Narragansett Bay Insurance Company v. Kaplan et al

Filing 37

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting 20 Motion for Summary Judgment and declaring that Narragansett owes the defendants no duty to defend them in the underlying Costello matter. (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

NARRAGANSETT BAY INSURANCE
COMPANY

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Plaintiff,
v.
KENNETH L. KAPLAN and
DONNA L. KAPLAN,
Defendants.

CIVIL ACTION NO.
14-12466-DPW

MEMORANDUM AND ORDER
November 19, 2015
At issue in this case is whether an insurance company has a
duty to defend its policyholders in a state court lawsuit
against them alleging the commission of three intentional wrongs
arising from a dispute among neighbors.

Defendants Kenneth and

Donna Kaplan reside in Hull, Massachusetts, and purchased a
homeowner’s insurance policy with a Mariner Plus endorsement
from plaintiff Narragansett Bay Insurance Company
(“Narragansett”).

That policy includes liability insurance for

the Kaplans, the terms of which will be detailed below.

Having

to date provided a defense — under a reservation of rights — for
the Kaplans in the underlying state litigation, Narragansett now
seeks a declaratory judgment determination by this court that it
has no duty to provide a defense.

1

For their part, the Kaplans

seek through counterclaims to establish that they are owed a
defense.
I. BACKGROUND
A.

The Underlying Suit
In 2013, the Kaplans were sued in state court by their

neighbors, William and Mary Costello.

That lawsuit came on the

heels of five years of conflict between the Kaplans and
Costellos. In the underlying action, the Costellos complained of
an ongoing campaign of harassment by the Kaplans in an attempt
to enlarge their own yard at the Costellos’ expense.

As part of

this campaign, according to the underlying complaint, the
Kaplans filed five lawsuits in state court that involved the
Costellos, initiated a number of complaints and appeals to town
and state agencies, and wrote many aggressive e-mails about the
matter to public officials and the local media.

In response,

the Costellos have asserted three causes of action: abuse of
process, intentional infliction of emotional distress, and
violation of the Massachusetts Civil Rights Act.

To date,

Narragansett has provided the Kaplans with counsel in the
underlying action.1

1

At some point, the original counsel provided by the insurer
withdrew from representation of the Kaplans and a successor has
been provided by Narragansett.
2

B.

The Kaplans’ Insurance Policy
The Kaplans’ homeowner policy provides personal liability

insurance.

The standard coverage includes a duty to defend

against all claims made against the insured for damages “because
of ‘bodily injury’ or ‘property damage’ caused by an
‘occurrence.’” Section II – Liability Coverages, § A.

“Bodily

injury” is defined as “bodily harm, sickness or death.” Id.
Definitions section (2).

“Property damage” is defined as

“physical injury to, destruction of, or loss of use of tangible
property.”

Id. Definitions section (9).

An “occurrence” is

defined as an “accident” during the policy period which results
in bodily injury or property damage.
(8).

Id. Definitions section

This standard coverage also contains a number of

exclusions, the most relevant of which excludes coverage for
injuries that are “expected or intended by an ‘insured,’” even
if the resulting harm is of a different kind, quality or degree
than initially intended or is sustained by a different person
than intended. Id. Section II – Exclusions, § E.1.

In short,

this section of the coverage concerns suits over unintentional,
physical harms to people or property.
The Kaplans also purchased an additional policy, called the
“Mariner Plus Endorsement,” which covers suits for “personal
injury.”

That term is defined to cover enumerated intentional

torts:
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1. False arrest or detention
2. Malicious prosecution;
3. The “wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a room,
dwelling or premises that a person occupies, committed by
or on behalf of its owner, landlord, or lessor”;
4. Defamation; and
5. The publication of material that violates a person’s
right to privacy.
Mariner Plus Endorsement, § 8.

The exclusions relevant to the

standard coverage are not applicable to the additional Mariner
Plus coverage, which are governed by a different set of
exclusions.

In relevant part, coverage is excluded if the

injury was “caused by” the insured, with “the knowledge that the
act would violate the rights of another and would inflict
‘personal injury’” or if the injury arose out of a criminal act
caused by the insured.

