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Zurich American Insurance Co. v. Electricity Maine, LLC

United States Court of Appeals, First Circuit

June 17, 2019

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff, Appellant,
v.
ELECTRICITY MAINE, LLC; EMILE CLAVET; KEVIN DEAN; SPARK HOLDCO, LLC; PROVIDER POWER, LLC; KATHERINE VEILEUX AND JENNIFER CHON, individually and behalf of all other similarly situated parties, Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE [Hon. Nancy Torresen, Chief U.S. District Judge]

          John S. Whitman, Esq., with whom Richardson, Whitman, Large, & Badger were on brief for appellant.

          Timothy E. Steigelman, with whom Melissa A. Hewey, and Drummond Woodsum were on brief for appellees.

          Before Howard, Chief Judge, Boudin and Barron, Circuit Judges.

          BARRON, CIRCUIT JUDGE.

         Electricity Maine LLC is a private energy company that serves customers in Maine. It held a D&O insurance policy (the "Policy") with Zurich American Insurance Co. ("Zurich") when, in November of 2015, a class action was brought against it, Spark Holco LLC, Emile Clavet, and Kevin Dean (together "Electricity Maine"). The named plaintiffs were two of Electricity Maine's customers, Jennifer Chon and Katherine Veilleux. They sought to represent a class of nearly 200, 000 of the company's customers. The complaint alleged that Electricity Maine had engaged in misconduct that resulted in customers receiving higher bills than Electricity Maine had represented that they would be. The complaint sought class-wide damages totaling approximately $35 million for a variety of Maine state common law claims, as well as for claims under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962, 1964; and the Maine Unfair Trade Practices Act, Me. Rev. Stat. Ann. tit. 5 § 207.

         Electricity Maine tendered notice of the suit to Zurich. Zurich then initiated the present action against Electricity Maine in the United States District Court for the District of Maine on May 3, 2017, based on diversity jurisdiction. 28 U.S.C. § 1332. Zurich seeks a declaratory judgment that it has no duty to defend Electricity Maine against the underlying action. Zurich contends that Electricity Maine's policy[1] with Zurich provides, in relevant part, that Zurich has a duty to defend Electricity Maine against any lawsuit that seeks damages for "bodily injury" caused by an "occurrence" and that the complaint in the underlying action fails to allege that Electricity Maine engaged in conduct that qualifies as an "occurrence" or that caused any "bodily injury."

         Zurich and Electricity Maine cross-moved for summary judgment on a stipulated record. The District Court ruled for Electricity Maine. Zurich Am. Ins. Co. v. Electricity Maine LLC, 325 F.Supp.3d 198, 202-03 (D. Me. 2018). This appeal followed. We affirm.

         I.

         We review the District Court's decisions on the parties' motions for summary judgment de novo. See Utica Mut. Ins. Co. v. Herbert H. Landy Ins. Agency, Inc., 820 F.3d 36, 41 (1st Cir. 2016). We must affirm the judgments below if there is no genuine issue of material fact in dispute and the District Court's conclusions are correct as a matter of law. See id.

         The parties agree that the only issues presented on appeal concern the District Court's interpretation of the relevant provisions of the Policy. Those issues present matters of law, which we review de novo. Massamont Ins. Agency, Inc. v. Utica Mut. Ins. Co., 489 F.3d 71, 72 (1st Cir. 2007).

         The parties agree that Maine law controls the interpretive questions at issue on appeal. Under Maine law, "[i]f the allegations in the underlying . . . action are within the risk insured against and there is any potential basis for recovery, the insurer must defend the insured regardless of the actual facts on which the insured's ultimate liability may be based." Elliott v. Hanover Ins. Co., 711 A.2d 1310, 1312 (Me. 1998).

         To determine if the allegations in the underlying action are within the risk insured, we must "compar[e] the complaint with the terms of the insurance contract." Id. The key terms in the Policy that define the "risk insured" are ...


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