United States Court of Appeals

For the First Circuit

No. 10-1096

WRIGHT-RYAN CONSTRUCTION, INC. and ACADIA INSURANCE COMPANY,

Plaintiffs, Appellants,

v.

AIG INSURANCE COMPANY OF CANADA,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

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

and Hon. John H. Rich III, U.S. Magistrate Judge]

Before

Torruella, Ripple, and Lipez, Circuit Judges. *

John S. Whitman, with whom Richardson, Whitman, Large & Badger

was on brief, for appellants.

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

Pachios, LLP was on brief, for appellee.

July 27, 2011

 Of the Seventh Circuit, sitting by designation. *
LIPEZ, Circuit Judge. This appeal requires us to

determine which of two commercial general liability (CGL) insurance

policies should be considered "primary" for coverage of a claim

arising from an accident at a construction site in Portland, Maine. 

At the time of the subject claim, Wright-Ryan Construction, Inc.

(Wright-Ryan) was insured under its own CGL insurance policy,

issued by Acadia Insurance Company (Acadia), and appeared as an

"Additional Insured" on a subcontractor's CGL policy, issued by AIG

Commercial Insurance of Canada (AIG). Wright-Ryan and Acadia filed

a complaint for a declaratory judgment that AIG was obligated to

defend Wright-Ryan and for compensation of costs incurred by Acadia

in Wright-Ryan's defense. On cross-motions for summary judgment,

the district court granted judgment in AIG's favor, holding that

Acadia's CGL policy provided primary coverage for the accident

claim, with the AIG policy affording solely excess coverage.

Appealing from this grant of summary judgment, WrightRyan and Acadia contend that the district court erred as a matter

of law in its interpretation of the "Other Insurance" clauses of

the two CGL policies, which govern priority of coverage between

overlapping insurance policies. According to plaintiffs, a proper

reading of these "Other Insurance" clauses dictates that the AIG

policy be deemed primary. We agree and therefore reverse.

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I.

The salient details of this insurance dispute are

uncontested. Wright-Ryan, a Maine construction company, was hired

by the University of Southern Maine as the general contractor for

the construction of a building known as University Commons. 

Wright-Ryan in turn subcontracted with the Canadian company Norgate

Metal, Inc. (Norgate) for the fabrication and erection of

structural steel for the project. Although Wright-Ryan had its own

CGL insurance policy, Wright-Ryan required Norgate, as a condition

of the subcontract, to obtain CGL insurance for the University

Commons project in the amount of $2 million and name Wright-Ryan as

an additional insured on the policy. Norgate procured the

requisite coverage through AIG, which issued a certificate of 1

liability insurance to Wright-Ryan and the University of Southern

Maine naming them "Additional Insureds" to Norgate's policy,

providing insurance coverage on a primary and non-contributory

basis for all liability "arising out of [Norgate's] premises or

operations."

In August 2007, Thomas Behrens, an employee of a company

hired by Norgate to assist with the erection of structural steel,

tripped while dismounting from a ladder at the construction site

To avoid confusion and as a matter of convenience, we refer 1

to Norgate's insurer as AIG throughout the opinion. This shorthand

obscures the fact that the CGL policy at issue was initially

purchased from Commerce & Industry Insurance Company of Canada,

whom AIG subsequently succeeded in interest.

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and fell through an unguarded stair opening. Behrens fell four

stories and landed on wet pavement at ground level, suffering

serious injuries. A little over six months later, Behrens filed

suit against Wright-Ryan in Maine's Superior Court for negligence

in connection with the accident. Norgate and Behrens's employer

were joined as defendants in a later amended complaint.

Upon receipt of the complaint, Wright-Ryan sent a letter

to Norgate and AIG tendering to them the defense of the Behrens

suit under Norgate's CGL policy. With no response forthcoming from

either AIG or Norgate, Wright-Ryan's CGL carrier, Acadia, assumed

responsibility for the company's defense. Acadia succeeded in

settling the suit against all three defendants for $150,000 in

2009.

Wright-Ryan and Acadia filed a complaint for declaratory

judgment against AIG in late 2008 in the federal court for the

District of Maine, seeking a declaration that AIG was obligated to

defend Wright-Ryan in the Behrens lawsuit. Following settlement of

the Behrens lawsuit, Wright-Ryan and Acadia amended their complaint

to seek reimbursement for the $150,000 settlement payment and over

$40,000 of attorney's fees incurred in Wright-Ryan's defense. 

