Of the Seventh Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

No. 08-2525

MEDICAL MUTUAL INSURANCE COMPANY OF MAINE,

Plaintiff, Appellant,

v.

INDIAN HARBOR INSURANCE COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge]

Before

 Howard, Ripple, and Selya, Circuit Judges. *

Jeffrey T. Edwards, with whom Preti, Flaherty, Beliveau &

Pachios, LLP was on brief, for appellant.

Leslie S. Ahari, with whom Troutman Sanders LLP, Louis K.

Thomas, and Pierce Atwood LLP were on brief, for appellee.

October 8, 2009
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SELYA, Circuit Judge. This appeal presents the question

of whether a corporation can recover under a director and officer

(D&O) liability insurance policy for losses stemming from judicial

and administrative complaints filed against the company but which

alleged wrongful conduct on the part of its directors and officers.

In typical fashion, the policy language limits coverage to losses

resulting from claims made against the directors and officers

themselves. 

D&O policies exist to fund indemnification covenants that

protect corporate directors and officers from personal liability,

not to protect the corporation by which they are employed. The

position advanced by the company in this case — extending coverage

to situations in which the directors and officers are not

themselves the actual targets of the claims made — would if

accepted transmogrify D&O policies into comprehensive corporate

liability policies. Because such a transmogrification is contrary

to both the letter and the spirit of the D&O policy at issue here,

we affirm the district court's entry of summary judgment in favor

of the insurer. 

I. BACKGROUND

This case had its genesis in a dispute between Medical

Mutual Insurance Company of Maine (MMIC) and Patrick A. Dowling,

who suffered a stroke in April of 2005. MMIC did not wait very
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long before ousting Dowling from his position as its chief

executive officer.

Dowling retained counsel who, in October of 2005, wrote

a demand letter to MMIC, seeking compensation for alleged

disability discrimination. When the demand letter failed to

produce the desired response, Dowling filed an administrative

complaint against MMIC with the Maine Human Rights Commission and

the federal Equal Employment Opportunity Commission. The statement

of charge named MMIC as the lone respondent, but alleged

discriminatory conduct on the part of MMIC, its directors, and its

officers.

After the agencies issued right-to-sue letters, Dowling

filed a civil complaint against MMIC in the United States District

Court for the District of Maine. Dowling did not name any director

or officer as a defendant, but the complaint contained allegations

of wrongful conduct attributable to MMIC's directors and officers.

The complaint sought damages against MMIC and, among a series of

other prayers for relief, also requested that the court "[e]njoin

MMIC, its agents, employees, and successors, from continuing to

violate" Dowling's rights.

The named parties eventually settled the case. MMIC paid

$325,000 out of its own coffers in exchange for Dowling's execution

of a release of all claims against MMIC and its "officers, agents,

employees, attorneys, [and] members of the Board of Directors."
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MMIC subsequently sought reimbursement from Indian Harbor

Insurance Company, which had issued a D&O policy (styled in this

instance as a management liability policy) to MMIC. That policy

provided reimbursement for any loss(es) to MMIC arising out of

claims made against its directors and officers. Indian Harbor

refused to pay the piper, concluding that Dowling's claims had been

made only against the company (MMIC) and not against its directors

or officers.

Undaunted by this rebuff, MMIC filed the instant action

against Indian Harbor in the district court, seeking to compel

payment under the Indian Harbor policy. On cross-motions for

summary judgment, the court concluded that the policy did not cover

losses resulting from either of the complaints (administrative or

judicial) filed by Dowling against MMIC. Consequently, it granted

summary judgment in Indian Harbor's favor. This timely appeal

ensued.

II. ANALYSIS

We operate under a familiar legal framework. This is a

diversity case, 28 U.S.C. § 1332(c), in which Maine law supplies

the substantive rules of decision. See Erie R.R. Co. v. Tompkins,

304 U.S. 64, 78 (1938). The district court, applying Maine law,

made its dispositive ruling at the summary judgment stage, and that

ruling engenders de novo review. Houlton Citizens' Coal. v. Town

of Houlton, 175 F.3d 178, 184 (1st Cir. 1999). 
 The parties agree that Section I(B) is the only policy 2

provision that might entitle MMIC to reimbursement. 

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Under Maine law, the general rule is that ambiguous

language in an insurance policy must be construed against the

insurer. Seaco Ins. Co. v. Davis-Irish, 300 F.3d 84, 86 (1st Cir.

