First Specialty Insurance Corporation v. Pilgrim Insurance Company (Lawyers Weekly No. 11-082-13)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750;  (617) 557-1030; SJCReporter@sjc.state.ma.us       12‑P‑1281                                       Appeals Court   FIRST SPECIALTY INSURANCE CORPORATION  vs.  PILGRIM INSURANCE COMPANY.     No. 12‑P‑1281. Suffolk.     April 4, 2013.  ‑  June 26, 2013. Present:  Kantrowitz, Brown, & Kafker, JJ.   Insurance, General liability insurance, Motor vehicle exclusion, Motor vehicle insurance, Insurer’s obligation to defend.  Indemnity.  Motor Vehicle, Insurance.       Civil action commenced in the Superior Court Department on March 12, 2010.   The case was heard by Geraldine S. Hines, J., on motions for summary judgment.     David A. White for the defendant. Barbara O’Donnell for the plaintiff.     KAFKER, J.  The instant case involves a dispute between a general liability insurer, First Speciality Insurance Corporation (FSIC), and an automobile insurer, Pilgrim Insurance Company (Pilgrim), regarding the scope of an automobile exclusion in a commercial general liability insurance policy (CGL policy).  By its express terms, this “exclusion applies even if the claims against any insured allege negligence . . . in the supervision[] [or] hiring[] . . . of others by that insured, if the ‘occurrence’ which caused the ‘bodily injury’. . . involved the . . . use . . . of any . . . ‘auto’ . . . owned or operated by . . . any insured.”  The question presented is whether FSIC had a duty to defend and indemnify its insureds for negligent supervision claims relating to an automobile accident involving an intoxicated employee of the insureds.  Pilgrim, which settled the underlying claims in their entirety, argues that the principles of Worcester Mut. Ins. Co. v. Marnell, 398 Mass. 240 (1986) (Marnell), and its progeny mandate coverage for all of FSIC’s insureds except the intoxicated driver, as they were not the owners or operators of the automobile, and therefore FSIC should reimburse Pilgrim for a portion of the costs incurred in litigating and settling the underlying action.  We conclude, however, that because FSIC’s policy contains the express terms referenced above that were not present in Marnell, a different result is warranted.  See Massachusetts Property Ins. Underwriting Assn. v. Berry, 80 Mass. App. Ct. 598, 602 (2011); Rhoades vs. Massachusetts Property Ins. Underwriting Assn., U.S. Dist. Ct., No. 09-11302-DPW (D. Mass. July 13, 2010).  We therefore affirm the summary judgment in favor of FSIC. 1.  Background.  a.  Underlying facts.  The facts of the underlying litigation are undisputed in this action.  In 2007, Dennis Pinto had […]

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