Lead Opinion
An eleven-year-old child (the child) suffered from long-term horrific abuse and on September 11, 2005, was beaten nearly to death by her adoptive mother and stepfather. The child’s legal guardian, David Murphy, brought suit in the Superior Court of the Commonwealth of Massachusetts against several defendants including the Carson Center for Human Services, Inc. (Carson Center), and one of its employees, licensed social worker Carol Field, whose patient the child was during this period. The complaint alleged that they failed to detect or report to state authorities signs of ongoing physical abuse of the child. That state court suit led to this insurance coverage litigation in federal court.
The federal plaintiffs are Valley Forge Insurance Company and American Casualty of Reading, PA, the insurers of the Carson Center and, as such, of Field as an employee of the Carson Center. The insurers sought a declaratory judgment that the allegations against the insureds in the underlying suit fall within exclusions to coverage. The district court granted the request for declaratory judgment. Valley Forge Ins. Co. v. Carson Ctr. for Human Servs., No. 09-cv-30038,
The issue is one of policy language interpretation. It is whether the policy language of an Abuse or Molestation Exclusion in a Professional Liability Coverage part and an Abuse or Molestation Exclusion in a Commercial Umbrella Coverage part precludes coverage. The language of these Exclusions precludes coverage for abuse that occurs to anyone in the insureds’ “care, custody or control.” The question is whether the Exclusions apply where, as here, at the time of the abuse the victim was not in the physical custody of the insureds and had been receiving biweekly outpatient therapeutic services from them for fourteen months covered by the policies in question. We conclude, as did the district court, that the word “care” in the Exclusions is unambiguous. We reject the defendants’ arguments, including that the term is limited to situations in which there is also “custody” and “control.” As a matter of undisputed fact, the child was in the care of the insureds as a long-term patient, and the plain terms of the Exclusions exclude liability on the part of the insurers. We affirm.
I.
Murphy filed the underlying suit in Superior Court on October 18, 2007. The
Murphy’s complaint further alleged that the negligent failure to suspect or report such abuse on the part of the Carson Center, Field, and the other providers culminated in the near-fatal brain injury the child sustained as a result of abuse by her parents on September 11, 2005, and that breach of their duties of reasonable care were substantial contributing factors to the child’s serious injuries. The child’s physical injuries, including paraplegia, are permanently disabling, and she has been left with significant and permanent mental deficits, for all of which she will require lifetime care.
Field was a social worker and therapist at the Carson Center in Westfield, Massachusetts, when she met the child on October 30, 2002. The Carson Center is a nonprofit facility that provides psychiatric, mental health, rehabilitation, and family stabilization services to the community. Field provided therapeutic services to the child over the course of the next thirty-five months. In the state suit, Field recalled approximately fifty-one in-person counseling sessions with the child; approximately twenty different meetings or telephone conferences with the child’s adoptive mother; at least four meetings with the child’s other health care providers; involvement in four of the child’s hospitalizations; eleven telephone conferences with the child’s medical providers; at least four telephone conversations with the child’s school counselors; and four conferences with the Massachusetts Department of Social Services. Field’s treatment of the child continued until the child suffered her catastrophic injuries on September 11, 2005.
This action for declaratory judgment is concerned only with Murphy’s claims in the underlying Superior Court suit for the years 2002 and 2003. All told, during the period of October 30, 2002, through December 19, 2003, Field saw the child about twenty-five times, which averages to a visit nearly every other week.
The plaintiffs insured the Carson Center from December 19, 1998, through December 19, 2003. At issue is the policy provided by Valley Forge for the period December 19, 2001, through December 19, 2002, and the policy provided by American Casualty for the period December 19, 2002, through December 19, 2003. Each of these policies had five different coverage sections, for which a single premium was paid and which contained a single policy number. The coverage parts at issue are the Professional Liability and Commercial Umbrella coverage parts. These coverage parts each contained an Abuse or Molestation Exclusion. The parties do not dispute that, absent these Exclusions, the policies would provide coverage to the Carson Center and Field for the underlying suit.