2002); Union Mut. Fire Ins. Co. v. Comm'l Union Ins. Co., 521 A.2d

308, 310 (Me. 1987). The very articulation of this rule indicates

its limitations: unambiguous language does not fall within the rule

but, rather, must be given its plain and ordinary meaning.

Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267

F.3d 30, 35 (1st Cir. 2001); Lidstone v. Green, 469 A.2d 843, 846

(Me. 1983). When a term is expressly defined within the four

corners of an insurance policy, an inquiring court must defer to

that definition and thereby give effect to the intent of the

parties. See John Hancock Life Ins. Co. v. Abbott Labs., 478 F.3d

1, 7-8 (1st Cir. 2006); see also In re Blinds to Go Share Purchase

Litig., 443 F.3d 1, 7 (1st Cir. 2006) ("Where the parties to a

contract take pains to define a key term specifically, their

dealings under the contract are governed by that definition.").

In the case at hand, the parties' dispute centers on

Section I(B) of the policy's insuring agreements. Section I(B) 2

provides:

The Insurer shall pay on behalf of the Company

Loss which the Company is required or

permitted to pay as indemnification to any of

the Insured Persons resulting from a Claim
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first made against the Insured Persons during

the Policy Period or, if applicable, the

Optional Extension Period, for a Wrongful Act

or Employment Practices Wrongful Act.

The policy defines "Insured Person" as "any past, present or future

director or officer, or member of the Board of Managers, of the

Company." The policy further defines the word "claim" to include

any one of the following four iterations:

(1) a written demand for monetary or nonmonetary relief;

(2) any civil proceeding in a court of law or

equity, or arbitration;

(3) any criminal proceeding which is commenced

by the return of an indictment; and

(4) a formal civil, criminal, administrative

regulatory proceeding or formal investigation

of an Insured Person or the Company (but with

respect to the Company only for a Company

Wrongful Act) which is commenced by the filing

or issuance of a notice of charges, formal

investigative order or similar document

identifying in writing such Insured Person or

the Company as a person or entity against whom

a proceeding as described in (C)(2) [civil

proceeding] or (3) [criminal proceeding] above

may be commenced, including any proceeding

before the Equal Employment Opportunity

Commission or any similar federal, state or

local governmental body . . . .

We bring these policy provisions to bear here. To

establish coverage under Section I(B), MMIC had to show both that

Dowling made a "claim" as defined in the policy and that Dowling's

claim was made against MMIC's directors and officers. In the

district court, MMIC pointed to two separate "claims" that it
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deemed sufficient to satisfy this two-part test: the administrative

complaint and the judicial complaint. In its reply brief in this

court, MMIC for the first time enlarged this list, contending that

a demand letter from Dowling's counsel to MMIC, dated October 13,

2005, constitutes a third such "claim." 

We take the newest contention first, and reject it out of

hand. For one thing, MMIC did not advance this contention in the

district court and, therefore, it is procedurally defaulted. See

United States v. Slade, 980 F.2d 27, 30 (1st Cir. 1992) ("It is a

bedrock rule that when a party has not presented an argument to the

district court, she may not unveil it in the court of appeals.").

For another thing, MMIC waived the contention by failing to allude

to it in its opening brief in this court. See DeCaro v. Hasbro,

Inc., ___ F.3d ___, ___ (1st Cir. 2009) [2009 WL 2767296, at *7]

("It is common ground that contentions not advanced in an

appellant's opening brief are deemed waived."); Sandstrom v.

ChemLawn Corp., 904 F.2d 83, 86 (1st Cir. 1990) (similar). 

This leaves the administrative complaint and the judicial

complaint. We address them in chronological order, beginning with

the administrative complaint.

The administrative complaint fails to satisfy the

policy's definition of a "claim." In order for an administrative

complaint to constitute a claim under that definition, the filing

must "identif[y] in writing [an] Insured Person . . . as a person
 To be sure, the omitted portion of the definition mentions 3

"the Company," but this refers only to coverage under Section I(C)

of the policy. That section, in turn, covers only losses resulting

from securities claims "made against the Company . . . for a

Company Wrongful Act." The policy's definition of "claim" makes

this distinction pellucid: "'Claim' means . . . a formal civil,

criminal, administrative regulatory proceeding or formal

investigation of an Insured Person or the Company (but with respect

to the Company only for a Company Wrongful Act) . . . ."

