What happens if you fail to follow the requirements of your insurance policy and do not get a release signed? In New Hampshire, you have no coverage.
Posted: July 17, 2017 Filed under: Climbing Wall, Insurance, New Hampshire, Release (pre-injury contract not to sue) | Tags: absurd, Ambiguity, Ambiguous, burden of proving, clear meaning, Climbing, Climbing Gym, construe, contracting parties, contractually, coverage, endorsement, Gym, Gymnastics, insurance coverage, Insurance policy, insured, insurer, linguistic, matter of law, objectively, ordinary meaning, policy language, policyholder, purported, question of law, reasonable expectations of coverage, Reasonable person, Release, Summary judgment, unambiguous, words used 1 CommentYou either have to create an absolutely fool proof system or take your release
online. If they don’t sign they don’t climb!
State: New Hampshire, Supreme Court of New Hampshire
Plaintiff: Colony Insurance Company
Defendant: Dover Indoor Climbing Gym& a.
Plaintiff Claims: There was no insurance coverage because the insured did not get a release signed by the injured claimant
Defendant Defenses: The insurance policy endorsement requiring a release to be signed was ambiguous
Holding: For the Plaintiff Insurance Company
Year: 2009
This is a scary case, yet the outcome is correct. The plaintiff insurance company issued a policy to the defendant climbing gym. An endorsement (an added amendment to the contract) to the policy said there would only be coverage if the gym all customers sign a release.
An endorsement to the policy stated: “All ‘participants’ shall be required to sign a waiver or release of liability in
your favor prior to engaging in any ‘climbing activity.’ “It further stated: “Failure to conform to this warranty will render this policy null and void as [sic] those claims brought against you.”
A climber came to the gym with a group of friends. The gym asked everyone if they had a release on file, and no one said no. (Yes really stupid procedures!) Bigelow was part of the group and did not have a release on file and had not signed a release. While climbing Bigelow fell and was injured.
Bigelow accompanied friends to the climbing gym, but did not sign a waiver. He testified that he was never asked to sign a waiver; the gym owner’s affidavit stated that the owner asked the group of climbers if they had waivers on file and received no negative answers. It is undisputed; however, that Bigelow did not sign a waiver or release. While climbing, Bigelow fell and sustained serious injuries.
The defendant climbing gym put the plaintiff insurance company on notice of the claim. When the insurance company found out no release was signed, the insurance company filed a declaratory judgment motion. A declaratory judgment is a way to go into a court and say there is no coverage under this policy because there was no release. It is an attempt to be a quick interpretation of the contract so the bigger issue can be resolved quickly.
The gym then put Colony on notice to defend and pay any verdict obtained by Bigelow. In response, Colony filed a petition for declaratory judgment, arguing that the gym’s failure to obtain a release from Bigelow absolved Colony of any duty to defend or indemnify the gym.
Both parties filed motions for summary judgment. The trial court granted the climbing gym’s motion for summary judgment saying the endorsement requiring the signed release was ambiguous. The ambiguity was created because the insurance company had not provided the gym with a sample waiver to use.
The trial court found that Colony’s failure to provide the gym with a sample waiver rendered the endorsement provision ambiguous. The trial court therefore denied Colony’s motion for summary judgment, and granted the defendants’ cross-motion for summary judgment.
This analysis by the court was absurd. Releases need to be written for the gym, for the gym’s clients and for the state law of the state where it is to be used. A “sample” release is a guaranteed loser in most cases. However, I suspect the court was looking for anyway it could find to provide coverage for the gym.
The trial court’s ruling meant the plaintiff insurance company had to provide coverage to the defendant for any claims made by the injured climber Bigelow.
The insurance company appealed the decision. New Hampshire does not have an intermediary appellate court system so the appeal went to the New Hampshire Supreme Court.
Analysis: making sense of the law based on these facts.
Insurance policies are contracts and are interpreted as such. However, because have been written in a specific way and are always offered on a take it or leave it basis, as well as the fact the insurance company has all the cards (money) insurance policies have additional legal interpretations in addition to contract law.
The New Hampshire Supreme Court started its analysis by looking at how insurance policies are interpreted. That means the policy is read as a whole objectively. Terms are given their natural meaning, meaning there is no special interpretation of any term, and if the policy is clear and unambiguous is it enforced. No special reading of the policy is allowed based on any party to the policy’s expectations.
