Littlefield v. Acadia Ins. Co.

• Decision Date: 08 December 2004
• Docket Number: No. 04-1778.,No. 04-1751.,04-1751.,04-1778.
• Citation: 392 F.3d 1
• Parties: Daniel LITTLEFIELD, Plaintiff, Appellant, v. ACADIA INSURANCE COMPANY, Defendant, Appellee, Karen K. Hartman, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1

392 F.3d 1

Daniel LITTLEFIELD, Plaintiff, Appellant, v. ACADIA INSURANCE COMPANY, Defendant, Appellee Karen K. Hartman, Defendant, Appellant.

No. 04-1751.

No. 04-1778.

United States Court of Appeals, First Circuit.

Heard November 2, 2004.

Decided December 8, 2004.

COPYRIGHT MATERIAL OMITTED

Gordon A. Rehnborg, Jr., with whom Mary Ann Dempsey and Wiggin & Nourie, P.A., were on brief, for Appellant Daniel Littlefield.

Leonard W. Langer, with whom Marshall J. Tinkle and Tompkins, Clough, Hirshon & Langer, P.A., were on brief, for appellee.

Before LYNCH, Circuit Judge, STAHL, Senior Circuit Judge, and LIPEZ, Circuit Judge.

LIPEZ, Circuit Judge.

This case requires us to decide whether a provision of a yacht insurance policy excluding coverage for "any loss, damage or liability willfully, intentionally or criminally caused or incurred by an insured person" is ambiguous as applied to an insured who was convicted of criminally negligent homicide after his involvement in a fatal boat collision, and, if not ambiguous, whether its enforcement would render coverage under the policy illusory. Answering both questions in the negative, we affirm the district court's order granting summary judgment to Defendant-Appellee Acadia Insurance Company ("Acadia") and denying summary judgment to Plaintiff-Appellant Daniel Littlefield in Littlefield's action seeking a declaratory judgment of coverage under the yacht insurance policy.

I.

On August 11, 2002, Daniel Littlefield was operating a thirty-six-foot motorized pleasure boat insured under an Acadia "yacht policy" on Lake Winnipesaukee in New Hampshire when it collided with another boat, killing one of that boat's passengers, John H. Hartman. In January 2003 Littlefield was indicted by a grand jury on two counts of criminally negligent homicide under sections 630:3(I) and (II) of the New Hampshire Criminal Code.¹ Also in January 2003, the victim's widow and executrix of his estate, Defendant-Appellant Karen K. Hartman ("Hartman"), brought a wrongful death action against Littlefield in New Hampshire state court alleging negligence. On April 3, 2003, Littlefield, in turn, sought a declaratory judgment in New Hampshire state court that Acadia was obligated under the terms of the yacht policy to provide him with insurance coverage, including a defense in Hartman's wrongful death suit.²

Acadia asserted that it had no such obligation under two separate provisions of the yacht policy, the first contained in Section B of the policy, which governs "Protection and Indemnity Insurance," and the second contained in Section G, which sets forth "General Conditions" applicable to the entire policy. The provision in Section B excludes from coverage "any loss, damage or liability willfully, intentionally or criminally caused or incurred by an insured person." The provision in Section G excludes coverage for "any loss, damage or expense arising out of or during any illegal activity on your part or on the part of anyone using the insured's property with your permission."³ On May 2, 2003, Acadia removed the case to federal district court, citing both diversity and possible admiralty jurisdiction.

On June 20, 2003, a Belknap County Superior Court jury found Littlefield not guilty on the indictment's first count of "negligently causing the death of another in the consequence of being under the influence of intoxicating liquor while operating a boat on Lake Winnepesaukee," a Class A felony, but guilty of the second count of "negligently caus[ing] the death of another while operating a boat ... and fail[ing] to keep a proper lookout," a Class B felony. Citing principles of issue preclusion, Acadia moved for summary judgment in this case on the ground that Littlefield's criminal conviction rendered his potential liability in Hartman's wrongful death action "criminally caused or incurred," as well as "arising out of or during ... illegal activity" within the meaning of the policy exclusions. Littlefield brought a cross-motion for summary judgment, arguing that the language of the policy exclusion in Section B of the policy is ambiguous and should be construed to provide coverage despite his criminal conviction. Littlefield asserted that a reasonable insured would interpret "willfully, intentionally or criminally caused or incurred" liability or losses to refer only to those caused or incurred through the commission of willful or intentional crimes. Under Littlefield's interpretation, liability incurred through the commission of unintentional crimes, including criminally negligent homicide, would not be excluded from coverage.⁴ Littlefield also argued that enforcement of either the exclusion provision in Section B or Section G of the policy would leave so few claims actually covered as to render coverage under the policy illusory in contravention of public policy favoring compensation of innocent victims unintentionally harmed by an insured.

