Harlor v. Amica Mut. Ins. Co.

2016 ME 161

DAWN M. HARLOR v. AMICA MUTUAL INSURANCE COMPANY

Docket: Kno-15-282

MAINE SUPREME JUDICIAL COURT

Argued: March 3, 2016

November 3, 2016

Reporter of Decisions

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

Majority: SAUFLEY, C.J., and MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

Concurrence:ALEXANDER, J.

JABAR, J.

[¶1] Dawn M. Harlor appeals from a summary judgment entered by the Superior Court (Knox County, Billings, J.) in favor of Amica Mutual Insurance Company on Harlor's complaint that Amica breached Harlor's homeowner's insurance policy by failing to defend Harlor in a lawsuit against her. Because the suit against Harlor included allegations that could potentially result in an award of damages covered by Harlor's homeowner's policy, Amica was bound to provide Harlor a defense. We therefore vacate the judgment and remand for the entry of a summary judgment in favor of Harlor on her claim for breach of contract relating to the duty to defend and remand for further proceedings on Harlor's claim for indemnification.

I. BACKGROUND

[¶2] The relevant facts are not in dispute. In March 2013, Jon and Winifred Prime brought suit against Harlor. The suit arose from a dispute between the parties over the Primes' right to use a dock according to an easement Harlor had granted to the Primes. The Primes alleged that, acting according to an agreement with Harlor, they made certain improvements to the dock that resulted in the removal of a restriction on the size of the boats they were allowed to maintain at the dock. The Primes alleged that when Harlor later sold the dock, she obtained—through false statements and undue pressure—the Primes' agreement to a "Confirmation of Easement" that may not have reflected the removal of the boat size restriction. The Primes further alleged that, following Harlor's sale, Harlor refused to confirm the Primes' right to use the dock for larger boats and made false statements regarding the Primes' right to use the dock. Harlor's actions, the Primes alleged, resulted in uncertainty regarding the easement and prevented the Primes from selling property that benefitted from the easement.

[¶3] The Primes brought a complaint against Harlor, seeking damages for slander of title, interference with an advantageous relationship, unjust enrichment, fraud, and negligent misrepresentation, and seeking through separate counts a declaratory judgment and punitive damages. The crux of the suit was a determination as to whether, by the terms of the agreement between Harlor and the Primes, the Primes' improvements to the dock removed the boat size restriction contained in the easement.

[¶4] At all relevant times, Harlor was insured by Amica under a homeowner's insurance policy that provided that Amica would defend Harlor against claims that may result in covered damages. Harlor notified Amica of the Primes' suit and requested that Amica provide a defense. In April 2013, Amica denied Harlor's request based on its conclusion that the suit could not result in covered damages.

[¶5] Harlor settled the suit with the Primes and brought suit against Amica. Harlor sought a declaratory judgment that Amica had been obligated to provide Harlor with a defense to the Primes' suit and claimed a breach of contract based on Amica's failure to defend her. Both parties moved for summary judgment. The court granted Amica's motion, concluding that any damages that might have resulted from the suit against Harlor would not be covered by Harlor's policies and consequently did not give rise to a duty to defend.¹

II. DISCUSSION

[¶6] On appeal, Harlor argues that Amica had a duty to tender her a defense because the Primes' claim for interference with an advantageous relationship created a potential that the Primes could have proved facts at trial that would have established liability covered by Harlor's insurance policy. She also contends that Amica is liable for the attorney fees she incurred in the underlying action with the Primes and in this declaratory judgment action, as well as the amount that she paid to settle the underlying claim.

A. An Insurer's Duty to Defend

[¶7] Whether an insurer has a duty to defend an insured is a question of law. York Ins. Grp. of Me. v. Lambert, 1999 ME 173, ¶ 4, 740 A.2d 984. As with summary judgment review in other contexts, here we consider de novo whether the trial court erred in granting summary judgment to Amica on Harlor's claim that Amica breached its duty to defend. See Hardenbergh v. Patrons Oxford Ins. Co., 2013 ME 68, ¶ 12, 70 A.3d 1237. Because the relevant facts are not in dispute, we review the summary judgment for errors of law, including errors in the interpretation of the insurance policy. See Howe v. MMG Ins. Co., 2014 ME 78, ¶ 5, 95 A.3d 79; Langevin v. Allstate Ins. Co., 2013 ME 55, ¶ 7, 66 A.3d 585. We therefore independently examine the language of the policy at issue to determine the scope of coverage, and then consider the general allegations of the Primes' complaint "to determine whether it falls within the scope of the policy's coverage." Hardenbergh, 2013 ME 68, ¶ 14, 70 A.3d 1237.