We construe the language of an insurance policy as would a reasonable person in the position of the insured based upon a more than casual reading of the policy as a whole. Policy terms are construed objectively, and where the terms of a policy are clear and unambiguous, we accord the language its natural and ordinary meaning. We need not examine the parties’ reasonable expectations of coverage when a policy is clear and unambiguous; absent ambiguity, our search for the parties’ intent is limited to the words of the policy.
The burden of proving that no insurance coverage exists as defined by the policy rests on the insurance company. That means coverage exists under the policy unless the insurance company can prove no coverage was written.
If an insurance company wants to limit its coverage, it is allowed to do so. However, that limitation must be clear and unambiguous. An ambiguity exists if a reasonable disagreement exists between the insurance company and the policyholder and that disagreement could lead to two or more, interpretations.
Although an insurer has a right to contractually limit the extent of its liability, it must do so “through clear and unambiguous policy language. Ambiguity exists if “reasonable disagreement between contracting parties” leads to at least two interpretations of the language.
Ambiguities will be examined in the appropriate context and the words construed in their plain, ordinary and popular meaning. If the interpretation of the ambiguity favors the policyholder, then the coverage will favor the insured.
In determining whether an ambiguity exists, we will look to the claimed ambiguity, consider it in its appropriate context, and construe the words used according to their plain, ordinary, and popular definitions. If one of the reasonable meanings of the language favors the policyholder, the ambiguity will be construed against the insurer.
If, however, the language in the policy is clear, the court will not bend over backward or as written in this case “perform amazing feats of linguistic gymnastics” to find an ambiguity and create coverage.
Where, however, the policy language is clear, this court “will not perform amazing feats of linguistic gymnastics to find a purported ambiguity” simply to construe the policy against the insurer and create coverage where it is clear that none was intended.
The court then looked at the determination of the trial court which found an ambiguity because the insurance company did not provide a sample insurance policy. The Supreme Court found that was an incorrect interpretation of the policy. Even the defendant climbing gym agreed with the court on this
issue.
Even the gym, however, contends that the trial court “reached the correct result for the wrong reasons.” Thus, the gym does not argue that the endorsement creates an ambiguity by its failure to provide the insured with a sample waiver form, but, rather, that the exclusionary language is ambiguous because it states that participants shall “be required” to sign waivers as opposed to mandating that the gym obtain signed waivers.
The court then applied to the law of New Hampshire in interpreting insurance policies to the facts of this case. The court found the language requiring a release was clear and that a reasonable person could only read it.
The clear meaning of the policy language is that the gym is required to actually obtain waivers from climbing participants. The gym’s interpretation would lead to the absurd result of requiring coverage even if the gym never actually enforced its waiver policy. A reasonable person reading the policy would not understand that coverage existed in such circumstances. The gym’s interpretation is unreasonably narrow, and is therefore not the type of alternative interpretation that renders policy language ambiguous.
Simply put the policy requires the defendant climbing gym to have everyone sign a release. If no release is signed, there was no coverage for the gym. The trial court was overturned, and the climbing gym faced the claims of the injured climber without insurance coverage.
So Now What?
One of the first cases I was involved with was very similar. A Montana stable was insured by an insurance company with an endorsement just as this one; all riders were required to sign a release. In Montana all guides, including horseback guides had to be licensed by the state. A state employee was checking out the
stable and found the releases. In Montana, you cannot use a release. (See States that do not Support the Use of a Release andMontana Statute Prohibits Use of a Release)
The state employee had the stable quit using the release, or they would lose their license to operate in Montana. A rider was injured and sued the stable, and the insurance company denied coverage. I was contacted by the law firm representing the insurance company and was floored by the facts and how the insurance company could deny coverage when it violated state regulations.
However, in that situation as well as this one, there is not much you can do to get around the situation if the policy clearly states you must have a release signed. In the Montana case, the stable owner should have immediately contacted his insurance company when he was told he could not use a release and pay to have the endorsement removed or found another insurance company to write him a policy.
In this case, a proper procedure should have been put in place to confirm signed releases rather than relying on the honesty of someone walking through the doors to the gym.
When you purchase insurance make sure you and your insurance agent are speaking clearly to each other, and you both understand what you are looking for. When the policy arrives, read the policy or pay a professional to read the policy for you looking for the coverage’s you need as well as looking for problems with the coverage.
