Union Mut. Fire Ins. Co. v. Inhabitants of Town of Topsham
| Decision Date | 25 February 1982 |
| Citation | 441 A.2d 1012 |
| Parties | UNION MUTUAL FIRE INSURANCE CO. v. INHABITANTS OF the TOWN OF TOPSHAM et al. * |
| Court | Maine Supreme Court |
Berman, Simmons, Laskoff & Goldberg, John E. Sedgewick (orally), Lewiston, for plaintiff.
Richardson, Tyler & Troubh, David O'Brien (orally), Portland, for Town of Topsham.
Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Charles S. Einsiedler, Jr. (orally), Portland, for Me. Central Railroad.
Before GODFREY, NICHOLS, ROBERTS, CARTER and VIOLETTE, JJ.
Union Mutual Fire Insurance Co. appeals from an order of the Superior Court denying its motions for summary judgment and granting the Town of Topsham's motion for summary judgment on the issue of the insurance company's duty to defend the town in a tort action. The insurance company also appeals from a related order of the Superior Court awarding the town the attorneys' fees it expended in defending both the tort action and the insurance company's declaratory judgment action. We affirm the judgment for the Town of Topsham declaring that the plaintiff company had the duty to defend it. We modify the judgment awarding attorneys' fees to the Town to exclude attorneys' fees expended in defending the declaratory judgment action.
On February 28, 1977, Union Mutual Fire Insurance Company filed in Superior Court a complaint for declaratory judgment. The complaint alleged that the Town of Topsham had been sued by one Cynthia Berry for the wrongful death of her husband. According to the insurer, Mrs. Berry had claimed that the town had "permitted to exist a dangerous and defective public road and failed to keep the said public road in a safe condition." The company admitted that at the time of the alleged wrongful death it insured the town under a comprehensive general liability policy. However, the company alleged that, by agreement with the town, the policy "specifically excluded streets and roads coverage, so-called," as well as "coverage for any of the bases for liability alleged" in Mrs. Berry's complaint. Accordingly, the company prayed for a judgment declaring that it was under no obligation to defend the town in Mrs. Berry's wrongful death action.
In its answer, the Town of Topsham admitted that under an earlier (1970) liability policy it had purchased from the insurer, "streets and roads coverage" had been excluded, but it denied that streets and roads coverage had been excluded from the 1973 policy in force at the time of Mr. Berry's death. Hence, the town alleged, the company had a duty to defend the town in this action.
Later, the company was granted leave to amend its complaint to include a count seeking reformation of its policy insuring the Town of Topsham. The company alleged that it was the intent of both parties that the policy in force at the time of the death exclude streets and roads coverage, which had been included only because of a mutual mistake. The insurer prayed that the 1973 insurance contract be reformed to provide for the agreed-on exclusion and, on the basis of the contract as reformed, the company be declared to have no duty to defend the town.
Seven months later the company filed a motion for summary judgment, alleging that there was no material issue of fact concerning the reformation of the policy and that, once the contract was reformed, there was no material issue of fact relating to its duty to defend. Supporting the motion were two affidavits and the town's answers to certain interrogatories propounded by the insurer. The first affidavit, by underwriter Robert Tilley, recited his understanding that the town, not wanting to include "streets and roads coverage" in the 1973 policy because of the cost, had agreed to exclude such coverage, and that an exclusionary endorsement relating to streets and roads had been "overlooked and unintentionally excluded." Tilley further stated that he had forwarded an exclusion endorsement to the town's insurance agent in June of 1975, over two years after the policy went into effect. The second affidavit, by the town's insurance agent, confirmed that he had received the exclusion endorsement and had forwarded it to the town. The town's answers to the insurer's interrogatories tended to show that there was a mutual mistake about the exclusion of coverage for the existence of streets and roads in the renewed policy and that Tilley's subsequent exclusion endorsement correctly expressed the parties' original intention to exclude such coverage.