The parties each moved for summary judgment, and the

matter was submitted to a magistrate judge for review. The

magistrate judge's recommended decision reached two key

conclusions. First, it concluded that Behrens's accident arose out

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of Norgate's "premises or operations," and thus Wright-Ryan was

entitled to coverage under Norgate's AIG policy. Second, it

concluded that the AIG policy was excess to Wright-Ryan's Acadia

policy for purposes of the Behrens claim. Because the amount

expended to defend and settle the Behrens suit was well within the

limits of the Acadia policy -- which the magistrate judge concluded

to be primary coverage for the Behrens claim -- the magistrate

judge recommended that AIG's motion for summary judgment be

granted. Adopting the magistrate judge's recommended decision in

its entirety, the district court judge entered judgment against

Acadia and Wright-Ryan.

This timely appeal followed.

II.

The issue in this appeal is straightforward. AIG has not

challenged the district court's holding that Wright-Ryan is

entitled to coverage for the Behrens claim under its policy. The

sole and determinative question is whether the district court

correctly held Wright-Ryan's Acadia CGL policy to be primary and

the AIG policy excess. Reviewing the court's legal construction of

the insurance contracts de novo, see Penn-Am. Ins. Co. v. Lavigne,

617 F.3d 82, 84 (1st Cir. 2010), we arrive at the opposite

conclusion.

Under Maine law, which the parties agree governs the

interpretation of the insurance policies here, the "paramount

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principle in the construction of contracts is to give effect to the

intention of the parties as gathered from the language of the

agreement viewed in the light of all the circumstances under which

it was made." Greenly v. Mariner Mgmt. Group, Inc., 192 F.3d 22,

26 (1st Cir. 1999) (quoting Whit Shaw Assocs. v. Wardwell, 494 A.2d

1385, 1387 (Me. 1985)) (internal quotation marks omitted). 

Unambiguous provisions in insurance contracts, as with any other

contract, must be interpreted as written, "giving force to their

plain meaning." Id. (citing Jack v. Tracy, 722 A.2d 869, 871 (Me.

1999)). The mere fact of a dispute over the meaning of a

particular provision does not render that provision ambiguous; it

will be so deemed only when an ordinary person would not understand

that the provision has a single accepted meaning. Id. 

To untangle the priority of the Acadia and AIG policies,

we focus on a provision entitled "Other Insurance," present in near

identical form in both contracts. These provisions are not unique

to the insurance contracts at issue here. "Other Insurance"

provisions are a standard element of liability insurance policies,

intended to govern the relationship between and obligations of

insurers whose policies provide overlapping coverage for the same

claim or loss. See 15 Lee R. Russ & Thomas F. Segalla, Couch on

Insurance § 219:1 (3d ed. 2011). There is just such an overlap

here. Wright-Ryan has coverage for the Behrens claim under both

the Acadia policy and the AIG policy. Wright-Ryan is a party to

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and appears as the Named Insured on the Acadia policy, and, while

not a party to the AIG policy, Wright-Ryan has been added as an

"Additional Insured" to that policy for all liability "arising out

of [Norgate's] premises or operations." Thus, we look to the

policies' "Other Insurance" provisions to determine which of these

coverages is primary.

"Other Insurance" provisions typically take one of three

forms: an "escape" clause, which completely denies coverage when

other insurance is available; a "pro rata" clause, which operates

to share coverage of a claimed loss with other available insurance

policies; or an "excess" clause, which extends coverage for a claim

only when other insurance available for the claim has been

exhausted. See Home Ins. Co. v. St. Paul Fire & Marine Ins. Co.,

229 F.3d 56, 61 (1st Cir. 2000). The provisions at issue here are

of the third, "excess" variety. The relevant portions of the two

provisions read as follows:

a. Primary Insurance

This insurance is primary except when b.,

below, applies. . . . 

b. Excess Insurance

This insurance is excess over:

(1) Any of the other insurance, whether

primary, excess, contingent, or on any other

basis . . . (a) That is . . . coverage for

"your work"; . . .