If you ask the agent or broker to clarify the coverage you are wanting, to make sure you get that clarification in writing (or an email), so you can take that to court if necessary.
Most importantly create a system to make sure that everyone who comes to your facility, activity or business when you use a release, signs a release.
What do you think? Leave a comment.
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Colony Insurance Company v. Dover Indoor Climbing Gym, 158 N.H. 628; 974 A.2d 399; 2009 N.H. LEXIS 51
Posted: June 23, 2017 Filed under: Climbing Wall, Legal Case, New Hampshire, Release (pre-injury contract not to sue) | Tags: absurd, Ambiguity, Ambiguous, burden of proving, clear meaning, Climbing, Climbing Gym, construe, contracting parties, contractually, coverage, endorsement, Gym, Gymnastics, insurance coverage, Insurance policy, insured, insurer, linguistic, matter of law, objectively, ordinary meaning, policy language, policyholder, purported, question of law, reasonable expectations of coverage, Reasonable person, Release, Summary judgment, unambiguous, words used Leave a commentColony Insurance Company v. Dover Indoor Climbing Gym & a., 158 N.H. 628; 974 A.2d 399; 2009 N.H. LEXIS 51
Colony Insurance Company v. Dover Indoor Climbing Gym & a.
No. 2008-759
SUPREME COURT OF NEW HAMPSHIRE
158 N.H. 628; 974 A.2d 399; 2009 N.H. LEXIS 51
March 18, 2009, Argued
April 24, 2009, Opinion Issued
HEADNOTES NEW HAMPSHIRE OFFICIAL REPORTS HEADNOTES
1. Insurance–Policies–Construction The interpretation of insurance policy language is a question of law for the court to decide. The court construes the language of an insurance policy as would a reasonable person in the position of the insured based upon a more than casual reading of the policy as a whole. Policy terms are construed objectively, and where the terms of a policy are clear and unambiguous, the court accords the language its natural and ordinary meaning. The court need not examine the parties’ reasonable expectations of coverage when a policy is clear and unambiguous; absent ambiguity, the court’s search for the parties’ intent is limited to the words of the policy.
2. Insurance–Proceedings–Burden of Proof The burden of proving that no insurance coverage exists rests squarely with the insurer.
3. Insurance–Policies–Ambiguities Although an insurer has a right to contractually limit the extent of its liability, it must do so through clear and unambiguous policy language. Ambiguity exists if reasonable disagreement between contracting parties leads to at least two interpretations of the language. In determining whether an ambiguity exists, the court will look to the claimed ambiguity, consider it in its appropriate context, and construe the words used according to their plain, ordinary, and popular definitions. If one of the reasonable meanings of the language favors the policyholder, the ambiguity will be construed against the insurer. Where, however, the policy language is clear, the court will not perform amazing feats of linguistic gymnastics to find a purported ambiguity simply to construe the policy against the insurer and create coverage where it is clear that none was intended.
4. Insurance–Policies–Construction When a climbing gym’s insurance policy stated, “All participants shall be required to sign a waiver or release of liability in your favor prior to engaging in any climbing activity,” the clear meaning of the policy language was that the gym was required to actually obtain waivers from climbing participants. The gym’s interpretation that a reasonable person would believe that coverage existed so long as the gym had a policy of requiring waivers regardless of whether it actually obtained waivers would lead to the absurd result of requiring coverage even if the gym never actually enforced its waiver policy. A reasonable person reading the policy would not understand that coverage existed in such circumstances. Because the policy required the gym to obtain waivers from all participants, the failure to do so in the case of an injured climber rendered coverage under the policy inapplicable to his claims.
COUNSEL: Wiggin & Nourie, P.A., of Manchester (Doreen F. Connor on the brief and orally), for the plaintiff.
Mallory & Friedman, PLLC, of Concord (Mark L. Mallory on the brief and orally), for defendant, Dover Indoor Climbing Gym.
Shaheen & Gordon, P.A., of Dover, for defendant, Richard Bigelow, filed no brief.
JUDGES: DUGGAN, J. BRODERICK, C.J., and DALIANIS, J., concurred.
OPINION BY: DUGGAN
OPINION
[**400] [*629] Duggan, J. The plaintiff, Colony Insurance Company (Colony), appeals an order of the Superior Court (McHugh, J.) denying its motion for summary judgment and granting that of the defendants, Dover Indoor Climbing Gym (the gym) and Richard Bigelow. We reverse and remand.