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. . . against whom a proceeding . . . may be commenced."3

Dowling's notice of charge names MMIC as the sole respondent and

does not identify any particular directors or officers. The

accompanying statement of charge makes a few categorical references

to MMIC's agents, representatives, and board members, but it does

not name any specific director or officer. Reading the policy as

it is written, the administrative complaint simply does not

comprise a "claim" for purposes of coverage under Section I(B). 

We turn next to Dowling's judicial complaint. That

pleading satisfies the definition of "claim" because it marks the

commencement of a "civil proceeding in a court of law." The larger

question is whether the claim is one "made against" an insured

person.

It cannot be gainsaid that the directors and officers

composed the entire roster of "Insured Persons" for purposes of the

coverage in question. MMIC itself is not included. It is equally

clear that Dowling brought his action only against MMIC. But even

though the judicial complaint named MMIC as the sole defendant,

MMIC notes that the complaint alleged a series of wrongful acts on
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the part of its directors and officers. Thus, MMIC says, the

complaint constitutes a "claim . . . made against the Insured

Persons," as required by the policy. 

This counter-intuitive proposition depends entirely on

the premise that the words "made against" are ambiguous and,

therefore, are subject to a broad construction in favor of

coverage. We reject this premise. 

The mere fact that a party says that it understands words

in a contract of insurance differently than the insurer understands

those words does not make the words ambiguous. Greenly v. Mariner

Mgmt. Group, Inc., 192 F.3d 22, 26 (1st Cir. 1999) ("[A]n insurance

policy is not considered ambiguous merely because a dispute arises

over the meaning of a particular provision."). By the same token,

the mere fact that a phrase such as "made against" is not

specifically defined in the policy does not mean that the phrase is

ambiguous. As long as language in an insurance policy, read in

context, has a plain and generally accepted meaning, that language

is free from ambiguity. See Am. Employers' Ins. Co. v. DeLorme

Publ'g Co., 39 F. Supp. 2d 64, 82 (D. Me. 1999). Relatedly, "[a]

contract need not negate every possible construction of its terms

in order to be unambiguous." Alternative Energy, 267 F.3d at 35.

These principles are controlling here. Both plain

meaning and common usage require that, in order for a judicial

complaint to be "made against" a person, that complaint must be
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filed in court and must identify the person as a defendant in the

action. See Gargano v. Liberty Int'l Underwriters, Inc., 572 F.3d

45, 49 (1st Cir. 2009) (finding that a claim was "made" when

plaintiff filed suit); see also Fed. R. Civ. P. 3 ("A civil action

is commenced by filing a complaint with the court."); cf. Fed. R.

Civ. P. 4 (providing that a summons must name the parties, be

directed to the defendant, and be served upon the defendant after

the complaint is filed). Because this is the only reasonable

interpretation of "made against" in the context of the policy as a

whole, that phrase is not ambiguous. See Alternative Energy, 267

F.3d at 34 (holding that a contract is ambiguous only when it is

"reasonably susceptible of different interpretations"); Lidstone,

469 A.2d at 846 (similar).

MMIC's rejoinder is that the factual basis for the

judicial complaint consists largely of allegations of misconduct on

the part of its directors and officers. That may be true, but it

does not take MMIC very far.

The insurance policy at issue here is not implicated

because, no matter what conduct the complaint describes, it is not

a claim "made against" any of the directors or officers. That

contention is the linchpin of coverage. See Bank of Carbondale v.

Kan. Bankers Surety Co., 755 N.E.2d 543, 544, 547 (Ill. App. Ct.

2001) (finding no coverage under D&O policy where counterclaim

named only the company even though it alleged wrongful conduct on
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the part of directors and officers); 85-10 34th Ave. Apart. Corp.

v. Nationwide Mut. Ins. Co., 725 N.Y.S.2d 98, 99 (N.Y. App. Div.

2001) (holding that complaint alleging wrongful conduct on

directors' part was not a claim made against directors and officers

"since no directors or officers were named as defendants in the

underlying action"); see also 17 Eric Mills Holmes, Holmes'

Appleman on Insurance § 120.1 (2d ed. 2001) (remarking that because

D&O polices "do not provide coverage to the employer for its

liabilities, a discrimination complaint that names only the

employer . . . usually will not trigger coverage under a D&O

policy"). That linchpin is missing here.

