Opinion ID: 2966290
Heading Depth: 2
Heading Rank: 2

Heading: Construction of the Policy

Text: We emphasize at the threshold of our analysis of the policy language that we are not asking the Law Court to construe the policy provisions. That is not an appropriate issue for certification. We present our reading of the policy to give context for the legal question we will pose. The district court focused on the second full sentence of Paragraph 1, highlighted above, in concluding that the policy incorporated the limitation of liability contained in § 8104-D. Fortin counters that Paragraph 1 is entirely inapplicable in this case. He asserts that, pursuant to the preceding sentence describing coverage, Paragraph 1 applies only to instances in which governmental immunity has been expressly waived by § 8104-A. Here, -21- the officer's loss of immunity does not derive from a statutory waiver, but from the jury's finding that he behaved egregiously. Hence, Fortin argues, this case is governed by Paragraph 2 of the endorsement, which he construes to provide up to $1 million in liability coverage if there is either no statutory immunity or no statutory limitation of damages. Because Titcomb lacks statutory immunity, Fortin maintains that the policy provides up to $1 million in coverage for damages awarded against the officer. Not surprisingly, Titcomb urges the district court's interpretation of the policy and asserts that Paragraph 1 explicitly limits Fortin's recovery to the $10,000 allowed by § 8104-D. He further argues that the $10,000 maximum would apply even if Paragraph 2 rather than Paragraph 1 governed this case because, in the words of the policy, that limitation of damages is . . . provided by the provisions of the Maine Tort Claims Act. The two-paragraph structure, with each paragraph beginning with a statement of $1 million in liability coverage, is a strong indication that the endorsement addresses two different categories of claims. The first full sentence of Paragraph 1 states that [c]overage is limited to those areas for which governmental immunity has been expressly waived by § 8104-A. As noted, this case, which does not involve a statutory waiver of -22- immunity, is not within the scope of that limitation.8 Logically, then, the next sentence in Paragraph 1, defining the [c]overage amount by reference, inter alia, to § 8104-D, also would not govern this case. Rather, the more sensible reading of the sentence in context is that it describes the amount of insurance available for claims that fall within the just-identified scope of coverage. Paragraph 1 thus appears to have a narrow focus: claims brought under the MTCA involving the types of conduct listed in § 8104-A, unless such conduct is otherwise immunized by §§ 8104-B and 8111. By contrast, Paragraph 2's scope of coverage is stated much more generally. It reaches any tort claim under federal or state law for which immunity or limitation of damages is not provided by the provisions of the Maine Tort Claims Act. Titcomb appears to suggest that this paragraph categorically excludes all tort claims covered by the MTCA; at oral argument, his counsel 8 The waiver in § 8104-A applies to the ownership, maintenance or use of vehicles, machinery or equipment, Me. Rev. Stat. Ann. tit. 14, § 8104-A(1); the construction, operation, or maintenance of public buildings, id. § 8104-A(2); the discharge of pollutants, id. § 8104-A(3); and road construction, cleaning, or repair, id. § 8104-A(4). The limitations on waiver contained in §§ 8104-B and 8111 cover claims against governmental entities and individual employees, respectively, arising out of various types of activities, including legislative, judicial, and prosecutorial functions; discretionary conduct; and military duties. Id. §§ 8104-B, 8111. Also excluded from the waiver are intentional acts or omissions by individual employees that occur within the course and scope of employment, unless the individual acted in bad faith. Id. § 8111(E). -23- urged us to read the policy to provide more than $10,000 in coverage only for civil rights causes of action and not for ordinary negligence claims. Fortin reads Paragraph 2 to provide coverage if either of two alternative conditions is present: (1) if, as here, there is no statutory immunity, or (2) if there is no limitation of damages . . . provided by the provisions of the Maine Tort Claims Act. He argues that the limitation of damages alternative cannot be read to negate coverage once coverage is triggered by the absence of immunity; such a reading, he points out, would appear to exclude coverage in every conceivable case under the MTCA because every MTCA recovery is subject to some statutory ceiling. In effect, that latter view is what Titcomb proposes – i.e., that Paragraph 2 is simply inapplicable to ordinary MTCA negligence claims. We have little difficulty rejecting the parties' selfserving constructions of Paragraph 2, as it makes no sense to read the paragraph's reference to a damages cap as incorporating either of the extremes they suggest. See Jipson v. Liberty Mut. Fire Ins. Co., 942 A.2d 1213, 1216 (Me. 2008) (The meaning of language in an insurance policy is a question of law.). On the one hand, an insured could not reasonably take Fortin's position that, where an absence of immunity opens the door to damages, Paragraph 2's invocation of statutory limits on the amount of the recovery becomes irrelevant. See Peerless Ins. Co. v. Wood, 685 A.2d 1173, -24- 1174 (Me. 1996) (noting that, in construing insurance policies, a court view[s] the contract language from the perspective of an average person, untrained in either the law or the insurance field, in light of what a more than casual reading