Quincy Mut. Fire Ins. Co. v. Another1

• Decision Date: 26 September 2011
• Docket Number: No. 10–P–1299.,10–P–1299.
• Citation: 80 Mass.App.Ct. 484,954 N.E.2d 27
• Court: Appeals Court of Massachusetts
• Parties: QUINCY MUTUAL FIRE INSURANCE COMPANYv.Jeffrey CRISPO & another.1

80 Mass.App.Ct. 484

954 N.E.2d 27

QUINCY MUTUAL FIRE INSURANCE COMPANY

v.Jeffrey CRISPO & another.1

No. 10–P–1299.

Appeals Court of Massachusetts, Norfolk.

Argued July 12, 2011.Decided Sept. 26, 2011.

Robert A. Curley, Jr., Boston, for the plaintiff.Brendan P. Donahue, of Vermont, for the defendants.Present: MILLS, GREEN, & KATZMANN, JJ.MILLS, J.

Sometimes ships do not pass in the night. At approximately 9:10 p.m. on Saturday, August 13, 2005, a ferry operated by a company doing business as Boston Harbor Cruises (BHC) struck two stationary boats tied together and anchored in Boston Harbor, sinking both. One of the two boats was a power boat owned by the defendants Jeffrey and Nicole Crispo (the Crispos). The other was a lobster boat owned and operated by Jeffrey's brother, Steven Crispo. The Crispos and Steven (in separate actions) sought to recover damages from BHC, and BHC in turn asserted claims for indemnification and contribution against the Crispos, contending that the Crispos' negligence caused the accident. The Crispos sought personal liability coverage under their homeowner's insurance policy (the policy) issued by the plaintiff, Quincy Mutual Fire Insurance Company (Quincy Mutual), which filed this action seeking a declaration that it had no duty to defend or indemnify against BHC's claims. Under the policy, losses arising out of the Crispos' use of the power boat are excluded from coverage, but losses arising out of their use of the lobster boat are excepted from that exclusion. In a thorough and thoughtful memorandum of decision, a Superior Court judge awarded summary judgment in the Crispos' favor. Quincy Mutual appeals. We affirm.

Background. We summarize the undisputed facts. On August 13, 2005, the Crispos were aboard their power boat, the MSJC69, and were towing the lobster boat, the Laina Lou, which had lost its propulsion due to transmission trouble. As the two vessels neared Quincy Yacht Club, the MSJC69's propeller shaft became entangled on a mooring line. After cutting loose from the mooring line, the Crispos were unable to restart the MSJC69, its battery dead. The Laina Lou dropped its anchor and the two boats remained attached by the tow line. Due to the dead battery, the MSJC69's running lights were not on. Approximately ten minutes later, the Nora Vittoria, a ferry boat operated by BHC, collided with the two vessels.

Steven Crispo and Dana Gagne, who were both aboard the Laina Lou, later sued BHC in United States District Court, and the Crispos sued BHC in Superior Court, seeking recovery for personal injuries and property damage. In the Federal action, BHC brought a third-party complaint against the Crispos, alleging that the Crispos were responsible for the Federal plaintiffs' damages by failing to take appropriate action to prevent the collision. In the Superior Court action, BHC counterclaimed against the Crispos for indemnification and contribution on the same grounds.²

The Crispos sought coverage from Quincy Mutual under the policy. In the section of the policy providing for personal liability coverage, the policy states that Quincy Mutual will defend and indemnify as to a claim brought against an insured for bodily injury or property damage caused during the policy period by an accident. The policy lists certain exclusions to liability coverage, including, in relevant part, the following:

“Personal liability ... [does] not apply to ‘bodily injury’ or ‘property damage’ ...

“g. Arising out of:

“(1) The ownership, maintenance, use, loading or unloading of an excluded watercraft described below ...

“Excluded watercraft are those that are principally designed to be propelled by engine power or electric motor, or are sailing vessels, whether owned by or rented to an ‘insured.’

“This exclusion does not apply to watercraft:

“(1) That are not sailing vessels and are powered by: (a) Inboard or inboard-outdrive engine or motor power of 50 horsepower or less not owned by an ‘insured’; (b) Inboard or inboard-outdrive engine or motor power of more than 50 horsepower not owned by or rented to an ‘insured’; (c) One or more outboard engines or motors with 25 total horsepower or less; (d) One or more outboard engines or motors with more than 25 total horsepower if the outboard engine or motor is not owned by an ‘insured’....”

It is undisputed that the Crispos' use of the MSJC69 would fall within the watercraft exclusion, and that their use of the Laina Lou, a nonsailing vessel powered by an inboard engine of more than fifty horsepower and not owned by the Crispos, would fall within the exception to the watercraft exclusion. Quincy Mutual's policy form had provided for an optional endorsement for watercraft liability, which the Crispos declined to purchase as part of their coverage.

