Consigli Construction Co., Inc. v. Travelers Idemnity Company et al
Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered denying 44 Motion to Remand; granting 51 Motion for Summary Judgment; denying 56 Motion for Summary Judgment (Woodlock, Douglas)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CONSIGLI CONSTRUCTION CO., INC, )
TRAVELERS INDEMNITY CO. and
UNITED SPECIALTY INSURANCE CO., )
CIVIL ACTION NO.
MEMORANDUM AND ORDER
June 21, 2017
Consigli Construction Co., Inc. and Travelers Indemnity
Company have each filed dispositive motions to resolve whether
Travelers has a duty to defend Consigli in a state tort action
brought by a subcontractor’s worker injured at one of Consigli’s
Meanwhile, Consigli has moved to remand the case
to state court.
As a matter of procedure, I find removal of the
case has not been shown to have been inconsistent with this
court’s diversity jurisdiction and will deny Consigli’s motion
As a matter of substance, I find that Consigli did not in a
timely fashion properly make Travelers aware of facts that would
be sufficient to bring Consigli within the scope of an insured
under the Travelers insurance agreement at issue; consequently,
Travelers has no duty to defend Consigli in the state court
action during the time period in dispute.
As a result, I will
grant summary judgment to Travelers.
Consigli was the general contractor for a renovation
project at Methuen High School.
Consigli engaged several
subcontractors to work on the project, including American
Environmental, Inc. and Costa Brothers Masonry of Fairhaven,
American Environmental was responsible for demolishing
concrete floors within the existing structures on the project;
Costa Brothers provided masonry work.
Wellington M. Ely, Jr.
was an employee of Costa Brothers and worked as a mason on the
Costa Brothers had a commercial general liability insurance
policy issued to it by Travelers.
In order to work on the
Methuen High School project as a subcontractor for Consigli,
Costa Brothers agreed to name Consigli as an additional insured
on its Travelers policy.
On October 22, 2013, Ely was walking inside a building on
the project where the concrete floor had been broken up when he
The facts recited here are drawn from the complaint filed in
the underlying state court action for which the costs of defense
tripped and fell over exposed wire.
and left shoulder.
He injured his knees, neck,
He also experienced headaches in the
aftermath of the fall.
American Environmental had demolished
the concrete floor in the area where Ely fell, allegedly without
removing protruding wires or warning workers of the potential
Ely alleged American Environmental and
Consigli were both responsible for his injuries because American
Environmental performed its demolition work negligently and
Consigli failed to maintain a safe working environment.
made no specific allegations that Costa Brothers caused his
Ely filed suit against American Environmental and Consigli
on July 1, 2015.
Consigli mailed a written demand to Travelers
on July 17, 2015, requesting that Travelers defend Consigli
against Ely’s action.
On July 22, 2015, Consigli, for its part,
filed a third-party complaint against Costa Brothers and
American Environmental in which it alleged that Ely’s injuries
were the result of the work by Costa Brothers and American
Environmental on the project.
Travelers informed Consigli on
August 12, 2015 that it would not defend it in the state action
because Costa Brothers “was not the cause of this loss.”
Consigli filed the instant coverage action against
Travelers and Century Surety Company, American Environmental’s
insurer, in state court on March 18, 2016, seeking a declaration
that the defendants were obligated to defend Consigli and
seeking damages for breach of contract.
the case to this court.
The defendants removed
I have since granted Consigli’s motion
to amend the complaint to substitute United Specialty Insurance
Company for Century Surety as a defendant because United
Specialty had replaced Century Surety as American
On February 3, 2017, Consigli and
United Specialty reported they had reached an agreement in
principle to settle the action against United Specialty and on
April 24, 2017, they filed a stipulation of dismissal of
Consigli’s claims against United Specialty.
The dispute between
Consigli and Travelers remains and is now framed by the remand
and summary judgment motion practice the parties have pressed.
MOTION TO REMAND
Before considering the cross-motions for summary judgment,
I must at the threshold address Consigli’s motion to remand this
case to state court for resolution.
