, Sept. 15, 2014, ECF No. 50.

On October 14, 2014, Excelsior filed its motion to intervene, Excelsior Ins. Co.'s Mot. Intervene, ECF No. 58, which this Court granted. Elec. Notice, Oct. 17, 2014, ECF No. 71. Excelsior also filed a memorandum in opposition to First Mercury's motion for summary judgment on October 14, 2014. Def. Excelsior Ins. Co.'s Mem. Law Opp'n First Mercury's Mot. Summ. J. ( & w/r/t Case Stated) (“Excelsior Mem.”), ECF No. 60.

All parties agreed to proceed on a case-stated basis. Where the parties stipulate to the material facts, such stipulation enables the court to render decision without trial. Rossi v. Boston Gas Co., 833 F.Supp. 62, 64 n. 4 (D.Mass.1993). This “case stated” procedural device is especially appropriate where the district court is faced with cross motions for summary judgment. Id. Unlike a motion for summary judgment, in a “case stated” the parties authorize the court to decide any significant issues of material fact or disputed factual questions that remain. Id. In contrast to summary judgment, where the Court must draw all reasonable inferences in favor of the nonmovant, in a “case stated” the Court approaches the issues as a neutral adjudicator and is entitled to “engage in a certain amount of factfinding, including the drawing of inferences.” TLT Constr. Corp. v. RI, Inc., 484 F.3d 130, 135 n. 6 (1st Cir.2007) (quoting United Paperworkers Int'l Union Local 14 v. Int'l Paper Co., 64 F.3d 28, 31 (1st Cir.1995) ) (internal quotation marks omitted).

The case stated hearing was held on October 17, 2014. The parties submitted further written briefs, and the Court entertained full oral argument just as it would do at the close of a trial. Elec. Notice, ECF No. 71. After careful reflection, this opinion resolves the following issues:

i. Did the Underlying Accident arise out of the ownership, maintenance or use of an automobile? Accordingly, does First Mercury or Excelsior have a duty to defend and indemnify A & W for the third-party claims arising out of the Underlying Accident?

ii. Depending on which policy is found to provide coverage, is Hart precluded from coverage?

iii. Does Charter Oak have a duty to defend and indemnify Hart, considering the presence of the CGL Policy and the Excelsior Auto Policy?³

iv. Has First Mercury violated Massachusetts General Laws Chapter 93A?

III. FINDINGS OF FACT

A & W is a contracting business based in Middleboro, Massachusetts. A & W Am. Compl. ¶ 1. A & W repairs failing infrastructure, such as tanks, tunnels, aqueducts, pipes, and manholes, primarily through the spray application of structural epoxy coatings. Id. First Mercury is an insurance company with its principal place of business in Michigan. Id. ¶ 2. A & W holds a commercial general liability policy from First Mercury. Id.; Aff. Christopher J. Crawford (“Crawford Aff.”), Ex. 1, Commercial General Liability Declarations (Occurrence Policy) Policy No. FMMA002902–2 (“CGL Policy”), ECF No. 29–1. At all relevant times A & W had paid its premiums, and its policy with First Mercury was in force. A & W Am. Compl. ¶ 4.

In the fall of 2010, A & W entered into a written subcontract with Hart to prepare and coat wastewater treatment tanks at the Bristol, Rhode Island Wastewater Treatment Plant. Id. ¶ 5; see also A & W Mem., Ex. 9, Subcontract (“Hart Subcontract”), ECF No. 41–9. On February 23, 2011, A & W's crew arrived at the jobsite in the morning to perform their work. A & W Am. Compl. ¶ 6. In order to reach the work area, A & W employees had to back their truck down a driveway which was bordered by a nearby building. Id.

Micheal Jodrie (“Jodrie”), an employee of A & W, got out of the truck and positioned himself at the rear right side of the truck to serve as a spotter/lookout for the driver, Dan Fortin (“Fortin”). A & W Mem. 3. While acting as a spotter, Jodrie stepped backwards and fell into a clarifier tank, which had been left open by Hart (the “Underlying Accident”).Id.; A & W Am. Compl. ¶ 7. It is undisputed that the truck belonged to A & W and that...