North East Insurance Co. v. Atkisson

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND,ss. CwIL ACTION STATE OF MAINE

NORTH EAST INSURANCE cumberland,5% clerk's Office ~JJPERI~RGOIJRT r: ., DOCKET NO. CV-04-772

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COMPANY JuL 11 2005

RAY ATKISSON d / b / a ATKISSON ORDER ON PLAINTIFF'S & SON CONSTRUCTION, MOTION FOR SUMMARY Defendant JUDGMENT AND DEFENDANT'S MOTION FOR

And SUMMARY JUDGMENT

ERIC SCOTT SIMONS, KEISER INDUSTRIES INC., ERIC KENWORTHY, Trustee of the Henderson Street Realty Trust, SCOT KENWORTHY, Trustee of the Henderson Street Realty Trust, and ROBERT J. JOLLY

Parties in Interest

FACTUAL BACKGROUND

., a declaratory

North East has filed a second amended complaint seelung

judgment that 1)"North East has no obligation to defend or indemnify Defendant Atkisson in the underlying action brought by Party in Interest Eric Scott Simons in the Commonwealth of Massachusetts, Mtddlesex County Superior Court Civil Action No. 03-4525" (herein "Massachusetts litigation") and that 2) "Defendant Atkisson is immune from suit from Party in Interest Simons pursuant to Maine Workers' Compensation statutes." Atlusson seeks a declaration that North East has a duty to continue to defend Atkisson in the Massachusetts litigation and an award of reasonable attorney's fees and court costs pursuant to 24-A M.R.S.A. § 2436-B (Supp. 2004).

North East issued a business owners' liability policy (herein "policy") to Atkisson, doing business as Atkisson & Son Construction, effective October 24,2002. Second Amended Complaint ¶ 21. Atkisson lured a crew, incluhng Simons, to install and complete prefabricated buildings on job sites in P,very, Massachusetts. North East's Statement of Material Facts (herein "PSMF") qI 4. There is a dispute as to whether Simons was h r e d as an employee or as an independent contractor. Simons was injured on the jobsite on August 28,2003. He applied for and received Maine Workers' Compensation benefits through Atlusson for a short period of time, before withdrawing h s claim. PSMF q[q[ 18, 19. Simons then filed a complaint in Massachusetts against Atlusson for personal injuries on December 1,2003. Atlusson's Statement of Material Facts (herein "DSMF") qI 1; Second Amended Complaint Exlubit A. North East has and continues to provide Atlusson's defense in the Massachusetts litigation. PSMF

The relevant portions of the policy provide as follows:

A) Coverages 1. Business Liability-We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury"

B) Exclusions 1. Applicable to Business Liability Coverage t h s insurance does not apply to d. Workers' Compensation and similar laws Any obligation of the insured under a workers'

compensation, disability benefits or unemployment compensation law or any similar law.

e. Employer's Liability "Bodily Injury" to;

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the "insured" or (b) Performing duties related to the conduct of the insured's business;

Second Amended Complaint Exlubit B.

North East argues that Simons was an employee and, thus, falls under parts (B)(d) (B)(e) of the zbove exclusionary !anpage. Atkisson and North East have filed cross motions for summary judgment pursuant to Maine Rule of Civil Procedure

DISCUSSION

1. Standard of Review Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a party is entitled to judgment as a matter of law. M.R. Civ. P. 56 (c);In Re Estate of Davis, 2001 VIE 106, ¶ 7, 775 A.2d 1127,1129. A fact is material when it has the potential to affect the outcome of the suit. Kenny v. Dep't of Human Services, 1999 ME 158, ¶ 3 , 740 A.2d 560, 562. An issue is genuinely disputed if sufficient evidence supporting the claimed factual dispute exists to require a choice between the parties' differing versions of the truth at trial. Id.

Both the trial and appellate courts undertake the same analysis of motions for summary judgment. The court first determines the elements of the cause of action at issue and then reviews the facts set forth in the parties' statements of material facts that are supported by appropriate record references. Curtis v. Porter, 2001 ME 158, ¶ 8, 784 A.2d 18/22.

2. Duty t o Defend and Indemnification The issue here relates to the interpretation and application of the policy's exclusion language to the pending Massachusetts litigation and the application of the rules of insurance policy language interpretation. The issue is not, as North East has argued, whether Simons was, as a factual matter, a subcontractor or an employee of Atlusson.

A duty to defend is determined by comparing the allegations in the underlying complaint with the language in the insurance policy. State Farm Mut. Auto. Ins. Co. v. Montagna, 2005 ME 68, ¶ 8, - A.2d - (emphasis added). "If there is any legal or factual basis that could be developed at trial, whch would obligate the insured to pay under the policy, the insured is entitled to a defense." J.A.J. Inc. v. Aetna Cas. 6 Sur. Co., 529 A.2d 806,808 (Me. 1987) (emphasis added). If the court finds that an insurer owes a duty to defend, the court should summarily decide in favor of the insured. Merrimack Mut. Fire Ins. Co. v. Brennan, 534 A.2d 353 (Me. 1987). Interpreting the language in an insurance contract is a question of law. Kinney v. Maine Mut. Group Ins. Co., 2005 ME 70, ¶ 18, -A.2d - (citing Foremost Ins. Co. v. Levesque, 2005 ME 34, ¶ 7,868 A.2d 244,246). "Exclusions and exceptions in insurance policies are disfavored and are construed strictly against the insurer." Id. "Any ambiguity in an insurance policy must be resolved against the insurer and in favor of coverage." Id. "An insurance contract is ambiguous if it is reasonably susceptible of different interpretations." Id. "['l?]he contract language is to be viewed from the perspective of an average person untrained in either the law or the insurance field in light of what a more casual reading of the policy would reveal to an ordinarily intelligent insured." Union Mut. Fire Ins. Co., Commercial Union Ins. Co., 521 A.2d 308, 310 (Me. 1987).