Consigli contends that the
amount in controversy is below the jurisdictional requirement
for diversity claims in federal court. 28 U.S.C. ' 1332.
Consigli states that as of January 13, 2017, it had incurred
only $60,000.45 in attorney’s fees and defense costs, below the
necessary $75,000 threshold.
After filing its motion to remand, Consigli agreed to
settle its claims against United Specialty.
In light of the
settlement with United Specialty, Consigli now asserts Travelers
owes only the defense costs of $17,143.80 Consigli incurred from
July 20, 2015 to December 7, 2015, together with the costs
Consigli incurred in pursuing the instant coverage case against
As of November 29, 2016, these amounted to $10,000.
Because Travelers has invoked federal jurisdiction by
removing the case from state court on diversity grounds, it
“bears the burden of demonstrating that the court has subjectmatter jurisdiction over the case” and “must show that the
amount in controversy exceeds $75,000.”
Co., Inc. v. Pan Am Rys., Inc., 695 F.3d 175, 178 (1st Cir.
“The amount in controversy in actions seeking
The First Circuit has yet to calibrate expressly the precise
burden a removing party bears in establishing that the case
meets the amount in controversy requirement in the setting of a
motion to remand. See Milford-Bennington, 695 F.3d at 179.
That court has, however, held that a defendant seeking removal
under the Class Action Fairness Act of 2005 “must show a
‘reasonable probability’ that the jurisdictional threshold is
satisfied.” Id. (citing Amoche v. Guarantee Trust Life Ins.
Co., 556 F.3d 41, 48-49 (1st Cir. 2009)). Judges in this
district have applied the “reasonable probability” standard to
cases otherwise removed on diversity grounds. See Huston v. FLS
Language Centres, 18 F. Supp. 3d 17, 21 (D. Mass. 2014) (Saylor,
J.); see also Laughlin Kennel Co. v. Gatehouse Media Inc., 202
F. Supp. 3d 178, 179 (D. Mass. 2016) (Hillman, J.) (“In a case
based in diversity jurisdiction, the defendant must show a
‘reasonable probability’ that the amount in controversy is
greater than $75,000.”) (citing Huston, 18 F. Supp. 3d at 21).
As I will discuss, I find Travelers has shown a reasonable
declaratory relief ‘is the value of the right or the viability
of the legal claim to be declared, such as a right to
indemnification or a duty to defend.’”
CE Design Ltd. v. Am.
Econ. Ins. Co., 755 F.3d 39, 43 (1st Cir. 2014) (quoting 14AA
Wright & Miller, Federal Practice and Procedure Jurisdiction '
3708 (4th ed.)).
In calculating the amount in controversy, Consigli
references immaterial events that have occurred after removal.
It is well-settled that “[f]or the purposes of establishing
diversity jurisdiction, the amount in controversy is determined
by looking to the circumstances at the time the complaint is
Coventry Sewage Assoc. v. Dworkin Realty Co., 71 F.3d
1, 4 (1st Cir. 1995).
For cases removed from state court,
“satisfaction of the amount-in-controversy requirement generally
is determined on the basis of the record existing at the time
probability that the amount in controversy at the time of
removal was greater than $75,000. Thus, I need not address the
question whether a removing party in these circumstances may
face a less demanding burden, one more in line with the
traditional burden a plaintiff faces when invoking diversity
jurisdiction outside the removal context. See St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938) (“The
rule governing dismissal for want of jurisdiction in cases
brought in the federal court is that . . . [i]t must appear to a
legal certainty that the claim is really for less than the
jurisdictional amount.”); see also LaValley v. Quebecor World
Book Servs. LLC, 315 F. Supp. 2d 136, 141 (D. Mass. 2004) (“The
Notice of Removal alleges that the amount in controversy exceeds
$75,000 and it does not ‘appear to a legal certainty that the
claim is really for less than [$75,000].’”) (citations omitted).
the notice of removal . . . is filed with the district court.”
14C Wright & Miller, Federal Practice and Procedure Jurisdiction
' 3725.1 (4th ed.).
