Opinion ID: 422027
Heading Depth: 1
Heading Rank: 3

Heading: Coverage of Harding and MacDonald for Bodily Injury to Morehouse

Text: 17 The policy extends general comprehensive liability coverage to Diamond and Groveton as named insureds and, as additional insureds, to any executive officer, director or stockholder thereof while acting within the scope of his duties as such. Excluded from coverage, in relevant part, are injuries for which the Insured ... may be held liable under any workmen's compensation, unemployment compensation or disability benefits law and bodily injur[ies] to any employee of the Insured arising out of and in the course of his employment by the Insured. Allstate denies coverage on two grounds, claiming that MacDonald and Harding were not executive officers within the meaning of the policy, and that Morehouse's injuries are in any event excluded from coverage. 8 18
19 Allstate does not address the New Hampshire definition of executive officers in its brief, arguing only that MacDonald and Harding were not executive officers under New York decisions, because they did not have [t]he power to guide or control the policies or purposes of the corporation [Diamond] or to represent it in a proprietary sense. Small v. Gibbs, 222 App.Div. 699, 225 N.Y.S. 141, 141-42 (App.Div.1927). See also Steiner v. Pleasantville Constructors, Inc., 181 Misc. 798, 46 N.Y.S.2d 120, 123 (N.Y.City Ct.1943). 20 Whatever the case under New York law, the New Hampshire Supreme Court has indicated that the term executive officer is ambiguous in the absence of a precise definition in the policy, and must therefore be construed against the insurer. Young v. New Hampshire Indemnity Co., 120 N.H. 882, 884, 424 A.2d 205, 206 (1980). In Young, the New Hampshire court distinguished between corporate officers and executive officers and indicated that an executive officer was any officer holding a position of administrative or managerial responsibility in a business organization. Id. at 883, 424 A.2d at 206. Applying this definition, the court concluded that a plant manager of a manufacturing plant was an executive officer under a provision virtually identical to the one at issue here. In reaching this result, the court noted a number of factors. First, the plant involved many large, complex machines. Second, the plant manager was responsible for supervising three foremen and forty employees and for compliance with federal environmental and occupational health and safety regulations. Third, the plant manager was involved in the purchase and construction of other plants. Fourth, he had in the past bound the corporation to contracts with machinery contractors and other tradesmen on his own signature. In addition, the company treasurer, who purchased the policy, had given his opinion that an executive officer was an officer with authority to hire, fire, get things done in his department. Finally, both the treasurer and president had testified that they thought the plant manager was covered by the policy. 21 Applying Young to the instant case, it is evident that MacDonald was an executive officer under the Allstate policy. He was a vice president of the company, in charge of manufacturing at the time of Morehouse's accident, and was responsible for the entire mill, its engineering functions, and all of its approximately 650 employees. He oversaw other supervisory personnel, including the safety director, the paper machine superintendent, the plant engineer, and the finishing room superintendent. 22 With regard to Harding, the picture is less clear. Like the plant manager in Young, Harding had certain supervisory responsibilities. He supervised seven tour bosses, who in turn supervised the paper machine crews; in all, a total of some 90 to 100 employees reported directly to him. He was a salaried employee. He had research, development, and purchasing responsibility, and power to hire and fire employees. He had an office, a telephone, and secretarial help, though not a secretary of his own. On the other hand, he evidently did not have the sort of plant-wide responsibilities of the manager in Young, nor responsibility for dealing with government regulators. 23 Since the district court denied coverage on other grounds on the basis of New York law, it left the question of Harding's status unresolved. Rather than resolve Harding's status ourselves, we are persuaded that the better course is to remand the question to the district court. As Young indicates, the status determination is fact-sensitive, particularly here, where the question may be close. On remand, the district court is free to develop additional facts. We note only that doubts should be resolved in favor of coverage, in keeping with Young. 24
25 The exclusion in question excludes bodily injury to employees of the Insured. Allstate and the district court read this language to mean employees of Groveton so as to exclude suits for bodily injury by co-employees. We disagree. 26 Although the policy defines insured to mean any person or organization qualifying as Insured in the 'Persons Insured' provision (emphasis added), the definitions section also provides that [t]he insurance afforded applies separately to each Insured against whom claim is made or suit is brought (emphasis added). We must therefore read the policy and exclusions as if Harding and MacDonald each had a policy of his own, substituting their names for the term Insured. Reading the policy in this way, it is evident that the exclusion is ineffective to exclude coverage here, for Morehouse was an employee of Groveton, but he was not an employee of either Harding or MacDonald. Since the policy only excludes bodily injury to employees of the Insured (i.e., employees of Harding and MacDonald, the particular insureds against whom the Morehouse claims were brought), the exclusion is inapplicable. 27 If the result seems anomalous, the short answer is that Allstate could easily have limited coverage more narrowly by excluding bodily injury to employees of named insureds from the coverage of executive officers, just as it did in the employee endorsement with respect to their coverage as employees. See note 8 supra. Since it did not, Allstate has made its bed and now must lie in it. Under New Hampshire law, we must construe the policy against the insurer wherever, as here, the policy is ambiguous or separate clauses lend themselves to conflicting interpretations. Young, supra, 120 N.H. at 884, 424 A.2d at 206-07.