Opinion ID: 2301146
Heading Depth: 1
Heading Rank: 6

Heading: The Applicability of the On-Premises Endorsement

Text: On appeal, plaintiffs contend that the United National policy contains an ambiguity which could lead a person to conclude that the On-Premises Endorsement does not apply to insured contracts [7] and that, therefore, the Holding Corp. is entitled to coverage in spite of the limiting language of the On-Premises Endorsement. The rationale underlying plaintiffs' contention is the following: (1) an obligation to indemnify exist[ed] irrespective of [where] the bodily injury or property damage [occurred], and (2) the On-Premises Endorsement modifie[d] the COVERAGES section of the policy, and coverage for `insured contracts' ha[d] been held to be found in an exclusion, not in the primary COVERAGES section. (All emphasis in original.) We are first called upon to determine whether the policy at issue is ambiguous. Vickers Antone v. Vickers, 610 A.2d 120, 123 (R.I.1992). To make this determination, we read the policy in its entirety, giving words their plain, ordinary, and usual meaning. Aetna Casualty & Surety Co. v. Sullivan, 633 A.2d 684, 686 (R.I. 1993); see also Bliss Mine Road Condominium Association, 11 A.3d at 1083; Lynch, 965 A.2d at 425; Rivera v. Gagnon, 847 A.2d 280, 284 (R.I.2004). However, in carrying out that review of the policy language, we are mindful that we should refrain from engaging in mental gymnastics or from stretching the imagination to read ambiguity into a policy where none is present. Mallane v. Holyoke Mutual Insurance Co. in Salem, 658 A.2d 18, 20 (R.I. 1995); see also Bliss Mine Road Condominium Association, 11 A.3d at 1083; Beacon Mutual Insurance Co., 11 A.3d at 649. After having carefully considered the instant United National policy, it is our opinion that the On-Premises Endorsement contained therein is unambiguous. Indeed, the policy's language is blunt and straightforward: coverage is limited to bodily injury or property damage which occurs only at the specified location viz., 245 Aliens Avenue, Providence, Rhode Island. [8] See Papudesu, 18 A.3d at 498 ([T]here are times when a court must engage in    the intolerable wrestle [w]ith words and meanings. But this is no such time. (second alteration in original) (footnote and internal quotation marks omitted)).
Having determined that the On-Premises Endorsement is unambiguous, it becomes our duty to apply the plain language of the policy to the pertinent facts. See Papudesu, 18 A.3d at 498 ([W]e do not actually construe an unambiguous contract; we simply consider the dictates of the plain language in the contract.); Aetna Casualty & Surety Co., 633 A.2d at 686 (stating that, when the terms of an insurance policy are clear and unambiguous, judicial construction is eclipsed and the contract must be applied as written). The plaintiffs urge this Court to apply the plain language in such a manner that the On-Premises Endorsement does not apply to the insured contract exclusion (the contract between Cheaters and the Holding Corp. being within said exclusion); plaintiffs' interpretation would result in there being broader coverage for an insured contract (or an additional insured) than the coverage that the policy accords to the original insured itself. That interpretation would permit the Holding Corp. to be indemnified under the United National policy in the instant casewhile Cheaters, the original insured, would enjoy no such coverage. We decline to read the pertinent language in that manner. It is the general rule that an additional insured, such as the Holding Corp., enjoys the full benefits of the policy, despite any restrictions contained in a separate contractual agreement with the insured, as well as being subject to all policy exclusions.  9 Steven Plitt et al., Couch on Insurance § 126:7 at 126-29 (3d rev. ed. 2008) (emphasis added); see also Bott v. J.F. Shea Co., 299 F.3d 508, 511 (5th Cir.2002) (stating that, if a party was an additional insured, it would still be subject to the exclusions in the policy). Accordingly, an additional insured not only reaps the benefits of the insured's policy, but it also bears the burden of the exclusions. It is further our view that, if the insurer intended to exclude indemnification agreements within insured contracts from the substantial restriction on coverage that the On-Premises Endorsement constitutes, [9] the policy would have expressly so stated. See Maroney v. New York Central Mutual Fire Insurance Co., 5 N.Y.3d 467, 805 N.Y.S.2d 533, 839 N.E.2d 886, 889 (2005) (stating that [i]f the insurer intended to limit [an] exclusion    it could have done so explicitly, as it does in the very same policy's    provisions); see also Chimbay v. AvalonBay Communities, Inc., 742 F.Supp.2d 265, 283 (E.D.N.Y.2008) (holding that if an insurer intended to exclude `insured contracts' from the