“Thus, events occurring subsequent to
removal which reduce the amount recoverable . . . do not oust
the district court’s jurisdiction once it has attached.”
Paul Mercury Indem. Co., 303 U.S. at 293.
At the time the case was removed from state court, the
jurisdictional threshold was met.
The notice of removal claimed
the amount in controversy exceeded $75,000 because Consigli
sought a declaration of a duty to defend that would cover the
attorney’s fees and defense costs incurred in defending the
state court action, prosecuting a third-party complaint and
cross-claim in the state court action, and prosecuting the
Such costs can be included in determining the
amount in controversy here.
Velez v. Crown Life Ins. Co., 599
F.2d 471, 474 (1st Cir. 1979) (attorney’s fees may be included
in calculating amount in controversy if “the fees are provided
for by contract”); see also Auto-Owners Ins. Co. v. Stevens &
Ricci Inc., 835 F.3d 388, 396 (3d Cir. 2016) (where an insurance
policy imposes a duty to defend its insured, attorney’s fees and
defense costs are “properly included in determining the amount
As Travelers notes in its opposition to remand, there was
in any event a reasonable probability at the time of removal
that these attorney’s fees and defense costs would exceed
Even if the attorney’s fees and defense costs have not
yet reached the jurisdictional threshold, it bears emphasizing
that Consigli also sought indemnification for the potential
damages that could be awarded to Ely in the state court action,
which Ely represented could total at least $147,034.33.
Consigli’s post-removal settlement agreement with United
Specialty does not divest me of the power to resolve this case
on the merits.
I will deny the motion to remand.
III. SUMMARY JUDGMENT AS TO DUTY TO DEFEND
Turning the merits, I must observe that I am obligated to
grant summary judgment if the moving party “shows that there is
no genuine dispute as to any material fact” and the moving party
“is entitled to judgment as a matter of law.”
Fed R. Civ. P.
When I am faced with cross-motions for summary judgment, I
must “consider each motion separately, drawing inferences
against each movant in turn.”
Reich v. John Alden Life Ins.
Co., 126 F.3d 1, 6 (1st Cir. 1997).
“Under Massachusetts law
the interpretation of an insurance policy and the determination
of the policy-dictated rights and obligations are questions of
law, appropriate grist for the summary judgment mill.”
Merchants Ins. Co. of N.H., Inc. v. U.S. Fidelity and Guar. Co.,
143 F.3d 5, 8 (1st Cir. 1998) (citing Assetta v. Safety Ins.
Co., 682 N.E.2d 931, 932 (Mass. App. Ct. 1997)).
Travelers has moved for summary judgment on the grounds
that Consigli’s settlement with United Specialty renders moot
Consigli’s claims against Travelers.
Consigli’s declaratory judgment claim is moot because United
Specialty has agreed to defend Consigli going forward in the
state court action.
Travelers also argues Consigli’s breach of
contract claim is no longer live because United Specialty has
agreed to reimburse Consigli for its defense costs and
attorney’s fees and therefore has suffered no damage from
Travelers’ alleged breach of its duty to defend it.
address this issue at the threshold before undertaking
resolution directly on the merits.
Consigli does not appear to contest that its settlement
agreement with United Specialty moots its claim for a
declaration that Travelers is obligated to defend it in state
court going forward.
However, because the settlement does not
cover all of the costs it has incurred in both the state court
action and the instant case, Consigli maintains that its breach
of contract claim against Travelers remains live.
Based on Consigli’s description of the terms of the
settlement agreement, Consigli’s claim for a declaratory
judgment as to Travelers’ duty to defend is moot in part.
declaratory relief to withstand a mootness challenge, the facts
alleged must ‘show that there is a substantial controversy . . .
of sufficient immediacy and reality to warrant the issuance of a
Am. Civil Liberties Union of Mass. v.
U.S. Conference of Catholic Bishops, 705 F.3d 44, 53-54 (1st
Cir. 2013) (quoting Preiser v. Newkirk, 422 U.S. 395, 402
In light of Consigli’s settlement with United
Specialty, there is no longer a sufficiently immediate
controversy as to Travelers’ duty to defend Consigli going
Because United Specialty has taken on the duty to
defend Consigli in the state court action, a declaration that
Travelers is required to defend Consigli going forward would not
affect the substantive rights of the parties.
