Metropolitan Property & Casualty Insurance v. McCarthy
2014 U.S. App. LEXIS 10622
1st Cir.2014Background
- This is a First Circuit declaratory judgment case about Metropolitan Property and Casualty Insurance Company's duty to defend its insured Glynis Dixon McCormack from a lawsuit alleging a minor ward sexually and physically abused a younger boy.
- The district court held that Metropolitan had a duty to defend because the underlying complaint could support coverage not foreclosed by policy exclusions.
- Metropolitan appeals asserting three main theories to defeat defense duty: (1) all alleged abuse is sexual or for concealing sexual abuse and thus excluded by bodily injury; (2) the abuse exclusion bars all abuse by any person; (3) the policy excludes non-sexual physical abuse by an insured and the ward is within the insured’s household.
- The court reviews the duty to defend de novo, using the 'potential or possibility' standard that any fact could fall within policy coverage.
- The complaint includes non-sexual physical abuse allegations and indicates the abuser may be a ward who did not necessarily reside in McCormack’s household, creating potential coverage under the policy.
- The court concludes the abuse exclusion is ambiguous and, under applicable rules, must be read in the insured’s favor, leading to a defense duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the abuse or bodily injury exclusion defeat coverage? | Metropolitan argues the abuse/bodily injury definition excludes all alleged abuse. | McCormack argues the abuse exclusion applies broadly to insureds or all abusers, precluding coverage. | Exclusion is ambiguous; not limited to all abusers, so some alleged acts may fall within coverage. |
| Does the abuse exclusion apply only to insureds? | Abuse exclusion applies to any abuse irrespective of actor. | Abuse exclusion applies only to individuals qualifying as 'you' (insured) under the policy. | Ambiguity requires reading in insured’s favor; non-insured conduct may be outside the exclusion for duty to defend. |
| Can a non-resident or non-insured perpetrator still trigger coverage? | Ward's conduct could be considered within the policy if he is an insured or resident of the household. | Perpetrator may be a non-insured whose conduct would be outside the abuse exclusion and possibly intentional loss. | Complaint permits inference that the ward was not a resident; thus his conduct could be within policy coverage and duty to defend. |
Key Cases Cited
- Bucci v. Essex Ins. Co., 393 F.3d 285 (1st Cir. 2005) (duty to defend based on potential policy coverage)
- Mitchell v. Allstate Ins. Co., 36 A.3d 876 (Me. 2011) (duty to defend standard; ambiguity resolved in insured's favor)
- Jipson v. Liberty Mut. Fire Ins. Co., 942 A.2d 1213 (Me. 2008) (policy language read as a whole; limitations clarified by other provisions)
- Peerless Ins. Co. v. Wood, 685 A.2d 1173 (Me. 1996) (policy language read for reasonable insured understanding)
- Foremost Ins. Co. v. Levesque, 868 A.2d 244 (Me. 2005) (exclusions disfavored and construed narrowly)
- Cox v. Commonwealth Land Title Ins. Co., 59 A.3d 1280 (Me. 2013) (policy ambiguity resolved in favor of insured)