Opinion ID: 196642
Heading Depth: 3
Heading Rank: 1

Heading: The Policy's Language

Text: 7 The Landlords argue that the lower courts erred in finding that the policy did not explicitly cover damage to the building, and concluding that the policy did not ambiguously address such coverage. In particular, the Landlords challenge the bankruptcy court's conclusion that, while the CGL portion of the policy does apply to certain property damage, it contains a specific exclusion for property damage to property you own, including the Landlords within the term you. The bankruptcy court concluded that since the term you is defined in the policy as any Named Insured, and the Landlords are both an ADDITIONAL INSURED 6 and an insured (under an endorsement modifying the CGL portion) under the CGL portion of the policy, the plain and unambiguous language of this exclusion bars the Landlords from asserting coverage. 8 The Landlords contend that the bankruptcy court erroneously failed to differentiate between the expressly defined term Named Insured used in the policy and the fact that the Landlords were included as an ADDITIONAL INSURED. Specifically, the Landlords attempt to distinguish the term Named Insured from the act of generically adding an entity to the group of those to be covered as part of a more broadly defined category referred to in various places in the policy as an insured, any insured, and those insured. According to the Landlords, capitalization is crucial; Named Insured is capitalized throughout the Policy, while insured, an insured and any insured are not similarly capitalized. Additionally, the Landlords attempt to draw a distinction between the terms ADDITIONAL INSURED, which they concede includes them, and Named Insured, which they deny applies to them. To this end, the Landlords emphasize the usage of you and your, noting that the Business and Personal Property Coverage Form states that [t]hroughout this policy the words 'you' and 'your' refer to the Named Insured shown in the Declarations and any other person or organization, while the Common Policy Declarations page states that the Named Insured is Wursthaus, Inc. & Wursthaus, Inc. DBA Cardullo's Gourmet Shop. 7 9 In contrast, NASIC argues that the courts below properly found that because the policy defined you as the Named Insured shown in the Declarations, and an endorsement modifies the policy to add the Landlords as an ADDITIONAL INSURED under the CGL portion, the plain and unambiguous language of the exclusion for damage to property you own, rent or occupy bars the Landlords from asserting coverage under the CGL portion. Furthermore, NASIC argues that, along with the contractual language, Massachusetts case law supports its contention that such exclusions apply not only to named insureds (such as Wursthaus), but also to additional insureds (such as the Landlords). See Massachusetts Turnpike Authority v. Perini Corp., 349 Mass. 448, 208 N.E.2d 807, 812 (1965). In Massachusetts Turnpike Authority, the Supreme Judicial Court noted that 10 [t]he naming of additional insureds does not extend the nature of the substantive coverage originally given by the policy but merely gives to other persons the same protection afforded to the principal insured. 11 Id., 208 N.E.2d at 813 (citing Sonoco Products Co. v. Travelers Indem. Co., 315 F.2d 126, 128 (10th Cir.1963)). According to NASIC, with respect to the exclusion for property you own, rent or occupy originally agreed to by Wursthaus, the same policy ... covers the added insured, the Landlords. See Sonoco, 315 F.2d at 128. 12 We agree with these cases that the exclusions for property you own, rent or occupy extend to the Landlords as an additional insured. The purpose of provisions to add insureds is to extend the policy coverage to others ... not to change the nature of th[e] coverage nor to change declarations nor to remove exclusions. Id. Where, as here, the endorsement naming the additional insured contains no language suggesting that the nature of coverage, declarations or exclusions were thereby altered, we see no reason to deviate from the well-settled [rule] that the policy does not extend any greater coverage to an additional insured. Id. 13 However, the fact that the exclusions for property you own, rent or occupy extend to the Landlords as an additional insured does not, in and of itself, dispense with the Landlords' capitalization argument. Although we cannot conclude, after finding that the policy's exclusions apply to the Landlords, that the capitalization scheme indicated clearly that the Landlords could benefit from the scope of coverage, if we were to find the contract ambiguous, we would have to reverse the district court's grant of summary judgment for NASIC. As a result, we must determine whether the capitalization and usage arguments suffice to show contractual ambiguity under Massachusetts law. 14 The first approach to the question of interpretation must be to read this insurance policy as one would read any ordinary contract--to inquire what the simplified, conversational language of the policy would mean to a reader applying normal reasoning or analysis. Nelson v. Cambridge Mutual Fire Ins. Co., 30 Mass.App. 671, 572 N.E.2d 594, 596 (1991); Commerce Ins. Co. v. Koch, 25 Mass.App. 383, 522 N.E.2d 979, 980 (1988). [A]n ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other's. Jefferson Ins. Co. of New York v. Holyoke, 23 Mass.App. 472, 503 N.E.2d 474, 476 (1987). Rather, [i]t must be shown that reasonably intelligent persons would differ as to which one of two or more meanings is the proper one. Id. (citing Ober v. National Cas. Co., 318 Mass. 27, 60 N.E.2d 90 (1945)). 15 Applying these standards, we conclude that under Massachusetts law, the Landlords' arguments do not suffice to show contractual ambiguity, let alone outright coverage, benefitting the Landlords' claims. First, we find that, in the face of the express exclusion pointed to by NASIC, the capitalization in the policy would not lead reasonably intelligent persons to conclude that the exclusions did not apply as stated. At least one Massachusetts court has rejected an argument for ambiguity contingent on the usage of one term contradicted by inclusion of other, clearer provisions. In Nelson v. Cambridge Mutual Fire Ins. Co., 30 Mass.App. 671, 572 N.E.2d 594, 596 (1991), the court found that the term residence premises in an exclusionary clause, despite the lack of a pertinent definition, did not lead to legal ambiguity. The court found that no trial was merited on the issue of whether a rented home was covered in addition to a separate owned home, since the declarations page included the address of the owned home under the policyholder's name. Id. Furthermore, in the absence of directly conflicting word meanings, see Quincy Mut. Fire Ins. Co. v. Abernathy, 393 Mass. 81, 469 N.E.2d 797, 799 (1984) (finding ambiguity regarding scope of coverage for reckless acts where policy covered accident[s] but where exclusion clause disclaims liability for bodily injury ... which is expected ... from the standpoint of the Insured), Massachusetts courts appear to find ambiguity in insurance contracts somewhat sparingly. See, e.g., Ober, 60 N.E.2d at 91 (finding no ambiguity as to whether theatre would encompass a restaurant or night club where no admission is charged, but where free entertainment is furnished in connection with the serving of food or other refreshments); Jefferson Ins. Co. of New York, 503 N.E.2d at 476 (concluding there was no ambiguity in contract, since exclusion of claims arising from events in which the injured party was in the care, custody or control of police department covered situation where injury was suicide). Under these rigorous standards, and in the face of the clear language of the exclusions and the Landlords' inclusion as an Additional Insured, neither the capitalization pattern nor the usage distinction between the terms Named Insured and Additional Insured referred to by the Landlords can suffice to create legal ambiguity. 16 Additionally, the Landlords point to the CGL portion's provision that [t]hroughout 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; from this provision, the Landlords conclude that they are not covered by the term you under this provision. Thus, they contend, ambiguity results. We disagree. Not only does the Landlords' argument hinge on the Named Insured versus ADDITIONAL INSURED distinction that we have already rejected, but in fact, the subsequent sentence in the CGL policy states that [t]he words 'we,' 'us' and 'our' refer to the company providing this insurance. Thus, the ordinary and common reading of the language in this context would be to find that you and your were defined as the Named Insured not to draw a distinction between Wursthaus and the Landlords, but between Wursthaus and NASIC.