Consigli may, however, seek a declaration that Travelers
was required to defend it from July 20, 2015 to December 7, 2015
and that Travelers is required to reimburse Consigli for the
costs incurred in prosecuting this current case.
United Specialty will not reimburse Consigli for either the
defense costs Consigli incurred from July 20, 2015 to December
7, 2015 or for the costs it incurred in pursuing this case
A declaration that Travelers had a duty to
defend during that time in the underlying action and will be
obligated for attorney fees in this action will therefore affect
the substantive rights of the parties.
Old Republic Ins. Co. v.
Chuhak & Tecson, P.C., 84 F.3d 998, 1001 (7th Cir. 1996) (“Old
Republic’s suit, while moot insofar as any further duty to
defend against Kearns’s 1991 suit is concerned, is not moot
concerning responsibility for the costs of defense already
For the same reasons, the United
Specialty/Consigli settlement agreement does not make moot
Consigli’s breach of contract claim for the costs incurred in
the underlying action from July 20, 2015 to December 7, 2015 and
for the costs incurred in prosecuting this action.
Because there remains a live dispute as to Travelers’ duty
to defend Consigli at least for some period of time in the
underlying action and for costs in this related action, I turn
to address the duty to defend directly on the merits.
Duty to Defend
I thus come now to the central question in this litigation:
whether Travelers had a duty to defend Consigli in the
underlying state action.
“‘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.’”
Billings v. Commerce Ins. Co., 936
N.E.2d 408, 414 (Mass. 2010) (quoting Sterilite Corp. v.
Continental Cas. Co., 458 N.E.2d 338, 341 (Mass. App. Ct.
“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.”
Id. (internal quotations omitted).
Costa Bothers agreed to name Consigli as an additional
insured on its commercial general liability policy with
Travelers, but only as to some injuries.
The dispute before me
turns on whether Consigli qualifies as an additional insured for
the injuries alleged in the underlying state court action.
Costa Brothers’ policy with Travelers defines an additional
insured under the policy as follows:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
1. WHO IS AN INSURED – (Section II) is amended to include
any person or organization that you agree in a
“written contract requiring insurance” to include as
an additional insured on this Coverage Part, but:
a) Only with respect to liability for “bodily
injury”, “property damage” or “personal injury”;
b) If, and only to the extent that, the injury or
damage is caused by acts or omissions of you or
your subcontractor in the performance of “your
work” to which the “written contract requiring
insurance” applies. The person or organization
does not qualify as an additional insured with
respect to independent acts or omissions of such
person or organization.
Consigli qualifies as an additional insured “[o]nly with
respect to liability for ‘bodily injury’, ‘property damage’ or
‘personal injury’” and “[i]f and only to the extent that, the
injury or damage is caused by acts or omissions of [Costa
Brothers] . . . .”
It is clear that section a) of the
endorsement is satisfied: Ely’s injury qualifies as a “bodily
injury” as alleged in his complaint in state court.
consequently determine whether a reasonable jury could find that
“the injury or damage [was] caused by” acts or omissions of
Consigli argues Ely’s injury was “caused by” Costa Brothers
because he was injured in the course and scope of his employment
with Costa Brothers at the project site.
In doing so, Consigli
relies on National Union Fire Insurance Co. of Pittsburgh v.
Lumbermens Mutual Casualty Co., in which the First Circuit
interpreted an agreement between a subcontractor and general
contractor and found the general contractor qualified as an
additional insured under the subcontractor’s policy.
47, 55 (1st Cir. 2004).
The policy in National Union, while similar to the policy
at issue here, used a critically different operative phrase to
define the scope of coverage.
The policy in National Union
defined an additional insured as “[a]ny person or organization
to whom or to which you are obligated by virtue of a written
contract, agreement or permit to provide such insurance as
afforded by this policy . . . but only with respect to liability
arising out of: a. ‘Your work’ for that insured by you.”
