Corinth Pellets, LLC v. Arch Specialty Ins. Co.
| Decision Date | 23 February 2021 |
| Docket Number | Docket: BCD-20-142 |
| Citation | 246 A.3d 586 |
| Parties | CORINTH PELLETS, LLC v. ARCH SPECIALTY INSURANCE CO. et al. |
| Court | Maine Supreme Court |
Eric J. Wycoff, Esq. (orally), and Kyle M. Noonan, Esq., Pierce Atwood LLP, Portland, for appellant Corinth Pellets, LLC
Aaron M. Frey, Attorney General, Thomas C. Sturtevant, Jr., Asst. Atty. Gen., and Lisa A. Wilson, Asst. Atty. Gen. (orally), Office of the Attorney General, Augusta, for appellants Maine Attorney General and Maine Superintendent of Insurance
Martha C. Gaythwaite, Esq., and Brett R. Leland, Esq. (orally), Verrill Dana LLP, Portland, for appellant Varney Agency Inc.
James M. Bowie, Esq. (orally), Thompson Bowie & Hatch LLC, Portland, and Joseph J. Blyskal, Esq., and Regen O'Malley, Esq., Gordon Rees Scully Mansukhani LLP, Glastonbury, Connecticut, for appellee Arch Specialty Insurance Company
Panel: MEAD, GORMAN, JABAR, HUMPHREY, and HORTON, JJ.
[¶1] Corinth Pellets, LLC (Corinth), appeals from the entry of a partial final judgment, see M.R. Civ. P. 54(b)(1), in the Business and Consumer Docket (Duddy, J. ) dismissing its complaint alleging that a catastrophic fire loss at Corinth's wood pellet mill is covered under a commercial property insurance policy issued by Arch Specialty Insurance Company (Arch). Also parties to this appeal are Varney Agency (Varney), named in Corinth's complaint as a defendant, and intervenors Maine Superintendent of Insurance and the Maine Attorney General (collectively, the State).
Varney joins Corinth and the State in appealing the dismissal of Corinth's complaint and appeals also from the court's dismissal of Varney's cross-claim for common law indemnification against Arch.
[¶2] Arch maintains that the fire loss is not covered because it occurred after the policy term had expired. Corinth contends that the fire loss is covered because Arch failed to notify Corinth of its intention not to renew the policy as required by Maine's surplus lines insurance law, 24-A M.R.S. § 2009-A (2020), and the policy was therefore automatically renewed at the end of the stated term. Arch counters that the statute does not require an insurer to give notice of its intent not to renew unless the insurer also intends to cancel the policy before it expires. Arch argues in the alternative that Corinth's interpretation would leave the statute unconstitutionally vague.
[¶3] Agreeing with Arch's interpretation of the statute, the court dismissed Corinth's complaint for failure to state a claim on which relief could be granted pursuant to M.R. Civ. P. 12(b)(6) and did not address Arch's constitutional argument. We vacate the court's judgment and remand for further proceedings.
[¶4] We draw the following facts from Corinth's second amended complaint, viewed in the light most favorable to Corinth. Doe v. Bd. of Osteopathic Licensure , 2020 ME 134, ¶ 3, 242 A.3d 182.
[¶5] Corinth owned and operated a wood pellet mill in Corinth, Maine. For some years Corinth retained Varney as its insurance agent to advise Corinth on insurance issues and procure insurance on Corinth's behalf. Arch issued to Corinth a surplus lines insurance policy1 that covered "property loss, business interruption and extra expenses suffered from a loss event" at the mill. Arch's policy had an initial term of January 13, 2017, to January 13, 2018, and was subsequently extended for three consecutive three-month terms, to September 18, 2018.
[¶6] In early September 2018, a Varney agent alerted Corinth that Arch would not renew the policy following its termination on September 18. The agent assured Corinth that he was in the process of finding a new insurance provider and that there was "[n]o need" for Corinth "to do anything on [its] end."
[¶7] On September 17, 2018, the Varney agent notified Corinth that he could not provide a "firm quote" from any insurer. Varney did not obtain substitute property insurance coverage for Corinth before September 19, 2018. Though Corinth knew by September 17, 2018, that Arch did not intend to renew the policy, at no point did Arch given written notice of its intent to Corinth or Varney.
[¶8] On September 19, 2018, the day after the Arch policy's final expiration date, Corinth's wood pellet mill sustained a catastrophic fire that caused about $15 million in damage. The fire met the definition of a "covered loss event" under the Arch policy. Corinth provided Arch with "timely notice" of the fire as required by the policy, but Arch declined to participate in the investigation into its cause and origin. Arch eventually denied coverage on the ground that, by the terms of the policy, coverage terminated on September 18.
