Dawn M. Harlor v. Amica Mutual Insurance COmpany
150 A.3d 793
| Me. | 2016Background
- Dawn Harlor owned a dock and had a homeowner policy with Arnica Mutual that promised a defense for covered claims.
- Jon and Winifred Prime sued Harlor after a dispute about whether improvements to the dock removed a boat-size restriction in an easement; they asserted claims including tortious interference with an advantageous relationship, fraud, slander of title, negligent misrepresentation, and sought declaratory and punitive relief.
- Arnica was notified and refused to defend Harlor, concluding the Primes’ suit could not result in covered damages; Harlor settled the underlying suit and sued Arnica for breach of the duty to defend and for indemnification.
- The trial court granted summary judgment to Arnica; the Supreme Judicial Court vacated that judgment and held Arnica breached its duty to defend.
- The court concluded the interference claim, as pleaded, could potentially support emotional-distress (bodily injury) damages falling within Harlor’s personal liability coverage, so Arnica was required to provide a defense.
- The court remanded for entry of summary judgment for Harlor on the duty-to-defend claim and for further proceedings to determine indemnification/apportionment of the settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend | Primes’ interference claim could lead to emotional-distress/bodily injury damages covered by policy, so Arnica must defend Harlor | Underlying claims could not yield covered damages; no duty to defend | Duty to defend exists because complaint, read broadly, could potentially show covered bodily injury from emotional distress; Arnica breached duty |
| Availability of emotional-distress damages on interference claim | Such damages are potentially recoverable from interference (court need not decide definitively now) | Emotional-distress damages not pleaded and may not be recoverable | Court: not deciding definitively, but potential for emotional-distress damages was sufficient to trigger duty to defend |
| Indemnification for settlement | Harlor seeks reimbursement of settlement as consequential damages for breach | Arnica argues settlement does not prove covered loss; indemnity is separate and insurer may assert noncoverage | Indemnity is separate from duty to defend; Arnica must prove allocation of settlement between covered and uncovered claims on remand; if it cannot, it may be liable for the whole settlement |
| Attorney fees and costs | Harlor seeks fees for defense and litigating this action | Arnica conceded breach makes it liable for attorney fees and costs of underlying and declaratory actions | Arnica liable for reasonable attorney fees and costs for defending the underlying claim and for this declaratory action per statute and precedent |
Key Cases Cited
- York Ins. Grp. of Me. v. Lambert, 740 A.2d 984 (Me. 1999) (duty to defend is a question of law and insurer should not force insured to try facts to obtain a defense)
- Mitchell v. Allstate Ins. Co., 36 A.3d 876 (Me. 2011) (insurer must defend where events alleged may be shown at trial to fall within coverage)
- Irving Oil, Ltd. v. ACE INA Ins., 91 A.3d 594 (Me. 2014) (compare policy to complaint to assess duty to defend)
- Douglas Dynamics, Inc. v. Me. Bonding & Cas. Co., 594 A.2d 1079 (Me. 1991) (low threshold for duty-to-defend to avoid mini-trials)
- Travelers Indem. Co. v. Dingwell, 414 A.2d 220 (Me. 1980) (precision in pleadings not necessary to trigger duty to defend)
- Vigna v. Allstate Ins. Co., 686 A.2d 598 (Me. 1996) (accidental/occurrence analysis focuses on unintentional nature of consequences)
- Elliott v. Hanover Ins. Co., 711 A.2d 1310 (Me. 1998) (duty to indemnify is independent and narrower than duty to defend; insurer who wrongfully declines defense bears burden to prove noncoverage)