The Northern Assurance Co. of America v. Richard Wells, et al.

Filing 50

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered finding as moot 45 Motion to Strike ; granting 20 Motion for Summary Judgment; denying 23 Motion for Summary Judgment and directing the Clerk to enter judgment for the Plaintiff. (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
THE NORTHERN ASSURANCE
COMPANY OF AMERICA,
Plaintiff,
v.
RICHARD W. WELLS, and MARY
E. WELLS,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

CIVIL ACTION NO.
12-10238-DPW

MEMORANDUM AND ORDER
May 21, 2013
This declaratory judgment action seeks to clarify whether an
insurance company is obligated to cover legal expenses and pay
any potential judgment on an underlying wrongful death case.
parties have cross-moved for summary judgment.

The

The Northern

Assurance Company of America, as plaintiff, argues that a familymember-exclusion clause in the insurance policy absolves it of
any payment obligations because the decedent and the insureds in
the underlying wrongful death case are related.

Defendants argue

that the clause does not apply because the executor of the estate
is not related to the insureds.

Defendants also present a

threshold issue, contending that this action is improper because
the insurance policy requires that the parties resolve any
disputes in binding arbitration.

I. BACKGROUND
This case is rooted in the decedent William Pasquantonio,
Jr.’s family tree.

His geneology therefore merits some

exploration.
William, Jr.’s parents are William Pasquantonio, Sr. and
Jane L’Heureux, who divorced in 2003.

The Defendants in this

action, Richard and Mary Wells, are William, Jr.’s grandparents.
They are also Jane L’Heureux’s parents, and were William, Sr.’s
parents-in-law until the divorce in 2003.
On June 22, 2008, 13-year old William Pasquantonio, Jr. died
while on his grandparents’ fishing boat, the Hat Trick, a 1996
Phoenix 29 SPX sport-fishing cruiser.
Richard and Mary Wells held an insurance policy on the Hat
Trick through Northern Assurance, which covered “loss of life or
bodily injury.”

On July 15, 2008, they filed a “Statement of

Loss” making a claim to Northern Assurance for the maximum
permissible recovery under the Policy: $300,000.
Assurance denied the claim on January 9, 2005.

Northern

The three

relevant aspects of the Policy for purposes of this action are
the family member exclusion, the arbitration clause, and the
meaning of the term “losses.”
A provision of the liability section of the Policy, titled
“Losses Not Covered (Exclusions),” includes the following family
member exclusion: “[Northern Assurance] will not pay: . . . for

2

any liability between or among ‘family members.’”

The Policy

defines “Family Members” as “persons related by blood, marriage
or adoption (including a ward or foster child).”
The arbitration clause states that “[i]f [Mr. and Mrs.
Wells] make a claim under this policy and [Northern Assurance]
disagree[s] about whether the claim is payable or about the
amount due to [Mr. and Mrs. Wells] under the policy, the
disagreement must be resolved by binding arbitration . . . .

The

demand for arbitration must be made within one (1) year of the
date of the loss or damage.”
Section B-1 of the Policy covers two forms of loss or
damage: “1. Loss of life or bodily injury; [and] 2. Property
damage.” (emphasis added).

The Policy obligates Northern

Assurance to “pay those sums [Mr. and Mrs. Wells] become legally
obligated to pay as damages arising out of [Mr. and Mrs. Wells’]
ownership, operation or maintenance of the covered ‘yacht.’”
On June 20, 2011, three years after his son’s death, and two
and one half years after Northern Assurance denied Richard and
Mary Wells’ request for coverage, William, Sr. filed a wrongful
death suit against the insureds, William, Jr.’s grandparents,
alleging that their negligent operation of the Hat Trick caused
William, Jr.’s death.

Northern Assurance is currently covering

the costs of the defense for the underlying suit under a
reservation of rights.

3

II. STANDARD OF REVIEW
A movant is entitled to summary judgment when “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(a).

The parties do not dispute the relevant facts.

This case

turns exclusively on interpretation of the insurance policy,
which is a question of law for the court.

Allmerica Fin. Corp.

v. Certain Underwriters at Lloyd’s, London, 871 N.E.2d 418, 425
(Mass. 2007).

Courts apply state law to interpretation of

maritime insurance contracts such as the one at issue here.

See

New Hampshire Ins. Co. v. Dagnone, 475 F.3d 35, 37 (1st Cir.
2007).
III. DISCUSSION
I address at the threshold the question of proper forum,
which is presented by Defendants’ argument that arbitration is
mandatory.

