Horace Mann Ins. Co. v. Maine Teachers Ass'n

• Decision Date: 16 August 1982
• Citation: 449 A.2d 358
• Court: Maine Supreme Court
• Parties: 113 L.R.R.M. (BNA) 3810, 6 Ed. Law Rep. 94 HORACE MANN INSURANCE CO. v. MAINE TEACHERS ASSOCIATION and Maine Teachers Association Affiliated Units and Merrymeeting Educators' Association 1 .

Page 358

449 A.2d 358

113 L.R.R.M. (BNA) 3810, 6 Ed. Law Rep. 94

HORACE MANN INSURANCE CO. v. MAINE TEACHERS ASSOCIATION and Maine Teachers Association Affiliated Units

and

Merrymeeting Educators' Association ¹.

Supreme Judicial Court of Maine.

Argued June 10, 1982.

Decided Aug. 16, 1982.

Berman, Simmons, Laskoff & Goldberg, P. A., Julian L. Sweet (orally), Gary Goldberg, Lewiston, for plaintiff.

Sunenblick, Fontaine & Reben, Howard T. Reben (orally), Thomas L. Bohan, Portland, for defendant.

Before McKUSICK, C. J., and GODFREY, ROBERTS, CARTER, VIOLETTE and WATHEN, JJ.

CARTER, Justice.

Summary judgment was entered for the plaintiff in the Superior Court, Androscoggin County, which ruled that the plaintiff-insurer had no duty to defend the defendant-insured in an underlying proceeding before the Maine Labor Relations Board (MLRB). On this appeal, the defendants claim that the motion justice did not correctly apply the controlling principles of law to determine the extent of the plaintiff's obligations under the insurance policy. We affirm the judgment.

Norman P. Whitzell filed with the Maine Labor Relations Board a prohibited practices complaint. Whitzell alleged therein that, as an employee of Maine School Administrative District # 75, he was represented for collective bargaining purposes by Merrymeeting Educators' Association (MEA), which is affiliated with the Maine Teachers Association (MTA). Pursuant to the collective bargaining agreement then in force, there existed a four-step grievance procedure to settle disputes between the employees and the Board of Directors for MSAD # 75, and MEA was contractually obligated to pursue the grievances of the employees. Whitzell also alleged that he was a beneficiary of this duty, even though he was not a member of the MEA.

Whitzell made the following further allegations in the prohibited practices complaint. The School Board tendered him notice of termination in March 1979, to be effective in August 1979. He invoked the grievance procedures and was represented by MEA through the first three levels. MEA subsequently withdrew from its representation of Whitzell after providing notice to him preceding the submission of his grievance to arbitration, which is Level IV. The collective "bargaining agreement precluded individual prosecution of grievances" through arbitration and he was thus effectively denied an opportunity to invoke that procedure. As a result, the discharge became effective.

Whitzell also asserted before the MLRB that MEA therefore "breached its duty of fair representation" in failing to represent him and to pursue the grievance, thereby violating state law, and that MEA discriminated against Whitzell on the ground that he was not a member of the organization, also assertedly in violation of state law. The ad damnum clause of that complaint sought both a ruling that MEA breached its duty of fair representation and relief from MEA as compensation for the unemployment caused by the allegedly unlawful termination. Apparently, the MLRB proceeding was resolved favorably to MEA.

From September 1, 1978, to September 1, 1979, the defendant, Maine Teachers Association Affiliated Units, was the named insured on a policy issued by the plaintiff, Horace Mann. In section B(I)(A) of the contract, the plaintiff agreed To indemnify Insured against any liability arising from any claim or claims which may be made against Insured by reason of:

* * *

4) Interference with the business, trade or professional relationships of any third parties whether or not members of the insured association, but only as to damage to such relationships and arising solely from the written or oral declaration of the insured association,

committed or alleged to have been committed and arising out of the conduct of the insured's activities as an Association of Teachers and/or School Administrators.

The plaintiff initiated the action at bar for a declaratory judgment that it had no duty under the terms of this policy to defend or indemnify the defendants in the MLRB proceedings commenced by Whitzell. See 14 M.R.S.A. §§ 5951--5963. The Superior Court reasoned that Whitzell's prohibited practices complaint, even when liberally construed, did not allege a claim within the scope of the policy's coverage. Summary judgment was granted for the plaintiff.

In order for the duty of defense to arise, the underlying complaint need only show, through general allegations, a possibility that the liability claim falls within the insurance coverage. 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.

Union Mutual Fire Insurance Co. v. Inhabitants of Topsham, Me., 441 A.2d 1012, 1015 (1982) (emphasis added). Accord Travelers Indemnity Co. v. Dingwell, Me., 414 A.2d 220, 226 (1980); Marston v. Merchants Mutual Insurance Co., Me., 319 A.2d 111, 114 (1974). Therefore, the insurer is under no obligation to defend its insured in the underlying proceeding if, when the allegations contained in the petition are compared with the terms and provisions of the contract, there exists no legal or factual basis, which could be developed under that pleading at trial or hearing, that would obligate the insurer to pay under the policy.

This "comparison test," by which the existence of a duty to defend is determined through an examination of the pleadings and the terms of the insurance policy, remains the proper basis upon which to delineate the scope of the insurer's obligation to the insured, notwithstanding some suggestion in the record on this appeal that the underlying administrative proceeding has reached a final disposition. ² The duty to defend is invoked by the filing of a complaint, the allegations of which potentially expose the insured to liability which can be...