DIMILLO v. THE TRAVELERS INDEMNITY COMPANY
Filing
33
ORDER granting 14 Motion for Summary Judgment. By JUDGE JOHN A. WOODCOCK, JR. (MFS)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
CHRISTOPHER DIMILLO,
Plaintiff,
v.
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA,
Defendant.
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1:10-cv-00163-JAW
ORDER ON MOTION FOR SUMMARY JUDGMENT
A condominium owner seeks to enforce coverage under a property insurance
policy purchased by his condominium association. Because he has not raised a
genuine issue of material fact as to whether he has standing to enforce the terms of
the policy, the Court grants the insurance company‘s motion for summary
judgment.
I.
STATEMENT OF FACTS
A.
Procedural Background
On March 31, 2010, Christopher DiMillo filed an amended complaint in
Cumberland County Superior Court seeking a judicial declaration that Travelers
Property Casualty Company of America (Travelers) is obligated to indemnify him
for damages to his condominium and to hold him harmless for all covered losses
under the Travelers policy that inured to his benefit; he also seeks damages against
Travelers for its failure to defend and indemnify him. Notice of Removal (Docket
#1) Attach. 2 (Compl.). On April 27, 2010, the action was removed to this Court.
Notice of Removal.
On September 15, 2010, Travelers moved for summary
judgment on the grounds that Mr. DiMillo lacks standing or capacity to prosecute
his claims because he is not an insured under the policy. Def. Travelers Property
Casualty Company of America’s Mot. for Summ. J. (Docket # 14) (Def.’s Mot.). On
October 6, 2010, Mr. DiMillo responded. Pl.’s Opp’n. to Def.’s Mot. for Summ. J.
(Docket # 17) (Pl.’s Opp’n). On October 20, 2010, the Magistrate Judge granted Mr.
DiMillo leave to file a supplemental response in recognition of ―an ongoing discovery
concern‖ between the parties. Order (Docket # 21). On November 16, 2010, Mr.
DiMillo filed his supplemental response. Pl.’s Supplemental Objection to Def.’s Mot.
for Summ. J. (Docket # 22) (Pl.’s Supplemental Opp’n). On November 24, 2010,
Travelers replied. Def. Travelers Property Casualty Company of America’s Reply
Mem. in Supp. of its Mot. for Summ. J. (Docket # 25) (Def.’s Reply).
B.
Factual Background
Mr. DiMillo owns an individual condominium unit (condo) in the
Mountainside Phase IX condominium project located at 2136 Crocker Mountain
Road in Kingfield, Maine. Def. Travelers Property Casualty Company of America’s
Statement of Undisputed Material Facts ¶ 1 (Docket # 16) (DSMF); Pl.’s Opp’n to
Def.’s Statement of Material Facts ¶ 1 (Docket # 18) (PODSMF). In the fall of 2009,
Mr. DiMillo‘s condo suffered severe water damage. DSMF ¶ 2; PODSMF ¶ 2. The
resulting repairs required Mr. Dimillo to strip the condo to its studs to remediate
the damage.
Pl.’s Additional Material Facts ¶ 8 (Docket # 18) (PAMF); Def.
2
Travelers Property Casualty Company of America’s Reply to Pl.’s Additional
Statement of Facts ¶ 8 (Docket # 26) (DRPAMF).
At the time of the incident, Mountainside Phase IX and Mountain Valley
Property, Inc. maintained in force a Travelers property insurance policy (the policy).
DSMF ¶ 3; PODSMF ¶ 3. Mountainside Phase IX is the condominium association
(the Association) and Mountain Valley Property, Inc. (MVP) is the Association‘s
property manager. PODSMF ¶ 3. The policy was a condominium PAC (property
and casualty) policy effective January 1, 2009 through January 1, 2010. DSMF ¶ 4;
PODSMF ¶ 4. The only named insured on the policy was ―Mountainside Phase IX
& Mountain Valley Property Inc.,‖ and the insured premises were described as
Crocker Mountain, Burnt Mountain, Bigelow Mountain, and Carrabasset Valley
condominiums.1
DSMF ¶ 5; PODSMF ¶ 5.
After Mr. DiMillo sustained water
Mr. DiMillo moves to strike this statement in his original statement of facts on the ground that the
policy had not been authenticated by an affidavit. PODSMF ¶ 5. He also denied the fact, stating
that Travelers had ―yet to respond to discovery requests and thus Plaintiff had no way of knowing
the verified terms of the insurance policy.‖ Id.
On October 20, 2010, Travelers filed an unopposed motion to amend deadlines to respond to
Mr. DiMillo‘s concern. Unopposed Mot. to Amend Deadline (Docket # 20). Travelers attached a
proposed order, outlining a process to resolve the dispute. Unopposed Mot. to Amend Deadline
Attach 1 (Proposed Order). In it, Travelers agreed to provide agreed-upon discovery to Mr. DiMillo
and an affidavit authenticating the policy. Id. at 2. Mr. DiMillo was given an opportunity to file a
supplemental response to the motion for summary judgment. Id. The Magistrate Judge granted
Travelers‘ motion without objection and adopted its proposed procedure. Order (Docket # 21).
Pursuant to that procedure, Mr. DiMillo filed a supplemental response to the motion for
summary judgment on November 16, 2010. Pl.’s Supplemental Opp’n. There, he states that he
―removes his objection to the absence of testimony authenticating the policy.‖ Id. at 1. However, he
argues that because Travelers submitted the affidavit late, the Court should not consider it for the
purposes of this motion. Id.
This is a perplexing objection, not in keeping with the spirit of the rules. If the Court cannot
consider the underlying insurance policy in a coverage dispute, it cannot rule on the substance of the
motion, and if the parties agree (as they seem to) about the proper contents of the policy, it would
seem in the best interest of both parties to obtain a ruling on the merits, rather than attempt to
deflect a resolution on procedural grounds.
1
3
damage to his condo, the Association attempted to assign to Mr. DiMillo its right to
pursue Travelers for all claims associated with the incident.2 PAMF ¶ 1; DRPAMF
¶ 1; Pl.’s Supplemental Statement of Material Facts ¶ 17 (Docket # 23) (PSSMF);
Def.’s Resp. to Pl.’s Supplemental Statement of Material Facts ¶ 17 (Docket # 26)
(DRPSSMF).
Mr. DiMillo is a member of the Association. PAMF ¶ 14; DRPAMF ¶ 14. The
Association‘s bylaws require the Board of Directors to ―obtain and maintain to the
extent available in accordance with general business practices, insurance on the
Condominium buildings and all other insurable improvements upon the land,
including both but not limited to all of the units . . . .‖3 PAMF ¶ 15 (emphasis
Furthermore, Mr. DiMillo is asserting that he has coverage under the Travelers policy;
Travelers says he has no standing. The Court is unclear how Mr. DiMillo gains an advantage by
failing to place the policy at issue before the Court.
Finally, the Magistrate Judge addressed Mr. DiMillo‘s timeliness concern in her order
extending the discovery deadline and granting him leave to file a supplemental response. See Order.
Mr. DiMillo offers no substantive objection to the policy or denial of what Travelers stated the policy
included in paragraph 5 of its statement of facts. Accordingly, the Court deems the fact is admitted.