Quincy Mutual initially defended the Crispos against BHC's claims while reserving its right to deny coverage pending the outcome of a declaratory judgment action. On September 14, 2007, Quincy Mutual filed this action seeking a declaration that it had no duty to defend or indemnify the Crispos in the Federal court action.³

On September 19, 2008, Quincy Mutual moved for summary judgment in the declaratory judgment action and, shortly thereafter, ceased its defense of the Crispos. The Crispos cross-moved for summary judgment.

On February 11, 2009, the Crispos and BHC settled the underlying actions, on terms by which the Crispos bore no liability and owed no money to BHC. At that point, the only issues remaining in this action were the existence and breach of Quincy Mutual's duty to defend. Summary judgment rulings issued in the Crispos' favor on those questions. Following the entry of final judgment, Quincy Mutual filed this appeal.⁴

Discussion. The sole issue before us is whether Quincy Mutual had a duty to defend the Crispos against BHC's claims.⁵ For purposes of our discussion, we begin with the premise that the Crispos' tying of the disabled MSJC69 to the Laina Lou at anchor constituted “use” of the Laina Lou within the meaning of the policy.⁶ The remaining question is whether the losses alleged in BHC's complaints against the Crispos, which allegedly arose out of the Crispos' use of the MSJC69 as well as the Laina Lou, created a potential for coverage that triggered Quincy Mutual's duty to defend. In other words, does a claim trigger a duty to defend when the alleged loss “arises out of” both a use that is excluded from coverage and a covered use (or, as in this case, a use that, due to an exception to the exclusion, is not excluded)? Quincy Mutual maintains that so long as a use that is excluded from coverage is alleged as a cause of the loss, the existence of a causal contribution by another use that is covered under the policy does not give rise to a duty to defend. We do not agree.

“[I]t is well settled in this jurisdiction that a liability insurer owes a broad duty to defend its insured against any claims that create a potential for indemnity.” Simplex Technologies, Inc. v. Liberty Mut. Ins. Co., 429 Mass. 196, 199, 706 N.E.2d 1135 (1999), quoting from Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 368, 667 N.E.2d 1149 (1996). “[I]f the allegations of the complaint are ‘reasonably susceptible’ of an interpretation that they state or adumbrate a claim covered by the policy terms, the insurer must undertake the defense.” Sterilite Corp. v. Continental Cas. Co., 17 Mass.App.Ct. 316, 318, 458 N.E.2d 338 (1983), quoting from Vappi & Co. v. Aetna Cas. & Sur. Co., 348 Mass. 427, 431, 204 N.E.2d 273 (1965). The complaints need only state a claim that gives rise to a possibility of recovery under the policy, rather than a probability of such recovery. Simplex Technologies, Inc. v. Liberty Mut. Ins. Co., supra.

In deciding whether the complaint posed potential for a covered loss triggering Quincy Mutual's duty to defend, we begin by comparing the complaints with the policy terms. See id. at 197, 706 N.E.2d 1135. The complaints alleged that the Crispos' negligence in using the MSJC69 and the Laina Lou caused the vessels to be struck by the ferry. The complaints do not distinguish between the Crispos' use of the two vessels with respect to which use caused the accident. As the motion judge accurately observed, the allegations of the underlying complaints raise the possibility that the claims against the Crispos arose from their use of the Laina Lou. As the motion judge also observed, the policy includes a so-called “anticoncurrent cause” provision in section I of the policy but contains no such provision in section II of the policy, governing the coverage at issue in this case.⁷ Where an anticoncurrent cause provision is included with reference to exclusions in one part of the policy, and omitted with reference to exclusions in another part of the policy, Massachusetts courts have interpreted the absence of such provision to mean that a loss caused by a risk excluded in the section without the provision will be covered if a covered risk also contributed to the loss. See Jussim v. Massachusetts Bay Ins. Co., 415 Mass. 24, 30–31, 610 N.E.2d 954 (1993); Driscoll v. Providence Mut. Fire Ins. Co., 69 Mass.App.Ct. 341, 346–347, 867 N.E.2d 806 (2007), quoting from Couch, Insurance § 101:47 (3d ed. 2005) (“[U]nless there is an express policy provision to the contrary, the requirement that the peril insured against be the proximate cause of the loss does not require that it be the sole cause of the loss”). Accordingly, the judge reasoned, Quincy Mutual could have included an anticoncurrent cause provision in the liability section of the policy had it intended to provide coverage only when a covered activity was the sole cause of the loss.

Quincy Mutual counters that it did not need to include an anticoncurrent cause provision in the liability section of the policy because, unlike the phrase “caused by” used in section I of the policy, the phrase “arising out of,” prefacing the section II exclusions...