Title: Hardenbergh v. Patrons Oxford Ins. Co.

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2013 ME 68 
Docket: 
Cum-12-387 
Argued: 
April 11, 2013  
 
 
 
 
 
 
 
Decided: 
July 16, 2013 
 
Panel: 
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, 
JJ. 
 
 
CHALMERS HARDENBERGH 
 
v.  
 
PATRONS OXFORD INSURANCE COMPANY 
 
 
LEVY, J. 
 
[¶1]  Patrons Oxford Insurance Company appeals from a summary judgment 
of the Superior Court (Cumberland County, Wheeler, J.) declaring that Patrons 
Oxford has a duty to defend Chalmers Hardenbergh, pursuant to his homeowners 
insurance policy, against a third-party suit.  Patrons Oxford contends that it has no 
duty to defend Hardenbergh because the third-party suit is based entirely on 
activity falling within the policy’s exclusion for the insured’s “business pursuits.”  
We agree, vacate the judgment, and remand the case to the Superior Court for 
entry of a summary judgment in favor of Patrons Oxford. 
I.  BACKGROUND 
 
[¶2]  The following undisputed facts appear in the summary judgment record 
unless otherwise indicated.  At all times relevant to this suit, Hardenbergh 
 
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maintained a homeowners insurance policy with Patrons Oxford.1  Pursuant to an 
endorsement to that policy, Patrons Oxford has a duty to defend Hardenbergh from 
claims for “personal injury,” including from claims for “injury arising out of . . . 
libel, slander or defamation of character.”  Explicitly excluded from this coverage 
are claims for “injury arising out of the business pursuits of any insured.” 
[¶3]  In September 2011, Pan Am Systems, Inc. and two other named 
plaintiffs (collectively, Pan Am) filed a complaint in the United States District 
Court against Hardenbergh; C.M. Hardenbergh, P.A., a Maine corporation; and 
Atlantic Northeast Rails & Ports, a publication owned by the corporation.  
Paragraph 12 of the Pan Am complaint alleges that Hardenbergh and/or the other 
defendants “published, without privilege, as fact untrue information regarding 
[Pan Am] in Atlantic Northeast Rails & Ports Newsletters and E-Bulletins, as well 
as on the Atlantic Northeast Rails & Ports website; such publications contained 
false and defamatory statements . . . including, but not limited to,” certain 
specifically identified statements made in those publications.     
 
[¶4]  Paragraph 14 alleges that Hardenbergh and/or the other defendants 
“published false and defamatory statements about [Pan Am] including, but not 
limited to, those described in paragraph 12.”  Paragraph 15 states, “[t]he false and 
                                         
1  Patrons Oxford issued a one-year homeowners insurance policy to Hardenbergh in November 2006.  
Although only the 2006 policy appears in the summary judgment record, the parties do not dispute that 
the operative language of the 2006 policy is identical to the operative language of the policy in effect at 
the times relevant to this case. 
 
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defamatory statements were published without privilege by Defendants to viewers 
of the Atlantic Northeast Rails & Ports’ Newsletters, E-Bulletins and website.”   
[¶5]  The Pan Am complaint also alleges that “Atlantic Northeast Rails 
& Ports is a widely read weekly trade newsletter and e-bulletin covering the 
Northeastern United States, Eastern Quebec and the Canadian Maritimes regions, 
with a place of business in Yarmouth, Maine.”  Further, “Atlantic Northeast Rails 
& Ports maintains a website that contains back issues of its newsletters, maps and a 
database about shippers, ports, railroads and intermodal facilities.”  Paragraph 7 
alleges, “Hardenbergh is the editor, publisher, owner and principal of Atlantic 
Northeast Rails & Ports.” 
 
[¶6]  In response to the Pan Am complaint, Hardenbergh tendered defense of 
the suit to Patrons Oxford.  Patrons Oxford declined to defend Hardenbergh.   
 
[¶7]  In January 2012, Hardenbergh filed in the Superior Court a complaint 
seeking a declaratory judgment that Patrons Oxford has a duty to defend him in the 
pending action by Pan Am.  Hardenbergh also sought to recover money damages 
for costs he had incurred to defend himself in that action.  Patrons Oxford moved 
to dismiss Hardenbergh’s complaint pursuant to M.R. Civ. P. 12(b)(6).  
Hardenbergh opposed that motion and moved for summary judgment.  Patrons 
Oxford filed a cross-motion for summary judgment.   
 
