Opinion
No. 11–P–2124.
2013-02-12
Betty Anne WATERS, administratrix, v. WESTERN WORLD INSURANCE COMPANY.
A “special condition” clause in the policy provides that coverage applies “only to acts committed or alleged to have been committed ... during the policy period” (emphasis supplied). A policy exclusion provides that coverage does not apply to “damages arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured....”
By the Court (KAFKER, COHEN & TRAINOR, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
After serving nineteen years of a life sentence for murder, the plaintiff's brother, Kenneth Waters, was exonerated and released. Six months later, he died in an accident. The plaintiff, on behalf of his estate, filed suit in Federal court seeking damages from the town of Ayer and two former town employees, claiming that their unconstitutional and tortious conduct resulted in her brother's wrongful conviction and incarceration. The Federal action resulted in a settlement, pursuant to which the town assigned the plaintiff its rights against the defendant Western World Insurance Company (Western World). In the present case, the plaintiff, as assignee, has sued Western World, claiming, inter alia, that it breached its duty to defend the town. On cross motions for summary judgment, a judge of the Superior Court ruled that Western World had no duty to defend the underlying action. After de novo review, see Norfolk & Dedham Mut. Fire Ins. Co. v. Cleary Consultants, Inc., 81 Mass.App.Ct. 40, 47 (2011), we conclude that the allegations of the underlying complaint are susceptible of an interpretation that states or roughly sketches claims covered by the terms of the policies issued by Western World to the town. See Metropolitan Prop. & Cas. Ins. Co., v. Morrison, 460 Mass. 352, 357–358 (2011). Accordingly, Western World was not entitled to summary judgment. 1. The policies. Western World insured the town under six consecutive law enforcement officers liability policies, spanning the period from July 26, 1985, to July 26, 1991. The following relevant provisions appear in each of the policies. The insuring agreement provides:
“The [c]ompany will pay on behalf of the [i]nsured all sums which the insured shall become legally obligated to pay as damages because of the negligent acts, errors, or omissions of the [i]nsured as follows: [c]overage A—[p]ersonal [i]njury ... to which this policy applies, and the [c]ompany shall [have] the right and duty to defend any suit against the [i]nsured seeking damages on account of such personal injury, bodily injury or property damage even if any of the allegations of the suit are groundless false or fraudulent ...” (emphasis supplied).
A “special condition” clause in the policy provides that coverage applies “only to acts committed or alleged to have been committed ... during the policy period” (emphasis supplied). A policy exclusion provides that coverage does not apply to “damages arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured....”
The term “Personal Injury” is defined to include, inter alia, “false arrest,” “false imprisonment,” and “malicious prosecution.”
2. Allegations in relation to policy terms. We first consider whether the plaintiff's second amended complaint alleges “negligent acts, errors, or omissions” during the period of Western World's coverage, from July 26, 1985 to July 26, 1991. Among other things, the complaint alleges that the town had a policy, custom, and practice, by and through its final policymakers and supervisors and “continuing throughout [Kenneth Waters'] incarceration” of failing to adequately train and supervise employees with respect to the disclosure of exculpatory evidence (paragraphs 101–102); that the town “failed to undertake any reinvestigation to discover and then remedy the fact that undisclosed exculpatory evidence existed” (paragraph 85); that the town violated “affirmative obligations to come forward in every year [from 1982 through 2001]” (paragraph 100); and that the town ignored its affirmative duty to disclose information that would have demonstrated Kenneth Waters' innocence in the years 1983 through 2001 (paragraphs 120 & 123).
There is no disagreement that the complaint to be analyzed is the second amended complaint. Western World acknowledged as much in its brief and at oral argument.
These allegations plainly implicate acts, errors and omissions during the period of Western World's coverage. Furthermore, they leave open the potential for liability to be predicated on negligence. See Sterilite Corp. v. Continental Cas. Co., 17 Mass.App.Ct. 316, 319 (1983) (complaint need only show possibility of claim within coverage). Indeed, as to the claim of supervisory liability under 42 U.S.C. § 1983, Western World, itself, has argued and established that such claims may sound in negligence. See Western World Ins. Co. v. Harford Mut. Ins. Co., 784 F.2d 558, 563 (4th Cir.1986).
Under the explicit wording of the special condition in Western World's policies, the trigger of coverage is not when the claimant was injured, it is when the insured's negligent acts, errors, or omissions took place. Accordingly, cases involving different policy language, e.g., Billings v. Commerce Ins. Co., 458 Mass. 194, 196–197 (2010), relied upon by the motion judge, are not apposite.
Because we conclude that the complaint may be read as roughly sketching claims based on negligence, we need not reach the plaintiff's argument that the definition of personal injury is inconsistent with the terms of the insuring agreement, thereby creating an ambiguity that must be construed against the insurer.
We turn next to the exclusion for “damages arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured....” The insurer bears the burden of proving the applicability of the exclusion. See, e.g., Hanover Ins. Co. v. Talhouni, 413 Mass. 781, 785 (1992). Moreover, “[i]f the claimant's factual allegations are susceptible of an interpretation that leaves room for coverage, or are insufficiently developed, the insurer must defend unless and until it ‘demonstrates with conclusive effect on the [claimant] that as matter of fact—as distinguished from the appearances of the complaint and policy—the [claimant] cannot establish a claim within the insurance.’ “ Norfolk & Dedham Mut. Fire Ins. Co. v. Cleary Consultants, Inc., supra at 52, quoting from Sterilite v. Continental Cas. Co., supra, at 323.
The judge relied upon the exclusion sua sponte. Western World did not argue the point in its summary judgment papers, explaining that the issue need not be reached.
Here, Western World cannot demonstrate that the exclusion applies based upon the allegations of the complaint alone. The complaint contains no explicit allegations of violations of a penal statute; nor does it allege that any insured was ever charged with or convicted of criminal conduct in relation to this matter. Indeed, even if the absence of such allegations is not dispositive, the complaint alleges a variety of factual grounds for liability against even the most blameworthy of the individual insureds, including negligent and reckless conduct. It cannot be concluded based upon the complaint alone that liability necessarily would be predicated upon the willful violation of a penal statute by an insured.
3. Conclusion. The judgment is vacated, and the case is remanded for further proceedings consistent with this decision, including, potentially, the allowance of the plaintiff's motion for partial summary judgment as to the duty to defend.
Western World suggests in a footnote to its brief that, if summary judgment in its favor is reversed, it should be allowed to litigate the “unresolved” issue of late notice as an additional defense to its duty to defend. We do not decide arguments relegated to a footnote, as they do not rise to the level of appellate argument. Commonwealth v. Clerk–Magistrate of W. Roxbury Div. of the Dist. Ct. Dept., 439 Mass. 352, 361 n. 7 (2003). In any event, this is a matter of case management best addressed by the trial court, taking into account, e.g., the tracking and other procedural orders in the case, as well as Western World's election not to rely upon late notice during the prior summary judgment proceedings.
So ordered.