Wells d/b/a Centerpoint Chimney v. Acceptance Indemnity Ins. Co.

2018 DNH 011

• Court: District Court, D. New Hampshire
• Decided: January 10, 2018
• Docket: 17-cv-669-JD
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Noah Wells d/b/a Centerpoint Chimney

v. Civil No. 17-cv-669-JD Opinion No. 2018 DNH 011 Acceptance Indemnity Insurance Company

O R D E R

Noah Wells, who does business as Centerpoint Chimney,

brought suit in state court against his insurer, Acceptance

Indemnity Insurance Company (“AIIC”), seeking a declaration that

AIIC owed him a defense and indemnification in an underlying

lawsuit and alleging that AIIC has breached its insurance

policy. AIIC removed the case to this court and moves to

dismiss on the ground that it has no duty to defend or indemnify

Wells under the terms of the policy. Wells objects. AIIC filed

a reply after the deadline for doing so. See LR 7.1(e)(1).

Standard of Review

For purposes of a motion to dismiss, the court accepts all

well-pleaded facts as true, disregarding mere legal conclusions,

and resolves reasonable inferences in the plaintiff’s favor.

Galvin v. U.S. Bank, N.A., 852 F.3d 146, 155 (1st Cir. 2017).

Taken in that light, the complaint must state sufficient facts to support a plausible claim for relief. In re Curran, 855 F.3d

19, 25 (1st Cir. 2017). The plausibility standard is satisfied

if the factual allegations in the complaint “are sufficient to

support the reasonable inference that the defendant is liable.”

In re Fidelity ERISA Float Litig., 829 F.3d 55, 59 (1st Cir.

2016) (internal quotation marks omitted).

In addition to the allegations in the complaint, the court

may also consider “documents the authenticity of which are not

disputed by the parties . . . , documents central to plaintiffs’

claim, . . . [and] documents sufficiently referred to in the

complaint.” Ironshore Specialty Ins. Co. v. United States, 871

F.3d 131, 135 (1st Cir. 2017) (internal quotation marks

omitted). For that reason, in this case, the court will

consider the insurance policy and the complaint in the

underlying suit against Wells, along with the allegations in

Wells’s complaint.

Background

Noah Wells and his company, Centerpoint Chimney, were sued

in state court by Marlin Fogg who alleges that he was an

authorized agent of one of Wells’s subcontractors on a

residential roofing project. Fogg also alleges that while

working on the project he fell off of the roof and was injured

2 as a result of the negligence of Wells and others. Wells was

insured by AIIC and provided notice of the suit to AIIC.

AIIC acknowledged receiving Wells’s notice but declined to

provide a defense or to indemnify Wells in Fogg’s suit on the

ground that two exclusionary endorsements in the policy

precluded coverage. Specifically, AIIC cited an endorsement

titled “Injury to Employees, Workers or Contracted Persons or

Insureds or Contracted Organizations Exclusion” and an

endorsement titled “Injury to Independent Contractors

Exclusion.” Wells brought suit to contest AIIC’s decision not

to provide a defense or indemnification in the Fogg suit.

Discussion

AIIC moves to dismiss Wells’s claims based on the

exclusions cited in the coverage denial letter. Wells objects,

arguing that other provisions in the policy create an ambiguity

as to whether the policy covers the claims in the Fogg suit.

Wells also argues that discovery is required to determine Fogg’s

status at the job site.

The parties do not distinguish between an insurer’s duty to

defend and the duty to indemnify. The duty to defend is

different from and broader than the duty to indemnify. Great

Am. Dining, Inc. v. Phil. Indem. Ins. Co., 164 N.H. 612, 627

(2013); accord Mass. Bay Ins. Co. v. Am. Healthcare Servs.

3 Ass’n, 172 A.3d 1043, 1049, n.12 (N.H. 2017). The duty to

defend arises at the beginning of the underlying litigation and

is based on allegations “that potentially support a covered

claim.” Id. The duty to indemnify arises only once liability

has been determined in the underlying litigation and is based on

“the facts actually established in the underlying suit.” Id.

The interpretation of the language in an insurance policy

is a legal question for the court to decide. Exeter Hosp., Inc.

v. Steadfast Ins. Co., 170 N.H. 170, 174 (2017). To interpret

policy language, the court considers “the plain and ordinary

meaning of the policy’s words in context . . . [and] construe[s]

the terms of the policy as would a reasonable person in the

position of the insured based upon more than a casual reading of

the policy as a whole.” Id. “Where an insurance policy’s

language is reasonably susceptible of more than one

interpretation, however, and one reasonable interpretation

favors coverage, we construe the ambiguity against the insurer

and in favor of coverage in order to honor the reasonable

expectation of the policyholder.” Id.

Insurers may use exclusions to limit the coverage provided

in their policies, as long as the exclusions comply with

statutory requirements. Mass. Bay, 172 A. 3d at 1049. To be

effective, the language in an exclusion “must be so clear,

4 however, as to create no ambiguity that might affect the

insured’s reasonable expectations.” Id. (internal quotation

marks omitted). “In a declaratory judgment action to determine

the coverage of an insurance policy, the burden of proof is

always on the insurer, regardless of which party brings the

petition.”1 Id. (internal quotation marks omitted).

