Mutual Real Estate Holdings, LLC d/b/a Re/Max Elite v. Houston Casualty Company et al

Filing 52

ORDER denying 48 Motion for Reconsideration Re: 47 Order on Motion for Summary Judgment. So Ordered by Magistrate Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Mutual Real Estate Holdings,
LLC, d/b/a Re/MAX Elite
v.

Civil No. 10-cv-236-LM

Houston Casualty Company and
Lexington Insurance Company

O R D E R
Mutual Real Estate Holdings, LLC (“Mutual”) moves the court
to reconsider its order granting summary judgment to Lexington
Insurance Company (“Lexington”).

Mutual appears to argue that

the court committed a manifest error of law, see LR. 7.2(e), by
ruling that the policy Lexington issued Mutual cannot reasonably
be construed to be an “occurrence” policy.

Mutual’s motion for

reconsideration is denied.
According to Mutual, the Insuring Agreement section of its
Lexington policy can reasonably be read as providing coverage
for claims made against Mutual by third parties when those
claims are reported to Lexington “in one of three time periods:
(1) pursuant to the terms of the policy; (2) within the policy
period; or (3) during the Basic or Extended Reporting Period.”
Pet’r’s Mot. Recons. (doc. no. 48) ¶ 3.

Construing the phrase

“pursuant to the terms of the policy” as denoting a time period,

and then placing that phrase in a disjunctive series along with
two phrases that unambiguously refer to actual time periods
expressly defined elsewhere in the policy must surely qualify as
an “amazing feat[ ] of linguistic gymnastics.”

Brickley v.

Progressive N. Ins. Co., 160 N.H. 625, 627 (2010) (citation
omitted).
Beyond that, the particular term of the policy Mutual would
call a time period for reporting claims to Lexingtion, i.e.,
“pursuant to the terms of this policy” construed to mean “as
soon as practicable after such Claim is first made,” would make
the policy’s references to the Basic and Extended Reporting
Periods meaningless.

That is, under Mutual’s construction, if

an insured did not pay the additional premium required for the
Extended Reporting Period, and reported a claim against it after
the end of the Basic Reporting Period, but as soon as
practicable after the claim was made, the insured would be
entitled to coverage.

Given that the policy requires additional

premiums for coverage for claims reported to Lexington after the
end of the Basic Reporting Period, Mutual’s interpretation of
the policy is not reasonable.
Moreover, Mutual’s reliance on the “as soon as practicable”
language in the Notice of Claim provision appears to be based on

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a fundamental misreading of that provision.

Section V.B.(1) of

the policy provides:
As a condition precedent to any right to coverage
afforded by this policy, the Insured must give written
notice to the Company of any Claim as soon as
practicable after such Claim is first made during the
Policy Period or 30 day Basic Reporting Period or the
Extended Reporting Period (if applicable), and as
otherwise required by the policy . . .
Resp’t’s Mot. Summ. J., Ex. G (doc. no. 30-8), at 18 (emphasis
in the original).

Given Mutual’s acknowledgement that the

Insuring Agreement requires that “the claim from the third party
to the insured must be made during the policy period,” Pet’r’s
Mot. Recons. ¶ 5, the phrase “during the policy period or 30 day
Basic Reporting Period or the Extended Reporting Period (if
applicable)” cannot be construed as describing when the third
party’s claim has to be made against the insured and must be
construed as describing when the insured must report to
Lexington a claim that has been made against it.

In other

words, the context from which Mutual draws the “as soon as
practicable” language on which it relies demonstrates, beyond
question, that that phrase cannot be reasonably construed as
abrogating the requirement that, to be entitled to coverage, an
insured must report third-party claims against it to Lexington
within the Policy Period, or during any applicable extended
reporting period.

In short, the Notice of Claim section of the

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policy contains the same reporting requirement Mutual would use
the “as soon as practicable” language to read out of the
Insuring Agreement section.
Based on the foregoing, the only reasonable interpretation
of the Insuring Agreement is that it requires claims to be
reported to Lexington within the Policy Period or, if
applicable, during the Basic or Extended Reporting Periods, and
pursuant to the terms of the policy, which include the
requirement that claims be reported as soon as practicable after
they are first made, but before the end of the applicable
reporting period.
Even if the Insuring Agreement could reasonably be
construed in the manner suggested by Mutual, problems remain.
With Mutual’s gloss on the phrase “pursuant to the terms of this
policy,” the Insuring Agreement would effectively read:
The Company will pay on behalf of the Insured Damages
for which the Insured becomes legally obligated to pay
because of any Claim first made against the Insured
during the Policy Period and reported in writing to
the Company as soon as practicable after such Claim is
first made during the Policy Period or 30 day Basic
Reporting Period or the Extended Reporting Period (if
applicable).
Mutual’s construction of the Insuring Agreement does not
eliminate the requirement that a third party’s claim against the
insured be made during the Policy Period.

Given that an

“occurrence” policy is one that “provides coverage for claims

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based on an event occurring during the policy period,
‘regardless of whether the claim is brought to the attention of
the insured or made known or made known to the insurer during
the policy period,’” Bates v. Vt. Mut. Ins. Co., 157 N.H 391,
398 (2008) (emphasis added, citation omitted), the construction
Mutual proposes does not reasonably lead to a conclusion that
the policy at issue is an “occurrence” policy.

Even under

Mutual’s construction, the policy would only provide coverage
for claims first made against the insured during the Policy
Period.

Such a limitation is hardly the hallmark of an

“occurrence” policy.
Because the court committed no manifest error of law in
ruling that Mutual’s Lexington policy cannot be reasonably
construed to be an “occurrence” policy, Mutual’s motion for
reconsideration is denied.
SO ORDERED.

__________________________
Landya McCafferty
United States Magistrate Judge
September 8, 2011
cc: Christopher H.M. Carter, Esq.
Sarah A. Kutner, Esq.
Aidan M. McCormack, Esq.
Mark D. Morrissette, Esq.
Danielle L. Pacik, Esq.
Ralph Suozzo, Esq.

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