Murphy has been named as a defendant in the federal suit along with the insureds and, not surprisingly, has argued that the exclusions do not apply. His arguments overlap with those of the insureds.
II.
We review the district court’s grant of summary judgment de novo, assessing the facts and the inferences to be
The pertinent part of the Abuse or Molestation Exclusion to the Professional Liability Coverage reads:
EXCLUSION — ABUSE OR MOLESTATION
This endorsement modifies insurance provided under the following:
PROFESSIONAL LIABILITY COVERAGE FORM
The following exclusion is added to paragraph 2., Exclusions of Section I — Coverage:
This insurance does not apply to damages arising out of:
1. The actual or threatened sexual or physical abuse or molestation by anyone to any person while in the care, custody or control of any insured;....
The parallel exclusion in the Commercial Umbrella Coverage part is essentially identical to the Professional Liability Exclusion and reads:
ABUSE OR MOLESTATION EXCLUSION
The following paragraph is added to 2. Exclusions, SECTION I — Coverages:
This insurance does not apply to “bodily injury”, “property damage”, “advertising injury” or “personal injury” arising out of:
1. The actual, alleged or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured;....
No one argues that these Exclusions should be interpreted differently from one another, so we will follow the district court and the parties in referring to a single Exclusion.
Exclusions of this type for sexual or physical abuse or molestation are not uncommon for these types of insurance policies for those who have care of others. Such exclusions appear to have been in use since 1987. See Harper v. Gulf Ins. Co., No. 01-CV-201-J,
Exclusions of this sort have generally been found to be unambiguous in the face of attacks on various parts of the language used, and the insureds in these cases have included medical or therapeutic care providers, health care centers, summer camps, schools and preschools, job training programs, churches, and the like. See, e.g., Nautilus Ins. Co. v. Our Camp Inc.,
Both sides argue that the Abuse or Molestation Exclusion here is unambiguous, offering competing interpretations of its language. That competing interpretations are given does not make an exclusion ambiguous. Cont'l Cas. Co. v. Canadian Universal Ins. Co.,
Under Massachusetts law, whose canons of construction dictate the outcome, we must give the term “care” its plain and ordinary meaning. In Hingham Mutual Fire Insurance Co. v. Smith, 69 Mass.App. Ct. 1,
In this context, the plain meaning of “care” i the Abuse or Molestation Exclusion here accords with the dictionary definition that being “in the care of’ includes “charge, supervision, management: responsibility for or attention to safety and well-being.” Webster’s Third New International Dictionary 338 (1993) (illustrating the definition of “care” by using it in the phrase “under a doctor’s care”). The underlying complaint alleges the child was not only a patient of the insureds, but also that she was in the care of the Carson Center and Field when she was abused, and there is no serious dispute about this. The dispute is whether as against the facts alleged in the complaint, the term “care” as used in the Exclusion should have a more limited meaning.
A second canon of construction refutes the defendants’ attempt to limit the term “care.” “Every word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practicable.” Bos. Gas,
The core argument of the defendants is that, regardless of common meaning, the word “care” in the phrase “care, custody or control” should be treated as an insurance industry term of art, across all types of coverage, meaning “physical dominion or control.” We disagree. In the context in which it is used, the term “care” is not a technical term of art at all. Further, it is not appropriate, in any event, to turn to definitions purported to be terms of art in property insurance law to define the term. The defendants rely on certain constructions of the phrase from property and construction law, not on constructions of the Exclusions for sexual and physical abuse from liability insurance for care givers. They cite to cases and insurance treatises for the propositions that “[physical control is the hallmark of ‘care, custo
The portions of both treatises defendants quote in support of their argument explicitly are concerned solely with the “care, custody or control” of property. They make no mention of the application of that three-part term to persons. Defendants quote from a section in Couch on Insurance but omit its heading. The heading is “IV. Coverage Limitations Based on Insured’s Relationship to Property. B. Phrased in Terms of Insured’s Care, Custody, Control, Charge, and Similar Concepts.” (Emphasis added) From that section defendants quote: “Physical control is the hallmark of ‘care, custody, and control ... ’ ” but they again omit the end of that sentence: “... of another’s property.” 9 Couch on Insurance § 126:22 (emphasis added). In a related section in the same subchapter, the treatise states that “[p]olicies of liability insurance, especially those covering the operations of contractors and similar businesses, commonly contain provisions specifically excluding from coverage liability for injury or damage to property in the ‘care, custody, or control of the insured.’ ” Id. § 126:20 (emphasis added).