50 (emphasis added).
The court noted that “‘under Massachusetts
law the phrase ‘arising out of’ denotes a level of causation
that lies between proximate and actual causation.’”
(quoting Merchants Ins. Co., 143 F.3d at 9).
“intermediate causation standard,” National Union held that
liability “aris[es] out of” a subcontractor’s work if “the
employee [is] injured within the general work area where the
subcontractor’s work [is] being performed, so long as his
presence [is] work-related.”
Id. at 52.
Here, the operative phrase setting the scope of coverage is
not “arising out of”; it is “caused by.”
law, the phrase “caused by” has a narrower meaning than the
phrase “arising out of.”
New England Mut. Life Ins. Co. v.
Liberty Mut. Ins. Co., 667 N.E.2d 295, 298 (Mass. App. Ct. 1996)
(“The usual meaning ascribed to the phrase ‘arising out of’ is
much broader than ‘caused by.’”); see also Bagley v. Monticello
Ins. Co., 720 N.E.2d 813, 816 (Mass. 1999) (“The phrase ‘arising
out of’ must be read expansively, incorporating a greater range
of causation than that encompassed by proximate cause under tort
I recognize that the precise meaning of “caused by,” when
used in an insurance policy in Massachusetts, does not appear to
be entirely settled.
At least one Massachusetts state trial
court judge has equated the phrase with proximate cause.
v. Lighthouse Masonry, Inc., No. MICV201100151, 2014 WL 7405931,
at *8 (Mass. Sup. Ct. June 2, 2014) (“In construing an insurance
policy, the phrase ‘caused by’ . . . embodies the concept of
But the Supreme Judicial Court has
construed “caused by” — when used in M.G.L c. 149, ' 29C, which
makes void any indemnity provision in a construction contract
“which requires a subcontractor to indemnify any party for
injury to persons . . . not caused by the subcontractor” — to
require only an act or omission that “‘brought about or provoked
Spellman v. Shawmut Woodworking & Supply, Inc.,
840 N.E.2d 47, 52 (Mass. 2006) (quoting Johnson v. Modern
Continental Constr. Co., 731 N.E.2d 96, 98-99 (Mass. App. Ct.
In any event, under any reasonable definition of “caused
by” there is no possibility, based on the allegations in the
complaint, that Costa Brothers caused the injury to Ely.
American Environmental caused the wire to be exposed by
demolishing the floors negligently.
Costa Brothers is not
alleged to have undertaken work in the area where the accident
Having retained in the agreement the right to “post
and maintain adequate danger signs and other warnings against
hazards” at the work site, Consigli was required to “exercise
In Johnson v. Modern Continental Construction Co., 731 N.E.2d
96 (Mass. App Ct. 2000) the Appeals Court observed that
proximate cause and the “brought about or provoked” standard of
causation are different, with the latter standard a slightly
lower burden. Id. at 99-100.
that control with reasonable care for the safety of others” and
would “[be] liable for damages caused by [its] failure to do
Corsetti v. Stone Co., 483 N.E.2d 793, 798 (Mass. 1985).
There is no act or omission by Costa Brothers identified in the
complaint that would make Costa Brothers the proximate cause of
Ely’s injury or would show that Costa Brothers brought about or
provoked Ely’s injury.
Consigli’s alternative attempts to show causation by Costa
Brothers apart from the express language of the complaint also
First, Consigli erroneously contends a reasonable jury
could find Ely’s own negligence caused his injury and this
negligence could be imputed to Costa Brothers through vicarious
Under Massachusetts law, however, “reliance on an
imputation theory” to prove causation under these circumstances
“is inappropriate since vicarious liability of an employer for
an employee’s negligence is generally recognized to provide an
injured victim of that negligence [and not some third party
seeking separate indemnification] with an increased likelihood
Collins v. Kiewit Const. Co., 667 N.E.2d 904,
906 n.4 (Mass. App. Ct. 1996) (emphasis in original) (citing
Elias v. Unisys Corp., 573 N.E.2d 946, 947-49 (Mass. 1991)).
