Weeks v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 07 February 1996
• Docket Number: No. 94-560,94-560
• Citation: Weeks v. St. Paul Fire & Marine Ins. Co., 673 A.2d 772, 140 N.H. 641 (N.H. 1996)
• Parties: Philip J. WEEKS and another v. ST. PAUL FIRE & MARINE INSURANCE COMPANY.
• Court: New Hampshire Supreme Court

Page 772

673 A.2d 772

140 N.H. 641

Philip J. WEEKS and another v.ST. PAUL FIRE & MARINE INSURANCE COMPANY.

No. 94-560.

Supreme Court of New Hampshire.

Feb. 7, 1996.

Rehearing Denied April 18, 1996.

Hall, Morse, Anderson, & Miller, P.C., Concord, for plaintiffPhilip J. Weeks, adopted the brief of plaintiffJoyce Weeks.

Casassa & Ryan, Hampton (Robert A. Casassa, on the brief and orally), for plaintiffJoyce Weeks.

Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester (Donald J. Perrault and Christine Desmarais-Gordon, on the brief, and Ms. Desmarais-Gordon, orally), for plaintiffNelson Ward.

Orr & Reno, P.A., Concord (Lisa Snow Wade and Laura E. Tobin, on the brief, and Ms. Wade, orally), for plaintiffMarjorie Dixon.

Taylor, Keane & Blanchard, Portsmouth, for plaintiffsW. Peter Torrey and Joan Young, filed no brief.

Devine, Millimet & Branch, P.A., Manchester (Andrew D. Dunn, on the brief and orally), for defendant.

JOHNSON, Justice.

The defendant, St. Paul Fire & Marine Insurance Company(St. Paul), appeals a Superior Court(McHugh, J.) order finding coverage for six former trustees(the trustees) of the Home for Aged Women (the Home) under two separate insurance policies issued by St. Paul to the Home for damages resulting from the trustees' mismanagement of the Home's assets.We affirm in part and reverse in part.

The Home is a New Hampshire charitable corporation organized in 1877 to provide lifetime nursing care, room, and board to elderly women in Portsmouth.The plaintiffs were all trustees of the Home at various times between 1974 and 1989.The Home also held and managed investments for its residents, which were used to fund the Home's operations and from which the residents received periodic dividends.The Home ceased to exist in 1990 due to lack of funds resulting from mismanagement of the Home's assets.After the Home closed, a former resident, Hazel Bunnell, sued the Home alleging breach of contract and breach of fiduciary duty (the Bunnell suit).In response, the Home filed a third party action against plaintiffsPhilip Weeks, Joyce Weeks, Nelson Ward, and Marjorie Dixon seeking indemnification for the Bunnell suit (Home Count I) and damages resulting from mismanagement of assets (Home Count II).The attorney general, acting as director of charitable organizations, subsequently petitioned the court, seeking civil penalties and surcharges against all six trustees(the attorney general's suit) and alleging breach of their fiduciary duty of care in managing the Home's assets and violation of State reporting statutes.

This appeal arises from consolidated declaratory judgment actions initiated by the trustees seeking coverage and defense from St. Paul for the claims brought against them.The parties filed cross-motions for summary judgment, and the Superior Court(McHugh, J.) ruled for the trustees, finding that the claims against them were covered by either the "Health Care Facility Commercial General Liability Protection" policy (CGL) or the "Health Care Facility Professional Liability Protection" policy (PLP) issued by St. Paul to the Home.Only those claims against Philip J. Weeks that arose from acts of intentional theft, seeState v. Weeks, 137 N.H. 687, 635 A.2d 439(1993), were found not to be covered by either the PLP or CGL.

St. Paul does not dispute that the trustees are insured under the policies as "protected persons," and that if coverage is found, it has a duty to defend and indemnify.Rather, St. Paul contends that the underlying claims against the trustees by the Home and the attorney general are not covered under the policy language of either the CGL or PLP.

"The interpretation of insurance policy language is ultimately a question of law for this court to decide."Allen v. Sentry Insurance, 137 N.H. 579, 580, 630 A.2d 780, 781(1993).An "insurance company remains free to limit its liability through clear and unambiguous policy language,"A.B.C. Builders v. American Mut. Ins. Co., 139 N.H. 745, 748, 661 A.2d 1187, 1190(1995)(quotation omitted);"the burden of establishing non-coverage is upon the insurer, and ... any ambiguities in the language of the policy will be construed in favor of the insured and against the insurer."Robbins Auto Parts, Inc. v. Granite State Ins. Co., 121 N.H. 760, 762, 435 A.2d 507, 509(1981)(quotation and citations omitted);see alsoRSA 491:22-a (1983).

I.Professional Liability Policy (PLP)

St. Paul argues that the superior court erred in finding that the PLP provided coverage for Home Count II and the attorney general's suit, both of which seek compensation for mismanagement of the Home's assets.The PLP provides coverage "for injury or death resulting from ... the providing or failure to provide professional services."The term "professional services" is not defined in the policy.St. Paul argues that the PLP covers only professional health care malpractice and not damages arising from the mismanagement of the Home's assets."Where disputed terms are not defined in the policy ..., we construe them in context, and in the light of what a more than casual reading of the policy would reveal to an ordinarily intelligent insured."Concord Hosp. v. N.H. Medical Malpractice Joint Underwriting Assoc., 137 N.H. 680, 682-83, 633 A.2d 1384, 1386(1993)(citation and quotation omitted).We find that an objective review of the policy, seeid. at 683, 633 A.2d at 1386, reveals that it may be fairly read to cover more than medical malpractice.The policy states that it was designed "to protect against a variety of liability claims."Further, the policy specifically excludes coverage for certain administrators when acting "as physicians in the direct treatment of patients" and does not cover employees who are "interns, externs, residents, dentists, osteopathic or medical doctors."

In the alternative, St. Paul argues that the trustees were acting in an "administrative" as opposed to a "professional" capacity and as such were not covered by the PLP.When "determining the coverage of a professional liability insurance policy, ... [the court] must examine the nature of the [tortious] act performed, rather than the title or professional character of the actor."Niedzielski v. St. Paul Fire & Marine Ins. Co., 134 N.H. 141, 144, 589 A.2d 130, 131(1991)(quotation omitted).The attorney general's suit and Home Count II both allege that the trustees breached a fiduciary duty to properly manage and invest, or supervise the management and investment of, the Home's assets.Therefore, we must determine whether making or participating in investment decisions as trustee of a charitable corporation is a "professional" activity.While a trustee, in making investment decisions, is held to the standard of a "prudent man" and not of a "prudent investment manager,"seeRSA 564-A:1, III (1974), a trustee has clearly defined fiduciary duties and powers.SeeRSA 564-A:3 (1974).The tortious conduct alleged in the underlying suits involves the negligent performance of acts within a trustee's fiduciary capacity that are "predominantly mental or intellectual, rather than physical or manual,"Ni...