Great Am. Dining, Inc. v. Phila. Indem. Ins. Co.

Decision Date25 February 2013
Docket NumberNo. 2012–088.,2012–088.
Citation62 A.3d 843,164 N.H. 612
CourtNew Hampshire Supreme Court

Primmer, Piper, Eggleston & Cramer, PC, of Manchester (Doreen F. Connor on the brief and orally), for the petitioner.

Morrison Mahoney, LLP, of Manchester (Edwin F. Landers, Jr. and Caroline K. Delaney on the brief, and Ms. Delaney orally), for the respondent.


The respondent, Philadelphia Indemnity Insurance Company (Philadelphia), appeals an order of the Superior Court (Smukler, J.) finding that the petitioner, Great American Dining, Inc. (GAD), is an additional insured under a policy issued by Philadelphia. We affirm.

The trial court found the following facts. DW Ray Commons, LLC (DW Ray) owned and leased a building to Webster Place Center, Inc. (Webster Place). Prior to renting the building, DW Ray required Webster Place to obtain an insurance policy listing DW Ray as an additional insured. In March 2008, Webster Place obtained from Philadelphia a commercial general liability policy that contained a provision listing as an additional insured "[a]ny person or organization with respect to their liability arising out of the ownership, maintenance or use of that part of the premises leased or rented to [Webster Place]...."

In October 2008, Dr. James Kenneth Wyly fell through the building's porch railing and suffered serious injuries. Dr. Wyly sued DW Ray and Webster Place for damages. After the Superior Court issued a declaration that DW Ray was an additional insured under Webster Place's policy with Philadelphia, Webster Place and DW Ray settled with Dr. Wyly and sued GAD for contribution on the theory that GAD negligently constructed, installed, and maintained the porch railing. A jury found that GAD was 45% at fault for Dr. Wyly's injuries.

GAD then filed the present declaratory judgment action, asking the trial court to find that it is an additional insured under Webster Place's policy with Philadelphia, and, as such, entitled to reimbursement for defense costs incurred in the action for contribution, the judgment rendered against it, and costs and attorney's fees pursuant to RSA 491:22–b (2010) for bringing the action against Philadelphia to determine coverage.

The trial court determined that GAD is an additional insured under a provision of the policy titled "Managers, Landlords or Lessors of Premises" because the provision applies to "any person or organization" whose liability "aris[es] out of ownership, maintenance or use" of the leased premises. The court found that Philadelphia owed GAD a duty of defending the contribution case because Dr. Wyly's pleadings sufficiently alleged that GAD engaged in maintenance. As to Philadelphia's duty to indemnify GAD, the court concluded that "the trial evidence and the theory upon which the judgment was actually entered establish that GAD's liability arose from its ‘maintenance’ of the lease[d] premises." Having determined that GAD is an additional insured and that Philadelphia owed it a duty both to defend and to indemnify, the court awarded GAD reimbursement for defense costs and the judgment rendered in the contribution action as well as attorney's fees and costs. This appeal followed.

In an action for declaratory judgment under RSA 491:22–a (2010), the insurer bears the burden of establishing lack of coverage. M. Mooney Corp. v. U.S. Fidelity & Guaranty Co., 136 N.H. 463, 466, 618 A.2d 793 (1992). "The fundamental goal of interpreting an insurance policy ... is to carry out the intent of the contracting parties." Bates v. Phenix Mut. Fire Ins. Co., 156 N.H. 719, 722, 943 A.2d 750 (2008) (quotation omitted). Our analysis begins with an examination of the insurance policy language. Pro Con Constr. v. Acadia Ins. Co., 147 N.H. 470, 472, 794 A.2d 108 (2002). We look to the plain and ordinary meaning of the policy's words in context, Concord Gen. Mut. Ins. Co. v. Mitchell, 138 N.H. 229, 231, 637 A.2d 903 (1994), "and we construe the terms of the policy as would a reasonable person in the position of the insured based on more than a casual reading of the policy as a whole." Deyette v. Liberty Mut. Ins. Co., 142 N.H. 560, 561, 703 A.2d 661 (1997) (quotation omitted). This is an objective standard. Concord Hosp. v. N.H. Medical Malpractice Joint Underwriting Assoc., 137 N.H. 680, 683, 633 A.2d 1384 (1993). "If more than one reasonable interpretation is possible, and an interpretation provides coverage, the policy contains an ambiguity and will be construed against the insurer." Brickley v. Progressive N. Ins. Co., 160 N.H. 625, 627, 7 A.3d 1215 (2010) (quotation omitted).