2 Mr. DiMillo‘s statement of fact states that the Association actually assigned him these rights, not
that it attempted to do so. PAMF ¶ 1. Travelers moves to strike that statement because Travelers
disputes the validity of the assignment and argues that whether the rights were actually assigned is
a matter of law. DRPAMF ¶ 1. Travelers admits that the Association intended to assign its rights to
Mr. Dimillo. Id. The Court agrees that the validity of the attempted assignment is a matter of law
and therefore adjusts the statement to reflect that the Association attempted to assign its rights
under the policy, and whether the assignment was effective is disputed.
3 Travelers moved to strike paragraphs 15 through 18 of Mr. DiMillo‘s statement of additional facts
on the grounds that they are irrelevant, include impermissible legal conclusions, and are not
supported by the bylaw provisions in the record. In reviewing the record, the Court noted that Mr.
DiMillo omitted pages 13 through 15 of the bylaws, which purportedly contained the supporting
language. Sensing that the omission was inadvertent and preferring to reach the merits of the
motion, the Court held a May 25, 2011 telephone conference with counsel to determine whether
there was a genuine dispute as to the content of the bylaws. On June 1, 2011, counsel informed the
Court during a follow-up telephone conference that there did not appear to be a dispute. The Court
granted Mr. DiMillo leave to submit the complete bylaws and granted Travelers an opportunity to
object to the submission. That afternoon, Mr. DiMillo submitted the complete bylaws in a
supplemental filing. Notice of Supplemental Filing (Docket # 32) Attach. 1 (Bylaws). Travelers did
not object, and if it had, the Court would have overruled it. The complete bylaws support the
quotations in Mr. DiMillo‘s statement of additional facts. Nevertheless, neither the bylaws, nor the
4
provided by Mr. DiMillo); DRPAMF ¶ 15. A certificate of insurance was to be issued
to each unit owner, showing the relative amount of insurance covering each unit.
PAMF ¶ 15; DRPAMF ¶ 15.
The insurance is paid for through the common
expenses, which are paid by each unit owner. PAMF ¶ 15; DRPAMF ¶ 15.
When Mr. DiMillo bought his condo in 2002, representatives of MVP told him
he only needed to buy a ―contents‖ policy as the Association had purchased a policy
for all other losses.4 PAMF ¶¶ 6-7; DRPAMF ¶¶ 6-7. Based on this representation,
Mr. DiMillo bought a ―contents-only‖ policy and no other insurance. PAMF ¶ 13;
DRPAMF ¶ 13.
After the damage to Mr. DiMillo‘s condo, Cindy Hammond, a
representative from the Association, told him that the Association and its insurer
would ―take care of‖ the damage to the condo.5 PAMF ¶ 9; DRPAMF ¶ 9. The
Association thought that the policy covered the damage to Mr. DiMillo‘s condo.
PSSMF ¶ 18; DRPSSMF ¶ 18. It brought a claim for damages to Mr. DiMillo‘s
condo under the policy, and Travelers denied that claim on October 7, 2009. DSMF
¶ 6; PODSMF ¶ 6.
C.
Previous Claims
other cited portions of the record supports Mr. DiMillo‘s conclusory statements in paragraphs 16
through 18 of his statement of additional facts. The Court disregards those statements.
4 Travelers moves to strike as irrelevant statements regarding Mr. DiMillo‘s and the Association‘s
perception of the extent of insurance coverage. The Court denies that request. For purposes of this
motion, the Court must view the facts in the light most favorable to Mr. DiMillo, and Mr. DiMillo‘s
defenses to summary judgment require the Court to consider the circumstances surrounding the
policy. Since the contested statements may be probative of the Association‘s subjective intent, it is
potentially relevant to this motion.
5 Travelers moves to strike this statement on the grounds that it is irrelevant ―to an analysis of the
contract between the Association and Travelers to determine whether Plaintiff has standing to sue.‖
DRPAMF ¶ 9. The Court finds it relevant to Mr. DiMillo‘s opposition to summary judgment, and
denies Travelers‘ motion to strike.
5
In 2006, Travelers paid a claim under a previous iteration of this same
Travelers policy.6 PSSMF ¶ 1; DRPSSMF ¶ 1. The underlying claim was for water
damage caused by a running toilet on the second floor, possibly due to a defective
valve. PSSMF ¶ 2; DRPSSMF ¶ 2. Travelers paid $29,971.32 on that claim for the
water damage and covered ―replacement costs‖ of ―building and contents.‖ PSSMF
¶ 3; DRPSSMF ¶ 3. Similarly, in 2010, Travelers paid a claim under the policy for
water damage to the unit located at 2174 Bigelow Road, unit 9, also in the
Association. PSSMF ¶ 4; DRPSSMF ¶ 4. The claim was for water damage caused
by an outside drain clogging and causing ―water backup.‖ PSSMF ¶ 5; DRPSSMF ¶
5.
Travelers paid $3,188.89 on that claim for water damage and covered
―replacement costs‖ and ―building and contents.‖ PSSMF ¶ 6; DRPSSMF ¶ 6.
In at least one annual policy, the underwriting documents referenced the
interior of individual units. PSSMF ¶¶ 14-16; DRPSSMF ¶¶ 14-16. In 2005, a
Travelers representative visited Maine to determine the extent of coverage for the
property under the ―General Liability and Property coverages‖ policy. PSSMF ¶ 14;
DRPSSMF ¶ 14. Travelers‘ March 2005 ―Commercial Building Valuation Report‖
did not limit valuation to the exterior portion of the property at 2135 and 2136
Crocker; it valued the interior at $68,649. PSSMF ¶ 16; DRPSSMF ¶ 16. In its
2005 ―Risk Assessment Report,‖ Travelers listed certain risks to the interior of the
Paragraphs 1 through 16 of Mr. DiMillo‘s Supplemental Statement of Material Facts refer to
information in Travelers‘ underwriting files for policies other than the policy at issue here.
Specifically, the files contain information concerning property insurance policies between Travelers
and the Association for years other than 2009. Travelers moves to strike each paragraph as
irrelevant. Generally, the Court denies these motions. Mr. DiMillo‘s defenses to this motion make
relevant the circumstances surrounding the Association‘s insurance purchases, Travelers‘
underwriting practices, and Travelers‘ handling of similar claims.
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property as risks it must assess in determining policy limits.
PSSMF ¶ 16;
DRPSSMF ¶ 16.
The underwriting file for previous iterations of the policy further made some
references to individual condominium units. PSSMF ¶¶ 8-13; DRPSSMF ¶ 8-13.
For example, Travelers permitted mortgagees of individual units to be added as
―additional insureds‖ on the Association‘s annual policies of insurance. PSSMF ¶ 8;
DRPSSMF ¶ 8. In 2006, Travelers discussed applying a credit for interior sprinkler
systems on the property.
PSSMF ¶ 10; DRPSSMF ¶ 10.
The Underwriting
Analysis for that year described the covered property as ―14 [buildings] with 1-4
units each totaling 40 units‖ with ―hardwired smoke detectors.‖
PSSMF ¶ 11;
DRPSSMF ¶ 11. The Statement of Value for that year valued the property at 2135
and 2136 Crocker at $317,304.00. PSSMF ¶ 12; DRPSSMF ¶ 12. It valued the
personal property at 2135 and 2136 Crocker at $1,000. PSSMF ¶ 13; DRPSSMF ¶
13. In 2008, Travelers calculated a policy limit of $548,872.00 on the property at
2135 and 2136 Crocker. PSSMF ¶ 9; DRPSSMF ¶ 9.