Concluding that the arbitration provision is no

longer relevant to the parties’ dispute, I then turn to the
merits of the parties’ respective interpretive contentions.
A.

Arbitration
Defendants’ arbitration demand is not timely.

than two years too late.

It comes more

See Rankin v. Allstate Ins. Co., 336

F.3d 8, 12 (1st Cir. 2003)(“[A]n arbitration provision has to be
invoked in a timely manner or the option is lost.”).

By the

terms of the Policy, Richard and Mary Wells must bring any
4

“demand for arbitration . . . within one (1) year of the date of
the loss or damage.”

The language of the Policy and the actions

of the parties prior to this lawsuit make clear that the phrase
“date of the loss or damage” refers to the date that some kind of
loss or damage happened to the “yacht” or those on board.

The

arbitration provision itself states that it applies when Richard
and Mary Wells “make a claim under this policy.”

And where

Defendants and Northern Assurance “disagree about whether the
claim is payable or about the amount due . . . under the policy.”
Thus, in context, the arbitration provision clearly contemplates
arbitrating the claim denial, not the dimensions of future
disputes arising from the claim denial.1
The date of the injury and loss, the date of the initial
claim, and the date of Northern Assurance’s denial of the claim
all occurred more than three years before Defendants demanded
arbitration.

The demand therefore falls outside the one-year

window for demanding arbitration.

William, Jr. lost his life on

the Hat Trick on June 22, 2008, more than three and one half
years before Defendants demanded arbitration on March 2, 2012.

1

In fact, because the Policy language ties the contractual
limitations period to the date of physical loss or damage to the
ship or its passengers, it leaves open the possibility that the
insureds could demand arbitration before the claim denial, and
further leaves open the question whether the insurer could
frustrate the arbitration clause by delaying its denial of a
claim for more than one year. Neither of those situations is
presented by the facts of this case and I offer no views
regarding how such a situation should be dealt with.
5

Defendants filed their claim with Northern Assurance for the
maximum permitted recovery, $300,000, on July 15, 2008, about one
month after William, Jr.’s death, but still more than three and
one half years before Defendants demanded arbitration.

Northern

Assurance finally denied the claim, citing the family member
exclusion, on January 2, 2009, just over three years before the
arbitration demand.

Because Defendants failed to make a timely

demand to arbitrate their “disagree[ment] about whether the claim
is payable . . . under the policy,” I will not dismiss Northern
Assurance’s declaratory judgment action on the basis of the
arbitration clause.

See Rankin, 336 F.3d at 12.

Defendants’ argument - that their demand for arbitration is
timely because the phrase “loss or damage” in the Policy refers
to legally determined damages from liability, which has not yet
occurred because there has been no final resolution to the state
court wrongful death action - contradicts the language of the
Policy.2

Moreover, Defendants’ argument cannot be reconciled

with the parties’ actions.

2

The interpretive dispute was ripe for resolution no later than
the claim denial, but Northern Assurance chose not to pursue
resolving it through arbitration in a timely fashion. Rather,
Northern Assurance chose the vehicle of this later-filed
declaratory judgment action to resolve the dispute. It is
conceivable, although I take no position on the issue, that
subsidiary disputes, for example, the reasonableness of the
attorney’s fees incurred for the cost of the defense or some
elements of any damage award would start the arbitration demand
clock running anew over a “amount due” under the policy. But,
disputes over the basic question of interpretation were fully
framed upon claim denial.
6

1. Policy Language
Defendants point to the preamble of the “Losses Covered”
provision of Section B-1 – Liability Insurance.

The preamble to

the Losses Covered section states “‘We’ [Northern Assurance] will
pay those sums ‘you’ [Mr. and Mrs. Wells] become legally
obligated to pay as damages arising out of ‘your’ ownership,
operation or maintenance of the covered ‘yacht’ . . . .”

This

does not, as Defendants contend, mean that phrase “date of the
loss or damage” in the Policy’s arbitration provision refers to
the date of the entry of final judgment on a case.

Their

suggestion that the preamble should somehow be incorporated into
the arbitration provision is unpersuasive.

The Losses Covered

preamble does not use the phrase “loss or damage,” nor does it
even use the individual words “loss” or “damage.”

It states that

Northern Assurance must cover the “sums” that the insured is
legally obligated to pay as “damages” for liability.