[¶8] To determine whether an insurer has a duty to defend, a court considers and compares two documents: the insurance policy and the underlying complaint against the insured. Irving Oil, Ltd. v. ACE INA Ins., 2014 ME 62, ¶ 12, 91 A.3d 594. An insurer has a duty to defend an insured when the complaint, read broadly in conjunction with the policy, reveals the existence of any legal or factual basis that could potentially be developed at trial and result in an award of damages covered by the terms of the policy.² Howe, 2014 ME 78, ¶¶ 6, 10, 95 A.3d 79; L. Ray Packing Co. v. Commercial Union Ins. Co., 469 A.2d 832, 833 (Me. 1983). Although courts "do not speculate about causes of action that were not stated[,] . . . our rules of noticepleading favor a broad construction of the duty to defend." York Golf & Tennis Club v. Tudor Ins. Co., 2004 ME 52, ¶ 8, 845 A.2d 1173 (citations omitted). "The facts alleged in the complaint need not make out a claim that specifically and unequivocally falls within the coverage. Rather, where the events giving rise to the complaint may be shown at trial to fall within the policy's coverage, an insurer must provide the policyholder with a defense." Mitchell v. Allstate Ins. Co., 2011 ME 133, ¶ 10, 36 A.3d 876 (quotation marks omitted) (citations omitted). We have explained the comparison test and its "low" threshold for triggering an insurer's duty to defend, Irving Oil, 2014 ME 62, ¶ 12, 91 A. 3d 594, as a test and a threshold designed to "discourage mini-trials on the issue of the duty to defend," Me. Bonding & Cas. Co. v. Douglas Dynamics, Inc., 594 A.2d 1079, 1080 (Me. 1991); see Lambert, 1999 ME 173, ¶ 5, 740 A.2d 984 ("We see no reason why the insured, whose insurer is obligated by contract to defend him, should have to try the facts in a suit against his insurer in order to obtain a defense." (quotation marks omitted)).

B. Harlor's Homeowner's Policy

[¶9] Harlor's homeowner's insurance policy included the following coverage for personal liability:

If a claim is made or a suit is brought against an insured for damages because of bodily injury . . . caused by an occurrence to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which an insured is legally liable. Damages include prejudgment interest awarded against an insured; and

2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the occurrence has been exhausted by payment of a judgment or settlement.

[¶10] The policy defined "occurrence" in relevant part as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period in . . . [b]odily injury." The term "bodily injury" was defined as "bodily harm, sickness or disease, including required care, loss of services and death that results."

[¶11] Referencing the personal liability provision of her homeowner's policy, Harlor argues that Amica was required to defend her because the Primes could potentially have recovered damages for emotional distress and bodily harm caused by such distress on their claim of interference with an advantageous relationship.

C. Duty to Defend Claim of Interference with an Advantageous Relationship

[¶12] To establish a claim of interference with an advantageous relationship, the Primes would have had to prove "the existence of a valid contract or prospective economic advantage, interference with that contract or advantage through fraud or intimidation, and damages proximately caused by the interference." Barnes v. Zappia, 658 A.2d 1086, 1090 (Me. 1995). Generally, a plaintiff claiming tortious interference alleges that the defendant interfered with a contract or prospective economic advantage involving the plaintiff and someone other than the defendant. See generally Currie v. Indus. Sec., Inc., 2007 ME 12, 915 A.2d 400; Rutland v. Mullen, 2002 ME 98, 798 A.2d 1104; Petit v. Key Bank of Me., 688 A.2d 427 (Me. 1996); MacKerron v. Madura, 445 A.2d 680 (Me. 1982), superseded by statute, P.L. 1987, ch. 740, § 8 (effective Aug. 4, 1988) (codified at 14 M.R.S.A. § 8111(1)(E) (1980 & Supp. 1988)); see also 3 Dan B. Dobbs, The Law of Torts § 616 at 498 (2d ed. 2011).

[¶13] At the outset, we disagree with the concurring opinion's proposition that Maine law demands that the fraud or intimidation required as an element of a tortious interference claim must be directed at an identified third party, not at the plaintiff. We have never announced such a limitation on Maine's common law, and we decline to do so now. As the First Circuit has noted, in Massachusetts, a plaintiff can...