On May 11, 2004, the federal district court granted Acadia's motion for summary judgment and denied Littlefield's cross-motion for summary judgment, finding that coverage was excluded under the provision in Section B regarding "any loss, damage or liability willfully, intentionally or criminally caused or incurred by an insured person." The court stated:

It is well understood that negligence can be criminal when it results in death. The policy does not limit the exclusion to intentional crimes and the mere fact that the phrase is grouped with exclusions for willfully and intentionally caused acts would not cause a reasonably informed insured to read a limitation into the exclusion that it does not contain.

Littlefield v. Acadia Ins. Co., No. 03-CV-220, 2004 WL 1064685, 2004 U.S. Dist. LEXIS 8410, at *8-9 (D.N.H. May 11, 2004). The court also rejected Littlefield's argument that the exclusion provision is unenforceable as contrary to public policy. The court did not reach the applicability or enforceability of the exclusion provision in Section G.⁵ Littlefield and Hartman appealed, and their cases were consolidated for purposes of appeal. ⁶

II.

We review a district court's grant of summary judgment de novo. Rodriguez v. Smithkline Beecham, 224 F.3d 1, 5 (1st Cir.2000). Summary judgment is appropriate only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "Cross motions simply require us to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed." Barnes v. Fleet Nat'l Bank, N.A., 370 F.3d 164, 170 (1st Cir.2004) (internal quotation marks and citation omitted). The parties contest only the interpretation of the yacht insurance policy's exclusion provisions. Whether there is any ambiguity in the exclusion provisions is a question of law for the court to determine. See Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63 (1st Cir.1992).

A. Choice of Law

We first identify the applicable law. The Acadia yacht policy contains a choice-of-law provision: "This Policy shall be governed by and construed under the general Maritime Law of the United States of America regardless of the venue or jurisdiction of the court or arbitration." The parties do not dispute the applicability of the choice-of-law provision, and federal maritime law is clearly applicable to the yacht policy at issue, Acadia Ins. Co. v. McNeil, 116 F.3d 599, 603 (1st Cir.1997). Even under federal maritime law, however, "[a] maritime contract's interpretation may so implicate local interests as to beckon interpretation by state law." Norfolk S. Ry. Co. v. Kirby, ___ U.S. ___, ___, 125 S.Ct. 385, 395, ___ L.Ed.2d ___ (2004).

To determine whether application of state law is appropriate under federal maritime law, we must first inquire whether any federal statute governs the interpretation of the policy provision at issue in this case, and we find none. See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 314, 321, 75 S.Ct. 368, 99 L.Ed. 337 (1955) ("Since Congress has not taken over regulation of marine insurance contracts... there is no possible question here of conflict between a state law and any federal statute."). Next, we ask whether there is a specific, federal, judicially-created rule governing the interpretation of this policy, and we also find none. See, e.g., Commercial Union Ins. Co. v. Flagship Marine Servs., Inc., 190 F.3d 26, 30 (2d Cir.1999) (finding "no specific federal rule governing construction of maritime insurance contracts"). Instead, we note that general principles of contract law are used to interpret marine insurance policies. See id.; see, e.g., Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293, 306 (2d Cir.1987) (noting that the principle that an ambiguous insurance contract "will generally be construed against the insurer who drafted it in order to promote coverage for losses to which the policy relates ... applies to all types of insurance policies[,] including maritime policies.") (citations omitted); Kalmbach, Inc. v. Ins. Co. of the State of Penn., 529 F.2d 552, 555 (9th Cir.1976) ("[W]e can see no significant difference between construction of an ordinary insurance policy and one with marine insurance overtones. In general, each is to be construed against the insurance company."). Having discerned that there is no federal statute or federal rule governing the interpretation of the policy in this case, we lastly must inquire whether we should fashion such a rule, and conclude we should not. See Wilburn Boat Co., 348 U.S. at 314, 75 S.Ct. 368 (deciding, as Congress has, to leave the regulation of marine insurance with the states); McNeil, 116 F.3d at 603 (favoring application of state law over "the fashioning of new federal law" where no conflict...