Opinion ID: 2826717
Heading Depth: 3
Heading Rank: 1

Heading: Ambiguous Antecedent

Text: We begin with the ambiguity in the L-500 Endorsement that the district court did not consider. Here, we focus not on the meaning of the word contractor in the Endorsement, but rather on the proper reading of a phrase: '[b]odily injury' to any . . . 'employee' . . . of any contractor . . . arising out of . . . rendering services of any kind . . . for which any insured may become liable[.] (Emphasis added.) The parties disagree about -7- the proper antecedent of the phrase for which any insured may become liable -- that is, whether it modifies services or bodily injury. According to Benchmark, [t]he phrase 'for which any insured may become liable . . .' modifies the clause 'services of any kind . . . ,' [indicating] that the policy excludes [the] claims [of a contractor's employee] only if the contractor's employee is injured while performing services for which the insured has some responsibility. USLIC, on the other hand, contends that the exclusion uses deliberately broad language to reflect that an insured might become liable to a worker on a job site with whom [the insured] has no contractual relationship. Under that interpretation, the phrase for which any insured may become liable modifies bodily injury, not services. Construing the provision as Benchmark suggests limits the exclusion to bodily injury that befalls employees of contractors [Benchmark] hires or has some contractual responsibility to. Such a limitation, Benchmark asserts, is consistent with Massachusetts common law, which limits a general contractor's particular duty to a subcontractor's employee according to whether the former retains the right to control the work in any of its aspects, including the right to initiate and maintain safety measures and programs. Kostrzewa v. Suffolk Constr. Co., 897 N.E.2d 1272, 1274 (Mass. App. -8- Ct. 2008) (quoting Corsetti v. Stone Co., 483 N.E.2d 793, 798 (Mass. 1985)). Benchmark therefore contends that USLIC's duty to defend and indemnify its insured turns on whether Benchmark retained the right to exert any control over Bailey's decorative painting services and could therefore be accountable for liabilities arising from or related to her work.4 Here, [t]he undisputed facts show that Benchmark did not hire Bailey's employer, nor was Bailey otherwise somehow performing work within Benchmark's general contract. Hence, even if Bailey was a contractor's employee, as the district court held she was, the exclusion does not apply to Bailey's claims because Benchmark could not become liable for her services. In contrast, USLIC maintains that the exclusion applies to bodily injury befalling any contractor, subcontractor, or employee of a contractor or subcontractor injured on the job if Benchmark may become liable for that injury. Reading the policy in this way means that the relationship of the injured party to the insured is simply inapposite. The irrelevancy of a contractual relationship between the injured party and the insured is underscored, USLIC argues, by the use of the word any in the 4 Liability for Bailey's services would include vicarious liability for any torts she might commit in the course of her employment, and liability to the homeowners for deficiencies in the quality of her work. -9- exclusion: as in, the policy excludes bodily injury to any employee of any contractor arising out of rendering services of any kind. To wit, USLIC asserts that the Endorsement applies with respect to 'any' contractor, not just [Benchmark's] subcontractors. To determine coverage under the L-500 Endorsement, then, the relevant inquiry is limited to whether the injured party is a contractor, subcontractor, or works for a contractor or subcontractor, whether the injury ar[ose] out of or in the course of rendering or performing services, and whether Benchmark may become liable for that injury. Here, USLIC contends that, although Bailey did not have a contractual relationship with Benchmark, the exclusion applies because she was employed by a contractor, she was injured on the job, and Benchmark's alleged negligence in maintaining the site may expose Benchmark to liability for her injuries. We are persuaded by these competing arguments that reasonably intelligent people could differ as to the proper antecedent of for which the insured may become liable. The exclusion is therefore ambiguous. Under Massachusetts law, Benchmark is entitled to have the ambiguity resolved in its favor, particularly where the ambiguity appears in an exclusion. See Boazova, 968 N.E.2d at 390. We therefore adopt the interpretation of the exclusion that Benchmark advances: the exclusion applies -10- only if the insured may become liable for the injured party's services. Since Benchmark could not have been liable for Bailey's decorative painting, the exclusion does not apply to Bailey's claims and USLIC has a duty to defend and indemnify Benchmark in the underlying personal injury suit. The reasonable expectations of the insured support this outcome. The purpose of a commercial general liability insurance policy, like the one Benchmark purchased from USLIC, is to protect the insured against losses to third parties arising out of the operation of the insured's business. 