D.
The Parties’ Contentions
1.
Travelers’ Motion
Travelers contends it is entitled to summary judgment ―on the ground that
[Mr. DiMillo] lacks standing or capacity to prosecute his claims because he is not an
insured under the policy.‖ Def.’s Mot. at 2. Travelers argues that the policy ―was a
contract of insurance with the Association and not with [Mr. DiMillo].‖ Id. at 4. It
says that the Association is an entity separate from Mr. DiMillo, that the relevant
7
provisions of the insurance policy are solely between the Association and Travelers,
and that the insurance contract did not impose any obligations on Mr. DiMillo or
vest any rights in him. Id. It contends that all of this is unambiguous from the
language of the policy. Id. at 5. To emphasize the lack of ambiguity, Travelers cites
policy language providing that where property damage is covered by the policy, ―any
claim for loss must be made by the Named Insured.‖ Id. at 6.
Travelers asserts that since Mr. DiMillo is not a party to the policy he ―has no
basis to sue to enforce the contract.‖ Id. It states that there is no ―cogent reason‖
the Court should disregard the separate identities of Mr. DiMillo and the
Association. Id. at 7. It argues that, instead, a suit against the Association is ―the
appropriate route for [Mr. DiMillo] to object to the claims handling by the
Association and its insurer.‖ Id.
2.
Mr. DiMillo’s Response and Supplemental Response
Mr. DiMillo responds that he has standing to bring this suit ―under an array
of legal theories.‖ Pl.’s Opp’n. at 1. He first contends that he has standing because
the Association ―assigned its right to pursue [Travelers] for covered damages.‖ Id.
at 4.
He asserts that the ―assignment was signed by an Association official
authorized to enter into such agreements and specifically gives [Mr. DiMillo] its
rights against [Travelers].‖
Id.
He argues that ―[a]n assignee of claims ‗has
standing to pursue the assignor‘s claims‘ for money owed.‖
Id. (quoting Sprint
Commc’ns. Co. LP v. APCC Servs., Inc., 554 U.S. 269, 128 S. Ct. 2531, 2535-2541
(2008)). Mr. DiMillo observes that Travelers does not dispute that the Association
8
had a policy in force at the time of the damage. Id. at 5. He reasons that the
assignment transferred the Association‘s rights under that policy to him, giving him
standing to sue under the policy. Id.
Mr. DiMillo‘s second theory is that the Maine Condominium Act (MCA), 33
M.R.S. § 1601-101 et seq., grants him standing. Id. He states that the MCA applies
to all condominiums in the state, requires condominium associations to buy certain
property insurance for their members, and makes every individual unit owner an
insured person under such policies. Id. at 5-6. Mr. DiMillo notes that he is a
member of the Association and argues that the ―policy at issue here is a
condominium policy, which is the Association‘s attempt to comply with the statutory
strictures.‖
Id. at 6.
He reasons that he is thus a named insured by statute,
defeating Travelers‘ motion for summary judgment. Id. at 6.
Mr. DiMillo‘s third theory is that he is an intended third party beneficiary of
the policy. He argues that ―[i]f the signatories to a contract so intend, a third party
can enforce the contract against the signatory so obligated.‖
Id. (quoting
Motorsports Eng’g, Inc. v. Maserati SPA, 316 F.3d 26, 29 (1st Cir. 2002)).
Mr.
DiMillo cites the Association‘s bylaws to argue that the Association has authority to
enter into contracts on behalf of its members and must use that authority to insure
all units as required by the bylaws. Id. at 7. He asserts that the bylaws require
that such insurance be ―paid for through the common expenses that are drawn from
each unit owner.‖ Id. He contends that the Association purchased the policy in an
attempt to fulfill its obligations under the bylaws. Id. He argues that ―the policy
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specifically covered all units, including the Condo here,‖ and that ―[a] certificate of
insurance on the policy was to be given to [Mr. DiMillo], naming him as an insured
and showing the amount of coverage specifically afforded to the Condo.‖ Id.
Moreover, Mr. DiMillo assigns significance to facts in the underwriting file
for the past several years of policies between Travelers and the Association. He
asserts that the file ―contains no references to limited coverage, coverage only for
Association-owned elements, or exclusions for portions of the premises owned by
individual unit owners.‖
Pl.’s Supplemental Opp’n at 3.
He cites numerous
references to the interior portions of individual condominium units in the
underwriting file and contends that if the policy ―only insured the Association, it
would have no concern for or interest in the internal portions of the unit.‖ Id. Mr.
DiMillo asserts that because previous iterations of the policy covered both the
internal and external portions of the individual units, ―those with interests in
individual units were third party beneficiaries‖ of the policy. Id. at 4. As such, he
argues that he is ―clearly an intended third party beneficiary.‖ Pl.’s Opp’n at 7.
Mr. DiMillo‘s fourth theory is that Travelers is estopped from denying him
standing. Id. at 8. He asserts that Travelers has covered losses from water damage
to other units in his condominium project in the past. Id. He further states that
―[t]here is no evidence of any major changes‖ from the policies that covered those
losses to the policy at issue here. Pl.’s Supplemental Opp’n at 9. Mr. DiMillo argues
that by providing coverage for similar losses, Travelers ―admitted that claims for
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water losses due to toilet failures are covered events‖ 7 and ―admits that individual
unit owners . . . may seek . . . coverage for these losses.‖ Pl.’s Opp’n at 8. Mr.
DiMillo cites no law to support this theory.8 See Id. and Pl.’s Supplemental Opp’n.
at 5-7.
3.
Travelers’ Reply
Travelers addresses each of Mr. DiMillo‘s theories.
Def.’s Reply.
It first
asserts that the Association ―may not assign its rights under the policy.‖ Id. at 2. It
argues that the ―express term[s] of the insurance contract prohibit[] any such
assignment.‖ Id. It quotes the following policy language:
F.
TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS
POLICY
Your rights and duties under this policy may not be transferred
without our written consent except in the case of death of an individual
named insured.
Id. at 2-3 (quoting Travelers Policy at 0011 (Docket # 15)). Travelers contends that
―[t]his type of ‗no assignment‘ provision is valid and enforceable in Maine.‖ Id. at 3
(citing Int’l Wood Co. v. Nat’l Assur. Co. of Ireland, 59 A. 544, 545 (Me. 1904)). It
further contends that 24-A M.R.S. § 2420 ―explicitly permits clauses prohibiting
assignment.‖ Id. Travelers asserts that the policy expressly prohibits assignment
without consent, ―and no such consent was obtained.‖ Id.
Nowhere in Mr. DiMillo‘s complaint or statements of material facts does he state that the losses to
his condo were caused by a toilet failure.
8 Mr. Dimillo asserted two additional theories to defeat summary judgment in his original opposition.
Pl.’s Opp’n at 8-12. Both theories arose from Travelers‘ alleged failure to produce sufficient
documentation during discovery. Id. The discovery issues were resolved by consent of the parties
and order of the Magistrate Judge. Order. Accordingly, Mr. Dimillo abandoned these theories in his
supplemental opposition, Pl.’s Supplemental Opp’n, and the Court does not consider them.