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[¶8]  In May, while this matter was pending in the Superior Court, the 
United States District Court dismissed, with leave to amend, the Pan Am complaint 
against Hardenbergh.  In June, Pan Am filed an amended complaint, which also 
names Hardenbergh as a defendant.  
[¶9]  In July, after a hearing on the parties’ motions, the Superior Court 
granted Hardenbergh’s motion for summary judgment, and denied Patrons 
Oxford’s motions to dismiss and for summary judgment.  The court concluded that 
Patrons Oxford had a duty to defend Hardenbergh against the original Pan Am 
complaint based on the complaint’s “including, but not limited to” language, which 
the court determined could include statements Hardenbergh made in his individual 
capacity and outside of the policy’s “business pursuits” exclusion.  The court did 
not address whether Patrons Oxford has a duty to defend against the amended Pan 
Am complaint. 
II.  DISCUSSION   
 
[¶10]  Patrons Oxford appeals, contending that the trial court should have 
granted summary judgment in its favor because it has no duty to defend 
Hardenbergh against the Pan Am lawsuit.  Before addressing Patrons Oxford’s 
arguments, we consider, sua sponte, whether the United States District Court’s 
dismissal of the Pan Am complaint, and Pan Am’s filing of an amended complaint, 
renders this appeal moot.   
 
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A. 
Mootness 
[¶11]  An appeal is moot “when there is no real and substantial controversy, 
admitting of specific relief through a judgment of conclusive character.”  Doe I v. 
Williams, 2013 ME 24, ¶ 14, 61 A.3d 718 (quotation marks omitted).  Here, the 
duty to defend against the original Pan Am complaint arose, if at all, upon its 
filing.  See Horace Mann Ins. Co. v. Me. Teachers Ass’n, 449 A.2d 358, 360 
(Me. 1982).  Regardless of whether Patrons Oxford has a duty to defend against 
the amended complaint, an issue that the trial court did not address and thus is not 
properly before us, Hardenbergh alleges in this action that he has incurred costs in 
defending against the original complaint, and he seeks damages.  Thus, Patrons 
Oxford’s appeal retains its “controversial vitality,” and is therefore not moot.  
See Doe I, 2013 ME 24, ¶¶ 14, 18, 61 A.3d 718; see also Smith & Nephew Inc. v. 
Fed. Ins. Co., 113 F. App’x 99, 102, 105 (6th Cir. 2004) (applying Tennessee law 
and federal procedural rules to hold that the filing of an amended complaint does 
not render moot the issue of whether a duty existed to defend against the original 
complaint).  
B. 
Duty to Defend 
 
[¶12]  Patrons Oxford argues that the trial court should have concluded that 
Patrons Oxford has no duty to defend against the original Pan Am complaint 
because the allegations of the complaint fall within the policy’s “business pursuits” 
 
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exclusion.  Our review of whether the trial court erred in granting summary 
judgment in favor of Hardenbergh is de novo.2  See Mitchell v. Allstate Ins. Co., 
2011 ME 133, ¶ 8, 36 A.3d 876.   
[¶13]  Whether Patrons Oxford has a duty to defend depends on whether the 
complaint “contains any allegations that, if proved, could fall within the coverage 
afforded by the policy.”  Cox v. Commonwealth Land Title Ins. Co., 2013 ME 8, 
¶ 9, 59 A.3d 1280.  An insurer’s duty to defend arises exclusively from the 
allegations in the complaint and the language of the policy.  See id.  Thus, “[a]n 
insurer may properly refuse to defend a policyholder if the allegations of the 
complaint fall entirely within a policy exclusion.”  Mitchell, 2011 ME 133, ¶ 13, 
36 A.3d 876.   
 
[¶14]  We begin by examining the language of the policy to determine the 
scope of coverage, and then turn to the language of the original Pan Am complaint 
to determine whether it falls within the scope of the policy’s coverage.  In 
construing the language of an insurance policy, we interpret unambiguous 
language in accordance with its plain meaning.  See Cox, 2013 ME 8, ¶ 8, 59 A.3d 
                                         
2  The trial court considered the parties’ competing motions for summary judgment, as well as Patrons 
Oxford’s motion to dismiss the complaint pursuant to M.R. Civ. P. 12(b)(6).  We review the court’s grant 
of Hardenbergh’s motion for summary judgment, and its denial of Patrons Oxford’s cross-motion for 
summary judgment, and do not directly review the court’s denial of Patrons Oxford’s motion to dismiss 
the complaint.  See M.R. Civ. P. 12(b) (providing that “[i]f, on a [Rule 12(b)(6) motion], matters outside 
the pleading are presented to and not excluded by the court, the motion shall be treated as one for 
summary judgment and disposed of as provided in Rule 56”). 
 
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1280.  We strictly construe policy exclusions in favor of coverage.  See Mitchell, 
2011 ME 133, ¶ 11, 36 A.3d 876. 
 
[¶15]  Pursuant to the endorsement to the policy, Patrons Oxford has a duty 
to defend Hardenbergh against claims for damages for “injury arising out of . . . 
libel, slander or defamation of character.”  The endorsement, however, explicitly 
excludes from coverage “injury arising out of the business pursuits of any insured.”  
The policy does not define the term “business pursuits,” but defines “business” to 
“include[] trade, profession or occupation.”  Because the term “business pursuits” 
pertains to an exclusion from coverage, we strictly construe that term against 
Patrons Oxford, interpreting it to mean pursuit of one’s “trade, profession or 
occupation.”  See id.  Thus, the policy requires Patrons Oxford to defend 
Hardenbergh against claims of injury arising out of “libel, slander or defamation of 
character,” unless the injury arose out of Hardenbergh’s pursuit of his “trade, 
profession or occupation.”  
 