The trial court found, or the record supports, the following facts. Colony issued a commercial general liability insurance policy to the gym, which was in effect from January 5, 2007, to January 5, 2008. An endorsement to the policy stated: “All ‘participants’ shall be required to sign a waiver or release of liability in your favor prior to engaging in any ‘climbing activity.’ ” It further stated: “Failure to conform to this warranty will render this policy null and void as [sic] those claims brought against you.”
On August 14, 2007, [***2] Bigelow accompanied friends to the climbing gym, but did not sign a waiver. He testified that he was never asked to sign a waiver; the gym owner’s affidavit stated that the owner asked the group of climbers if they had waivers on file and received no negative answers. It is undisputed, however, that Bigelow did not sign a waiver or release. While climbing, Bigelow fell and sustained serious injuries. The gym then put Colony on notice to defend and pay any verdict obtained by Bigelow. In response, Colony filed a petition for declaratory judgment, arguing that the gym’s failure to obtain a release from Bigelow absolved Colony of any duty to defend or indemnify the gym.
Both Colony and the defendants filed motions for summary judgment, which the trial court addressed in a written order. The trial court found that Colony’s failure to provide the gym with a sample waiver rendered the endorsement provision ambiguous. The trial court therefore denied Colony’s motion for summary judgment, and granted the defendants’ cross-motion [**401] for summary judgment. This appeal followed.
[*630] On appeal, Colony argues that the trial court erred in finding that the endorsement was ambiguous, and contends that the [***3] gym’s failure to obtain a waiver from Bigelow renders the policy inapplicable as to his claims. Alternatively, Colony argues that even if the endorsement is ambiguous, the gym is not entitled to coverage because it had actual knowledge of the policy’s waiver requirement.
[HN1] In reviewing the trial court’s grant or denial of summary judgment, we consider the evidence, and all inferences properly drawn from it, in the light most favorable to the non-moving party. Everitt v. Gen. Elec. Co., 156 N.H. 202, 208, 932 A.2d 831 (2007); Sintros v. Hamon, 148 N.H. 478, 480, 810 A.2d 553 (2002). If there is no genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, the grant of summary judgment is proper. Everitt, 156 N.H. at 209; Sintros, 148 N.H. at 480. We review the trial court’s application of the law to the facts de novo. Everitt, 156 N.H. at 209; Sintros, 148 N.H. at 480.
[1] [HN2] The interpretation of insurance policy language is a question of law for this court to decide. Godbout v. Lloyd’s Ins. Syndicates, 150 N.H. 103, 105, 834 A.2d 360 (2003). We construe the language of an insurance policy as would a reasonable person in the position of the insured based upon a more than casual reading [***4] of the policy as a whole. Id. Policy terms are construed objectively, and where the terms of a policy are clear and unambiguous, we accord the language its natural and ordinary meaning. Id. We need not examine the parties’ reasonable expectations of coverage when a policy is clear and unambiguous; absent ambiguity, our search for the parties’ intent is limited to the words of the policy. Id.
[2, 3] In this case, the gym argues that the policy is ambiguous and Colony maintains that it is not. [HN3] The burden of proving that no insurance coverage exists rests squarely with the insurer. Curtis v. Guaranty Trust Life Ins. Co., 132 N.H. 337, 340, 566 A.2d 176 (1989); see RSA 491:22-a (1997). [HN4] Although an insurer has a right to contractually limit the extent of its liability, it must do so “through clear and unambiguous policy language.” Id. (quotation omitted). Ambiguity exists if “reasonable disagreement between contracting parties” leads to at least two interpretations of the language. Int’l Surplus Lines Ins. Co. v. Mfgs. & Merchants Mut. Ins. Co., 140 N.H. 15, 20, 661 A.2d 1192 (1995); Trombly v. Blue Cross/Blue Shield, 120 N.H. 764, 771, 423 A.2d 980 (1980). In determining whether an ambiguity exists, we will look to the claimed ambiguity, [***5] consider it in its appropriate context, and construe the words used according to their plain, ordinary, and popular definitions. Int’l Surplus, 140 N.H. at 20. If one of the reasonable meanings of the language favors the policyholder, the ambiguity will be construed against the insurer. Id. Where, however, the policy language is clear, this court “will not [*631] perform amazing feats of linguistic gymnastics to find a purported ambiguity” simply to construe the policy against the insurer and create coverage where it is clear that none was intended. Hudson v. Farm Family Mut. Ins. Co., 142 N.H. 144, 147, 697 A.2d 501 (1997); Curtis, 132 N.H. at 342.
