National Union Fire Insurance Company of Pittsburgh, PA v. Town of Norwood et al
Judge Richard G. Stearns: ORDER entered granting 52 Motion for Summary Judgment; denying 57 Motion for Summary Judgment. It is ADJUDGED and DECLARED that National Union is relieved of its duty to defend Norwood against the retaliation claim, the court having determined the CGL Policy exclusion for knowing violations unambiguously extinguishes any remaining coverage. Norwood's cross-motion for summary judgment is DENIED. (RGS, law1)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 16-11978-RGS
NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH, PA
TOWN OF NORWOOD ET AL.
MEMORANDUM AND ORDER ON
CROSS MOTIONS FOR SUMMARY JUDGMENT
July 26, 2017
This is a dispute over an insurance company’s duty to defend its
insured in a lawsuit alleging, inter alia, retaliation by the insured against a
third party for the exercise of First Amendment rights. Plaintiff National
Union Fire Insurance Company of Pittsburgh, PA, denied having a duty to
defend, but agreed to provide a defense for the Town of Norwood and
affiliated defendants1 (collectively “Norwood”) in a lawsuit brought by
Boston Executive Helicopters, LLC (BEH), under a reservation of rights.
The defendants are the Town of Norwood, Norwood Memorial
Airport, the Norwood Airport Commission (NAC), Francis T. Maguire, Mark
P. Ryan, Kevin J. Shaughnessy, Martin E. Odstrchel, Michael Sheehan, Leslie
W. LeBlanc, and Thomas J. Wynne (all current or former Commission
members or employees of the Airport or NAC). National Union also named
as a defendant Boston Executive Helicopters, LLC (BEH), the plaintiff in the
This court eventually dismissed all but one of BEH’s claims – that Norwood
allegedly retaliated against BEH in violation of 42 U.S.C. § 1983. See Boston
Exec. Helicopters v. Maguire, 196 F. Supp. 3d 134 (D. Mass. 2016).
In this action, National Union seeks a declaration pursuant to 28
U.S.C. § 2201 that under the policy it owes no duty to defend or indemnify
Norwood against the retaliation claim. Norwood filed a cross-motion for
summary judgment.2 See Fed. R. Civ. P. 56. A hearing on the motions was
held on July 6, 2017.
BEH has held a commercial permit (the Part 135 Permit) to operate a
helicopter flight service at the Norwood Airport since 2010. BEH Am.
Compl. ¶ 49. Conflicts that culminated in the underlying lawsuit between
Norwood and BEH began in 2011 when BEH attempted to expand its
business by applying for a permit to become a fixed base operator (FBO). Id.
¶¶ 2, 55. The NAC required an FBO applicant to make a substantial capital
investment at the Airport as a ticket of admission.
To satisfy that
requirement, BEH leased a 30,000 square foot plot on which it built a new
hangar and fuel farm facility. Id. ¶ 53-59. Disputes arose when the NAC
refused to provide BEH with necessary ramp space, which BEH perceived as
Norwood has also counterclaimed for attorneys’ fees.
favoring the Airport’s sole existing FBO, FlightLevel Norwood, LLC. Id. ¶ 64.
BEH served public records requests on Norwood regarding the decision to
deny it the ramp space and subsequently petitioned for a court order to
compel Norwood to comply with the requests. Id. ¶ 70-71. On June 5, 2014,
BEH filed a formal complaint with the Federal Aviation Administration
(FAA). Id. ¶ 75.
On June 11, 2014, the NAC voted to table discussion of BEH’s FBO
permit application. Id. ¶ 222. On October 26, 2015, BEH filed a twelve-count
complaint against Norwood, alleging that the NAC had colluded with
FlightLevel to stifle competition at the Airport. The original complaint has
since been whittled down to one surviving claim – an allegation that
Norwood unlawfully retaliated against BEH in violation of the First
In analyzing the First Amendment claim in Boston Executive
Helicopters, this court held that BEH’s allegations that: (1) the NAC had
tabled consideration of BEH’s application for an FBO permit in response to
its filing a complaint with the FAA; (2) the NAC had refused to issue the FBO
permit, in part, because BEH publicly litigated the dispute in the press; and
(3) the NAC had denied hearings on BEH’s FBO permit application in
retaliation for BEH filing a public records dispute, when considered
collectively, made out a plausible claim of First Amendment retaliation. 196
F. Supp. 3d at 144-145.
At all relevant times, Norwood held two identical Aviation Commercial
General Liability (CGL) Policies with National Union.
Under the CGL
Policies, National Union undertook the defense against BEH’s claims under
a reservation of rights. National Union now seeks a declaration from the
court that under the CGL Policies it owes no duty to defend Norwood against
the remaining retaliation claim. The sole issue is whether the surviving claim
falls within the scope of the CGL Policies’ coverage.
The CGL Policies require National Union to defend and indemnify
Norwood for damages incurred arising from any “suit” resulting from
“personal and advertising injury,” subject to various exclusions.
operative exclusion for present purposes is the exclusion from coverage of
“knowing” violations on the part of the insured, including “‘[p]ersonal and
advertising injury’ caused by or at the direction of the insured with the
knowledge that the act would violate the rights of another and would inflict
‘personal and advertising injury.’” Dkt #1-2 at 7.
Summary judgment is appropriate when, based upon the pleadings,
the discovery and disclosure materials on file, and any affidavits, “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(a),
(c). “A genuine issue is one that could be resolved in favor of either party,
and a material fact is one that has the potential of affecting the outcome of
the case.” Calero-Cerezo v. U.S. Dep’t of Justice, 355 F.3d 6, 19 (1st Cir.
