Am. Fire & Cas. Co. v. Pettegrow
| Decision Date | 30 December 2021 |
| Docket Number | 1:20-cv-00250-JDL |
| Court | U.S. District Court — District of Maine |
| Parties | AMERICAN FIRE AND CASUALTY COMPANY, et al., Plaintiffs v. WARREN PETTEGROW, et al., Defendants |
AMERICAN FIRE AND CASUALTY COMPANY, et al., Plaintiffs
v.
WARREN PETTEGROW, et al., Defendants
No. 1:20-cv-00250-JDL
United States District Court, D. Maine
December 30, 2021
RECOMMENDED DECISION ON MOTIONS FOR SUMMARY JUDGMENT AND MOTION TO DISMISS
John C. Nivison, U.S. Magistrate Judge.
In another action in federal court, a lobster wholesaler (Lobster 207, LLC) alleges Defendants (Warren Pettegrow, Lobster 207's former CEO, Anthony and Josette Pettegrow, Warren's parents, and Trenton Bridge Lobster Pound, Inc., the Pettegrow's family lobster business) engaged in conduct designed to deprive Lobster 207 of product and profits to which it was entitled. (Amended Complaint, 1:19-cv-552-LEW, ECF No. 184.) In this action, Defendants' insurers[1] seek a judgment declaring that they have no duty to provide a defense against the underlying lawsuit. (Complaint, ECF No. 1; Intervenor Complaint, ECF No. 43.) Defendants countersue the insurers for breach of contract and unfair claims settlement practices. (Answer and Counterclaim Complaint at 22-25, ECF No. 10; Complaint, 1:21-cv-00147-DBH, ECF No. 1.) The matter is before the Court on the insurers' motions for summary judgment, (ECF Nos. 34, 47), a motion to
dismiss one of Defendants' breach of contract counterclaims, (ECF No. 48), and Defendants' motions for summary judgment. (ECF Nos. 55, 57.)
Following a review of the underlying amended complaint, the summary judgment record, and the parties' arguments, I recommend the Court find Plaintiffs have a duty to provide a defense and the Court grant and deny the parties' motions accordingly.
Procedural History
Lobster 207 initiated the underlying lawsuit in December 2019 and subsequently amended its complaint against Defendants. (Complaint, 1:19-cv-00552-LEW, ECF No. 1; Amended Complaint, 1:19-cv-00552-LEW, ECF No. 184). In July 2020, American Fire and Casualty Company and Ohio Casualty Insurance Company initiated this lawsuit against Defendants for declaratory relief regarding the insurers' duty to defend. (Complaint, ECF No. 1.) In May 2021, Hanover Insurance Company and Citizens Insurance Company of America intervened in this lawsuit seeking the same declaratory relief. (Motion to Intervene, ECF No. 38; Intervenor Complaint, ECF No. 43.)
In June 2021, Warren filed a separate lawsuit against Ohio Casualty Insurance Company and Ohio Security Insurance Company for declaratory relief and breach of contract as result of their decision not to provide a defense under the policies they issued to Lobster 207 and Warren against the claims asserted in the underlying lawsuit. (Complaint, 1:21-cv-00147-DBH, ECF No. 1.) At the request of the parties, the Court consolidated Warren's separate action with this matter. (Consent Motion to Consolidate, ECF No. 45; Order, ECF No. 46.)
