The opinion
STATE OF MAINE SUPERIOR COURT
CUMBERLAND,ss. CwIL ACTION
STATE OF MAINE
NORTH EAST INSURANCE
cumberland,5% clerk's Office
~JJPERI~RGOIJRT r: .,
DOCKET NO. CV-04-772
,
cg I/
1
COMPANY JuL 11 2005
RAY ATKISSON d / b / a ATKISSON ORDER ON PLAINTIFF'S
& SON CONSTRUCTION, MOTION FOR SUMMARY
Defendant JUDGMENT AND
DEFENDANT'S MOTION FOR
And SUMMARY JUDGMENT
ERIC SCOTT SIMONS, KEISER
INDUSTRIES INC., ERIC KENWORTHY,
Trustee of the Henderson Street Realty
Trust, SCOT KENWORTHY, Trustee
of the Henderson Street Realty Trust,
and ROBERT J. JOLLY
Parties in Interest
FACTUAL BACKGROUND
., a declaratory
North East has filed a second amended complaint seelung
judgment that 1)"North East has no obligation to defend or indemnify Defendant
Atkisson in the underlying action brought by Party in Interest Eric Scott Simons in the
Commonwealth of Massachusetts, Mtddlesex County Superior Court Civil Action No.
03-4525" (herein "Massachusetts litigation") and that 2) "Defendant Atkisson is immune
from suit from Party in Interest Simons pursuant to Maine Workers' Compensation
statutes." Atlusson seeks a declaration that North East has a duty to continue to defend
Atkisson in the Massachusetts litigation and an award of reasonable attorney's fees and
court costs pursuant to 24-A M.R.S.A. § 2436-B (Supp. 2004).
North East issued a business owners' liability policy (herein "policy") to
Atkisson, doing business as Atkisson & Son Construction, effective October 24,2002.
Second Amended Complaint ¶ 21. Atkisson lured a crew, incluhng Simons, to install
and complete prefabricated buildings on job sites in P,very, Massachusetts. North East's
Statement of Material Facts (herein "PSMF") qI 4. There is a dispute as to whether
Simons was h r e d as an employee or as an independent contractor. Simons was injured
on the jobsite on August 28,2003. He applied for and received Maine Workers'
Compensation benefits through Atlusson for a short period of time, before
withdrawing h s claim. PSMF q[q[ 18, 19. Simons then filed a complaint in Massachusetts
against Atlusson for personal injuries on December 1,2003. Atlusson's Statement of
Material Facts (herein "DSMF") qI 1; Second Amended Complaint Exlubit A. North East
has and continues to provide Atlusson's defense in the Massachusetts litigation. PSMF
The relevant portions of the policy provide as follows:
A) Coverages
1. Business Liability-We will pay those sums that the insured
becomes legally obligated to pay as damages because of
"bodily injury"
B) Exclusions
1. Applicable to Business Liability Coverage
t h s insurance does not apply to
d. Workers' Compensation and similar laws
Any obligation of the insured under a workers'
compensation, disability benefits or unemployment
compensation law or any similar law.
e. Employer's Liability
"Bodily Injury" to;
(1) An "employee" of the insured arising out of
and in the course of:
(a) Employment by the "insured" or
(b) Performing duties related to the conduct
of the insured's business;
Second Amended Complaint Exlubit B.
North East argues that Simons was an employee and, thus, falls under parts
(B)(d) (B)(e) of the zbove exclusionary !anpage. Atkisson and North East have
filed cross motions for summary judgment pursuant to Maine Rule of Civil Procedure
DISCUSSION
1. Standard of Review
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that a party is entitled to judgment
as a matter of law. M.R. Civ. P. 56 (c);In Re Estate of Davis, 2001 VIE 106, ¶ 7, 775 A.2d
1127,1129. A fact is material when it has the potential to affect the outcome of the suit.
Kenny v. Dep't of Human Services, 1999 ME 158, ¶ 3 , 740 A.2d 560, 562. An issue is
genuinely disputed if sufficient evidence supporting the claimed factual dispute exists to
require a choice between the parties' differing versions of the truth at trial. Id.
Both the trial and appellate courts undertake the same analysis of motions for
summary judgment. The court first determines the elements of the cause of action at
issue and then reviews the facts set forth in the parties' statements of material facts that
are supported by appropriate record references. Curtis v. Porter, 2001 ME 158, ¶ 8, 784
A.2d 18/22.
2. Duty t o Defend and Indemnification
The issue here relates to the interpretation and application of the policy's
exclusion language to the pending Massachusetts litigation and the application of the
rules of insurance policy language interpretation. The issue is not, as North East has
argued, whether Simons was, as a factual matter, a subcontractor or an employee of
Atlusson.
A duty to defend is determined by comparing the allegations in the underlying
complaint with the language in the insurance policy. State Farm Mut. Auto. Ins. Co. v.
Montagna, 2005 ME 68, ¶ 8, - A.2d - (emphasis added). "If there is any legal or factual
basis that could be developed at trial, whch would obligate the insured to pay under
the policy, the insured is entitled to a defense." J.A.J. Inc. v. Aetna Cas. 6 Sur. Co., 529
A.2d 806,808 (Me. 1987) (emphasis added). If the court finds that an insurer owes a
duty to defend, the court should summarily decide in favor of the insured. Merrimack
Mut. Fire Ins. Co. v. Brennan, 534 A.2d 353 (Me. 1987). Interpreting the language in an
insurance contract is a question of law. Kinney v. Maine Mut. Group Ins. Co., 2005 ME 70,
¶ 18, -A.2d - (citing Foremost Ins. Co. v. Levesque, 2005 ME 34, ¶ 7,868 A.2d 244,246).
