York Golf and Tennis Club v. TUDOR INSURANCE COMPANY

• Decision Date: 09 April 2004
• Citation: 845 A.2d 1173,2004 ME 52
• Parties: YORK GOLF AND TENNIS CLUB et al. v. TUDOR INSURANCE COMPANY.
• Court: Maine Supreme Court

2004 ME 52

845 A.2d 1173

YORK GOLF AND TENNIS CLUB et al. v. TUDOR INSURANCE COMPANY.

Docket: Yor-03-481.

Supreme Judicial Court of Maine.

Submitted on Briefs: December 12, 2003.

Decided: April 9, 2004.

Stephen Wade, Esq., Skelton, Taintor & Abbott, Auburn, ME, Attorney for the plaintiff.

Thomas LaPrade, Esq., Lambert Coffin, Portland, ME, Attorney for the defendant.

Panel: SAUFLEY, C.J., and RUDMAN, DANA, ALEXANDER, and CALKINS, JJ.

CALKINS, J.

[¶1] York Golf and Tennis Club and its directors appeal from the summary judgment entered by the Superior Court (York County, Fritzsche, J.). Although the club was successful in obtaining a declaration that Tudor Insurance Company had a duty to defend it in a lawsuit brought by Francis Reilly, the club and its directors appeal the amount of damages and the denial of attorney fees. Tudor cross-appeals the declaration that it had a duty to defend the club pursuant to its insurance policy. We agree with Tudor that it had no duty to defend, and we vacate the judgment.

I. BACKGROUND AND PROCEDURE

[¶2] York Golf and Tennis Club, a non-profit corporation, purchased a non-profit organization liability insurance policy from Tudor. The policy required Tudor to defend the club and its directors against claims for losses for their wrongful acts.

[¶3] A dispute arose from the election of the club's board of directors at its 2000 annual meeting. Francis Reilly and Dana Foster were elected to the board, but the club held a recount, which resulted in the removal of Reilly and Foster from the board of directors. Reilly, Foster, and others filed a complaint with four counts against the club, its directors, and an individual who was not a director. The first and second counts respectively requested preliminary and permanent injunctions requiring the club to seat Reilly and Foster on the board. The third count alleged slander and sought compensatory damages from three of the individual defendants, and the fourth count sought punitive damages for slander from the same three defendants.

[¶4] The club presented the complaint to Tudor. It denied coverage, relying on two exclusions in the policy. One exclusion provided that there was no coverage for losses in connection with any claim seeking relief "in any form other than money damages," and the other excluded slander and libel claims.

[¶5] The Reilly plaintiffs subsequently filed an amended complaint, which dropped Foster as a plaintiff, added defendants, and added two additional counts. The two new counts, however, sought the same injunctive relief requested in the original complaint, that is, to seat Reilly as a board member. The amended complaint also alleged that relief was available to the Reilly plaintiffs pursuant to 13-A M.R.S.A. § 621 (1981), repealed by P.L. 2001, ch. 640, § A-1 (effective July 1, 2003), which pertains to judicial review of domestic corporation elections. The two slander counts, although renumbered, remained basically the same as in the original complaint. The club delivered the amended complaint to Tudor and asked it to reconsider its earlier denial of coverage. The insurer again denied coverage.

[¶6] After successfully defending itself in the Reilly action, the club filed the instant suit against Tudor for breach of contract and sought a declaration that Tudor had a duty to defend the club against the Reilly lawsuit and damages for the club's costs of defense. The club also sought to cover its attorney fees in this case. The court granted the club's motion for partial summary judgment and declared that Tudor had a duty to defend the Reilly lawsuit. The court denied the club's request to find that Tudor's duty to defend was clear under Maine precedent and that Tudor was liable for the club's attorney fees in the instant suit.

[¶7] The club and Tudor stipulated that the club had incurred costs of $34,719.73 in defense of the Reilly lawsuit, of which $12,719.73 were incurred after Reilly filed the amended complaint. The court issued a judgment for the club against Tudor in the amount of $12,719.73 plus costs and interest.

II. DUTY TO DEFEND

[¶8] We review a summary judgment de novo. McLaughlin v. Superintending Sch. Comm. of Lincolnville, 2003 ME 114, ¶ 11, 832 A.2d 782, 785. To determine whether an insurer has a duty to defend, we compare the complaint in the underlying action with the insurance policy. Found. for Blood Research v. St. Paul Marine & Fire Ins. Co., 1999 ME 87, ¶ 4, 730 A.2d 175, 177. The duty to defend arises if there is any potential basis for recovery against the insured and the recovery is an insured risk. Gibson v. Farm Family Mut. Ins. Co., 673 A.2d 1350, 1352 (Me. 1996). However, we do not speculate about causes of action that were not stated. We recognize that an insurer's duty should not depend on the skill of the drafter of the complaint against the insured. Travelers Indem. Co. v. Dingwell, 414 A.2d 220, 226 (Me. 1980). Furthermore, our rules of notice pleading favor a broad construction of the duty to defend. See Gibson, 673 A.2d at 1352

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[¶9] The policy stated that Tudor would pay all losses arising from a claim against any insured for any wrongful act. It further stated that Tudor "shall have the rights and duty to defend a claim . . . seeking damages on account of a Wrongful Act." "Loss" was defined as "money damages, judgments, settlements and Defense Costs." "Wrongful Act" was defined as "any actual or alleged breach of duty, neglect, error, misstatement, misleading statement or omission" by any insured or the club itself. The term "insured" included the club's directors and officers. The policy contained a list of exclusions and provided that the insurer was not liable for losses arising out of claims for "libel or slander" or for claims "seeking relief, or redress, in any form other than money damages." The club concedes that Tudor had no duty to defend against the slander counts in the Reilly complaint.

[¶10] The Reilly complaint alleged that the actions of the club and its directors were illegal when they conducted a recount of the election of the directors, invalidated the election, and held a new election. It alleged that certain directors of the club acted maliciously in accusing Reilly of tampering with the ballots of the first election and that the directors' accusations were false and slanderous.

[¶11] Both the complaint and the amended complaint contained numerous paragraphs alleging facts that pertained to all counts. Each count was set forth separately in several paragraphs; each count had its own prayer for relief; and each prayer was specific in describing the requested relief. All of the requests for relief were for injunctive relief except for the slander counts, which requested damages against three of the defendants "for their slander."

[¶12] Tudor argues that it had no duty to defend the club against the Reilly complaint because the complaint sought injunctive relief and not monetary damages with the exception of the allegation of damages in the slander counts. However, the fact that the complaint itself did not request monetary damages, in its prayers for relief, does not end the matter. A court can grant relief to a plaintiff that is not requested in a complaint if the plaintiff is entitled to the relief and the judgment is not granted by default. M.R. Civ. P. 54(c). Thus, we must look to the allegations in the underlying complaint to determine whether they would support an award of damages even though damages were not requested in the non-slander claims.

[¶13] The club argues that there was a...