Camp Dresser & McKee, Inc. v. Home Ins. Co., No. 89-P-111

• Court: Appeals Court of Massachusetts
• Writing for the Court: JACOBS
• Citation: 30 Mass.App.Ct. 318,568 N.E.2d 631
• Docket Number: No. 89-P-111
• Decision Date: 26 March 1991
• Parties: CAMP DRESSER & McKEE, INC. v. The HOME INSURANCE COMPANY; Imperial Casualty and Indemnity Company, intervener.

Page 631

568 N.E.2d 631 30 Mass.App.Ct. 318 CAMP DRESSER & McKEE, INC.
v.
The HOME INSURANCE COMPANY; Imperial Casualty and Indemnity
Company, intervener. No. 89-P-111. Appeals Court of Massachusetts,
Suffolk. Argued Jan. 9, 1990.
Decided March 26, 1991.

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Allen N. David (Kevin J. O'Connor, Boston, with him), for Home Ins. Co.

Francis H. Fox (Joanne D'Alcomo, Boston, with him), for Camp, Dresser & McKee, Inc., et al.

Before BROWN, SMITH and JACOBS, JJ.

JACOBS, Justice.

The defendant, The Home Insurance Company (Home), appeals from a judgment which, in effect, declared it in breach of its duty to defend the plaintiff, Camp Dresser & McKee, Inc. (CDM), and ordered it to pay certain settlement[30 Mass.App.Ct. 319] and defense costs incurred by or in behalf of CDM. ¹ We affirm.

We summarize the facts as found by a Superior Court judge after a trial without jury. CDM is an international consulting engineering firm. At the time in issue, CDM was under contract with the city of Detroit to provide extensive services in connection with Detroit's water pollution control system and its wastewater treatment plant (plant). In 1981, Joseph Brown, an employee of the city of Detroit, suffered severe injuries when his left hand and arm were drawn into a conveyor machine (conveyor A) at the plant. Employees at the plant commonly engaged in the dangerous practice of throwing ash onto wet conveyor belts in order to create friction and reduce slippage. Brown was injured when he got too close to conveyor A while attempting to throw ash onto the head pulley, which turned and pulled the conveyor belt. At the time, a guard was missing from the head pulley, thereby exposing that portion of the conveyor in which Brown's hand and arm became entangled. CDM had not issued any warnings concerning the missing guard or the practice of throwing ash.

In 1982, Brown (and members of his family exercising derivative rights) sued CDM in a Michigan State court alleging injuries due to negligence. Imperial Casualty and Indemnity Company (Imperial), CDM's professional liability insurer under a policy with a $150,000 deductible, assumed defense of the case. Thereafter, CDM notified Home that it claimed coverage under the comprehensive general liability policy which Home had issued it and which had no deductible. Home initially disclaimed coverage on the basis of the allegations in the Brown complaint and the language of the professional liability exclusion in its general liability policy. After investigation, Home again disclaimed coverage. CDM then filed this action seeking a judgment declaring Home's [30 Mass.App.Ct. 320] obligations under its general liability policy. Imperial later intervened as a plaintiff in this suit. During the pendency of this action, $265,000 was contributed by and in behalf of CDM to a settlement of the Brown litigation. Imperial paid defense expenses and so much of the settlement contribution as exceeded the $150,000 deductible.

The relevant broad coverage provision of Home's liability policy stated:

"[Home] will pay on behalf of [CDM] all sums which [CDM] shall become legally

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obligated to pay as damages because of bodily injury ... due to an occurrence, ² and [Home] shall have the ... duty to defend any suit against [CDM] seeking damages on account of such bodily injury ... even if any of the allegations of the suit are groundless, false or fraudulent...." An endorsement to Home's policy contained the following standard "Engineers, Architects or Surveyors Professional Liability" exclusion: ³ "It is agreed that the insurance does not apply to bodily injury or property damage arising out of the rendering of or failure to render any professional services by or for [CDM], including (1) the preparation or approval of maps, plans, opinions, reports, surveys, designs or specifications and (2) supervisory, inspection or engineering services."

The issue presented is whether the professional liability exclusion exempted Home from all duty to defend CDM against the Brown suit. The Brown complaint alleged that CDM was responsible for the operation of the plant and its equipment and that Joseph Brown's injuries were due to CDM's "negligence and wrongdoing" which consisted, "inter alia," of its failure to advise and warn of the limitations on the use of conveyor A and its failure properly and adequately to (1) exercise control over the operations of the plant, including conveyor A; (2) make recommendations concerning [30 Mass.App.Ct. 321] the safe operation of conveyor A "so as to protect against foreseeable hazards"; (3) "advise and warn of the dangers and hazards attendant upon the use of "[conveyor A]"; and (4) "instruct on the operation, repair and maintenance of" conveyor A and its parts.

The judge found that, at the time of Brown's injury, CDM's relationship to the plant was based upon four contracts which it had with the city of Detroit. He found that the "lead consultant contract ... was a long term contract in which CDM's main function was project management to coordinate the projects of all consultants at the plant." The other contracts required CDM: (1) to prepare operation and maintenance manuals for the plant and to develop and implement a training program; (2) to develop an energy efficient design for various disposal facilities; and (3) to evaluate the plant in terms of efficiency and capacity.

While no reported appellate decision in Massachusetts has addressed or defined the scope of an engineer's professional liability exclusion to general liability insurance coverage, the decisions dealing with insurance policies provide considerable guidance. As a general rule, the policyholder bears the initial burden of proving coverage within the policy description of covered risks. Markline Co. v. Travelers Ins. Co., 384 Mass. 139, 140, 424 N.E.2d 464 (1981). Once basic risk coverage is established, the burden shifts to the insurer to prove the applicability of any exclusion to coverage set forth outside of the insuring clause. See Murray v. Continental Ins. Co., 313 Mass. 557, 563, 48 N.E.2d 145 (1943); Ratner v. Canadian Universal Ins. Co., 359 Mass. 375, 381, 269 N.E.2d 227 (1971). The fact that CDM sought declaratory relief does not alter the defendant's burden of proof. Stop & Shop, Inc. v. Ganem, 347 Mass. 697, 703, 200 N.E.2d 248 (1964). Ranger Ins. Co. v. Air-Speed, Inc., 9 Mass.App.Ct. 403, 406 n. 9, 401 N.E.2d 872 (1980).

"It is settled in this jurisdiction, and generally elsewhere, that the question of the initial duty of a liability insurer to defend third-party actions against the insured is decided by matching the third-party complaint with the policy provisions...." Sterilite Corp. v. Continental Cas. Co., 17 [30 Mass.App.Ct. 322] Mass.App.Ct. 316, 318, 458 N.E.2d 338 (1983). If the allegations of that complaint can be reasonably read to "state or adumbrate a claim covered by the policy terms," the insurer is obligated to defend. Ibid. See Continental Cas. Co.

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v. Gilbane Bldg. Co., 391 Mass. 143, 146-147, 461 N.E.2d 209 (1984); Terrio v. McDonough, 16 Mass.App.Ct. 163, 166, 450 N.E.2d 190 (1983). In order to give rise to the duty to defend, the underlying complaint need show only a possibility of coverage. Sterilite Corp. v. Continental Cas. Co., supra 17 Mass.App.Ct. at 319, 458 N.E.2d 338.

There being no dispute that the complaint in the underlying action alleged bodily injury due to an "occurrence," we look to whether Home has...