If more were needed — and we doubt that it is — the

policy itself vividly illustrates why free-standing allegations of

wrongful conduct by an insured corporation's directors and officers

cannot be the equivalent of a claim made against those directors

and officers. Section I(B) of the policy entitles MMIC to coverage

for losses "resulting from a Claim . . . made against the Insured

Persons . . . for a Wrongful Act." Each of the capitalized terms

is defined in the policy. The words "Wrongful Act" are defined to

mean "any actual or alleged act, error, omission, misstatement,

misleading statement, neglect, or breach of duty by any Insured

Person." For the company to achieve coverage under this language,

the remonstrant not only would have to allege wrongful acts on the

part of directors or officers, but also would have to bring a claim
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against them. These are complementary requirements, and

allegations of wrongful conduct, without more, do not satisfy them

both. See MGIC Indem. Corp. v. Home State Sav. Ass'n, 797 F.2d

285, 288 (6th Cir. 1986) (explaining that "a claim that a wrongful

act has occurred is not the same thing as a claim for payment on

account of a wrongful act").

In an endeavor to snatch victory from the jaws of defeat,

MMIC points out that "claim" is disjunctively defined in the policy

as "a written demand for monetary or non-monetary relief." With

this in mind, it directs our attention to the tagalong prayer for

relief set out at the end of Dowling's judicial complaint, which

asks the court to enjoin "MMIC, its agents, employees, and

successors, from continuing to violate [his] rights." MMIC then

asseverates that this prayer for injunctive relief against MMIC's

"agents" qualifies as a claim for non-monetary relief made against

MMIC's directors and officers.

A prayer for injunctive relief against a company, which

incidentally refers to the company's agents, does not qualify as a

claim made against the agents because it does not demand relief

from them in their personal capacities. Although the agents can be

enjoined — to the extent that the company itself is enjoined — as

corporate representatives, see Fed. R. Civ. P. 65(d)(2), they

cannot be held legally liable in their personal capacities unless

and until they are joined as parties to the suit. See Nat'l Bank
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of Ariz. v. St. Paul Fire & Marine Ins. Co., 975 P.2d 711, 716

(Ariz. Ct. App. 1999) (holding that because directors and officers

were neither named as defendants nor subject to demands for relief,

no claim was made against them); cf. SEC v. Coffey, 493 F.2d 1304,

1310 (6th Cir. 1974) (reiterating "basic equity principle" that

when an injunction "is directed to a corporation, it also runs

against the corporation's officers, in their corporate capacities"

(emphasis supplied; internal quotation marks omitted)). 

So it is here. Because none of the directors or officers

was named as a defendant in Dowling's judicial complaint, that

complaint could not be an effective vehicle for making a meaningful

demand for relief against them. See Buckingham Aparts., Ltd. v.

Liberty Mut. Ins. Co., 508 N.Y.S.2d 493, 495 (N.Y. App. Div. 1986)

(holding that prayer for relief against corporate policyholder and

its "directors, officers, [and] agents" did not amount to a claim

against the directors and officers because "no directors or

officers were named as defendants"). 

MMIC has one last shot in its sling. It notes the

wording of the general release signed by Dowling and argues that

this wording is an admission that Dowling's civil action

constituted a claim made against MMIC's directors and officers.

This argument runs along the following lines. The release says

that Dowling "hereby releases and agrees to waive any claims he may

have against MMIC, and its officers, agents, employees, attorneys,
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[and] members of the Board of Directors . . . of and from any and

all actions, causes of action, suits, claims or demands for damages

. . . now existing or arising in the future." The breadth of this

taxonomy means, in MMIC's view, that Dowling's claim must have been

made against the same classes of persons (including MMIC's officers

and directors).

This argument is a non-sequitur. Dowling named MMIC

alone as a defendant in the civil action, and Dowling and MMIC

settled the case while it stood in that posture. The fact that

MMIC, as a condition of the settlement, prudently required Dowling

to renounce any potential claims that he might have against its

directors and officers does not expand the parameters of the civil

action. Nor does the release transform, by some mysterious

alchemy, a non-covered allegation of wrongdoing into a covered

claim. See Richardson Elecs., Ltd. v. Fed. Ins. Co., 120 F. Supp.

2d 698, 704 (N.D. Ill. 2000) (holding that a release of potential

liability against a company's officers did not "translate into an

actual claim against them"). It would make no sense to allow an

insured to manufacture coverage by the simple expedient of

insisting, as a condition of settlement, that a plaintiff frame a

release more broadly than the plaintiff had framed the claim

actually made.
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III. CONCLUSION

We need go no further. For the reasons elucidated above,

we hold that the district court did not err in granting summary

judgment in favor of Indian Harbor.

 

Affirmed.