Simplex Technologies, Inc. v. Liberty Mut. Ins. Co.

CourtUnited States State Supreme Judicial Court of Massachusetts
Citation429 Mass. 196,706 N.E.2d 1135
PartiesSIMPLEX TECHNOLOGIES, INC. v. LIBERTY MUTUAL INSURANCE COMPANY & another. 1
Decision Date10 March 1999

Marcia Golden Weiner, Boston (Carol A. Kelly with her) for Liberty Mutual Insurance Company.

Robert P. Kavanaugh of California (Lawrence M. Slotick, Boston, with him) for Home Insurance Company.

John H. Kazanjian, New York City (John P. Winsbro, New York City, & John A. Wortmann, Jr., Boston, with him) for Simplex Technologies, Inc.

Present: WILKINS, C.J., ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL, & IRELAND, JJ.

LYNCH, J.

The plaintiff, Simplex Technologies, Inc. (Simplex), manufactured and distributed insulated wire and electric cable products. Simplex was named as a defendant in a number of asbestos products liability actions. On July 24, 1996, Simplex sought a declaration in the Superior Court that its primary insurer, Liberty Mutual Insurance Company (Liberty Mutual), and its two excess insurers, Home Insurance Company (Home) and Employers Insurance of Wausau (Wausau), had a duty to defend it in the underlying products liability actions.

A Superior Court judge allowed Simplex's motion for partial summary judgment, declaring that Liberty Mutual had a duty to defend and ordered it to reimburse defense costs that Simplex had already incurred. The judge's order also declared that "Home and Wausau 2 have secondary responsibilities to defend in the event that Liberty Mutual does not."

On appeal Liberty Mutual asserts that the relevant policies do not obligate it to defend Simplex in the underlying actions. Home argues on appeal that, as an excess carrier, it has no duty to defend Simplex. Home also challenges the judge's order insofar as it purports to rule on Home's potential indemnification obligations on the ground that there are insufficient facts in the record to permit such a ruling. We transferred the case here on our own motion and now conclude that the judge correctly determined that Liberty Mutual has a duty to defend Simplex in the underlying actions. We further conclude that the issue of Home's potential indemnification obligations was not before the judge.

Because we conclude that Liberty Mutual has a duty to defend Simplex, we do not address Simplex's alternative argument that the products hazard exclusion does not apply to claims alleging negligent failure to warn or bodily injury resulting from asbestos exposure, and we strike the declaration that Home has secondary responsibilities to defend in the event that Liberty Mutual does not.

1. Liberty Mutual's defense obligations. Simplex contends that Liberty Mutual, as primary insurer, has a duty to defend Simplex pursuant to the terms of the several insurance policies in effect during the relevant time periods. In reviewing this grant of summary judgment, we resolve all evidentiary inferences in favor of Liberty Mutual. Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991), and cases cited.

The duty to defend an insured against third-party actions arises if, in comparing the policy terms with the third-party complaint:

"[T]he allegations of the complaint are 'reasonably susceptible' of an interpretation that they state or adumbrate a claim covered by the policy terms.... Otherwise stated, the process is one of envisaging what kinds of losses may be proved as lying within the range of the allegations of the complaint, and then seeing whether any such loss fits the expectation of protective insurance reasonably generated by the terms of the policy."

Liberty Mut. Ins. Co. v. SCA Servs., Inc., 412 Mass. 330, 332, 588 N.E.2d 1346 (1992), quoting Continental Cas. Co. v. Gilbane Bldg. Co., 391 Mass. 143, 146-147, 461 N.E.2d 209 (1984).

The Liberty Mutual policies from 1951 through 1974 provided Simplex with comprehensive general liability coverage. These policies expressly require Liberty Mutual to "defend any suit against [Simplex] alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent." From this broad coverage, these policies exclude so-called products liability claims falling within the following language:

"It is agreed that such insurance as is afforded by the Bodily Injury Liability Coverage and the Property Damage Liability Coverage does not apply to bodily injury or property damage included within the Completed Operations Hazard or the Products Hazard."

The policy contains the following definitions:

" '[N]amed insured's products' means goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, including any container thereof (other than a vehicle), but 'named insured's products' shall not include a vending machine or any property other than such container, rented to or located for use of others but not sold....

" '[P]roducts hazard' includes bodily injury and property damage arising out of the named insured's products or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs away from premises owned by or rented to the named insured and after physical possession of such products has been relinquished to others."

Simplex's 1960 through 1970 Liberty Mutual policies added Hitemp Wires Company (Hitemp), a division of Simplex during this period, as a named insured. These policies also included an indorsement making the above product hazard exclusion inapplicable to products manufactured by Hitemp. As with Simplex's other divisions, Hitemp manufactured insulated wire and cable products.

We begin our analysis by asking whether, on the basis of their complaints, the plaintiffs in the underlying actions could establish liability against Simplex by proving that at least some of their injuries resulted from exposure to Hitemp products. If so, the Liberty Mutual policies would provide coverage, because "[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" (emphasis added). Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 368, 667 N.E.2d 1149 (1996), citing Liberty Mut. Ins. Co. v. SCA Servs., Inc., supra...

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