Gibson v. Farm Family Mut. Ins. Co.

• Decision Date: 10 April 1996
• Docket Number: Docket No. O,No. 7611,7611
• Citation: 673 A.2d 1350
• Parties: William GIBSON et al. v. FARM FAMILY MUTUAL INSURANCE COMPANY DecisionLawxf 95 448
• Court: Maine Supreme Court

Page 1350

673 A.2d 1350

William GIBSON et al. v. FARM FAMILY MUTUAL INSURANCE COMPANY

Decision No. 7611

Law Docket No. Oxf 95 448

Supreme Judicial Court of Maine.

Argued March 6, 1996.

Decided April 10, 1996.

Stephen B. Wade, (orally), Skelton, Taintor & Abbott, Auburn, for Plaintiff.

Robert V. Hoy (orally), Platz & Thompson, P.A., Lewiston, for Defendant.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and LIPEZ, JJ.

RUDMAN, Justice.

Farm Family Mutual Insurance Company appeals from the summary judgment entered in the Superior Court (Oxford County, Calkins, J.) in favor of William and Jane Gibson on their breach of contract claim against the insurance company. Farm Family contends that pursuant to the terms of an insurance policy issued by it to the Gibsons it had no duty to defend the Gibsons against two lawsuits brought by neighboring landowners. Farm Family further contends that even if it did have a duty to defend the Gibsons against some counts of the neighbors' suits it cannot be held to have been obligated to defend those counts that fall outside the Gibsons' policy coverage. Farm Family also contends that the court, having determined that Farm Family breached its contract to defend the Gibsons, erred in awarding the Gibsons attorney fees in their breach of contract action against the insurance company. We find no merit in Farm Family's contentions and affirm the judgment in favor of the Gibsons.

In 1992 neighbors of William and Jane Gibson in West Paris filed lawsuits against the Gibsons alleging various transgressions including tortious interference with potential buyers of the neighbors' property, trespass on the neighbors' property, and violation of the neighbors' civil rights. The Gibsons, who had contracted with the Farm Family Mutual Insurance Company for liability insurance as part of a "Special Farm Package" policy, sought to have Farm Family defend and indemnify them in the pending lawsuits. Farm Family refused, and the Gibsons provided for their own defense. The action, commenced in federal court, was dismissed for lack of jurisdiction, and a summary judgment ultimately was awarded to the Gibsons on all counts in a second complaint filed against them by the neighbors in the Superior Court. The Gibsons then filed this action alleging that Farm Family had breached its contractual obligations by refusing to defend the lawsuits brought by the Gibsons' neighbors. The court granted a summary judgment in favor of the Gibsons, awarding them $14,848.19 in attorney fees and costs incurred in the defense of the underlying lawsuits, plus the amount of attorney fees and costs incurred by the Gibsons in bringing this breach of contract action against Farm Family.

When reviewing the grant of a summary judgment, we view the evidence in the light most favorable to the party against whom the judgment has been granted and review the trial court's decision for error of law. Keyes Fibre Co. v. Lamarre, 617 A.2d 213, 214 (Me.1992) (citations omitted). The Gibsons and Farm Family stipulated to an agreed statement of facts and disputed as an issue of material fact only the amount of the Gibsons' attorney fees in their breach of contract action. We review the trial court's decisions in matters of law de novo. Collins v. Trius, Inc., 663 A.2d 570, 572 (Me.1995).

I.

Farm Family contends that, pursuant to the terms of the policy it issued to the Gibsons, it owed no duty to defend the Gibsons and therefore did not breach its contract by refusing to provide the Gibsons a defense. The determination of an insurer's duty to defend is a question of law the court decides "by comparing the allegations in the underlying complaint with the provisions of the insurance policy." Baywood Corp. v. Maine Bonding & Casualty Co., 628 A.2d 1029, 1030 (Me.1993).

Farm Family has a duty to defend the Gibsons against the claims brought by the neighbors if the neighbors' complaint shows, through general allegations, a possibility that the liability claim falls within the insurance coverage. Union Mut. Fire Ins. Co. v. Town of Topsham, 441 A.2d 1012, 1015 (Me.1982).

There is no requirement that the facts alleged in the complaint specifically and unequivocally make out a claim within the coverage. Moreover, where there is an ambiguity in the language of the policy, the doubt should be resolved in favor of finding that the insurer has a duty to defend the insured.

Id. Given the possible existence of any legal or factual basis for payment under a policy, an insurer's duty to defend should be decided summarily in favor of the insured. Merrimack Mut. Fire Ins. Co. v. Brennan, 534 A.2d 353, 354 (Me.1987). If the allegations in the underlying tort action are within the risk insured against and there is any potential basis for recovery, the insurer must defend the insured regardless of the actual facts on which the insured's ultimate liability may be based. Id. An insured is not at the mercy of the notice pleading of the third party suing him to establish his own insurer's duty to defend. J.A.J., Inc. v. Aetna Casualty & Sur. Co., 529 A.2d 806, 808 (Me.1987).

By the terms of the Gibsons' policy, Farm Family contracted to provide the Gibsons coverage for "damages" for which the Gibsons are legally liable as a result of "property damage" caused by an "occurrence." ¹ Although "damages" is not defined in the policy, we have construed a promise to pay "all sums which the insured shall become legally obligated to pay as damages because of ... property damage" to mean a promise to pay amounts that might be awarded against an insured to "recompense" a third party for damage to the third party's property for which the insured is held legally liable. Patrons Oxford Mut. Ins. Co. v. Marois, 573 A.2d 16, 18-19 (Me.1990). A claim that exposes the Gibsons to liability for compensatory damages because of "property damage" caused by an "occurrence" within the policy coverage is a claim within the "damages" coverage provided by the Farm Family policy.

The Gibsons' Farm Family policy defines "property damage" as "physical injury to or destruction of tangible property, including the loss of use of this property." Farm Family argues that a loss of use of property does not constitute "property damage" pursuant to the policy unless the property also suffers physical injury. We interpret a standard policy of insurance, however, "most strongly" against the insurer. Massachusetts Bay Ins. Co. v. Ferraiolo Constr. Co., 584 A.2d 608, 609 (Me.1990). "Property damage" as defined by the Gibsons' Farm Family policy includes the loss of use of tangible property with no accompanying physical injury to that property.

The Gibsons' Farm Family policy extends coverage only to harms that result from an "occurrence," which the policy defines as "an accident, including continuous or repeated exposure to conditions, that result[s] in bodily injury or property damage." The policy specifically excludes from coverage any damages resulting from an intentional act by the insured. Farm Family argues that all the neighbors' allegations against the Gibsons involve intentional acts by the Gibsons and liability for such acts therefore is excluded from coverage by the Gibson's insurance policy. If, however, under any circumstances any of the harms claimed in the neighbors' lawsuits could constitute an accidental unintended consequence of an act allegedly committed intentionally by the Gibsons, the Gibsons' liability for such harm would be the result of an unintentional "occurrence" within the coverage of the Farm Family policy. See Massachusetts Bay Ins. Co. v. Ferraiolo Constr. Co., 584 A.2d at 610.

In their complaints against the Gibsons the neighbors sought, among other things, compensatory...