Farmington v. Tudor Insurnce Co.

Opinion

USCA1 Opinion

[Not for Publication]
                                [Not for Publication]

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 94-1333

                             TOWN OF FARMINGTON, ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                               TUDOR INSURANCE COMPANY

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. Morton A. Brody, U.S. District Judge]
                                            ___________________

                                 ____________________

                                        Before

                             Torruella, Boudin, and Stahl
                                   Circuit Judges.
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                                 ____________________

            Martica S.  Douglas with  whom Douglas, Whiting,  Denham &  Rogers
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        was on brief for appellants.
            Thomas V.  Laprade  with whom  Philip  M.  Coffin III  and  Black,
            __________________             ______________________       ______
        Lambert, Coffin & Rudman were on brief for appellee.
        ________________________

____________________

                                  September 2, 1994
                                 ____________________

Per  curiam.   Plaintiffs  Town of  Farmington, its
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            Board of  Selectmen, and Steven S.  Moore, the superintendent

            of  Farmington's sewage  treatment plant  (collectively, "the

            Town") filed this diversity action seeking a declaration that

            Tudor Insurance Co. ("Tudor")  has a duty to defend  the Town

            against  a suit  brought  by  Cottle Enterprises  ("Cottle").

            Cottle, the developer of a mobile home park frustrated by the

            Town's refusal to allow  more than two sewer hook-ups  a year

            at the new park, sued the Town in state court seeking damages

            because  of  the  hook-up  limitation.    A  magistrate-judge

            recommended that the district  court grant Tudor's motion for

            summary judgment, reasoning that  all of Cottle's claims fall

            within the  "inversion condemnation exclusion" clause  of the

            municipal liability  insurance policy  issued to the  Town by

            Tudor.   The  district court  adopted the  recommendation and

            entered judgment in  favor of Tudor.   This appeal  followed.

            Because our  independent analysis leads us  to the conclusion

            that Tudor is  indeed "entitled  to judgment as  a matter  of

            law," Fed. R. Civ. P. 56(c), we affirm.

                                          I.
                                          I.

                      The facts underlying this appeal are undisputed and

            adequately laid out in the written opinion of the magistrate-

            judge, see Town of Farmington v. Tudor Ins. Co., No. 93-0074-
                   ___ __________________    ______________

            B (Jan.  31, 1994).  The parties agree that Maine law governs

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the  interpretation  of the  Town's  insurance  policy.   The

            language in dispute is the following:

                      [Tudor]  shall  not  be  liable  to  make
                      payment  for Loss in  connection with any
                      claim    made   against    the   Insureds
                      allegedly, based upon or arising out of .
                      . . inverse condemnation . . . .

                                         II. 
                                         II.

                      The  Town's first  argument on  appeal is  that the

            magistrate-judge failed to  follow Maine  law in  determining

            that the  phrase "inverse  condemnation" is unambiguous.   We

            disagree.    Maine  law  favors  the  insured  in  construing

            ambiguities   in  insurance   contracts  and   encourages  an

            expansive view of the  insurer's duty to defend.   See, e.g.,
                                                               ___  ____

            Union  Mut. Fire Ins. Co. v. Inhabitants of Topsham, 441 A.2d
            _________________________    ______________________

            1012, 1015 (Me.  1982).  Nonetheless, even  if the boundaries

            of "inverse condemnation" are  not firmly settled, we believe

            the  phrase has  an  unambiguous core  meaning, namely,  "[a]

            cause  of action against  a government agency  to recover the

            value  of property  taken  by the  agency,  though no  formal

            exercise of the power of eminent  domain has been completed,"

            Black's  Law  Dictionary  740   (5th  ed.  1979).    Cottle's
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            "confiscatory  taking"  claim  (Count  I  of  its  complaint)

            clearly fits within this category.

                      The  Town next  suggests that  the magistrate-judge

            incorrectly  determined that  the  other counts  in  Cottle's

            complaint are  "based upon or  aris[e] out  of . .  . inverse

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condemnation."    Once  again, we  cannot  agree.   Like  the

            magistrate-judge,  we  think  that  Baywood  Corp.  v.  Maine
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            Bonding &  Casualty Co., 628  A.2d 1029 (Me.  1993), provides
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            the relevant  framework for  analyzing the merits  of Tudor's

            motion  for summary judgment.1  In that case, Baywood, a real

            estate developer,  sought a  declaration that  Maine Bonding,

            its  insurer, had a duty to defend  it against a lawsuit by a

            condominium   association   representing   buyers  of   units

            developed by  Baywood.  The association  alleged that Baywood

            performed faulty  work in designing  the development's  sewer

            system,  and sought compensation for the cost of replacing or

            upgrading the system.   While Maine Bonding would have  had a

            duty  to defend  Baywood  against an  allegation of  property

            damage, the  insurance policy at issue  specifically excluded

            coverage  for claims  seeking  the repair  or replacement  of

            faulty  work.  See id. at 1031.   The court held that because
                           ___ ___

            the association's claim was qualitatively different from  the

            type of third  party claim  covered by the  policy at  issue,

            Maine Bonding had  no duty to  defend Baywood.   See id.   In
                                                             ___ ___

            reaching this  conclusion, the  court focused  exclusively on

            the type of harm alleged, attaching no importance to the fact

            that the underlying  complaint charged that Baywood's  faulty

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            1.  We  note with  dismay  that, although  Baywood was  cited
                                                       _______
            prominently by the magistrate-judge,  see Town of Farmington,
                                                  ___ __________________
            slip op. at 5 n.2,  the Town chose not to mention,  much less
            distinguish, the case in its brief. 

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work  amounted to a violation  of various legal  duties.  See
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            id.  at  1030  (noting   that  the  association  had  alleged
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            "fraudulent misrepresentation, breach  of warranty, breach of

            contract,  negligence,  negligent  misrepresentation,  and  a

            violation of the uniform fraudulent transfer act").

                      An analysis of the type of harm alleged in Cottle's

            complaint leads to a similar conclusion in this case.  Cottle

            seeks  compensation for the  diminution in  the value  of his

            land caused by the  Town's regulatory actions.  Although  the

            complaint alleges  that the Town's  regulatory maneuvers  are

            violative  of  a  number  of constitutional  and  common  law

            duties, each  count seeks compensation  for the same  type of

            harm alleged in  the "confiscatory taking"  count.  In  other

            words, Cottle has not alleged  any wrongful conduct that does

            not  "arise[] out of . . . inverse condemnation."  Therefore,

            the inverse  condemnation exclusion clause and  Maine law (as

            expounded in Baywood) combine to preclude the Town's claim.
                         _______

                                         III.
                                         III.

                      For the foregoing reasons,  we affirm the  district

            court's entry of summary judgment.

                      So ordered.
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