"Exclusions and exceptions in insurance policies are disfavored and are construed
strictly against the insurer." Id. "Any ambiguity in an insurance policy must be
resolved against the insurer and in favor of coverage." Id. "An insurance contract is
ambiguous if it is reasonably susceptible of different interpretations." Id. "['l?]he
contract language is to be viewed from the perspective of an average person untrained
in either the law or the insurance field in light of what a more casual reading of the
policy would reveal to an ordinarily intelligent insured." Union Mut. Fire Ins. Co.,
Commercial Union Ins. Co., 521 A.2d 308, 310 (Me. 1987).
- in the Massachusetts litigation, that "Atlusson hrred Eric
Here, Simons is alleging,
S. Simons as an independent contractor to work inter alia, at the construction site on the
properties." Under the traditional comparison test, the Massachusetts allegation clearly
brings the litigation within the contours of the policy. The Massachusetts Superior
Court may, ultimately, find that Simons was Atkisson's employee; under Maine, law,
the court is not permitted to make a factual determination in this regard.
However, North East argues that h s case falls into one of the exceptions to the
traditional comparison test as expressed in Patrons Oxford Mut. Ins. Co. v. Garcia, 1998
M E 38,707 A.2d 384. "Except in limited circumstances, an insurer cannot avoid its duty
to defend by establishing, before the underlying action has concluded, that ultimately
there will be no duty to indemnify." Id. ¶ 6,707 A.2d at 385. "[El xceptions exist where
the insured, the insurer, and the injured claimant stipulate to the facts material to the
A
insurer's duty to indemnify or where the pertinent facts have been determined in other
proceedings." Id. 9[ 7, 707 A.2d at 386.
Here, Athsson has not admitted or stipulated that Simons was an employee,
despite the fact that he is, apparently, malung this argument in the Massachusetts
litigation in order to avoid liability. North East argues that this case falls under the
second listed exception, that "the pertinent facts have been determined in other
proceedings." Id. However, in Patrons, the Law Court clarified t h s exception and cited
State Mut. Ins. Co. v. Bragg, 589 A.2d 35,38 (Me. 1991). In Bragg, the Law Court found
that an insured's criminal conviction was "sufficient to preclude relitigation of the issue
of [the insured's] subjective intent." Id. North East argues that some of the facts drawn
out in the discovery proceedings in the Massachusetts litigation bring this case under
h s exception.
However, the Law Court in Bragg stated that h s exception is identical to the use
of collateral estoppel in that "the identical issue [must be] determined by a prior final
judgment and that the party estopped had a fair opportunity and incentive to litigate
A A
the issue in the prior proceeding." Id. at 37. Discovery proceedings are not a final
determination for purposes of collateral estoppel. The factual determination must be
the subject a "priorfinal judgment." The Massachusetts litigation has not been finalized
and, thus, any alleged determinations emerging from discovery cannot bring h s case
w i h n the factual determination exception.
Given that the exceptions do not apply, the allegations in the Massachusetts
litigation clearly bring that case withn the coverage of the policy and the court declares
that North East has a duty to continue to defend Atlusson. As for indemnification, it is
premature for tlus court to make such a determination until and unless liability is
established in the Massachusetts litigation. Royal Ins. Co. v. Pinette, 2000 ME 155, 9[ 3, 756
A.2d 520,522. TTlus court will stay these proceedings until the Massachusetts litigation is
finally determined.
3. Atkisson's Immunity from Simons' suit Under Workers Compensation
Laws
North East also makes a short and rather vague argument that it also has no
duty to defend, because of the Maine Workers' Compensation Act. However, h s
argument is also premised on an allegation that Simons was Atlusson's employee and
not a contractor. North East seems to be attempting to circumvent the comparison test
and is attempting to have h s court determine Simons' employment status. As stated
above, such a factual determination would be inappropriate and premature in h s case.
The court declines to make a declaration that Atlusson is immune from suit under
Maine's workers' compensation laws.
4. Attorney's Fees and Court Costs
24-A M1.R.S.A. § 2436-B states that in a declaratory judgment action "to determine
an insurer's contractual duty to defend an insured under an insurance policy, if the
insured prevails in such action, the insurer shall pay court costs and reasonable
8'
attorney's fees." Here, Atlusson has prevailed against North East's declaratory
judgment action, in regard to the duty to defend, and is entitled to court costs and
reasonable attorney's fees so far as they relate to the duty to defend.
The entry is:
Defendants' Motion for Summary Judgment is GRANTED.
Plaintiff's Motion for Summary Judgment is DENIED.
This court declares that Plaintiff has a duty to continue to defend
Defendant in the Massachusetts litigation and that Plaintiff is required to
pay Defendant's court costs and reasonable attorney's fees for the duty to
defend aspect of t h s case. Defendant has twenty (20) days to file an
affidavit detailing its reasonable attorney's fees and court costs and
Plaintiff then has twenty (20) days within w h c h to respond. The court
will, thereafter, decide if a hearing is necessary on the issue.
The court STAYS any further proceedings in this case, pending the
outcome of the Massachusetts litigation.
Dated at Portland, Maine h s - day of July, 2005.
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