Nagog Real Estate Consulting Corp. v. Nautilus Ins. Co.

• Decision Date: 20 July 2020
• Docket Number: Civil No. 19-cv-11714-DJC
• Citation: 474 F.Supp.3d 459
• Parties: NAGOG REAL ESTATE CONSULTING CORP., Plaintiff, v. NAUTILUS INSURANCE CO., Defendant.
• Court: U.S. District Court — District of Massachusetts

474 F.Supp.3d 459

NAGOG REAL ESTATE CONSULTING CORP., Plaintiff,

v.NAUTILUS INSURANCE CO., Defendant.

Civil No. 19-cv-11714-DJC

United States District Court, D. Massachusetts.

Filed July 20, 2020

Rodney W. Ames, Jr., Michael P. Sams, Patricia B. Gary, Kenney & Sams, P.C., Southborough, MA, for Plaintiff.

Michael F. Aylward, Morrison Mahoney LLP, Boston, MA, for Defendant.

MEMORANDUM AND ORDER

CASPER, J.

I. Introduction

Plaintiff Nagog Real Estate Consulting Corp. ("Nagog Real Estate") filed this lawsuit against Defendant Nautilus Insurance Company ("Nautilus") seeking a declaratory judgment under its Commercial Lines Policy No. NN836687 (the "Policy") in connection with a civil action brought in Middlesex Superior Court (the "Underlying Suit"). D. 1-1. Nautilus has moved for summary judgment as to its duty to defend and the Mass. Gen. L. c. 93A ("Chapter 93A") claim against it, D. 19, and Nagog Real Estate has cross-moved as to Nautilus's duty to defend as asserted in its claim against Nautilus and as asserted in Nautilus's first counterclaim. D. 22. Nagog Real Estate also seeks to strike Nautilus's motion for summary judgment and supporting documents. D. 29. For the reasons discussed below, the Court ALLOWS IN PART and DENIES IN PART Nagog Real Estate's motion to strike, D. 29, DENIES Nagog Real Estate's motion for summary judgment, D. 22, and ALLOWS Nautilus's motion for summary judgment, D. 19.

II. Standard of Review

The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Material facts are those that carry the potential "to affect the outcome of the suit under the applicable law."

Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000) (quoting Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996) ). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000) ; see Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "If he does so, the burden shifts to the nonmovant to establish that a genuine material dispute exists." Harley-Davidson Credit Corp. v. Galvin, 807 F.3d 407, 411 (1st Cir. 2015). That is, the nonmoving party "must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor." Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). In conducting this inquiry, the Court "constru[es] the record in the light most favorable to the non-movant and resolv[es] all reasonable inferences in that party's favor." Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008).

III. Factual Background and Procedural History

The following facts are drawn from Nagog Real Estate's statement of undisputed material facts, D. 24, Nautilus's statement of undisputed facts, D. 21, each party's response to the same, D. 28; D. 31, and the documents attached thereto.

A. The Policy

Nautilus issued the Policy to Hawthorn Homes, LLC, Nagog Homes LLC ("Nagog Homes") and Nagog Real Estate for the policy period of 9/16/2017 – 9/16/2018. D. 28 ¶ 13; D. 24 ¶ 13; D. 25-3. The Policy includes several types of coverage, including Building and Personal Property Coverage and Commercial General Liability Coverage. D. 25-3 at 5. The terms of these types of coverage under the Policy are outlined in general forms, such as the Commercial General Liability Coverage Form, followed by amendments and endorsements that modify these general forms. See D. 25-3 at 5. The coverage at issue here is the Commercial General Liability Coverage, which provides for a general aggregate limit of $2 million and an occurrence limit of $1 million. D. 28 ¶ 14; D. 24 ¶ 14. The Commercial General Liability Coverage provides:

[w]e will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damages" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages.

D. 25-3 at 61. The general terms of the Commercial General Liability Coverage include terms of the Policy including exclusions, D. 25-3 at 61-76, and are followed by several endorsements and amendments that modify the general terms, D 25-3 at 77-115. The general terms of the Policy include an exclusion for employer's liability ("employer's liability exclusion") which provides:

2. Exclusions

This insurance does not apply to: ...

e. Employer's Liability

"Bodily Injury" to:

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business; ....

This exclusion applies whether the insured may be liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury.

D. 25-3 at 62. The general terms of the Commercial General Liability Coverage also include a "separation of insureds" clause,¹ which provides:

[e]xcept with respect to the Limit of the Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies:

a. As if each Named Insured were the only Named Insured;

b. Separately to each insured against whom claim is made or "suit" is brought.

