Hansen v. Sentry Insurance Company
756 F.3d 53
1st Cir.2014Background
- Hansen, a former Wilcox vice president, founded ALST and faced Wilcox-initiated litigation alleging unfair competition and misappropriation of trade secrets.
- Hansen sought defense and indemnity from Sentry under Wilcox's Commercial General Liability Policy; Sentry denied coverage.
- The policy named Wilcox as the sole insured, with insured status for executive officers only with respect to duties as Wilcox officers or directors.
- Underlying claims include disparaging Wilcox, misappropriation of trade secrets, and competitive acts by Hansen through ALST while leveraging Wilcox confidential information.
- Sentry denied coverage on grounds that damages alleged fell outside the policy period and outside the scope of Hansen’s duties as a Wilcox officer; Hansen filed a coverage action in diversity, and the district court granted summary judgment for Sentry.
- On appeal, the First Circuit assessed whether any coverage existed under Coverage B for personal and advertising injury arising from Hansen’s alleged acts during his Wilcox tenure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Coverage B apply to personal and advertising injury here? | Hansen claims the Underlying Complaint may allege injury arising from his duties as VP within policy period. | Sentry argues injuries arise from ALST, not Wilcox, and not within covered duties; intent breaches fiduciary duties outside coverage. | No duty to defend; injuries do not arise out of Wilcox's business or Hansen's duties. |
| Do the alleged damages arise out of Wilcox's business and fall within the policy scope? | Damages may have occurred during the policy period and relate to Hansen’s VP duties. | Damages arise from Hansen's ALST activities and are not Wilcox's business. | Damages arise from ALST, not Wilcox's business; not covered. |
| Is Hansen an insured with respect to his duties as Wilcox's officer for the alleged acts? | If statements were made during his vice presidency, he could be covered. | Even if statements occurred during tenure, the acts breach fiduciary duties and are outside the officer duties scope. | Hansen not insured for the alleged acts; fiduciary breaches fall outside the policy. |
Key Cases Cited
- Great American Dining, Inc. v. Philadelphia Indem. Co., 62 A.3d 843 (NH 2013) (interpret policy language and ambiguity rules; insurer bears burden of noncoverage)
- Ross v. Home Ins. Co., 773 A.2d 654 (N.H. 2001) (insurer obligated to defend when pleadings alleged covered liability)
- White Mtn. Cable Constr. Co. v. Transamerica Ins. Co., 631 A.2d 907 (N.H. 1993) (insurer's duty to defend based on underlying complaint's purpose)
- Johnson Shoes, Inc. v. U.S. Fidelity & Guar. Co., 461 A.2d 85 (N.H. 1983) (burden of establishing noncoverage on insurer)
- EnergyNorth Natural Gas, Inc. v. Century Indem. Co., 452 F.3d 44 (1st Cir. 2006) (apply New Hampshire law in coverage disputes; de novo interpretation)