The defendants also cite to the Construction Law volume of the Massachusetts Practice Series, which states that “[f]or property to be considered within the care, custody or control of the insured, the insured must have been in charge of the property or exercised dominion or control over the property at the time when the property was damaged.” 57 Massachusetts Practice: Construction Law § 8.29 (2009-2010); see also id. (“One of the most common exclusions in a CGL insurance policy applicable to construction disputes is the ‘care, custody, or control,’ or ‘owned property,’ exclusion.”). By their terms, these treatise definitions of the phrase do not apply to the policies at issue here, which are concerned with the care, custody or control of a person.
The defendants also contend that Massachusetts courts have consistently interpreted “care, custody or control” to require physical dominion or control. All of the cases they cite save one concern policy language in which the exclusion is by its terms limited to the care, custody or control of property and so are not on point. See Rogala v. Farm Family Cas. Ins. Co., No. 0700049,
The one Massachusetts case defendants cite where a care, custody or control exclusion was applied to a person, and not to
By contrast, when we review case law concerning exclusions for sexual and physical abuse of persons, cases from other jurisdictions give the word “care” its plain, ordinary meaning when used in abuse or molestation exclusions similar to that at issue here. In McAuliffe v. Northern Insurance Co. of New York,
In Children’s Aid Society of Montgomery County v. Great American Insurance Co., the court considered an abuse or molestation exclusion which was substantially identical to the one at issue here and contained a “care, custody or control” clause. The court applied those terms “according to their usual English definitions” and determined that “[t]he dictionary definition of ‘care’ that is most applicable to the instant case is ‘charge, supervision^] management: responsibility for or attention to safety and well-being,’ ”
In Nautilus Insurance Co. v. Our Camp Inc., the court held that an abuse or molestation exclusion like the one here precluded coverage of an insured summer camp operator where a child attending the summer camp was abused by a co-camper. The court stated that “[t]he express language of the exclusion is worded broadly,”
Defendants rely on the doctrine that “technical terms and words of art are given their technical meaning when used in a transaction within their technical field.” Restatement (Second) of Contracts § 202(3)(b). This is a canon of construction accepted by Massachusetts courts, see W. Alliance Ins. Co. v. Gill,
Gill is a far different case from this. Gill does not support defendants’ argument that the term “care” in the context not be given its ordinary meaning, or that it must be viewed as a technical term of art, much less that its meaning must be taken from another area of insurance law covering different hazards. Nor does Gill purport to establish a rule governing interpretation of Professional Liability and Commercial Umbrella Coverage, much less for Abuse or Molestation Exclusions.