7
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Travelers next argues that the MCA does not grant Mr. DiMillo standing. Id.
It contends that the MCA requires that individual condominium association
members be insured persons under the association‘s liability insurance coverage but
not under its property insurance coverage. Id. at 3-4. Travelers asserts that the
policy addresses the Maine statute and provides for the requisite liability coverage.
Id. Travelers cites the liability portion of the policy to point out that it expressly
names individual unit-owners as insureds, ―but only with respect to that person’s
liability arising out of the ownership, maintenance, or repair of that portion of the
premises which is not owned solely by the unit-owner or out of that person‘s
membership in the association.‖ Id. (quoting Travelers Policy Attach. 2 at 0059)
(emphasis added in Travelers‘ brief).
Travelers argues that Mr. DiMillo‘s
contention that the MCA gives him standing under the policy is rooted in his
―failure to distinguish between liability and property insurance‖ in the statutory
language. Id. Travelers further contends that this Maine-specific portion of the
policy ―highlights the fact that unit owners are not universally contemplated as
insureds under the policy, for if they were there would be no need of a provision
detailing this particular narrow coverage.‖ Id.
Travelers turns to Mr. DiMillo‘s third party beneficiary argument. Id. It
says that whether Mr. DiMillo is a third party beneficiary depends on Travelers‘
intent. Id. at 4-5 (citing Devine v. Roche, 659 A.2d 868, 870 (Me. 1995)). It asserts
that for Mr. DiMillo to be an intended beneficiary, ―the intent to benefit [Mr.
DiMillo] ‗must be clear and definite‘ on the part of the contracting parties.‖ Id. at 5
12
(quoting Devine, 659 A.2d at 870). Otherwise, Travelers maintains, any benefit
enjoyed by Mr. DiMillo as a result of the contract ―renders him a mere incidental
beneficiary,‖ without standing to sue to enforce the policy. Id. Travelers contends
that the Maine Supreme Judicial Court addressed this situation in F.O. Bailey Co.,
Inc. v. Ledgewood, Inc., 603 A.2d 466, 468 (Me. 1992), and ―held that individual
condominium owners were not third-party beneficiaries of a contract entered into by
the owner of their condo building, even though they benefited from the contract.‖
Id. Travelers asserts that there is no indication ―in the plain language of the policy‖
that the parties intended Mr. DiMillo to be a third-party beneficiary of the policy
and it argues that the facts Mr. DiMillo extracts from the underwriting file ―do not
support his contention that the policy contemplates the unit owners as anything
more than incidental beneficiaries.‖ Id.
Finally, Travelers asserts that estoppel is not a bar to summary judgment
because ―prior coverage determinations are irrelevant to [Mr. DiMillo]‘s standing.‖
Id. Travelers argues that, as a general rule, estoppel cannot expand the coverage of
an insurance policy or create a contract of insurance where none existed. Id. It
says that the only exception to this general rule in Maine ―is that ‗an insurer may
be estopped from denying coverage when the party claiming coverage has
demonstrated (1) unreasonable conduct of the insurer that misleads the insured
concerning the scope of his coverage and (2) justifiable and detrimental reliance by
the insured upon the insurer‘s conduct.‖ Id. (quoting Maine Mut. Fire Ins. Co. v.
Grant, 674 A.2d 503, 504 (Me. 1996)). Travelers contends that Mr. DiMillo has
13
presented no evidence of these elements. Id. at 7. Travelers maintains that its
determination of other claims under the Association‘s 2006 and 2010 policies has no
bearing on Mr. DiMillo‘s standing or whether his losses are covered by the 2009
policy.
II.
DISCUSSION9
A.
Scope of Analysis
Travelers‘ motion is grounded exclusively on the premise that Mr. DiMillo is
not a party to the policy and therefore does not have standing to enforce its terms.
Def.’s Mot. Under Maine law, contracts generally do not grant enforceable rights to
non-signatories. See Stull v. First Am. Title Ins. Co., 2000 ME 21, ¶ 11, 745 A.2d
975, 979; Sturtevant v. Town of Winthrop, 1999 ME 84, 732 A.3d 264; Amburgey v.
Atomic Ski USA, Inc., Civil No. 06-149-P-S, 2007 WL 4468707, at *5-6 (D. Me. Dec.
17, 2007), aff’d, 2008 WL 248637 (D. Me. Jan. 29, 2008).
The Court limits its
analysis to determining whether Mr. DiMillo has standing to enforce the terms of
the policy. The Court does not consider the merits of the claims in Mr. DiMillo‘s
Complaint or the merits of any underlying claims that have been or may be brought
under the policy for damage to his condo.
The parties apparently agree that Maine law governs the interpretation of the policy in this case.
In its motion for summary judgment, Travelers cites law from California, Oklahoma, and
Washington, D.C. See Def.’s Mot. In his response and supplemental response, Mr. DiMillo supports
his substantive contractual claims with only Maine law and common law authority. See Pl.’s Opp’n
and Pl.’s Supplemental Opp’n. Further, he argues that the Court should disregard Travelers‘
reliance on ―extra-jurisdictional precedent.‖ Pl.’s Opp’n at 5. Seeming to take Mr. DiMillo‘s cue,
Travelers relies exclusively on Maine statutory and case law, a Restatement provision adopted by
Maine courts, and a legal treatise to support the arguments in its reply. See Def.’s Reply. Neither
party has asserted that a state‘s law other than Maine‘s should govern. Nor has either party
provided the Court with information that would enable a choice-of-law analysis. Accordingly, the
Court accepts the parties‘ implicit agreement that Maine law governs the substantive claims in this
motion.
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B.
Legal Standard
A party moving for summary judgment is entitled to judgment in its favor
only ―if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.‖ Fed. R. Civ. P. 56(c)(2).
A fact is material if its resolution ―might affect the outcome of the suit under the
governing law.‖ Buchanan v. Maine, 469 F.3d 158, 166 (1st Cir. 2006) (quoting
Seaboard Sur. Co. v. Town of Greenfield, 370 F.3d 215, 218–19 (1st Cir. 2004)). An
issue is genuine ―if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.‖ Id. (quoting Seaboard Sur. Co., 370 F.3d at 218–19). The
Court views ―all facts and reasonable inferences therefrom in the light most
favorable to [Mr. DiMillo], the nonmoving party.‖ White v. R.M. Packer Co., 635
F.3d 571, 575 (1st Cir. 2011). ―When a contract is unambiguous, the trial court may
decide an issue pertaining thereto by summary judgment.‖ Fowler v. Boise Cascade
Corp., 948 F.2d 49, 54 (1st. Cir. 1991).
Under Maine law, whether a contract is ambiguous is a question of law. Am.
Prot. Ins. Co. v. Acadia Ins. Co., 2003 ME 6, ¶ 11, 814 A.2d 989, 993. ―Contract
language
is
ambiguous
when
it
is
reasonably
susceptible
of
different
interpretations.‖ Id. (quoting Portland Valve, Inc. v. Rockwood Sys. Corp., 460 A.2d
1383, 1387 (Me. 1983)). If the Court determines ―that the contract is unambiguous,
then its interpretation is also a question of law.‖ Id. (citing Acadia Ins. Co. v. Buck
Constr. Co., 2000 ME 154, ¶ 8, 756 A.2d 515, 517).