In the

context of a yacht insurance policy, the distinction between
“damage” - meaning destruction or harm to property or people and “damages” - meaning a legally determined amount of liability
measured in dollars - is fundamental.

The fact that the two

words share most of their letters in common does not diminish the
distinction between two different concepts, nor does it permit
Defendants to substitute the meaning of one for instances of the
other throughout the Policy.

See Bank v. Thermo Elemental, Inc.

888 N.E.2d 897, 908-09 (Mass. 2008)(“[A]lthough words used in one
7

undoubted sense in one place [in a will, contract, or statute]
may be presumed to be used in the same meaning in another place
in the writing, this rule itself is an aid and not an end.
generally to be followed but it is not inflexible.

It is

It yields to

the main purpose, which is to find out what the writing means as
a whole.” (alterations in original)(internal quotations
omitted)).

Furthermore, in reading the Policy as a whole, it is

clear that the phrase “loss or damage” in the arbitration
provision refers to physical loss or damage to the yacht or its
passengers, not to the legal liability arising from such an
occurrence.
The Policy uses the words “loss” and “damage” throughout
according to their standard, colloquial meanings, and in ways
that would be inconsistent with Defendants’ term-of-art
interpretation.3

For instance, only nine lines below the phrase

“loss or damage” in the arbitration provision, the Policy states
“[w]ith respect to any claim for loss or damage to insured
property, any suit against ‘us’ must be commenced within one year
of the date of loss or damage,” using the identical phrasing from
the arbitration provision to define the appropriate time window.
(emphasis added).

In this clause, it is beyond any reasonable

dispute that the phrase “date of loss or damage” must refer to

3

Indeed, the Policy uses plain language throughout, avoiding
terms of art wherever possible, including referring to the
insureds as “you” and the insurer as “we.”
8

“loss or damage to insured property.”

It must therefore refer to

the physical harm to the yacht, as it would make no sense to
speak of damages in the form of legal liability to the insured
property.

This phrasing is nearly identical to that included in

the arbitration provision, and Defendants have put forth no
justification for treating the two iterations differently.
The Policy is replete with similar uses of the words “loss”
and “damage” that are consistent with a physical-harm meaning and
inconsistent with a legal-liability meaning.

For instance,

Section F - Duties After an Accident or Loss, states that “[i]f
there is a loss or a claim . . . ‘you’ must:

1. Take all

reasonable steps to protect the insured property from further
loss . . . [and] 5. Advise anyone else responsible for the loss
or damage as soon as possible, in writing that ‘you’ are holding
them liable.” (emphasis added).

Similarly, Section A - Property

Insurance, states “‘we’ will pay for . . . accidental, direct
physical loss of or damage to the insured property; [or] Physical
loss or damage to the covered ‘yacht’ caused by a ‘latent
defect.’” (emphasis added).

Again, in this context, it would not

make sense to speak of legal liability to the insured property.
Nor would it be reasonable to interpret the insureds’ obligation
to notify others when they believe them to be responsible for
“loss or damage” that the insureds would be “holding them liable”
if the phrase “loss or damage” itself means legal liability.

9

2. Actions of the Parties
Defendants’ actions have been inconsistent with their own
proposed definition of the phrase “loss or damage.”

In

accordance with their “Duties After an Accident or Loss,”
Defendants filed a “detailed proof of loss signed and sworn . . .
and evidence of an insured interest” on July 15, 2008.

Thus,

immediately following William, Jr.’s death, Richard and Mary
Wells operated under the assumption that the word “loss” both in
the Policy and in their “Statement of Loss” referred to the
tragic death of their grandson and not to some future potential
legal liability.

Otherwise, they would not have filed the claim

until the state court action resolved.
Defendants eventually demanded arbitration on March 2, 2012.
But under their own proposed definition, there was nothing to
arbitrate on March 2, 2012 because no court had yet determined
liability under the Policy.

Under Defendants’ proposed

definition, to demand arbitration in March 2012 would be
equivalent to requesting arbitration at the time of the accident:
there was no determination of liability let alone a dispute over
such a determination that might require arbitration.

Under

Defendants interpretation, they could not even have requested
arbitration regarding Northern Assurance’s obligation to cover
their legal expenses because Northern Assurance agreed to cover
legal expenses under a reservation of rights pending the outcome
of this declaratory action.
10

*

*

*

I find that the phrase “date of the loss or damage” in the
clumsily constructed arbitration provision of the Policy refers
to the date on which the physical injury occurred, not the date
of a final judgment establishing liability in the wrongful death
case or even the date on which costs of defense began to be
incurred.