[¶9] That November, Corinth sent a letter to Arch claiming that the loss was covered because under Maine law Arch's failure to communicate its decision not to renew the policy in writing meant that the policy automatically renewed. Arch maintained its denial of coverage. Corinth requested proof that Arch provided notice of its intent not to renew the policy. In December, Arch responded that it had communicated its intent only to a company called Quaker Special Risk. However, Corinth did not know about this communication before Arch's December response and was not even aware of Quaker's existence until October 2018, when Corinth received a letter from Arch's adjuster mentioning the company.
[¶10] On May 10, 2019, Corinth filed in the Penobscot County Superior Court a complaint that included six counts against Varney and two counts against Arch.2 Varney's answer asserted its affirmative defenses to Corinth's allegations and brought a cross-claim against Arch. Arch moved to dismiss both claims. On Corinth's application, the case was transferred to the Business and Consumer Docket in August 2019. Later that month, the court (Duddy, J. ) granted separate motions to intervene filed by the Maine Attorney General and the Superintendent of Insurance. Both State parties opposed Arch's motions to dismiss.
[¶11] In orders dated January 23, 2020, the court granted Arch's motions to dismiss pursuant to M.R. Civ. P. 12(b)(6) Corinth's complaint and Varney's cross-claim. Varney timely filed a motion to reconsider, which the court denied. In the interim, Arch moved for entry of a final judgment. On April 27, 2020, the court granted the motion and entered partial final judgment pursuant to M.R. Civ. P. 54(b)(1) for Arch as to Corinth's claims against Arch and Varney's cross-claim only. Corinth's claims against Varney remain pending. Corinth, Varney, and the State timely appealed the partial final judgment. See 14 M.R.S. § 1851 (2020) ; M.R. App. P. 2B(c)(1).
[¶12] A threshold question is whether this appeal is appropriately before us given that it is not taken from a final judgment that disposes of all claims against all parties. See Kittery Point Partners, LLC v. Bayview Loan Servicing, LLC, 2018 ME 35, ¶ 6, 180 A.3d 1091 (). Rule 54(b) of the Maine Rules of Civil Procedure creates a limited exception to the "strong policy against piecemeal review of litigation." Guidi v. Town of Turner, 2004 ME 42, ¶ 9, 845 A.2d 1189. "In limited instances, when the resolution of one part of an action may be dispositive of the remaining unresolved components of the action, the parties may seek appellate review of one component alone by obtaining a certification of final judgment pursuant to M.R. Civ. P. 54(b)(1)." Musson v. Godley , 1999 ME 193, ¶ 7, 742 A.2d 479. "In its certification, the trial court must make specific findings and a reasoned statement explaining the basis for its certification under M.R. Civ. P. 54(b)(1)." Guidi, 2004 ME 42, ¶ 9, 845 A.2d 1189 (citing Bates v. Eckhardt Telecomms., Inc. , 2002 ME 69, ¶¶ 5-7, 794 A.2d 648 ; Citicorp Mortg., Inc. v. Keneborus , 641 A.2d 188, 190 (Me. 1994) ; Key Bank of Me. v. Park Entrance Motel , 640 A.2d 211, 212 (Me. 1994) ). In the absence of those specific findings and statement, we will not review a partial final judgment entered pursuant to M.R. Civ. P. 54(b). See Kittery Point Partners, 2018 ME 35, ¶ 8, 180 A.3d 1091. We review the trial court's grant of Rule 54(b)(1) certification for abuse of discretion. Guidi, 2004 ME 42, ¶ 10, 845 A.2d 1189.
[¶13] In determining whether to enter partial final judgment pursuant to Rule 54(b)(1), the trial court must address certain factors, and we consider the same factors in deciding whether to review the judgment.3 See McClare v. Rocha, 2014 ME 4, ¶ 8, 86 A.3d 22.
[¶14] Here, the court made specific findings and issued a concise and thoughtful statement of its reasoning that supports its Rule 54(b)(1) certification. In particular, interlocutory appellate review of Corinth's claims and Varney's cross-claim against Arch entails a single narrow and purely legal question of statutory interpretation, and the resolution of that question may substantially, if not completely, resolve the claims that were not adjudicated in the order of dismissal. Accordingly, we discern no abuse of discretion and proceed to the merits of the issue raised. See id.
[¶15] This appeal presents the question of whether 24-A M.R.S. § 2009-A requires a provider of surplus lines insurance that intends not to renew a policy to notify the insured, prior to the end of its policy term, of its intention not to renew. The statutory notice requirement states:
Cancellation and nonrenewal by an insurer of surplus lines coverage subject to this chapter shall not be effective unless received by the named insured at least 14 days prior to the effective date of cancellation or, when the cancellation is for nonpayment of premium, at least 10 days prior to the effective date of cancellation.
24-A M.R.S. § 2009-A.
[¶16] The trial court construed the statute...
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