provision denying coverage for injuries to employees, it could have expressly stated as such). The policy at issue in the instant case does not express an intention to exclude insured contracts from the exclusions that are set forth in the policy. Instead, it will be recalled that the Additional Insured Endorsement that extends coverage to the Holding Corp. specifically states that [t]he naming of an additional insured will not increase our limit of liability. It is therefore clear to us that the function of that endorsement was to add insureds rather than to alter the contract with the original insured. See Great West Casualty Co. v. Mayorga, 342 F.3d 816, 817 (7th Cir.2003). See generally Pearson v. Pearson, 11 A.3d 103, 109 (R.I.2011) (We decline to read nonexistent terms or limitations into a contract.). In their written and oral arguments, plaintiffs have advocated for a totally contrary principle; they would have this Court rule that the Additional Insured Endorsement (as well as the insured contract exclusion) altered the contract with the original insured by conferring broader coverage on the additional insured than on the original insured itself. However, it is a basic principle that, when we review an insurance policy, we consider[] the policy in its entirety and [will] not establish ambiguity by viewing a word in isolation or by taking a phrase out of context. Bliss Mine Road Condominium Association, 11 A.3d at 1083 (internal quotation marks omitted); see also Smith v. United States, 508 U.S. 223, 229, 113 S.Ct. 2050, 124 L.Ed.2d 138 (1993) (Language, of course, cannot be interpreted apart from context.); In re Brown, 903 A.2d 147, 150 (R.I.2006) (In our view,    the `plain meaning' approach is not the equivalent of myopic literalism.). Judge Posner of the United States Court of Appeals for the Seventh Circuit has memorably described as follows an approach to contract interpretation that focuses on a snippet of contractual language taken out of context: That way madness lies. Suppose you order a Cosmopolitan in a bar, and the bartender gives you a copy of the woman's magazine and insists that you pay for it; can he appeal to literal meaning to defeat your contention that it is not what you agreed to? Great West Casualty Co., 342 F.3d at 818. [10] We therefore decline to read the policy in such a myopic manner; rather, we adhere to the principle that exclusions should be read seriatim, not cumulatively[;]    [t]here is no instance in which an exclusion can properly be regarded as inconsistent with another exclusion, since they bear no relationship with one another. [11] Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 405 A.2d 788, 795 (1979) (emphasis added) (internal quotation marks omitted); see also Bond Brothers, Inc. v. Robinson, 393 Mass. 546, 471 N.E.2d 1332, 1334 (1984) (We flatly reject the concept that, because [an] exclusion    excludes certain possible coverage and then provides for an exception, that exception creates an ambiguity, or an objectively reasonable expectation of coverage, when it is confronted with another explicit exception.). In our reading of the insurance policy at issue, we have been mindful of the principle that exclusion clauses do not grant coverage; rather, they subtract from it.  Kemper National Insurance Cos. v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 872 (Ky.2002) (emphasis added) (internal quotation marks omitted); see also Continental Casualty Co. v. Pittsburgh Corning Corp., 917 F.2d 297, 300 (7th Cir. 1990) ([A]n exclusion from insurance coverage cannot create coverage.); Sturla, Inc. v. Fireman's Fund Insurance Co., 67 Haw. 203, 684 P.2d 960, 965 (1984) (stating that extending the scope of an insurance policy based on an exception to an exclusion would run directly counter to the basic principle that exclusion clauses subtract from coverage rather than grant it (emphasis in original) (internal quotation marks omitted)); Weedo, 405 A.2d at 795 (noting the basic principle that exclusion clauses subtract from coverage rather than grant it (emphasis in original)); Raymond Corp. v. National Union Fire Insurance Co. of Pittsburgh, Pa., 5 N.Y.3d 157, 800 N.Y.S.2d 89, 833 N.E.2d 232, 235 (2005) ([A]n exclusion from insurance coverage cannot create coverage. (internal quotation marks omitted)). Reading the instant policy in its entirety, it is our view that the On-Premises Endorsemente applies to the insured contract between Cheaters and the Holding Corp. For that reason, there is no coverage with respect to the underlying civil actions because the collision that gave rise to those civil actions took place in South Boston, Massachusettsnot on the premises at 245 Aliens Avenue in Providence, Rhode Island. Accordingly, we hold that the hearing justice did not err in granting summary judgment in favor of United National based on the On-Premises Endorsement. [12]