D. 25-3 at 73.

The Policy includes Endorsement L205 (the "L205 Endorsement"). D. 25 at 84. The L205 Endorsement states in capital letters that it "CHANGES THE POLICY" and further reiterates that the endorsement "modifies the insurance policy" by replacing the employer's liability exclusion in the general terms with the following terms of the exclusion:

e. Injury to Employees, Contractors, Volunteers and Other Workers

"Bodily Injury" to:

(1) "Employees", "leased workers", "temporary workers", "volunteer workers", statutory "employees" casual workers, seasonal workers, contractors, subcontractors, or independent contractor of any insured; or

(2) Any insured's contractors’, subcontractors’ or independent contractors’ "employees", "leased workers", "temporary workers", "volunteer workers", statutory "employees", casual workers, seasonal workers, contractors, subcontractors or independent contractors arising out of and in the course of:

(a) Employment by any insured; or

(b) Directly or indirectly performing duties related to the conduct of any insured business; ....

This exclusion applies:

(1) Regardless of where the:

(a) Services are performed; or

(b) "Bodily injury" occurs; and

(2) Whether any insured may be liable as an employer or in any other capacity; and

(3) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

D. 25 at 84.

B. The Underlying Suit

On October 4, 2018, Richard Desjean ("Desjean") filed the Underlying Suit in Middlesex Superior Court against Nagog Homes and Jay Pramberg. D. 25-1. On April 23, 2019, Desjean filed an amended complaint adding Nagog Real Estate as a defendant in the Underlying Suit. D. 25-2. Desjean asserts claims in the Underlying Suit for negligence, negligent supervision, negligent hiring and a violation of Mass. Gen. L. c. 93A against Nagog Real Estate and Nagog Homes, D. 25-2 ¶¶ 14-39, 48-65, in connection with an incident where Desjean was injured while working on a construction project at a property allegedly owned by Nagog Homes. D. 25-2 ¶¶ 6, 11, 12.

The Underlying Suit includes the following allegations: Nagog Homes was the owner of Lot 7, Hutchinson Road, Acton, Massachusetts and Nagog Real Estate was the general contractor for a residential project on this site. D. 28 ¶¶ 3, 5; D. 24 ¶¶ 3, 5; D. 25-2 ¶¶ 5-6. Pramberg "as an employee of Nagog Real Estate and authorized agent of Nagog Homes" obtained a building permit for Lot 7. D. 25-2 ¶ 7. J.H. Pettingwell, Inc. ("Pettingwell") submitted a proposal to Nagog Homes to perform framing work, which was "accepted by Pramberg as an employee of Nagog Real Estate and/or as an agent of Nagog Homes." D. 25-2 ¶ 8. On or around October 7, 2017, Desjean, an employee of Pettingwell, was working at the construction project when he fell through a stairwell opening that did not have any stair railings or protective barriers. D. 25-2 ¶ 11. "Nagog Real Estate and/or Nagog Homes and/or Pramberg negligently failed to install stair railings or protective barriers on the stairwells of the construction project." D. 25-2 ¶ 12.

Nagog Real Estate has denied liability in the Underlying Suit. D. 28 ¶ 12; D. 24 ¶ 12. On April 3, 2019 and again on May 8, 2019, Nagog Real Estate demanded that Nautilus defend it in the Underlying Suit. D. 28 ¶ 18; D. 24 ¶ 18. Nautilus has refused to defend Nagog Real Estate, D. 28 ¶ 19; D. 24 ¶ 19, and Nagog Real Estate brings this suit seeking a declaration that Nautilus has a duty to defend and indemnify it in the Underlying Suit. D. 28 ¶ 21; D. 24 ¶ 21.

IV. Discussion

A. Motion to Strike

Before turning to the cross motions for summary judgment, the Court addresses Nagog Real Estate's motion to strike. Nagog Real Estate urges this Court to strike or disregard and deny Nautilus's motion for summary judgment, memorandum of law and statement of undisputed facts because, Nagog Real Estate argues, these filings impermissibly rely upon extrinsic evidence, D. 29 at 1-2. An insurer "may not use extrinsic evidence to avoid its duty to defend by challenging the allegations in the complaint [in the Underlying Suit]." See Biochemics Inc. v. Axis Reinsurance Co., 963 F. Supp. 2d 64, 70 (D. Mass. 2013). An insurer may use extrinsic evidence to deny a duty to defend based on facts irrelevant to the merits of the underlying litigation, such as whether the claim was first made during the policy period, whether the insured party reported the claim to the insurer as required by the policy, or...