Legal Standards
A. Summary Judgment
“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “After the moving party has presented evidence in support of its motion for summary judgment, ‘the burden shifts to the nonmoving party, with respect to each issue on which he has the burden of proof, to demonstrate that a trier of fact reasonably could find in his favor.'” Woodward v. Emulex Corp., 714 F.3d 632, 637 (1st Cir. 2013) (quoting Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 158 (1st Cir. 1998)). A court reviews the factual record in the light most favorable to the non-moving party, resolving evidentiary conflicts and drawing reasonable inferences in the non-movant's favor. Perry v. Roy, 782 F.3d 73, 77 (1st Cir. 2015). If a court's review of the record reveals evidence sufficient to support findings in favor of the non-moving party on one or more of the Plaintiff's claims, a trial-worthy controversy exists, and summary judgment must be denied as to any supported claim. Id. at 78 (“The district court's role is limited to assessing whether there exists evidence such that a reasonable jury could return a verdict for the nonmoving party.” (internal quotation marks omitted)). Unsupported claims are properly dismissed. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
B. Motion to Dismiss for Failure to State a Claim
A party may seek dismissal of a claim for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In reviewing a motion to dismiss under Rule 12(b)(6), a court “must evaluate whether the complaint adequately pleads facts that ‘state
a claim to relief that is plausible on its face.'” Guilfoile v. Shields, 913 F.3d 178, 186 (1st Cir. 2019) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In doing so, a court must “assume the truth of all well-pleaded facts and give the plaintiff the benefit of all reasonable inferences therefrom, ” but need not “draw unreasonable inferences or credit bald assertions [or] empty conclusions.” Id. (alteration in original) (internal quotation marks omitted); see Bruns v. Mayhew, 750 F.3d 61, 71 (1st Cir. 2014) (“[A] court is ‘not bound to accept as true a legal conclusion couched as a factual allegation.'” (quoting Twombly, 550 U.S. at 555)). Federal Rule of Civil Procedure 12(b)(6) “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To evaluate the sufficiency of the complaint, therefore, a court must “first, ‘isolate and ignore statements in the complaint that simply offer legal labels and conclusions or merely rehash cause-of-action elements,' then ‘take the complaint's well-pled (i.e., non-conclusory, non-speculative) facts as true, drawing all reasonable inferences in the pleader's favor, and see if they plausibly narrate a claim for relief.'” Zell v. Ricci, 957 F.3d 1, 7 (1st Cir. 2020) (alteration omitted) (quoting Zenon v. Guzman, 924 F.3d 611, 615-16 (1st Cir. 2019)).
Factual Background[2]
A. The Policies
In December 2017, American Fire issued a commercial insurance policy to Trenton Bridge (Policy No. BKA 58 14 52 71) with a policy period from December 1, 2017 to
December 1, 2018. (American Fire 2017-18 Policy, ECF No. 1-1; PSMF ¶ 1.) In December 2018, American Fire issued a practically identical commercial insurance policy to Trenton Bridge (Policy No. BKA 58 14 52 71) with a policy period from December 1, 2018 to December 1, 2019. (American Fire 2018-19 Policy, ECF No. 1-2; PSMF ¶ 2.)
Because the named entity on the policies is a corporation, the executive officers and directors also qualify as insureds “but only with respect to their duties as your officer or directors, ” and the stockholders also qualify as insureds “but only with respect to their liability as stockholders.” (American Fire 2017-18 Policy at 87; American Fire 2018-19 Policy at 97; PSMF ¶ 18.)
Coverage A of the Commercial General Liability Coverage Form provides in relevant part:
We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.
(American Fire 2017-18 Policy at 78; American Fire 2018-19 Policy at 88; PSMF ¶¶ 5, 7.)[3] The insurance only applies to “bodily injury” or “property damage” that “is caused by an ‘occurrence' that takes place in the ‘coverage territory, '” and “occurs during the policy
period.” (American Fire 2017-18 Policy at 78; American Fire 2018-19 Policy at 88; PSMF ¶ 6.)
The term “occurrence” means “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” (American Fire 2017-18 Policy at 93; American Fire 2018-19 Policy at 103; PSMF ¶ 14.) “‘Bodily injury' or ‘property damage' expected or intended from the standpoint of the insured” is excluded from coverage. (American Fire 2017-18 Policy at 79; American Fire 2018-19 Policy at 89; PSMF ¶ 17.) The term “property damage” is defined as
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.
(American Fire 2017-18 Policy at 93-94; American Fire 2018-19 Policy at 103-104; PSMF ¶ 13; DRPSMF ¶ 13.)
In December 2017, Ohio Casualty issued an umbrella insurance policy to Trenton Bridge (Policy No. USO 58 14 52 71) with a policy period from December 1, 2017 to December 1, 2018. (Ohio Casualty Trenton Bridge 2017-18 Policy, ECF No. 1-3; PSMF ¶ 19.) In December 2018, Ohio Casualty issued a practically identical umbrella insurance policy to Trenton Bridge (Policy No. USO 58 14 52 71) having a policy period from December 1, 2018 to December 1, 2019. (Ohio Casualty Trenton Bridge 2018-19 Policy, ECF No. 1-4; PSMF ¶ 20.) The policies define as insureds “[a]ny of your partners, executive officers, directors, or employees but only while acting within the scope of their
duties.” (Ohio Casualty Trenton Bridge 2017-18 Policy at 20; Ohio Casualty Trenton Bridge 2018-19 Policy at 20; PSMF ¶ 34.)
The Coverage section within the Umbrella Coverage Form of the policies provides in relevant part:
We will pay on behalf of the “Insured” those sums in excess of the “Retained Limit” that the “Insured” becomes legally obligated to pay by reason of liability imposed by law . . . because of “bodily injury, ” [or] “property damage, ” . . . that takes place during the Policy Period and is caused by an...
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