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Harlor v. Amica Mutual Insurance Co.

Supreme Court of Maine

November 3, 2016

DAWN M. HARLOR
v.
AMICA MUTUAL INSURANCE COMPANY

          Argued: March 3, 2016

         On the briefs:

          James D. Poliquin, Esq., Norman, Hanson & DeTroy, LLC, Portland, for appellant Dawn M. Harlor

          Martica S. Douglas, Esq., Douglas, Denham, Buccina & Ernst, Portland, for appellee Amica Mutual Insurance Company

         At oral argument:

          Benjamin N. Donahue, Esq., Norman, Hanson & DeTroy, LLC, Portland, for appellant Dawn M. Harlor

          Martica S. Douglas, Esq., for appellee Amica Mutual Insurance Company

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

          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 Harlors complaint that Amica breached Harlors homeowners 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 Harlors homeowners 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 Harlors 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 Harlors 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. Harlors 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 homeowners 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 Harlors 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 Amicas failure to defend her. Both parties moved for summary judgment. The court granted Amicas motion, concluding that any damages that might have resulted from the suit against Harlor would not be covered by Harlors 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 Harlors 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 Insurers 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 Harlors 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 policys coverage." Hardenbergh, 2013 ME 68, ¶ 14, 70A.3d1237.

         [¶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., 469A.2d 832, 833 (Me. 1983). Although courts "do not speculate about causes of action that were not stated[, ] .. . our rules of notice pleading 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 policys 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 insurers 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. Harlors Homeowners Policy

         [¶9] Harlors homeowners 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 ...

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