Mariner Plus Endorsement, Section II -

Exclusions.
No coverage is provided for conduct performed prior to the
effective date of the policy.

The policy commenced on November

8, 2012, and accordingly Narragansett would only have a duty to
defend against suits arising out of events after that date.
II. STANDARD OF REVIEW
Narragansett has moved for summary judgment on its
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declaratory judgment action and all counterclaims raised by the
Kaplans.

Summary judgment is appropriate where there is no

genuine dispute of material fact and the undisputed facts
demonstrate that the moving party is entitled to judgment as a
matter of law.

Fed. R. Civ. P. 56(a); Carmona v. Toledo, 215

F.3d 124, 132 (1st Cir. 2000).

A genuine issue is one which

“may reasonably be resolved in favor of either party,” and a
material fact is one which could affect the outcome of the
litigation. Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir.
2008).

In determining whether genuine disputes of material fact

exist, all reasonable inferences must be drawn in the nonmovant’s favor. Id.

The interpretation of an insurance policy

and the application of its language to facts is a question of
law.

Massamont Ins. Agency, Inc. v. Utica Mut. Ins. Co., 489

F.3d 71, 72 (1st Cir. 2007).
III. ANALYSIS
A.

Continuance under Fed. R. Civ. P. Rule 56(f)
As a threshold matter, I must address the Kaplans’ effort

to obtain a continuance under Rule 56(f) of the Federal Rules of
Civil Procedure in order to conduct additional discovery.

That

rule provides that a court may order a continuance to permit
additional discovery to be obtained, if there is a basis for
finding that a party lacks the facts essential to justify its
opposition to summary judgment.

Defense counsel avers that he
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was unable to secure the facts necessary to oppose summary
judgment.

He states that he needs the continuance in order to

depose Narragansett employees and agents.
The Kaplans and their counsel have failed to make the
requisite showings necessary for a continuance under Rule 56(f).
A party seeking extra time under this Rule must show “(i) good
cause for his inability to have discovered or marshalled the
necessary facts earlier in the proceedings; (ii) a plausible
basis for believing that additional facts probably exist and can
be retrieved within a reasonable time; and (iii) an explanation
of how those facts, if collected, will suffice to defeat the
pending summary judgment motion.” Rivera-Torres v. ReyHernandez, 502 F.3d 7, 10 (1st Cir. 2007).

The party must also

show “due diligence” in pursuing discovery prior to the
deadline. Id.
Here, the Kaplans are unable to meet any of these criteria,
much less all of them.

Discovery in this action closed on

September 14, 2015, yet no reason was provided in June, when the
issue was first raised, why adequate discovery could not be
conducted before the end of discovery.

More fundamentally, the

Kaplans and their counsel have provided no explanation of
specifically what facts they seek in discovery, much less the
availability of those facts and how they would assist in the
opposition to summary judgment.

At the hearing on the summary
6

judgment motion, counsel for the Kaplans remained unable to
identify material facts for discovery.

This is not surprising

because the motion turns on undisputed facts, principally
construction of insurance contracts.
B.

I will deny a continuance.

Narragansett’s Duty to Defend
The basic principles governing an insurer’s duty to defend

are well-established under Massachusetts law.

“An insurer has a

duty to defend an insured when the allegations in a complaint
are reasonably susceptible of an interpretation that states or
roughly sketches a claim covered by the policy terms.”

Billings

v. Commerce Ins. Co., 936 N.E.2d 408, 414 (Mass. 2010).
duty extends broadly.

This

“[T]he underlying complaint need only

show, through general allegations, a possibility that the
liability claim falls within the insurance coverage. There is no
requirement that the facts alleged in the complaint specifically
and unequivocally make out a claim within the coverage.
However, when the allegations in the underlying complaint lie
expressly outside the policy coverage and its purpose, the
insurer is relieved of the duty to investigate or defend the
claimant.” Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 788
N.E.2d 522, 531 (Mass. 2003) (internal citations omitted).