(2) Any other primary insurance 

available to you covering liability for

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damages arising out of the premises or

operations for which you have been added as an

additional insured by attachment of an

endorsement.

When this insurance is excess, we will have no

duty . . . to defend the insured against any

"suit" if any other insurer has a duty to

defend the insured against that "suit".

The above language renders the policies excess in two situations:

(1) where there exists another insurance policy covering "your

work," a term defined in both the AIG and Acadia policies as

"[w]ork or operations performed by you or on your behalf"; and (2)

where there exists another liability insurance policy for the

premises or operations that is "available to you" and on which "you

have been added as an additional insured." Inescapably, the key to

interpreting and applying these provisions is the definition of

"you." 

The parties have given us two choices of definition, each

of which produces a different answer to the priority inquiry. 

Appellants Wright-Ryan and Acadia argue that "you" means only the

"Named Insured" identified in each policy. Read in this manner,

the terms of the policies produce complementary results: the Acadia

policy indicates that its coverage must be excess to AIG's, and the

AIG policy that its coverage is primary.

Not surprisingly, appellee AIG rejects this reading. It

champions instead a broader definition of "you" adopted by the

district court, which equates "you" with the Named Insured as well

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as any Additional Insureds added to the respective policies. AIG

appears to argue, as it did before the district court, that this

coverage dispute can be resolved merely by plugging the definition

of "you" it advocates into the AIG policy, which, thus interpreted,

provides that its coverage must be excess to the Acadia policy.2

To resolve this definitional dispute, we begin with the

plain language of the policies. See Bristol W. Ins. Co. v.

Wawanesa Mut. Ins. Co., 570 F.3d 461, 463 (1st Cir. 2009). The

very first page of each policy states, "Throughout this policy the

words 'you' and 'your' refer to the Named Insured shown in the

Declarations, and any other person or organization qualifying as a

Named Insured under this policy." Turning to the Declarations page

of the AIG policy, we find the Named Insured prominently

identified, under the header "Item 1. Named Insured and Address,"

as Norgate Metal Inc. No other individual or entity is listed. 

In reality, this is an incomplete argument. Under AIG's

2

proposed interpretation of "you," the Acadia policy would also

indicate that its coverage must be construed as excess to AIG's. 

AIG's reading therefore results in direct conflict between the

terms of the two policies, as each policy's "Other Insurance"

clause is triggered and requires that its policy be treated as

excess over the other. To avoid this sort of "logical logjam,"

well-established Maine law instructs that the conflicting "Other

Insurance" clauses be disregarded as mutually repugnant. See

Carriers Ins. Co. v. Am. Policyholders' Ins. Co., 404 A.2d 216, 220

(Me. 1979). A finding of mutual repugnancy would typically result

in the two insurers sharing coverage of the claimed loss pro-rata. 

See Carriers, 404 A.2d at 220. However, the appellant did not

argue for mutual repugnancy and request proration below, and thus

the district court's grant of summary judgment left AIG with no

obligation to contribute to the Behrens settlement and costs of

Wright-Ryan's defense.

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Likewise, the Acadia policy's Declarations identify only WrightRyan Construction, Inc. and Wright-Ryan Real Estate LLC (an

associated entity with no relation to this lawsuit) as the Named

Insureds.

The Declarations pages do not themselves define the class

of other "person[s] or organization[s] qualifying as a Named

Insured" who are not specifically listed in the policies'

Declarations. That task is left to Section II of each policy,

descriptively titled "WHO IS AN INSURED." Appearing in near

identical form in the two policies, Section II provides a roadmap

to the insurance coverage extended automatically to various

individuals and entities not expressly listed in the respective

policies' Declarations and Endorsements. For example, both

policies provide that the executive officers, directors, and

employees of a Named Insured company automatically qualify as

"insureds," though with certain limitations on the scope of their

coverage. Relevant to the question here, both policies also

specify that "[a]ny organization you newly acquire or form, . . .

and over which you maintain ownership or majority interest, will

qualify as a Named Insured if there is no other similar insurance

available to that organization." Section II identifies no other

persons or entities who may qualify as a Named Insured, nor is

there mention of others so qualifying anywhere else throughout the

policies.