of the policy would reveal to an ordinarily intelligent insured). On the other hand, it is irrational to construe the limitations language as Titcomb does to entirely bar recovery where immunity is waived or inapplicable; allowing a recovery, after all, is the very point of withdrawing immunity. Confronted with the illogic of both parties' interpretations, we conclude that a rational insured would read the policy language to provide some amount of coverage – up to the statutory limit – where there is no immunity. Nothing in the language of Paragraph 2 limits its coverage to civil rights claims. Indeed, if the paragraph were so limited, the endorsement would provide no coverage at all where immunity is waived based on the defendant's conduct rather than on a statutory provision – unless, of course, we go back to Paragraph 1 and widen its explicit, limited description of coverage to include actions involving conduct-based waivers of immunity. As we have explained, however, the policy's format and language do not reasonably support such a construction. Hence, we conclude that Paragraph 2 provides insurance for the damages awarded in this case up to the statutory limit. A -25- question remains, however, as to which statutory maximum applies. Titcomb argues that the applicable statutory ceiling is the $10,000 limitation on personal liability specified by § 8104-D. That view incorporates an assumption that Paragraph 2 adopts the most restrictive possible limitations provision. Such a construction of the policy language is reasonable, but not inevitable. As described in Section II above, the MTCA may authorize governments to procure insurance on behalf of their employees that would allow plaintiffs to collect up to $400,000 in damages for personalcapacity claims (and more, if the insurance has a higher liability limit). Section 8105 thus imposes a limitation of damages that also may be reasonably applied to the circumstances of this case. Indeed, if § 8116 authorizes a governmental entity to procure insurance coverage for personal-capacity claims against its employees, it strikes us as equally likely that the cap on damages would be the $400,000 set by § 8105. Hence, Paragraph 2 reasonably could be read to state only that the maximum coverage for Fortin's award is $400,000. In fact, the difference between the types of claims covered under Paragraphs 1 and 2 of the Endorsement suggests a plausible basis for distinction in the recoverable amount of damages. Paragraph 1 provides coverage for claims that arise in the limited set of categories for which the legislature has chosen to waive the immunity of governmental entities. By contrast, -26- Paragraph 2 includes coverage for claims involving conduct found to be so egregious that the statutory immunity to which the defendantemployee would otherwise be entitled is stripped away. In such cases, where individuals are harmed by outrageous on-the-job conduct of government actors, the employing entity reasonably could want to insure for the statutory maximum of $400,000 to more fully compensate the victims. As the imprecise language of Paragraph 2 does not tell us which statutory cap applies here, it is necessary to apply an interpretive principle to construe the policy. Ordinarily, where language in an insurance policy is ambiguous, it is construed in favor of coverage. Jacobi v. MMG Ins. Co., 17 A.3d 1229, 1233 (Me. 2011); see also Korhonen v. Allstate Ins. Co., 827 A.2d 833, 836 (Me. 2003) ('The language of a contract of insurance is ambiguous if it is reasonably susceptible of different interpretations,' and, if so, the contract will be strictly construed to resolve ambiguities in favor of coverage. (citation omitted)). However, it is also true that the burden of showing insurance coverage lies on the person claiming coverage, here, Fortin. See Pelkey v. Gen. Elec. Capital Assurance Co., 804 A.2d 385, 387 (Me. 2002) (It is [the claimant]'s burden . . . to show that his injury falls within the scope of the [insurance] contract.). Although there is no dispute that the Town of Wells policy provides some coverage for Fortin's claim, the same -27- competing state interests that gave us pause in interpreting the MTCA also cause us to question how Maine would apply these two divergent principles in determining the amount of available coverage. See supra pp. 17-19.9 That the direct burden of a coverage-favorable interpretation would be borne by the insurer, not the Town, does not eliminate the issue. The indirect result of a coveragefavorable interpretive principle could be increased costs for the Town if the insurer sought to recoup its losses through higher premiums. As noted above, ensuring the availability of affordable insurance was one of the Legislature's concerns in adopting the MTCA. See supra p. 18. We therefore will certify the following question to the Law Court: In light of the competing state interests described, which interpretive principles should be applied to construe an insurance policy, procured by a governmental body to cover itself or its employees for MTCA damages liability, that contains an ambiguity affecting the scope of coverage?10 9 The parties argue over the significance of Titcomb's submission of policy excerpts in support of his Rule 59 motion that identified neither the insured nor the insurer. Although they characterize the debate as a matter of who has the burden to establish insurance coverage, we see their argument as essentially a dispute over the authenticity of the excerpts. The parties, however, agree that the policy provisions described above apply here. 10 This case presents the unusual posture of an insured – Titcomb – arguing for a construction of the policy adverse to -28-