Other Massachusetts cases that cite the rule that technical terms of art should be given their technical meanings also support our conclusion. Atlantic Mutual Insurance Co. v. McFadden,
Indeed, City of Springfield cites to Davis v. Dawson, Inc.,
These cases reinforce that the plain and ordinary meaning rule applies and that the preconditions for applying the technical term of art rule are not met here. Further, they support our view that the technical term of art rule applies to the specific field of expertise involved, and does not justify abandonment of the ordinary meaning rule where that specific technical field is not involved. Indeed, in City of Springfield, the SJC cited to the Restatement (Second) of Contracts, see
Further, as the district court stated, “[t]he use of the word ‘care’ in relation to a physical object is necessarily much different from the use of the same term in relation to a child receiving medical or therapeutic services.” Valley Forge,
Moreover, we reject the defendants’ related argument that because other coverage clauses in the policies are concerned with property damage, we must adopt their two-step proposition that (1) in property damage coverage the term “care” can never mean anything other than “custody” and “control,” and (2) because the different coverage parts are all contained in one policy, the terms “care, custody or control”
The defendants make a separate argument from their technical term of art argument. They argue the district court’s construction of “care” requires that word to be construed one way in the Professional Liability Exclusion and another way in an endorsement to the Commercial General Liability (CGL) Coverage. To be precise, they point to the CGL Coverage part and to the Sexual or Physical Abuse or Molestation Specified Liability Coverage Endorsement. The CGL endorsement excludes coverage for “ ‘bodily injury,’ ‘property damage,’ or ‘personal and advertising injury’ arising out of ... [t]he actual or threatened abuse or molestation ... of a ‘patient’ or ‘resident’ of the insured while in the care, custody or control of any insured.”
While the argument is unclear, defendants appear to argue that the definition of “patient” in the CGL endorsement refers to recipients of care and that use of the ordinary meaning of the term “in the care of’ renders the word “patient” surplusage. They invoke two Massachusetts cases, J.A. Sullivan Corp. v. Commonwealth,
We go back to what we said at the start — defendants’ reading both departs from the ordinary meaning rule and equates care with custody or control and so renders “care” in that three-part term meaningless. The defendants’ precise argument assumes that under Massachusetts insurance law, the ordinary meaning rule is trumped by a no-surplus-language rule. But we see no basis for that assumption, and the cases cited to us do not stand for
In any event, we disagree, as did the district court, that there is surplusage here. As the district court recognized, a patient who received “care services” on only a single occasion or infrequently is not necessarily “in the care” of a provider in relevant terms. Valley Forge,
Finally, the defendants present arguments that the Exclusions make coverage illusory and leave them stripped of coverage that an objectively reasonable person would have expected to have. See McGregor v. Allamerica Ins. Co.,
That is simply not so. There are many instances of professional malpractice that are covered, which are not concerned with sexual or physical abuse. Indeed, many usual professional malpractice claims are in that first category and are covered. The Exclusion precludes coverage on the limited occasions where the damages flow from sexual or physical abuse by another of someone in the care of the insured. As explained earlier, that is the very purpose for the Abuse or Molestation Exclusion since its creation. Nor is this a case in which application of the Exclusion defeats an objectively reasonable policyholder’s expectations of coverage. Since the Exclusion was not ambiguous, the Carter Center and Field had no reasonable expectation of coverage.
Notes
. To the extent the insurers suggest on appeal that because Field, who saw the child extensively, was in a position to recommend the child be removed from the parents and so had "control,” we disregard that argument, which was not presented to the district court.
. Cases defendants cite from other jurisdictions applying the "care, custody or control” exclusion to a person are similarly not on point because they involve the question of custody or control of a person, not a situation, as here, where a person was allegedly under an insured’s care only. See Am. Family Mut. Ins. Co. v. Nunley, No. CV 07-2276,
. By contrast with property cases, it would be rare in ordinary usage for property to be "in the care” of another without the other's having some sort of custody or control over the property.
. Further, the rule of giving meaning to every phrase is still governed by two other principles: that it be done "whenever practicable” when construed with other terms and that the construction be "a workable and harmonious means for carrying out and effectuating the intent of the parties.” J.A. Sullivan Corp. v. Commonwealth,
. The variant of this argument as to Coverage D of the CGL Coverage fails for similar reasons. The parties agree Coverage D is inapplicable to this matter, and it is not contained in the Umbrella policies.
. We also note the tension between this argument by defendants and their argument that the term "care, custody or control” must not be given its plain and common meaning, but its "accepted meaning in the insurance industry” as to property insurance. We have rejected the term of art argument, reinforcing the conclusion that there could be no reasonable expectation of coverage. See Aguiar v.