The trial court found that the endorsement requiring waivers is ambiguous because Colony did not provide the gym with a sample waiver. Even the gym, however, contends that the trial court “reached the [**402] correct result for the wrong reasons.” Thus, the gym does not argue that the endorsement creates an ambiguity by its failure to provide the insured with a sample waiver form, but, rather, that the exclusionary language is ambiguous because it states that participants shall “be required” to sign waivers as opposed to mandating that the gym obtain signed waivers. [***6] Under this interpretation, the gym argues, a reasonable person would believe that coverage exists so long as the gym has a policy of requiring waivers regardless of whether it actually obtained waivers from climbing participants. Colony argues that the policy language is unambiguous. We agree with Colony.
[4] The clear meaning of the policy language is that the gym is required to actually obtain waivers from climbing participants. The gym’s interpretation would lead to the absurd result of requiring coverage even if the gym never actually enforced its waiver policy. A reasonable person reading the policy would not understand that coverage existed in such circumstances. The gym’s interpretation is unreasonably narrow, and is therefore not the type of alternative interpretation that renders policy language ambiguous. See Curtis, 132 N.H. at 342 ( [HN5] refusing to find ambiguity when alternate interpretations would “inevitably lead to absurd results”). To construe the exclusion against the insurer here would create coverage where it is clear that none was intended. We therefore conclude that the policy language is unambiguous and that a reasonable insured would understand that the exclusion would [***7] apply in this case.
Because the policy requires the gym to obtain waivers from all participants, the failure to do so in the case of Bigelow renders coverage under the policy inapplicable to his claims. In light of our holding, we need not address Colony’s remaining argument. We therefore reverse the order of the trial court granting the defendants’ motion for summary judgment, and hold that Colony is entitled to summary judgment as a matter of law.
Reversed and remanded.
Broderick, C.J., and Dalianis, J., concurred.
Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209
Posted: April 23, 2016 Filed under: Contract, Insurance, Legal Case, Massachusetts | Tags: amount in controversy, asserting, bodily injury, Certificate of Insurance, Coaster, contractual, cross-claims, cross-motions, declaratory, disclosures, disputed, duty to defend, fully performed, Indemnification, Insurance policy, insured, insurer, Jimmy Peak, judgment ordering, liability claims, Liability insurance, Navigator, negligence claim, owe, own expense, Premium, principal place of business, publicly, separately, seriously injured, state law, threshold amount, traded, wholly-owned subsidiary, Wiegand Leave a commentTo Read an Analysis of this decision see: Indemnification between businesses requires a contract outlining the type of indemnification and a certificate of insurance from one party to the other so the insurance company knows it is on the hook.
Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209
Jiminy Peak Mountain Report, LLC, Plaintiff, v. Wiegand Sports, LLC, and, Navigators Specialty Insurance, CO., Defendants.
Civil Action No. 14-40115-MGM
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
2016 U.S. Dist. LEXIS 34209
March 16, 2016, Decided
March 16, 2016, Filed
COUNSEL: [*1] For Jiminy Peak Mountain Resort, LLC, Plaintiff: Jennifer C. Sheehan, Matthew D. Sweet, Richard J. Shea, Hamel, Marcin, Dunn, Reardon & Shea, P.C., Boston, MA.
For Navigators Specialty Insurance Company, Defendant: David A. Grossbaum, LEAD ATTORNEY, Matthew R. Watson, Hinshaw & Culbertson LLP, Boston, MA.
JUDGES: MARK G. MASTROIANNI, United States District Judge.
OPINION BY: MARK G. MASTROIANNI
OPINION
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS
(Dkt. Nos. 40 & 42)
MASTROIANNI, U.S.D.J.
