Norfolk & Dedham Mutual Fire Insurance v. Cleary Consultants, Inc.
958 N.E.2d 853
Mass. App. Ct.2011Background
- Cleary defendants are named insureds under a Norfolk homeowners-style business policy with personal and advertising injury coverage.
- Towers filed an MCAD discrimination charge alleging sexual harassment by Adelman and related invasion of privacy and slander claims.
- Norfolk initially disclaimed defense, citing no bodily injury, property damage, or personal and advertising injury, and an employee exclusion for any bodily injury.
- Towers amended the MCAD complaint to add specific invasion of privacy and slander allegations; a supporting affidavit characterized Adelman’s harassment and witnesses.
- The trial judge held Towers’ allegations potentially fall within personal and advertising injury but found exclusion p could negate coverage; the appellate court later held exclusion p does not defeat the duty to defend.
- The court remanded to enter a judgment that Norfolk had a duty to defend and left open issues related to defense costs and counterclaims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Towers’ claims fall within personal and advertising injury coverage. | Towers’ invasion of privacy and slander allegations are within coverage. | Exclusion p precludes coverage for these claims. | Towers’ claims are within coverage; exclusion p does not bar defense. |
| Whether exclusion p negates Norfolk’s duty to defend Cleary. | Exclusion p should bar coverage for intentional/knowing injury. | Exclusion p applies to intentional acts only and not to reckless/negligent conduct; duty remains. | Exclusion p does not negate the duty to defend. |
| Whether Cleary’s state of mind can be imputed to Cleary Consultants, Inc. for purposes of exclusion p. | If Cleary knew or should have known of Adelman’s conduct, liability could be attributed to Cleary Consultants, triggering exclusion. | Imputation is inappropriate absent fully developed record; corporate liability requires careful fact-specific analysis. | Imputation did not defeat the duty to defend; exclusion not applicable as a matter of law. |
Key Cases Cited
- Sterilite Corp. v. Continental Cos. Co., 17 Mass. App. Ct. 316 (1983) (duty to defend standard; adumbration/rough sketch tests)
- Billings v. Commerce Ins. Co., 458 Mass. 194 (2010) (duty to defend standard; exact formulation of 'roughly sketch')
- Bagley v. Monticello Ins. Co., 430 Mass. 454 (1999) (broad interpretation of 'arising out of' towing causation)
- Transamerica Ins. Co. v. KMS Patriots, L.P., 52 Mass. App. Ct. 189 (2001) (invasion of privacy analysis; statutory reference guidance)
- Worcester Ins. Co. v. Fells Acres Day Sch., Inc., 408 Mass. 393 (1990) (reckless vs. intentional conduct; knowledge coupled with failure to protect)