Wells v. Acceptance Indemnity Insurance Company

Filing 19

ORDER denying 5 Motion to Dismiss. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Noah Wells d/b/a
Centerpoint Chimney
v.

Civil No. 17-cv-669-JD
Opinion No. 2018 DNH 011

Acceptance Indemnity
Insurance Company
O R D E R
Noah Wells, who does business as Centerpoint Chimney,
brought suit in state court against his insurer, Acceptance
Indemnity Insurance Company (“AIIC”), seeking a declaration that
AIIC owed him a defense and indemnification in an underlying
lawsuit and alleging that AIIC has breached its insurance
policy.

AIIC removed the case to this court and moves to

dismiss on the ground that it has no duty to defend or indemnify
Wells under the terms of the policy.

Wells objects.

a reply after the deadline for doing so.

AIIC filed

See LR 7.1(e)(1).

Standard of Review
For purposes of a motion to dismiss, the court accepts all
well-pleaded facts as true, disregarding mere legal conclusions,
and resolves reasonable inferences in the plaintiff’s favor.
Galvin v. U.S. Bank, N.A., 852 F.3d 146, 155 (1st Cir. 2017).
Taken in that light, the complaint must state sufficient facts

to support a plausible claim for relief.
19, 25 (1st Cir. 2017).

In re Curran, 855 F.3d

The plausibility standard is satisfied

if the factual allegations in the complaint “are sufficient to
support the reasonable inference that the defendant is liable.”
In re Fidelity ERISA Float Litig., 829 F.3d 55, 59 (1st Cir.
2016) (internal quotation marks omitted).
In addition to the allegations in the complaint, the court
may also consider “documents the authenticity of which are not
disputed by the parties . . . , documents central to plaintiffs’
claim, . . . [and] documents sufficiently referred to in the
complaint.”

Ironshore Specialty Ins. Co. v. United States, 871

F.3d 131, 135 (1st Cir. 2017) (internal quotation marks
omitted).

For that reason, in this case, the court will

consider the insurance policy and the complaint in the
underlying suit against Wells, along with the allegations in
Wells’s complaint.
Background
Noah Wells and his company, Centerpoint Chimney, were sued
in state court by Marlin Fogg who alleges that he was an
authorized agent of one of Wells’s subcontractors on a
residential roofing project.

Fogg also alleges that while

working on the project he fell off of the roof and was injured

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as a result of the negligence of Wells and others.

Wells was

insured by AIIC and provided notice of the suit to AIIC.
AIIC acknowledged receiving Wells’s notice but declined to
provide a defense or to indemnify Wells in Fogg’s suit on the
ground that two exclusionary endorsements in the policy
precluded coverage.

Specifically, AIIC cited an endorsement

titled “Injury to Employees, Workers or Contracted Persons or
Insureds or Contracted Organizations Exclusion” and an
endorsement titled “Injury to Independent Contractors
Exclusion.”

Wells brought suit to contest AIIC’s decision not

to provide a defense or indemnification in the Fogg suit.
Discussion
AIIC moves to dismiss Wells’s claims based on the
exclusions cited in the coverage denial letter.

Wells objects,

arguing that other provisions in the policy create an ambiguity
as to whether the policy covers the claims in the Fogg suit.
Wells also argues that discovery is required to determine Fogg’s
status at the job site.
The parties do not distinguish between an insurer’s duty to
defend and the duty to indemnify.

The duty to defend is

different from and broader than the duty to indemnify.

Great

Am. Dining, Inc. v. Phil. Indem. Ins. Co., 164 N.H. 612, 627
(2013); accord Mass. Bay Ins. Co. v. Am. Healthcare Servs.
3

Ass’n, 172 A.3d 1043, 1049, n.12 (N.H. 2017).

The duty to

defend arises at the beginning of the underlying litigation and
is based on allegations “that potentially support a covered
claim.”

Id.

The duty to indemnify arises only once liability

has been determined in the underlying litigation and is based on
“the facts actually established in the underlying suit.”

Id.

The interpretation of the language in an insurance policy
is a legal question for the court to decide.

Exeter Hosp., Inc.

v. Steadfast Ins. Co., 170 N.H. 170, 174 (2017).

To interpret

policy language, the court considers “the plain and ordinary
meaning of the policy’s words in context . . . [and] construe[s]
the terms of the policy as would a reasonable person in the
position of the insured based upon more than a casual reading of
the policy as a whole.”

Id.

“Where an insurance policy’s

language is reasonably susceptible of more than one
interpretation, however, and one reasonable interpretation
favors coverage, we construe the ambiguity against the insurer
and in favor of coverage in order to honor the reasonable
expectation of the policyholder.”

Id.

Insurers may use exclusions to limit the coverage provided
in their policies, as long as the exclusions comply with
statutory requirements.

Mass. Bay, 172 A. 3d at 1049.

To be

effective, the language in an exclusion “must be so clear,

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however, as to create no ambiguity that might affect the
insured’s reasonable expectations.”
marks omitted).

Id. (internal quotation

“In a declaratory judgment action to determine

the coverage of an insurance policy, the burden of proof is
always on the insurer, regardless of which party brings the
petition.”1
A.

Id. (internal quotation marks omitted).

Policy Provisions

In Section I, the policy provides coverage for the
insured’s liability for bodily injury “to which this insurance
applies” that is caused by an occurrence during the policy
period.

