325 F. Supp. 3d 198
D. Me.2018Background
- Zurich American Insurance Company (ZAIC), successor to Assurance Company of America (ACA), issued three commercial general liability policies at issue; all cover "bodily injury" from an "occurrence" (defined as an "accident").
- Plaintiffs in underlying suit (Veilleux and Chon) filed a Second Amended Complaint (SAC) against Electricity Maine LLC, Spark Holdco LLC, Emile Clavet, and Kevin Dean asserting RICO, UTPA, negligence, negligent and fraudulent misrepresentation, unjust enrichment, and breach of contract. Defendants seek a defense from ZAIC.
- ZAIC seeks a declaratory judgment that it owes no duty to defend, arguing the SAC alleges intentional, not accidental, conduct and does not seek bodily injury damages within policy coverage.
- Defendants move for summary judgment arguing the SAC alleges negligence (and alternative pleading) and that emotional distress (mental anguish) damages could be awarded under the negligence theory, which the policies treat as "bodily injury."
- The core legal question is whether, under Maine law's comparison test, the SAC (read broadly) reveals any possibility that covered "bodily injury" from an "occurrence" could be recovered—thereby triggering ZAIC's duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the SAC alleges an "occurrence" (i.e., accidental conduct) | ZAIC: Allegations describe intentional "scheme," fraud and deception, so no "accident." | Defendants: Negligence count pleads alternative theory; misleading conduct can be negligent; duty to defend is broad. | Court: The negligence count plausibly alleges an occurrence; insurer must defend. |
| Whether the SAC can give rise to "bodily injury" (mental anguish) damages | ZAIC: SAC does not plead bodily or emotional injury; relief is economic only. | Defendants: Prayer for "actual damages" could include emotional distress; Maine law allows emotional damages in negligence. | Court: Possibility of emotional distress exists on negligence claim; policies cover "mental anguish" as bodily injury. |
| Whether duplicative or legally insufficient pleading negates duty to defend | ZAIC: Negligence is duplicative of negligent misrepresentation and therefore should be ignored. | Defendants: Alternative/possibly insufficient claims still invoke duty to defend; courts should not parse legal sufficiency at threshold. | Court: Even legally insufficient claims can trigger duty to defend; negligence count must be considered. |
| Overall duty to defend on the SAC | ZAIC: No duty to defend under policies. | Defendants: ZAIC owes duty to defend. | Court: ZAIC's motion denied; Defendants' motion granted — ZAIC has a duty to defend. |
Key Cases Cited
- Harlor v. Amica Mut. Ins. Co., 150 A.3d 793 (Me. 2016) (explains Maine's comparison test and that emotional distress damages can trigger duty to defend)
- Travelers Indem. Co. v. Dingwell, 414 A.2d 220 (Me. 1980) (even legally insufficient complaints can give rise to duty to defend if they show intent to state a covered claim)
- Auto Europe, LLC v. Conn. Indem. Co., 321 F.3d 60 (1st Cir. 2003) (ambiguities resolved in favor of duty to defend; low threshold for triggering defense)
- Me. Bonding & Cas. Co. v. Douglas Dynamics, Inc., 594 A.2d 1079 (Me. 1991) (court should not base duty-to-defend ruling on novel legal insufficiency)
- Mitchell v. Allstate Ins. Co., 36 A.3d 876 (Me. 2011) (insurer must defend if any cause of action alleged could fall within policy coverage)