Dissenting Opinion
dissenting.
The insurers’ interpretation of the phrase “care, custody or control,” which the majority has adopted, is certainly rational. However, I am not persuaded that the policy language indisputably supports this interpretation. In my view, the interpretation offered by the defendants is equally (if not more so) rational. Because I think my colleagues got it wrong when they disregarded the defendants’ interpretation — rendering erroneous their conclusion that there is no insurance coverage — I dissent.
I.
Under Massachusetts law, ambiguity exists when the language in an insurance policy “is susceptible to more than one rational interpretation.” Brazas Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins. Co.,
In the property context, courts have consistently read the expression “care, custody or control” to denote physical dominion or control. See, e.g., Acadia Ins. Co. v. Peerless Ins. Co.,
The majority says it does not, dismissing the Massachusetts cases that defendants cite to as inapplicable because they only address “care, custody or control” of property or because, with respect to the one case that involved “care, custody or control” of a person, custody was not disputed. However, I take something different from these cases. In particular, this case law demonstrates that in the instances where Massachusetts courts have applied an exclusion that required “care, custody or control,” the insured actually exercised physical dominion or control over a person or property. See Jefferson Ins. Co. of N.Y. v. City of Holyoke,
Further endorsement for defendants’ standpoint is found in the fact that Massachusetts courts accept the canon of construction that technical terms and words of art are given their technical meaning when used within their technical field. See Davis v. Dawson, Inc.,
First, the majority distinguishes the various Massachusetts cases that apply the canon because they either involve a different technical field, see W. Alliance Ins. Co.,
What is more, this ordinary meaning reading of “care” advocated by the majority is not ironclad. “Words in an agreement are given their ordinary and usual sense ‘unless it appears that [the words] are to be given a peculiar or technical meaning.’ ” City of Springfield,
As for the majority’s slant that the word “care” must be given meaning and effect separate from “custody” and “control”; such a reading is certainly consistent with canons of construction. Nonetheless, crediting the rationality of the defendants’ position, which I have, this canon is inapplicable since the phrase “care, custody or control” needs to be read as a whole and treated as a term of art. Furthermore, the corresponding position taken by the majority that the word “or” should be treated as disjunctive “unless the context and the main purpose of all the words demands otherwise,” Miller v. Miller,
The majority also made quick time with the defendants’ argument that the Exclusions must be read in conjunction with the other policy provisions that used the phrase “care, custody or control” but I think the argument is compelling. Courts must construe an insurance contract as a whole. See Am. Home Assurance Co. v. Fore River Dock & Dredge, Inc.,
Finally, I agree with the defendants that the insurers’ tack — now the majority’s holding — defeats the reasonable expectation of an insured. When construing insurance polices, Massachusetts courts “consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered.” McGregor v. Allamerica Ins. Co.,
III.
This brings me to the end result. Where there are two rational interpretations of policy language, the insured is entitled to the benefit of the one that is more favorable to it. See Makrigiannis v. Nintendo of Am., Inc.,
These canons of construction point in only one direction. Faced with two rational interpretations of an exclusionary clause, we must strictly construe the Exclusion against the insurers, applying the interpretation of “care, custody or control” that is most beneficial to the defendants (i.e., the phrase requires physical dominion or control). Because neither Field nor the Carson Center exercised any such dominion or control over the child at the time the abuse took place, the Exclusion does not apply and coverage for the claims asserted exists. I therefore dissent.
. The majority cites to a string of cases for the proposition that abuse and molestation exclusions are generally found to be unambiguous. I do not find these cases particularly helpful. Two of the cases dealt with exclusions that did not contain the critical language. See Insights Trading Grp., LLC v. Fed. Ins. Co., Civil Action No. RDB-10-340,
The only case that did involve consideration of the verbiage "care, custody or control” was Children's Aid Soc’y of Montgomery Cnty. v. Great Am. Ins. Co., Civ. A. No. 91-7778,