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City of South Portland v. Maine Municipal Association Property & Casualty Pool

Supreme Court of Maine

March 28, 2017

CITY OF SOUTH PORTLAND et al.
v.
MAINE MUNICIPAL ASSOCIATION PROPERTY & CASUALTY POOL

          Argued: December 14, 2016

          Roy T. Pierce, Esq., (orally) and Sally J. Daggett, Esq., Jensen Baird Gardner & Henry, Portland, for appellants City of South Portland and Patricia Doucette.

          James M. Bowie, Esq., (orally) and Hillary J. Bouchard, Esq., Thompson & Bowie, LLP, Portland, for appellee Maine Municipal Association Property & Casualty Pool.

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

          HUMPHREY, J.

         [¶1] The City of South Portland and its Code Enforcement Officer Patricia Doucette appeal from a summary judgment entered in the Superior Court (Cumberland County, L. Walker, J.). The court concluded that the Maine Municipal Association Property & Casualty Pool had no duty to defend the City of South Portland and Doucette in a federal lawsuit challenging an ordinance. We agree that the Pool had no duty to defend, not because, as the court concluded, the complaint requested only nonmonetary relief, but rather because any potential damages would be excluded from coverage. We accordingly affirm the judgment.

         I. BACKGROUND

         [¶2] The following facts, developed in the summary judgment record, are undisputed. See N. E. Ins. Co. v. Young, 2011 ME 89, ¶ 5, 26 A.3d 794.

         [¶3] On July 21, 2014, the City Council of South Portland enacted Ordinance #1-14/15. The Ordinance prohibits the bulk loading of crude oil on marine tank vessels in South Portland. On February 6, 2015, the Portland Pipeline Corporation and American Waterways Operators (PPLC) filed suit against the City of South Portland and Doucette in the United States District Court for the District of Maine. The suit challenged the legality of the Ordinance, arguing that the Ordinance was unconstitutional, preempted by state and federal law, and otherwise beyond the legislative authority of the municipality. The complaint and prayer for relief requested declaratory and injunctive relief and attorney fees pursuant to 42 U.S.C.S. § 1988 (LEXIS through Pub. L. No 115-9). In Count VII, PPLC alleged that the Ordinance "deprives [PPLC] of [its] rights secured by the United States Constitution . . . under color of state law, thereby violating 42 U.S.C. § 1983." PPLC further alleged in Count VII that it is "suffering and will suffer irreparable harm as a result of being deprived of [its] Constitutional rights and [is] entitled to declaratory and injunctive relief against the City and Doucette in her official capacity."

         [¶4] The Maine Municipal Association Property & Casualty Pool is a public self-funded pool established pursuant to 30-A M.R.S. §§ 2251-2256 (2016). The Pool provides liability coverage to the City of South Portland and its public officials pursuant to a Coverage Certificate. The City notified the Pool of the PPLC lawsuit, tendered the complaint, and requested a defense, which the Pool declined to provide.[1] The City has therefore funded its own defense in the PPLC litigation.

         [¶5] Agreement H of the Coverage Certificate provides that the Pool will "pay those sums which the Member shall be obligated to pay by reason of liability imposed upon the Member by law for damages, direct or consequential, as defined by the term Ultimate Net Loss on account of any Wrongful Act of the Member." Included within the definition of "Wrongful Act" is a "violation of civil rights protected under 42 U.S.C. § 1981 et seq. committed by a Member ... solely in the course of duties or activities for or on behalf of the Named Member." Excluded from the definition of "Ultimate Net Loss" are "punitive or exemplary damages ... or injunctive, non-monetary or restitutionary relief." There is an additional exclusion for "any claim or suit seeking injunctive or non-pecuniary relief." "Suit" is defined as "[a] civil proceeding in which damages because of bodily injury, ' property damage, ' personal injury, ' advertising injury, ' or wrongful acts to which this Certificate applies are alleged." Exclusion C, titled the "TAKING AND OTHER GOVERNMENTAL CONDUCT AFFECTING LAND AND PROPERTY RIGHTS AND INTERESTS EXCLUSION, " provides:

This Certificate does not cover, and does not apply to, any loss, damage, injury, claim, "suit" or liability directly or indirectly (1) caused or occasioned by, happening through, because or in consequence of, resulting from, arising out of or in any way connected with the operation of the principles of eminent domain, condemnation, inverse condemnation, adverse possession, prescription, dedication by adverse use, or any other similar principle, by whatever name called; or (2) caused or occasioned by, happening through, because or in consequence of, resulting from, arising out of, in any way connected with, or constituting an impairment of title, diminution of value, loss of value, inability to realize or obtain full value, diminution of use, loss of use, or inability to realize or obtain full use, of land or any property right or property interest therein, allegedly or actually caused by or resulting from governmental action, omission or conduct of any nature, by whatever name called. This exclusion applies whether or not any such loss, damage, injury, claim, "suit, " or liability is asserted against any Member directly or by virtue of because of any agreement entered into by or on behalf of any Member.

         [¶6] On May 8, 2015, the City brought the present action in the Superior Court (Cumberland County). The amended complaint alleged a breach of the duty to defend. The City moved for summary judgment on September 4, 2015, and the Pool moved for summary judgment on October 20, 2015. The court (L. Walker, J.) denied the Citys motion and granted the Pools motion by written order. The court concluded that the Pool had no duty to defend because the complaint, as drafted, requested only declaratory and injunctive relief, not ...


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