Pub. Serv. Mut. Ins. Co. v. Cape Cod Distributors, Inc.

• Decision Date: 08 March 2012
• Docket Number: Civil Action No. 09-11872-DJC
• Parties: PUBLIC SERVICE MUTUAL INSURANCE COMPANY, Plaintiff, v. CAPE COD DISTRIBUTORS, INC., JEAN PAUL ARTEAGA, DONUT II REALTY LLC, MCCARTHY MANAGEMENT CO., INC., and DUNKIN' DONUTS CORP., INC., Defendants.
• Court: U.S. District Court — District of Massachusetts

PUBLIC SERVICE MUTUAL INSURANCE COMPANY, Plaintiff,
v.
CAPE COD DISTRIBUTORS, INC., JEAN PAUL ARTEAGA, DONUT II REALTY LLC,
MCCARTHY MANAGEMENT CO., INC., and DUNKIN' DONUTS CORP., INC., Defendants.

Civil Action No. 09-11872-DJC

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

March 8, 2012

MEMORANDUM AND ORDER

CASPER, J.

I. Introduction

Public Service Mutual Insurance Company ("PSM") has brought this action against Cape Cod Distributors, Inc. ("CCD"), Jean Paul Arteaga ("Arteaga"), Donut II Realty, Co. ("Donut II"), McCarthy Management Co., Inc. ("McCarthy Management") and Dunkin' Brands, named in the complaint as "Dunkin' Donuts Corp., Inc.," (collectively, the "Defendants") seeking a declaratory judgment that its insurance policies provide no coverage for claims arising out of injuries CCD employee Arteaga sustained when he fell from the roof of a building at CCD's facility. Three of the Defendants and PSM have now moved for summary judgment. For the reasons set forth below, PSM's motion for summary judgment is DENIED; CCD's cross-motion for summary judgment is GRANTED in part and DENIED in part; Dunkin' Brands' cross-motion for summary judgment is GRANTED; and Donut II's cross-motion for summary judgment is GRANTED in part and DENIED

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in part.

II. Burden of Proof and Standard of Review

A party moving for summary judgment bears the burden of "show[ing] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the suit under governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is "genuine" where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.

Once the moving party has satisfied its burden, the burden shifts to the non-moving party to set forth specific evidence showing that there is a genuine, triable issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir.1993). If after viewing the record in this light the Court determines that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law, summary judgment is appropriate. Fed. R. Civ. P. 56(a).

III. Factual Background

Unless otherwise indicated, the following are the undisputed facts.¹

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A. The Accident and State Court Litigation

In December 2007, Arteaga was working as an employee of CCD at its location at 17 Kendrick Road in Wareham, Massachusetts (the "Premises"). (PSM Statement of Facts ¶ 14; CCD Resp. to PSM Statement of Facts ¶ 14). Arteaga was a production manager responsible for ensuring proper operations of all kitchen machines. (PSM Statement of Facts ¶ 14; CCD Resp. to PSM Statement of Facts ¶ 14). On the evening of December 4, 2007, Arteaga alleges that while working for CCD and servicing a piece of equipment on the roof of CCD's facility, he sustained serious injuries when he fell from the roof in his attempt to repair a piece of equipment. (PSM Statement of Facts ¶ 15; CCD Resp. to PSM Statement of Facts ¶ 15). Arteaga received workers' compensation benefits for his injuries under a workers' compensation policy issued by PSM to CCD. (PSM Statement of Facts ¶ 16; CCD Resp. to PSM. Statement of Facts ¶ 16).

On August 26, 2009, Arteaga filed a "complaint for discovery" in Plymouth Superior Court against CCD, Donut II, Dunkin' Brands (named in the complaint as Dunkin' Donuts Corp.) and McCarthy Management, among others, seeking certain information to frame his complaint for damages arising out of his personal injury and premises liability claims. (PSM Statement of Facts ¶¶ 17-18, Ex. 1 (2009 complaint); CCD Resp. to PSM Statement of Facts ¶¶ 17-18). When CCD, Donut II, Dunkin' Brands and McCarthy Management made a demand upon PSM for insurance coverage, PSM denied coverage. Kossuth Aff., ¶ 5, Ex. 3 (August 5, 2008 letter), ¶ 6, Ex. 4 (August 26, 2009 letter), ¶ 7, Ex. 5 (October 30, 2009 letter). The Superior Court subsequently dismissed Arteaga's lawsuit as to all defendants, but allowed him to inspect the Premises and have his

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deposition taken to preserve his testimony. (PSM Mem., Ex. 6 (docket); CCD Statement of Facts ¶ 7).

