387 F. Supp. 3d 157
D.D.C.2019Background
- On Sept. 8, 2013, Laura and Robert Reagan were injured when a vehicle struck the rear of a pedicab operated by Dennis Suozzi and owned by Boston Rickshaw LLC. The Reagans sued Suozzi and Boston Rickshaw for negligence in Massachusetts state court.
- Atain Specialty Insurance issued a Commercial General Liability policy to Boston Rickshaw for Apr. 5, 2013–Apr. 5, 2014, which included an Aircraft/Auto/Watercraft exclusion (Exclusion (g)) as amended by endorsement.
- The amended exclusion disclaims coverage for "bodily injury . . . arising out of or in connection with any 'auto' . . . whether or not owned, maintained, used . . . or provided to another by any insured." The policy defines "auto" to include land motor vehicles subject to compulsory insurance laws.
- Atain filed this declaratory-judgment action seeking a ruling that it has no duty to defend or indemnify Suozzi or Boston Rickshaw. Atain moved for judgment on the pleadings under Fed. R. Civ. P. 12(c).
- The court treated the duty-to-defend issue as ripe (even if duty to indemnify might not be) because the duty to defend is determined from the underlying complaint and the policy language.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Atain owes a duty to defend under the policy given Exclusion (g) | Exclusion is ambiguous and should be read to apply only to autos connected to insured (i.e., autos owned/operated/entrusted to Boston Rickshaw); thus Atain must defend | Exclusion unambiguously bars coverage for bodily injury "arising out of any 'auto'" whether or not tied to the insured; Reagans' injuries arose from an auto collision, so no duty to defend | Court held exclusion unambiguous and applied to any auto; Atain has no duty to defend or indemnify |
| Whether the Reagans' injuries "arose out of" an auto (causation standard) | Reagans argued intervening negligent lane change by Suozzi broke causation chain, so injuries did not "arise out of" the other auto | Atain argued Massachusetts uses expansive "arising out of" (but-for) test, so injuries from the collision arose out of an auto | Court applied Massachusetts "arising out of" (but-for) test and found injuries arose out of an auto, so exclusion applies |
| Whether interpretation should favor insured based on reasonable expectations | Reagans urged that a reasonable pedicab operator would not expect exclusion to bar coverage for autos outside their control | Atain argued reasonable-expectation rule applies only if policy language is ambiguous; here it is not | Court declined to apply reasonable-expectation relief because policy language was unambiguous |
| Ripeness of declaratory judgment on duty to defend/indemnify | Reagans argued indemnity question is not ripe and discovery incomplete | Atain argued duty to defend is ripe and can be decided from complaint and policy | Court held duty-to-defend is ripe and dispositive; since no duty to defend, no duty to indemnify follows under Massachusetts law |
Key Cases Cited
- Bagley v. Monticello Ins. Co., 430 Mass. 454 (Mass. 2000) (if no duty to defend, no duty to indemnify; "arising out of" construed broadly)
- Finn v. Nat. Union Fire Ins. Co. of Pittsburgh, Pa., 452 Mass. 690 (Mass. 2008) ("arising out of" incorporates a broader, but-for style causation)
- Scottsdale Ins. Co. v. Torres, 561 F.3d 74 (1st Cir. 2009) (duty to defend assessed by whether underlying complaint is reasonably susceptible to coverage)
- Jacobs v. U.S. Fid. & Guar. Co., 417 Mass. 75 (Mass. 1994) (plain policy language controls; interpret words by fair meaning)
- Brazas Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d 1 (1st Cir. 2000) (ambiguity exists only when policy language admits more than one rational interpretation)
- Certain Interested Underwriters at Lloyd's, London v. Stolberg, 680 F.3d 61 (1st Cir. 2012) (reasonable expectations considered only when policy language ambiguous)
- Minden v. Atain Specialty Ins. Co., 788 F.3d 750 (8th Cir. 2015) (contrasting decision under Missouri law interpreting similar endorsement)
- United States v. Laraneta, 700 F.3d 983 (7th Cir. 2012) (series-qualifier grammatical principle: a modifier applies to all items in a series)