Certain Interested Underwriters at Lloyd's, London v. Stolberg

Decision Date16 May 2012
Docket NumberNo. 11–2251.,11–2251.
Citation680 F.3d 61
PartiesCERTAIN INTERESTED UNDERWRITERS AT LLOYD'S, LONDON, Plaintiff, Appellee, v. Perry STOLBERG, Defendant, Appellant.
CourtU.S. Court of Appeals — First Circuit

OPINION TEXT STARTS HERE

Ronald E. Harding, with whom Weston Patrick P.A. was on brief, for appellant.

John Egan, with whom David B. Stanhill and Rubin and Rudman LLP were on brief, for appellee.

Before LYNCH, Chief Judge, SELYA and THOMPSON, Circuit Judges.

SELYA, Circuit Judge.

An injured party sued defendant-appellant Perry Stolberg, a developer, in a Massachusetts state court for injuries allegedly sustained in the course of construction work. The appellant tendered the defense of the suit to Certain Interested Underwriters at Lloyd's, London (Lloyd's), issuer of a commercial general liability (CGL) policy. Lloyd's provisionally accepted the defense but repaired to the federal district court in an effort to obtain a declaration that its policy did not obligate it either to defend the suit or to indemnify the insured. The district court agreed and entered summary judgment accordingly. After careful consideration, we affirm.

I. BACKGROUND

At all times relevant hereto, the appellant owned property at 204–206 Norfolk Street in Cambridge, Massachusetts. He planned to renovate the premises for use as condominiums. Before starting the project, he purchased a CGL policy from Lloyd's. He also maintained workers' compensation coverage.

The CGL policy applies to bodily injury and property damage for which the insured (Stolberg) is found to be liable, whenever the same results from qualifying “occurrences” or accidents happening during the policy period. It states that:

[Lloyd's] 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. [Lloyd's] will have the right and duty to defend the insured against any “suit” seeking those damages. However, [Lloyd's] 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.

The policy contains a number of exclusions from its broadly worded coverage. Three of these exclusions have potential pertinence here. The first—the Independent Contractors Exclusion (Contractors Exclusion)—provides:

This insurance does not apply to “bodily injury”, “property damage”, “personal and advertising injury” or medical payments arising out of operations performed for you by independent contractors or your acts or omissions in connection with your general supervision of such operations.

The second—the Independent Contractors' Employees or Leased Workers Exclusion (Employees Exclusion)—provides:

This insurance does not apply to “bodily injury” or “personal and advertising injury” to ... [a]ny employee or leased worker of independent contractors arising out of operations performed for you by said independent contractors or your acts or omissions in connection with the general supervision of such operations if you have rejected the obligations of any workers' compensation or any similar law, or abrogated, waived or otherwise set aside common rights or defences generally accorded an employer under any workers' compensation, disability benefits or unemployment compensation law or any similar law[.]

The third—the Workers' Compensation and Similar Laws Exclusion (Workers' Compensation Exclusion)—states that the CGL policy does not apply to any obligation arising under workers' compensation or similar laws.

The CGL policy took effect on May 20, 2005. By the fall of that year, the condominium conversion was in full swing. The appellant retained Allen Fox as the general contractor. Fox, in turn, engaged Robert Gatta, doing business as Simply the Best Construction (STBC), as a subcontractor. Jose Romero claims to have been employed by STBC as a day laborer on the job. He alleges that he sustained bodily injuries on or about October 6, when he toppled from a ladder at the site.

Romero sued the appellant for negligence and breach of duty in a Massachusetts state court. The appellant notified Lloyd's. Lloyd's provisionally agreed to furnish a defense, reserving the right to disclaim coverage and withdraw should it be determined that the policy did not apply. It then instituted this action seeking a declaration that it had no obligation to defend or indemnify the appellant in connectionwith Romero's claims.1See28 U.S.C. § 2201(a); Fed.R.Civ.P. 57.

At the close of discovery, Lloyd's moved for summary judgment, contending that Romero's claims fell within the Contractors Exclusion. The appellant not only opposed the motion but also cross-moved for summary judgment, positing that the Employees Exclusion established coverage under the policy.

The district court referred the motions to a magistrate judge. See28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). The magistrate judge, in a thoughtful rescript, recommended granting the original motion and denying the cross-motion. See Certain Interested Underwriters at Lloyd's London v. Stolberg, No. 09–cv–11279, 2011 WL 4458981 (D.Mass. Sept. 2, 2011). On de novo review, the district court adopted this recommendation in full and entered judgment accordingly. This timely appeal followed.