- in the Massachusetts litigation, that "Atlusson hrred Eric Here, Simons is alleging,

S. Simons as an independent contractor to work inter alia, at the construction site on the properties." Under the traditional comparison test, the Massachusetts allegation clearly brings the litigation within the contours of the policy. The Massachusetts Superior Court may, ultimately, find that Simons was Atkisson's employee; under Maine, law, the court is not permitted to make a factual determination in this regard.

However, North East argues that h s case falls into one of the exceptions to the traditional comparison test as expressed in Patrons Oxford Mut. Ins. Co. v. Garcia, 1998

M E 38,707 A.2d 384. "Except in limited circumstances, an insurer cannot avoid its duty to defend by establishing, before the underlying action has concluded, that ultimately

there will be no duty to indemnify." Id. ¶ 6,707 A.2d at 385. "[El xceptions exist where the insured, the insurer, and the injured claimant stipulate to the facts material to the

A

insurer's duty to indemnify or where the pertinent facts have been determined in other proceedings." Id. 9[ 7, 707 A.2d at 386.

Here, Athsson has not admitted or stipulated that Simons was an employee, despite the fact that he is, apparently, malung this argument in the Massachusetts litigation in order to avoid liability. North East argues that this case falls under the second listed exception, that "the pertinent facts have been determined in other proceedings." Id. However, in Patrons, the Law Court clarified t h s exception and cited State Mut. Ins. Co. v. Bragg, 589 A.2d 35,38 (Me. 1991). In Bragg, the Law Court found that an insured's criminal conviction was "sufficient to preclude relitigation of the issue of [the insured's] subjective intent." Id. North East argues that some of the facts drawn out in the discovery proceedings in the Massachusetts litigation bring this case under h s exception.

However, the Law Court in Bragg stated that h s exception is identical to the use of collateral estoppel in that "the identical issue [must be] determined by a prior final

judgment and that the party estopped had a fair opportunity and incentive to litigate A A

the issue in the prior proceeding." Id. at 37. Discovery proceedings are not a final determination for purposes of collateral estoppel. The factual determination must be the subject a "priorfinal judgment." The Massachusetts litigation has not been finalized and, thus, any alleged determinations emerging from discovery cannot bring h s case w i h n the factual determination exception.

Given that the exceptions do not apply, the allegations in the Massachusetts litigation clearly bring that case withn the coverage of the policy and the court declares that North East has a duty to continue to defend Atlusson. As for indemnification, it is premature for tlus court to make such a determination until and unless liability is established in the Massachusetts litigation. Royal Ins. Co. v. Pinette, 2000 ME 155, 9[ 3, 756

A.2d 520,522. TTlus court will stay these proceedings until the Massachusetts litigation is finally determined.

3. Atkisson's Immunity from Simons' suit Under Workers Compensation Laws

North East also makes a short and rather vague argument that it also has no duty to defend, because of the Maine Workers' Compensation Act. However, h s argument is also premised on an allegation that Simons was Atlusson's employee and not a contractor. North East seems to be attempting to circumvent the comparison test and is attempting to have h s court determine Simons' employment status. As stated above, such a factual determination would be inappropriate and premature in h s case.

The court declines to make a declaration that Atlusson is immune from suit under Maine's workers' compensation laws.

4. Attorney's Fees and Court Costs 24-A M1.R.S.A. § 2436-B states that in a declaratory judgment action "to determine an insurer's contractual duty to defend an insured under an insurance policy, if the

insured prevails in such action, the insurer shall pay court costs and reasonable 8'

attorney's fees." Here, Atlusson has prevailed against North East's declaratory judgment action, in regard to the duty to defend, and is entitled to court costs and reasonable attorney's fees so far as they relate to the duty to defend.

The entry is:

Defendants' Motion for Summary Judgment is GRANTED.

Plaintiff's Motion for Summary Judgment is DENIED.

This court declares that Plaintiff has a duty to continue to defend Defendant in the Massachusetts litigation and that Plaintiff is required to pay Defendant's court costs and reasonable attorney's fees for the duty to defend aspect of t h s case. Defendant has twenty (20) days to file an affidavit detailing its reasonable attorney's fees and court costs and

Plaintiff then has twenty (20) days within w h c h to respond. The court will, thereafter, decide if a hearing is necessary on the issue.

The court STAYS any further proceedings in this case, pending the outcome of the Massachusetts litigation.

Dated at Portland, Maine h s - day of July, 2005.

Justice, Superior Court

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