I. Introduction
Plaintiff, Jiminy Peak Mountain Resort, LLC (“Jiminy”) operates a ski area in Hancock, Massachusetts. In 2005 it entered into a contract with Defendant, Wiegand Sports, LLC (“Wiegand”), to purchase a Wiegand, Alpine Coaster (the “Coaster”). The Coaster opened to the public in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. The parents of the minors subsequently filed two lawsuits (together, the “Underlying Action”), each asserting claims against Jiminy and Wiegand. Jiminy subsequently filed this suit against Wiegand and Defendant, Navigators Specialty Insurance, Co. (“Navigators”), Wiegand’s insurer at the time the minors were injured, seeking a declaratory judgment [*2] ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in the Underlying Action. Before the court are cross-motions for judgment on the pleadings from Jiminy and Navigators. Jiminy and Wiegand have stipulated to the dismissal of their cross-claims, agreeing to litigate those claims in the Underlying Action, rather than in this lawsuit.
II. Jurisdiction
In this action, Jiminy seeks an order requiring Navigators to pay Jiminy’s past and future defense costs in the Underlying Action based on the terms of the contract between Jiminy and Wiegand and the insurance policy Navigators issued to Wiegand. The relief is requested pursuant to state law. Federal courts have jurisdiction over suits brought pursuant to state law where there is complete diversity of citizenship between the adversaries and the amount in controversy exceeds a threshold amount of $75,000. 28 U.S.C. § 1332; Arbaugh v. Y&H Corp., 546 U.S. 500, 513, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006). Based on the content of the complaint and the corporate disclosures filed by the parties (Dkt. Nos. 20, 21, 55), the court finds that (1) Jiminy is a Massachusetts limited liability company, owned by two other Massachusetts limited liability companies, which in turn are owned by members who reside in Massachusetts [*3] and (2) Navigators is incorporated in Delaware, has its principal place of business in Connecticut, and is a wholly-owned subsidiary of the publicly traded Navigators Group, Inc., less than ten percent (10%) of which is owned by any other single publicly traded corporation.1 Plaintiff asserts the amount in controversy exceeds the statutory threshold amount. In the absence of any challenge from Defendant, the court finds it has jurisdiction in this case pursuant to 28 U.S.C. § 1332.
1 Though Jiminy is no longer pursuing its claim against Wiegand, the court notes that Wiegand, as a wholly-owned subsidiary of a German entity with its principal place of business in Salt Lake City, Utah, is also diverse with respect to Jiminy. (Compl. ¶ 7, Dkt. No. 1, Corp. Disclosure, ¶ 1, Dkt. No. 19.)
III. Standard of Review
“‘A motion for judgment on the pleadings [under Rule 12(c)] is treated much like a Rule 12(b)(6) motion to dismiss,’ with the court viewing ‘the facts contained in the pleadings in the light most favorable to the nonmovant and draw[ing] all reasonable inferences therefrom.'” In re Loestrin 24 Fe Antitrust Litig., No. 14-2071, 2016 U.S. App. LEXIS 3049, 2016 WL 698077, at *8 (1st Cir. Feb. 22, 2016) (quoting Pérez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008)). Where, as here, the court is presented with cross-motions for judgment on the pleadings, the court’s role is [*4] “to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed.” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir. 2007) (internal citations omitted)). As in the case of a motion under Rule 12(b)(6), the court is permitted to consider documents central to the plaintiff’s claims where the authenticity of the documents is not disputed and the complaint adequately references the documents. Id. (citing Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).
IV. Background
In December of 2005, Jiminy and Wiegand entered into a “Consulting, Purchase, Delivery, Assembly and Inspection Contract” (the “Contract”). (Compl. ¶ 9, Dkt. No. 1.) Pursuant to this contract, Jiminy agreed to purchase the Coaster and Wiegand agreed to deliver, assemble, and inspect it. (Id.) Section 8 of the Contract, titled “Rights and Obligations of [Jiminy]” included in its final subsection, 8(j), language stating that Wiegand would purchase product liability insurance for the Coaster, but that Jiminy was required to pay a portion of the premium, the amount of which would be determined based on the purchase price of the Coaster, and Jiminy would then be listed as an additional insured. (Compl. Ex. A, Contract, § 8(j), Dkt. No. 1-1.) (Id.) The Contract did not set forth the term during which Wiegand’s product [*5] liability insurance policy would apply, but did provide that Jiminy would have the option to continue as an additional insured during subsequent periods, provided it continued to pay the “same premium ratio.” Id. The same section also provided that Jiminy would separately maintain a personal injury insurance policy “at its own expense at all times so long as [it] operates [the Coaster].” (Id.) The Complaint does not assert that Jiminy continued to pay premiums to remain an additional insured under Wiegand’s product liability insurance policy.