More than one year later, on December 2, 2010, Arteaga filed a second lawsuit in Plymouth Superior Court on behalf of himself and his family against Donut II, Dunkin' Brands, McCarthy Management, among others, but not CCD. (PSM Mem., Ex. 2 (2010 complaint); PSM Statement of Facts ¶ 20; CCD Resp. to PSM Statement of Facts ¶ 20; CCD Statement of Facts ¶ 8). In the 2010 complaint, Arteaga alleges that multiple defendants, including Donut II, Dunkin' Brands and McCarthy Management, negligently failed to warn of hazards, negligently failed to train its employees or negligently failed to inspect the premises, among other allegations. (PSM Mem., Ex. 2 at ¶ 89 (allegations against Donut II), ¶ 107 (same with respect to Dunkin' Brands), ¶ 113 (same with respect to McCarthy Management).

B. PSM Policies and Other Relevant Agreements

1. Lease Agreement Between CCD and Donut II

At the time of the accident in December 2007, CCD had a lease agreement whereby it leased the Premises from the property owner, Donut II. (CCD Statement of Facts ¶ 18; Couto Aff. ¶ 14). The lease required CCD to obtain an insurance policy protecting CCD and Donut II against any "loss, liability, or expense whatsoever from (without limitation) fire, personal injury, theft, death, property damage or otherwise arising or occurring upon or in connection with the Premises . . ." (Lease of Dunkin' Donuts Kitchen Facility between Donut II and CCD at § 12(c) (Aug. 15, 2002) ("Lease Agreement") attached as Ex. 6 to Kossuth Aff. ¶ 8).

2. Franchise Agreement Between CCD and Dunkin' Brands

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CCD also had a franchise agreement with Dunkin' Donuts, Inc. (Dunkin Donuts Franchise Agreement for a Co-operative Production Location ("Franchise Agreement") between Dunkin Donuts, Inc. and CCD, attached as Ex. 7 to Kossuth Aff. ¶ 9). The Franchise Agreement similarly required CCD to obtain an insurance policy protecting Dunkin' Brands from "any loss, liability, or expense whatsoever from, without limitation, fire, personal injury . . . or otherwise arising or occurring upon or in connection with the [the leased premises] or by reason of FRANCHISEE's [CCD] operation or occupancy of the CPL." Id. at § 5.3.

The Franchise Agreement included an indemnity provision, which provided:

Without limitation, [CCD] shall save, defend, exonerate, indemnify and hold harmless Dunkin' Donuts, and its subsidiaries, and their respective officers, directors, employees, agents successors and assigns, from and against (i) any and all claims based upon, arising out of, or in any way, related to the operation or condition of any part of the [Co-operative Production Location] or the Premises, the conduct of business thereupon, the ownership or possession of real or personal property and any negligent act, misfeasance or nonfeasance by [CCD] or any of its . . . employees, or licensees, and including without limitation, all obligations of [CCD] incurred pursuant to any provisions of this Agreement, and (ii) any and all fees (including reasonable attorney's fees), costs and other expenses incurred by or on behalf of Dunkin' Donuts in the investigation of or defense against any and all such claims.

Id. at § 11.1

CCD obtained two liability insurance policies issued by PSM which were in effect at the time of the December 4, 2007 incident: the Future Builder Business Owners Policy ("Primary Policy") and the Commercial Umbrella Liability Policy ("Umbrella Policy"). (PSM Mem., Exs. 4 & 5).

3. Primary Policy

Under the Primary Policy, PSM agreed to "pay any amounts up to [CCD's] Limit of

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Coverage for which you or anyone else covered under [CCD's] Liability Coverages becomes liable as a result of 'bodily injury' . . . that is caused by an accident." PSM Mem., Ex. 4 at 32. The Primary Policy "explains the coverage [PSM] offers for liability to others for injury and property damage" and the restrictions on that coverage. PSM Mem., Ex. 4 at 31.

a. Insured Contracts provision

The Primary Policy does not cover certain liability assumed by CCD. The policy states that "[PSM] will not cover liability that you or anyone else covered under your Liability Coverages assumed under contract or other agreement." PSM Mem., Ex. 4 at 34. However, PSM agreed to "cover liability: assumed in contract or agreement that is an 'insured contract'; or that [CCD] or anyone else covered under [CCD's] Liability Coverages would have in absence of the contract or agreement." Id. The Primary Policy defines an "insured contract" among other things, as "a lease of premises" or "that part of any other contract or...