In

other words, unless the insured could not be covered under the
policy, there is a duty to defend.

The burdens of persuasion

begin with the obligation of the insured party to prove coverage
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and then may shift to the insurer to prove that an exclusion
applies.

Manganella v. Evanston Ins. Co., 746 F. Supp. 2d 338,

345 (D. Mass. 2010) aff'd, 700 F.3d 585 (1st Cir. 2012).

Once

the insured party’s ultimate burden regarding coverage is
satisfied with regard to at least one claim against the insured,
the insurer has a duty to defend generally.

Dilbert v. Hanover

Ins. Co., 825 N.E.2d 1071, 1075 (Mass. App. Ct. 2005).
When determining whether an insurer has a duty to defend, a
court must look not merely to “the specific theories of
liability alleged in the complaint” but rather “the source from
which the plaintiff’s [injury] originates.”

New England Mut.

Life Ins. Co. v. Liberty Mut. Ins. Co., 667 N.E.2d 295, 299
(Mass. App. Ct. 1996).

The court must independently “look

beyond the specified causes of action” and turn to the
“underlying allegations” in determining whether a claim can be
sketched that would be covered by the policy.

Global NAPs, Inc.

v. Fed. Ins. Co., 336 F.3d 59, 62 (1st Cir. 2003)].

In this

case, however, the parties have not identified any other claims
which might be raised based upon the underlying allegations.
Given the burden on the policyholder to establish coverage, I am
limited by the submissions before me to determining whether
Narragansett has a duty to defend based upon the three causes of
action actually pled by the Costellos in their underlying
complaint and identified by the Kaplans in this action.
8

Applying this standard, it is apparent that Narragansett
does not have a duty to defend the Kaplans in the underlying
suit.

The standard coverage only covers accidental harms, not

intentional harms.

Each of the three causes of action requires

intentional conduct for liability to exist and thus each is
outside the coverage Narragansett undertook to provide.
The elements of an abuse of process claim are that: “(1)
‘process' was used; (2) for an ulterior or illegitimate purpose;
(3) resulting in damage.” Gutierrez v. Massachusetts Bay Transp.
Auth., 772 N.E.2d 552, 563 (Mass. 2002).

The “crux of an abuse

of process claim” is a showing of an “illegitimate motive,”
making this cause of action turn on intent.

Millennium Equity

Holdings, LLC v. Mahlowitz, 925 N.E. 2d 513, 526 (Mass. 2010).
Intentional infliction of emotional distress is, as the
name makes clear, an intentional tort.

The elements of the

offense are that “(1) that [defendant] intended, knew, or should
have known that his conduct would cause emotional distress; (2)
that the conduct was extreme and outrageous; (3) that the
conduct caused emotional distress; and (4) that the emotional
distress was severe.” Polay v. McMahon, 10 N.E.3d 1122, 1128
(Mass. 2014).
Finally, the Costellos’ claim under the Massachusetts Civil
Rights Act alleges the interference with a right through

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“threats, intimidation, or coercion.”

For the purposes of that

act,
a “threat” consists of “the intentional exertion of
pressure to make another fearful or apprehensive of injury
or harm”; “intimidation” involves “putting in fear for the
purpose of compelling or deterring conduct”; and “coercion”
is “the application to another of such force, either
physical or moral, as to constrain him to do against his
will something he would not otherwise have done.”
Glovsky v. Roche Bros. Supermarkets, 17 N.E.3d 1026, 1035 (Mass.
2014).

Once again, this provision covers intentional, not

accidental, conduct: these are behaviors undertaken with the
purpose of improper persuasion.
The three causes of action alleged cannot arise out of an
“occurrence,” since they do not stem from accidental behavior,
and they are necessarily excluded under the standard provisions’
exclusion of expected or intended injuries.
These three causes of action are not covered under the
standard provisions for a second reason.

None of the harms for

which the three causes of action provides relief – legal
harassment, emotional distress, or civil rights violations –
constitute bodily injury or damage to property.

In the

insurance context, “bodily injury” is a “narrow and unambiguous
term.” Richardson v. Liberty Mut. Fire Ins. Co., 716 N.E.2d 117,
10

121 (Mass. App. Ct. 1999).