II. ANALYSIS

We review orders granting or denying summary judgment de novo, considering the record and all reasonable inferences therefrom in the light most favorable to the non-moving part[y].” Estate of Hevia v. Portrio Corp., 602 F.3d 34, 40 (1st Cir.2010). We will affirm only if the record reveals ‘that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ Avery v. Hughes, 661 F.3d 690, 693 (1st Cir.2011) (quoting Fed.R.Civ.P. 56(a)).

Once the moving party alleges the absence of all meaningful factual disputes, the non-moving party must show that a genuine issue of material fact exists. See Borges ex rel. S.M.B.W. v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir.2010). This showing “requires more than the frenzied brandishing of a cardboard sword.” Calvi v. Knox Cnty., 470 F.3d 422, 426 (1st Cir.2006). The non-moving party must point to facts memorialized by materials of evidentiary quality and reasonable inferences therefrom to forestall the entry of summary judgment. See Medina–Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990).

These conventions are not altered when a court is faced with cross-motions for summary judgment. Rather, the court must examine the motions independently, applying the usual summary judgment protocol to each of them. See Blackie v. Maine, 75 F.3d 716, 721 (1st Cir.1996).

The case at hand was brought under the federal court's diversity jurisdiction. See28 U.S.C. § 1332(a). Such jurisdiction inures where, as here, the parties are of diverse citizenship and the amount in controversy exceeds $75,000.

In this instance, Massachusetts law supplies the substantive rules of decision. See Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). This panoply of rules includes “the rules relating to interpretation of the insurance policy.” Eaton v. Penn–Am. Ins. Co., 626 F.3d 113, 114 (1st Cir.2010).

The interpretation of an insurance policy is a matter of law. See Cody v. Conn. Gen. Life Ins. Co., 387 Mass. 142, 439 N.E.2d 234, 237 (1982). Ascertaining the meaning of an insurance policy “is no different from the interpretation of any other contract, and we must construe the words of the policy in their usual and ordinary sense.” Hakim v. Mass. Insurers' Insolvency Fund, 424 Mass. 275, 675 N.E.2d 1161, 1164 (1997). Ambiguities in the policy must be “interpreted against the insurer ... and in favor of the insured.” Allmerica Fin. Corp. v. Certain Underwriters at Lloyd's, London, 449 Mass. 621, 871 N.E.2d 418, 425 (2007).

Even so, ambiguity—unlike beauty—does not lie wholly in the eye of the beholder. An ambiguity must be real. A policy provision will not be deemed ambiguous simply because the parties quibble over its meaning. Jefferson Ins. Co. of N.Y. v. City of Holyoke, 23 Mass.App.Ct. 472, 503 N.E.2d 474, 476 (1987). Rather, a policy provision “is ambiguous only if it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one.” Citation Ins. Co. v. Gomez, 426 Mass. 379, 688 N.E.2d 951, 953 (1998).

The parties agree that, in the absence of a relevant exclusion, the CGL policy at issue here would cover tort claims arising in consequence of Romero's on-site injuries. They disagree, however, about the meaning and effect of certain of the exclusions from coverage.

Lloyd's asserts that the Contractors Exclusion is directly on point and that its unambiguous meaning dictates that no coverage is afforded for Romero's claims. At first blush, this appears to be correct. The facts of this case fit neatly within the encincture of the Contractors Exclusion, which precludes coverage for any injuries “arising out of operations performed for [the insured] by independent contractors.” Romero's complaint alleges that he was working for STBC when he fell, that STBC was a subcontractor on the appellant's project, and that his injuries arose out of its operations.2 On these facts, this case is a dead ringer for Monticello Insurance Co. v. Dion, 65 Mass.App.Ct. 46, 836 N.E.2d 1112 (2005), in which the court interpreted an identical provision broadly to exclude coverage for injuries suffered by an independent contractor. Id. at 1114.

The appellant does not dispute the clarity of the language used in the Contractors Exclusion, but he nevertheless strives mightily to contest the force of that language. Even though the Contractors Exclusion is unambiguous in isolation, he argues that it must be read alongside other exclusions in the policy. He insists that, when this is done, an ambiguity looms: if the Contractors Exclusion is read to...

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