Defendants’ arbitration request was untimely and I

deny their request for dismissal on the basis of the arbitration
provision.4
B.

Family Member Exclusion
The parties agree that Massachusetts enforces insurance

policy exclusions such as the family member exclusion in this
case.

See Kanamaru v. Holyoke Mut. Ins. Co., 892 N.E.2d 759,

763-64 (Mass. App. Ct. 2007) (upholding an exclusion for “anyone
living in your household who is related to you by blood, marriage
or adoption.

This includes wards, step-children or foster

children”).

The dispute centers around whose family member

status is relevant:
executor’s.

the decedent’s or the representative

If William, Jr.’s status is relevant, then the

4

I also note that the presence of the arbitration provision does
not foreclose the possibility of alternative legal action. The
Policy specifically contemplates legal actions beyond arbitration
in a section entitled “Legal Action Against Us,” which provides
that once “‘you’ have complied with all terms of this policy,
including arbitration . . . any suit against ‘us’ must be
commenced within one (1) year of the date of loss or damage.”
Thus, the mere presence of the arbitration provision could not,
alone, be sufficient grounds to dismiss Northern Assurance’s
declaratory judgment action.
11

family member exclusion applies because William, Jr. is the
godson of Richard and Mary Wells (the insureds).

If William,

Sr.’s status is relevant, then the family member exclusion does
not apply because William, Sr. has not been related to Richard
and Mary Wells since his divorce from Jane L’Heureux in 2003.
This question answers itself.
death statute,

The Massachusetts wrongful

M.G.L. 229 § 2, provides that damages for

wrongful death may be “recovered in an action of tort commenced .
. . by the executor or administrator of the deceased.”

However,

the executor does not bring the action on his own behalf, but
“acts merely as a representative or conduit” for recovery.
Gaudette v. Webb, 284 N.E.2d 220, 230 (Mass. 1972); see also
Hallett v. Town of Wrentham, 499 N.E.2d 1189, 1192 (Mass. 1986).
The position of executor exists because the decedent is not alive
to bring his claim himself, but rather needs a representative.
The executor brings an action on behalf of the decedent’s estate,
and on behalf of all other claimants.
claim on his own behalf.

He does not bring the

By the very nature of being a

representative, the executor does not speak on his own behalf and
his own personal standing is not relevant.

See Gaudette, 284

N.E.2d at 229 (“[O]ur wrongful death statutes . . . requir[e]
that any action for wrongful death be brought by a personal
representative on behalf of the designated categories of
beneficiaries.”).

To hold otherwise would result in having the

substantive rights of a decedent’s estate depend on the
12

particular characteristics of the appointed executor.

Canons of

contract construction counsel against such an interpretation.
See Demers Bros. Trucking, Inc. v. Certain Underwriters at
Lloyd’s, London, 600 F. Supp. 2d 265, 278 (D. Mass. 2009)(“When
scrutinizing a contract, a court should interpret broad contract
language so as to avoid absurd results.”); see also Emhart
Indus., Inc. v. Century Indem. Co., 559 F.3d 57, 71 (1st Cir.
2009)(refusing to accept an interpretation of an insurance policy
that would “lead to absurd results”).
Defendants cite a First Circuit decision which observes that
“[d]amages under [M.G.L. 229 § 2] shall be recovered in an action
of tort by the executor or administrator of the deceased.”
Mitchell v. U.S., 141 F.3d 8, 21 (1st Cir. 1998).

However they

apparently ignore the next two sentences of the opinion, in which
the First Circuit cautions against giving the executor special
consideration because that “would elevate form over substance,
looking less at the question, ‘who is injured’ and more at the
question, ‘who is technically bringing the suit.’”

Id.

(citations omitted).
Although no Massachusetts court has directly addressed the
issue, courts in other jurisdictions consistently consider the
family-member status of the decedent rather than that of the
executor or administrator.

See Carpenter v. United Ohio Ins. Co,

1997 WL 232727, *3 (May 9, 1997)(holding that administrator’s
claim failed because the represented decedent fell within a
13

family member exclusion in an insurance policy); see
also Chrysler Credit Corp. v. United Servs. Auto. Assoc., 625
So.2d 69, 72-73 (Fla. Dist. Ct. App. 1993); Wright v. State Farm
Mut. Auto. Ins. Co., 952 P.2d 73, 106-107 (Or. App. 1998).
Although in both Chrysler and Wright, the insurance policies at
issue excluded, by their terms, injury to a member of the
insured’s family while the Northern Assurance Policy more
generically excludes “liability between or among ‘family
members,’” the thrust of the exclusion is the same:

both seek to

exclude from coverage liability or harm between the insureds and
their family.
I find that Massachusetts courts would also consider the
family member status of the decedent rather than that of the
executor or administrator in applying a family member exclusion
clause.