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Reading these provisions together, we find the definition

of "you" to be unambiguous: it refers solely to a person or

organization listed as a Named Insured in the policy Declarations

or "qualifying as Named Insured" by virtue of being newly formed or

acquired by a Named Insured. Where, as here, "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." Med. Mut. Ins. Co. of Me. v.

Indian Harbor Ins. Co., 583 F.3d 57, 60 (1st Cir. 2009). 

The parties have not disclosed the existence of any newly

formed or acquired organizations that might qualify as Named

Insured under the above provision; we must therefore conclude that

the term "you" means solely Norgate in the AIG policy and WrightRyan in the Acadia policy. A substitution of Wright-Ryan and

Norgate for "you" in their respective policies readily establishes

the priority of coverage between the two. With the substitution,

the pertinent section of the Acadia policy reads as follows:

This insurance is excess over:

(2) Any other primary insurance 

available to [Wright-Ryan] covering liability

for damages arising out of the premises or 

operations for which [Wright-Ryan has] been

added as an additional insured by attachment

of an endorsement.

As Wright-Ryan has primary insurance under the AIG policy for

liability arising out of Norgate's work at the University Commons

site, having been added as an Additional Insured on the AIG policy

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by means of an endorsement, the above provision clearly applies. 

The Acadia policy thus requires that it be treated as excess over

the AIG policy.

Making the corresponding substitution of Norgate for

"you" in the AIG policy, a different result obtains:

This insurance is excess over:

(2) Any other primary insurance 

available to [Norgate] covering liability for

damages arising out of the premises or 

operations for which [Norgate has] been added

as an additional insured by attachment of an

endorsement.

On the record before us, this provision has no application: Norgate

is not an additional insured on the Acadia policy. Moreover, the

AIG policy unambiguously states that "[t]his insurance is primary

except when" the excess coverage provisions, including the above,

apply. Reading the two policies together, then, the AIG policy

must be treated as primary and the Acadia policy as excess.

Because we consider the operative language of the

insurance contracts here to be unambiguous, resort to extrinsic

evidence of the parties' intentions is wholly unnecessary. Cf. 

Pine Ridge Realty, Inc. v. Mass. Bay Ins. Co., 752 A.2d 595, 601

n.11 (Me. 2000) (noting that extrinsic evidence may considered

where language of insurance contract is ambiguous). Nonetheless,

we note that our interpretation is consistent with the design

manifest in the parties' course of dealing. Wright-Ryan required

as a condition of its subcontract with Norgate that Norgate procure

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CGL insurance and name Wright-Ryan an additional insured on the

policy. Wright-Ryan, of course, already had its own CGL insurance

policy through Acadia; the only plausible explanation for the

subcontract's insurance requirement would be the desire to shift

the risk to Norgate for liability arising out of Norgate's

subcontract work for Wright-Ryan, ensuring that claims related to

that work were paid out of Norgate's CGL insurance before WrightRyan's was reached. This arrangement and the risk-shifting

motivation underlying it appear to be typical of subcontracting

relationships:

Contracting parties that have required insured

status [under an additional insured

endorsement] will want the endorsed policy to

respond to their losses on a primary basis,

leaving their own general liability insurance

limits untouched (or called upon only as

excess coverage). 

. . . . 

[T]he CGL policy makes special provisions for

coordinating coverages available to these

"endorsed" additional insureds, reflecting the

risk transfer intentions that the named and

additional insureds will have -- that is, that

additional insured coverage will pay first,

before the additional insured['s] . . . own

CGL policy is called upon to pay.

W. Jeffrey Woodward et al., Commercial Liability Insurance §

VI.H.1, 14 (2009). By giving effect to the Acadia "Other

Insurance" clause and finding the AIG policy primary, we have no

doubt that we are properly effectuating the intent of the parties. 

See Greenly, 192 F.3d at 26.

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III.

Because the district court's construction of the

insurance contracts here differs so sharply from our own, we

briefly address the basis for its decision. The district court

relied for its rationale almost exclusively on our decision in

Wyner v. North American Specialty Insurance Co., 78 F.3d 752 (1st

Cir. 1996), another case in which we had occasion to construe the

term "you" in the context of an insurance policy. There, applying

Massachusetts law to interpret a provision excluding coverage for

property "you own, rent or occupy," we held "you" to include not

just the "Named Insured" but also anyone constituting an

"Additional Insured." Id. at 755-56. Because the language

defining "you" in the Acadia and AIG policies is apparently

identical to the policy language in Wyner, the district court felt,

not surprisingly, that our reading in Wyner controlled the

interpretation here.