Separately at Section 12, titled “Indemnification,” the Contract provided that:
in the event of a product liability suit against [Wiegand], [Wiegand] “shall, at its own expense, defend any suit or proceeding brought against [Jiminy] and shall fully protect and indemnify [Jiminy] against any and all losses, liability, cost, recovery, or other expense in or resulting from such . . . suit (provided, however, [Jiminy] has fully performed all ongoing maintenance obligations).
(Id. at § 12(A)(1).)
The following paragraph then provided that Jiminy would
protect, indemnify, defend and hold [Wiegand] harmless from and against any and all losses of [Wiegand] arising out of or sustained, [*6] in each case, directly or indirectly, from . . . any default by [Jiminy] . . . including without limitation, from defective/bad maintenance and/or operation of the Alpine Coaster caused by [Jiminy’s] gross negligence or willful misconduct.
(Id. at § 12(A)(2).)
Under Section 18, the Contract is to be interpreted in accordance with Massachusetts law.
(Id. at § 18.)
The Coaster was installed and became operational in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. At the time of the accident, Wiegand had a general commercial liability insurance policy with Navigators (“Policy”). (Policy, Ex. C, Dkt. No. 1-3.) The Policy Period ran from March 1, 2012 through March 1, 2013. Id. Pursuant to Section I(1)(a), the Policy provided that Navigators would “pay those sums that [Wiegand] becomes legally obligated to pay as damages because of ‘bodily injury’ . . . to which [the Policy] applies.” (Id. at Section I(1)(a).) The obligation established under Section I(1)(a) is further defined in Section I(2)(b) as excluding certain types of damages, including those assumed in a contract, unless assumed in an “insured contract.” (Id. at Section I(2)(b).) In the case of an “insured contract,” “reasonable [*7] attorney fees and necessary litigation expenses incurred by or for a party other than an insured [was] deemed to be damages because of ‘bodily injury’ . . . , provided . . . that the party’s defense [had] also been assumed in the same ‘insured contract'” and the damages arise in a suit to which the Policy applied. (Id.) An “insured contract” is defined in the Policy as including “[t]hat part of any other contract or agreement pertaining to [Wiegand’s] business . . . under which [Wiegand] assume[d] the tort liability of another party to pay for ‘bodily injury’ . . . to a third person or organization.” (Id. at Section V(9)(f)). “Tort liabililty” is, in turn, defined as “a liability that would be imposed by law in the absence of any contract or agreement.” (Id.)
The parents of the minors injured on the Coaster in August of 2012 subsequently filed the Underlying Action against Jiminy and Wiegand.2 (Compl., Ex. B, Compls. in Underlying Action, Dkt. No. 1-2.) The six-count complaints3 both include a negligence claim against Jiminy (Count I), a negligence claim against Wiegand (Count II), products liability claims against Wiegand (Counts III and IV), breach of implied warranty of merchantability claim against [*8] Wiegand (Count V), and a loss of consortium claim against Wiegand and Jiminy (Count VI). (Id.) After the Underlying Action was filed, Jiminy filed this action against Wiegand and Navigators, seeking a declaratory judgment ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in connection with the Underlying Action. (Compl., Dkt. No. 1.) As mentioned above, Jiminy and Wiegand agreed to the dismissal of Jiminy’s claim seeking declaratory judgment from Wiegand in this action and instead are litigating the issues in the Underlying Action.
2 These suits were initially filed in the Eastern District of New York, but have since been transferred to this court where they are proceeding as a consolidated case – 13-cv-30108-MGM. The claims brought on behalf of the minors have already been settled. The only remaining claims in those cases are the cross-claims between Jiminy and Wiegand.
3 In both complaints, the claims are actually labeled 1-5 and 7.
V. Discussion
Both Jiminy and Navigators have moved for judgment on the pleadings. Navigators argues that as an insurer it owes a duty to defend its insured, Wiegand, but it does not owe a direct duty to defend Jiminy because Jiminy [*9] is not an additional insured under the Policy.4 Further, the duty Navigators has under the Policy to pay defense costs to a non-insured party pursuant to a contractual liability of its insured only requires it to make payments to the insured, and only when the insured has actually requested payment. In this case, Navigators asserts that even if Wiegand is found to owe Jiminy its defense costs, it will be up to Wiegand to determine whether it wishes to pay the amount or to make a claim to Navigators. Since Navigators owes no duty directly to Jiminy and it would be up to Wiegand to determine whether to make a claim in the event judgment is entered against it with respect to Jiminy’s defense costs, Navigators argues judgment on the pleadings should enter in its favor.