[¶16]  We now turn to the original Pan Am complaint to determine whether 
it “contains any allegations that, if proved, could fall within the coverage afforded 
by the policy.”  See Cox, 2013 ME 8, ¶ 9, 59 A.3d 1280.  Because the complaint 
includes claims for defamation, Patrons Oxford properly concedes that it has a duty 
to defend Hardenbergh unless the allegations of the complaint fall entirely within 
the “business pursuits” exclusion.  To make this determination, we consider the 
 
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allegations in the complaint regarding the publications in which the alleged 
defamatory statements appeared, and Hardenbergh’s relationship to those 
publications.   
[¶17]  According to the complaint, all of the alleged false or defamatory 
statements appeared in Atlantic Northeast Rails & Ports publications.  Although 
paragraph 12 of the complaint alleges defamation arising from statements 
“including, but not limited to,” statements specifically described in the complaint, 
it also unequivocally alleges that all of the actionable statements appeared in 
Atlantic Northeast Rails & Ports publications.  Similarly, although paragraph 14 
alleges that Hardenbergh and/or other defendants “published false and defamatory 
statements about [Pan Am] including, but not limited to, those described in 
paragraph 12,” paragraph 15 alleges that “[t]he false and defamatory statements 
were published without privilege by Defendants to viewers of the Atlantic 
Northeast Rails & Ports’ Newsletters, E-Bulletins and website.”  Read in its 
entirety, the complaint alleges defamation arising only out of statements appearing 
in Atlantic Northeast Rails & Ports publications.  
[¶18]  We therefore turn to the question of whether Hardenbergh’s activity 
with regard to Atlantic Northeast Rails & Ports falls within the definition of a 
“business pursuit.”  The complaint describes Hardenbergh as the “editor, publisher, 
owner and principal of Atlantic Northeast Rails & Ports,” which is “a widely read 
 
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weekly trade newsletter and e-bulletin” that has “a place of business in Yarmouth, 
Maine.”  As the policy states, “‘[b]usiness’ includes trade.”  In short, all of the 
alleged defamatory statements appeared in a trade publication, which has a place of 
business and for which Hardenbergh is the “editor, publisher, owner and 
principal.”   
[¶19]  The “including, but not limited to” language of paragraphs 12 and 14 
of the complaint does not support the opposite conclusion.  Although that language 
is indefinite as to the specific statements supporting the defamation claim, the 
complaint is definite that the statements Hardenbergh allegedly made all appeared 
in pursuit of a trade—the publishing of an electronic and print trade publication for 
which he serves as the “editor, publisher, owner and principal.”  Statements 
published in a trade publication by that publication’s “editor, publisher, owner and 
principle” arise out of that person’s “business pursuits.”  
[¶20]  Because the allegations in the original Pan Am complaint fall entirely 
within the “business pursuits” exclusion of the policy, Patrons Oxford has no duty 
to defend Hardenbergh against that complaint.  See id.  Accordingly, the trial court 
erred in granting summary judgment for Hardenbergh, and should have granted 
 
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Patrons Oxford’s motion for summary judgment.3  See Mitchell, 2011 ME 133, ¶ 8, 
36 A.3d 876. 
 
The entry is: 
Judgment vacated.  Remanded for entry of a 
summary judgment in favor of Patrons Oxford 
declaring that Patrons Oxford had no duty to 
defend Hardenbergh against the original Pan Am 
complaint.  
 
 
 
 
 
 
 
 
On the briefs: 
 
James M. Bowie, Esq., and Hilary J. Bouchard, Esq., Thompson & Bowie, 
LLP, Portland, for appellant Patrons Oxford Insurance Company 
 
Jeffrey T. Edwards, Esq., and Jonathan G. Mermin, Esq., Preti Flaherty 
Beliveau & Pachios, LLP, Portland, for appellee Chalmers Hardenbergh 
 
 
At oral argument: 
 
 
James M. Bowie, Esq., for appellant Patrons Oxford Insurance Company 
 
 
Jeffrey T. Edwards, Esq., for appellee Chalmers Hardenbergh 
 
 
 
Cumberland County Superior Court docket number CV-2012-00034 
FOR CLERK REFERENCE ONLY  
 
                                         
3  The parties do not contest the Superior Court’s conclusion that, insofar as Hardenbergh’s complaint 
for declaratory relief and the parties’ motions for summary judgment requested a determination of 
whether Patrons Oxford has a duty to indemnify Hardenbergh in the underlying action, such a claim is 
premature.  Accordingly, we do not address this issue.  Further, we do not consider and express no 
opinion regarding Patrons Oxford’s duty, if any, to defend against the amended Pan Am complaint, a 
question not addressed by the Superior Court and therefore not properly before us.