Oxford Aviation, Inc. v. Global Aerospace, Inc.
680 F.3d 85
1st Cir.2012Background
- Oxford Aviation refurbished an Airlarr aircraft under a 2006–2007 contract and completed work including repairs and installations.
- Airlarr sued Oxford in Maine state court in 2010 for breach of contract, express/implied warranties, and other claims, including a cracked side window occurring during flight home.
- Oxford notified Global Aerospace, its CGL insurer, of the suit and sought a defense; Global denied coverage and defense duties.
- Global removed the case to federal court, and the district court granted summary judgment for Global, holding no duty to defend due to policy exclusions.
- Oxford appealed; the First Circuit reviewed de novo the duty to defend and Maine law governs; the case hinges on whether any allegations fall within coverage notwithstanding exclusions.
- The court vacated the district court’s ruling, held there is at least a realistic possibility of coverage for the cracked window, and remanded for entry of judgment consistent with this decision; attorney’s fees denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend standard in Maine law | Oxford argues the complaint creates potential coverage. | Global argues exclusions defeat any defense obligation. | Duty to defend exists if any claim plausibly within coverage. |
| Coverage A applicability to Airlarr’s damages | Window damage could be a covered property damage arising from Oxford’s aviation operations. | Coverage limited by exclusions targeting faulty workmanship. | Coverage can apply to the in-flight window crack despite some exclusions. |
| Exclusion (j)(6) Your work vs. products-completed operations | Damage to the cracked window may be within your work or products-completed operations. | Exclusions bar coverage for damage to the insured’s own work or products. | Your work exclusion does not defeat the duty to defend for the cracked window; the exclusion’s scope is narrower here. |
| Exclusion (k) Your product and (l) products-completed operations | Window could be part of a product or product’s completed operations. | Exclusions apply to defects in the insured’s products or completed work. | Exclusions (k) and (l) do not categorically defeat the duty to defend for the window damage. |
| Exclusion (m) Impaired property | Loss of use may fall under impaired property. | Impaired property excludes losses without physical injury; not applicable to window itself. | Exclusion (m) does not negate the duty to defend for the cracked window damage. |
Key Cases Cited
- Peerless Ins. Co. v. Brennon, 564 A.2d 383 (Me. 1989) (duty to defend hinges on exclusions, not just coverage)
- Me. Mut. Fire Ins. Co. v. Gervais, 715 A.2d 938 (Me. 1998) (courts construe coverage terms like 'accident' generously)
- Vigna v. Allstate Ins. Co., 686 A.2d 598 (Me. 1996) (interpretation of 'occurrence' and coverage limitations)
- Travelers Indem. Co. v. Dingwell, 414 A.2d 220 (Me. 1980) (scope of the insurer’s defense obligation and coverage construction)
- Penney v. Capitol City Transfer, Inc., 707 A.2d 387 (Me. 1998) (insurer defense duties and coverage interpretation principles)
- Baywood Corp. v. Me. Bonding & Cas. Co., 628 A.2d 1029 (Me. 1993) (use of Maine-law interpretation in insurance disputes)
- Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365 (5th Cir. 2008) (related analysis of exclusions in CGL policies)