152 F. Supp. 3d 15
D. Mass.2015Background
- Gomes rented an electric boom lift from United Rentals; Gomes (insured by Scottsdale) operated the lift at a trade show and a bystander, Ayotte, was injured.
- Ayotte sued United Rentals, Gomes and others in Rhode Island state court alleging, inter alia, negligent operation and vicarious liability of United Rentals.
- United Rentals sought defense and indemnity from Scottsdale under Gomes’s policy, which contained a blanket additional-insured endorsement. Scottsdale denied providing a defense.
- Key contractual clause in the rental agreement required the customer to maintain insurance and to provide a certificate "naming United as loss payee and additional insured"; Scottsdale contested whether this created an obligation to add United as an additional insured and the scope of such coverage.
- Scottsdale’s additional-insured endorsement limited coverage to injury "caused, in whole or in part, by" Gomes (or those acting on its behalf) and stated any coverage would be excess unless a written contract specified otherwise; the endorsement also said Scottsdale would defend if no other insurer had a duty to defend.
Issues
| Issue | Scottsdale's Argument | United Rentals' Argument | Held |
|---|---|---|---|
| Choice of law | Massachusetts law need not apply; forum law differs | Massachusetts law should govern | Massachusetts law governs for purposes of this motion (parties agreed the tests are substantially the same) |
| Ripeness of indemnification claim | Scottsdale: duty to indemnify can be decided now | United: seeks indemnity now | Duty to indemnify is unripe; declaratory relief on indemnity dismissed without prejudice |
| Contractual obligation to add United as additional insured | Contract ambiguous or only requires insurance for equipment damage; no unconditional duty to add United | Contract requires Gomes to name United as additional insured (certificate language plus cross-reference) | Contract unambiguously required Gomes to name United as additional insured; Scottsdale’s narrower reading rejected |
| Duty to defend United Rentals (including excess/primary issue) | Even if additional insured, coverage limited (excess) and other insurers may owe defense | Allegations reasonably susceptible to covered claim (including vicarious liability); Scottsdale must defend if no other insurer has duty to defend | Scottsdale owes United Rentals a duty to defend; Scottsdale breached that duty and must reimburse defense costs (and reasonable fees in this action) |
Key Cases Cited
- Adria Int’l Grp., Inc. v. Ferre Dev., Inc., 241 F.3d 103 (1st Cir.) (cross-motions for summary judgment do not alter Rule 56 standard)
- Cody v. Connecticut Gen. Life Ins. Co., 387 Mass. 142 (Mass. 1982) (insurance contracts construed by fair and reasonable meaning)
- Billings v. Commerce Ins. Co., 458 Mass. 194 (Mass. 2010) (duty to defend triggered when complaint is reasonably susceptible of coverage)
- Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387 (Mass. 2003) (insured need only show possibility of coverage; insurer excused only when allegations lie expressly outside coverage)
- Travelers Ins. Co. v. Waltham Indus. Labs. Corp., 883 F.2d 1092 (1st Cir.) (distinguishing duty to defend from duty to indemnify; indemnity depends on facts developed at trial)
- Bagley v. Monticello Ins. Co., 430 Mass. 454 (Mass. 1999) ("arising from" language construed broadly)
- Rubenstein v. Royal Ins. Co. of Am., 429 Mass. 355 (Mass. 1999) (insurer breach of duty to defend can require payment of defense costs and insurer may be liable for attorney’s fees in declaratory action)