78 F.4th 53
1st Cir.2023Background
- On March 17, 2021 an arsonist destroyed the "State Building" on the Brockton Fairgrounds, owned by BAS Holding Corp.; BAS notified its insurer, Philadelphia Indemnity, the same day.
- Philadelphia investigated, issued a reservation of rights citing potential vacancy exclusion and the Policy's cooperation/EUO provisions, and served document requests; BAS produced 700+ documents.
- Philadelphia requested an examination under oath (EUO) and BAS designated Susan Rodrigues (Operations Coordinator) to testify on August 3; Rodrigues answered many questions, identified six people (including BAS president/owner George Carney) who might have additional information, and agreed to follow up on questions she could not answer immediately.
- Philadelphia then asked (Aug 4) for EUOs of the six individuals and proposed Aug 19 for Carney; BAS replied it would respond further and on Aug 9 objected to multiple EUOs as not "reasonably required" but said it would consider further requests if Philadelphia explained the factual basis.
- Philadelphia denied the claim on Aug 13 partially for "refusing" to participate in EUOs and sued in September 2021 seeking declarations (including that BAS breached the EUO condition); the district court granted summary judgment for Philadelphia, finding BAS failed to cooperate by not producing Carney.
- The First Circuit vacated that judgment and remanded, holding the record did not show a willful, unexcused refusal to submit to an EUO: BAS produced a designee who testified substantively, BAS asked for justification for additional EUOs, and Philadelphia denied the claim before any EUO was missed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BAS willfully and without excuse refused to submit to an EUO of Carney, permitting Philadelphia to disclaim coverage | BAS’s Aug 4 and Aug 9 emails were categorical refusals to produce Carney; Rodrigues was incapable of testifying on the requested topics | BAS never willfully refused: its emails promised further response, objected only to multiple, unexplained EUOs, and Rodrigues was a proper, knowledgeable designee | Reversed: on this record BAS did not willfully and unexcusedly refuse; summary judgment for Philadelphia vacated and matter remanded |
| Whether this Court should resolve other coverage defenses (e.g., vacancy exclusion) on appeal | Philadelphia urged broader affirmance of its denial based on other Policy provisions | BAS argued issues unresolved below should be decided in district court first | Court declined to address other coverage defenses and remanded for further proceedings |
Key Cases Cited
- Mello v. Hingham Mut. Fire Ins. Co., 656 N.E.2d 1247 (Mass. 1995) (attendance at reasonably requested EUOs is a condition precedent to coverage)
- Lorenzo-Martinez v. Safety Ins. Co., 790 N.E.2d 692 (Mass. App. Ct. 2003) (insurer may disclaim coverage for a willful, unexcused refusal to submit to an EUO)
- Darcy v. Hartford Ins. Co., 554 N.E.2d 28 (Mass. 1990) (insured's failure to cooperate can justify disclaimer where insurer is prejudiced)
- Hanover Ins. Co. v. Cape Cod Custom Home Theater, Inc., 891 N.E.2d 703 (Mass. App. Ct. 2008) (insurer may deny coverage after repeated EUO failures and intentional obstruction)
- Miles v. Great N. Ins. Co., 634 F.3d 61 (1st Cir. 2011) (affirming denial where insureds failed to answer at EUOs)
- Ellis v. Safety Ins. Co., 672 N.E.2d 979 (Mass. App. Ct. 1996) (insurer free from coverage obligations where insured missed multiple EUOs)
- Ferrari v. Vitamin Shoppe Indus., 70 F.4th 64 (1st Cir. 2023) (summary judgment standard review)
- Motorists Comm. Mut. Ins. Co. v. Hartwell, 53 F.4th 730 (1st Cir. 2022) (summary judgment standard and viewing evidence for nonmovant)