However, if the Court
determines that the contract is ambiguous, ―its interpretation is a question of fact
15
for the factfinder.‖
Id. (quoting Buck, 2000 ME 154, ¶ 8, 756 A.2d at 517).
Furthermore, pursuant to a ―long-standing rule‖ in Maine, whether an insurance
contract is ambiguous requires an evaluation of the instrument as a whole:
A contract of insurance, like any other contract, is to be construed in
accordance with the intention of the parties, which is to be ascertained
from an examination of the whole instrument. All parts and clauses
must be considered together that it may be seen if and how one clause
is explained, modified, limited or controlled by the others.
Id. (quoting Peerless Inc. Co. v. Brennon, 564 A.2d 383, 384-85 (Me. 1989)).
C.
Policy Language
Mr. DiMillo has not directed the Court to any ambiguity in the 137-page
insurance policy. The policy contains declarations, Common Policy Conditions, a
Businessowners Property Coverage Part, a Commercial General Liability Coverage
Part, and various endorsements that modify the other portions.
The Common
Policy Declarations list ―Mountainside Phase IX & Mountain Valley Property Inc.‖
and no other entities as the ―Named Insured.‖
Travelers Policy at 0002.
Mr.
DiMillo acknowledges that Mountainside Phase IX is the condo association and that
Mountain Valley Property, Inc. is ―the management company charged with
maintaining the Condo.‖ PODSMF ¶ 3. Although the policy designates unit owners
as named insureds for purposes of liability coverage, Mr. DiMillo does not allege the
policy lists him or refers to him as an insured or owner for purposes of property
coverage.10
As such, nothing on the face of the insurance agreement between
An endorsement in the policies designates unit owners as named insureds with respect to liability
coverage. Travelers Policy Attach. 2 at 0059. Mr. DiMillo‘s claim is based on property damage
coverage, Compl ¶ 22, and he does not allege that the designation of unit owners as named insureds
10
16
Travelers and the Association confers standing on Mr. DiMillo to bring this action
for property coverage under the insurance contract.
The Court turns to Mr.
DiMillo‘s other theories.
D.
Assignment
Under Maine law, signatories to insurance policies are free to choose whether
their rights and obligations are assignable. 24-A M.R.S. section 2420(1) provides
that ―[a] policy may be assignable or not assignable, as provided or permitted by its
terms.‖ This statutory language is plain enough: an insurer is permitted to forbid
an insured from assigning its policy.
Perhaps because the statutory language is unmistakable, there is no recent
case law on the issue. Tellingly, the parties cite only one Maine case dating back to
1904. See Def.’s Reply at 3, (citing Int’l Wood Co. v. Nat’l Assurance Co., 99 Me. 415,
417, 59 A. 544, 545 (1904)).11
International Wood‘s conclusion tracks section
2420(1). Id. Maine statutory and case law is also consistent with the general rule
elsewhere; Couch on Insurance states that ―[a]n insurer may by the contract of
insurance impose conditions upon the assignment of its policies.‖ 3 COUCH ON INS. §
35:1 (2010). Accordingly, the Court turns to the language of the policy to determine
whether the parties intended to impose conditions upon assignment.
The Common Policy Conditions, which apply to all Coverage Parts in the
policy, include Subsection F, ―TRANSFER OF YOUR RIGHTS AND DUTIES
in the liability portion of the policy grants him standing to bring this action. Therefore, that
designation does not raise a genuine issue of material fact for purposes of this motion.
11 On this point, Maine law enjoys an historic lineage.
International Wood cited Waterhouse v.
Gloucester, 69 Me. 409 (1879), which in turned cited Pollard v. Somerset Mut. Fire Ins. Co., 42 Me.
221 (1856).
17
UNDER THIS POLICY.‖ Travelers Policy at 0010-0011. Subsection F provides that
―Your rights and duties under this policy may not be transferred without our
written consent except in the case of death of an individual named insured.‖ Id. at
0011.
Clarifying the meaning of those pronouns, the policy provides that
―Throughout the policy, ―the words ‗you‘ and ‗your‘ refer to the Named Insured
shown in the Declarations. The words ‗we‘, ‗us‘ and ‗our‘ refer to the Company
providing this insurance.‖ Id. at 0018. The ―Common Policy Declarations‖ list the
―Named Insured‖ as ―Mountainside Phase IX & Mountain Valley Property Inc.‖ Id.
at 0002. Reading these provisions together, see Am. Prot. Ins., 2003 ME 6 ¶ 11, 814
A.2d 989, 993, it is unambiguous that the Association and MVP cannot transfer
their rights and duties under the policy without Travelers‘ written consent.
Mr. DiMillo has failed to respond to Travelers‘ argument on this point. He
has not addressed the non-assignment clause in the policy, the Maine statute,
Maine case law, and he has therefore waived objection. Astro-Med, Inc. v. Nihon
Kohden Am., Inc., 591 F.3d 1, 19 (1st Cir. 2009) (―[I]ssues adverted to . . . in a
perfunctory manner, unaccompanied by some developed argumentation, are deemed
to have been abandoned‖) (internal punctuation and citations omitted).12
Furthermore, under Maine law, a person claiming contractual rights as an assignee
has the ―the burden of proof on the issue of assignment.‖ Sturtevant, 1999 ME 84, ¶
10, 732 A.3d 264, 267. Here, there is no suggestion in this record that Travelers
Mr. DiMillo cites Sprint Commc’ns Co., LP v. APPCC Servs., 554 U.S. 269, 128 S. Ct. 2531, 2542
(2008) for the proposition that an assignee ―unequivocally‖ has standing. The Court has no quarrel
with that general proposition but the preliminary question is whether the policy is assignable to
begin with.
12
18
assigned any contractual rights to Mr. DiMillo or consented to the Association‘s
assignment to Mr. DiMillo. Even in the context of a motion for summary judgment,
where the Court is required to view the facts in the light most favorable to the nonmovant, once Travelers asserted the absence of a Travelers‘ assignment or its
consent to the Association assignment, Mr. DiMillo must produce some evidence to
sustain his burden of proof. See Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d
1, 5 (1st Cir. 2010) (stating that in a summary judgment motion, the non-moving
party must ―with respect to each issue on which she would bear the burden of proof
at trial, demonstrate that a trier of fact could reasonably resolve that issue in her
favor.
As a general rule, that requires the production of evidence that is
significantly probative.‖ (internal citations omitted)). He has not. On this record,
absent some probative evidence of a cognizable assignment, Mr. Dimillo has failed
to create a genuine issue of material fact as to whether he has standing to enforce
the policy under his assignment theory.
E.
Maine Condominium Act
Mr. DiMillo‘s statutory argument—that the MCA grants him standing to
claim property coverage under the Travelers policy—misses the mark. The MCA
provides that condominium associations in Maine ―shall maintain, to the extent
reasonably available‖ certain ―property insurance‖ and ―liability insurance.‖
33
M.R.S. § 1603-113(a). It further provides that ―Insurance policies carried pursuant
to subsection (a) must provide that: (1) ―Each unit owner is an insured person under
the policy with respect to liability arising out of his ownership of an undivided
19
interest in the common elements or membership in the association.‖ 33 M.R.S. §
1603-113(d).