9A Steven Plitt et al., Couch on Ins. § 129:2 (3d ed. 2014). The relationship of the injured party to the insured is at the core of this type of broad coverage. See id. at § 129:1 (explaining that commercial general liability insurance is designed to provide coverage for tort liability for physical damages to others (emphasis added)); see also id. at § 129:10 (describing commercial general liability insurance as providing coverage for the employer's liability to the general public for the negligence of the employer's agents . . . and employees). The distinction between an insured's employees on the one hand and the public on the other is typically maintained through two employment-related exclusions, the workers' compensation exclusion and the employer's liability exclusion. See id. at §§ 129:10-11. -11- Here, the standard employer's liability exclusion from the original policy has been replaced with the L-500 Endorsement, although the parties dispute whether the Endorsement deleted the exclusion heading, Employer's Liability. Benchmark contends that the heading was retained, thus providing a lens through which to interpret the Endorsement's substantive provisions. At the very least, Benchmark argues, it is reasonable to read the Endorsement as a modification of the Employer's Liability exclusion rather than [as] a whole new set of unrelated exclusions. We conclude that whether the heading persists is immaterial because, in light of the content of the Endorsement, it is reasonable to read the Endorsement as an employer's liability exclusion, even if the heading was deleted. In other words, the Endorsement may reasonably be read as an employer's liability exclusion that has been modified by the insurer to reflect a particular type of employer, namely, a contractor. In its first provision, the Endorsement simply adds a handful of worker classifications to the employee classification used in the original policy's Employer's Liability exclusion. The provision in the original policy excluded Bodily injury to: (1) An employee of the insured, whereas the Endorsement excludes Bodily injury to any employee, volunteer worker, temporary worker, or casual laborer arising out of . . . [e]mployment by any Insured[.] Compare Add. 50 with Add. 51 (internal quotation marks -12- omitted). The added classifications reflect the different types of workers that a contractor like Benchmark might engage, but they do not upset the basic objective of the exclusion: to exclude injuries to individuals who work directly for Benchmark. The second provision in the L-500 Endorsement is the one at issue: exclusion of bodily injury to any contractor, subcontractor or any employee, volunteer worker, temporary worker, or casual laborer of any contractor or subcontractor arising out of . . . rendering services . . . for which any insured may become liable[.] This provision does not have a direct counterpart in the original Employer's Liability exclusion but, read in context, it is reasonably interpreted as an extension of the Endorsement's first provision. Here, the Endorsement responds to a situation, common in Benchmark's line of work, in which there may be several layers of subcontractors between any given worker and the general contractor. By expanding the exclusion to any contractor, subcontractor or any employee, volunteer worker, temporary worker, or casual laborer of any contractor or subcontractor, the Endorsement builds upon the first provision so that the exclusion encompasses not only those who work directly for Benchmark, but also those who work for subcontractors of Benchmark. This is nothing more than an adaptation of the Employer's Liability exclusion to the particular circumstances that commonly arise when -13- the insured is a general contractor who frequently contracts with subcontractors. Given that the purpose of the policy is to indemnify Benchmark against third-party liability and that the Endorsement may reasonably be read as an employer's liability exclusion, it would be incongruous to exclude Bailey's claims on the basis of the Endorsement. Bailey neither worked directly for Benchmark, nor was Benchmark anywhere in her chain of employment. Dividing the world into those who work for the insured and the general public, Bailey is squarely in the latter camp. Hence, her claims are of the sort that Benchmark could reasonably expect to be covered under the policy.