Geehan v. Trawler Arlington, Inc.

• Decision Date: 23 December 1976
• Docket Number: No. 76-1159,76-1159
• Citation: 547 F.2d 132
• Court: U.S. Court of Appeals — First Circuit
• Parties: Monica M. GEEHAN, Administratrix, etc., Plaintiff, Appellee, v. TRAWLER ARLINGTON, INC., et al., Defendants, Appellees, Oceanus Mutual Underwriting Association Limited, Defendant, Appellant.

Page 132

547 F.2d 132

Monica M. GEEHAN, Administratrix, etc., Plaintiff, Appellee, v. TRAWLER ARLINGTON, INC., et al., Defendants, Appellees Oceanus Mutual Underwriting Association Limited, Defendant, Appellant.

No. 76-1159.

United States Court of Appeals First Circuit.

Argued Sept. 10, 1976.

Decided Dec. 23, 1976.

Alan R. Hoffman, Boston, Mass., with whom Kaplan, Latti & Flannery, Boston, Mass., was on brief for Monica M. Geehan, Administratrix, etc., appellee.

Solomon Sandler, Gloucester, Mass., with whom Sandler, Sandler & Laramee, Gloucester, Mass., was on brief, for Mutual Marine Office, Inc., appellee.

Before Clark, ^* Associate Justice, U. S. Supreme Court (Ret.), and McENTEE and CAMPBELL, Circuit Judges.

McENTEE, Circuit Judge.

In 1967 John Geehan, a crew member of the Trawler Arlington, was injured while in the employ of the vessel. His death occurred several years later and his estate ultimately obtained a judgment in a Massachusetts court against the vessel for $55,887.97. Thereafter, his widow, as administratrix of the estate, instituted the present action in state court to reach and apply the contractual obligations of Oceanus Mutual Underwriting Association (Oceanus) and Mutual Marine Office, Inc. (Mutual) to indemnify the vessel for its maritime tort liabilities. The case was removed to the district court on the basis of diversity of citizenship. On a motion for summary judgment, the court ruled that Oceanus, as primary insurer, was liable to pay the first $25,000 of the judgment awarded the Geehan estate, minus a small deductible, with credit for whatever amount Oceanus had previously paid to the Geehans for maintenance and cure. The judge specifically refused to allow Oceanus to apply against the $25,000 (its maximum liability) the $17,174.50 paid for legal expenses. The court also ruled that the balance due on the judgment was to be paid by the "excess" insurer, Mutual.

Oceanus appeals, claiming that the terms of its policy with the Trawler Arlington expressly authorized payment of legal expenses as well as judgment liability from the $25,000 maximum insurance. Mutual resists this argument since crediting Oceanus with payment of legal expenses will shift a proportional amount of the judgment liability to Mutual's shoulders. The outcome of the dispute, we think, is controlled by the literal terms of Oceanus' policy to which we now turn. ¹ Oceanus' policy provides that it "has the sole right to appoint and discharge the experts, surveyors, lawyers, and others (not including the Assured) to undertake the investigation &/or defence of (1) any occurrence which might develop into a claim or law suit against the Assured, (2) any claim or law suit made against the Assured against which the Assured shall be or may claim to be insured under this certificate; provided, however, that all costs and expenses so incurred shall be for the account of the Assured; . . . ."

Simply stated, the language of this provision permits Oceanus to hire legal counsel for a defendant insured but requires the insured to pay for the attorney's fees.

The next pertinent portion of Oceanus' policy provides that, in addition to liability for loss of life or personal injury,

"(t)he Assured is protected and indemnified as Shipowner in respect of liabilities and expenses which he shall have become liable to pay and shall have in fact paid in respect of the ship named herein for the following:

"(m) Costs, when incurred with (Oceanus') approval, of investigating &/or defending any claim or suit against the Assured based on a liability or an alleged liability of the Assured covered by this insurance . . .."

The excess insurer, Mutual, claims that ambiguity lurks within this language, i. e. that the legal costs referred to in paragraph (m) can be read to mean only costs independently incurred by the Trawler Arlington and subsequently ratified by Oceanus. This reading would exclude costs such as those in the present case where Oceanus itself provided counsel. Assuming that ambiguity exists, Mutual argues that the language should be read in light of the principle that ambiguous language in a policy is to be read adversely to the insurer's interests and favorably to the interests of the insured. See, e. g., King v. Prudential Ins. Co., 359 Mass. 46, 50, 267 N.E.2d 643, 646 (1971).

We reject Mutual's arguments for several reasons, primarily because we do not believe that the...