The Travelers policy complies with this statutory requirement. The policy
contains an endorsement identifying unit owners as named insureds ―but only with
respect to that person‘s liability arising out of the ownership, maintenance, or
repair of that portion of the premises which is not owned solely by the unit-owner or
out of that person‘s membership in the association.‖
Travelers Policy Attach. 2 0059).
Def.’s Reply at 4 (quoting
That clause closely parallels the language in
section 1603-113(d)(1), and Travelers contends that the clause was added to address
the requirements in the MCA. Id. Consistent with the MCA, the clause designates
unit owners named insureds with respect to liability. Under the terms of Travelers
policy, if Mr. DiMillo were seeking to enforce liability coverage, under the statute
and the express language of the policy, he would likely have standing.
But Mr. DiMillo is not seeking to enforce the liability coverage of the policy.
He is seeking property coverage. The Maine statute does not require that the condo
insurer provide property coverage to the unit owners, and the Travelers policy does
not make them named insureds with respect to property coverage. Because Mr.
DiMillo‘s cause of action arises from a purportedly ―covered property damage claim
under the policy,‖ Compl. ¶ 22, and makes no mention of liability, the MCA does not
grant Mr. DiMillo standing to bring his claim.
Finally, Mr. DiMillo does not explain why the Association‘s failure to
purchase insurance required by the MCA would give Mr. DiMillo a claim against
20
the insurer for coverage the Association did not purchase. Section 1603-113 makes
condominium associations responsible for obtaining adequate insurance ―to the
extent reasonably available.‖
Although Maine occasionally requires insurers to
provide specific types of coverage in order to issue a policy in the state, see 24-A
M.R.S. § 3002, the Court is unaware of any Maine law mandating that to insure a
condo association, an insurer must provide property coverage for the unit owners.
Instead, the provision of property coverage is a matter between the condo
association and the insurer, and Mr. DiMillo‘s discontent with the scope of the
coverage the Association purchased should be directed to the purchaser, not the
provider of insurance.
F.
Third Party Beneficiary
1.
Third Party Beneficiary Law in Maine
Maine has adopted section 302 of the Restatement (Second) of Contracts to
determine whether a person is a third party beneficiary. Perkins v. Blake, 2004 ME
86, ¶ 8, 853 A.2d 752, 754-755. (citing F.O. Bailey, 603 A.2d at 468); Thompson v.
Miles, 741 F. Supp. 2d 296, 306 (D. Me. 2010). Section 302 provides:
(1) Unless otherwise agreed between promisor and promisee, a
beneficiary of a promise is an intended beneficiary if recognition of a
right to performance in the beneficiary is appropriate to effectuate the
intention of the parties and either
(a) the performance of the promise will satisfy an obligation of
the promisee to pay money to the beneficiary; or
(b) the circumstances indicate that the promisee intends to give
the beneficiary the benefit of the promised performance.
RESTATEMENT (SECOND) OF CONTRACTS § 302 (1981).
21
To prove third party beneficiary status, Mr. DiMillo must generally
demonstrate that recognition of his right to enforce the policy ―is appropriate to
effectuate the intention of the parties.‖ Perkins, 2004 ME 86 ¶ 9, 853 A.2d, 752,
755; see also Amburgey, 2007 WL 4468707, at *6-8 (analyzing the intention of both
promisor and promisee in determining whether ski equipment manufacturer was
intended beneficiary of Rental/Release Agreement between skier and rental shop).
More specifically, Mr. DiMillo must demonstrate ―the promisee, [the
Association], intended to give [him] the benefit of performance.‖ F.O. Bailey, 603
A.2d at 468. In the words of the Maine Law Court, ―[i]n order to proceed as third
party beneficiaries on a contract theory, plaintiffs must generate a genuine issue of
material fact on the issue of [the promisee‘s] intent that they receive an enforceable
benefit under the contract.‖
Id.
The F.O Bailey Court directs that ―[s]uch an
intention is gathered from language of the written instruments and the
circumstances under which they were executed.‖ Id. ―The intent must be clear and
definite.‖ Id. Moreover, it is not enough that Mr. DiMillo may have benefitted
incidentally from the policy; ―[a]n incidental beneficiary cannot sue to enforce third
party beneficiary rights.‖ Id.
2.
The Insurance Policy
The Court begins with the language of the contract.
Devine v. Roche
Biomedical Laboratories, 659 A.2d 868, 870 (Me. 1995) (concluding first that ―[n]o
language in the contract indicates BIW‘s intent to benefit third parties‖).
Mr.
DiMillo has pointed to no language in the policy that creates a genuine issue as to
22
whether the Association intended to grant an enforceable benefit to Mr. DiMillo.
The policy does not mention Mr. DiMillo by name. The liability portion of the policy
designates ―unit owners‖ as insureds but does not identify them by name, unit
number, or other personal identifiers, and specifies that the unit owners are insured
―only with respect to that person‘s liability.‖ Travelers Policy Attach. 2 at 0059.
The property coverage portion of the policy does not mention the unit owners.
There is no suggestion in the contract itself that Mr. DiMillo was intended to be a
third party beneficiary of the policy for purposes of property insurance.
3.
Relevant Circumstances
This does not end the analysis. Even absent contractual language, it remains
possible that the parties intended to benefit Mr. DiMillo. Devine, 659 A.2d at 870
(―In the absence of contract language, there must be circumstances that indicate
with clarity and definiteness that BIW intended to give an employee such as Devine
an enforceable benefit under the contract‖). The Court turns to the circumstances
surrounding the policy‘s execution. In doing so, the Court heeds the guidance of the
Maine Law Court:
In assessing the relevant circumstances, courts must be careful to
distinguish between the consequences to a third party of a contract
breach and the intent of a promisee to give a third party who might be
affected by that contract breach the right to enforce performance under
the contract. If consequences become the focus of the analysis, the
distinction between an incidental beneficiary and an intended
beneficiary becomes obscured. Instead, the focus must be on the
nature of the contract itself to determine if the contract necessarily
implies an intent on the part of the promisee to give an enforceable
benefit to a third party.
Id.
23
a.
Nature of the Association
Mr. DiMillo‘s ―circumstances‖ argument starts with the nature of the
Association. Pl.’s Opp’n at 7. He observes that he is a member of the Association
and that its members consist of all unit owners. Id. He notes that the bylaws ―force
the Association to enter into insurance agreements‖ and that they provide that the
―Board of Directors [of the Association] shall obtain and maintain, to the extent
available in accordance with general business practices, insurance on the
Condominium buildings and all other insurable improvements upon the land,
including both not limited to all of the units. . . . ‖ Id. (emphasis in Pl.’s Opp’n).
He observes that the bylaws ―require that a certificate of insurance be issued to
each unit owner,‖ that the certificate of insurance show ―the relative amount of
insurance covering each unit,‖ and that the insurance be paid ―through the common
expenses that are drawn from each unit owner.‖
Id.
He concludes that ―the
Association is authorized to, and in the case of insurance, obligated to, act for its
members, including the Plaintiff.‖ Id.