The interpretation of an insurance policy, like any contract, is an issue of law for the court to decide. Allstate Ins. Co. v. Armstrong, 144 N.H. 170, 172, 738 A.2d 1280 (1999). We review questions of law de novo. In the Matter of Taber–McCarthy & McCarthy, 160 N.H. 112, 115, 993 A.2d 240 (2010).

On appeal, Philadelphia argues that: (1) GAD was not an additional insured because it was not a manager, landlord, or lessor of the premises; (2) GAD's liability did not arise out of "the ownership, maintenance or use" of the premises leased to Webster Place; and (3) GAD was a stranger to the policy and ambiguities, therefore, need not be construed in its favor.

The policy language at issue here, Provision 2f, is the portion of the additional insured endorsement that provides:

2. Each of the following is also an insured:
f. Managers, Landlords, or Lessors of Premises —Any person or organization with respect to their liability arising out of the ownership, maintenance or use of that part of the premises leased or rented to you subject to the following additional exclusions:
This insurance does not apply to
(1) Any "occurrence" which takes place after you cease to be a tenant in that premises.
(2) Structural alterations, new construction or demolition operations performed by or on behalf of that person or organization.

The trial court found that Provision 2f covers more than just managers, landlords and lessors because, notwithstanding its heading, the provision broadly encompasses any person or organization with respect to its liability arising out of the ownership, maintenance or use of the premises. The court contrasted Provision 2f with Provision 2b, which defines as additional insureds "managers and supervisors ..., but only with respect to their duties as your managers and supervisors. " (Emphasis added.) The court reasoned:

Importantly, the terms "managers and supervisors" are both included in the heading and in the language [of Provision 2b], indicating a clear intent to limit coverage only to managers and supervisors. Because Philadelphia did not similarly draft the "managers, landlords, and lessors" provision, the broader language of the provision controls.

In ruling that Provision 2f applies more broadly than its caption suggests, the court relied on Concord Hospital, 137 N.H. at 683, 633 A.2d 1384, which states that "we disregard the labels attached to ... policies and examine the various provisions themselves."

As an initial matter, we disagree with Philadelphia that the court misapplied Concord Hospital: consistent with that case, the court read the policy as a whole. In Concord Hospital, we addressed whether several medical malpractice insurance policies covered certain occurrences that the insured hospital reported to the insurer two days before the policies lapsed, but for which the hospital did not file claims until after the policies lapsed. Concord Hosp., 137 N.H. at 682, 633 A.2d 1384. The policies were labeled "claims made," which we described as "afford[ing] coverage for tort claims that [we]re ... reported to the insurance company during the policy period." Id. at 683, 633 A.2d 1384. We looked past the "claims made" label to the policies' various provisions to determine whether they were, in fact, "claims made," in that claims had to have been reported before the policies lapsed.

[The policies] are not "claims made" simply because they say they are. "Claims made" is a category of policies that contain certain provisions; without those provisions, no amount of labelling can make these policies "claims made" or induce us to treat them as such. The layperson of average intelligence does not know what "claims made" refers to and cannot be expected to read crucial provisions into the term. The insurance company must spell out the provisions of a "claims made" policy.
Accordingly, we disregard the labels attached to the ... policies and examine the various provisions themselves.

Id. (citation omitted).

Even though three provisions in the policies stated that covered claims had to have been first made while the policies were still in force, a fourth provision stated that "[a] claim shall be considered to be first made when the company first receives written notice of the claim or occurrence. " Id. at 684, 633 A.2d 1384 (quotation omitted). Reading the policies as a whole, we concluded that, although titled "claims made," the policies in fact offered coverage for claims made after the policy had expired, as long as the underlying occurrences were reported while the policy was still in effect. Id. at 687, 633 A.2d 1384.

Similarly, we read insurance policies as a whole in Hanover Insurance Co. v. Grondin, 119 N.H. 394, 397, 402 A.2d 174 (1979), and Atwood v. Hartford Accident & Indemnity Co., 116 N.H. 636, 365 A.2d 744 (1976), two cases on which Philadelphia relies in arguing that we should read the caption of Provision 2f as controlling. In Atwood, we considered whether the policy provided coverage by looking at the size and inconspicuous location of the provision extending coverage, confusingly redundant headings in the policy, obscure phrasing of the exclusion, and the fact that one part of the policy contained four indications of coverage, whereas the relevant exclusion was buried among thirteen others. A...

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