It refers only to “harm arising from

corporeal contact,” in relation to “an organism of flesh and
blood,” and does not extend to mental or emotional suffering.
Id. (quoting Williams v. Nelson, 117 N.E. 189, 196 (Mass.
1917)).

The incorporeal harms which these three causes of

action seek to remedy do not constitute bodily injury in this
sense.

Nor do they address damage to “tangible property” within

the scope of the policy.

Compare Citation Ins. Co. v. Newman,

951 N.E.2d 974 (Mass. App. Ct. 2011).
The supplemental coverage purchased by the Kaplans likewise
fails to cover those three causes of action.

The Mariner Plus

Endorsement lists five enumerated intentional torts which
constitute a covered “personal injury.”

Intentional infliction

of emotional distress, abuse of process,2 and civil rights
violations are not among the claims on that list.

Because the

three causes of action pled by the Costellos in the underlying
suit are not covered under either the standard coverage or the
supplemental coverage, they “lie expressly outside the policy
coverage and its purpose” and Narragansett has no duty to defend
the Kaplans against them.

No other claims supportive of

coverage have been suggested in submissions by the parties.

The

2

The express inclusion of the related, though distinct, tort of
malicious prosecution in the Mariner Plus Endorsement, without a
parallel inclusion of abuse of process, is corroborative of a
contractual determination not to cover abuse of process claims.
11

Kaplans have failed to meet their burden to show coverage.

Cf.

Manganella v. Evanston Ins. Co., 746 F. Supp. 2d 338, 345 (D.
Mass. 2010) aff'd, 700 F.3d 585 (1st Cir. 2012).
C.

Narragansett’s Duty to Indemnify
Narragansett also seeks a declaration that it lacks a duty

to indemnify the Kaplans in the underlying action.

Failing

that, it seeks a declaration that its duties are limited,
including by the applicable policy period.

“The duty to

indemnify is narrower in scope and distinct from the duty to
defend.” Travelers Ins. Co. v. Waltham Indus. Labs. Corp., 883
F.2d 1092, 1099 (1st Cir. 1989) (citing Sterilite Corp. v.
Continental Cas. Co., 458 N.E.2d 338, 341 (Mass. App. Ct.
1983)).

Whereas an insurer’s duty to defend is “measured by the

allegations of the underlying complaint,” the duty to indemnify
is “determined by the facts, which are usually established at
trial.” Id. (citing Newell-Blais Post No. 443 v. Shelby Mut.
Ins., 487 N.E.2d 1371, 1374 (Mass. 1986)).

Accordingly, a

declaratory judgment is not yet ripe for consideration regarding
the duty to indemnify where, as here, the underlying action has
not determined liability or adjudicated factual disputes.
“[A]ny determination as to the obligation of the insurer to
indemnify its insured would now be premature and must await the
resolution of the underlying claim.” Spoor–Lasher Company, Inc.
v. Aetna Casualty and Surety Company, 39 N.Y.2d 875, 386
12

N.Y.S.2d 221, 352 N.E.2d 139 (1976) (relied upon in Sterilite
Corporation v. Continental Casualty Company, 458 N.E.2d at 341);
see also John Beaudette, Inc. v. Sentry Ins. A Mut. Co., 94 F.
Supp. 2d 77, 103 (D. Mass. 1999).

A declaration of

Narragansett’s duty to indemnify must wait until the underlying
action is resolved.

I observe at this point, however, that

having determined there is no duty to defend, there is
necessarily no demonstrated basis for a duty to indemnify.
D.

Counterclaim: Estoppel
The Kaplans argue that even if Narragansett did not owe

them a duty to defend under the terms of the insurance policy,
it was estopped from halting coverage once it began, based on
promises that it had made.

As a general rule, estoppel claims

are easily overcome in the context of an insurer’s duty to
defend.