Mr. DiMillo then asserts that the Association ―attempted to satisfy this
obligation by purchasing the insurance policy at issue here.‖ Id. He notes that the
members paid for the insurance, that the insurance covers all units, and that he
was to be issued a certificate of insurance, which named him as an insured and
showed the amount of coverage for his unit. Id. Mr. DiMillo concludes that he was
a third party beneficiary to the Travelers policy. Id.
b.
The Underwriting File
24
In
his
supplemental
opposition,
Mr.
DiMillo
pointed
to
Travelers‘
underwriting file to confirm that it intended to cover the interior of the individually
owned units. Pl.’s Supplemental Opp’n at 3-5. Mr. DiMillo points to a Travelers
underwriting visit to the condo unit in October 2005. Id. at 3. He says that the
underwriting analysis indicates that Travelers ―was underwriting a policy of
insurance that covered ‗14 [buildings] with 1-4 units each totaling 40 units‘, not
solely the external portions of the building.‖ Id. at 4. He observes that throughout
the file there are numerous references to banks and mortgagees as additional
insureds to the individual units and therefore ―[i]t is clear, then, that those with
interests in individual units were third party beneficiaries.‖ Id. He contends that
in January 2008, Travelers increased the policy limits on the individual units, not
on the building as a whole, and the amount of the increase varied among the units.
Id.
He then argues that the underwriting file reveals: 1) that Travelers
considered a sprinkler credit for interior units, 2) that Travelers confirmed that the
individual units had hardwired smoke detectors, 3) that Travelers‘ statement of
value for the building was not limited to the exterior of the building, and 4) that
Travelers also assessed the interior value of the premises. Id. at 4-5. All of these
facts, he says, demonstrate Travelers ―believed it covered individual unit owners‘
interests.‖ Id. at 5.
He goes on to point out that Travelers‘ November 2005 Risk Assessment
Report states 1) that if the units had to be rebuilt, they would need sprinklers
25
added, 2) that there was a ―moderate‖ risk of damage to the interior due to water, 3)
that the property‘s insurance to value ratio appeared reasonable, and 4) that
damage due to flood was covered.
Id. at 5.
Finally, he observes that the
underwriting file ―specifically values Plaintiff’s personal property at $1,000.‖
Id. (emphasis in original).
c.
The Maine Condominium Act
Under the MCA, a condominium is a legal hybrid with some portions of the
building deemed ―common elements‖ and some portions deemed ―part of the unit.‖
33 M.R.S. §§ 1602-102(1), 1602-107, 1602-108.
For example, unless the
condominium declaration provides otherwise, the ―lath, furring, wallboard,
plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring and any
other materials constituting any part of the finished surfaces thereon‖ are ―part of
the unit‖, but ―all other portions of the walls, floors or ceilings are part of the
common elements.‖
33 M.R.S. § 1602-102(1).
The MCA defines ―units‖ as ―a
physical portion of the condominium designated for separate ownership or
occupancy.‖ 33 M.R.S. § 1601-103(26).
The MCA authorizes the Association to purchase insurance:
(a) Commencing not later than the time of the first conveyance of a
unit to a person other than a declarant, the association shall
maintain, to the extent reasonably available:
(1) Property insurance on the common elements, insuring against
all risks of direct physical loss commonly insured against . . .
(b) The insurance maintained under subsection (a), paragraph (1), to
the extent reasonably available, may, and in the case of buildings
containing units having horizontal boundaries between them, shall
26
include the units, but need not include improvements and
betterments installed by unit owners.
33 M.R.S. § 1603-113(a)(1), (b). The MCA delineates the insurance coverage an
Association must provide:
(d) Insurance policies carried pursuant to subsection (a) must provide
that:
(1) Each unit owner is an insured person under the policy with
respect to liability arising out of his ownership of an undivided
interest in the association;
(e) Any loss covered by the property policy under subsection (a),
paragraph (1), and subsection (b) shall be adjusted with the
association, but the insurance proceeds for that loss shall be payable to
any insurance trustee designated for that purpose, or otherwise to the
association, and not to any mortgagee. The insurance trustee or the
association shall hold any insurance proceeds in trust for unit owners
and lien holders as their interest may appear. Subject to the provisions
of subsection (h), the proceeds shall be disbursed first for the repair or
restoration of the damaged property, and unit owners and lien holders
are not entitled to receive payment of any portion of the proceeds
unless there is a surplus of proceeds after the common elements and
units have been completely repaired or restored, or the condominium is
terminated.
(f) An insurance policy issued to the association does not prevent a unit
owner from obtaining insurance for his own benefit.
33 M.R.S. § 1603-113(a), (b), (d)(1), (e), (f).
d.
The Travelers Policy and the Maine Condominium
Act
Mr. DiMillo and Travelers acknowledge that the policy was executed to
address the statutory requirements of the MCA. Pl.’s Opp’n at 6; Def.’s Reply at 4.
The policy defines the covered ―building‖ to include personal property owned by the
27
Association that is ―used to maintain or service the building or structure or its
premises.‖13 Travelers Policy at 0057.
e.
Mr. DiMillo’s Association Arguments and the MCA
Mr. DiMillo‘s arguments about the Association, its bylaws, his membership in
the Association, the mandate that it procure insurance, and the certificate of
insurance track the provisions of the MCA. That Travelers insured the common
elements of the units and covered the individual unit owners for liability purposes,
are entirely consistent with the MCA‘s division of responsibility between the
Association and the unit owner. Similarly, that the bylaws entitled Mr. DiMillo to a
certificate of insurance showing the relative amount of coverage for his unit is
consistent
with
section
1603-113(b)‘s
provision
that
association-purchased
insurance may cover the individual units. These facts do not make the Association‘s
insurer the personal insurer for the unit owners, and in fact, the MCA expressly
provides that a unit owner may elect to obtain separate insurance ―for his own
benefit.‖ 33 M.R.S. § 1603-113(f).
Consistent with the MCA, the bylaws state that ―proceeds payable as a result
of casualty losses sustained which are covered by insurance purchased by the Board
of Directors . . . shall be paid to it. The Board of Directors shall act as the insurance
trustee.‖ Notice of Supplemental Filing (Docket # 32) Attach. 1 at 16 (Bylaws); see
While reviewing the policy, the Court observed that the policy defines ―building‖ to also include
certain types of property contained within a unit if the ―Condominium Association Agreement‖
requires such property to be insured. Travelers Policy at 0057. The parties did not address this
expanded definition of ―building‖ in their briefs or statements of fact. During the May 25, 2011
telephone conference, the Court asked if the expanded definition of ―building‖ applied to the policy at
issue. During the June 1, 2011 follow-up telephone conference, Mr. DiMillo expressly waived any
claim that the expanded definition of ―building‖ provided a basis to accord him standing.
Accordingly, the Court has not considered the expanded definition.
13
28
also 33 M.R.S. 1603-113(e) (providing that ―insurance proceeds for that loss shall be
payable to any insurance trustee designated for that purpose‖). Indeed, one of the
duties of the insurance trustee is to hold the proceeds in trust for the benefit of the
unit owners and their respective mortgagees. Bylaws at 16. But the insurance
trustee is also charged with holding the proceeds in trust for other purposes. Id.
Notably, ―damage to or destruction of the buildings‖ is to be ―promptly repaired and
reconstructed‖ using insurance proceeds.