In opposition to the insurer's motion for summary judgment, the Town of Topsham submitted an affidavit that tended to show that only the insurance company intended to exclude coverage for liability arising out of the existence of streets and roads. The town also submitted copies of both the original (1970) policy and the replacement (1973) policy it had received from Union Mutual Fire Insurance Company. Finally, the town filed its own motion for a partial summary judgment declaring the company obligated to defend it in Mrs. Berry's wrongful death action.
On July 11, 1979, the Superior Court issued an order denying the company's motions for summary judgment and granting the town's motion for partial summary judgment. The presiding justice first ruled that the insurer had a duty to defend its insured if the facts alleged in the underlying complaint against the insured appeared to bring the liability claim within the policy coverage. Mrs. Berry's underlying complaint against the Town of Topsham alleged, among other things, that the town had failed to maintain an intersection between one of its roads and a railroad track "in a safe condition so that upon perceiving the approach of a train, a motorist could apply his brakes and stop within a reasonable time before reaching said tracks." Noting this allegation, the Superior Court then examined the insurance policy for provisions affecting coverage of the town's possible liability for Mrs. Berry's claim.
The policy purported to provide the town with "comprehensive general liability insurance." However, the policy contained a "mandatory governmental exclusion endorsement" which stated in pertinent part:
1. The insurance does not apply to bodily injury or property damage arising out of:
(a) The ownership, maintenance, supervision, use or control of streets ... but this exclusion does not apply to bodily injury or property damage which arises out of and occurs during the performance of construction, street cleaning and repair operations ....
The presiding justice also had before him the additional exclusion endorsement that the company asserted was omitted by mistake. That endorsement indicated that
1. The insurance does not apply to bodily injury or property damage which arises out of:
(a) The existence of streets ... but this exclusion does not apply to bodily injury or property damage which arises out of and occurs during the performance of construction, street cleaning and repair operations ....
Because, even with the additional exclusion endorsement, the policy provided coverage for bodily injury which arises out of and occurs during the performance of street cleaning and repair operations, the Superior Court found that the policy could possibly cover Mrs. Berry's wrongful death claim against the town. Accordingly, the presiding justice ruled that the insurer had a duty to defend the town in Mrs. Berry's action. Since incorporation of the additional exclusion endorsement into the insurance policy would not have affected his decision concerning the insurance company's duty to defend, the justice expressly declined to decide whether the policy should be reformed so as to include the additional exclusion endorsement.
The company argues that the Superior Court erred in concluding that the company had a duty to defend the town in Mrs. Berry's wrongful death action. In the insurer's view, the allegations in the complaint for wrongful death must be read as relating to liability stemming from the existence of streets rather than from street cleaning or repair. On that hypothesis, according to the company, the additional exclusion endorsement shows a lack of coverage for the liability claim and the company has no duty to defend the town. The argument expresses too narrow a conception of the duty to defend.
In order for the duty of defense to arise, the underlying complaint need only show, through general allegations, a possibility that the liability claim falls within the insurance coverage. There is no requirement that the facts alleged in the complaint specifically and unequivocally make out a claim within the coverage. Moreover, where there is an ambiguity in the language of the policy, the doubt should be resolved in favor of finding that the insurer has a duty to defend the insured. Travelers Indemnity Co. v. Dingwell, Me., 414 A.2d 220 (1980).
The underlying complaint for wrongful death alleged, among other things, that the town failed to maintain a road leading to a railroad crossing so that a motorist could apply his brakes and stop before reaching the railroad tracks. Mrs. Berry claimed that her husband was killed when the vehicle he was driving collided with a train at the railroad crossing. Although her allegation could be viewed as charging a defect in the design of the road itself, thereby possibly bringing her claim within the exclusion of liability for injury arising out of the existence of the roadway, it is equally reasonable to read her complaint as alleging that the town was negligent in the performance of street cleaning or repair. 1 Because Mrs. Berry's wrongful death complaint raised the possibility that her claim fell within the coverage provisions of the policy, the company was under a duty to defend the town in the wrongful death action. We find no error either in the Superior...
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