A reservation-of-rights letter suffices under

Massachusetts law to block any estoppel claim. Three Sons, Inc.
v. Phoenix Ins. Co., 257 N.E.2d 774, 777 (Mass. 1970) (“A
reservation of rights in such circumstances notifies the insured
that the insurer's defence is subject to the later right to
disclaim liability.

The insured thus can take the necessary

steps to protect his rights, and has no basis for claiming an
estoppel.”); see also Salonen v. Paanenen, 71 N.E.2d 227, 231
(Mass. 1947).

Narragansett sent the Kaplans such a reservation-

of-rights letter in this case.

Moreover, the Kaplans have
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averred that their counsel was provided under a reservation of
rights.
Despite this unambiguous reservation of rights acknowledged
by the Kaplans, they contend that Narragansett is estopped from
denying coverage based on a second, separate communication.

The

initial attorney provided by Narragansett, John Haverty, wrote
to the Kaplans on November 1, 2013, stating that he would
provide “a defense throughout the course of this action.”
“promise,” however, is not enough to create estoppel.

This

It is

little more than a statement of present intent, readily
understandable to be modifiable by changed circumstances, as Mr.
Haverty’s subsequent withdrawal and the substitution of
successor counsel makes clear.
In this context, the elements of promissory estoppel cannot
be made out.

First, promissory estoppel requires that that a

person reasonably rely on a statement.

Trifiro v. New York Life

Ins. Co., 845 F.2d 30, 33 (1st Cir. 1988).

Yet in the face of

two ostensibly contradictory statements (only one of which, it
should be noted, came directly from Narragansett), it is at a
minimum unreasonable to rely on one contradicted by the other.
Id. (“The conflicting [statements] should have placed petitioner
on notice that he should not rely on either statement.
Confronted by such conflict a reasonable person investigates
matters further; he receives assurances or clarification before
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relying.”).

As a matter of law, the Kaplans could not have

reasonably relied on the Haverty statement, and their estoppel
claims must fail.
Second, promissory estoppel requires that the promisee have
detrimentally relied on the promise.

Anzalone v. Admin. Office

of Trial Court, 932 N.E.2d 774, 786 (Mass. 2010).

How much

evidence is required to prove detrimental reliance remains
largely undefined under Massachusetts law, Suominen v. Goodman
Indus. Equities Mgmt. Grp., LLC, 941 N.E.2d 694, 703 (Mass. App.
Ct. 2011), although some evidence of detriment more than a “well
founded hope” of a better outcome is clearly required. Hall v.
Horizon House Microwave, Inc., 506 N.E.2d 178, 184 (Mass. App.
Ct. 1987).

The Kaplans fail to provide any meaningful evidence

of detriment, however.

They allege in their complaint that they

have been harmed by delays and interruptions caused by
Narragansett’s original selection of a lawyer and subsequent
selection of a replacement lawyer.

Additionally, they assert

that they would have hired private counsel and engaged in more
aggressive legal strategies were it not for the representations
of Narragansett.

These allegations lack meaningful specificity,

which on its own is enough to defeat their claim.

Compare Hall,

506 N.E.2d at 184 (“There is no evidence of how Hall fared as an
independent entrepreneur and, therefore, whether he suffered any
economic loss by postponing his own venture.”).
15

Moreover, the

alleged detriments are not causally linked to the promise in
question.

Dissatisfaction with the professional services

provided cannot transform an open-textured “promise” to keep
representing the Kaplans through the course of the underlying
action, made by the attorney eventually selected, into a promise
enforceable against Narragansett.

The promise of continuous

representation has no connection to the allegedly deficient
legal tactics employed by the Kaplans’ counsel.

Narragansett

did not give up its right to contest the duty to defend.
Summary judgment must be granted in favor of Narragansett on the
Kaplans’ estoppel counterclaim.
E.

Counterclaim: Unfair Trade Practices under Chapter 93A
The Kaplans assert as an additional counterclaim, that

Narragansett’s behaviors constitute unfair and deceptive trade
practices in violation of MASS. GEN. L. ch. 93A.