Id. at 16-17.
Moreover, in certain
circumstances, the Board of Directors is barred from distributing proceeds to unit
owners prior to the unit owner‘s mortgagee. Id. at 16. Finally, the bylaws provide
that ―Each unit owner shall be deemed to have delegated to the board of directors
his right to adjust with the insurance companies all losses under policies purchased
by the Board of Directors.‖ Id. at 16. In harmony with the MCA, the bylaws create
a system of priority for distributing insurance proceeds that would likely be
disrupted if individual unit owners were granted standing to enforce insurance
policies purchased by the Association.
Thus, the bylaw provisions are congruent with subsection (e) of section 1601113, which explains that property insurance proceeds are not directly payable to
unit owners. The funds are payable to a trustee who is charged with distributing
them for the restoration of the common elements and units, and to the unit owners
and lienholders ―as their interests appear.‖ § 1601-113(e).
f.
Mr. DiMillo’s Underwriting Argument and the MCA
29
In view of the MCA‘s contemplated division of responsibility between the
condominium association and the unit owners, the Court views as unremarkable
that in underwriting the Association, Travelers was interested in whether the units
had sprinklers, the names and interests of the unit owners‘ mortgagees, differences
in value among the units, and the other facts Mr. DiMillo asserts reflect Travelers‘
intention to cover the unit owners. The Travelers policy does insure the ―common
elements‖ of the condo so it matters to the insurer whether the units have hardwired smoke detectors and sprinkler systems since a fire in one unit could destroy
the entire building, including the insured common elements. Furthermore, as the
insurer of the common elements of each unit, it would be only prudent for an
insurer to assess the individual owner‘s stake in the unit as an owner‘s interest in
self-preservation lessens the risk. The same logic applies to each of the factors Mr.
DiMillo presents as evidence of Travelers‘ intention to insure his personal property.
In the Court‘s view, Mr. DiMillo‘s factors do not meet the ―clear and definite‖
standard for demonstrating the parties‘ intention to cover his personal property.
4.
Summary: Third Party Beneficiary
The terms of the policy and the relevant circumstance do not create a genuine
issue of material fact as to whether the parties intended to give Mr. DiMillo an
enforceable benefit. Devine, 659 A.2d at 870. There is no evidence that granting
that benefit would effectuate the parties‘ intentions. Travelers‘ concern for interior
and individually-owned portions of the condominium in underwriting the policy is
consistent with coverage of the common elements. To the extent the policy may
30
cover individual units, neither the language of the policy nor the circumstances
evince Travelers‘ intent to include property damage claims from individual unit
owners. To require it to do so could open it up to claims from numerous nonsignatories to the policy in contravention of its terms.
Moreover, to grant an enforceable benefit to Mr. Dimillo could well
undermine the Association‘s express intent to maintain control over the distribution
of insurance proceeds for policies it purchased. As the MCA and the bylaws make
clear, the Association intended to maintain that control even for policies that
covered individually-owned property. Accordingly, Mr. DiMillo‘s evidence that the
policy covered individual units is not evidence that the Association intended to
grant him an enforceable benefit.
He has not presented evidence that the
Association is obligated to pay him insurance proceeds or even that individual unit
owners were the beneficiaries of insurance proceeds in the past. As such, he has not
created a genuine issue as to whether he was a third party beneficiary.
G.
Estoppel
Turning to Mr. DiMillo‘s estoppel theory, in Maine ―[a]n insurer may be
estopped from denying coverage when the party claiming coverage has
demonstrated (1) unreasonable conduct of the insurer that misleads the insured
concerning the scope of his coverage and (2) justifiable and detrimental reliance by
the insured upon the insurer‘s conduct.‖ Me. Mut. Fire. Ins. Co. v. Grant, 674 A.2d
503, 504 (Me. 1996); Allstate Ins. Co. v. Elwell, 513 A.2d 269, 272 (Me. 1986);
Roberts v. Me. Bonding & Cas. Co., 404 A.2d 238, 241 (Me. 1979). ―To withstand a
31
motion for summary judgment on the issue of estoppel in a case involving insurance
coverage, the party claiming the estoppel must present facts tending to show both of
these elements.‖ Me. Mut., 674 A.2d at 504.
Mr. DiMillo presented no such facts. First, Maine law requires that there be
―unreasonable conduct of the insurer that misleads the insured‖ and justifiable
reliance by the insured ―upon the insurer‘s conduct.‖ Id. (emphasis added). In his
affidavit, Mr. DiMillo states that upon purchasing his condominium in 2002, he
spoke ―with Association representatives, specifically employees of the Association‘s
property manager, [MVP] concerning applicable insurance‖ and that ―[t]hose
representatives indicated to [him] that [he] only needed to purchase a ‗contents‘
policy for the Condo, as the Association purchased a policy to cover all other losses.‖
Aff. of Christopher DiMillo ¶¶ 7-8 (Docket # 19) (emphasis added). Mr. DiMillo
makes no mention of any conversations that he had with Travelers about the scope
of the Association‘s coverage that led him not to purchase personal coverage.
Roberts, 404 A.2d at 241 (to sustain an estoppel claim the insurer‘s conduct must
have induced the insured ―to do what resulted to his detriment and what he would
not otherwise have done‖). To state the obvious, the Association is not Travelers.
Nor has Mr. DiMillo provided any evidence that the members of the Association had
conversations with Travelers that caused them to mislead him.
Second, Mr. DiMillo‘s only evidence to support his estoppel theory is that
Travelers paid claims for water damage to individual units similar to the water
damage to his condo. Pl.’s Opp’n at 8; Pl.’s Supplemental Opp’n at 6. The issue
32
before the Court is whether Mr. DiMillo has standing as a unit owner to enforce the
policy, and Mr. DiMillo presents no evidence that unit owners, rather than the
Association, brought the previous claims.14 Furthermore, even if Travelers paid
claims from unit owners, Mr. DiMillo does not assert that he was aware before
discovery in this litigation that Travelers had done so.
To sustain an estoppel
claim, Mr. DiMillo must present evidence that Travelers‘ conduct misled him. Me.
Mut., 674 A.2d at 504. As there is no evidence of any conduct by Travelers that
would mislead the Association or Mr. DiMillo into justifiably believing that
individual unit owners could enforce the policy, Mr. DiMillo‘s estoppel claim against
Travelers must fail.
III.
CONCLUSION
Because there is insufficient evidence in this record to raise a genuine issue
of material fact as to whether Christopher DiMillo has standing to enforce the
policy between the Association and Travelers, the Court GRANTS Travelers‘ Motion
for Summary Judgment (Docket # 14).
SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
CHIEF UNITED STATES DISTRICT JUDGE
Dated this 2nd day of June, 2011
Mr. DiMillo asserts that in 2006 Travelers paid a claim to David McGrillis, but that is not
supported in the record. PSSMF ¶ 1. Mr. DiMillo cites a claim summary to support his assertion.
The claim summary repeatedly lists ―Mountainside Phase IX‖ as the insured and claimant. Saksen
Aff. (Docket # 24) Attach. 1. The only mention of David McGrillis is in the ―loss description‖ where
he is listed once as the owner of the damaged unit. Id. This is not evidence that David McGrillis
brought the claim or was paid the insurance proceeds.
14
33
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