CERTAIN INTERESTED UNDERWRITERS v. Stolberg
2012 U.S. App. LEXIS 9941
| 1st Cir. | 2012Background
- Stolberg owned property in Cambridge, MA and planned condo renovation; purchased a CGL policy from Lloyd's; policy excludes certain injuries via Contractors Exclusion, Employees Exclusion, and Workers' Compensation Exclusion.
- Romero, an alleged STBC employee, sued Stolberg in MA state court for on-site injuries; Lloyd's provisionally defended but sought a declaration that defense/indemnity were not owed.
- Romero’s claim would be covered absent exclusions; Lloyd's moved for summary judgment arguing Contractors Exclusion applies.
- Stolberg cross-moved, arguing Employees Exclusion renders coverage; district court referred to magistrate, who recommended granting Lloyd's and denying Stolberg’s motion.
- Court analyzed under MA law in diversity; policy interpretation is a question of law; ambiguities are construed against the insurer; exclusions are to be read harmoniously.
- Court affirmed summary judgment for Lloyd's, holding Contractors Exclusion cleanly excludes coverage and Employees Exclusion does not create coverage when read with Contractors and Workers’ Comp Exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Contractors Exclusion bars coverage | Stolberg argues language is broadened by contract, creating ambiguity. | Lloyd's Contractors Exclusion unambiguous and controls. | Contractors Exclusion unambiguously excludes coverage. |
| Whether Employees Exclusion creates coverage when Contractors Exclusion applies | Employees Exclusion should provide coverage when workers’ comp compliance exists. | Exclusions read harmoniously; Contractors Exclusion overrides. | No coverage under Employees Exclusion in presence of Contractors Exclusion. |
| Whether reasonable expectations can overcome unambiguous exclusions | insured reasonably expected coverage for Romero’s claim. | Reasonable expectations do not defeat clear exclusions. | Reasonable-expectations doctrine inapplicable; unambiguous exclusions control. |
| Whether overlaps among exclusions create ambiguity | Overlap could create gap in coverage. | Overlaps are permissible; must give effect to all terms. | Exclusions read harmoniously; no ambiguity created. |
Key Cases Cited
- Monticello Insurance Co. v. Dion, 65 Mass.App.Ct. 46 (Mass. App. Ct. 2005) (contractor injury exclusion applied broadly)
- Bond Bros. v. Robinson, 471 N.E.2d 1332 (Mass. 1984) (rejects notion that an exception creates coverage when an exclusion applies)
- Finn v. Nat'l Union Fire Ins. Co., 896 N.E.2d 1272 (Mass. 2008) (reasonable expectations do not override unambiguous exclusions)
- Allmerica Fin. Corp. v. Certain Underwriters at Lloyd's, London, 871 N.E.2d 418 (Mass. 2007) (ambiguities construed against insurer; exclusions interpreted in context)
- Hanover Ins. Co. v. Locke, 624 N.E.2d 615 (Mass. App. Ct. 1993) (interpretation should give effect to all contract terms)
- Utica Mut. Ins. Co. v. Weathermark Invs., Inc., 292 F.3d 77 (1st Cir. 2002) (Massachusetts contract interpretation principles applied; harmonize provisions)