Because they do

not meaningfully brief this claim, it is difficult to discern
precisely which behaviors the Kaplans deem unfair trade
practices; the thrust seems to be that by reserving its right to
stop defending the Kaplans in the underlying action and then
seeking to do so in this action, Narragansett has unfairly led
them to believe they were covered.
As a threshold matter, Narragansett asserts that the
Kaplans failed to write a demand letter, as required by ch. 93A
§ 9(3).

However, that provision expressly excepts counterclaims
16

and cross-claims from the demand requirement.

Id.

See also

Crosby Yacht Yard, Inc. v. Yacht Chardonnay, 159 F.R.D. 1, 3 (D.
Mass. 1994).

No such procedural hurdle stands in the way of the

Kaplans’ ch. 93A claim.
More fundamentally, no ch. 93A violation appears viable on
the merits.

To constitute an unfair practice giving rise to ch.

93A liability, the conduct in question must be “egregious.”
Baker v. Goldman, Sachs & Co., 771 F.3d 37, 51 (1st Cir. 2014).
Behavior that satisfies “the standard of the commercial
marketplace” does not violate 93A. Commercial Union Ins. Co. v.
Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir. 2000).
Narragansett’s behavior, even indulging every inference in the
Kaplans favor, does not qualify.

The reservation of rights,

followed by orderly recourse to a declaratory judgment action
for the judicial determination of the duty to defend, is a
standard and prudent practice in the insurance industry, as
recognized in the case law.

Narragansett has followed that

practice and the Kaplans have offered neither allegation nor
evidence to suggest any behavior worse than, or even different
from, the norm.

See Hanover Ins. Co. v. Golden, 746 N.E.2d 574,

576 (Mass. App. Ct. 2001) aff'd, 766 N.E.2d 838 (Mass. 2002)
(finding “not much substance” in a ch. 93A claim that an
insurer’s reservation of rights letter and subsequent action for
a declaratory judgment were unfair acts).
17

Even an incorrect but

reasonable insurer determination to contest its duty to defend
would not, as a matter of law, support a claim under ch. 93A.
Cf. Polaroid Corp. v. Travelers Indem. Co., 610 N.E.2d 912, 916
(Mass. 1993).

“There is nothing immoral, unethical or

oppressive in such an action.” Boston Symphony Orchestra, Inc.
v. Commercial Union Ins. Co., 545 N.E.2d 1156, 1160 (Mass.
1989).

Where the complaint in the underlying action asserted

three causes of action not covered by the policy, an insurer
hardly acts unfairly in seeking a judicial determination whether
its duty to defend is in force.

Narragansett’s motion for

summary judgment will be granted on the Kaplans’ ch. 93A claims.
F.

Counterclaim: Breach of Contract
Finally, the Kaplans assert as two additional counterclaims

breach of contract and breach of the covenant of good faith and
fair dealing.

Again, these counterclaims arise from the same

facts and the same conflict over Narragansett’s duty to defend.
Any claims of breach are as a formal matter premature.

In this

case, Narragansett merely seeks a declaratory judgment
determining whether it has a duty to defend the Kaplans in the
underlying suit.

It is uncontested that Narragansett has

provided the Kaplans with a defense up to this point.
Massachusetts does not recognize the doctrine of anticipatory
breach, Tucker v. Diamond, 2010 Mass. App. Div. 253 (2010)
aff'd, 957 N.E.2d 254 (Mass. App. Ct. 2011) (citing Daniels v.
18

Newton, 114 Mass. 530 (1874)).

Unless and until Narragansett

fails to defend or indemnify the Kaplans, at a point when it is
obligated to do so, there can be no breach of contract.

Thus

far, Narragansett has defended the Kaplans under a reservation
and I will declare they have no duty to do so; there is no basis
at this point to find Narragansett is or will be required to
indemnify the Kaplans.

No breach has occurred.
IV. CONCLUSION

For the reasons set forth above, I GRANT Narragansett’s
motion for summary judgment.

In this connection, I declare that

Narragansett owes the Kaplans no duty to defend them in the
underlying Costello action; as a formal matter, I issue no
declaratory judgment on Narragansett’s duty to indemnify because
the issue is not now ripe, if it ever will be.

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

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