Second, Consigli separately seeks to impute to Costa
Brothers the alleged negligence of Ely’s foreman William Russell
based on additional facts not recited in the complaint.
was deposed as a part of the underlying state court case on
April 14, 2016.
He testified he was walking with Ely at the
time of the accident and saw him trip on the wire.
stated there was a strip of finished concrete about ten feet
wide stretching across the room, but that he and Ely walked
across the broken up concrete floor because it was the more
The underlying complaint itself does not allege that
Russell was negligent or that Costa Brothers should be
vicariously responsible for Russell’s negligence.
In fact, the
complaint states no claims against Costa Brothers and makes no
reference to Russell.
“Massachusetts courts generally use
extrinsic facts (such as those set forth in demand letters to
the insured) to aid interpretation of the complaint, and not as
independent factual predicates for a duty to defend.”
Software Found., Inc. v. U.S. Fidelity & Guar. Co., 307 F.3d 11,
15 (1st Cir. 2002).
The adverb “generally” may be read to leave open the
possibility that extrinsic facts in some limited but uncertain
circumstances might be used as predicates for triggering a duty
In Boston Symphony Orchestra, Inc. v. Commercial
Union Insurance Co., the Supreme Judicial Court limned the
limited role extrinsic facts should play in determining whether
a duty to defend exists:
[O]ur opinion in this case should not be taken to mean that
an insured can, in the absence of a complaint that requires
coverage, force its insurer to defend the insured by simply
telling the insurer facts which would create coverage. We
hold only that an insurer must give consideration to facts
outside the complaint when it considers the allegations in
the complaint to determine if coverage exists. 545 N.E.2d
1156, 1160 (Mass. 1989).
I may not consider additional facts, outside of what is alleged
in the underlying complaint, that were developed, adduced, and
presented after the closed period for which a duty to defend is
claimed in determining whether a duty existed during that
I am tasked with determining the duty to defend solely for
the period from July 20, 2015 to December 7, 2015.
A duty to
defend does not arise until the insurer receives notice of the
suit against the insured.
Rass Corp. v. Travelers Cos., Inc.,
63 N.E.3d 40, 46-47 (Mass. App. Ct. 2016).
The parties agree
that Russell’s account of the accident had not been presented to
Travelers before his deposition on April 14, 2016.4
even if the facts developed at Russell’s deposition triggered a
duty to defend, Travelers’ duty to defend would have begun on
April 14, 2016; Travelers would have had no duty to defend
Consigli before that date.
Rass Corp., 63 N.E.3d. at 47.
The pleadings filed in the underlying action establish the
metes and bounds of the territory Travelers must survey in
There was, for example, no demand letter asserting these facts.
determining the duty to defend in this circumstance.
alleged in the underlying complaint do not support coverage
That complaint has not been amended.
I will not rely on
belatedly developed extrinsic facts to find a duty to defend in
For the reasons more fully set forth above, I DENY
plaintiff’s motion [Dkt. No. 44] to remand the case to state
court. I conclude Travelers has no duty to defend Consigli and
therefore GRANT defendant’s motion [Dkt. No. 51] for summary
judgment and correlatively DENY plaintiff’s motion [Dkt. No. 56]
for summary judgment.
/s/ Douglas P. Woodlock______
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE
Although beyond the grounds of my decision regarding the basis
for determining whether there is any duty to defend on the
record before me, my review of the extrinsic facts developed
prompts me to note my view that even if the extrinsic facts now
referenced were considered, I would still not find a duty to
defend. Russell’s request, as Ely’s supervisor with Costa
Brothers, that Ely walk with him to other parts of the
construction site, could not be said to have brought about or
proximately caused the accident. To be sure, construction sites
are accident-prone places. However, walking from one specific
site to another on the general site is no more dangerous or
causative than any other common activity on an active
construction site. There are no facts developed here to show
Russell’s direction took them through some open and obviously
dangerous territory and thereby caused the injury; indeed, it
was Consigli that was required to maintain a safe site.
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