A. Policy Provisions

In Section I, the policy provides coverage for the

insured’s liability for bodily injury “to which this insurance

applies” that is caused by an occurrence during the policy

period. Doc. 6-4, at 33. In those circumstances, AIIC will

provide a defense to the insured in a suit seeking damages for

bodily injury. The amount that AIIC will pay is limited by the

policy. AIIC is not obligated to provide a defense or pay

damages for bodily injury “to which this insurance does not

apply.” Id.

AIIC does not dispute that the Fogg suit would meet the

conditions for coverage in Section I but argues that the

insurance does not apply because of the two exclusionary

endorsements. The first endorsement states, in pertinent part,

1 Wells’s declaratory judgment claim is brought pursuant to RSA 491:22. For purposes of the motion to dismiss, AIIC focuses on the declaratory judgment claim.

5 that the insurance coverage provided in Section I of the policy

does not apply to “[a]ny person who is an ‘employee’, ‘leased

worker,’ ‘temporary worker’ or ‘volunteer worker’” for Wells.

Doc. 6-5, at 2. The second endorsement provides that the

insurance in Section I does not apply to “[a]ny independent

contractor or ‘employee’ of any independent contractor while

such independent contractor or their ‘employee’ is working: (a)

On behalf of any insured; or (b) On the job site, but not

working on behalf of any insured.” Doc. 6-6, at 2.

Wells does not dispute the meaning of the exclusionary

endorsements. Instead, Wells argues that other provisions in

the policy, specifically premiums paid for additional coverage

as shown on the Declarations page and a provision titled

“Independent Contractors Special Condition” support a reasonable

expectation that the insurance would apply to Fogg.

B. Declarations

In support of his argument that an ambiguity exists, Wells

relies on certain coverage he obtained by paying additional

premiums, as listed on the Declarations page of the policy. In

its reply, AIIC argues that the cited coverage does not apply to

Fogg’s suit.

The Declarations page shows that Wells paid additional

premiums for four classifications: chimney cleaning, masonry,

6 contractors and subcontracted work, and an additional insured.2

In support of ambiguity, Wells relies on the last two

classifications that are described on the Declarations page, as

follows:

91583 Contractors – Subcontracted Work-in Connection with Building Construction, Reconstruction, Repair or Erection-One or Two Family Dwellings

ADD’L INSURED PER FORM CG2010

Doc. 6-4, at 17.

A General Change Endorsement shows that the additional

insured added by Form CG2010 was Pinkerton Academy. Doc. 6-4,

at 7. Because the project where Fogg was injured did not

involve Pinkerton Academy, the additional insured listed on the

Declarations page does not appear to be pertinent to the

coverage issue here. As a result, to the extent a premium was

paid to add Pinkerton Academy as an additional insured, Wells

has not shown that would create an ambiguity as to whether the

exclusionary endorsements apply to Fogg’s suit.

The premium paid for “Contractors – Subcontracted Work-in

Connection with Building Construction, Reconstruction, Repair or

Erection – One or Two Family Dwellings,” however, raises a

question about coverage in this case. The roofing project was a

2 The amounts of the premiums paid were redacted by AIIC.

7 repair of a home, apparently a one family dwelling. The

additional coverage, which could be interpreted to cover Wells’s

liability for bodily injury to contractors and those doing

subcontracted work, could reasonably be understood to cover

Fogg, who alleges that he worked for a subcontractor.

In its reply, AIIC contends that the coverage for

contractors and subcontracted work is inapplicable here because

it only reflects the nature of Wells’s business and does not

change the effect of the exclusionary endorsements. That

explanation does not resolve whether the policy provides

coverage for Fogg’s claim against Wells because Fogg alleges he

was working for a subcontractor. AIIC also argues that Wells’s

interpretation of the contractors and subcontracted work

coverage is unreasonable because it would directly contradict

and render meaningless the exclusionary endorsements that

preclude coverage for independent contractors and their

employees.

At this early stage of the case, however, the parties have

not sufficiently explained the coverage for contractors and

subcontracted work to allow the court to determine as a matter

of law what the policy covers and whether an ambiguity exists.

8 C. Independent Contractors Special Condition

Wells also cites the endorsement that required him to

provide AIIC with evidence of insurance held by independent

contractors as follows:

You will provide certificates of insurance from all independent contractors providing evidence of: 1. Limits of liability equal to or greater than the limits provided by this policy; and 2. Coverage equal to or greater than the coverages provided by this policy.

However, should you fail to comply with this condition, independent contractors will be considered your “employees” and a premium charge will be made accordingly. The cost of the sublet labor for each independent contractor not in compliance will be used as the rating basis for the work they performed.

Doc. 6-4 at 32. Wells contends that that provision also

supports a reasonable understanding that the policy covered

independent contractors. If the exclusionary endorsements

preclude coverage for independent contractors, the exclusionary

endorsements appear to render the special condition endorsement

meaningless. AIIC does not explain why the policy includes the

special condition for independent contractors, along with the

exclusionary endorsements. Additional explanation is necessary

to understand the meaning of the various policy provisions.

9 Conclusion

For the foregoing reasons, the defendant’s motion to

dismiss (document no. 5) is denied.

SO ORDERED.

__________________________ Joseph A. DiClerico, Jr. United States District Judge

January 10, 2018

cc: Melissa Brill, Esq. Laura Dowgin, Esq. J. Bruce Maffeo, Esq. Peter J. Nicosai, Esq.