The relative ease of the interpretive question before us,

along with corroborative, extrinsic evidence of the parties'

intent, presents us with no pressing need to look to authority

interpreting other contracts. If we were to seek such guidance,

though, Wyner is neither the sole nor most relevant authority on

the point. Decisions interpreting the use of "you" and

distinguishing between the "Named Insured" and "Additional Insured"

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are common, due to the ubiquitous use of those terms in insurance

policies:

Insurance carriers often employ the terms

"you" and "your" throughout the language of a

policy. These terms are typically defined as

referring to the named insured shown in the

declarations of the policy, and any other

person or organization qualifying as a named

insured under the policy. Accordingly, "you"

and "your" do[] not encompass individuals or

entities added as an additional insured to the

policy.

3 Russ & Segalla, supra, § 40:26 (footnote omitted). The

mainstream of opinions interpreting this or similar definitions has

held "you" to be unambiguous and to refer solely to the individual

or organization identified as the "Named Insured" in the policy

Declarations. See, e.g., Nat'l Union Fire Ins. Co. v. Liberty Mut.

Ins. Co., 234 F. App'x 190, 193 (5th Cir. 2007) (taking "as a

given" that, under definition of "you" identical to the definition

here, "you" was limited to the named insured and did not encompass

an additional insured); Alexander v. Nat'l Fire Ins., 454 F.3d 214,

226-27 (3d Cir. 2006) (same); Seaco Ins. Co. v. Davis-Irish, 300

F.3d 84, 86 (1st Cir. 2002) (holding that definition of "you" was

unambiguous and referred only to named insured).

Numerous factors counsel against looking to Wyner for aid

in interpreting the language here, among them its focus on a

different type of insurance provision (an exclusionary provision),3

Specifically, the provision at issue in Wyner excluded 3

coverage for property "you own, rent or occupy." 78 F.3d at 755. 

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the dissimilarity of the parties and their contracting intentions

(there, the policy was formed to provide coverage for a tenant and

its landlord), and the rather idiosyncratic posture of the case.4

Indeed, a closer fit can be found in at least two other cases from

this circuit that have interpreted "you" and "your" in the precise

factual setting here: CGL policies obtained by a subcontractor as

a condition of work for a general contractor on a construction

project. See Nat'l Union Fire Ins. Co. v. Lumbermens Mut. Cas.

Co., 385 F.3d 47, 50 (1st Cir. 2004) (interpreting "your work" to

refer to Named Insured subcontractor's work for Additional Insured

general contractor); Merchants Ins. Co. v. U.S. Fid. & Guar. Co.,

143 F.3d 5, 7 (1st Cir. 1998) (stating that it was "clear indeed"

that "you" referred to Named Insured subcontractor). If we had any

doubt about the proper interpretation of the language here, we

might also find more helpful guidance in cases from other

jurisdictions interpreting "you" in the context of an "Other

Insurance" provision, as here. See, e.g., Alexander, 454 F.3d at

226-27 (holding, in interpreting "Other Insurance" provision, that

"you" means only "Named Insured," and noting that the fact "[t]hat

The typical CGL case involves a third party suing an insured 4

for injury or property damage; this is precisely what CGL insurance

policies are meant to cover. Wyner did not fit the typical mold,

but involved instead a suit by an insured against its own CGL

policy for damage to property it owned, requiring that we consider

whether the CGL policy at issue could be read to cover damage

suffered by the insured.

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someone may be an additional insured does not mean they are a Named

Insured -- the two terms are not interchangeable"). 

Given the weight of the authority interpreting a CGL

policy's use of the defined term "you" in circumstances similar to

ours to mean solely the Named Insured, we see no reason to apply

the interpretation adopted -- on very different facts -- in Wyner. 

IV.

Upon careful review, we conclude that the plain language

of the policies at issue here requires the Acadia policy to be

treated as excess over the AIG policy. We therefore reverse the

judgment of the district court.

So ordered.

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