Doc. 6-4, at 33.

In those circumstances, AIIC will

provide a defense to the insured in a suit seeking damages for
bodily injury.
policy.

The amount that AIIC will pay is limited by the

AIIC is not obligated to provide a defense or pay

damages for bodily injury “to which this insurance does not
apply.”

Id.

AIIC does not dispute that the Fogg suit would meet the
conditions for coverage in Section I but argues that the
insurance does not apply because of the two exclusionary
endorsements.

The first endorsement states, in pertinent part,

Wells’s declaratory judgment claim is brought pursuant to
RSA 491:22. For purposes of the motion to dismiss, AIIC focuses
on the declaratory judgment claim.
1

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that the insurance coverage provided in Section I of the policy
does not apply to “[a]ny person who is an ‘employee’, ‘leased
worker,’ ‘temporary worker’ or ‘volunteer worker’” for Wells.
Doc. 6-5, at 2.

The second endorsement provides that the

insurance in Section I does not apply to “[a]ny independent
contractor or ‘employee’ of any independent contractor while
such independent contractor or their ‘employee’ is working: (a)
On behalf of any insured; or (b) On the job site, but not
working on behalf of any insured.”

Doc. 6-6, at 2.

Wells does not dispute the meaning of the exclusionary
endorsements.

Instead, Wells argues that other provisions in

the policy, specifically premiums paid for additional coverage
as shown on the Declarations page and a provision titled
“Independent Contractors Special Condition” support a reasonable
expectation that the insurance would apply to Fogg.
B.

Declarations

In support of his argument that an ambiguity exists, Wells
relies on certain coverage he obtained by paying additional
premiums, as listed on the Declarations page of the policy.

In

its reply, AIIC argues that the cited coverage does not apply to
Fogg’s suit.
The Declarations page shows that Wells paid additional
premiums for four classifications: chimney cleaning, masonry,
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contractors and subcontracted work, and an additional insured.2
In support of ambiguity, Wells relies on the last two
classifications that are described on the Declarations page, as
follows:
91583 Contractors – Subcontracted Work-in Connection
with Building Construction, Reconstruction, Repair or
Erection-One or Two Family Dwellings
ADD’L INSURED PER FORM CG2010
Doc. 6-4, at 17.
A General Change Endorsement shows that the additional
insured added by Form CG2010 was Pinkerton Academy.
at 7.

Doc. 6-4,

Because the project where Fogg was injured did not

involve Pinkerton Academy, the additional insured listed on the
Declarations page does not appear to be pertinent to the
coverage issue here.

As a result, to the extent a premium was

paid to add Pinkerton Academy as an additional insured, Wells
has not shown that would create an ambiguity as to whether the
exclusionary endorsements apply to Fogg’s suit.
The premium paid for “Contractors – Subcontracted Work-in
Connection with Building Construction, Reconstruction, Repair or
Erection – One or Two Family Dwellings,” however, raises a
question about coverage in this case.

2

The roofing project was a

The amounts of the premiums paid were redacted by AIIC.
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repair of a home, apparently a one family dwelling.

The

additional coverage, which could be interpreted to cover Wells’s
liability for bodily injury to contractors and those doing
subcontracted work, could reasonably be understood to cover
Fogg, who alleges that he worked for a subcontractor.
In its reply, AIIC contends that the coverage for
contractors and subcontracted work is inapplicable here because
it only reflects the nature of Wells’s business and does not
change the effect of the exclusionary endorsements.

That

explanation does not resolve whether the policy provides
coverage for Fogg’s claim against Wells because Fogg alleges he
was working for a subcontractor.

AIIC also argues that Wells’s

interpretation of the contractors and subcontracted work
coverage is unreasonable because it would directly contradict
and render meaningless the exclusionary endorsements that
preclude coverage for independent contractors and their
employees.
At this early stage of the case, however, the parties have
not sufficiently explained the coverage for contractors and
subcontracted work to allow the court to determine as a matter
of law what the policy covers and whether an ambiguity exists.

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C.

Independent Contractors Special Condition

Wells also cites the endorsement that required him to
provide AIIC with evidence of insurance held by independent
contractors as follows:
You will provide certificates of insurance from all
independent contractors providing evidence of:
1. Limits of liability equal to or greater than the
limits provided by this policy; and
2. Coverage equal to or greater than the coverages
provided by this policy.
However, should you fail to comply with this
condition, independent contractors will be considered
your “employees” and a premium charge will be made
accordingly. The cost of the sublet labor for each
independent contractor not in compliance will be used
as the rating basis for the work they performed.
Doc. 6-4 at 32.

Wells contends that that provision also

supports a reasonable understanding that the policy covered
independent contractors.

If the exclusionary endorsements

preclude coverage for independent contractors, the exclusionary
endorsements appear to render the special condition endorsement
meaningless.

AIIC does not explain why the policy includes the

special condition for independent contractors, along with the
exclusionary endorsements.

Additional explanation is necessary

to understand the meaning of the various policy provisions.

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Conclusion
For the foregoing reasons, the defendant’s motion to
dismiss (document no. 5) is denied.
SO ORDERED.

__________________________
Joseph A. DiClerico, Jr.
United States District Judge
January 10, 2018
cc:

Melissa Brill, Esq.
Laura Dowgin, Esq.
J. Bruce Maffeo, Esq.
Peter J. Nicosai, Esq.

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