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United States Liab. Ins. Co. v. Benchmark Constr. Servs., Inc.

United States Court of Appeals, First Circuit

August 12, 2015

UNITED STATES LIABILITY INSURANCE COMPANY, Plaintiff, Appellee,
v.
BENCHMARK CONSTRUCTION SERVICES, INC., Defendant, Appellant

Page 117

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Nathaniel M. Gorton, U.S. District Judge.

Michael P. Sams, with whom Ryan P. Menard and Kenney & Sams, P.C. were on brief, for appellant.

John B. DiSciullo, with whom Mitchell & DeSimone was on brief, for appellee.

Before Barron, Circuit Judge, Souter,[*] Associate Justice, and Lipez, Circuit Judge.

OPINION

Page 118

LIPEZ, Circuit Judge.

In this declaratory judgment action, Benchmark Construction Services, Inc. (" Benchmark" ) and its insurer, United States Liability Insurance Company (" USLIC" ), debate the scope of an employer's liability exclusion in a dispute over the insurer's duty to defend and indemnify Benchmark in an underlying personal injury lawsuit. Ruling on cross motions for summary judgment, the district court concluded that USLIC had no duty to defend or indemnify Benchmark in the personal injury lawsuit. Given ambiguities in the exclusion, which must be construed in the insured's favor, we reverse.

I.

In July 2009, homeowners Tom and Sue Ghezzi hired general contractor Benchmark to renovate their Newton, Massachusetts home. The homeowners had hired architect Thomas Huth to design the renovation plans. Huth, in turn, hired Sara Egan d/b/a Painted Design to apply decorative painting to one of the interior walls, and Egan set her employee, Meghan Bailey, to the task. Uncontestedly, Benchmark had no contractual relationship with Huth, Egan, or Bailey; neither was Bailey's work performed under a contract with any of Benchmark's contractors or subcontractors. On March 5, 2010, while Bailey was applying the decorative paint, she fell from a ladder that was positioned on top of scaffolding.

Bailey sued Benchmark in the Massachusetts Superior Court, alleging that she was injured in the fall, that Benchmark owed her a duty of care, and that Benchmark negligently erected and maintained the ladder and scaffolding.[1] Benchmark sought a defense from its insurer, USLIC, but USLIC determined that Bailey's claims are not covered under Benchmark's insurance policy and, hence, that USLIC has no duty to defend or indemnify Benchmark against those claims. According to USLIC, an endorsement to the policy excludes Bailey's injuries from coverage.

At the time of the accident, Benchmark was insured under USLIC's Commercial General Liability Coverage policy. The policy confers broad coverage for " bodily injury" and " property damage," as well as for " personal and advertising injury" and medical expenses. These coverages are then refined through numerous exclusions. Twenty-five endorsements are appended to the policy, many of which provide additional exclusions or alter the contours of existing exclusions. One of these endorsements, " Bodily Injury Exclusion -- All Employees, Volunteer Workers, Temporary Workers, Casual Laborers, Contractors, and Subcontractors" (the " L-500 Endorsement" ), entirely replaces the " Employer's Liability" exclusion from the original policy

Page 119

and is at the heart of this appeal. As modified by the L-500 Endorsement, the insurance does not apply to:

[(I)(2)(e)](2) " Bodily injury" to any contractor, subcontractor or any " employee", " volunteer worker", " temporary worker" or " casual laborer" of any contractor or subcontractor arising out of or in the course of rendering or performing services of any kind or nature whatsoever by such contractor, subcontractor or " employee", " volunteer worker", " temporary worker" or " casual laborer" of such contractor or subcontractor for which any insured may become liable in any capacity[.]

Stripped of language not relevant here, this provision excludes:

" Bodily injury" to any . . . " employee" . . . of any contractor . . . arising out of . . . rendering services of any kind . . . for which any insured may become liable in any capacity[.]

" Contractor" is not a defined term under the policy.[2] The policy provides that USLIC has a duty to defend Benchmark against suits seeking damages " because of 'bodily injury' . . . to ...


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