In this case, because there is a direct familial

relationship between the insured grandparents and the decedent
child, any claim the child’s father brings as executor of his
son’s estate falls under the exclusion.
Even the most relevant case Defendants cite for the
proposition that an executor’s personal status may be relevant,
Johnson v. Georgia Farm Bureau Mut. Ins. Co., cannot sustain the
weight Defendants seek to place on it.5

5

In Johnson, a foreign

The other cases Defendants cite in response stand only for the
entirely uncontroversial position that divorce legally divides a
family. See, e.g., Groves v. State Farm Life Ins. & Casualty
Co., 829 P.2d 1237 (Ariz. 1992); Tobin v. Nat’l Grange Mut. Ins.
14

state court action, the Georgia Court of Appeals held that the
family member exclusion does not bar an ex-husband from bringing
his own claim for his insured ex-wife’s wrongful death because it
was not derivative of the child’s claims.

See 616 S.E.2d 459,

462 (Ga. App. 2005).
By contrast, in this case, William, Sr. does not bring the
case on his own behalf.

The Massachusetts wrongful death statute

does not permit him his own claim.

See M.G.L. 229 §§ 1, 2.

He

can only bring the case as executor or administrator of the
decedent’s estate.

Unlike the Georgia wrongful death statutes,

which specifically provide causes of action to a surviving spouse
or parent, see O.C.G.A. § 41-4-2(a) (“The surviving spouse or, if
there is no surviving spouse, a child or children . . . may
recover for the homicide of the spouse or parent the full value
of the life of the decedent . . . .”); id. § 19-7-1(c)(2) (“If
the deceased child does not leave a spouse or child, the right of

Co., No. 9-117-B-S, 2009 WL 1683627 (D.Me. June 15, 2009)
(Magistrate Recommended Decision and Order). None of these cases
analyzes the effect of a divorced executor representing a
family-member decedent.
In another case Defendants cite, Allstate Ins. v. Shelton, the
court found that a man going through the process of divorce was
not related - as that term was defined in his own insurance
policy - to his new, co-habitatant girlfriend’s daughter. 105
F.3d 514 (9th Cir. 1997). However, Shelton is not relevant to
the facts in this case because in Shelton, the decedent child and
the insured were not related and the question of the relevance of
the executor’s familial relationship never arose. By contrast,
in this case, the decedent child and the insured grandparents are
related and the question of the relevance of the executor’s
familial relationship is central to Defendants’ argument.
15

recovery shall be in the parent or parents . . . .”),
Massachusetts does not segregate the right to recover for
wrongful death by claimant.

Massachusetts bundles the rights of

all claimants for a wrongful death and vests the executor with
the power to bring the suit.

Specifically, M.G.L. 223 § 2

provides that “[a] person who . . . by his negligence causes the
death of a person . . . under such circumstances that the
deceased could have recovered damages for personal injuries if
his death had not resulted . . . shall be liable in damages . . .
as provided in section one.” (emphasis added).

Section 1

provides the method of distributing any recovery, specifying the
particular percentages allocated to various family
members/claimants based on the marital status of the decedent and
whether he had any children.

See M.G.L. 223 § 1.

Thus,

Massachusetts law specifies that claimants’ rights are
necessarily derivative of the decedent’s because they can only
recover if the decedent died “under such circumstances that the
deceased could have recovered damages for personal injuries if
his death had not resulted.”

M.G.L. 223 § 2.

William, Sr. would

be entitled to the statutorily specified percentage of any
successful recovery for the wrongful death of his son, but he has
no independent claim himself.

I will not unbundle those rights

in contravention of Massachusetts law to allow William, Sr. to
circumvent the family member exclusion by bringing his own claim.

16

III.

CONCLUSION

For the foregoing reasons, I GRANT Plaintiff’s Motion for Summary
Judgment (Dkt. 20), and DENY Defendants’ cross-motion (Dkt. 23).
I DENY Defendants’ Motion to Strike (Dkt. 45) as moot.

I direct

the Clerk to enter judgment for the Plaintiff.

/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

17