4 In its filings and at oral argument, Jiminy was clear that it was not claiming to be an additional insured under the Policy.
For its part, Jiminy begins its argument with the Contract, asserting first that the language in the Contract at § 12(A)(1) clearly establishes that Wiegand has a duty to pay Jiminy’s defense costs regardless of any potential factual disputes between Jiminy and Wiegand, provided (1) the defense costs are incurred [*10] in litigation in which there is a product liability claim against Wiegand and (2) Jiminy is also a defendant named in the action.5 As the Underlying Action includes product liability claims against Wiegand, as well as other claims against Jiminy, Jiminy asserts the two requirements are met. Jiminy then turns to the Policy, arguing that the Contract is an “insured contract” for purposes of the Policy. Finally, Jiminy argues that since the Policy provides coverage for liability assumed by Wiegand in an “insured contract,” Navigator, as an insurer, is required under Massachusetts law, to pay for Jiminy’s defense, without regard to the resolution of the dispute between Wiegand and Jiminy.
5 Initially, in its memorandum in support of its motion for judgment on the pleadings, Jiminy argued that it would also be necessary to establish that there were no disputes as to whether Jiminy had “fully performed all ongoing maintenance obligations.” (Compl., Ex. B, Contract §12(A)(1).) Subsequently, in its opposition to Navigators’ motion for judgment on the pleadings, Jiminy instead argued that the requirement regarding maintenance obligations applied only to indemnification claims.
Navigators has not contested, [*11] at least relative to the purpose of the motions currently before the court, that the Contract between Jiminy and Wiegand is an “insured contract” for purposes of the Policy. Also, Navigators does not dispute or that the Underlying Action is the type of litigation covered under the Policy. The court begins its analysis by considering whether Massachusetts law allows Jiminy to compel payment from Navigators based on Navigators’ obligations to its insured, Wiegand. Massachusetts law imposes on insurers a “broad duty to defend its insured against any claims that create a potential for indemnity.” Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 667 N.E.2d 1149, 1151 (Mass. 1996). This duty is broad and attaches whenever the claims in the complaint match up with the language in the policy. See Liberty Mut. Ins. Co. v. SCA Services, Inc., 412 Mass. 330, 588 N.E.2d 1346, 1347 (Mass. 1992). However, the cases cited by the parties all involve cases in which the court discussed the duty in the context of the insured.
Jiminy has not cited any cases in which a court imposed on an insurer a duty to defend a third-party beneficiary of a policy. Instead, Jiminy argues the language of the Policy providing coverage for defense costs of a third-party pursuant to an “insured contract” shows the parties’ intention that Navigators would pay such costs and, therefore, such language [*12] should be construed to impose upon Navigators a duty to make payment directly to Jiminy. The court disagrees. As demonstrated by the provisions in the Policy that allow for the designation of an additional insured, Navigators and Wiegand knew how to extend Navigators’ duties as an insurer to other parties. Damages, including defense costs, associated with “insured contracts” were handled differently, indicating that Navigators and Wiegand did not, in fact, intend that in a case like this one Navigators would have any direct obligations to Jiminy based on the Contract. The Contract also included provisions regarding both additional insureds and “insured contracts,” suggesting that Jiminy, like Navigators and Wiegand, understood that Wiegand’s promise to pay Jiminy’s defense costs would not grant Jiminy the status of an “additional insured” with respect to Navigators.
In the absence of a contractual relationship between Navigators and Jiminy, the court finds no legal basis for ordering Navigators to pay Jiminy’s defense costs directly. Any obligation upon Navigators to pay such costs will arise only after an insured, in this case Wiegand, makes a claim for payment and then its only obligation [*13] will be to Wiegand. Judgment on the pleadings in favor of Navigators is, therefore, appropriate.
VI. Conclusion
For the Foregoing reasons, Plaintiff’s Motion for Judgment on the Pleadings is hereby DENIED and Defendant’s Motion for Judgment on the Pleadings is hereby ALLOWED.
It is So Ordered.
/s/ Mark G. Mastroianni
MARK G. MASTROIANNI
United States District Judge
G-YQ06K3L262
Recreation Law 