2004). “[W]ith cross-motions for summary judgment, we ‘must view each
motion, separately,’ in the light most favorable to the non-moving party, and
draw all reasonable inferences in that party’s favor.” OneBeacon Am. Ins.
Co. v. Commercial Union Assur. Co. of Canada, 684 F.3d 237, 241 (1st Cir.
2012) (quoting Estate of Hevia v. Portrio Corp., 602 F.3d 34, 40 (1st Cir.
Massachusetts law, which controls in this case, provides that if the
allegations in the third-party complaint against the insured are “‘reasonably
susceptible’ of an interpretation that they state or adumbrate a claim covered
by the policy terms, the insurer must undertake the defense.” Utica Mut. Ins.
Co. v. Herbert H. Landy Ins. Agency, Inc., 820 F.3d 36, 41 (1st Cir. 2016)
(quoting Metro. Prop. & Cas. Ins. Co. v. Morrison, 460 Mass. 352, 357
(2011)). “In order for the duty of defense to arise, the 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.” Sterilite Corp. v. Continental Cas. Co., 18 Mass. App.
Ct. 316, 319 (1983). Moreover, where an insurer is obligated to defend the
insured on one of the counts alleged against it, the common law “in for one,
in for all” doctrine requires the insurer to mount a defense on all counts,
including those that are not covered.
Mount Vernon Fire Ins. Co. v.
Visionaid, Inc., 477 Mass. 343, 347-348 (2017). By contrast, where the
allegations in the underlying complaint “lie expressly outside the policy
coverage and its purpose, the insurer is relieved of the duty” to defend.
Terrio v. McDonough, 16 Mass. App. Ct. 163, 168 (1983); see also Metro.
Prop. & Cas. Ins. Co. v. Fitchburg Mut. Ins. Co., 58 Mass. App. Ct. 818, 820
The apparent tension between these two bedrock propositions of
insurance law raises the question of whether the general duty to defend
under the “in for one, in for all” doctrine requires an insurer to continue the
defense at the point the only remaining claim against the insured falls within
an exclusion from the policy. The answer is found in the venerable Sterilite
decision: “When, as in the present case, the allegations of the third-party
complaint find apparent lodgment in the effective coverage of the policy, the
insurer is obligated to defend. But it can, by certain steps, get clear of the
duty from and after the time when it demonstrates with conclusive effect on
the third party that as matter of fact – as distinguished from the appearances
of the complaint and policy – the third party cannot establish a claim within
the insurance.” Sterilite Corp., 17 Mass. App. Ct. at 323. In other words,
under Sterilite, the insurer is permitted to withdraw the defense when only
“counts falling directly within the policy exclusions remain.” Conway
Chevrolet-Buick, Inc. v. Travelers Indem. Co., 136 F.3d 210, 214 (1st Cir.
1998). National Union argues that the CGL Policies’ exclusion for knowing
violations extinguishes any conceivable remaining coverage.
But there is one more bedrock proposition at play. Policy “[exclusions]
are strictly construed against the insurer.” Camp Dresser & McKee, Inc. v.
Home Ins. Co., 30 Mass. App. Ct 318, 323-324 (1991). Norwood argues that
for the knowing violations exclusion to apply, it must have not only intended
the retaliatory acts, but also to have intended any resulting harm. Norwood
is correct that Massachusetts courts have interpreted the policy exclusion for
knowing violations as applying to the intentional and knowing infliction of
injury, and not to injury resulting from reckless or negligent behavior.
Norfolk & Dedham Mut. Fire Ins. Co. v. Cleary Consultants, Inc. 81 Mass.
App. Ct. 40, 41 (2011). For example, in Norfolk, the underlying claim of
sexual harassment remained outside the scope of the exclusion because the
defendant’s offensive conduct “f[e]ll well within the range of reckless
misconduct.” Id. at 53. Norwood asserts that whether it intended to injure
BEH is still in dispute in the underlying litigation. And because the insurer’s
duty to defend is independent from, and broader than, its duty to indemnify,
Morrison, 460 Mass. at 357, Norwood argues that until the facts are
conclusively established, National Union must provide a defense.
But the weakness in Norwood’s argument is this: while I can easily
imagine an intentional act undertaken without any intent to cause injury,
retaliation is not one of those imaginings. A desire to punish fuels retaliatory
conduct. See Retaliation, Oxford English Dictionary (3d ed. 2010), available
“[r]epayment (in kind) for injury or insult; reprisal, revenge; retribution”).
Because the conduct covered by a First Amendment retaliation claim is
inherently willful, it requires intentionality and the deliberate infliction of
injury. See, e.g., Collins v. Nuzzo, 244 F.3d 246, 251-252, 251 n.2 (1st Cir.
2001) (“intent to retaliate” for First Amendment activities must be a
“substantial factor” motivating the challenged action). It therefore falls
within the policy’s knowing violations exclusion, relieving National Union of
its duty to defend.
For the foregoing reasons, it is ADJUDGED and DECLARED that
National Union is relieved of its duty to defend Norwood against the
retaliation claim, the court having determined the CGL Policy exclusion for
knowing violations unambiguously extinguishes any remaining coverage.
Norwood’s cross-motion for summary judgment is DENIED.
/s/ Richard G. Stearns
UNITED STATES DISTRICT JUDGE
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